Trader Talk

Rough Day For IPOs

Futures advanced modestly as November Retail Sales were better than expected, up 1.3 percent and 1.2 percent ex-transports (consensus was for a gain of 0.6 percent and 0.4 percent respectively).

China's industrial production expanded more than expected in November (up 19.2 percent vs. 18.2 percent consensus).


1) Rough morning for IPOs: 1) Automobile auctioneer KAR Auction Services (KAR) priced its IPO of at least 25 million shares at $12 a share Thursday, far below its expected price range of $15 to $17, and 2) Ellington Financial (EFC), a specialty finance company that acquires mortgages, delayed its IPO last night citing poor market conditions.

2) HMO giant Healthnet provided 2010 guidance of $2.30-2.40 ex-items (consensus is $2.04). Stock trades down slightly, and no surprise: it's up nearly 50 percent since the beginning of November, along with most HMOs as investors began betting that a public option was far less likely. Citigroup raised the price target to $29 from $26.

3) United Technologies gave typically conservative guidance for 2010: $4.40-$4.65 in line with consensus of $4.53. 2010 revenue expectations $54 billion-$55 billion, with consensus of $53.3 billion. UTX has handsomely outperformed the S&P 500 this year, despite the fact that it is typically considered a late-cycle play.

4) National Semi reported Q2 earnings better than expected: $0.20 vs $0.14 consensus, and also better on the topline: $344.6 m vs $336.5 m consensus. Gross margins were higher, and there was strong order trends from the industrial end of the market. Third quarter revenue guidance also above consensus: flat with the prior quarter ($345 m) vs $331.5 consensus. 

UPDATE: Dollar strength hampering stock advances. 2-1 advancing to declining stocks but U.S. dollar strength is putting a lid on the stock market advance. The US Dollar Index is at a one month high. It started with better U.S. retail sales, and import prices higher did not help. Interest rates are up, with the 10 year Treasury yield at 3.54 percent, a one month high as well.



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