Trader Talk

Pisani: Good News in Retail, KKR IPO and Fertilizer

S&P futures moved up about 4 points as February retail sales were much stronger than expected, up 0.3 percent vs. consensus of a drop of 0.2 percent; ex-autos up 0.9 percent, also way better than decline of 0.2 percent expected. These are impressive numbers, especially given the snowstorms.


1)In another sign that the economy is recovering, Potash is up 8 percent pre-open and will likely close at a 52-week high today. They dramatically raised its first quarter outlook, to $1.30-$1.50 from its guidance of $0.70-$1.00 on January 28th. That is an amazing lift...after just six weeks! Consensus estimate is $0.94.

They cite a sharp rebound in potash demand on a record quarter for North American sales volumes, and stronger offshore levels as well. Potash is a main ingredient in fertilizer.

Potash producers had already announced price increases for the second quarter, hoping that demand would be improving. They appear to be getting their wish.

2) KKR is seeking to list on the NYSE, nearly three years after it was proposed.

KKR originally announced its U.S. IPO in July 2007, but never made it due to the nascent financial crisis. In June 2009, it instead merged with its European arm. That company, now called KKR Guernsey, was listed on the Euronext in Amsterdam.

They are seeking to raise 204.9 million common units worth about $2.21 billion and will trade under the symbol KKR. The Guernsey company will be dissolved; shareholders in that company will receive a 30 percent stake in the U.S. listed company on a one-for-one basis.

3) Ann Taylor reported better-than-expected Q4 earnings (profit of $0.05 vs. loss of $0.01 consensus) on cost cuts and better inventory management, which helped substantially boost margins from 36 percent to nearly 53 percent. Stronger sales at its LOFT chain offset weakness at its Ann Taylor stores.

Its current quarter is off to a good start with strong February comps, and the women's apparel retailer expects this year's sales to rise from 2009 levels.

Shares were under $2.50 at the lows a year ago, and have since risen 8 fold to $19.45 yesterday.

4) National Semiconductor is up 3 percent after Q3 earnings topped forecasts ($0.22 vs. $0.18 consensus) as demand picked up, pushing revenues and margins up.

Like its upside revenue surprise in the past quarter, the chipmaker sees current quarter revenues ($375 million-$390 million) significantly above analyst estimates of $361 million.

5) Discover Financial falls 1 percent after revealing its plans to set aside an additional $305 million for loan loss reserves. As a result, the credit card firm now expects a Q1 loss of $0.22-$0.23 vs. Street estimates for a profit of $0.09.

Discover also sees a slight rise in the current quarter's charge-off rate (loans that won't be repaid) to 8.5 percent from 8.43 percent. However, it also notes that delinquencies (loans more than 30 days overdue) "may have peaked" last quarter, with its Q1 rate falling slightly to 5 percent.

6) Terra Industries falls 2 percent after Norwegian firm Yara said it would not raise its current $4.1 billion offer for the U.S. fertilizer company. As a result, it's now likely that Terra will accept the "superior" $4.7 billion offer from competitor CF Industries , which falls 7 percent this morning on these developments.

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