Morning Report: August 16, 2011

David Cameron, Prime Minister, Herman Van Romp...

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Ahead of the Bell: Dow futures are trading down 98 points and S&P futures are trading down 15.00 points ahead of the meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy, and after a disappointing report showing that growth in Germany has slowed to a seasonally adjusted 0.1% in the second quarter. Investors will also be looking to earnings from retailers today, including Dick’s Sporting Goods, Home Depot, Saks, TJX Cos., and Wal-Mart.

  • Investors will be looking ahead to the outcome of today’s meeting, and press conference at 1:30 pm EST, between the German and French leaders, which has been given added focus because of the markets’ reaction to the slowdown in German growth reported today. On the economic calendar, housing starts, import and export prices are expected at 8:30 am.  Housing starts are expected to be up 600k and import prices are expected to be down 0.1%. The dollar is down against the Japanese yen and British Pound and up against the Euro. Crude oil is currently trading at about $87 a barrel.  Gold is currently trading at $1,778.
  • Also concerning international investors today was the report on Britain’s consumer price index, which rose to 4.4% in July, up 0.2% from June’s reading, and slightly higher than the 4.3% that economists had been forecasting.
  • President Obama’s bus tour continues today, and the President is expected to announce plans to increase hiring in rural areas in his appearance today. 
  • On CNBC this morning, Bob Doll, the Chief Equity Strategist at Blackrock Inc., said he thinks that there is a 30% possibility of a double dip, a much lower risk than markets are suggesting. Doll says he does not anticipate a double dip despite concerns about both the debt situation and growth in Europe because many of the factors that hampered the economy in the first quarter, like weather, high oil prices, and the earthquake in Japan, are seasonal or one-time events. The most important issue moving forward is growth, both in terms of the US and the global economy which is dependent on finding “band-aids” to patch up the debt crisis.

Monday’s Close

DJIA up 213.88 pts/+1.90%/11,482.90

S&P up 25.68 pts/+2.18%/1,204.49

Nasdaq up 47.22 pts/+1.88%/2,555.20

Tuesday’s Futures

Dow Futures down 98 pts/-0.87%

S&P Futures down 15.00 pts/-1.25%

Nasdaq Fut down 26.25 pts/-1.20%

Overseas Markets

FTSE -1.03%

CAC 40 -1.44%

NIKKEI 225 +0.23%

HANG SENG -0.24%

Overseas:  World stock markets were lower today because Germany reported the slowest seasonally adjusted growth since 2009.

Economic Reports:  Housing Starts (expected to be 600k), Import Prices (expected to be -0.1%) and Export Prices at 8:30 am.

Top Headlines:

  • Royal Dutch Shell Plc confirmed its broken pipeline is still leaking oil, less than two barrels a day into the North Sea.  The spill is considered the worst oil spill in the United Kingdom in over a decade.
  • Allstate Corp. sued Goldman Sachs for not disclosing the risks in $123 million of mortgage securities purchased during the 2008 financial crisis.  The suit follows similar suits from Allstate bought against Bank of America, Citi and JP Morgan.
  • Australian Airline Qantas announced it is ordering up to 110 Airbus A320 jets, a deal valued at $9.4 billion, in a move to set up two airlines in Asia. 
  • John Paulson cut his stake in Bank of America from 124 million shares at the end of the first quarter to 60.4 million shares at the end of the second quarter.

Commodities/Currency:

Gold:up $21.70 to $1,779.70

Oil:down $1.21 to $86.93

EUR/USD 1.4363 -0.0080

USD/JPY 76.71 -0.13

GBP/USD 1.63074 +0.0074

Volatility Index (VIX): As of the close of business Monday, August 15, the VIX is down 4.56 to 31.78

Companies Reporting Quarterly Earnings:

Agilent Technologies (A):FQ3 EPS of $0.77 beats by $0.04. Revenue of $1.69B in-line

Home Depot (HD):Q2 EPS of $0.86 beats by $0.04. Revenue of $20.2B beats by $240M

Wal-Mart (WMT):Q2 EPS of $1.09 beats by $0.01. Revenue of $109.37B beats by $0.88B.

Dick's Sporting Goods (DKS):Q2 EPS of $0.52 beats by $0.02. Revenue of $1.31B misses by $10M

Today’s Opening and Closing Bells:

Rare Element Resources Ltd. (NYSE Amex-Listed REE), a mineral resource company focused on exploration and development of rare-earth elements and gold, visits the NYSE to mark the company’s first anniversary of its dual listing on NYSE Amex and the Toronto Stock Exchange (NYSE Amex: REE, TSE: RES).In honor of the occasion, President and CEO Donald Ranta rings The Opening BellSM.

Kodiak Oil & Gas Corp visits the NYSE.In honor of the transfer from NYSE Amex, representatives from the company will ring The Closing BellSM.

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