Citiis providing the main upside impetus, but relief that big industrials like Caterpillar and Honeywell did not repeat GE's concern that last two weeks of March fell apart, is also a big help; the dollar has rallied. Today is an options expiration day.
For Citigroup , similar to Merrill Lynch : earnings a tad worse than expected, but not much (loss of $1.06 vs. estimated loss of $0.95), writedowns a bit worse but not dramatically so. Non performing assets were up 16 percent, but that seems less than expected. Perhaps most importantly, CEO Vikrim Pandit is out on the conference call saying the leveraged loan market is beginning to trade. Citi up 8 percent pre-open.
What's up in China? Reported strong GDP growth of over 10 percent this week, but you wouldn't know it looking at the Chinese stock market: the Shanghai Composite Index is at a 52-week low, though Hong Kong is holding up a bit better. The Chinese government has been tightening its monetary policy to slow economic growth.
What happened to the deterioration in the last two week of March that GE talked about? It didn't happen to Caterpillar . They reported earnings of $1.45, 12 cents ahead of expectation, revenues ahead of expectations as well. Maintaining 2008 guidance. Again, look at the U.S. vs. international machinery sales: North America up 3 percent, but Europe/Australia/Middle East up 27 percent, Asia/Pacific up 35 percent, and Latin America up 18 percent. Caterpillar now gets two-thirds of its sales outside the U.S. Up 4 percent.
Honeywell also beat expectations, and raised its full-year guidance. Stronger growth overseas. Aeorpsace (about 35 percent of sales) up 7 percent, Automation and Control Solutions (also about 35 percent of sales) up 14 percent, Transportation Systems (about 15 percent of sales) up 14 percent, and Specialty Materials (also about 15 percent of sales) up 18 percent. Up 4 percent.
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