Before The Bell: Signs in Wal-Mart; Credit Suisse's Credit Scares
Wal-Mart lowers guidance, more rogue traders in Europe cause writedowns.
Bellwether retail giant Wal-Mart (WMT) reported earnings this morning. The company said EPS for 4Q came in at $1.04 per share, $0.02 better than consensus estimates of $1.02, but revenues came in at $106.27 billion below $106.91 consensus. The figure marked a year-over-year increase of 8.3%. Further, the company issued guidance in the lower range of analyst estimates with 1Q EPS coming of $0.70-0.74 vs. expectations of $0.74 and downside guidance for FY '09 with EPS of $3.30-3.43 vs. $3.44 cons. See Professor Jeff Macke's recent article Reality Bites For Retail.
From the Bull Pen: Taking into consideration his concerns on the overall sector, Professor Macke mentioned Costco (COST) as his favorite name in the retail space. Sell-stops may be placed below $62.50.
From the Bear Cave: Bears see multi-year resistance for WMT at $50. Buy-stops may be set above this level on downside attempts. Also bears believe WMT is an indicator of the overall sector. Buy-stops may be set above $95 for the retail ETF (RTH).
Credit Suisse's Credit Scares
According to Bloomberg, credit default swaps on Credit Suisse (CS) rose 12 basis points to a record 172 basis points after the company discovered pricing errors by a "small number of traders." Credit Suisse, Switzerland's second largest bank, disclosed $2.85 billion in write-downs, blaming the problems on adverse conditions in the first quarter of 2008 as well as "mismarkings" from the group of traders in its structured credit group. Further, the bank said in a statement today that it is determining whether 2007 earnings were also affected. For context, read Toddo's Random Thoughts from Friday: The Spread of Subprime.
From the Bull Pen: Bulls looking for financial exposure are looking at State Street (STT). Sell-stops may be set below $80.
From the Bear Cave: Bears are playing the downside in CS using trades above $50 as a buy-stop. Alternatively, bears can short the overall sector using the Financial ETF (XLF). Entry at $28 should the stock rally to that level, buy-stops may be set above.
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
Traders return to their turrets this Tuesday and find foreign markets giddy in green.
Asian trading closed with the Hang Seng +1.53%, Nikkei +0.90%, Sensex +0.15%, Taiwan +1.69% and Shanghai +2.10%.
A quick check towards Europe finds the CAC +0.34%, DAX +0.18%, FTSE +0.68%, ATX +0.46%, Swiss Mkt. -0.09% and Stockholm +0.84
A Look At Commodities
Commodities are stronger. Crude oil is higher +1.92 to 97.42. Gold is up +17.2 to 920.00. Silver is higher +0.237 to 17.345, and copper is up +13.00 to 365.10.
The dollar index is lower -0.366 to 75.890.
As of 8:45 AM EST, S&P futures are trading higher +17.4 points to 1368 and Nasdaq futures are up +26 points to 1813.
On the Radar
1:00 NAHB Housing Market Index: 19 cons
5:00 ABC Consumer Confidence
Click here for the full radar.
Good luck, Minyans! Have an excellent day!
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