Trader Talk

Strong PPI Spikes Dollar

Stock futures dropped and the dollar rallied as the PPI figures were higher than expected, while the Empire Manufacturing survey was weaker than expected.

The dollar has rallied 3.3 percent this month, including an 0.9 percent gain overnight. U.S. stock futures are down, but only by a couple points.


1) Wells Fargo is up 3 percent after announcing a $10.4 billion stock offering that would fund its repayment of the $25 billion in TARP funds loaned to the bank by the Federal Government. Pricing of the secondary will be made later this morning.

2) Citi , B of A , and Wells Fargo aren't the only companies trying to raise money. Insurance giant Conseco plans to sell at least 45 million shares, which it will it will use to repay borrowing after sustaining billions in losses from investments.

4) Best Buy is down 4 percent despite reporting better-than-expected Q3 earnings ($0.53 vs. $0.43 consensus) and revenues (up 5 percent vs. expectations of up 4 percent).

Good news: capped by a strong November and a solid Black Friday weekend, the electronics retailer saw improved traffic and higher average ticket prices, which were also likely helped by the bankruptcy of competitor Circuit City. Sales of higher-priced items like laptop computers and flat panel TVs remained strong and offset weakness in music, movie and video game sales.

Primarily as a result of the strong Q3 results, the retailer boosted its full-year earnings guidance to $3.00-$3.15 vs. $2.96 consensus, but that includes the gain in the third quarter. Overall Q4 earnings look below expectations.

5) Weyerhauser soars 10 percent pre-open after the lumber harvester and paper producer announced it would convert to become a real estate investment trust in 2010. As part of the conversion, the firm will also pay shareholders a special dividend of "undistributed earnings and profits" in the form of stock.

6) We are getting the monthly credit card delinquency and charge-off numbers:

a) Capital One reported that both delinquencies (past due 30 days or more) and charge-offs (debts unlikely to be repaid) rose in November. Charge-offs rose to 9.60 percent from 9.04 percent in October, while delinquencies rose to 5.87 percent from 5.72 percent. Last week CEO Richard Fairbank said he expected chargeoffs to peak in the first quarter of 2010.

b) Discover also reported higher numbers: chargeoffs increased to 8.98 percent in November, from 8.54 percent in October. Delinquencies were 5.65 percent.

c) Bank of America charge off rate dropped slightly to 13.0 percent, vs. 13.22 percent in October. Deqlinquencies rose to 7.69 percent vs. 7.59 percent in October.

d) JP Morgan, Citi, and AmEx will also be reporting number today. 

Reporting Today



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