Markets Cheer as Europe Speeds Up Effort to Fix Debt Crisis

We get it, we get it! The euro is again higher this morning as more officials indicate they will speed up efforts to resolve the debt crisis. This time European Commission President Jose Manuel Borroso implied euro bonds were coming—but down the road.

Meanwhile, the Finns have approved the EFSF expansion, a day after Slovenia approved. It did not include any requirements for collateral. That makes eight approvals. The other six are Belgium, France, Spain, Italy, Luxembourg, and Greece. Germany and Estonia vote tomorrow; Austria on Friday.

The European Financial Stability Facility (EFSF) currently can only sell bonds that are used to provide loans to member countries. The expanded program would also allow the EFSF to buy sovereign debt and provide aid to banks.

Nothing like talk of a big haircut to get investors interested: A Greek financial paper has reported that the Greek debt swap plan has reached a 90 percent target participation rate and may even exceed it. Recall that this swap—in which investors would take a 21 percent haircut—was part of a debt renegotiation plan within the Greek restructuring. Considering Greek debt is trading at 50 cents on the dollar, it is a great deal for the debtholders, if they can get it done.


1. Amazon will unveil a new color-screen Kindle today, reportedly called Fire. Is this finally the device that will challenge the iPad? At a rumored price of $199, the price point is certainly right. But initially, most analysts seem to think sales will cannibalize the Kindle, not the iPad.

Regardless. The key is that Amazon sells stuff: books, music, magazines, gardening equipment. It is not primarily a hardware company. That's where they have an edge over, say, Samsung.

Another key point: Amazon has some 8 million members signed up for its Prime service. They are big spenders on Amazon. Offering a discount to those members would be a big way to boost sales. And offering buyers discount (or free) Prime membership is an incentive for buyers, as well.

But a 7-inch screen seems a bit small. There's talk that the one to watch is the Fire 2, which may be available in the first quarter of 2012, which will reportedly have a larger 10-inch screen with a dual processor.

The bottom line: There is room for a No. 2 tablet player. Of all the players, Amazon has the best shot at it.

And the market seems to believe in Amazon. It is up about 20 percent this year, far outperforming the S&P 500 and tech stocks in general.

2. Darden Restaurants reported inline fiscal first-quarter results as higher costs impacted earnings and as closures from Hurricane Irene hurt sales. The restaurant operator also said the hurricane cut earnings by 2 cents a share. Overall same-store sales rose just 2.8 percent, but Olive Garden same-store sales slumped 2.9 percent. The firm cautioned that full-year earnings growth rate would be at the low end of its prior forecast of up 12 percent to 15 percent.

3. Family Dollar sank 1 percent despite topping fourth-quarter estimates (66 cents a share vs. 63 cents a share consensus) as the discounter’s same-store sales rose a solid 5.6 percent. Guidance for the current quarter is strong, with earnings seen between 65 cents a share and 73 cents a share (mostly above 66 cents a share consensus) and same-store sales rising 4 percent to 6 percent. The retailer also expects its flurry of store openings to continue, with 450 to 500 new stores planned for the current fiscal year.

4. Circuit board maker Jabil Circuit rises 8 percent after beating fourth-quarter estimates (62 cents a share vs. 56 cents a share consensus) on better-than-expected sales and lower costs. Market share continues to grow and CEO Timothy Main notes that demand for the company’s "expertise in managing global supply chain networks remains robust." The company’s first-quarter guidance of 62 cents a share to 70 cents a share is above Street expectations for 61 cents a share.

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