Trader Talk

QE Still Rules Thinking on Wall Street


Stock futures moved down as the ADP Employment report came in at a loss of 39,000, below expectations of a gain of 18,000. However, the August number was revised UPWARD, to a gain of 10,000, from a loss of 10,000, and this may have helped mitigate the modest 3-point decline in futures.

Of course, when you have the trading community convinced that QE is coming from Japan, the U.S., the U.K. and heaven knows where else, modest disappointments in fundamentals are not going to drop the markets, at least not yet.

Fitch cut Ireland's debt rating A+ with an outlook negative, citing the 'exceptional' cost of the Irish government's bank recaptialization, but hey, when you have the trading community convinced that QE is coming from Japan, the U.S., the U.K. and heaven knows where else....

Get it?


1) The IMF is releasing its World Economic Outlook this morning; they are cutting their forecast for advanced economies to 2.2 percent from 2.4 percent. 2011 global growth was seen slowing to 4.2 percent from 4.8 percent in 2010.

2) How big is the reach for yield? Late yesterday Mexico priced the world's first billion dollar 100-year started trading this morning, and demand has been strong, up 4 points.

3) Costcobeat expectations by a couple pennies ($0.97), due partly to higher interest income. Also, membership income grew 8.4 percent, while gross margins continue to expand. Comp store sales were solid: U.S. comparable store sales were up 2 percent, international was up 14 percent. September same store sales, a separate number, was up 5 percent, roughly in line with consensus.

4) Yum! Brandsbeats estimates by a penny as strong China sales continued to propel growth. Same-store sales in China for the fast food chain rose 6 percent, outpacing 1 percent growth in the U.S.

The company also increased its dividend by 19 percent to $0.25 and boosted its full-year earnings outlook to $2.43-$2.48, but that's a bit conservative to the $2.48 the Street is expecting.

5) AMR reported September air traffic increased 5.6 percent as international passenger traffic surged 12 percent. Traffic in the U.S. rose just 1.6 percent, and the airline continued to fly fuller planes.

Another good sign: the airline announced it is recalling 800 furloughed employees due to greater international travel and its new alliances with British Airways, Iberia, and Japan Airlines.

6) Monsanto reported a greater-than-expected loss (loss of $0.09 vs. loss of $0.05 consensus), but shares are up 2 percent as sales exceeded estimates ($1.95 billion vs. $1.81 billion consensus). Earnings guidance for 2011 remains cautious ($2.72-$2.82 vs. $2.84 consensus) as the seed maker forecast single digit unit volume growth in its seeds and genomics division.

7) Family Dollarrises 2 percent after announcing it will accelerate part of its current stock buyback program. The discounter will now repurchase $250 million in stock, and as a result of that, it is also increasing full-year earnings guidance to $3.04-$3.24 vs. $3.10 consensus. Same-store sales guidance for the current quarter remains up 5 percent to 7 percent.

8) Deutsche Bank said it has completed its $14 billion (10.2 billion Euro) capital increase. The German bank sold 306.5 million shares were sold at 33 Euros a piece.

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