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Tuesday, January 24, 2012

Greek bondholders take a stand

The chase by Marty Cej:

European stocks are slumping and U.S. stock index futures are pointing to early declines as European finance ministers did their best to cajole Greek bondholders into taking an even bigger loss on their investments. Bondholders are saying enough is enough; they have shown their willingness to take billions of dollars in losses in the short term to help provide Greece with both the time and cheap money needed to help repair the country's long-term structural problems. Finance ministers have countered with "aw, c'mon guys.

What's a hundred basis points between friends?" The stalemate is threatening to spill over into the European Summit on January 30. A solution is probable though not a sure thing, which has the market fretting, again, that the impasse in Athens could mean less enthusiasm for short-term debt sales in Spain, Italy and Portugal and higher rates for everyone. And that could mean an end to the rallies in global stocks since the start of the year.

Canadian National Railway said late yesterday that it has suspended former CEO Hunter Harrison's pension payments -- a package valued at about $40 million -- because he has violated provisions in his retirement deal and now poses a serious threat to the future of CN if he takes the top job at Canadian Pacific, a job that is neither open nor offered. Pershing Square Capital, CP's biggest shareholder and pain in the pass (Rogers Pass, that is), says it still wants Harrison as CEO of CP and promises to protect him from any lawsuits and cover any financial shortfall from his CNR pension. It's nice to be wanted.

CN reported its highest quarterly revenue ever a few minutes ago and raised its dividend by 15 percent. The report provides a compelling hook for our coverage today as we continue to advance the story. Among our guests this morning is railroad expert Tony Hatch of ABH Consulting. Hatch will examine Pershing Square's ambitious plan to slash CP's operating margins and tell us whether Hunter Harrison, or anyone for that matter, can get it done. Hatch joins us at 10:35 a.m. ET.

Research In Motion shareholders greeted the appointment of CEO Thorstein Heins yesterday with the question "where's our Hunter Harrison?" The stock tumbled 9 percent yesterday and is extending its slide today after Heins insisted on BNN and elsewhere that he will mostly follow the path laid out by Jim Balsillie and Mike Lazaridis. Yale University management guru Jeffrey Sonnenfield will explain to us what's wrong with this picture at 11:15 a.m. ET.

The U.S. Federal Reserve's policy-setting Open Market Committee kicks off a two-day meeting this morning that will result tomorrow in the first ever release of the members' forecasts for the benchmark interest rate. There is still much debate as to whether this new level of transparency will help or hinder the Fed's policy. Some say the forecasts will be perceived by the market as a promise of sorts, painting the Fed into a corner and sapping the central bank of flexibility.

The other side argues that the market is sophisticated enough to know that a forecast is nothing more than an estimate and therefore constantly subject to change as new facts emerge. Tomorrow's announcement and subsequent news conference will be historic. We need to set the table today.

Stock pickers should sharpen their pencils this afternoon. Howard Green sits down at 1:00 p.m. ET for a small-cap roundtable with Brian Pow of Acumen Capital, Peter Hodson, former Chairman of Sprott Asset Management and founder of 5i Research and Alex Lane of Dynamic Funds. They will look across sectors and across the country for their top picks for 2012.

Earnings! Companies that could be on the move today with their earnings reports include McDonald's, Verizon, Travelers, Yahoo, Baker Hughes, Johnson & Johnson, Harley-Davidson, DuPont, Coach, Norfolk Southern and Kimberly-Clark. Oh, and that tech company… Apple! That's the one, Apple.