Stocks powered on after well-received earnings, including Goldman’s. The S&P 500 rose 1.03 per cent to close at 1,454.92. (Reuters)
Vikram Pandit made a sudden exit from Citi. Michael Corbat, a 29-year veteran of Citi institutions, replaces him. “This was my decision,” Mr Pandit said of his resignation (Financial Times, Reuters). But others cited a clash with Citi’s board over setbacks, including shareholder rejection of Pandit’s pay package, the bank’s performance in Fed stress tests and Morgan Stanley’s windfall from Citi’s sale of Smith Barney. Pandit’s departure also follows the promotion of Michael O’Neill to Citi chairman. (Financial Times, Bloomberg, WSJ). John Havens, Citi’s president and chief operating officer, is also leaving the bank. O’Neill told a hastily-convened analyst conference call that there were “no other shoes to drop” after Pandit’s resignation.
Intel earnings came with another sombre outlook. The chipmaker said that it saw gross margins of between 57 and 58 per cent in fourth-quarter revenue, reporting revenues this quarter of $13.5bn, a 14 per cent drop (Intel, Reuters). It sees $13.6bn plus or minus $500m next quarter, amid headwinds in global PC demand (WSJ).
IBM posted $24.7bn in third-quarter revenue, below forecasts of $25.3bn. Earnings per share were $3.62 excluding items, one cent above expectations (Reuters). The stronger dollar hurt revenues by some $1bn, with revenues down 9 per cent in Europe, the Middle East and Africa.
Moody’s confirmed Spain’s credit rating at Baa3, relieving fears of an imminent downgrade to junk status. It assigned a negative outlook. The move included “Moody’s assessment that the risk of the Spanish sovereign losing market access has been materially reduced by the willingness of the European Central Bank (ECB) to undertake outright purchases of Spanish government bonds to contain their price volatility,” according to the rating agency (Moody’s). But Moody’s warned that if it became clear that Spain “had either lost, or was very likely to lose, access to private markets, then Moody’s would most likely implement a downgrade, potentially of multiple notches. ”
Housing-themed data on Wednesday: Housing starts (consensus 765m, permits 810m) and also the MBA purchase applications index.
FURTHER FURTHER READING
- Bank CEO thought du jour: “None of us really likes honesty. We prefer deception”
- Magic, deficits, and future generations.
- Paul Krugman’s introduction to Asimov’s Foundation Trilogy. (PDF)
- Enjoying the rich, bountiful legacy of the Bush deficits. Maybe.
- Citi: the Pandit exit gets Whitneyed.