Morning Note...

Futures are ~25bps higher this morning on better-than-expected U.S. earnings (on the aggregate; Bloomberg is reporting that 85% of companies reporting thus far have beat analysts estimates), positive economic data out of Europe, and news that Greece will begin tapping into the IMF/EU bailout funds.  In economic news, the headline March Durable Goods Orders was weaker than expected, at -1.3% vs. the +0.2% estimate.  However, Durable Goods Orders Ex Transportation was +2.8%, blowing away the +0.7% estimate.  The read through has to be that weakness in cars or planes (Boeing?) dragged down the headline number appreciably, while other Durable Goods Orders were quite impressive.  Positive earnings news this morning comes from credit card giants AXP (profit doubles as consumers spend; +2.5%) and COF (profit doubles, decreased bad loan losses; +5%), while AMZN (missed estimates; -4%), TRV (lower profit; -3%) and MSFT (revenue miss; -1.5%) trade to the downside.  Additionally, warehouse retailer COST raised its dividend, mining giant BUCY falls 7% premkt on lighter than expected quarterly results, and energy giant SLB trades higher on in-line results but bullish guidance.  Regarding Europe, Eurozone Feb IP, German IFO, French Consumer Spending and Italian Retail sales were all stronger, while UK Q1 GDP disappointed.  Additionally, Portugal approved tax hikes in order to help plug its budget deficit, and in the second debate among UK PM candidates, the Conservative party’s Cameron scored a narrow victory over Brown/Clegg.  Regarding Greece, I will borrow from JPM’s summary this morning since it neatly captures the relevant news:

Greece Update – a lot of moving pieces once again on the Greek front.  During the overnight session, spreads remained wide.  However, Reuters reported this morning (starting to hit the market at ~4amET) that Greece will make a formal request to have the IMF/EU rescue package activated (Greece’s Papandreou made the request at ~5:55amET and another press event is scheduled for 7am according to wire reports).  The news that an activation request was going to be made is helping to tighten spreads slightly (recall they were at record wides again early Fri morning) although the markets are still skeptical.  We are still waiting on details on when, how much, and in what form, assistance will flow to Greece (it still seems like some countries, inc. Germany, could see internal legal challenges to their pledges of aid….although a Reuters headline this morning says that any delay in the German parliament on this issue wouldn’t jeopardize Greek aid).  The EU Commission said it has only just heard of the Greek request this morning and will decide on the release of emergency loans to Greece after it has determined whether the aid request is valid.  It was assumed that when the EU/IMF officials came to Athens this Wed to discuss the terms of an activation that such a request would be made and traders are viewing this morning’s announcement as an attempt to tighten spreads back to more reasonable levels.  The markets still have their same concerns: 1) not clear if the IMF/EU rescue framework will be enough; 2) not clear if Greek populace will tolerate further austerity measures (judging by the continued strikes); 3) not clear if Greek statistics are even viable (see Thurs morning's large revision to the prior budget deficit). There have been a lot of articles this week (starting on Tues morning in the FT) talking about how a Greek debt restructuring of some sort is inevitable. 

If you are looking for a little more on Greece, here is Gartman:

IT’S UNANIMOUS; THE WORLD WANTS US DOLLARS for in one of the very rarest of circumstances, the US dollar is this morning higher relative to every currency we mark here each morning. It is not materially higher in all instances, for the dollar has only risen 0.2 Yen in the course of the past twenty four hours, but the sheer unanimity of the move has… and should have… our attention this morning. Further, the weakness is most pronounced, as it should be, relative to the EUR for the problems of Greece… and Portugal and Spain, and Italy, et al…are back upon the centre stage given the downgrades yesterday by the ratings organisation of Greece’s sovereign debt, with the understanding that more such downgrades almost certainly shall be following hard upon.

The situation in Greece is devolving into street battles and open protests on the part of Greek unionists who are openly antagonistic toward the material reforms that the Papandreou government is going to have to put into effect if Greece is to remain within the political and economic unions there. Things have fallen nearly out of control with very intense selling pressure against the EUR when it was reported that the Union itself now projects the Greek budget deficit to be a stunning 13.6% of GDP this year, more than 6 times what it is supposed to be at its worst and far, far above even the most bearish expectations on the part of most market participants.

We can look forward to weeks of this sort of anti-IMF, anti-American, anti-reform street actions by the left-ofcentre unions in Greece, for the unions know that their position is tenuous at best and that their elite positions ahead of everyone else in Greece shall soon come to a crashing end. Long holidays that are far beyond the numbers and frequencies of what harder working Germans get; fewer working hours per week… far fewer than what hard working Germans have to work; early retirements in their 50’s by Greek public workers compared to retirements in their 60’s by German workers… all of these things are going to be tossed into some fiery pyre if Greece is going to bring itself into compliance with Maastricht’s demands, and the Greek trade unionists know they are fighting a rear guard action. Rear guard actions are rarely pleasant sights.

We note, for the record, that the Greek 5 year CDS went out to a 625 bp premium to Germany yesterday, the widest in history. This is out from 480 bps the day before and out from 350 bps only a week ago. Panic is in the air in Greece, and well it should be.

Speaking of panic, note that three people died from a grenade attack during a “peaceful protest” in Thailand.  It seems to be getting ugly over there:

BANGKOK (AP) — The Thai capital's main financial district was partially crippled Friday following deadly grenade attacks and a tense standoff between die-hard, anti-government demonstrators and a government that has yielded vital areas of Bangkok to them.

Many banks, offices, restaurants and a major shopping complex were closed along Silom Road, known as Thailand's Wall Street. Traffic was light in the normally jammed four-lane thoroughfare, and even many small-time food vendors had left their patches of pavement.

The late-night attacks involved five M-79 grenades shot from near where anti-government Red Shirt protesters have been encamped for weeks, and the blasts struck areas where counter-demonstrators gathered, but the government stopped short of directly blaming the Red Shirts.

The late-night attacks killed at least one person and wounded 86, according to the government's Erawan Emergency Center, which handles victim counts in crises and disasters.

The head of a key security agency, Tharit Pengdit, urged the general public to avoid the area near the protests and warned that anyone involved in "terrorism" will face the death penalty.

Thousands of mostly rural Red Shirts have been entrenched on Bangkok's streets since March 12 in a campaign to dissolve Parliament and hold immediate elections, and Thailand's powerful military has warned them that time is running out to clear the streets or face a crackdown.

In New York, U.N. Secretary-General Ban Ki-moon voiced concern that the situation could escalate and called for dialogue, his spokesman said.

And the U.S. State Department advised American citizens to avoid travel to Bangkok. Earlier in the week, the U.S. had recommended against visiting the Thai capital but did not go as far to advise against it.

Finally, for those seeking a Goldman Sachs fix, note that the Washington Post reported that the two Republicans on the SEC sharply questioned senior investigators about whether there was enough evidence to bring charges against Goldman.  The Commissioners warned that if investigators moved forward with a flawed case that failed to succeed it could damage the agency.  Interesting…

VZ downgrade at GSCO.  NOK cut at JEFF.  DBAB ups SON.  GSCO ups Q.  OPCO ups STP.  BARD ups WDC, CPHD.  DBAB cuts WNS.  GSCO cuts JNS.  OPCO cuts ASBC, CTL, CSIQ.  UBSS cuts ASBC.  AMZN beats by 5c and guides in-line.  BUCY misses by 12c.  ARMH CEO talks down AAPL acquisition chatter.  AXP beats by 9c.  CAKE beats by 5c.  CRBC misses by 7c.  DV beats by 7c.  EMN beats by 22c.  ERIC misses but trades higher.  GVA misses.  MSFT beats by 3c.  NCR misses by 4c.  RMBS higher on earnings.  SYNA beats by 5c.  WDC beats by 16c.  XRX beats by 5c. OPCO ups YGE. 

Asia lower overnight. Europe about 1% higher.  USD +40bps.  Oil -60bps.  Gold -50bps. 

S&P 500 PreMarket 8:30am (last/% change prior close/volume): 

XEROX CORP                 11.23    +7.46%             78130

EASTMAN CHEMICAL      72.00    +7.27%             1750

CAPITAL ONE FINA         48.10    +5.6 %              57364

AMAZON.COM INC          143.34  -4.5 %              343025

INGERSOLL-RAND           37.25    -4.49%              40225

TRAVELERS COS IN        52.11    -3.12%              1850

DISCOVER FINANCI        16.18    +2.28%             100

SCHLUMBERGER LTD      69.70    +2.23%             49427

MBIA INC                       10.22    +2.2 %              29630

JOHNSON CONTROLS     35.76    +2.14%             15080

AMERICAN EXPRESS       47.77    +2.14%             23830

Today’s Trivia:  The most widely watched television series in the world (142 countries and 1.1 billion viewers) debuted on this date in 1989 before ending in 2001.  What is it?

                                                                                                                                                                        

Yesterday's Answer:  Earth Day was founded in 1970, thus yesterday marked its 40^th anniversary. 

Best Quotes:  “Good Morning -  The Obama scalding was fully priced into he tape by the time he spoke.   Once finished the focus shifted right back to earnings performance, and supply and demand.  Shorts got squeezed, and the chase was on.   Greece this morning asking for the help.  Stocks in Europe rose, and the Euro snapped declines that took it to one year lows against the dollar. Earnings season is 50% complete and companies have exceeded estimates by 82% on average.  Corporate bond spreads have now recovered to 2007 levels as corporate bonds are now seen safer than many sovereigns.   12210 still the key level to break through to the upside.   I think we break on through.   Have a great weekend.”  --BofAMLCO trader note