Afternoon Review

Stress Test Details Unveiled
The market obviously welcomes any details they can get their hands on regarding the government’s plans for the financial system. It is not a surprise that the market took off this afternoon when these details were released. The good people in Washington also provided us with some FAQs. Gosh golly, how did they know we would have questions?

Bernanke’s comments today also seemed to lift sentiment for financials.


AT&T (T) +1.98%
AT&T rallied on a U.S. Supreme Court ruling in the company’s favor, which makes it tougher to sue companies for antitrust violations. Bloomberg reported the justices unanimously rejected a claim that an AT&T subsidiary engaged in a “price squeeze” aimed at driving out competition in the market for digital subscriber line (DSL) service.

Also boosting shares was an analyst upgrade at JPMorgan, citing the growing number of iPhone customers spurring sales growth. The report estimates that iPhone customers will boost AT&T’s the average monthly bill 1.2 percent this year by paying extra for plans that support the phone’s web-surfing features.

Last quarter, AT&T posted subscriber gains that exceeded estimates as consumers scooped up web-capable phones and projected that their decision to subsidize the iPhone (which cut into profit margins) would begin to pay off in the upcoming quarters. This analyst report supports AT&T’s projections.


Positive prospects for PC sales
Reports that Microsoft’s Windows 7 may ship as early as September, sent PC makers Dell and Hewlett-Packard higher on hopes the release may spur sales of PCs amid the global recession.

Intel (INTC) also moved higher, despite reports that global chip sales will decline in 2009, as the company could benefit from higher PC and netbook sales. Unlike Vista, Windows 7 is also designed to run on the increasingly popular netbooks that run on Intel’s lower-priced Atom chips.

There has been a large concern that these cheaper chips would erode profits, but Intel said today at Goldman Sachs Technology and Internet Conference their margins in netbooks are better than cheap notebooks.


Principal Financial Group (PFG) -6.68%
Labor federation Change to Win has made a direct request to Geithner that Principal’s $2 billion TARP application be denied due to its lobbying activities, specifically regarding it’s opposition to Employee Free Choice Act.

Principal later in the day released this statement, denying any stance on the Employee Free Choice Act.



Quick Hits

• Bank Nationalization is Done Deal, Let’s Move On
• Signs of Life
• Obama in Canada Finds World’s Best Financial System
  
  

Peter Lazaroff, Junior Analyst