All Roads (And Trades) Lead To Rome
Yesterday's late-day spike as Mr. Lockhart floated a trial balloon of help for home owners is, according to the few bulls around, a sign that there is just as much risk on the upside as the downside. To bears, it was a short-covering rally that occurred on thin volume and meant nothing because the plan is almost certainly not workable.
Treasury Secretary Tim Geithner arrived in Rome this morning for a meet and greet with the G7. Protectionism is big on the agenda; he will certainly be criticized for the strong "buy American" component of the stimulus plan.
He may be happy to just get out of Washington, given the disappointment associated with his Financial Stability Plan.
Contrast this with the programs being offered by the Federal Reserve: Credit Sights and others have noted that programs to address specific problems in the banking system (the Primary Dealer Credit Facility, the Money Market Investor Funding Facility, the Commercial Paper Funding Facility, the Term Securities Lending Facility) have all enjoyed support, and there is considerable interest in the Term Asset-Backed Securities Facility that is coming as well.
Elsewhere:
1) The stimulus plan is expected to be passed by the House today.
2) Abercrombie & Fitch up 5 percent pre-open, as they reported earnings ahead of expectations ($1.10 vs. expectations of $1.00). Better expense management seems to be the most important factor. They are not providing 2009 guidance.
This is the first of the big retailers to be reporting, many bears are betting that retail earnings reports over the next two weeks will get many analysts to reduce their 2009 guidance, much of which has been back-ended loaded to the second half of 2009.
2) Chinese stocks at the highest levels since September.
3) Hotel chain Wyndham Worldwide (Howard Johnson, Days Inn, Ramada) came in above expectations on earnings, light on revenues, first quarter guidance is above expectations, full year in-line. That is a bit of a surprise.
4) British bank Lloyds down nearly 40 percent pre-open as the said that HBOS is expected to post a 10 billion British pound pretax loss in 2008.
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