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Refunds Kick Start The Futures

Futures are modestly higher today after yesterday's rally...there are some big Treasury refundings coming, on top of some very large corporate bond issuances coming from the likes of Procter & Gamble ($3 billion), Novartis ($5 billion), and Altria ($4.225 b) which is continuing to put pressure on Treasuries.

Mortgages applications to purchase homes slipped 11.2 percent last week, a real disappointment given that mortgage rates have fallen about three-quarters of a point in the last 4 months or so.

The theme for stocks today--indeed the theme for the last couple weeks--has been reducing first quarter earnings expectations.

1) Trucking company Ryder reported earnings above expectations, but first quarter guidance is well below expectations: $0.40-$0.50 vs. analyst expectations of $0.80.

2) Kraft down 9 percent pre-open, they lowered their 2009 internal revenue growth from "at least 4%" to 3% due to lower than expected pricing. 2009 guidance of $1.88 is down from prior guidance of $2.00 (analyst consensus is $2.02). Much of this difference ($0.16) is due to the negative effects of an anticipated stronger dollar.

3) Costco down 10 percent pre-open, reported same store sales down 2 percent in January (other retailers will report tomorrow) and said that second quarter earnings (the current quarter) would be "substantially below" current consensus analyst estimates of $0.70. Competitor BJ's Wholesale down 6 percent in sympathy.

4) Coal giant Massey down 10 percent pre-open reported operating earnings below expectations, but more importantly cut their 2009 coal production forecast, due largely to weakness in the steel market.

5) Disney down 7 percent pre-open as results were below expectations, hurt by parks attendance (revenues down 4 percent), and a decline in advertising sales. DVD sales also declined. Disney CEO Bob Iger said the economy was "the worst we have seen" in our lifetime.

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