Trader Talk

Good New Is Bad News, Again


China's GDP rose 8.9 percent in the third quarter from a year ago, about in line with expectations, but still the biggest gain in a year. Stocks in China dropped on concerns the government may end the stimulus program there, but the government reiterated it would keep its loose monetary policy.

  • Mixed Bag: Weekly Job Claims Rise; 4-Week Average Falls

What's up with the Dole IPO? Big-name IPO, set to price tonight, looks weak. There is now a separate $300 million convertible offering as well, which came out of the blue. Huh? Original terms were to price 35.715 million common shares at $13 to $15; now price talk is closer to $12 for the common. The stock underlying the convert is owned by majority shareholder David Murdock, who took Dole private in a $1.4 billion deal in 2003. He was the CEO of Dole, beginning in 1985.

Hyatt also announced this week the terms of its IPO, though not when it would go public.


1) Traders talking about comments from Moody's lead U.S. analyst, Steven Hess, that the U.S. could lose its triple-A rating if it does not reduce the deficit to manageable levels in the next 3-4 years. He made the comments in a Reuters interview.

2) Shipping giant UPS reported earnings of $0.55, a few pennies ahead of consensus, and said "[a] stabilizing economic environment led to improving volume trends during the quarter."

However, the holiday outlook is cloudy: "our customers have widely differing views on their outlook for the holiday season."

Fourth quarter guidance of $0.58-$0.65 is about in line with consensus.

3) PNC trading up 6 percent pre-open, reported earnings well above expectations. Net charge-offs (loans the bank does not expect to recover) declined by 18 percent, which is very good news indeed.

CEO Rohr said the "economy has stabilized."

4) McDonald's is up 2 percent after its Q3 earnings beat estimates ($1.15 vs. $1.11 est.). Global same-store sales rose 3.8 percent, led by a 5.8 percent rise in European comps. Same-store sales rose 2.5 percent in the U.S. and 2.2 percent in Asia, Middle East and Africa. 

5) J. Crew up 13 percent after boosting its Q3 and Q4 guidance. As with a string of other retailers recently, the apparel retailer cited improving sales and margins for the raised outlook.

Q3 earnings are now seen between $0.54 and $0.59, up from $0.30-$0.33 and better than Street expectations of $0.36. Q3 comp. store sales are expected to grow in high single digits, while margins are likely to improve by 5 percentage points.

Sales for Q4 are also seen higher, with comp. store sales now rising mid to high single digits.

6) Shares of Black & Decker rise 2 percent after beating earnings estimates by a penny, helped by a more favorable tax rate and improved margins from tighter cost controls. While a 20 percent decline in Q3 revenues was inline with expectations, sales continued to be very weak across all segments.

Q4 sales are expected to decline at similar rates, and earnings for the current quarter are now seen at $0.68-$0.78, above estimates of $0.50.

CEO Nolan Archibald anticipates "continued stabilization of demand, but not a near-term rebound."



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