Morning Report: November 14, 2011

Warren Buffet

Image by secretagent007 via Flickr

Ahead of the Bell: Dow futures are trading down 38 points and S&P futures are trading down 8 points after Japan reported its economy grew 1.5% in the third quarter following a decade long recession and the worst earthquake to hit the country. Greece’s new Prime Minister, George Papandemos is set to meet with EU finance ministers later this week to discuss the countries latest round of rescue package, but he will have to win a confidence vote in his cabinet on Wednesday before the meeting. Following the resignation of former Prime Minister, Silvio Berlusconi, Italy’s new Prime Minister, Mario Monti is racing to set up a new government to win market confidence in Italian bonds.

  • On the economic calendar today, no reports are due. Companies reporting earnings include Lowes.  The dollar is up against the major currencies. Crude oil is currently trading at $97 a barrel. Gold is trading at $1,774.  
  • Last week, stocks surged to close out the week on the upside, after dropping sharply on Wednesday due to the Italian debt crisis. On Friday, all the major indices were up on or about 2%, after optimism grew that the Greek and Italian sovereign debt crisis is heading towards a resolution. For the week, the Dow rose 1.4%, and the S&P gained 0.9%. Crude oil and gold both rallied for the week. The economic data was better than expected, led by initial jobless claims and consumer sentiment. 
  • The week ahead, now that two of Europe's most financially troubled countries, Greece and Italy have implemented new regimes, investors will be hoping the political change will bring stability to financial markets.  Traders will turn their attention to economic data, including retail sales and inflation, from the New York Fed and the Philadelphia Fed in the coming week. The size of deficit reduction package by the federal super committee will be the focus in the next two weeks. The equity markets are anticipating a minimum of $1.2 trillion in deficit reduction over the next 10 years.
  • On CNBC today, Warren Buffett chairman and CEO of Berkshire Hathaway, talked about the housing market, QE3, the presidential race, and the super committee. Buffett said in a recession, household formation normally goes way down, and the housing market is not improving as fast as he had thought it would.  He also said, refinancing is useful, but doesn’t change the basic housing equation; we don’t need stimulus for the housing market, the non-housing segment of the economy is pretty healthy.  On QE3, Buffett commented he is not in favor of a third round of quantitative easing.  On the presidential race, he pointed out that Governor’s Perry flub won’t take him out to the race, but Romney is probably the strongest candidate against President Barack Obama.  On the super committee, he agrees with the committee to keep deliberations in private, and he is not giving up on them to come up with something meaningful by the deadline.  Finally, he feels better about developments in Greece and Italy, but a loss of confidence in Europe still concerns him, it’s not clear who in Europe has the ability to do whatever it takes to solve the debt crisis, as European banks are losing funding right now.  Buffett announced that Berkshire has recently increased its investments in IBM and Wells Fargo & Company.
  • "Immortals" was the top movie at the Box Office this weekend. 
  • Happy Monday, have a nice day and a wonderful week.  

Friday’s Close

DJIA up 259.21 pts/+2.19%/12,153.68

S&P up 24.16 pts/+1.95/1,263.85

Nasdaq up 53.60 pts/+2.04/2,678.75

Monday’s Futures

Dow Futures down 38.00 pts/-0.31%

S&P Futures down 8.50 pts/-0.61%

Nasdaq Fut down 8.58 pts/-0.38%

Overseas Markets

FTSE -0.79%

CAC 40 -1.61%

NIKKEI 225 +1.05%

HANG SENG +1.94%

Overseas:  World stock markets were mixed today. European markets are down on deepening concerns the region will struggle to contain the debt crisis. Asian markets were up after Japan reported its economy grew more than expected following the earthquake.      

Economic Reports:  None for today, later in the week, Producer Price Index, Retail Sales, Empire State Mfg, Business Inventories, Consumer Price Index, Treasury International Capital, Industrial Production, Housing Market Index, Housing Starts, Jobless Claims, Philadelphia Fed Survey, and Leading Indicators.

Top Headlines:    

  • Boeing Company (BA) announced it signed an agreement with Emirates for 50 777-300ER jets, and an option for 20 more, in a deal valued at $26 billion.
  • VeriFone Systems Inc. (PAY) announced it is acquiring Point International from Nordic Capital Fund V for about $815 million.
  • Reports indicate Morgan Stanley’s (MS) Asian arm is in talks to acquire Chinese packaging company HCP Holdings Inc., which could be valued at about $500 million.    

Commodities/Currency:

Gold:up $14.10 to $1,774.85

Oil:down 1.20 to $97.79

EUR/USD 1.3652 -0.0097

USD/JPY 77.0035  -0.1800

GBP/USD 1.5935 -0.0130

Volatility Index (VIX): As of the close of business Friday, November 11, the VIX is down 2.77 at 30.04

Companies Reporting Quarterly Earnings:     

Lowe's (LOW): Q3 EPS of $0.35 beats by $0.02. Revenue of $11.8B (+2.3% Y/Y) in-line. Sees FY11 Non-GAAP EPS at $1.37 to $1.40.

Today’s Opening and Closing Bells:

NYSE Kick Off Global Entrepreneurship Week with “Movers & Changers” Forum Successful Entrepreneurs Speak Candidly with Aspiring Entrepreneurs. Renowned Entrepreneur Mark Cuban; Charlie Chanaratsopon, CEO & founder of Charming Charlie and Alexandra Wilkis Wilson, Co-Founder of Gilt Groupe, will ring the opening bell.

Novo Nordisk to Recognize World Diabetes Day and Celebrate 30th Anniversary of Trading on the NYSE President and CEO Lars Rebien Sørensen will ring the closing bell.

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