Trader Talk

Pisani: Euro Slides; MF Global Soars


European stocks weakened as Fitch downgraded Portugal's credit rating to AA- from AA, with a negative outlook.

Predictably, this caused another drop in the euro, which is now at the lowest level against the dollar since May of last year.


1) Lennar: some relief after KB Home disappointment. LEN up 6 percent pre-open, as they reported a loss of $0.06, much less than the loss of $0.30. They say they are on track to be profitable this year.

Orders, up 18 percent compared to the same period a year ago, were much stronger than the Street was expecting. Cancellation rates were also lower.

Management said, "the overall housing market is moving toward stabilization as more confident homebuyers recognize the increased affordability of homeownership".

2) IPO market finally shows signs of life. MaxLinear (MXL), which makes chips for broadband video (so you can watch TV on your mobile device), sold 6.44 million shares at $14 a share, above the $11-$13 price talk and above the 5.43 million share expected.

Calix Networks (CALX), a group of old Cisco veterans that provides broadband access equipment to small and mid-sized service providers, sold 6.3 million shares at $13.00, the high end of the $11-$13 price talk.

Finally, First Interstate BancSystem (FIBK) sold 10 million shares at $14.50. That is within the price talk of $14-$16, but give them a break: its the first bank IPO in years.

Plenty of secondaries pricing as well, including coal giant Massey (MEE), which priced 8.5 millions shares at $49.75, a slight discount to the $50.88 close.

3) Sprint Nextel up 7 percent pre-open as they unveiled a 4G Android phone that they said will be available this summer.

4) Darden Restaurants Q3 earnings beat estimates ($0.95 vs. $0.92 consensus) as sales at its restaurants improved. Blended same-store sales for the owner of Olive Garden, Red Lobster, and LongHorn Steakhouse restaurants rose 1.3 percent, the first rise in almost 2 years.

Earnings for the full year are now expected to be between $2.86 and $2.92, inline with the consensus estimate of $2.88.

5) General Mills topped Q3 earnings estimates ($0.97 vs. $0.93 consensus) on lower commodity costs and ongoing costs cuts. Sales were inline with expectations, as stronger demand overseas (volumes up 2 percent) offset flat volumes in the U.S.

The food maker raises full-year guidance to $4.57-$4.59, but that still remains below the current Street forecast of $4.60.

6) Despite better-than-expected Q2 earnings $0.29 vs. $0.28 consensus), Jabil Circuit falls 6 percent after revenues in the past quarter missed expectations. While sales for the electronic components and circuit board maker rose 4 percent, its top line growth was tempered by a 30 percent decline in its large mobility segment.

Guidance for the current quarter is seen between $0.30 and $0.36, inline with expectations of $0.32.

7) MF Global soars 15 percent after the derivatives and options brokerage firm announced former New Jersey governor and Wall Street veteran Jon Corzine will immediately become its new chairman and CEO.

8) Despite the runup in stocks in the last month, bullishness is still high, according to the weekly survey of financial newsletter writers conducted by Investors Intelligence. 48.9 percent are bullish, close to the highest level since January, which was right at the market top before the 9 percent correction that lasted into February.

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