U.S. Slowdown Hitting European Markets?

U.K. markets down 1.5 percent on disappointing results from retailer Marks & Spencer (down 20 percent in the U.K.) and vague concerns that the U.S. slowdown may be spreading to Europe. Yesterday a confluence of events, including comments from AT&T about slowing consumer business, and poor commentary from Circuit City and Brinker , added to the poor sentiment.


1) While we are waiting for Alcoa to report after the close, DuPont has already made comments. DuPont raising earnings guidance for fourth quarter 2007 and 2008 (to $3.35-$3.55, from $3.31 to $3.52). Charles Holliday, DuPont CEO, was on our air a short while ago. He noted strong growth in agricultural business--23 percent of sales are in seeds or chemicals into agriculture. Housing? He notes there has been a recession in U.S. housing for five quarters, have not seen an improvement, and are not counting on one for 2008.

He notes price increases have been holding. 34 percent of sales come from products less than 5 years old. Dupont sells seed for corn and soybeans. Talked about making ethanol from cellulose.

But Alcoa and DuPont, while both materials companies, are not the same. Alcoa has more sales in the U.S. (56 percent vs. 41 percent in 2006), and Alcoa does not have DuPont's Agriculture and Nutrition division, which is where the fastest growth is.

2) Countrywide , on the heels of an awful day yesterday on no news, said that mortgage loan fundings rose 1 percent in December compared to the prior month, stronger than expected.

3) Bond insurer MBIA is raising more capital--$1 billion to be exact. They are cutting their dividend more than 60 percent (to $0.52 a share), which will save about $80 million a year. The rest will be raised by issuing more debt. Stock hit hard yesterday on comments from an analyst at Morgan Stanley that future profits would be worse than already lowered expectations.

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