U.S. stock futures , as well as European markets , turned lower as the German Finance Ministry said it saw no need to give the European Stability Mechanism (ESM) a banking license. Not a huge surprise, since that would be a big move. That means that the European Central Bank has three options for short-term action:
1) Purchase bonds in the primary market through the ESM/European Financial Stability Facility, and in the secondary market through the Securities Market Program.
2) Reducing interest rates into negative territory.
3) A third long-term refinancing operation (LTRO) , perhaps, as Steve Liesman has suggested, a longer-term LTRO of five years or more, instead of the three-year LTRO that has already been used. It could also lower collateral requirements.
1) The outlook is getting tougher. Earnings and revenue continue to decelerate. Of nine companies I follow that reported after the bell yesterday or this morning, five beat on earnings, but seven were below revenue estimates. That's been the trend this quarter.
Third-quarter earnings estimates are now NEGATIVE, and fourth-quarter estimates are about 11 percent — well below the 16 percent gain expected at the start of the month.Page 1 of 3 | Next Page