Ahead of Wall Street - January 31, 2012 - Ahead of Wall Street
January 31 2012 - 3:59AM
Zacks
Tuesday, January 31, 2012
There is favorable looking news out of Europe this morning, with
Greece appearing to be making progress in arm-twisting its private
creditors to accept ‘voluntary’ losses on their holdings and all
except two of the 27 European Union members agreeing to put more
flesh on their plans to move towards a closer fiscal union. On the
domestic front, we have the Chicago-PMI reading a little later
giving us a preview of the manufacturing ISM survey coming out
Wednesday. We also have the November Case-Shiller Home Price Index
and a host of earnings reports from blue-chip companies.
As a follow up to the December agreement, 25 out of the 27 EU
members agreed to new rules that define new deficit and debt levels
for member countries and provides for stricter enforcement
mechanisms. The two hold-outs, Britain and the Czech Republic, are
not part of the Euro-zone, which is a sub-set of the broader
EU.
The agreement requires governments to keep budget deficits at an
average of 0.5% of GDP over the economic cycle and to reduce
government debt to 60% of GDP over time. There will be fines for
errant governments, with the European Court of Justice given the
authority to impose fines, which will be capped at 0.5% of GDP. The
leaders did not announce the creation of a €500 billion permanent
bailout fund, known as the European Stability Mechanism. A decision
on that issue, including the proposal to boost the size of the
fund, has been put off till the next EU summit on March 1. This is
an incremental positive development for Europe as it moves the
union towards greater fiscal integration.
On the earnings front, Pfizer (PFE) came ahead
of earnings and revenue expectations, but the company lowered its
2012 earnings guidance. Eli Lilly (LLY) also came
ahead of expectations. Both the drug giants recent lost patent
protection on core blockbuster drugs, with Pfizer’s Lipitor and
Lilly’s Zyprexa going generic. Archer Daniels
Midland (ADM) missed earnings expectations on continued
margin pressures in its oilseeds business, offsetting its better
than expected revenue numbers.
United Parcel Service (UPS) modestly beat on
earnings on roughly in-line top-line numbers.
RadioShack (RSH) pre-announced weaker than
expected numbers for the quarter, citing softness in its business
reselling Sprint (S) wireless service and margin
pressures due to greater reliance on promotions during the holiday
season. We have Amazon (AMZN) reporting after the
close today.
Sheraz Mian
Director of Research
ARCHER DANIELS (ADM): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
PFIZER INC (PFE): Free Stock Analysis Report
RADIOSHACK CORP (RSH): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
UTD PARCEL SRVC (UPS): Free Stock Analysis Report
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