Europe, China Higher

Europe is higher on talk of yet another Greek bailout package from the IMF: a proposed $145 billion package to help Greece through 2012 and 2013. But the most important event of the morning is that Greece sold 3 month bills at a yield of 4.88 percent, only a little higher than last month's auction. Apparently the Greeks have not been completely shut out of the capital markets.

China trade surplus hit a record $11.4 billion in April, four times more than consensus. Exports were up 29.9 percent over a year earlier, but imports were up only 21.8 percent, short of expectations. This can be read as both good and bad news: good news in that demand for Chinese goods are still strong (with the help of the strong yuan), bad news in that the weak imports may be a sign that China is slowing down.


1) The conspiracy theorists are out again. Four margin increases in silver in the last few days, and a margin increase for oil last night—have many on the Street complaining that the Obama administration is trying to engineer a commodity price slowdown.

If they are, who could blame them? The CRB Index—a basket of 19 commodities—is up 50 percent in less than a year. There is widespread commodity inflation but no wage inflation—that is a recipe for consumer disaster.

Does raising margin requirements really keep commodity prices down? Not clear, but with the exception of oil all the major commodities—including silver—are up again today.

Unfortunately, concerns about the flooding in the Midwest are driving up gasoline prices—yet another fly in the commodity ointment.

2) Dean Foods soars 11 percent after more than doubling earnings estimates ($0.14 vs. $0.06 consensus), but revenues were just inline with expectations. The milk processor still saw weaker milk volumes (down 2.4 percent), but the good news is that it was able to raise prices to offset rising dairy costs.

Soft milk volume trends are expected to continue this year too, but the company has "stepped up" its focus on cutting costs. Full-year earnings guidance is raised, as the firm now expects to reduce expenses by more than 2 times its earlier projection. Q2 guidance of $0.15-$0.20 is also ahead of $0.13 consensus.

3) Wendy's Arby's missed by a penny on a disappointing flat comps at its Wendy's restaurants. Offsetting the little growth there was a better-than-expected 5.5 percent rise in Arby's comps. The fast food chain expects overall comps to grow by 1-3 percent in 2011, but also now expects "significantly higher" commodity costs, which are seen rising 5-6 percent this year.

4) Chemical maker Celenese rises 3 percent after providing a better-than-expected 2013 earnings outlook at a conference. The firm sees 2013 earnings of at least $6.00 vs. Street expectations of $5.88 consensus.

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