CAG ConAgra Brands Inc

Tuesday, December 20, 2011

The fabled "Santa Claus rally" has eluded us thus far. Stocks are down more than 3% this month and the window of opportunity is fast closing with just a few more trading sessions left. If St. Nickolas continues to look for inspiration from Mario Draghi, the president of European Central Bank, then we should probably head out for holidays ahead of time.

There is some positive news out of Europe this morning, with a key German business confidence survey coming in better than expected. We also have Spanish government bond yields coming down following a successful auction. But we will have to see if these readings will be enough to carry us through the day. 

There is not much positive happening on the domestic front either. We have better than expected November Housing Starts numbers this morning, but it is unlikely to cheer the mood all by itself. Even the temporary payroll tax extension, earlier agreed to by the Senate by a wide margin, has run into difficulty in the House. I find it hard to imagine that Congress will let this measure expire, but stranger things have happened in the recent past. So, it shouldn’t entirely come as a surprise.

In corporate news, Red Hat (RHT), the seller of the open-source Linux operating system, reported weaker than expected billings and revenue for its fiscal third quarter. AT&T (T) has withdrawn its $39 billion bid for T-Mobile USA in the face of resistance from the Justice department on anti-trust grounds. On the earnings front, we have better than expected results from ConAgra Foods (CAG) this morning, while Oracle (ORCL) and Nike (NKE) report after the close today.

Sheraz Mian
Director of Research

 
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