Futures are ~130bps higher this morning on better-than-expected economic data in Europe, solid earnings here in the
(on the heaviest reporting day of the season), and M&A activity. Note the USD is also lower today, thus – perhaps – “reflating” U.S. equities. Additionally, weaker-than-expected Initial Jobless Claims (464k vs. 445k/e) have done little to dampen the pre-market ebullience. In U.S. earnings news, Qualcomm (QCOM; +4.6%) and EBAY (+4%) beat analysts estimates after the bell yesterday. This morning, global economic bellwethers (see trivia section below) UPS (+4%) and Caterpillar (CAT; +50bps) also beat expectations. 3M (MMM; +2%) and AT&T (T; +2%) also impressed. Banks STI, HBAN, FITB, and NT also trade higher pre-market on earnings. In European economic news, July Eurozone Services PMI was better-than-expected and reached the highest level since August 2007, July Eurozone Manufacturing PMI was also higher than anticipated, U.S. Germany’s July Services & Manufacturing PMI topped expectations, ’s Services PMI beat but Manufacturing disappointed, and U.K. June Retail Sales surprised to the upside. In M&A news, General Motors has agreed in principle to buy subprime lender AmeriCredit Corp. (ACF; +22%) for $3.5 billion. Elsewhere, CITI lowers France and Global GDP growth forecasts. Bernanke’s Congressional testimony continues today. Leading Economic Indicators data is due at 10am, along with Existing Home Sales. AMZN reports after the bell today, along with ETrade, Federated, SanDisk, American Express, Capital One, Compuware, Chubb, and Cabot Oil. China
Regarding the European stress tests, here’s the latest summary from BCAP (unsure of source):
STRESS TESTS WILL BE RELEASED EARLIER THAN PLANNED European Union regulators are considering releasing the results of bank stress tests early Friday to avoid having a situation where a market is open which would be sensitive to the information, according to sources at two EU regulators. The regulators cautioned that no final decision has been made. But they cited concern that the original plan to release the results at 1600 GMT Friday would allow fears about the European banking system to grow over the weekend. The regulators are instead considering publishing the results at 0600 GMT Friday, said one source.
On that topic (stress tests), Dennis Gartman had this to say (also, please see quote section below for a colorful Gartman rant):
…tomorrow we’ll see the results of the ECB’s “stress tests” upon the largest banks across Europe, and at this time the results and the tests themselves are shrouded in mystery. We know only a very few things about the tests, but we now this: Firstly, we know that some banks, somewhere, shall have to fail the test, for if no banks fail then the tests will have been for naught. If no banks fail, the test itself will be un-tested. At the moment we’ve no idea which banks shall have to fail, but if we had to put money on the notion we’d put money on the smaller “savings and loan”-like banks in Spain and/or
. Please understand, however, that this is mere speculation on our part. It could be that one of the smaller “landes” banks in Portugal Germany might fail; or that one of the small regional banks in France, or one of the small banks of . It is anyone’s guess, but rest assured that some banks shall have to fail the test; otherwise the test will be scoffed at. Italy
Secondly, the very thesis of the test is itself comical, for the simple fact is that the greatest exposure that the largest banks in Europe have is to sovereign debts of the nations within the Monetary
Union. To “Stress” the banks, it shall be necessary to posit that these sovereign credits fell in price by 15%, or 25% or even 50%, and that simply cannot be allowed. Even the thought of that sort of thing would be anathema. Even Dr. Nouriel Roubini himself could not conjure up such a notion. So the central thesis to the “stress test” is debatable. Nonetheless, we, and the world, await the results of the “stress tests and we are ourselves stressed in the process.
PTV downgraded at GSCO. ARG cut at DBAB. BRO upped at JPHQ. JEFF ups CERN, CNQR. WEFA ups ETN. RBC ups FFIV. BARD ups HGSI. GSCO cuts PJC. FBRC ups WFC. BIDU beats and raises. AEIS beats by 1c. BANR higher on earnings. CCK upped at GSCO. ELN misses on revenues but trades higher. FCX upped at CreditAgricole. FFIV beats by 7c. FITB beats by 14c. HBAN beats by 3c. ISRG beats by 15c. MMM beats by 6c. NFLX is lower on earnings. NOK reports in-line. STI beats by 24c. TEL beats by 2c. UPS beat by 7c. XRX beats by 3c.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
TEXTRON INC 17.9200 -8.80% 100
XEROX CORP 8.95 +6.42% 58750
TOTAL SYS SERVS 15.00 +5.93% 2788
QUALCOMM INC 38.30 +5.92% 436652
TYCO ELECTRONICS 26.9000 +5.66% 100
ST JUDE MEDICAL 36.50 +5.43% 2500
KEYCORP 7.94 +5.31% 6400
SUNTRUST BANKS 23.50 +4.82% 31700
UNITED PARCEL-B 62.76 +4.58% 89688
CARNIVAL CORP 32.84 +4.49% 49877
UNION PAC CORP 72.17 +4.41% 12669
INTUITIVE SURGIC 302.52 -4.3 % 36852
STARWOOD HOTELS 45.55 +4.0 % 13100
EBAY INC 20.94 +3.82% 146350
AUTONATION INC 22.05 +3.67% 1200
FIFTH THIRD BANC 11.67 +3.46% 65910
VF CORP 76.50 +3.43% 100
NORTHERN TRUST 48.77 +3.41% 575
LEUCADIA NATL 20.60 +3.31% 3400
SIMON PROPERTY 85.00 +3.21% 1000
MANITOWOC CO 9.68 +3.2 % 2850
US STEEL CORP 46.20 +3.15% 88266
AK STEEL HLDG 14.60 +3.11% 18950
ENSCO PLC-ADR 43.18 +3.1 % 2200
LABORATORY CP 78.30 +3.09% 8500
WEATHERFORD INTL 15.65 +3.03% 31538
TEREX CORP 19.6000 +3.00% 100
Today’s Trivia: This one is courtesy of Mike Bogorad at Barclay’s, who kept seeing the word “bellwether” during earnings season and wondered about its origin. Does anyone know?
has the most bars – per capita – in the world. Halifax
ON AYN RAND; BEING AMERICAN AND “OBAMA-NOMICS:” God Bless Ayn Rand for explaining to the world, in massively wordy and hyper-extended terms, the wonders of capitalism and why it works so well. We came across the following excerpt from Atlas Shrugged, where the protagonist of the book, Henry “Hank” Rearden, explains the wonder that is the
… or was… He said US
If you ask me to name the proudest distinction of Americans I would choose—because it contains all others—the fact that they were the people who created the phrase “to make money”…. Men had always thought of wealth as a static quantity—to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words “to make money” hold the essence of human morality.
Upon re-reading this statement, we came to suddenly understand why it is that the Obama Administration is not American at all, for the very essence of the Left in the US is to believe that making money is wrong; that wealth is indeed to be seized; that it is static and that one gains at the expense of another; that the world is sum zero. The essence, in our view, of Reaganism/Thatcherism/capitalism is that the world is not static; that one can and indeed will gain at the benefit of another, not at the other’s expense; that growth is good; that progress is better and that “making money” is the highest good of all. God Bless Ayn Rand and God Bless Hank Rearden for defining what it is to be an American.