Trader Talk

The Bernanke Dollar Bounce & Gross Says Forget About Rate Hike

Maybe Bernanke really does have some clout: ever since Monday, when Bernanke engaged in unusual jawboning in support of the dollar, the dollar has stabilized and is even in a mild uptrend.

Pimco's Bill Gross' monthly letter is getting an unusual amount of discussion on trading desks this morning, particularly his insistence that rates will remain low for some time: "Raise interest rates with 15 million jobless and 25 million part-time working Americans? All because gold is above $1,100? You must be joking or smoking - something. We will need another 12 months of 4-5% nominal GDP growth before Bernanke and company dare lift their heads out of the 0% foxhole - mini-bubbles or not."

Stocks, predictably, have floundered around, uncertain about what to do: the S&P close for the last three days has been 1109, 1110, and 1109. Talk about a narrow trading range!

Under-promise, over deliver: profits are down for 9 straight quarters, but per share earnings have topped estimates at 80 percent of S&P 500 companies, according to Bloomberg data (they are using consensus analyst estimates from the day before the companies reported).

Elsewhere, retailers continue to be a mixed bag:

1) A few continue to surprise on the upside: yesterday it was Chico's. You'd think things would be pretty tough at Pottery Barn these days, but no...Williams Sonoma up 4 percent pre-open because they beat expectations by a wide margin: $0.16 versus consensus of $0.05.

They had said comparable store sales would be DOWN 8 to 13 percent, but it was UP 1.7 percent.

Wait, there's more: they raised guidance for the fourth quarter to $0.36-$0.45 from $0.27-$0.36, while the same-store sales forecast was boosted to down 1 percent-up 4 percent from down 6 percent-down 11 percent.

See? Under-promise, over-deliver…just don’t disappoint…

2) Swing and a miss: Dick's Sporting Goods falls 9 percent on poor Q4 guidance. While the retailer handily topped estimates in the third quarter ($0.16 vs. $0.09 consensus), Q4 guidance of $0.41-$0.46 fell well short of the consensus estimate of $0.57.

Putting pressure on fourth quarter results: weaker sales, as comps are seen down 4 percent-6 percent. This is particularly disappointing since same-store sales in the last quarter managed a 1.9 percent rise. So why the Q4 reversal? The company cites an early blast of cold weather shifted cold weather product sales earlier into the third quarter.

3) Game on: Shares of GameStop rise 3 percent pre-open after the video game retailer topped earnings estimates ($0.33 vs. $0.30 consensus) despite a bigger-than-expected 7.8 percent decline in same-store sales. Despite the disappointing sales numbers, traffic improved from the prior quarter and stronger used game sales helped margins.

Looking ahead, GameStop reaffirms fourth quarter guidance of $1.47-$1.65 vs. $1.57 consensus), with same-store sales falling 1 percent to 7 percent.

4) Semiconductors are falling low to mid single digits this morning after Bank of America Merrill Lynch cut its 2010 industry growth forecast to 18 percent from 21 percent citing supply chain inventory concerns. Concurrently, as a result of this view, the firm also downgrades 10 chipmakers including Intel, Texas Instruments, National Semiconductor, Marvell Technology, and LSI. 



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