I said last week that a small but persistent group was starting to believe that the "stew" of TARP, TALF, stimulus and other Treasury action would help create a bottom in the economy, and that if that was the case shorting of banks and consumer discretionary would be riskier in the near future.
That thinking was behind the rally in the latter half of last week. While the delay we are seeing is a mild disappointment, it could become a big problem if there is a substantial delay.
The Street believes these programs will become a reality, but a substantial group (the majority) believe that the markets will sell off in the next month once it is realized they will not create a bottom any time soon.
Elsewhere, earnings continue on the disappointing side.
1) Whirlpool down 6 percent, reported earnings well below expectations ($0.60 vs. $0.78 expected), while sales declined 19 percent.
But it's worse than that: the company recorded a tax credit of about $160 million, which covered almost all of its $44 million in profits, once $109 million in restructuring and product recall was backed out.
In other words, Whirlpool reported no real operating profits at all.
They are expecting 2009 earnings between $3.00 and $4.00 (consensus is $4.12), but given the tax credits its not clear what the operating income will be. They are expecting U.S. shipments in 2009 to decline approximately 10 percent.
2) NYSE Euronext reported earnings a bit below expectations ($0.52 vs. $0.55). The good news is that all the market chaos in the fourth quarter was a big help, pushing volumes up. Unfortunately, market share continues to dip. Like many U.S. multinationals, foreign exchange, higher costs, and pricing pressures was an issue.
3) Hasbro , like Mattel , reported earnings below expectations, down 5 percent pre-open.
4) On the positive side, Barclays up 13 percent on better than expected earnings. Other banks are also trading to the upside.
5) McDonald's again reported strong same store sales, this time for January, where U.S. comparable store sales were up 5.4 percent, up 10.2 percent in Asia/pacific, Middle East and Africa.
- Treasury Delays Bank Bailout Details, Focus on Stimulus
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