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Pre-Market Primer: Greece Gets a Bailout


Stock futures edge up, but Greece concerns still linger on.

It's official: Greece will avoid a default.

After a 13-hour meeting in Brussels, the eurozone's finance ministers accepted the Greek politicians' promises to continue the unpopular fiscal austerity programs after the general elections in April. In this second rescue package, the Greek government will receive 130 billion euros through 2014 and private bondholders will take a 53.5% haircut, more than the 50% agreed to previously. The debts that will come due in March will be paid. The reduced threat of contagion helped bring Spanish and Italian bond yields down.

Problem solved? Not really. The Eurogroup of finance ministers might be convinced that Athens has the willpower to outgrow its fiscal mess, but investors are still concerned that the eurozone is merely postponing an inevitable Greek default. At the moment, European stock markets are actually down.

The International Monetary Fund cautioned that Greece, unable to devalue its currency, might see its debt balloon to 160% of GDP by 2020. The fiscal reforms tied to the bailout are intended to bring Greece's debt down to 120.5% of GDP.

Despite being unsurprising, at least this deal clears the air of uncertainty, and is boosting US stock futures.
  • Dow (^DJI) futures rose 0.28% to 12,965.00.
  • S&P 500 (SPY) futures edged up 0.17% to 1,362.00.
  • Nasdaq (^IXIC) futures rose 0.1% to 2,595.00.
Oil hit a nine-month high this morning on tensions in the Persian Gulf. Brent crude rose 0.03% to $120.08/barrel and West Texas Intermediate jumped 1.45% to $104.69/barrel as Iran stopped selling crude to France and Britain.

Economic growth in the OECD, the rich nation club, grew by a paltry 0.1% in the fourth quarter of last year. Accelerated growth in the US was overshadowed by declines in Japan, Britain, and the euro area.

A spate of retail earnings came out this morning.

Shares of Saks Inc. (SKS) rose 1.2% in the pre-market after the company posted better-than-expected earnings of $0.17 per share. Macy's (M) also reported a strong holiday quarter and beat expectations. The second-largest department store chain in the US earned $1.74 per share and shares rose 3.75% in the pre-market.

Warm weather this winter kept house construction going and contributed to a 32% year-over-year increase in profit for Home Depot (HD). Home Depot posted earnings of $0.50 per share for the quarter ending on January 29. Home Depot shares rose 3% in the pre-market.

Barnes & Noble (BKS), the maker of the Nook e-reader tablet, came up short. Barnes & Noble will announce a new, cheaper version of the Nook later this week. Shares of the big-box bookseller declined 89% in the pre-market.

Walmart (WMT) profits fell 15% from the year before, but still beat the Street, earning $1.51 per share in the fourth quarter. The world's biggest retailer is down over 3% in pre-market trading.

Twitter: @vincent_trivett
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