The simple fact is that the effect of the European Central Bank's two long-term refinancing operations (LTRO) has dissipated a bit quicker than many expected. The euro zone banks in Italy and Spain bought huge amounts of euro zone debt with their money.
The ECB's next meeting is this Thursday. Traders seem to be expecting the status quo, believing that it's far too easy to hit the panic button and do a third LTRO. Instead, you'll hear more of "the ball is in the court of national governments" for structural reforms.
Regardless: Behind the doors there are no doubt discussions underway on how to recapitalize Spanish banks. What will happen? There will likely be low-cost loans extended. It will not be an LTRO, but it will likely come from the European Financial Stability Facility or the European Stability Mechanism, which is supposed to be the "permanent" European Union rescue funding program, currently capitalized at 500 million euros ($661 million), and is supposed to come into effect in July 2012.
1) A trend for HMOs? First it was Coventry Health Care disappointing last week, then Aetna, now Humana, one of the big providers of Medicare Advantage health plans, disappoints.
The good news: Membership is growing, up 7.7 percent.
The bad news: More people are utilizing their services, driving up costs. The medical cost ratio (the percentage of premium ratio used to pay medical bills) rose to 85.4 percent from 83.8 percent a year earlier.
Humana did raise its 2012 earnings per share guidance by 5 cents on both ends to between $7.55 and $7.75 a share, but it's below analyst estimates of 2012 estimates of $7.99 a share.
2) Building materials business still tough: Armstrong World Industries, which makes flooring and ceiling systems, confirmed what we have seen from other building material companies — the residential remodeling market is strong, but the commercial market is weak, particularly in Europe.
Armstrong reported earnings and revenues below expectations, and said 2012 earnings would be toward the low end of guidance.
Net sales decreased 2.5 percent — pricing improved, but it could not compensate for declining volume. While about 60 percent of revenues are generated in the U.S., the company noted that volumes declined across all business and geographies, particularly in Europe.
3) Last day of the month, with a wide range of performances. China outperformed for the first time in a while:
China up 5.9%
Hong Kong up 2.6%
S&P 500 down 0.4%
Germany down 2.4%
Brazil down 4.4%
Japan down 5.6%
Spain down 11.6%
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