Trader Talk

Trader Talk: Bearish on Greece Bailout & Commodities

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Stocks continue to be tethered to the outcome of a potential Greece rescue plan. Futures were up modestly, with European banks leading the way — up 3 percent to 4 percent — earlier this morning (Wednesday) on hopes that a rescue package may be announced later this week.

However, shortly before 8am ET, futures lost most of their gains as a Reuters headline cited comments from a German government official that no decision on aid has been made, nor is one pending. Subsequently, European banks lost half of their earlier gains. Additionally, the US Dollar Index moved up, with commodities and commodity stocks falling off their highs this morning.


1) While demand for commodities is rising, commodity firms remain bearish on commodity prices and are still very cautious in their outlooks for the speed of the recovery:

a) BHP Billiton is down 1 percent after beating first-half estimates, despite lower commodity prices and “restrained” demand in developed countries.

The miner is cautious looking ahead, citing uncertainty over the global recovery and tighter lending in China. It warns “stimulus has supported the recovery and underlying issues may not have been fully addressed.”

b) The world’s biggest steelmaker, ArcelorMittal , falls 4 percent after disappointing Q1 earnings guidance. It sees global steel demand rising 10 percent in 2010, but headwinds would still be seen with lower prices. It also cautions that although the recovery has begun, it is “slow and progressive.”

Other big steelmakers AK Steel and U.S. Steel are also down about 1 percent in pre-market trading.

2) Walt Disney is down 1 percent despite topping Q1 earnings estimates ($0.47 vs. $0.38 consensus). Higher profits from its studio division helped, boosted by further cost cuts and solid sales of the studio’s DVDs.

Cable networks (ESPN & Disney Channel) continued to see sales growth (up 7 percent). That offset flat revenues at the company’s theme parks where stronger attendance was overshadowed by lower ticket prices and less in-park spending by guests.

3) New York Times rises 6 percent after Q4 earnings top expectations ($0.44 vs. $0.38 consensus). Revenues still fell (down 12 percent), but the pace of the declines slowed from the prior quarter (down 17 percent).

Ad revenues fell 15 percent, but conditions were improving as advertisers increased their rate of spending. Circulation revenues rose 2 percent on higher subscription prices.

4) Sprint falls 4 percent after a much wider-than-expected Q4 loss (loss of $0.34 vs. loss of $0.19 consensus). Revenues were also short of estimates as the wireless carrier continued to lose customers (subscribers down 148,000). However, that was a smaller decline from its third quarter decline, when it lost 545,000 subscribers.

5) The string of dividend and buyback increases continue:

a) 3M boosted its quarterly dividend 3 percent to 52.5 cents. That follows the likes of other big companies like Time Warner, News Corp., and Marriott which all raised their dividends earlier this month.

b) Health insurer UnitedHealth raised its buyback program to 120 million shares, which includes 23 million shares that remained from a prior buyback program. Last year, the firm repurchased 74 million shares.

c) Wyndham Worldwide boosted its quarterly dividend from $0.04 to $0.12 after it beat earnings estimates and sees improving travel demand. The hotel chain also announced that it was resuming its $200 million stock buyback plan.

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