Spain's Blowout Auction

Blowout Spanish auction, is the European Central Bank (ECB) program working? You have to think it's having an effect. Spain sold 3.7 billion euros of three-month paper at 1.735 percent...way below the 5.11 percent yield it paid in November. It also sold 1.92 billion euros of six-month paper at an average yield of 2.435 percent, also way below the 5.227 percent in a previous auction.

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Tomorrow the ECBwill begin offering bank loans of up to three years at a rate of 1 percent. How much will banks borrow? There's estimates that it will be in the 500 billion euro ($655 billion) range.

What will they do with the money? Most traders do not believe there will be a huge rush to buy sovereign debt. Instead, they will use the money to cover maturing bank debt. Some 800 billion euros ($1.04 trillion) in term wholesale maturities come due in 2012, according to RBS.

This new three-year loan program appears to be considerably relieving market anxiety.

Another factor: The new Spanish government announced tough new austerity measures.


1. The German December IFO business confidence survey rose.

2. Navistar soars 11.5 percent in pre-market trading after reporting fourth quarter earnings per share of $3.37, beating The Street’s $3.08 expectation. Navistar achieved its best full-year profit since 2008 due to an uptick in demand in the U.S. truck market. Lower costs and a sustained performance in its military business boosted the company's performance. Navistar's fourth-quarter revenue rose 28 percent to $4.32 billion, versus $4.44 billion estimates.

3. JefferiesGroup climbed 5.5 percent in pre-market trading after posting earnings per share of 17 cents, excluding items, versus analysts’ 14 cents a share estimate. Jefferies reported $554 million in fourth-quarter revenue, versus estimates of $562 million. The investment bank reported that Monday its board of directors declared a quarterly dividend of $0.075 per share.

4. CVS Caremark rose 3.8 percent in premarket trading after increasing its quarterly dividend 30 percent to $0.1625 per share. CVS provided 2012 guidance expecting adjusted earnings per share to be in the range of $3.15 a share to $3.25 a share, an increase of 13 percent to 16.5 percent. The company expects the retail portion’s operating profit to increase by 7 percent to 9 percent, and the pharmacy segment’s operating profit to increase by 11 percent to 15 percent.

5. Packaged-food companies were a mixed bag:

ConAgra Foodsbeat The Street, posting a second-quarter adjusted earnings per share of 47 cents a share versus 43 cents a share estimates. ConAgra cited strength in its consumer food segment, which accounts for 63 percent of year-to-date sales and reported second-quarter sales of $2.2 billion — up 4 percent year-over-year. ConAgra's second-quarter revenue was $3.4 billion, versus analysts’ $3.3 billion estimate.

General Mills fell 3.6 percent in pre-market trading after missing analysts’ estimates, as higher input costs hurt gross margins. General Mills posted second-quarter earnings per share of 76 cents a share, excluding items, versus The Street’s 79 cents a share expectation. The company's sales rose 14 percent to $4.62 billion, fueled by the Yoplait acquisition, increases in price and volume, and foreign-exchange rates.

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