The Thunder From Down Under Sends Stocks Higher

Global stock markets are higher overnight due to...Australia? Yep. The central bank there became the first G20 country to raise interest rates, by 25 basis points to 3.25 points. The Australian dollar jumped to a 14-month high, and stocks rose as well.

The U.S. dollar, predictably, continued to decline, with the Dollar Index approaching its lows for the year.

Commodity stocks of all stripes--gold, aluminum, coal, oil--are all higher by 2 to 4 percent. Gold is at a 52-week high.


1) Earnings for fertilizer producer Mosaic came in well below expectations ($0.23 vs $0.36 consensus) on lower prices for its fertilizers. But the stock is trading up because CEO Jim Prokopanko said higher corn prices may increase fertilizer sales.

2) St. Jude Medical plunges 12 percent pre-open after revealing that its Q3 earnings will fall short of estimates. The medical devices maker now sees weaker-than-expected sales of $1.16 billion (vs. $1.19 billion est.) due to a "slowdown in hospital stocking." Shares of competitors Boston Scientific and Medtronic are falling 3 percent and 7 percent, respectively, on the St. Jude news.

3) Pepsi Bottling is up 2 percent after beating earnings estimates by a penny. Revenues fell short of estimates, however, as volumes fell 2 percent led by a 5 percent drop in Europe and a 1 percent decline in North America. Offsetting the weak volumes were higher prices and lower commodity costs.

The bottler, which is set to be acquired by PepsiCo , still sees full-year earnings at the high end of its range of $2.30-$2.40 vs. $2.40 est.

4) MGM Mirage is up 3 percent after it announced it will reduce condo prices 30 percent at its Las Vegas City Center project. Shares are rising on this news as investors hope that the price reduction will help entice buyers to close the stalled condo deals that they had agreed to buy when housing prices were at their peak.

5) The big data point this week is September Retail Sales, out Thursday. We are looking for a decline of 1 percent in year over year same store sales. This would be the smallest monthly drop since September 2008, when same-store sales fell 0.9 percent.

But Christmas may be tougher. The National Retail Federation said 2009 Christmas sales will fall 1 percent. That, on top of a fall of 3.4 percent in sales last year. If true, a two-year drop in sales would be unprecedented. High unemployment will be a major pressure point on holiday sales.

6) Banco Santander's IPO of its Brazilian operation, which is seeking to raise about $7.3 billion, is scheduled to price tonight and begin trading tomorrow. It will be dual listed on the NYSE and Brazil and will be the second-biggest IPO of the year, globally. _____________________________


Questions? Comments?