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Pisani: Retail & Airline Turnaround?

Most European indices are down 1 percent or more this morning, as concerns about Greece continues. The spread on the 10-year Greek to comparable German bonds widened to 440 basis points. More worrisome is the inversion: Greek 2 year bonds, at 7.8 percent or so, have inverted against the 10 year, at about 7.5 percent yield. The dollar is up again.

The benchmark Athens Composite Index is now down 9 percent since trading resumed on Tuesday after the Easter holiday.

Elsewhere:

1) March retail sales were even better than analyst expectations, despite the fact that analysts were aggressively raising numbers going into the end of the month.

Sales were up 8.7 percent compared to the same period last year, above expectations of gain of 6 percent. Eighty-six percent beat expectations, versus an average beat of 54 percent, according to RetailMetrics.

Many companies raised guidance:

Target: March sales showed a 10.3 percent gain versus 7.3 percent expected, raised guidance for Q1 above consensus.

Kohls had a blowout number (22.5 percent gain, versus expectations of 12 percent) and raised guidance

JCPenney was a bit light but raised guidance by a penny, to $0.22.

Aeropostale, sales up 19 percent well above expectations of up 11 percent, guides higher for Q1 to $0.44 vs. previous guidance of $0.39-$0.40 and $0.40 consensus.

Cato up 24 percent (!) way above expectations of up 4 percent, and guides higher, to $0.79-$0.83 versus previous guidance of $0.71-$0.75 and consensus of $0.75.

TJX had sales up 12 percent, well above expectations of up 5.6 percent, and guided higher, to $0.76-$0.79 vs. previous guidance of $0.60-$0.65 vs. $0.65 consensus.

Gymboree guides higher as well.

American Eagle up 15 percent above expectations of 10.8 percent gain and reaffirmed Q1 guidance

Pier One reported earnings in line with expectations, with March sales up 19.4 percent, way above expectation of up 6 percent.

Still disappointing: Abercrombie & Fitch, down 4 percent pre-open on sales up 5.0 percent, below expectations of a gain of 6.9 percent.

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XXICM
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CATO
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JCP
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KSS
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PIR
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TGT
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TJX
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Airlines:

2) UAL (the parent of United Airlines) and US Airways are reportedly in merger talks. If a deal is struck, the combined company would be one of the biggest airlines in the world, but the media reports caution that a formal agreement may be still weeks away. One potential barrier to the deal: heavy union opposition, which also de-railed past merger attempts.

With the U.S. airline industry expected to lose another $1.8 billion this year, many industry observers have expressed the need for further consolidation in the industry.

Ahead of the open, LCC soars 19 percent and UAUA rises 5 percent. Other airlines are also getting a pre-open boost: AMR is up 6 percent, Continental is up 3 percent, JetBlue Airways is up 4 percent.

3) Forest Laboratories plunges 9 percent after an FDA panel voted to recommend the rejection of a new lung drug (Daxas) on concerns that its side effects may outweigh its benefits on treating chronic obstructive pulmonary disease (smoker's lung).

The FDA, which takes into account panel recommendations, is scheduled to vote on the drug's approval in mid-May. Getting this drug to the market is key for Forest Labs, as analysts believe it could potentially provide more than $500 million in sales annually.

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