The euro has been rising against the dollar all Wednesday morning and is now at a 2-month high. There have been unconfirmed reports that the German government is exploring ways to restructure Greek debt now; Greek stocks up 3 percent.
December housing starts a bit weaker than expected at 529,000 (550,000 expected), but permits — considered an indicator of future activity — was much stronger than expected 635,000 (560,000 consensus), but this was led by multifamily. November permits were also revised upward.
Bottom line: the decline in home ownership rates is creating some upward momentum in apartment building.
1) Wells Fargo reported earnings in-line with expectations ($0.61), but if you back in one-time expenses of 12 cents a share it was a pretty good quarter: credit quality improved dramatically, and that allowed them to release reserves ($850 million or roughly 10 cents per share), just like all the other banks that have reported (Comerica , and Citigroup ).
2) Goldman Sachs reported earnings of $3.79, a couple pennies above consensus, trading revenues (fixed income, commodities and currency) were down 39 percent. They're not alone...Citi's trading revenues were down about 30 percent.
3) Time to sell the fertilizers? Cargill is set to spin off its $24 billion stake in Mosaic , the fertilizer producer. That is big news: Cargill owns 64.4 percent of Mosaic; they will distribute the shares in a three-step process over two years. While this will keep Cargill private, which was a priority for the families that control the company, one has to wonder if this is also not viewed as an opportune time to sell, with fertilizer supplies tight, prices may have peaked. And stock prices are at two-year highs. Of course, MOS free of the protection of Cargill is now considered a takeover target by one of the Big Three: Rio Tinto , BHP Billiton or Vale .
4) Strong tech earnings in the last 24 hours from 3 big tech firms. Will tech strength help lead the markets to even higher highs? Remember tech was an underperfomer in December (up just 5.2 percent vs. S&P's 6.5 percent gain). However, the tech sector has been the standout so far this year (up 5.0 percent in January vs. S&P's 3.0 percent gain).
a) IBM rises 2 percent after beating Q4 estimates ($4.18 vs. $4.08 consensus) on higher revenues and margins. Top line growth was particularly strong overseas: Asian revenues grew 14 percent, sales in key BRIC nations jumped 19%, while revenues in the Americas rose just 9 percent.
An optimistic sign that IT spending is resuming: signed services contracts rose 18 percent. Guidance for the current year of "at least $12.56" vs. Street estimates of $12.58.
b) Apple rises 2 percent after posting another impressive quarter. Q1 earnings of $6.43 easily topped the $5.40 expected by analysts. Sales grew 71 percent, exceeding Street expectations, on extremely strong sales of its iPad and iPhone devices. Over 7 million iPads were sold, while i Phone unit sales skyrocketed 86 percent and even Mac computer unit sales rose a very respectable 23 percent.
Investors continue to shrug off concerns about Steve Jobs' medical leave of absence, and are instead showing the jubilance for the banner quarter. With shares back at $348, shares have erased all the losses following Monday's announcement on Steve Jobs.
c) Western Digital rises 1 percent after handily beating estimates ($0.96 vs. $0.58 consensus). The second largest hard disk manufacturer realized higher-than-expected margins on solid pricing. No guidance was given, but looking ahead, one potential headwind for drive makers is the increased use of flash memory-based storage in computers and tablets in lieu of hard drive storage.
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