Ben's Global Bounce

Commodities, commodity stocks, and financials are up around the world on hopes that the aggressive Fed action might shorten the global downturn. The fact that there was a similar flurry of activity when the Chinese announced their stimulus plan is being ignored.

The story this morning is the dollar decline, commodity rally, and reflation. Oil is over $50, copper is at the highest level since November, and the usual bevy of big commodity firms (Rio Tinto, ArcelorMittal, US Steel) are all trading up in the mid-single digits.

European and U.S. banks are also trading up in mid to high single digits.


1) Citigroup is proposing a reverse stock split at one of several ratios to be selected by its board, which they hope to effect in April. They also announced agreements with private holders of convertible preferred stocks to a swap into common stock, with a liquidation value of about $12.5 billion. The conversion rate was $3.25.

2) FedEx down 5 percent pre-open, had earnings well below expectations ($0.31 vs. $0.46 expected), despite the fact that they have less competition now that DHL has left. Guidance for the current quarter (fourth quarter) of $0.45-$0.70 is also below consensus of $0.72.

U.S. domestic package revenue declined 15 percent, largely due to lower fuel charges. Domestic express package volume declined 3 percent, again despite DHL exiting the market. International priority package volume declined 13 percent.

UPS down 3 percent in sympathy.

3) We're all sitting home watching TV: glass maker Corning up 4 percent pre-open, making some positive statements at an investor meeting for later today. Total glass volume for the first quarter will only be down 5 percent sequentially, versus original guidance of down 20 to 50 percent. The company has been seeing "increasing glass orders" over the past several weeks. Forecating positive net income for the quarter, analyst estimates are for a gain of $0.01.

4) Prudential quits AIG auction. Lost in all the furor over AIG is just how difficult it is trying to dispose of the various units. Two of the international divisions have been for sale for some time, but have found no buyers. This morning Prudential PLC (the British insurance company, not the American one) said they had pulled out of the auction for the Asian division of AIG, AIA. "Our view was that we could not get to the value critieria that we had in place, the trade off being between price and value," Prudential Plc CEO Mark Tucker said in a statement.




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