Trader Talk

Is Irish Economic Miracle Over?


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

S&P futures dipped about 3 points following a weaker-than-expected durable goods report (up 0.3 percent vs. up 3.0 percent consensus). The Dow & S&P 500 are now poised to fall for the 5th straight day in a row. The S&P has not had a 5-day losing streak since the end of June/beginning of July. The major indices are all hovering at their lowest levels since the start of July.

And the declines haven’t been limited to the US:

a) European markets are down 1 percent after S&P downgraded Ireland’s debt rating, and warned the rating could be cut even further. The agency noted, "the downgrade reflects our opinion that the rising budgetary cost of supporting the Irish financial sector will further weaken the government's fiscal flexibility over the medium term.” (See PIIGS nations credit default swaps here.)

Ireland’s stock markets are at 13-month lows, while most of the other major European markets are hitting their lowest levels since early July.

b) Asian markets were broadly lower, falling 1-2 percent in their trade today. Of particular note, Japan’s benchmark Nikkei 225 fell to a 16-month low as the Yen rose to a 15-year high vs. the U.S. Dollar and as Japanese exports slowed for the fifth straight month.


1) Toll Brothers posted a surprising profit thanks to some tax benefits. However, revenues also fell less than expected as deliveries rose 1 percent. Despite that gain, prices fell, and signed contracts saw a 16 percent decline.

Looking ahead, the homebuilder narrowed its full-year home delivery outlook to 2,500-2,700 from an earlier forecast of 2,200-2,750. Averaged delivered prices in the current quarter are seen between $560,000 and $570,000.

2) American Eagle falls 2 percent even though it beat earnings estimates be a penny. Same-store sales fell 1 percent, but margins deteriorated. More problematic, overhead costs soared 25 percent while inventories edged 1 percent higher.

Guidance for the current quarter of $0.23-$0.26 falls mostly below estimates of $0.26. And just like rival Abercrombie & Fitch the teen retailer said it will continue to close a significant number of stores — 50 to 100 stores over the next 2-5 years.

3) BHP Billiton reported strong full-year results, but the Australian mining giant cautioned on the economic outlook ahead. The firm continues to be concerned about future Chinese growth (where it sees a more modest 8 percent growth in 2nd half GDP) and also noted that “economies such as Brazil and India have returned to full output, and the focus has now shifted away from supporting growth, towards controlling inflation."

4) Verifone rises 2 percent as the manufacturer of credit card swipe machines beat earnings estimates ($0.36 vs. $0.30 consensus) on stronger-than-expected revenue growth. The company also raises full-year guidance to $1.26-$1.27, ahead of $1.15 consensus as sales and earnings in the current quarter are seen higher than expected.

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