N AMERICAN MORNING BRIEFING:Greek Bailout Move To Aid Stocks

23rd Apr 2010 11:30

DJIA Futures 11069.0 +4.0 +0.0% S&P 500 Futures 1203.4 +1.7 +0.1% Nasdaq Futures 2038.6 +2.4 +0.1% Above are as of 0615 ET FTSE 100 5707.0 +41.6 +0.7% Xetra DAX 6249.7 +80.9 +1.3% CAC40 3951.3 +26.6 +0.7% Above are as of 0615 ET Nikkei 225 10914.5 -34.6 -0.3% Hang Seng 21244.5 -210.4 -1.0% Above are closing prices BREAKING NEWS: *Sears Hldgs Sees 1Q EPS 0c-EPS 31c *Sears Hldgs Sees 1Q Adjusted Ebitda $290M-$350M *Sears Hldgs Expects To End 1Q With About $1.8B Cash Balances *Sears Hldgs 1Q Kmart Same-Store Sales To Date Up 3.2% *Schlumberger 1Q Oilfield-Services Rev $5.1B, Down 6% *Schlumberger 1Q Adj EPS 62c SNAPSHOT: -Stocks seen a touch higher; Treasurys lower; dollar mixed; Nymex crude higher at $83.95; gold flat at $1140.33. -Watch for: durable goods at 0830 ET; new home sales at 1000 ET. OPENING CALL: Stocks are set to open a little higher, with futures reversing earlier losses on reports that the Greek government may formally request IMF aid Friday. "It's all about Greece today," said Joshua Raymond at City Index in London. The pickup in sentiment is also boosting risk appetite, he added, as investors move money back into riskier assets. A raft of positive economic data out of Europe is also boosting the market, with German business confidence at its highest level in two years. "That said, there's still uncertainty in the market. Traders are using dips as an excuse to buy - there's a lot of volatility." EQUITIES: In M&A news, UAL's (UAUA) United Airlines and Continental Airlines (CAL) are studying a stock-for-stock merger with no premium, Bloomberg reported Friday. If concluded, a deal would create the world's largest carrier with an estimated market value of $6.6 billion. The news comes after The Wall Street Journal reported that U.S. Airways (LCC) dropped out of merger talks with United Airlines, clearing the way for United to focus on talks with Continental Airlines over a possible combination. At the same time, though, U.S. Airways' withdrawal reduces the pressure on Continental to consummate such a deal, sparking speculation of further tie-ups in the sector. At 0620 ET, shares in UAL were up 10.7% in Frankfurt. Goldman Sachs (GS) faces complaints from German officials, companies and banks after the city of Berlin accused the U.S. bank of trying to intimidate it with legal threats in order to make more profit from a housing sale, The Wall Street Journal reported. Goldman denied the accusation. Elsewhere, Goldman Sachs is under further fire after it emerged that the bank both underwrote and was an investor in Lloyds Banking Group's (LYG) refinancing deal last year, the Financial Times reported on its Web site Friday, highlighting potential conflicts of interest at the heart of its business model. Meanwhile, the largest insider-trading case in a generation took a turn for the worse for Goldman Sachs after it emerged that one of the company's directors tipped off a hedge-fund billionaire about a $5 billion investment in Goldman by Warren Buffett's Berkshire Hathaway before a public announcement of the deal. At 0621 ET, shares in Goldman Sachs were up 1.2% in Frankfurt. Apple (APPL) on Thursday became the second-largest company on the S&P 500 Index in terms of market capitalization, surpassing software giant Microsoft (MSFT), boosted by upbeat investor reaction to its strong earnings report this week. The news comes despite a 35% rise in Microsoft's profit for the third-quarter, largely due to sales of the latest version of its Windows operating system. Investors remained unimpressed, with shares down 2.6% in Frankfurt at 0619 ET, while Apple shares were up 2.3%. BONDS: Treasurys were lower in London trading as Greece appeared close to activating the aid package. A government official said Greece will ask for E.U./IMF help Friday and the Greek Prime Minister will make a statement around 1100 GMT. The 2-year note was down at 99 29+/32, yielding 1.037%, the 10-year was down at 98 22+/32 to yield 3.785%, with the 30-year bond unchanged at 99 22+/32, yielding 4.643%. Corporate bonds: European corporate credit senior and subordinated financial CDS indexes were a touch tighter, according to London traders. The iTraxx senior index was around 2bps tighter at 108bps, with the index of subordinated financial CDS outperforming slightly, 3-5 tighter at 173/175bps. Traders said the majority of flow in single names came as investors concentrated on unwinding single name short positions put on during Thursday trading. FOREX: The euro rebounded in Europe, helped by more strong economic data suggesting that the euro-zone recovery is becoming more established. However, market sentiment remains constrained by concerns over Greece and suggestions that the country might be seeking a short-term solution to its debt problems while talks with the IMF and the E.U. proceed. Analysts said they are now looking to see if anything emerges from a meeting of finance ministers from the G20 nations in Washington this weekend, where Greece is expected to be top of the agenda. By 0530 ET, the dollar was down in Europe at Y93.46, while the euro was up at $1.3340 and the pound had fallen to $1.5379. COMMODITIES: Brent moved in a tight range above $85/bbl in European trade as worries over Greece's sovereign debt helped the dollar maintain its strength against the Euro, while pressuring equities. "With end of week we think that the bearish forces will have the upper hand and move Brent crude further down from current levels in the coming trading session," said Bjarne Schieldrop, chief commodities analyst at SEB Commodities. Positive macro readings will likely keep hopes of economic recovery alive and support Brent prices, "however, we are not there today," he added. Spot gold was trading in a narrow range and should remain between $1,122 a troy ounce and $1,160/oz for the time being, said James Moore of TheBullionDesk. He said if there is a reversal in U.S. dollar sentiment that could spark a rise in gold out of the range. He added underlying deficit concerns were providing some support but noted a small decline in the largest gold exchange traded fund SPDR Gold Shares holdings. =======TODAY'S CALENDAR======= ET PERIOD 0830 Mar Durable Goods 1000 Mar New Home Sales 1800 Geithner holds press conference at G20 Meeting ============================== OTHER TOP STORIES OF THE DAY: FILING FAVORS J.P. MORGAN'S WAMU BID OVER CITI'S Citigroup Inc.'s (C) unsuccessful bid for the teetering banking operations of Washington Mutual Inc. proposed that the U.S. government absorb a majority of the thrift's loan losses and limited Citigroup's financial exposure to $10 billion, according to a document released by regulators, The Wall Street Journal reports. US NEWSPAPERS DRAW RECORD TRAFFIC IN FIRST QUARTER - NAA U.S. newspapers might have trouble finding a business model for the digital age but they drew record traffic to their Web sites in the first quarter of 2010, according to figures released Thursday. US VICTIM SUES TO OPEN SECRET VATICAN PRIEST SEX ABUSE FILES The alleged victim of a U.S. priest accused of being a serial pedophile sued the pope and the Vatican on Thursday in an attempt to open secret files containing internal investigations into sex abuse in the Roman Catholic Church. GREECE TO ASK FOR EU-IMF HELP TODAY - OFFICIAL The Greek government is expected to formally request today that it is seeking financial support under a joint European and International Monetary Fund loan package, a government official said Friday. GREEK MARKETS REMAIN UNDER PRESSURE, DECISION ON AID TAP NEARS The Greek government's likely decision during the weekend on the timing of tapping the aid mechanism set up by the European Union and the International Monetary Fund is keeping the euro and the Greek debt markets under pressure Friday, albeit spreads are somewhat tighter than Thursday. GERMANY SHOULD ONLY HELP GREECE IN EMERGENCY -ECONOMICS MINISTER Germany should only assist Greece if an emergency warrants such action, the country's economics minister, Rainer Bruederle, said Friday. CHINA COMMERCE MINISTRY: 2010 RETAIL SALES TO GROW AROUND 16% China's retail sales are likely to grow around 16% this year, partly due to rising inflationary pressures amid the economy's recovery, the Ministry of Commerce said Friday. FITCH: JAPAN FISCAL REFORM PLAN MAY NOT TRIGGER RATING CHANGE A Fitch Ratings' sovereign analyst said Friday that the Japanese government's June fiscal reform plan probably won't trigger an immediate change in the nation's credit ratings, which have come under threat of downgrade due to its ballooning debt. JAPAN OPPOSES PRESSURING CHINA ON YUAN BEFORE G-20 Japan's finance minister and central bank governor on Thursday signaled their opposition to openly pressuring China to revalue its currency, the yuan, seemingly distancing themselves from the U.S. and European positions ahead of key international meetings. JAPAN FINANCE MINISTER SAYS G-7 OFFICIALS FOCUSED ON GREECE Top Group of Seven finance officials Thursday devoted a "significant" part of their dinner conversation to Greece's debt turmoil, Japan's finance minister said, underscoring how concerned they are about a European problem that continues to roil global financial markets. -By Caroline Henshaw, Dow Jones Newswires; 4420-7842-9478; [email protected] (MORE TO FOLLOW) Dow Jones Newswires April 23, 2010 06:30 ET (10:30 GMT)