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Minyanville's T3 Morning Market Call: Bulls Maintain Faith in Europe, Shrug Off Netflix


Investors piled out of Netflix after last night's fourth-quarter guidance; it is currently down about 34% after hours.

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The two European powers spearheading the debate, France and Germany, continue to have differences of opinion on how to increase the firepower of the EFSF. German Chancellor Angela Merkel is expected to ask parliament to approve a plan that would add 440 billion euros to the rescue fund, which would be leveraged to provide about 1 trillion euros in firepower. The vote is expected to be taken ahead of Wednesday's crunch summit. In addition, the Financial Times is reporting that negotiators are asking Greek bondholders to take a 60% haircut, a dramatic increase from the 21% agreed upon in July.

This earnings season has been a mixed bag so far, with some notable casualties as well as rousing successes. Apple (AAPL) missed on its first report in six years, and another former market leader has fallen harder than Humpty Dumpty. After last night's earnings report, the company is now left to pick up the pieces of what once seemed like an unstoppable media juggernaut.

When Netflix (NFLX) dramatically raised prices last year, it likely knew there would be some defections, but it certainly could not have expected the backlash it received from subscribers. Last night's fourth-quarter guidance reflects that greater than expected cancelation, and investors piled out of NFLX after seeing the numbers. NFLX is currently down about 34% after hours, back to levels last seen in early 2010. At what point does NFLX become a buy? The stock will certainly be in play for traders, but it remains to be seen if the company and stock can make a comeback.

Hints dropped from NY Fed President William Dudley yesterday also served to boost optimism. The dollar slumped yesterday as Dudley said the Fed could do more to help the housing market. Similar rumblings came last week from Fed Governors Daniel Tarullo and Janet Yellen.

While a lot of fireworks have already gone off this earnings season, there are still some big names left to report. (AMZN) has a chance to emerge as a clear market leader after it reports earnings after the bell today. The Internet bookseller-turned-tech behemoth is attempting to penetrate several new markets, and it will be interesting to see how much of that is reflected in its earnings.

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Scott Redler is long SPY, RENN, AAPL, QQQ, GOOG, XLF, SDS (inverse ETF), DANG, YOKU.
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