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The Greeks scrambled to put together a deal to beat the March 20 deadline when they will be faced with a substantial refunding need. But now that they have a deal among themselves and agreed to pretty much all of the pre-conditions for a fresh bailout, the Europeans seem be in no hurry to discuss it with them.
A meeting of the Euro-zone finance ministers is tentatively scheduled for Monday, but there is also talk that the actual deal may get pushed to after the Greek elections in April. Some have started wondering if the Europeans are thinking of pushing the Greeks out of the common currency club. I don’t think that is likely, but the continued delay in closing the deal is adding to market uncertainty.
Greece-related concerns aside, today’s trading action will also reflect Moody’s ratings warning to a number of major banking institutions, including J.P. Morgan ( JPM - Analyst Report ) , Goldman Sachs ( ( GS - Analyst Report ) and Morgan Stanley ( ( MS - Analyst Report ) . Offsetting these headwinds are this morning’s favorable economic readings on Jobless Claims, Housing Starts and wholesale inflation fronts.
Initial Jobless Claims dropped a better than expected 13K last week to 348K. This is the lowest initial Jobless Claims level since March 2008. The four-week average, which smooths out the week-to-week fluctuation, dropped by 1.8K to 365.3K, maintaining its downtrend of recent weeks. This key data series witnessed some sharp volatility in recent weeks, but appears to be back on its downtrend.
We also have a better-than-expected Housing Starts numbers this morning, while Permits were inline with expectations. With respect to Producer Price Index (PPI), the headline number came in better than expected, but the ‘core’ number was a tad on the hotter side.
On the earnings front, General Motors ( ( GM - Analyst Report ) earned record annual profits in 2011, but its fourth quarter results came short of expectations on weakness in Europe and Latin America. CBS ( ( CBS - Analyst Report ) beat on EPS, but came short of revenue expectations after the close on Wednesday. CF Industries ( ( CF - Analyst Report ) missed on EPS, but matched revenue. Online jeweler Blue Nile ( ( NILE - Snapshot Report ) also came short of expectations.
Tension between positive domestic economic readings and continued Greece-centric anxieties will push stocks in opposite directions today. My feeling is that the overall bias will remain to the downside.
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