S&P futures moved almost 10 points at 7 a.m. ET on reports the EU Commission will offer a 6-month extension of its current bailout program to the Greek government.
Greek newspapers are reporting that the Greek government will be presenting a plan for a bridge program (despite denials by euro zone officials that they don't do bridge programs) linked to a "new deal" that would begin in September. It would involve a change in the arrangement with creditors, and some change to the austerity mix. The Greek Finance Minister said Monday they will adhere to 70 percent of the austerity measures previously agreed.
In short, we seem to be moving toward some kind of agreement, and not a day too soon, as the meeting with Eurozone Finance Ministers is tomorrow.
Money flows: out of bonds, into stocks?
Meanwhile, U.S. long-bond yields have risen for a fourth day in a row; 10-year yields are now back over two percent, up 40 basis points since the start of the month.
This is good news for banks, which would benefit from any increase in rates. After the close Monday, Deutsche Bank upgraded Citigroup to a "buy" and increased the price target to $54 from $51.
1) Dean Foods reported earnings and revenues slightly below estimates, but more importantly, first quarter guidance of 12 cents a share to 22 cents a share was below expectations of 22 cents a share. The problem is milk: the company is the largest seller of milk in the U.S, and they have been raising prices. This may now be an issue: in addition to talking about "record high dairy commodity costs" and hinted that retailers (their customers) may make deals to do private label milk, which would impact their full year 2015 results. As a result, they are only provide guidance for the upcoming quarter.
2) Looking for cheaper hotel rooms in 2015? Not likely. Starwood reported a strong beat on earnings, and included this comment: "The U.S. economy looks set to continue its growth, and in the U.S. hotel business, limited new supply points to rising rates for some time to come." Revenue Per Available Room (RevPAR, the key industry metric) was up 7 percent in North America in constant dollars last year, a healthy increase. They expect worldwide RevPAR to be up 5 to 7 percent.
Wyndham also reported a beat, and raised their dividend. Domestic RevPAR was also up 8.6 percent.
3) Teen retailers better? A lot of traders had given up teen retailers for dead, but Aeropostale and Urban Outfitters both reported Q4 sales better than expected. ARO earnings guidance of a loss of 6 cents to a share to a loss of a penny share is also much better than prior guidance of a loss of 25 cents a share to 31 cents a share. Sales and margins were both better than expected. Naturally, there's now talk the whole group will be better, including American Eagle and Abercrombie and Fitch.