Trader Talk

How Low Can Bank of Japan Go?


The Bank of Japan cut interest rates ... to a range of zero to 0.1 percent, from 0.1 percent (seriously)...and pledged to keep rates at "virtually zero" until deflation has ended.

Is Australia starting to cool down? Meanwhile, the Reserve Bank of Australia left its benchmark interest rate unchanged... this was a surprise to traders, as the Aussie dollar dropped notably (after rising steadily for 5 weeks against the dollar).

Slow down the investing! Brazil's government doubled the tax to 4 percent on foreign purchases of the country's bonds. The rate hike is aimed at slowing the fast-growing amount of foreign investments, which are seeking to capitalize on the country's high-yielding interest rates. South Korea also said banks who do foreign exchange trades will face audits.


1) JP Morgan counter-programs on banks. Most analysts have been lowering earnings estimates for banks, due to lower trading volumes for commercial banks and poor loan demand in general. JP Morgan, in a note this morning, said that bank earnings would beat consensus. The main points: 1) trading revenues are "likely not as bad as feared," mortgage banking revenues will be strong, and net interest income will be better than expected.

2) Fertilizer giant Mosaic reported earnings slightly below consensus due to higher production costs. Phosphates (about 70 percent of sales) reported good volume and price, potash (about 29 percent of sales) reported sales and pricing above guidance.

3) Talbots plunges 11 percent after reducing its revenue guidance for the current quarter. Because of "inconsistent" traffic so far this quarter, sales are now seen down low single digits now, compared to prior expectations for growth. The women's apparel retailer's earnings outlook was reiterated at $0.22-$0.28 for the quarter, but that's quite cautious compared to Street expectations for $0.27.

4) MaxLinear plunges 15 percent after the company slashed its revenue outlook for the current quarter to $18.4 million-$18.6 million, significantly below $20.3 million consensus. Citing "uncertainty in the current semiconductor market," the semiconductor firm, which provides equipment for cable TV boxes, stereos, TVs, phones, and computers, said many of its customers cut or postponed their orders.

5) Walgreen reported a 0.4 percent rise in September same store sales, which exceeded Street expectations for declines in the month. The drug store saw lower incidences of the flu and greater generic drug sales, but pharmacy comps still managed to eek out a 0.3 percent gain. That was slightly outpaced by general merchandise same-store sales which grew 0.7 percent.

6) Chevron  announced it will begin to repurchase stock in the fourth quarter. The oil giant said it aims to buy back $500 million to $1 billion in shares per quarter to meet a previously-announced share repurchase program.

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