Morning Report: July 14, 2011

Ben Bernanke (lower-right), Chairman of the Fe...

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Ahead of the Bell: Dow futures are trading up 25 points and S&P futures are trading up 4 points despite ratings agency Moody's warning that the U.S. could lose its top credit rating if Congress and President Obama do not agree on raising the country's debt limit.  Moody's said it will likely assign a negative outlook to the nation credit rating if a long term solution is not achieved on the debt ceiling.  Federal Reserve Chairman Ben Bernanke, testifying before Congress, said the agency stands ready to introduce more stimulus if economic growth slows down further.

For an update on these developments, check back at noon for our midday update.

On the economic calendar today, the Labor Department will issue its weekly jobless claims report and its June producer price index report before the market opens.  Economists anticipates weekly jobless claims to be 419,000, up 1,000 from last week and producer price index is expected to fall 0.3%. The Commerce Department will issue its reports on June retail sales before the opening, and retail sales are expected to fall 0.2% for June. Federal Reserve Chairman Ben Bernanke's testimony to Congress continues, with the Fed chairman appearing before the Senate's Committee on Banking, Housing, and Urban Affairs. Companies reporting earnings include Google and JPMorgan Chase. Crude oil is currently trading at about $98 a barrel. The dollar is down against the major currencies.

Yesterday, stocks were up sharply after Federal Reserve Chairman Ben Bernanke said he is prepared to further stimulate the economy. Also, China reported better than expected  growth.

On CNBC today, Roger Altman, Founder and Chairman of Evercore Partners, talked about the budget and debt ceiling vote.  Altman said Moody’s warning to lower the credit rating of the U.S. is a serious and helpful warning as it sends a message to the negotiators in Washington that they are playing with fire. Altman believes there will be a major down payment on the deficit (about $2.5 trillion) which is about half of the GDP to debt ratio we have now. Altman also believes the U.S. will not default and that the various parties will have to come together and agree on a plan. He thinks senator Mitch McConnell’s proposal is very clever and would allow the President to go forward with the debt ceiling vote. Altman believes the budget and debt limit vote should be done together, not separately and that serious progress on deficit reduction will get done.              

Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up 44.73 pts/+0.36%/12,491.61

S&P up 4.08 pts/+0.31%/1,317.72

Nasdaq up 15.01 pts/+0.54/2,796.92

Thursday’s Futures

Dow Futures up 25.00 pts/+0.20%

S&P Futures up 4.50 pts/+0.37%

Nasdaq Fut up 13.50 pts/+0.55%

 Overseas Markets

FTSE -0.68%

CAC 40 -0.87%

NIKKEI 225 -0.27%

HANG SENG +0.06%

Overseas:  World stock markets were down today. European and Asian markets were down after Moody’s warns it could cut U.S. credit rating.    

Economic Reports:  Procedure Price Index expected to be -0.3%, Retail Sales expected to be unchanged, & Jobless Claims expected to be 419K at 8:30 a.m., and Business Inventories expected to be 0.8% at 10:00 a.m.

Top Headlines:

  • ConocoPhillips (COP) announced it plans to spin off its Refining & Marketing business into a stand-alone company expected to be completed in the first half of 2012.     
  • Reports indicate Joy Global Inc. (JOYG) is in talks to acquire International Mining Machinery Holdings, a Chinese based mining equipment maker to compete with Caterpillar.
  • Amazon (AMZN) announced it will introduce a new tablet computer to compete with Apple and expand in mobile commerce and sell more digital products.
  • Bloomberg reports Graham Packaging Co. (GRM) bond holders plan to reject the company's offer to buy back or change terms of outstanding debt before its $4.5 billion takeover by Reynolds Group Holdings.

Commodities/Currency:

Gold: up $4.95 to $1,587.85

Oil: up $0.16 to $99.10



EUR/USD 1.4194 -0.0046

USD/JPY 79.0100  -0.1450

GBP/USD 1.6121 -0.0053

Volatility Index (VIX): As of the close of business Wednesday, July 13, the VIX is up 0.04 at 19.91

Companies Reporting Quarterly Earnings:     

JPMorgan (JPM): Q2 EPS of $1.27 beats by $0.07. Revenue of $27.4B (+7% Y/Y).

Fairchild Semiconductor Intl. (FCS): Q2 EPS of $0.41 beats by $0.01. Revenue of $433.2M (+5.8% Y/Y).

Today’s Opening and Closing Bells:  

The French Institute Alliance Française Visits the NYSE, Bastille Day European Chairman of the Global Subsidiaries Group at Citigroup, Jean-Claude Gruffat will ring the opening bell.   

Safeguard Scientifics (SFE) visits the NYSE to celebrate the company’s 40th anniversary of trading. Safeguard Scientifics President and CEO Peter J. Boni will ring the closing bell.

 

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