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.
- TARP Executive Compensation Limits Set at $500,000
- Job Losses Hit 522,000; Planned Layoffs Also Spike
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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