Pisani: Earnings Mantra? Sell the News

It's early, but sell the news is the mantra so far for earnings. Stock are futures down, bonds and the dollar are up this morning.

The S&P 500 recorded its largest down day in almost a month last Thursday, despite a good report from Intel.

In-line (Citi) or even slightly better than expected earnings (Intel) may not be good enough, given the runup we have seen recently and the positive news that already seems to be discounted into stocks.


1) Traders are showing an unusual amount of interest in today's race to fill the Senate seat of Edward Kennedy in Massachusets. Still too close to call, but a loss by Democrat Martha Coakley, the well regarded Massachusetts State Attorney General, to State Senator Scott Brown, would remove the filibuster-proof majority in the Senate.

2) Citigroup posted a fourth-quarter loss of $7.6 billion ($0.33 a share, in line with expectations); much of the loss was due to charges related to the repayment of government money. The $8.2 billion set-aside for bad loans was 36 percent below that of a year ago as well.

3) A Sweet Deal Finally "Krafted": Cadbury rises 5 percent pre-open after it finally approved a deal to be acquired by Kraft Foods .

The U.S. foodmaker raised its cash and stock offer to $19.44 billion from its earlier hostile bid of $16.5 billion, sealing the deal for the British confectioner. The wait was worthwhile for Cadbury shareholders: not only did they get a higher bid, but they also get a bigger cash portion from Kraft in the new deal (now at 60 percent of total offer vs. 40 percent originally).

Meanwhile, reports speculate this morning that Hershey will pull out of the bidding race giving its stock a 3 percent boost pre-open.

4) Unlocking a Deal: Brink's Home Security soars 32 percent after agreeing to be acquired by Tyco International , forming one of the biggest home and business security brands in the country.

Brink's shareholders will get $2.0 billion in cash and stock — valuing the company at a 35 percent premium — while Tyco will expand its security portfolio, which currently includes its well-known ADT brand. The deal is expected to close by March.

5) Forest Laboratories saw Q3 earnings topping analyst estimates ($0.97 vs. $0.86 consensus). Strong sales of its Alzheimer's and hypertension drugs were offset by weaker sales in its biggest product, the depression drug Lexapro.

6) Parker Hannifin , which makes motion control technology for the manufacturing and aerospace industry, reported earnings higher than expected for its second quarter and raised its full year guidance, noting a sequential increase in sales.




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