· GE reports 1Q earnings – GE reported earnings of $0.21 (st. $0.16) on revenues of $36.6B (st. $37B). The company said losses, delinquencies, and non-earnings assets declined QoQ and industrial profits were up 30 bps YoY. Losses, delinquencies and non-earning assets (ex. FAS 167) declined versus the prior quarter. “2010 framework remains achievable with upside potential; we expect to grow earnings for the balance of 2010. GE call @ 8:30amET this morning.
· GE – from press release - “GE’s environment continued to improve in the first quarter of 2010,” GE Chairman and CEO Jeff Immelt said. “We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets. Our Healthcare and Oil & Gas businesses experienced solid orders growth and our equipment and services backlog remains strong. “We are very encouraged by GE Capital’s performance, earning $0.6 billion in the quarter,” Immelt said. “We are seeing solid signs of stabilization. Losses, delinquencies and non-earning assets declined in the Q…. GE Capital losses seem to have peaked. Commercial real estate continues to be challenging, but the risks are understood and we expect them to be manageable”
· BAC – earnings due this morning; conf call @ 9:30amET 888.245.1801Pwd:79795
· Fed expected to reit “extended period” in their next FOMC communiqué (the next meeting is 4/27-28) according to the WSJ; while parts of the economy are signaling that a strong rebound may be underway, inflation and the jobs market remain subdued.
· China property cooling measures released yesterday after China close/pre-US trading weighing on the region today and concerns remain that China’s government will take stronger measures to slow the economy. On the Yuan front, a PBOC advisor is on the tape overnight saying that China has come to a “consensus” on adjusting its exchange rate gradually and wants to avoid the impression that it is bowing to U.S. pressure by allowing appreciation. On the China rate front, today’s 15B yuan ($2.20 billion) auction of 182-day bills attracted strong demand after the central signaled in its open market operations this week that it does not want higher money rates for now (recall that an auction last week of 91d and 273d bills failed to meet its sales target on concerns that the country’s central bank was set to raise rates).
· Greece - In our view, the support mechanism could be activated at any time. The Euro area agreement reached last weekend was a significant step to ease liquidity stress, but it does nothing to resolve the medium-term issue of whether Greece can achieve debt sustainability. JPMorgan’s D Mackie.
· Portugal – debt worries shift to Portugal according to the NYT – the article notes that speculators are now turning there attentions towards another smaller EU nation that has a lot of the same problems as Greece: Portugal.
· UK - The Sterling fell today after investors reasoned that an apparently solid performance by Nick Clegg, the Liberal Democrat leader, in the first televised UK election debate would increase the chances of a hung parliament.
· Earnings season recap from JPMorgan’s T Lee - Earnings season is off to a good start so far, with 79% of companies (of 36 that reported) exceeding Street expectations.
· Earnings season rolls on - #s out from ISRG, GOOG, and AMD Thurs night were all fine, but investors weren’t satisfied as the bar has been set high in wake of UPS, INTC, and others; for GOOG, people not happy w/EBITDA margin shortfall and weaker CPCs (paid clicks were strong but CPCs, or rev per click, were light). Int’l revs were a bit softer than anticipated too. Also Google talked about ramping back up headcount, raising worries about margins being hurt. The fact that GOOG CEO Eric Schmidt will no longer be on the call raised some questions as well.
· TSM alarmed by rising chip inventory levels according to Digitimes - Taiwan Semiconductor Manufacturing Company (TSMC), alarmed by its rising inventory level, has demanded IC design houses take delivery of their ordered wafer starts before placing new orders (note that of the chip firms we have heard from already, inc. INTC, LLTC, FCS, and AMD, none have talked about rising inventory levels and all said overall stocks are lean; FCS said its channel is about as lean as its ever been).
· Wall St protest march planned for Apr 29; ~10K people are expected to descend on Wall St in NYC next week in conjunction w/the Senate taking up action on the financial regulatory overhaul bill.
Financials
· PBCT – kicks off regional bank earnings; CC Fri morning 11amET 888.396.2356Pwd:52496449 - PBCT reported core EPS of $0.08, which was in line with Street expectations but a penny shy of our estimate. strong NIM expansion and declining credit costs, offset by weaker fee/expense trends and a slight pick-up in nonperforming assets. Provision matched charge-offs.
· RBS – BoA/Merrill out w/a bullish note on the company this morning; the stock is outperforming in London trading; says the firm could be profitable in ’10 (Bloomberg)
· Wall St protest march planned for Apr 29; ~10K people are expected to descend on Wall St in NYC next week in conjunction w/the Senate taking up action on the financial regulatory overhaul bill. Sen Reid this week said he is aiming to start floor action on the bill late next week. AFL-CIO President Richard Trumka will speak at the New York City event. DJ
· GS – the FT points out that the co’s Whitehall St Int’l, its int’l real estate investment fund, has lost nearly all of its $1.8B of equity. As of the end of ’09, the fund was down to its last $30MM of equity (a loss of 98c on the dollar). Goldman took a loss of $1.76B from all its real estate principle investments last year. FT http://www.ft.com/cms/s/0/9ca7d968-48d2-11df-8af4-00144feab49a.html
· GS – a WSJ article describes the co’s new HQ - http://online.wsj.com/article/SB20001424052702303828304575180581255747658.html#mod=todays_us_money_and_investing
· Small/medium-sized banks see recovery starting later – the nation’s larger banks are seeing a faster-than-expected recovery; smaller banks don’t have the business lines that are proving to be so lucrative for the largest firms (WSJ)
· SCHW – money market fee waivers substantially hit SCHW’s earnings; the co thinks the worst has past when it comes to the waivers and the impact they will have on the company (WSJ)
· Credit Card update – credit continues to stabilize/improve but loan growth outlook weak – from JPMorgans A Wessel after Thurs’ master trust #s - March trust reports indicated continued stabilization of credit card loan performance. Total delinquencies were down 16bps MoM in the bank card index that we track, after falling 5bps in February. Total delinquencies were lower across the major issuers for two months in a row, which gives us greater confidence in our positive credit outlook. However, we are still maintaining neutral on the credit card sector based on the view that despite stabilizing credit, the card balances will be down 10-12% YoY in 2010.
· Citic Securities Co., China’s largest brokerage by market value, suspended trading of its shares in Shanghai, saying it is holding “important” discussions. Citic Securities, based in Beijing, and Credit Agricole SA’s Asian broking affiliate are in talks to create a venture in the region – Bloomberg
· Japanese banks - Japan's six top banking groups, including Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are expected to swing to a profit for the year ended March 31, as bad-debt disposal costs declined (Reuters)
· ANH - Anworth Mortgage cuts quarterly dividend by 3.6% to $0.27 from $0.28
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