- Markets climb to two-year high. Wednesday's long-awaited QE2 announcement sent the stock market to a two-year high yesterday. The Dow soared 2% to 11,435 and the S&P 500 jumped 1.9% to 1221. The price of gold for December delivery rose to a high of $1,384.80 per ounce as the U.S. Dollar Index slipped 0.6% to $75.84. In after-hours trading, gold rallied to $1,393.40, its highest price ever. Analysts say the Fed gave the "green light" to buy gold and that "gold and non-dollar investments should benefit."
- BoJ keeps key rate near zero, prepares QE. Japan's central bank kept its key interest rate near zero today, and said it will follow in the Fed's footsteps by buying Japanese government bonds next week, plus exchange-traded funds and real-estate investment trusts later, to inject liquidity into its financial system and help stabilize the economy. The Asset Purchase Program will total ¥35T ($434B).
- Cost of Fannie, Freddie bailout might hit $685B. Initially projected two years ago to cost taxpayers $200B, the bailout of Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) could reach $685B, according to a new S&P estimate. The tab so far is $134B, but a slowdown in the housing market might lift that total to $280B. Creating the companies to take the place of the two fallen mortgage giants will likely cost taxpayers another $400B in capital. S&P analysts wrote that addressing the firms' problems "is likely to be an expensive repair job for U.S. taxpayers."
- Strong banks may get go-ahead on dividend hikes. The Fed looks ready to grant some banks with strong capital levels permission to increase dividend payments. Analysts note the solid performance numbers that some banks are posting, and say that investors are eager to be shown the benefits of those numbers. One source said the Fed does not want to prevent that from happening. Investors are cheering, sending shares of financial stocks higher. Yesterday's key gains: Bank of America (BAC) +5.3%, Citigroup (C) +3.3%, Goldman Sachs (GS) +2.3%, JPMorgan (JPM) +5.5%, Wells Fargo (WFC) +3.8%. Premarket: BAC -1.1%, C -1.15%, JPM -0.25% (7:00 ET).
- Citigroup wins EMI court battle. Citigroup (C) defended itself against a multibillion dollar lawsuit by Terra Firma Capital Partners and its chairman, Guy Hands, who said the bank tricked him into overpaying for EMI Group in 2007. U.S. District Judge Jed Rakoff called the suit "a catfight between two rich companies," and narrowed the range of damages to $2.2B from $8.3B and dismissed punitive damages entirely. Hands is likely to lose control of EMI in the wake of the trial, and Citigroup will probably break up the company to try recouping some of the $4.8B it lent to finance the EMI acquisition. EMI has not fared well, and Terra Firma partners is unlikely to want to continue supporting it.
- Geithner's current-account deficit target may be 'unworkable.' Treasury's Geithner wants to end the "currency war" by having nations set current-account deficit or surplus targets of less than 4% of GDP, citing excessive savings in Asia as having helped spark the recent credit crisis. Asian officials counter that the Fed's liquidity injections are warping global capital flows. China's vice foreign minister said the setting of a numerical target smacks of "a planned economy." The issue will be raised at meetings in Kyoto, Japan today and tomorrow of the Asia-Pacific Economic Cooperation, and next week at the G-20 summit in Seoul.
- Unemployment probably still near 10%. Economists surveyed by Bloomberg think today's unemployment report will show a jobless rate of 9.6% in October. The key figure has been at 9.5% or higher since August 2009, a record time span at such high levels since monthly data began six decades ago. The survey results predicted nonfarm payrolls increasing by 60,000 in October. Analysts say the economy needs a monthly net gain of at least 125,000 jobs to begin reducing the unemployment rate.
- Toyota turns profit despite strong yen. Toyota (TM) said today that it achieved a net profit of ¥289B ($3.58B) in the first half of its fiscal year through September, and improved its full-year outlook even though it expects the already strong yen to strengthen further. It previously assumed the dollar would average 90 yen for the year, but lowered that to 85. Even so, it raised its full-year net profit forecast to ¥350B from ¥340B. Toyota's strong report assuaged concerns that its massive safety recalls would create ugly earnings. Overnight in Japan, Toyota shares gained more than 2%.
- Starbucks brews 86% profit. Starbucks (SBUX) reported that its profit for the quarter ended Oct. 3 increased 86%. It posted a profit of $278.9M, or 37 cents a share, up from $150M, or 20 cents a share, a year earlier. Its net revenue jumped 17% to $2.84B and same-store sales grew 8%, marking the fourth quarter in a row of improving revenue. The company raised its full-year profit forecast, and founder and CEO Howard Schultz said in the conference call that its "future has never looked brighter." Thus emboldened, the company is considering ending its 12-year-old arrangement with Kraft Foods (KFT) to distribute packaged Starbucks coffee. In AH trading, SBUX +2.5%. Premarket: KFT -2.1% (7:00 ET).
Earnings: Friday Before Open
- Coventry Health Care (CVH): Q3 EPS of $1.25 beats by $0.58. Revenue of $2.8B (-17.7%) vs. $2.9B. (PR)
- DISH Network (DISH): Q3 EPS of $0.55 beats by $0.13. Revenue of $3.2B (+11.1%) in-line. (PR)
- Fortress Investment Group LLC (FIG): Q3 EPS of -$0.62 may not be comparable with consensus of $0.11. Revenue of $162.2M (+12.9%) vs. $144.7M. (PR)
- ReneSola (SOL): Q3 EPS of $0.70 beats by $0.18. Revenue of $359M (+154.6%) vs. $319M. Shares +1.1% premarket. (PR)
Earnings: Thursday After Close
- Activision (ATVI): Q3 EPS of $0.12 beats by $0.03. Revenue of $857M (+18.2%) vs. $750M. Shares +0.2% AH. (PR, earnings call transcript)
- Alkermes (ALKS): FQ2 EPS of -$0.01 beats by $0.14. Revenue of $49.2M (+2.1%) vs. $43.3M. Shares +0.2% AH. (PR)
- Amkor Technology (AMKR): Q3 EPS of $0.30 misses by $0.08. Revenue of $794M (+28.9%) vs. $803M. Shares -8.7% AH. (PR, earnings call transcript)
- Amylin Pharmaceuticals (AMLN): Q3 EPS of -$0.35 in-line. Revenue of $156M (-19.5%) vs. $158M. (PR)
- Assured Guaranty (AGO): Q3 EPS of $1.19 may not be comparable with consensus of $0.88. Shares -4.5% AH. (PR)
- Atmel (ATML): Q3 EPS of $0.18 beats by $0.06. Revenue of $444M (+39.8%) vs. $428M. Shares +5.4% AH. (PR, earnings call transcript)
- CBS (CBS): Q3 EPS of $0.46 beats by $0.15. Revenue of $3.3B (-1.6%) vs. $3.4B. Shares +0.7% AH. (PR, earnings call transcript)
- CF Industries (CF): Q3 EPS of $1.10 misses by $0.33. Revenue of $917M (+113.2%) vs. $984M. Shares -3.9% AH. (PR)
- Clearwire (CLWR): Q3 EPS of $0.58 beats by $1.19. Revenue of $147M (+113.7%) vs. $158M. Shares -5.8% AH. (PR)
- Coherent (COHR): FQ4 EPS of $0.69 beats by $0.05. Revenue of $166M (+54.6%) vs. $168M. (PR)
- Crocs (CROX): Q3 EPS of $0.28 beats by $0.04. Revenue of $216M (+30.1%) vs. $206M. Shares -6.4% AH. (PR)
- DaVita (DVA): Q3 EPS of $1.15 beats by $0.02. Revenue of $1.7B (+5%) vs. $1.6B. (PR)
- Fluor (FLR): Q3 EPS of $0.02 may not be comparable with consensus of -$0.26. Revenue of $5.5B (+1.9%) vs. $5.2B. Shares +2.4% AH. (PR)
- Kraft (KFT): Q3 EPS of $0.47 beats by $0.01. Revenue of $11.9B (+26.2%) vs. $12B. Shares -0.6% AH. (PR, earnings call transcript)
- JDS Uniphase (JDSU): FQ1 EPS of $0.20 beats by $0.04. Revenue of $411M (+37.7%) vs. $418M. Shares -3.1% AH. (PR, earnings call transcript)
- Live Nation (LYV): Q3 EPS of $0.30 misses by $0.06. Revenue of $1.8B (+2.3%) vs. $1.9B. (PR)
- Microchip Technology (MCHP): FQ2 EPS of $0.63 beats by $0.05. Revenue of $382M (+68.6%) vs. $342M. (PR, earnings call transcript)
- PerkinElmer (PKI): Q3 EPS of $0.31 beats by $0.02. Revenue of $419M (+11.2%) vs. $402M. Shares -0.4% AH. (PR, earnings call transcript)
- Public Storage (PSA): Q3 EPS of $1.69 beats by $0.35. Revenue of $365M (+1.2%) vs. $382M. (PR)
- Republic Services (RSG): Q3 EPS of $0.45 misses by $0.01. Revenue of $2.1B (-0.6%) in-line. Shares -3.1% AH. (PR, earnings call transcript)
- SandRidge Energy (SD): Q3 EPS of -$0.06 misses by $0.09. Revenue of $245M (+82%) vs. $271M. Shares -10.4% AH. (PR)
- Skyworks Solutions (SWKS): FQ4 EPS of $0.43 beats by $0.03. Revenue of $313M (+37.3%) vs. $310M. Shares -2.1% AH. (PR, earnings call transcript)
- Sotheby's (BID): Q3 EPS of -$0.29 beats by $0.13. Revenue of $73M (+62.6%) vs. $61M. Shares +0.6% AH. (PR)
- Starbucks (SBUX): FQ4 EPS of $0.37 beats by $0.05. Revenue of $2.8B (+17.2%) in-line. Shares +2.5% AH. (PR, earnings call transcript)
- Tenaris (TS): Q3 EPS of $0.52 beats by $0.04. Revenue of $2B (+2.3%) in-line. Shares -0.3% AH. (PR)
- Tesoro (TSO): Q3 EPS of $0.51 beats by $0.04. Revenue of $5.3B (+12.2%) vs. $4.7B. Shares +0.2% AH. (PR)
- In Asia, Japan +2.9% to 9626. Hong Kong +1.4% to 24877. China +1.4% to 3130. India closed.
- In Europe, at midday, London -0.2%. Paris -0.6%. Frankfurt flat.
- Futures at 7:00: Dow -0.3%. S&P -0.45%. Nasdaq -0.3%. Crude +0.1% to $86.60. Gold +0.1% to $1384.60.
Friday's Economic Calendar
- 8:15 Atlanta Fed Conference: The History and Future of the Federal Reserve
8:30 KC Fed's Hoenig: Factors Impacting the Economy
8:30 Nonfarm payrolls
12:30 PM Pending Home Sales
2:00 PM Bernanke speaks at Jacksonville University
3:00 PM Consumer Credit
- Notable earnings before Friday's open: AIG, AMT, CVH, DISH, FIG, IAG, PXP, SOL, VTR
Seeking Alpha's Market Currents team contributed to this post.
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