Mon 1.30.12

First on the macro front, Portuguese credit-default swaps rose to a record 39.5%, signaling a 71% chance of default over the next five years, as investors continue to remain concerned about debt talks and the upcoming E.U. summit. Investors are focusing on Greek bond talks, which could offer the best idea of what haircut debt holders are willing to take. Also with respect to Greece, Germany has proposed that Greece hand control over its finances to a Eurozone budget commissioner before the newest terms of its bailout are agreed upon. As one can imagine, Greece is not happy about this new wrinkle, at all.


Lastly, to update my note from last week on S&P earnings and the number that are missing Consensus. See below from a table that Credit Suisse prepared. As I noted in a previous note, 70% of companies had beaten expectations in 1Q11, 2Q11, and 3Q11 results, and 62% of the long-term historical average. So, although earnings are trending toward the historical average, this is still way down from the last 3 quarters of results.  The S&P 500 was up 1.9% last week, with Information Technology sector leading the way, up 8.5% (almost entirely due to Apple's earnings), while Telecom Services were the lowest performing sector (primarily due to AT&T's loss as a result of its break-up fee it paid for the T-Mobile deal that was denied by the DOJ).