General News

Wolverine Worldwide (WWW) recently reported its fifth consecutive positive earnings surprise on record quarterly revenue. Despite the strong quarter, management reiterated its revenue and EPS guidance for the remainder of the year. Perhaps they were being too conservative though, as analysts have been raising their earnings estimates over the last few days, sending the stock to a Zacks #2 Rank (Buy). Based on consensus estimates, Wolverine is expected to grow EPS by 14% in 2011 and 11% in 2012. On top of this growth, the company pays a dividend that yields 1.2%. Valuation looks attractive too with shares sporting a PEG ratio around 1.0. Company Description Wolverine Worldwide markets branded casual, active lifestyle, work, outdoor sport and uniform footwear and apparel. The company offers well-known brands like Bates®, Chaco®, Cushe(TM), Hush Puppies®, HYTEST®, Merrell®, Sebago® Soft Style® and Wolverine®. Wolverine is also the exclusive footwear licensee of popular brands, including CAT®, Harley-Davidson® and Patagonia®. The company was founded in 1883 and is headquartered in Rockford, Michigan....

The event of the day on Friday was the release of the European bank stress results. The European Banking Authority waited until very late in the day before publishing the results, probably to prevent “unnecessary” aggravation to financial markets, especially since the response is always unknown. In all, 90 banks across the European Union were reviewed for how much money they have in reserves, a cushion needed in case of economic slowdown across the continent. Eight banks in three countries failed the test (5 in Spain, 2 in Greece and 1 in Austria) while sixteen others barely passed. Immediately, some countries challenged the results as inaccurate and overly pessimistic, insisting that they would not force their weaker banks to raise new cash. On the other hand, many economists warned that the tests were insufficient because they did not simulate the main risk hanging over Europe, a default by Greece and precarious position of other PIIGS countries. All said, the test turned out to be...

The Eurozone sovereign debt crisis remains in focus, with Eurozone finance ministers meeting on Sunday to discuss the next steps for Greece. All clear, for the time being. The Greek government had its implementation law approved on Friday with a majority of 155 to 136 in its second voting round. After the double parliamentary vote, the disbursement of the fifth tranche of the original €110bn package will have no obstacles and will be almost certainly deliberated on Sunday July 3rd by the Eurogroup and on Tuesday July 5th by the IMF. Now that the short term liquidity issue has been solved, all efforts will be put on the finalisation of the “private sector involvement” aspect of the new bailout package. With press reports ‘hinting’ at progresses both on Banks’ (and other institutional investors) commitment to maintain exposure to Greece and on that of a possible clearance from rating agencies that the options would not be considered an event of default,...

Wow, so much to talk about today. I’m going to skip quickly over poor Dominique Strauss-Kahn who is now, fairly obviously, the victim of a conspiracy to frame him. What’s the difference now? Strauss-Kahn was "too soft on Greece" and was focused on ending the bond speculation that he felt was crippling that country (and the Socialist Kahn was also warming up to be France’s next President) so he was "removed" from his position and Legarde (a better Bankster ballplayer) stepped in and teamed up with the EU to push the Greek people into debt slavery and, of course, "save" the Banksters from taking any awkward losses writing down Greece’s very obviously bad debt. With Strauss-Kahn out of the way they stole Billions here and Billions there and shuffled some money around and now that Greece is "fixed" (on the evening of the day Greece finally gives up and votes to pass the draconian austerity measures) and evening of the same day...

Economic News On the economic front, leading indicators rose more than expected in May to a record high, according to the Conference Board. Meanwhile, consumer sentiment worsened more than expected in June amid concerns over the outlook for the economy. This while worries about inflation eased modestly, according to the Thomson Reuters/University of Michigan survey. The Week Ahead MONDAY: No major economic news expected TUESDAY: Existing home sales, FOMC meeting begins; Earnings from Walgreens, Barnes & Noble, Adobe WEDNESDAY: Weekly mortgage apps, oil inventories, FOMC meeting announcement; Earnings from FedEx, Bed Bath & Beyond THURSDAY: Weekly jobless claims, new home sales, money supply, Yahoo shareholders meeting; Earnings from ConAgra, Discover Financial, Oracle FRIDAY: Durable goods, GDP, corporate profits

The soft patch is over – the US National Manufacturing ISM index for June rose to 55.3 from 53.5 with gains in the production, new orders, and employment indices. This was a surprise, though slightly less so following yesterday’s strong Chicago PMI. That said, the release does buck the trend of the majority of the regional manufacturing surveys for June, and ought to be treated with a ‘degree of caution’ until we have some more corroborating evidence. But evidence for a 2H11 pick up is slowly gathering momentum, with yesterday’s optimistic outlook from Japan’s Tankan survey adding to the sense that supply disruptions are falling away, and normality is being resumed. The prices paid component of the ISM also fell – echoing an earlier decline in the inflation expectations in the Final June Michigan consumer confidence index. Rising activity and falling inflation expectations is a good mix for equity markets, and will likely see gains there resulting in higher yields on longer-dated...

There are certain things in life that we can be sure about...death..taxes and the fact that the Bank will leave rates unchanged on Thursday!! The Bank of England appears certain to keep interest rates at 0.50% at its July policy meeting as concerns mount regarding growth. Meanwhile, forthcoming data and survey releases are expected to indicate that the economy is struggling to generate decent growth and remains mired in a soft patch. It now looks highly likely that an interest rate hike will be delayed until May 2012. Mounting growth concerns mean that if the Bank does act this year, it is increasingly possible that it will relax monetary policy by reviving QE) which has been ‘on hold’ since February 2010. However, given still-significant inflation risks, we believe that more QE is unlikely to occur unless the economy truly goes ‘belly-up’ over the coming months. Nevertheless, we now expect the Bank of England to refrain from raising interest rates until mid-2012....

Why has the rally in the EUR been so lackluster? Because there are a still 4 3 more hurdles to overcome before we can put the Greek debt crisis behind us. The Greeks have jumped over 2 hoops on their own with one more expected to be cleared once the Greek implementation vote is completed this afternoon. 1. Win no Confidence Vote 2. Get Parliament to Approve Austerity Plan 3. Get Parliament to Approve Implementation Procedure 4. Get EU/IMF to Release Next Tranche of Aid 5. EU/IMF Needs to Come up With a Second Rescue Plan for Greece 6. Rating Agencies need to be convinced that the Rescue Plan does not constitute a default The Greeks have lived up to their end of the bargain by passing the Austerity Package that the EU and IMF demanded and now the ball is in their court. When European Finance Ministers meet on July 3rd, we expect them approve the next bailout tranche, worth EUR12 billion. They will then start to...

Greece has announced its economic plan to privatize 87 billion Euros of state assets, 50 billion of which is being planned for bailing out the country until 2015 by selling off loss-making or entirely non-liquid assets. For example, a non-operating airport not far from Athens is being planned to go up for sale. The Postal Savings Bank will also be offered up for privatization; the bank is the country’s biggest holder of sovereign bonds. Prime Minister Papandreou’s government now faces the task of implementing the entire plan. It seems people who are entirely unconcerned about how to pay back at least a portion of Greece’s debt on time are the same ones that created the plan and chose the assets to be privatized. Greece may become a milkmaid for Europe, much in the same way as Cuba was for the Soviet Union. Final estimates were given last night on the consumer price level in the Euro zone and the actual figures will...

Follow through was seen into today’s European trading session with the euro and other higher yielding currencies receiving a bid. An additional Greek vote on austerity measures will come today though this should be more of pomp and circumstance when compared to yesterday’s drama. Technicals hint at a period of consolidation versus the dollar but with euro strength brings opportunities for traders to enter into the EUR/CHF at better levels. Today’s Economic Data Releases: EUR – CPI Flash Estimate y/y – 09:00 GMT Expectations: 2.8%. Previous: 2.7%. Yesterday and today Trichet spoke of the need for “strong vigilance”, another sign of the ECB’s intention to lift interest rates at its next meeting. Euro zone inflation is expected to remain at higher levels for now which could be supportive of further gains. This may offer traders an opportunity to enter into the EUR/CHF at better levels as the pair comes off of its all-time low. Resistance is found at 1.2150. USD – Unemployment Claims – 12:30...