Morning Report: January 30, 2012

Ahead of the Bell: Dow futures are trading down 77 points and S&P futures are trading down 8 points following reports that Germany is seeking for the Greek government to give up control of its budget as part of the agreement for the country to receive the second round of rescue funds.  European leaders will be meeting at a summit in Brussels later today and the main topic of discussion will be Greece and a permanent rescue fund for the euro zone.  Negotiations between Greece and private bondholders over 200 billion Euros in Greek debt made progress over the weekend, but it is not expected to be completed before the summit concludes. 

  • On the economic calendar today, the Bureau of Economic Analysis will release personal income and outlays for December before the market opens and it is forecasted to be 0.4% compared with 0.1%.  Companies reporting earnings include Canon, Cemex, Enbridge Energy, Gannett, Old National Bancorp, Thomas & Betts, Wolverine World Wide, Graco, McKesson, Solutia, and Triumph Group.  The dollar is up against the Japanese yen and down against the euro and British pound.  Crude oil is currently trading at $99 a barrel.  Gold is trading at $1,720.  

  • Last week, the equity markets wrestled between better than expected corporate earnings and the Greek debt crisis.  The IMF and EU pressured the debt laden nation to implement stricter austerity measures but talks between private bondholders and Greece stalled.  For the week, the Dow was down 0.5%, the S&P was flat, and the Nasdaq was up 1%. According to Thomson Reuters, thus far about 37% of the S&P 500 have reported earnings and about 59% have beaten earnings estimates. The economic data for the week was disappointing, as fourth quarter GDP came in lower than expected at 2.8% versus estimates of 3.0%.  The Labor Department reported initial jobless claims numbers came in higher than anticipated, and consumer spending was restrained in the final quarter of 2011.  However, the big headline for the week was the Federal Reserve kept short term interest rates low for the next three years, and the agency stands ready to implement another bond buy-back program if the recovery falters.

  • The week ahead is expected to be chaotic between Europe and fourth quarter earnings season, as about 20% of the S&P 500 are due to report quarterly results.  Other companies reporting earnings this week include Exxon Mobil, Merck, Pfizer,, Blackstone, Aetna, and MasterCard.  Investors will get a few important economic reports this week including the monthly jobs report, initial jobless claims, ISM manufacturing data, and monthly auto sales.  Federal Reserve Chairman, Ben Bernanke will be testifying on Thursday before the House Budget Committee.  The Chairman is expected to be questioned about the agency’s new forecast and whether the central bank is considering another round of quantitative easing. Facebook is expected to announce its much-anticipated IPO filing on Wednesday.  

  • On CNBC today, Senate, Ron Johnson of Wisconsin, talked about balancing the budget at the state and federal level.  Johnson said he ran his own business and had an open door policy, but he does not believe in unionizing employees.  Johnson also said you are always going to have class warfare in America, right now it’s the private sector versus public sector.  He pointed out that he does not want to underpay public workers, however we need to have a balance where everyone is contributing their fair share to the retirement system.  Johnson believes prior to Wisconsin Governor, Scott Walker taking office, he did not think public employees were contributing their fair share into the state’s retirement system.  He went on to say, we need elected officials to tackle the tough budgets in other states and the federal government.  He added, we need officials to show courage like Governor, Scott Walker and tackle the deficits at the state level.  Finally, Johnson said Governor, Scott Walker has done a great job taking on the unions. 

  • The Grey was the top movie at the Box Office this past weekend.

  • Happy Monday, have a nice day, and a wonderful week.  

Friday’s Close

DJIA down 74.17 pts/-0.58%/12,660.46

S&P down 2.11 pts/-0.16/1,316.32

Nasdaq up 11.27 pts/+0.40/2,816.55


Monday’s Futures

Dow Futures down 77.00 pts/-0.63%

S&P Futures down 8.40 pts/-0.68%

Nasdaq Fut down 16.58 pts/-0.67%


Overseas Markets

FTSE -0.86%

CAC 40 -1.03%

NIKKEI 225 -0.54%

HANG SENG -1.66%


Overseas:  World stock markets were down today.  European and Asian markets were down after the Greek government and private bond holders failed to reach an agreement over the weekend on debt swap.      


Economic Reports:  TodayPersonal Income and Outlays expected to be 0.4% at 8:30 a.m., later in the week, Employment Cost Index, S&P Case-Shiller HPI, Chicago PMI, Consumer Confidence, Motor Vehicles Sales, ADP Employment Report, ISM Mfg Index, Construction Spending, Jobless Claims, Employment Situation, Factory Orders, and ISM Non-Mfg..


Top Headlines:    

  • ABB Ltd. (ABB) announced it has agreed to acquire Thomas & Betts Corporation (TNB) for about $3.9 billion or about $72 per share in cash.

  • TonenGeneral Sekiyu KK said it is buying 99 percent of Exxon Mobil Corp.’s (XOM) Japanese business for about $3.9 billion.   

  • Reports indicate Apollo Global Management is in talks to acquire El Paso Corporation's (EP) oil-exploration business which could be worth about $7 billion.

  • Reports indicate Delta Airlines Inc. (DAL) is considering acquiring US Airways Group Inc., (LCC).  Delta has also been assessing a similar move for bankrupt AMR Group.

  • Bloomberg reports Bank of America Corporation (BAC) is reshuffling its investment-banking business and has name Christian Meissner to be the head of the unit.    


Gold:up $18.10 to $1,720.85
Oil:down 0.33 to $99.26

EUR/USD 1.3125 +0.0019
USD/JPY 76.6450  -0.8100
GBP/USD 1.5689 -0.0004


Volatility Index (VIX): As of the close of business Friday, January 27, the VIX is down 0.21 at 18.36

Companies Reporting Quarterly Earnings:     

Wolverine World Wide (WWW): Q4 EPS of $0.47 beats by $0.03. Revenue of $406.5M (+5.6% Y/Y) in-line.

Today’s Opening and Closing Bells:

Startup America Partnership Celebrates First Anniversary of Helping Startups Grow Eight Startup America Firms join Chairman Steve Case and CEO Scott Case will ring the opening bell.


Eurasian Minerals Inc. Celebrates Listing on the New York Stock Exchange Chief Executive Officer David M. Cole will ring the closing bell.