Wrong again: Traders Tuesday believed that Europe would be down 2 percent on what was termed a "disappointing" press conference with Merkel and Sarkozy.
Wrong. Most of Europe is up; even German, which saw disappointing gross domestic product numbers Tuesday, is only down fractionally. What happened? Well, Europe is moving, slowly, toward more integration, and Italian bond yields are back below 5 percent, the euro is rallying. All OK for now.
Producer Price Index (PPI), both core (ex-food and energy) and headline, were a bit hotter than expected. Food prices were up 0.6 percent, while energy was down 0.6 percent due to a drop in gasoline prices. This normally would not get tremendous attention, but many are watching PPI and the consumer price index because a weak number for both might give the Fed some cover should they need to start a third round of quantitative easing. Higher numbers makes it tougher to argue for QE3.
1. Dellearnings report from last night was the final confirmation that PC sales are being undercut by tablets: Servers & networking grew 9 percent year over year, services 6 percent, software & peripherals 1 percent, notebooks 1 percent, but desktop PCs declined 3 percent. Get it? Dell is going to do what all the other PC guys are going to do—ditch this low margin business and go bigger into services and data centers.
2. Target rises 6 percent after beating estimates ($1.03 a share vs. 97 cents a share consensus) on better-than-expected sales and improving credit-card operations. Same-store sales grew a solid 3.9 percent while profitability increased at its credit card unit as bed debt expenses plunged. Full-year guidance is now comfortably ahead of estimates and the discounter’s third-quarter outlook is also mostly above Street expectations (70 cents a share to 75 cents a share vs. a 71 cents a share consensus).