Morning Report: June 1, 2011

Ahead of the Bell: Dow futures are trading down 14 points and S&P futures are trading down 2 points.  Traders will focus on the Eurozone as reports indicate the EU is expected to put together a draft bail-out plan for Greece.  The aid package may include incentives for bondholders to roll over maturing debt without triggering a credit-rating downgrade.  However, investors are concerned about whether the IMF will agree to a second relief package.           

  • On the economic calendar today, the ISM Index will be out after the opening and is expected to slip to 57.6 from April's reading of 60.4.  Construction spending will also be out and is expected to decrease 0.5%.  Auto manufacturers will release their May sales figures after the opening.  Federal Reserve Governor Daniel Tarullo will speak on U.S. and international financial regulatory reform to the Peterson Institute in Washington.  Companies reporting earnings include Dollar General and Vimpel-Communications.  The dollar is down against the major currencies.
  • Yesterday, the equity markets were up on optimism a bail-out package for Greece could be coming soon.  Energy companies led the rally.  All three major averages were up better than 1% each, despite an unexpected drop in consumer confidence.
  • On CNBC today, Roger Altman, Founder & Chairman of Evercore Partners, talked about a possible U.S. default.  Altman said people are beginning to become concerned with the debt ceiling vote, some are worried we might fumble the ball at the last moment as the fight over the debt limit will be bloody.  Altman said there will be market disruptions as the debt ceiling vote gets closer to the deadline, with institutions around the world possibly cutting back on investing. However, the U.S. has never defaulted on its debt and Altman believes the current focus on the debt ceiling vote will be good news in the long term, prompting a serious deficit reduction. 
  • Also, on CNBC today David Greenlaw, Managing Director & Chief U.S. Fixed Income Economist, talked about the debt ceiling vote.  Greenlaw also said he expects increased volatility as we get closer to the vote deadline, but that most people feel we will be able to get thru the debt ceiling vote. 
  • Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 128.21 pts/+1.03%/12,569.79

S&P up 14.10 pts/+1.06%/1,345.20

Nasdaq up 38.44 pts/+1.37%/2,835.30

Wednesday’s Futures

Dow Futures down 14 pts/-0.10%

S&P Futures down 2.00 pts/-0.10%

Nasdaq Fut down 2.75 pts/-0.12%

Overseas Markets

FTSE -0.22%

CAC 40 -0.13%

NIKKEI 225 +0.27%

HANG SENG -0.24%

Overseas:  World stock markets were down today.  European markets are down on lower Eurozone growth.  Asian markets were mixed after a report showed China’s manufacturing sector expanded at the slowest pace in months.

Economic Reports:  Motor Vehicle Sales expected to be 9.7M, ISM Mfg Index expected to be 57.5 & Construction Spending expected to be 0.1% @10:00 a.m.

Top Headlines:   

  • President Barack Obama has nominated John Bryson former chairman of Edison International to be his next commerce secretary.  Bryson is currently a senior adviser with KKR.
  • The House of Representatives rejected a debt limit increase of $2.4 trillion. The symbolic vote was lopsided, with just 97 in favor of the measure and 318 against.
  • Sealed Air Corporation (SEE) announced it is acquiring privately-owned Diversey Holdings, Inc. a solutions provider to the global cleaning and sanitization market for $4.3 billion.
  • Sprint Nextel Corp. (S ) said it formally asked the Federal Communications Commission to block AT&T Inc.'s proposed acquisition of T-Mobile USA.
  • Bloomberg reports Coca-Cola Co. (KO) is in talks with Chinese government to list its shares in Shanghai to accelerate its expansion in Asia.     
  • MBA reports mortgage applications were down 4% versus up 1.1% last week.


Gold:down $3.57 to $1,532.85

Oil:down $0.10 to $102.55

EUR/USD 1.4390 -0.0006

USD/JPY 81.2950  -0.2100

GBP/USD 1.6426 -0.0023

Volatility Index (VIX): As of the close of business Tuesday, May 31, the VIX is down 0.53 pts to 15.45

Companies Reporting Quarterly Earnings:     

Vimpel-Communications (VIP): Q1 EPS of $0.46 beats by $0.13. Revenue of $2.74B (+22.9% Y/Y) misses by $0.02B.

Dollar General (DG): Q1 EPS of $0.48 misses by $0.02. Revenue of $3.45B (+11% Y/Y) beats by $0.03B. Reaffirms FY'12 EPS guidance of $2.20-2.30.

Today’s Opening and Closing Bells:

Listing of 5 FactorShares ETFs on NYSE Arca Stuart Rosenthal, CEO will ring the opening bell. See our post.

Institutional Investor Highlights 32nd Annual Corporate Financial Executive Summit with NYSE will ring the closing bell.