“Earlier today, Citi’s Chief Economist Willem Buiter published a research note in which he raised the odds of a Greek exit from the eurozone to 90 percent.
Morgan Stanley’s Global Cross-Asset Strategy Team led by Greg Peters is also worried about a Greek exit from the euro. They’re also concerned about Spain, which is getting worse and is also much bigger than Greece.
From their latest note to clients:”
Comments »“Whole Foods Market Inc.’s (WFM) healthy performance in the second quarter of 2012 was followed by better-than-expected third quarter results. The company seems to be sustaining its growth momentum in fiscal 2012 on the back of strong sales as shoppers are flocking to the grocery chain.
The company has been gaining better market share against other supermarket chains, defying economic fears.
These boosted management’s expectations about the company’s performance in 2012, which was quite evident from an upbeat outlook. The shares of the company rose $9.82 or 11.6% to $94.35 in after-market trading hours on Wednesday.”
Comments »Customers paid higher prices which helped to boost sales by 6.4%, but the company saw its losses widen.
Comments »“PulteGroup Inc. (PHM), the largest U.S. homebuilder by revenue, reported a second-quarter profit that exceeded analyst estimates as it reduced costs and sold more houses at higher prices.
Net income was $42.4 million, or 11 cents a share, compared with a loss of $55.4 million, or 15 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The average estimate of 10 analysts in a Bloomberg survey was for earnings of 6 cents a share.”
Comments »“Zynga Inc. (ZNGA), the biggest developer of games played on Facebook Inc. (FC)’s socialnetwork, fell as much as 40 percent in early trading after missing analysts’ second- quarter revenue and profit estimates.”
Comments »“France’s biggest banks are rushing to cut the more than 140 billion euros ($171 billion) they provide their operations in Europe’s troubled economies, seeking to protect themselves against a possible breakup of the euro.
In a retreat, French banks, especially BNP Paribas SA (BNP) and Credit Agricole SA — the largest by assets — are trying to make their businesses in Italy, Spain, Greece, Portugal and Ireland less reliant on funds from the parent company.”
Comments »“Alcatel-Lucent SA (ALU) will cut 5,000 jobs after slumping to a loss, signaling Chief Executive Officer Ben Verwaayen’s effort to revive the company is losing steam and sending the stock to its lowest level since at least 1989.”
Comments »“China may refrain from stepping up its monetary stimulus or increasing spending because measures now in place are sufficient to support growth, the International Monetary Fund’s top official in the nation said.
Authorities will probably maintain the “status quo” after already shifting their monetary stance to a “more neutral or accommodating one” and may forgo expanding this year’s budget, Il Houng Lee, 54, the IMF’s senior resident representative in China, said in an interview yesterday in the fund’s Beijing office.”
Comments »“Toronto-Dominion Bank (TD) said it will consider buying assets similar to its purchase of Chrysler Financial Corp. to bolster U.S. operations amid signs of a “modest” turnaround in the world’s largest economy.
The $6.3 billion purchase of auto loans from Cerberus Capital Management LP last year is “a great example of an asset class that we really like,” Chief Financial Officer Colleen Johnston said yesterday in an interview at Bloomberg’s New York headquarters. “We’re continuing to think about acquiring assets and we continue to look.”
Comments »Draghi’s comments also helped to boost growth currencies and stocks in Asia.
Comments »“European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, suggesting they may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc.
“To the extent that the size of these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate,” Draghi said in a speech at the Global Investment Conference in London today. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.”
Comments »Comments »The euro stayed weaker against the dollar as a report showed Italian retail sales dropped in May.
The common currency slipped 0.1 percent to $1.2148 at 9:02 a.m. London time. It was at 94.97 yen, from 95.03 yesterday.
Comments »Sweden’s krona climbed 0.49 percent against the euro to 8.4279 as of 9:42 a.m. in Stockholm, and gained 0.44 percent versus the dollar to 6.9359 after consumer confidence rose and unemployment increased less than estimated.
Comments »Citigroup Inc. (C) said there’s now a 90 percent chance that Greece will leave the euro in the next 12 to 18 months, with prolonged economic weakness and spillover for the currency bloc.
In an analyst note, Citigroup updated its forecast for a Greek exit from the 17-nation currency union from a previous estimate of 50 percent to 75 percent, and said it would most likely happen in the next two to three quarters. Specifically, the bank assumes a Greece exit would occur on Jan. 1, 2013, while saying that is not a forecast of a precise date.
Comments »Canon Inc. (7751), the world’s largest camera maker, plunged the most in more than three years in Tokyo after cutting its full-year profit forecast because of a stronger yen and expectations for weaker global growth.
The shares declined 7.8 percent to close at 2,470 yen, the most since November 2008. The benchmark Nikkei Index gained 0.9 percent. Canon shares have declined 28 percent this year.
Comments »China’s stocks fell to the lowest level since March 2009 as speculation the government will maintain real-estate curbs overshadowed a State Council plan to develop the nation’s central provinces.
China Vanke Co. (000002) and Poly Real Estate (600048) Group Co. paced declines among developers after the official Xinhua News Agency said China must prevent local governments from weakening real- estate controls. Hunan Valin Steel Co. (000932), part-owned by the world’s biggest mill ArcelorMittal, surged to a one-month high as the China News Service said Hunan province’s Changsha city unveiled an 829.2 billion yuan ($130 billion) investment plan.
“Market sentiment is pretty weak and it will take a while for investors to reverse their pessimistic expectations about the economy,” said Wang Weijun, a strategist at Zheshang Securities Co. inShanghai. “We’ll probably see more stimulus packages from the government going forward.”
The Shanghai Composite Index (SHCOMP) dropped 0.5 percent to 2,126 at the close, erasing a 0.5 percent gain. The CSI 300 Index (SHSZ300) lost 0.5 percent to 2,347.49. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, retreated 0.3 percent in New York yesterday.
Comments »Chancellor of the Exchequer George Osborne came under renewed criticism after Britain’s recession deepened in the second quarter, prompting questions about his economic plans and whether he should remain at the Treasury.
The opposition Labour Party and economists including Stewart Robertson at Aviva Investors said Osborne should reconsider his fiscal squeeze after the economy shrank 0.7 percent, the most in more than three years. One coalition lawmaker questioned whether the chancellor should keep his job.
“There is enough to be seriously worried about and it casts doubt on the idea of an expansionary fiscal contraction,” said Robertson, chief European economist at Aviva in London. “It would be absolutely irresponsible for the government not to take note and say we have to take our foot off the brake.”
Osborne’s 2010 austerity program — which was extended for two years in November — envisaged that the economy would be growing by 2.8 percent this year. Instead, it is 0.9 percent smaller than in the third quarter of 2010, just after Prime Minister David Cameron’s coalition came to power, and struggling to overcome aftershocks of the 2008 banking crisis and the euro- area debt turmoil.
