Archive - Dec 16, 2010 - Story

Following yesterday's threat to the country's Aa1 rating by Moody's, Spain was put in the unpleasant position of having to raise €3 billion in 10 and 15 year bonds. Not surprisingly, the auction was as close to a disaster as it could be, considering it had the ECB's backing. In its final bond auction the country managed to raise just €2.4 billion (€1.782 billion in 10 years and €619 million in 15 years), with the 10 Year yielding 5.446% and the 15 Year 5.932. These rates compare to 4.615% and 4.541% previously: obviously many are concerned by this massive jumpin rates. The Bid To Covers came at 1.67 and 2.5, compared to 1.84 and 1.44 previously. Obviously, at these rates, ongoing funding for the country is unsustainable considering the internal cost of capital. Luckily, this is the last bond auction for the year for Spain.

After reporting Q2 results that missed substantially on both the top and the bottom line, FedEx is now down over 3%, and is pushing the broader futures lower. The company which was expected to make $9.77 billion in revenue and $1.32 in EPS, made only $9.63 billion and $1.16 in adjusted EPS. And just like every other institution in the US, the firm hopes to make up for its current loss in the future: FedEx actually boosted its adjusted year end EPS projections from $4.80 to $5.25 to $5.00 to $5.30, on consensus of $5.20. Yet while everyone is happy for the company's optimism, having such a substantially subpar quarter at a time when the firm should have been benefiting materially from a restocking and/or liquidating economy and an expected "surge" in logistical expenditures, will make quite a few people scratch their heads. The only question is whether, just like Cisco and Best Buy previously, this surprising miss will be attributed to company specific factors, or the sell-side analysts finally realize there are systemic factors which are actually impacting companies broadly in a downward fashion.

• Asian stocks, Copper decline before European debt talks; Treasuries gain.
• EU faces `gridlock' on debt crisis; agrees on a crisis- management mechanism in 2013.
• India’s central bank kept benchmark interest rates unchanged after 6 increases this year.
• Oil falls to near $88 in Asia despite plunge in US crude inventory.
• Qatar makes $65B bet it can remake economy in World Cup preparation.
• US foreclosure filings plunge to two-year low as lenders probe practices.
• AAR Corp beats by $0.07, posts Q2 EPS of $0.42. Revs rose 36.0% to $447M.

Today we have claims, housing starts, current account, Philly Fed index, and the Fed’s balance sheet. There is also a $6-8 billion POMO of 6/30/2013 – 11/30/2014 maturities.

RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 16/12/10

The latest report from RealtyTrac indicates that, as expected, November foreclosure activity has fallen off a cliff. In November "default notices, scheduled auctions and bank repossessions were reported on 262,339 U.S. properties, a 21 percent decrease from the previous month and a 14 percent decrease from November 2009. One in every 492 U.S. housing units received a foreclosure filing during the month." This is the largest Y/Y and M/M drop in RealtyTrac's records. “Foreclosure activity decreased dramatically in November, with fewer than 300,000 properties receiving a foreclosure notice for the first time since February 2009,” said James J. Saccacio, chief executive officer at RealtyTrac. “While part of the decrease can be attributed to a seasonal drop of 7 to 10 percent that typically occurs in November, fallout from the foreclosure robo-signing controversy forced lenders and servicers to hit the pause button on many foreclosures while they scrambled to revamp their internal procedures and revise or resubmit questionable paperwork.” It's a good thing then that our very own, and very corrupt, attorneys general are about to announce a major settlement that will wipe the slate clean and allow the conveyor to crank out 1000 foreclosures a day once again... And all manner of thing shall be well.