Stressing Over The Stress Test

Banks sold off at the close yesterday on increasing stress over the stress test.

In case you're not paying attention, no one is exactly clear what is going to happen because they are still deciding; as a result, there are lots of leaks and erroneous interpretations of what might be coming.

The only good news is that this speculation, like speculation on the fate of GM and Chrysler, will be over very soon.

The Street is expecting the Treasury Departmnet to release a White Paper this Friday that will describe the methodology behind the test. Conclusions will be announced May 4th, during which time we can expect lots of leaks about the food fight going on between the banks and the regulators.

What is still not clear is how much of this information will be communicated to the public.


1) UPS announcing first quarter earnings below expectations, $0.52 vs. $0.56, revenues also a bit light. This occurred despite the fact that DHL exited the business as a major competitor; volume per day declined 4.3 percent; revenue per piece declined 15.3 percent because average package weight declined.

Second quarter guidance of $0.45-$0.55 vs. Street expectations of $0.65. "Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010," said Kurt Kuehn, UPS' CFO.

2) Earnings from Apple a thing of beauty: handily beats earnings estimates, and look at the future: a new operating system coming, new phones, the iPod Touch combined with WiFi, all point toward the future: mobile computing platforms. And Apple will dominate.

3) Defense contractor Raytheon beat on top and bottom line(revenues grew 10 percent), more importantly management raised 2009 guidance $0.10 to $4.55-4.70, at the midpoint of consensus of $4.62.

4) Autonation's up 8 percent, profit fell almost 32 percent to $0.23, but still topped the street estimate of $0.16. America's largest auto retailer cited weaker than expected demand for vehicles in the quarter but CEO Mike Jackson agrees with industry projections that sales rates will improve in the second half of the year.

5)Black and Deckerreported earnings of $0.08, in line with expectations, but that was 93 percent below earnings for the same period last year. They lowered their full year earnings outlook to $1.50-$1.90 from $1.75 to $2.25. They expect weak demand seen in the first quarter to continue.

6) Marriott reported earnings above expectations, but full year guidance is being taken down a bit.




Questions? Comments?