Geithner on Charm Offensive

This craziness in Europe cannot continue. Greece just issued 13-week paper at a yield of 4.1 percent — to put this in perspective, Germany pays 3.8 percent for its 30-year bond.

That's right: Greece is paying more for 3-month paper than Germany pays for a 30-year bond. Greek 10-year yields are now approaching 15 percent — 15 percent! Let me put this in some perspective — if you live in the U.S., had nothing more than a high school education, had terrible credit, and haven't worked in, say, five years, I bet you could borrow money for 15 percent. That's how bad it is. Fifteen percent!

Keep buying: Treasury Secretary Geithner on CNBC, going on a charm offensive to convince the rest of the world to keep buying...supportive comments from Japan and India.


1) March housing starts and building permits were stronger than expected, rebounding from the miserable February numbers. We are still bouncing along the bottom.

2) Goldman Sachs up nearly 2 percent pre-open, reported earnings of $1.56 (excluding the preferred dividend), well above consensus of $0.82; revenues of $11.89 billion also well above consensus of $10.2 billion. They repurchased 9 million shares during the last quarter — that's almost 2 percent of the shares outstanding. For all the worry about trading, FICC (fixed income, currency and commodity) trading is not dead: $4.33 billion. Key point: no negative surprises.

3) Fellow regional bank Regions Financial also pleased the Street, posting a surprising $0.01 profit, vs. expectations of a loss of $0.10. Revenues grew 4 percent while provisions for loan losses fell 37 percent to $482 million. Just like the other banks, credit improved too with charge-offs sharply falling to 2.37 percent (down from 3.22 percent in the prior quarter) and delinquencies falling for the 4th straight quarter.

4) Comerica beats estimates ($0.57 vs. $0.48 consensus) as credit quality improved and significantly less money was set aside for loan losses. But still no signs of loan growth — the regional bank forecasted "a low single-digit decrease in average loans" this year.

5) NYSE says it will not comment immediately on the proposed merger agreement submitted to them by NASDAQ/ICE this morning. Under the proposed merger agreement NASDAQ/ICE says: 1) they are prepared to pay a reverse termination fee of $350 million in case the deal cannot close due to antitrust issues; and 2) they have received fully committed financing of $3.8 billion. "We believe that, in addition to a superior financial proposal, the synergies available for our customers, our ability to lower costs and the highly focused business segments of NASDAQ OMX and ICE are significantly more attractive in both the short-term and the long-term than the proposed acquisition of NYSE Euronext by Deutsche Boerse," NASDAQ CEO Robert Greifeld and ICE CEO Jeffrey Sprecher said in a letter to the NYSE/Euronext.

6) Texas Instruments falls 1.5 percent after the earthquake in Japan caused Q1 earnings to miss estimates by a penny. The semiconductor firm blamed the shortfall on costs resulting from damages at its Japanese factories and lower chip demand following the disaster.

The ripple effects from the earthquake will likely extend to the current quarter too. The firm is uncertain when its supply chain of silicon and wafers will return to normal, and cautions growth will be under pressure. Q2 earnings guidance of $0.52-$0.60 is fairly conservative given consensus of $0.58.

7) Johnson & Johnson easily topped estimates ($1.35 vs. $1.25 consensus) despite costs from recalls and a production suspension at one of its facilities. Sales growth overseas far exceeded lagging sales in the U.S. That was most notable at its consumer unit, where U.S. sales dropped 14 percent compared to a 6 percent increase overseas. Offsetting the firm's sluggish consumer sales was stronger pharmaceutical sales. Guidance for the full year is raised to $4.90-$5.00 (above $4.83 consensus).

8) Retail sales off to a good start in April, up 5.1 percent in the latest week from a year ago, according to Redbook.

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