Holiday over, back to the stress mill. Grinding lower on Monday:
- Dow Jones down 4%
- S&P down 4.5%
- Nasdaq 4.7%
and in London…
- FTSE 100 4.3%
- Great British Krona at $1.4861
Elsewhere
- Dollar/Yen trading under 94
- Brent Spot under $50 a barrel
- Gold down 3%, silver drops 10%
- Yield on 10-year UK gilt touches 3.65% - the lowest in 30 year
- iTraxx Crossover at 937.62, +48.3 on the day
No apparent trigger for all this, apart from a recent note from Citigroup:
GE Capital Webcast Could Be Forum to Lower 2009 Outlook
GECS Webcast Tomorrow — On 11/25 GE announced it will be holding a webcast on 12/2 to review GE Capital. The goal of the webcast is to review strategy, funding, liquidity, risk management and details behind the recently announced $2 billion cost reduction program at GE Capital
Opportunity for GE to Lower 2009 EPS Expectations? — We believe the webcast could also serve as a venue to lower 2009 EPS expectations. Normally the coming year guidance is communicated by CEO Jeff Immelt at the late December meeting which is scheduled for 12/16 this year.
Historical Precedent For Guide Down — In prior years, when street estimates were too high, GE has held late Nov/Early Dec meetings and used them as a forum to lower expectations so the CEO could focus more on strategy, etc at the late Dec meeting. The likelihood of this being the case this year appear reasonably high given the short notice on the webcast and the unprecedented macro and financial upheaval. We cut our ‘09 GE estimates on 11/14 to $1.65 and while numbers have drifted down since, the street is still at $1.75. Further, the risk to our below consensus estimate appears biased to the downside.
Could it be that investors are refocusing on the grim outlook for corporate earnings?
Mind you, this call from Meredith Whitney at Oppenheimer & Co probably failed to help matters.
Related Links:
Full house buy signal turns red - FT Alphaville
