Today's Financial Markets News - Jan-14-09

By The Greek - Economy & Markets:

Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

We've compiled, sorted and analyzed the day's market-moving news for you. Today's financial news highlights: dire December retail sales; diving import & export prices; shrinking business inventories; Deutsche Bank (NYSE: DB) sees loss; HSBC (NYSE: HBC) needs capital; Citigroup (NYSE: C) merges brokerage unit with Morgan Stanley unit (NYSE: MS); Tiffany (NYSE: TIF) notes tough holidays; Nortel (NYSE: NT) files for bankruptcy; S&P threatens downgrades for much of Europe including Greece; China passes Germany in GDP; missiles flying from Lebanon and Clinton scrutinized. The broader markets are lower through midday thanks to overwhelmingly negative news flow.

(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

Overseas Markets
(Prices as of hour of publishing, which may not be the close)

Asia:

1. MSCI Asia APEX 50: +0.48%


2. Japan NIKKEI 225: +0.29%


3. Hong Kong Hang Seng: +.027%


4. China CSI 300: +4.21%


5. India BSE SENSEX 30: +3.30%

Europe:

1. DJ Euro STOXX 50: -5.21%


2. UK FTSE 100: -5.94%


3. France CAC 40: -5.12%


4. Germany DAX: -5.02%

Shares turned down globally, as the start higher in Asia was canceled in Europe on several possible factors. Sovereign credit downgrade threats against several European nations certainly did not help. Several large foreign based financial institutions reported tough news, namely Deutsche Bank (NYSE: DB), Barclays (NYSE: BCS) and HSBC Holdings (NYSE: HBC). Besides this, the Chinese economy surpassed Europe's Germany to become the third largest globally. U.S. data in the pre-market played a role as well, maybe the key role, as retail sales were reported worse than forecast.

Economic Data & Analysis

Retail Sales - December

December's retail sales news was reported this morning, and the report offered dire data. We would have expected the market to be well-prepared after last week's holiday sales report from the International Council of Shopping Centers (ICSC) and individual retailers' chain store sales reports. However, the degree weakness was worse than the expert forecast and sent stocks lower. Retail sales were reported down 2.7% month-to-month, versus economists' consensus expectation for a 1.2% drop. Excluding autos, sales fell 3.1%, versus expectations for a 1.3% decline. Comparing to December of 2007, sales fell 9.8%. Still, last week's report from the ICSC, where it noted December sales were the worst in 40 years, down 1.7%, had already inflicted adequate pain (or so we thought). The market was apparently not adequately beaten last week though, as the broader indexes moved lower through midday.

Import & Export Prices

December's Import & Export Prices Report noted steep declines for both; however, the steady dive of energy prices led the segment to maintain its role as the key driver. Import prices sank by 4.2%, versus steeper expectations for a 5.3% dive. Prices have fallen for five months in a row and are down 21.7% overall since July! Petroleum was the obvious driver for the fifth month in a row, down 21.4% in December. Commodity and raw materials price drops also continued, and capital goods prices declined modestly while food prices rose on net. Export prices fell as well, moving 2.3% lower, as "everything must go" is the new sales mantra!

Business Inventories

November Business Inventories shrunk 0.7%, versus expectations for a 0.5% drop, and coming off of a 0.6% fall in October. Businesses have been keen to move inventory, versus the risk of ending up moving it at liquidation pricing in bankruptcy proceedings. While inventories declined, sales fell at a much greater rate, down 5.1% from October. Because these figures are not adjusted for price changes, clearly price discounting played a significant role. Thus, the inventory-to-sales ratio jumped to 1.41, as compared to 1.24 just a year ago.

Corporate News Drivers

Citigroup
Last evening, Citigroup (NYSE: C) clarified its business with Morgan Stanley (NYSE: MS), as the two answered rumors by closing a deal to merge business units. Citigroup is effectively selling 51% of its Smith Barney retail brokerage unit, with expectation to unload the remainder of its stake in five years time. The deal generates immediate cash and operating cost savings, helping Citi manage the short-term and restructure itself for the long-term.

Deutsche Bank
Deutsche Bank (NYSE: DB) reported expectations for a fourth quarter loss of 4.8 billion euro. Is anyone surprised? Apparently a great many of you were, as the stock is down about 9% today as of the hour of publishing.

HSBC Holdings
A Morgan Stanley analyst's note indicates expectations that HSBC will need to raise $30 billion, likely through the halving of its dividend and other capital raising efforts. HSBC promptly dived, and is about 7.4% lower at the hour of publishing here.

Tiffany
Tiffany (NYSE: TIF) reported holiday period sales data nearly a full week after its peers. The results were no different though, as TIF noted a 24% same-store sales decline through the holidays. Overall sales fell by 21%, leading the luxury jewelry retailer to slash its profit forecast. Tiffany is only down fractionally today, which may confuse you. Since its high-end peers reported horrible news last week, bets mounted all week long against Tiffany's stock. This is a pure case of buy (or sell in this case) the rumor and sell (buy) the news. Don't cry for Tiffany's though, as the company still expects to earn $2.25 to $2.30 a share before charges this fiscal year.

Nortel Networks
Nortel (NYSE: NT) filed for bankruptcy protection today, so the continent's largest telecom equipment maker bites the dust. Here's yet another victim of the financial crisis of our time.

Earnings Report Schedule
The day's earnings include CLARCOR (NYSE: CLC), Courier Corp. (Nasdaq: CRRC), HDFC Bank (NYSE: HDB), LeCroy Corp. (Nasdaq: LCRY), Mercantile Bank (Nasdaq: MBWM), Volt Information Sciences (NYSE: VOL) and Xilinx (Nasdaq: XLNX).

Commodities, Currency, Fixed Income and Other

S&P Downgrades Europe
After warning four European nations of potential downgrade over the past week, S&P followed through by cutting the sovereign debt rating of Greece by one notch to A-. Spain, Ireland and Portugal have also been warned, not to mention Russia. Polls show that public pressure is only mounting on Greece's sitting government, and this latest hit took the Athex Composite Share Pr Index down 5.47% today.

Oil Inventories
The weekly EIA Petroleum Status Report noted an oil inventory build of 1.2 million barrels. The increase in inventory turned the price of the commodity around. Oil started the morning rising, as cold weather bears down on the nation. However, a somewhat surprising build, as OPEC cuts are only just taking hold, turned the price trend around. We should move lower until traders note the day's bitter cold once a few guys return from cigarette breaks. Really, it can be nearly that simple when you're studying the price on a minute-by-minute basis. It's the longer term bets that require more significant analysis. T. Boone Pickens, who may have been talking his book today since he's deep in wind power bets, predicts the price of crude could return to over $140 a barrel when the economy turns.

Geopolitical & Global Matters

Conflict Unites Gazan Factions and Hezbollah
Al Jazeera reported recently that weaker factions are joining Hamas against Israel. What was much more notable today were rockets firing on Israel that originated in Lebanon. Talk about coalition seems to be the Middle Eastern them today, as al-Qaeda Chief Osama Bin Laden also called on all Muslims to unite against Israel because of its battering of Gaza.


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