Watching China For Signs Of Growth

The big story this morning is not the ADP report, which was bad, but the Chinese economy.

Commodities are higher as Chinese February PMI rose for a 3rd month to 49, the highest since September.

Anything above 50 indicates growth.

Also, Chinese Premier Wen said he will announce another stimulus plan tomorrow

Some commodity stocks like Cemex, ArcelorMittal and Rio Tinto are up in the high single digits.

India has also just announced that it cut interest rates by a half point.


1) Retailers reported mixed earnings today, with the discounters doing better:

BJ's Wholesale Club reported earnings of $0.89, 3 cents ahead of expectations, guidance of $2.26 to $3.26 for the fiscal year is solid compared to consensus estimates of $2.28.

Big Lots up 13 percent pre-open as they beat expectations, but more importantly guidance was strong: first quarter guidance is $0.34 vs. consensus estimate of $0.35, full year of $1.75-$1.90, versus consensus estimate of $1.74.


Not so great elsewhere.

Costco at $0.55 cents was below expectations; this after they warned on February 2nd. The consensus is that Costco has decided to sacrifice margins in an effort to protect both its membership renewal rates and sales trends.

Liz Claiborne reported a loss that was smaller than expected, but more importantly they have declined to give guidance for the year, though they did forecast a "meaningful loss" for the year, with comp store sales for all brands declining 15 to 25 percent through the third quarter of 2009.

2) US Bancorp trading UP this morning as it joined dozens of other companies and cut their dividend by 88 percent, from 42.5 cents to 5 cents per share. This week alone Talbots suspended its quarterly dividend, IGT cut its dividend 56 percent.

3) Mortgage refi's fell 15.3 percent and purchases fell 5.6 percent last week.


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Questions? Comments?