Japan's Nikkei Up 4.3% — But Production Cuts Uncertain

Global bourses were mixed overnight, though Japan's Nikkei was up 4.3 percent after being closed yesterday.

But production cuts continue to play havoc with the global supply chain. Sony will likely cut production at five more plants (nine have already had production cuts) and said they were considering temporarily moving some production overseas. Iron ore miner Rio Tinto noted that some steel mills have suspended operations in Japan and that Hitachi, which supplies heavy equipment for mining, has also closed plants. Camera maker Nikon, which has also closed plants in the north, said they hoped to resume production by the end of March. Honda said it would take more than a week to recover; they had 110 suppliers in the affected area.

Egypt's stock market will reopen Wednesday, officials say. It's been closed since January 27. There are new circuit breakers that are being installed. We'll see.


1) BJ Wholesale trading up 3 percent per-open as private equity firm Leonard Green has a confidentiality agreement with the retailer to discuss a possible deal to take them private. Green has become quite active in the retail space, having taken Jo-Ann Stores private and participated in the buyout of J. Crew with TPG Capital.

2) Walgreen falls 3 percent despite beating estimates ($0.82 vs. $0.80 consensus) as store traffic improved. Same-store sales rose 4.1 percent on a solid rise in general merchandise and prescription sales. The drugstore's prescription sales growth exceeded that of the industry, and its market share grew to 20.1 percent.

3) Dollar General rises 4 percent after earnings topped estimates ($0.65 vs. $0.59 consensus). The discounter's comps rose 3.8 percent, as higher traffic and average transaction amounts offset the negative impact from the winter storms.

Looking ahead, guidance of $2.20-$2.30 exceeds estimates of $2.14, while same-store sales are seen growing 3 percent-5 percent.

4) Dollar Thrifty is up 3 percent after the car rental agency raised its 2011 guidance. EBITDA for the year is expected to be 30 percent higher than its previous forecast because of expectations of lower costs ahead and stronger demand in the summer travel season.

5) Jefferies jumps 8 percent beat estimates ($0.42 vs. $0.36 consensus). Revenues far exceed Street expectations ($758 million vs. $637 million consensus) as trading revenues soared 32 percent and investment banking revenues jumped 21 percent. Jeffries has a February-ending quarter; while other brokerage firms like Morgan Stanley have a March-ending quarter, it is nonetheless a good sign for JEF's bigger competitors.

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