Global Indexes Falter as Greek Turmoil Deepens, Fannie Reports Profit

Arthi Gupta
09 May, 2012
New York City

U.S. and global indexes edged lower as Greek leaders struggle to form a new government. Political chaos in Greece raised concerns that the nation may cancel its bailout terms and may head for another election in the next six weeks. Toyota net and sales rose in the fourth quarter.

[R]9:35 AM New York – U.S. and global indexes edged lower as Greek leaders struggle to form a new government. Political chaos in Greece raised concerns that the nation may cancel its bailout terms and may head for another election in the next six weeks. Toyota net and sales rose in the fourth quarter.[/R]

U.S. and global indexes edged lower as the efforts to form a new government in Greece flounder and the prospect of another election as early as June loom large.

Investors are increasingly factoring the possibility of Greece exiting the euro zone, once unthinkable only weeks ago.

Euro zone leaders are expected to meet in the next two weeks to discuss the future bailouts for Greece and the possible losses stemming from the Greek default.

Alexis Tsipras, leader of Greece''s left-wing Syriza party has been given the mandate by President Karolos Papoulias to form a government within the next three days. However, Tsipras refused to enter in a coalition with parties that supported the bailout and declared the loan agreement “null.”

In addition, Spain is expected to demand banks to set aside another €35 billion against loans to the ailing building sector raising the possibility that more public cash will be needed to rescue the country''s lenders. The news was first cited by Reuters and did not quote any sources.

Germany raised €4.032 billion from the sale of its new 0.50% five-year Federal Notes or Bobls against the auction target of €5 billion, Bundesbank said.

The yield on the debt declined to 0.56% from 0.80% paid for securities of similar maturity on April 4. The bid-to-cover ratio dropped to 1.4 from 1.8 at the last auction in April.

Earnings Review

AOL, Inc. ((AOL)), the struggling internet portal reported first quarter total revenue dropped 4% to $529.4 million compared to $551.4 million last year. Net income in the quarter surged 349% to $21.1 million or 22 cents diluted share compared to net income of $4.7 million or 4 cents per share in the prior-year quarter.

Dollar Thrifty Automotive Group Inc. ((DTG)) the vehicle rental and leasing company reported first quarter total revenues rose 2.3% to $356.27 million from $348.35 million in the prior-year quarter. Net income in the quarter soared 145% to $40.4 million or $1.35 per diluted share compared to net income of $16.5 million or 53 cents per share for the first quarter of 2011.

Fannie Mae ((FNMA.OB)), the government-sponsored enterprise reported first quarter net income of $2.7 billion compared to a net loss of $6.5 billion in the first quarter of 2011, due primarily to lower credit-related expenses. Net interest income in the quarter grew 4.8% to $5.2 billion from $4.96 billion in the prior-year quarter.

Macy''s, Inc. ((M)), the department store holding company reported first quarter net sales gained 4.3% to $6.14 billion from $5.89 billion in the same period in the same period last year. On a same-store basis, first quarter sales were up 4.4% in 2012 over 2011.

Net income in the quarter advanced 38% to $181 million or 43 cents per diluted share compared to net income of $131 million or 30 cents per share last year.

Toyota Motor Corporation ((TM)), the Japanese automotive company reported fourth quarter net revenues climbed 23% to 5.70 trillion yen from 4.64 trillion yen a year ago. Consolidated vehicle sales for the quarter grew to 2.36 million vehicles from 1.79 million vehicles. Net income in the quarter surged 376% to 121 billion yen from 25.4 billion yen last year.

For fiscal year 2012, net revenues fell 2.2% to 18.58 trillion yen, even as vehicle sales edged up 0.6% to 7.35 million units. Net income for the year plunged 30.5% to 283.56 billion yen or 90.20 yen per share.

Toyota also guided higher operating earnings in the current financial year, after the market close in Tokyo.