What’s The Story Morning Glory

by CC December 20, 2011 8:52 am • Commentary


Housing starts surged 9.3% in November to a 685,000-unit annualized pace, the Commerce Department said, way above the 630,000 or so economists expected. It’s also the highest pace of starts since April 2010.

Stock futures are continuing to plow higher after the report, without much apparent reaction to this report. Dow futures recently up 92 points, S&P futures up 12 and Nasdaq futures up 21.

The 10-year Treasury yield is up to 1.85%.


A sharp fall in Spanish short-term borrowing costs boosted the euro on Tuesday albeit in thin trade, with fresh signs that the German economy is holding up in the teeth of the euro zone debt storm also supportive.

But sentiment was fragile and investors were still looking to sell into a bounce as efforts by policymakers to address the debt crisis fell short of expectations and European Central Bank chief Mario Draghi dashed hopes of any aggressive support.

The euro was up 0.5 percent at $1.3065, above an 11-month low of $1.2945 hit on trading platform EBS last week. It extended gains to hit a session high of $1.3089 after stops were triggered when Spain issued short term debt at sharply lower costs.

The euro was already cheered after Munich-based Ifo think tank said its business climate index, based on a monthly survey of some 7,000 companies, rose to 107.2 in December from 106.6 in November, confounding expectations of a fall.

The currency was also garnering some support on expectations that banks will borrow a large amount of three-year funds from the ECB later this week and invest some of the money on buying peripheral debt and use them as collateral. Euro zone banks are expected to buy some 250 billion euros, according to a Reuters poll.

Italian 10-year government bond yields were last 17 basis points lower at 6.69 percent, narrowing the spread over Bunds to 477 bps. Equivalent Spanish paper fell 11 bps to 5.14 percent.

Seeking Alpha

Red Hat (RHT) reported Q3 earnings yesterday, narrowly beating on EPS and reporting revenue in-line, but shares fell sharply in after hours trading. The company’s deferred revenue balance reached $819.6M, up 20% Y/Y but less than 1% Q/Q. Red Hat guided for FQ4 revenue of $289M-$292M and EPS of $0.26-$0.27; the latter meshes well with a consensus of $0.26, but the former is below a consensus of $292.5M. Shares, which were down over 10% in the AH session, have recovered slightly and are currently -7.7% premarket