Trader Talk

‘Worst Economic Crisis Since 1929’


“We are in the worst economic crisis since 1929,” Credit Agricole CEO Jean-Paul Chifflet.

If you think the Greece mess is costless or bloodless, just look at the European bank news this morning. At least four banks posted poor earnings and cited losses on their Greek holdings:

1) Credit Agricole reported a net loss of 3.07 billion euros ($4.08 billion), and took a 220 million euro ($292 million) charge on its Greek debt;

2) Royal Bank of Scotlandposted a loss of almost 2 billion pounds ($2.6 billion) (they wrote down their Greek debt by 79 percent last year);

3) Germany’s Commerzbank took a 700 million euro ($930 million) hit on Greek writedown;

4) bailed-out French-Belgian bank Dexiareported a loss of 11.6 billion euros last year on the cost of its breakup and exposure to Greek debt, and said it may go out of business unless it got more state guarantees that would allow it to borrow more money.

This is on top of billions of euros in Greek debt that have already been written down.

Is it over? “We can’t say that the writedown are over,” a director at Barclays France told Reuters. “Even if some can say that the worst is over, we are only at a new stage in terms of provisioning and not necessarily at the end.”

It’s not just Greece: There’s more provisioning occurring for future losses, and banks are still trying to shrink their assets.


1) Waiting for the Greek parliament to vote on the terms of the Greek private debt swap. Portugal and Spain are down again today.

2) Retailers post mixed results:

Target shares rise slightly after the nation’s second largest retailer beat fourth-quarter earnings estimates and said it predicts 2012 and first-quarter earnings per share above analysts’ expectations. Target sees 2012 earnings per share of $4.55 to $4.75, versus analysts’ $4.24 estimate. Despite beating the Street and providing upbeat guidance, Target’s fourth-quarter earnings slipped 5.2 percent as the retailer witnessed muted sales during the holiday season. For the full year, Target saw its strongest growth in same-store sales since 2007. The retail giant plans to open its first store in Canada in early 2013.

Kohl’s shares slump 2.7 percent after the department store chain’s fourth-quarter net income fell 8 percent, hurt by holiday promotions and mild winter weather that caused same-store sales to drop 2.1 percent. Kohl’s beat fourth-quarter earnings per share estimates by 1 cent, earning $1.81 per share compared to analysts’ $1.80 expectation. The company expects its sales to rise in 2012, but its predictions for profit in the current quarter and the rest of the year fall short of the Street’s expectations. Yesterday, Kohl’s increased its quarterly cash dividend by 28 percent to $0.32 per share.

Limited Brands drops 2.2 percent pre-market after the retailer provided full year outlook below analysts’ expectations. Limited Brands, the parent company of Victoria’s Secret, sees 2012 earnings per share of between $2.60 and $2.80, compared to the Street’s $2.91 estimate. Limited Brands anticipates same-store sales growth in February.

Darden Restaurants gains 1.2 percent pre-open after it forecast third-quarter profit above the Street’s expectations as the mild winter and an earlier Lenten season boost sales. Darden Restaurants, which runs Red Lobster, Olive Garden, and LongHorn Steakhouse, sees third-quarter earnings per share of $1.23 to $1.25, versus analysts’ $1.19 estimate. Lent started in the fourth-quarter last year, but began in the third quarter this year, drawing in more customers looking to avoid meat during the fasting season. Darden Restaurants affirmed it anticipates 2012 same-store sales growth of approximately 2.5 to 3 percent.

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