Recapitalization of European banks is continuing: ING took a 10 billion euro ($13.5 billion) cash influsion from the Netherlands and is up 10 percent in the U.S. pre-open. French banking giant Societe Generale was down in early trading on concerns it may be too thinly capitalized. Sweden outlined a $205 billion plan to support its banks.
Secretary of the Treasury Paulson will speak at 11:30am ET, giving details of the application process for the capital purchase program.
1) We are seeing some signs of bottom-picking emerging: Oppenheimer is upgrading all the big oil and gas names this morning, with a bullish piece entitled, "Now Is The Time to Buy Oil and Gas Stocks." They upgrade Anadarko , Apache , Cabot , Exxon , XTO , Sunoco , and others. Oppenheimer believes the upside potential of the shares in the next 12 months could significantly exceed the downside risk from a further decline in oil and gas prices.
At the same time that Oppenheimer is encouraging traders to buy commodities, Deutsche Bank, Credit Suisse and UBS are lowering their targets on various commodities. Deutsche Bank, for example, cut its crude oil price outlook for 2009 from $92.50 to $60, and said it could go as low as $50.
2) Speaking of commodities: oil services giant Halliburton beat estimates by a small amount ($0.76 vs. $0.74), but like its competitors, the stock is sitting near 52-week lows on concerns that capital spending will slow significantly in 2009. CEO Dave Lesar acknowledged this in his reporting, noting that the announced reduction in some customers' capital spending will result in a decline in rig counts below those previously anticipated.
3) Diversified manufacturer Eaton also beat by a small margin ($1.95 vs. $1.88), but more importantly, they lowered fourth quarter earnings estimates to $1.55-$1.65, vs. estimates of $1.91. Eaton is a global player in manufacturing; they noted that while the North American markets were weak all quarter, Europe, Brazil and China weakened "dramatically" toward the end of the quarter.
4) Goldman downgrades insurers MetLife and Prudential (Pru to a "sell"), saying that a number of companies could face significant unrealized losses or impairments on various mortgage related assets.
5) Circuit City is considering closing 150 stores, according to The Wall Street Journal. They are in the middle of developing a turnaround plan but financing is proving difficult.
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