What’s the Story?

by CC April 4, 2012 9:15 am • Commentary


The European Central Bank left its main interest rate unchanged Wednesday, as expected, amid signs that the euro zone economy is sputtering and that credit remains tight.

At its monthly monetary policy meeting in Frankfurt, the E.C.B. governing council left its benchmark rate at 1 percent, equal to the record low.

Recent economic data showing that the euro-zone economy is struggling probably outweighed concerns by some policymakers about the risk of inflation caused by E.C.B. anti-crisis measures and rising energy prices.


Companies in the U.S. expanded payrolls in March, showing the labor market is strengthening, according to data from a private report based on payrolls.

Employment increased by 209,000 for the month after a revised 230,000 gain in February, figures from ADP Employer Services showed today. The median estimate in the Bloomberg News survey called for a 206,000 increase.


Spain sold 2.59 billion euros ($3.4 billion) of bonds at an auction today, the Bank of Spain said. That was less than the maximum target of 3.5 billion euros. It auctioned 973 million euros of five-year notes at an average yield of 4.32 percent. Investors bid for 2.46 times the amount of debt allotted. That compared with a bid-to-cover ratio of 2.59 at the previous auction of the securities on March 1.


A report at 10 a.m. New York time will show that service industries in the U.S. expanded at a slower pace in March, economists said. The Institute for Supply Management’s non- manufacturing index fell to 56.8 from 57.3 in February, according to the median estimate in a Bloomberg News survey of 68 economists. Readings greater than 50 signal growth.


Monsanto – The company reported quarterly profit of $2.28 per share, excluding certain items, 16 cents above consensus, and also raised its guidance for the fiscal year. Monsanto credits strong U.S. results as well as growth in its Latin American business for the quarter’s performance.

Walgreen  – Sales at stores open at least a year fell 6.8 percent in March, a wider loss than the 4.8 percent estimate of analysts surveyed by StreetAccount. The drop was led by an 11.1 percent fall in pharmacy sales, as Walgreen exited the Express Scripts pharmacy network.


American International Group  – Bernstein has upgraded the insurance company’s stock to “outperform” from “market perform,” while increasing the price target to $45 from $29. Bernstein sees asset sales and the government’s eventual exit as a shareholder.

International Business Machines – Bank of America/Merrill Lynch has downgraded the stock to “neutral” from “buy,” saying the company’s consistent business model and strong market position are already reflected in a premium valuation.

Yahoo!  – The company is expected to announce layoffs affecting 2,000 employees across most departments, with more cuts reportedly to come.

General Electric – Moody’s has downgraded its rating for both GE and its GE Capital subsidiary. Moody’s cites risks associated with GE Capital for both moves. GE counters by saying its liquidity and capital position have never been stronger.

Biogen Idec  – Goldman has upgraded the stock to “buy” from “neutral,” saying the risk/reward ratio is still attractive despite recent outperformance.

Hovnanian  – The homebuilder has announced a secondary offering of 25 million common shares.

SanDisk  – The chipmaker says weak demand from mobile phone makers, as well as lower prices from a glut of memory chips, are hurting both its margins and revenues.

U.S. Airways  – The airline is stepping up overtures for bankrupt American Airlines parent AMR, reportedly telling creditors that a combination of the two could result in annual savings of more than $1.5 billion.

IlluminaRoche is increasing its efforts to convince the gene sequencing company to accept its sweetened $6.7 billion takeover bid. It says the offer represents concrete value in a high-risk market.

Tim Horton  – Goldman Sachs has downgraded the chain’s stock to “neutral” from “buy,” saying that while it’s still positive on the stock, it sees better opportunities elsewhere in the restaurant category.

Starbucks  – Goldman has upgraded the coffee chain’s shares to “conviction buy” from “neutral,” saying Starbucks is poised to enter a renewed growth phase with its new offerings.

DDi Corp.  – The engineering services company has agreed to a $13 a share share takeover offer from printed circuit board maker Viasystems . The deal is worth $268 million and represents a 6 percent premium over Tuesday’s close for DDi.

Dick’s Sporting Goods  – The sporting goods retailer has been added to the “Top Picks Live” list at Citi, which cited expectations for upbeat same-store sales.