Trader Talk

Predictions for 2010-A Mixed Bag

Most European exchanges are up about 1 percent (but China closed down 1 percent), commodities are strong, with metals up 2 percent across the board. Oil over $80.

U.S. futures are up about 7 points, but remember the close on Thursday was pretty poor.

While analysts are talking about a slowly improving economy and raising estimates for corporate earnings, economists assembled in Atlanta for the American Economic Association seem to be extremely pessimistic. Lot's of talk that U.S. GDP growth will average only 2 percent a year for the next decade.


1) Chinese manufacturing grew by the most in five years in December; separately, the HSBC Manufacturing PMI survey also came in higher than expected and has expanded for the ninth straight month.

2) Novartis says it will exercise an option to acquire a 52% stake in Alcon from Nestle for $28.1 billion, about $180 a share, a 9% premium to Thursday's close. The Swiss health care giant originally bought a 25% stake of Alcon from nestle in April 2008. Once that deal is done, Novartis will bid $11.2 billion for the remaining shares. Alcon is the maker of the Opti-Free brand of contact lenses and solutions as well as pharmaceuticals and surgical products.

3) Goldman Sachs is raising price targets on most of the chemical companies, including Dupont (DD, to $41 from $35) and Dow Chemical (DOW, to $38 from $37). "We maintain a strong pro-cyclical stance and recommend that investors continue to overweight the specialty and diversified chemical sector, as its compelling exposure to cyclical end markets could fuel a powerful earnings rebound in 2010-2011," Goldman says.

4) Morgan Stanley up about 3 percent pre-open after upgraded by UBS and Credit Suisse. Morgan to Buy from Neutral on the belief that the bank still a "work in progress" but shows attractive year-on-year improvement in 2010. Credit Suisse upping Morgan to Outperfrom from Neutral, raising price target to $38 from $32 and 2010 earnings view to $3.20 from $3.10.

5) Everyone wants in on nat gas: French oil company Total striking a $2.25 billion deal with Chesapeake Energy for a stake in the American energy company's natural gas assets. CHK up 6 percent pre-open. Total will buy a 25% interest in Chesapeake Energy's upstream Barnett Shale (located in northern Texas) assets with $800 million in cash and $1.45 billion to fund 60% of Chesapeake's share of drilling and completion expenditures. The move Total calls "strategically important", will allow Total to enter the U.S. shale-gas market for the first time.

6) According to the L.A. Times, Allied Aviation Services, a New York aviation services company, has offered to buy AIG's International Lease Finance Corp. in Century City for more than $12 billion. So far no response from AIG.



Questions?  Comments?