Futures -10bps this morning, shrugging off weaker than expected earnings from Citigroup (-3%) and perhaps buoyed by M&A, as Cadbury accepts Kraft’s $19.5B deal. Tyco also announced plans to acquire CFL for $42.50/share. Note that this week will be earnings-heavy, as roughly 20% of the S&P500 reports. Europe is slightly lower to this point in the morning, and Asian markets were mixed, as China UK Massachusetts Massachusetts
Looking ahead this week, financials will be in focus, as we’ll see earnings from BAC, WFC, GS, and MS. Credit card companies AXP and COF will report Thursday, and a slew of regional banks will report throughout the week. In tech, we’ll get IBM after the bell today, EBAY & XLNX on Wednesday, and AMD & GOOG on Thursday. In the consumer sector, SBUX & EAT report Wednesday, and MCD reports Friday. GE also reports pre-open on Friday. Note that JPM and GSCO took up their 4Q09 GDP forecasts to 5.7% and 5.8%, respectively, perhaps emboldened by better than anticipated earnings to this juncture. In terms of economics, PPI data will be released Wednesday, and the Philly Fed release is Thursday. Overseas, China
While markets have been very difficult to decipher thus far in 2010, Friday’s action may have marked an important inflection point. Despite solid earnings from both JPM and INTC, markets felt “heavy” and sold off. To oversimplify, Friday’s “good news” was read as “bad news,” or at least was read as “sell the news,” which is an interesting psychological response. Despite market pundits chirping about 2010 as a great “stock pickers market,” I tend to disagree. While 2009 marked tremendous opportunity, perhaps 2010 will be all about capital preservation. (Thus the trend to “sell the good news.”) In order to better understand institutional thinking (which oftentimes drives markets), maybe it’s worth reflecting on the personal: In my case, personal investment was “maxed out” in the Spring of 2009, as I sought to “buy the fear” of others. But looking at 2010, I plan on taking the more conservative “dollar-cost averaging” approach because of the slew of unknowns in the marketplace. So is my thinking “consensus?” Might major market players behave similarly? On the one hand, how does one buy a market up 70% off the lows? On the other, how does one short the Fed’s ZIRP? Moreover, how do you read the political tea leaves in Washington , DC
Barron’s positive on “Dogs of the Dow” laggards WMT, PG, KFT, MCD. BofAMLCO ups HST. BCAP ups VALE. CSFB ups MCD. DBAB ups X, AIV. JPHQ ups EVVV. BARD ups HT. BofAMLCO cuts GNW, SHO. CITI cuts BAX. CSFB cuts BKC. DBAB cuts AKS. UBSS cuts TAC. WMB announces restructuring.
USD +70bps. Oil -120bps. Gold -25bps.
Brightpoint News:
Brightpoint PreMarket (yest close/premkt/% change/volume):
S&P 500 PreMarket (last/% change prior close/volume):
WILLIAMS COS INC 23.30 +9.03% 20705
CIENA CORP 12.38 +6.45% 487136
PARKER HANNIFIN 61.11 +4.35% 34107
JDS UNIPHASE 8.49 +3.41% 22050
E*TRADE FINANCIA 1.78 -3.26% 815934
SPRINT NEXTEL CO 3.70 -3.14% 849419
CITIGROUP INC 3.315 -3.07% 95409014
HERSHEY CO/THE 37.33 +2.98% 6990
GENWORTH FINANCI 13.00 -2.91% 37546
Today’s Trivia: Stolen from Jeopardy at some point over the weekend – what is the world’s third largest island?
Yesterday's Answer: Africa is home to 53 independent countries (47 mainland + 6 island nations), which represents more than 25% of the countries of the world.
Best Quotes: Obama Slips in Polls as Crises Dominate First Year as President -- 2010-01-19 05:01:00.30 GMT (BBERG NEWS)
By Julianna Goldman
Jan. 19 (Bloomberg) -- President Barack Obama decided it was time for a haircut.
Three hours into another Sunday meeting at the White House last March -- faced with the ongoing threat of the collapse of the financial system -- he told Treasury Secretary Timothy Geithner, economic adviser Lawrence Summers and participants in the Roosevelt Room to stop debating and deliver a plan to restart bank lending.
He said he was going to his barber and then to have dinner with his family. The president wanted a decision when he returned at 7:30 p.m.
“I’m not sure that he needed to get a haircut at that moment, I think he could have waited a little while to go back for dinner,” recalled senior adviser David Axelrod, who was in the meeting. “But he sensed that there was a time in the discussion at which his leaving the room might actually facilitate a more candid exchange and a decision. And that’s exactly what happened.”
The result was a plan to remove toxic assets from the books of the nation’s banks that Geithner unveiled March 23.
That anecdote provides a window onto the leadership and management style of Obama, who hadn’t been an executive before taking the oath of office Jan. 20, 2009. It also underscored the pace and intensity of a first year in office for which he has been both criticized and praised.
Banks, Carmakers
The bank plan illustrated the degree to which Obama, 48, used the levers of government in unprecedented ways to prop up the country’s largest corporations including Citigroup Inc. in New York , Bank of America Corp. headquartered in Charlotte , North Carolina
It is an approach that also has cost him politically.
His decision to leave details to Congress on the centerpiece of his domestic agenda, an overhaul of the U.S.
health-care system, angered some in his party and may have slowed down the enactment of any final measure.
If Republican Scott Brown defeats Democrat Martha Coakley in today’s special election to fill the Massachusetts Senate seat of the late Edward Kennedy, Obama risks losing his signature health-care bill altogether as Democrats would no longer have the 60-vote majority that helps overcome Republican attempts to defeat legislation.
To be sure, Obama is closer to passing a major remake of health care than any president since Theodore Roosevelt first proposed it a century ago, and his policies to rescue the financial system, stimulate growth and bail out the automakers have helped prevent an economic collapse, according to economists such as former Federal Reserve Vice Chairman Alan Blinder, now an economist at Princeton University in New Jersey.
War in Afghanistan
On his top military issue, he spent several months deliberating a new strategy for Afghanistan Arizona
In addition, Obama pursued an agenda that included establishing new fuel-efficiency standards, legislation to make it easier for women to win pay-discrimination suits and the seating of the first Latina
Nobel Prize
He also has changed the perception of the U.S.
The economy, however, remains the most-pressing issue for voters.
Mitch McConnell of Kentucky, the Republican leader in the Senate, has said the president should have focused more attention on the unemployment rate, which stood at 10 percent in December, and he should have worked to narrow the federal budget deficit, forecast by the White House budget office to surpass $1 trillion again this year after hitting $1.4 trillion in 2009.
“We’ve got double-digit unemployment, we’ve got red ink as far as the eye can see, permanent bailouts, and no long-term plan to put any of this back in shape,” House Minority Leader John Boehner of Ohio said last month.
Partisan Atmosphere
On one major campaign promise -- to reduce the level of partisanship and rancor in Washington
By other measures, he has succeeded. Financial markets, a leading indicator of economic recovery, have rebounded with the Standard & Poor’s 500 Index up 33 percent over the last year.
The employment picture shows signs of improvement: The U.S. lost 85,000 jobs in December, compared with 741,000 last January.
His approval ratings have averaged 57 percent in his first year, the same as President Ronald Reagan at the same point in his first term, according to polls by Gallup
“There is only so much political capital that you have as a first-term president and he has chosen to use a lot of it” on health care, said Representative Jason Altmire, a Pennsylvania Democrat.
‘Unpopular Decision’
Early on, Obama went against political advisers who warned him not to pursue a health-care overhaul. “He said at the end of the day this is going to be an unpopular decision until we get it done,” said Senator Richard Durbin, an Illinois Democrat. “And then we go out and tell the American people, ‘I don’t care what you’ve heard, this is what we’ve done for you.’
And he’s at that point now. It’s a low point.”
And this may make him politically vulnerable, said Ken Duberstein, who was Reagan’s chief of staff.
“They’ve used an awful lot of political capital on a health-care bill that still lingers while the American people are saying what are you doing about jobs,” Duberstein said.
Now Obama is pivoting to emphasize proposals such as a tax on financial companies to recapture some of the support of independents that helped propel his White House victory.
Campaigning for Coakley on Jan. 17, Obama said a vote for Brown would be a vote for bankers. It’s a theme the president will sound throughout the year, press secretary Robert Gibbs said.
Crisis Mode
Obama begins his second year in office in the mode he began his first: crisis. While the president has deemed job creation a priority, he also must deal with a renewed threat of terrorism as he winds down the war in Iraq and escalates the war in Afghanistan U.S. military forces and $100 million in financial assistance to help victims of the devastating earthquake in Haiti
The president, Axelrod has said, believes there was little choice but to tackle multiple problems at once. Last week, as Obama was negotiating on health care in the Roosevelt Room, he had to shuttle to meetings with his national-security team in the Situation Room to coordinate relief efforts in Haiti
According to Axelrod and Summers, Obama reads briefing papers the night before meetings and insists that his advisers don’t rehash information he’s already reviewed. They say he also is adamant that he’s exposed to all points of view.
Obama is “hands on,” said Summers, who heads the National Economic Council. “These are all quite in-depth questions that he sort of wanted to have debated out in front of him.”
At the same time, Obama knows when to delegate, Axelrod said.
“He sets the direction and then counts on his managers to execute on that direction,” said Axelrod. “He checks in and if he feels like you’re veering off course, he will draw you back, but he doesn’t micromanage.”
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