Futures are essentially flat this morning, but don't kid yourself. Every comment from traders I have received this morning sings the same song: we must get government policy sorted out in the next few weeks, or the market will make new lows.
Part of the problem was that the Street's expectations were too high.
Like children, they demand an instant fix, and then pout when it doesn't materialize. And if it did materialize in the form they wanted, they would quickly digest it and complain it wasn't enough.
Look at mark-to-market, the current cause celebre among trading desks. Futures moved up a few points last night after Senate Banking Committee Chairman Chris Dodd told reporters that adjusting mark-to-market accounting "may be" part of the Obama administration's final plan to stabilize banks. Thin gruel, but it gets a response.
Elsewhere:
1) Everyone was waiting to see what homebuilder Toll Brothers would say about January sales, since they came up with an aggressive 3.99 percent 30-year fixed rate mortgage.
They reported preliminary results for the quarter ending in January, and the bottom line is that traffic did improve, but not orders. Net orders were down 59 percent compared to the same period last year.
Given the publicity around the 3.99 percent mortgage, the lack of any spike in January sales numbers are a disappointment.
2) Ingersoll-Rand reported earnings above expectations. First quarter guidance of break-even is well below consensus of a gain of $0.28, while full-year guidance of $1.85-$2.25 is in-line with consensus estimate of $1.95.
Bottom line: like many companies, they are pushing earnings into the second half of the year. This is a risky strategy.
3) An IPO! The first one in 3 months! Mead Johnson Nutrition (MJN), a children's nutrition company that is a Bristol-Myers spin-off, priced 30 million shares at $24. That is the high end of the range, and the size was expanded from 24 million to 30 million shares.
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