December 16, 2011
“All banks are leveraged black boxes.” Mike Mayo
Stock futures are up this morning after a relatively quiet evening in Europe and a better than expected CPI report that has investors emboldened about possible future Fed intervention. The CPI rose 3.4% vs. expectations of 3.5% as gasoline price increases eased. Core CPI (that’s the consumer price index for people who don’t eat or use transportation) rose 2.2% vs. expectations of 2.1%. Yesterday PPI came in at 5.7% vs. expectations of 5.8%, and the core measure rose 2.9%, in line with expectations. Unemployment claims were down yesterday to the lowest weekly number since early 2008, 366K.
Research in Motion (RIMM) missed earnings and lowered next quarter’s estimates for sales and earnings. The stock, which is already down 74% YTD, is down another 10% in pre-market action. Adobe (ADBE) is bid up 5% on slightly better than expected earnings and better than expected guidance.
Ascena (ASNA) is reportedly taking a look at $540 million market cap retailer Charming Shoppes (CHRS). ASNA has had a successful track record of acquiring troubled retailers and returning them to profitability.
You may have thought we were finished with threatened government shutdowns, but Congress averted another potential government shutdown by agreeing to fully fund most of the government with a $1 trillion spending deal. The Defense Department, Education Department, and EPA were all at risk for the rest of the 2012 fiscal year, which ends September 30, 2012.
Before we give DC too much credit, they still haven’t come to terms on how to extend the payroll tax break. There is now discussion about extending it for two months to give them time to figure out how to extend it for the rest of the year. What these folks don’t seem to understand is that the benefit of a tax cut is the certainty that the funds will be available to spend. A delay, then a two month extension, then a 10-month extension certainly puts extra money in people’s pockets, but it doesn’t give them the confidence it will be there so they tend not to spend the extra cash as readily on discretionary items that will help move the economic needle.
Fitch cut their ratings yesterday on a number of global banks, including BNP Paribas, Credit Suisse, Deutsche Bank, Barclays, Goldman Sachs, and Bank of America.
APAC markets were strong yesterday, led by the Shanghai, which was up 2% after falling for six consecutive days. The Hang Seng rose 1.4%, Nikkei 0.3%, S&P/ASX 200 0.5%, the Kospi 1.2%, and the Sensex 1.3%.
Online gaming maker Zynga (ZNGA) will begin trading today after raising $1 billion in its initial public offering, selling 100 million shares at $10. Texas Instruments (TXN) has announced it will move from the NYSE to the NASDAQ next year, but plans to keep its ticker.
Have a great weekend