Trader Talk

China On A Roll


The Chinese get going, again: as the Shanghai Index has hit new 52-week highs, Chinese investors have rushed back into the market, opening the most new stock accounts (484,799 last week) in the past 18 months.

Talk about trends: NASDAQ is up 10 days in a row, the biggest winning streak since July 1997.


1) Boeing beat, $1.41 vs. $1.21 consensus (one of the few companies that did better than last year at the same period), while topline was essentially inline with expectations. They reaffirmed full year guidance of $4.70-$5.00.

2) A couple banks continued to note credit deterioration issues.

Wells Fargo down 7 percent pre-open, beat on the bottomline ($0.57 GAAP) and did better than expected on the topline, but as Ed Najarian at ISI noted on our air there was significant part of that came from mortgage refis, which is unlikely to recur with such intensity. There was also notable derioration in credit quality, a 50 percent increase in nonperforming assets, with little reserve build.

Keycorp reported a larger loss than expected ($0.69 vs. $0.41 consensus), and as with Regions Financial yesterday the main problem was deteriorating credit. Non-performing loans (those not paying interest) rose to 3.09 percent of loans, while net charge-offs (essentially debts that are not collectible) rose to 2.99 percent, higher than most analysts expected. As a result, they are building loan loss reserves.

3) Apple up 4 percent pre-open, as they beat expectations for earnings as well as Mac and iPhone sales, though forecasts were conservative as usual. 5.2 million iPhones were sold, seven times the volume of a year earlier.

4) Pfizer reported earnings basically inline with expectations, but was hurt by a stronger dollar. Topline of $10.98 billion was below consensus of $11.26 billion. Pfizer raised its full-year earnings forecast, ex-items, to $1.90 to $2.00 per share, versus Street estimates of $1.94. Previously, the company guided FY estimates between $1.85 and $1.95.

5) Eli Lilly reported earnings 20 percent higher than a year ago--$1.06 per share ($1.12 ex-items). Analysts were expecting $1.02 a share gains. Sales of the company's top-selling Antipsychotic Zyprexa fell 3%, but sales of the antidepressant Cymbalta climbed 14% and sales of the lung-cancer therapy Alimta escalated 40%. The Indianapolis-based drug maker raises 2009 non-GAAP EPS forecast to $4.20-$4.30. The Street had an estimate of $4.23.



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