Morning Report: July 12, 2011

Ahead of the Bell: Dow futures are trading down 29 points and S&P futures are trading down 5 points. Traders are concerned the Euro zone sovereign debt crisis will spread to other member countries. EU finance ministers have promised to allow cheaper loans with longer maturities and more flexible rescue funding so Greece and other European countries including Spain and Italy can avoid defaulting.  Investors are skeptical as reports indicate several small Spanish banks have failed. Resource related stocks will be in focus today including gold, silver, and copper.

  • On the economic calendar today, the trade balance figures for May will be out before the market opens. Economists surveyed by Briefing.com are forecasting the U.S. posted a $44 billion trade deficit in May, slightly wider than the $43.7 billion deficit for April. The minutes from the Federal Reserve's Federal Open Market Committee meeting from June are due out in the afternoon. Crude oil is currently trading at about $94 a barrel. The dollar is down against the major currencies.
  • Yesterday, stocks were down sharply on continued fears that the European debt crisis appears to be spreading beyond Greece, Ireland and Portugal into Italy and Spain. 
  • On CNBC today, Aubrey McClendon, Chairman and CEO of Chesapeake Energy, talked about how America can rid its self of OPEC oil. McClendon said his company is trying to break away from OPEC oil by investing about $1 billion in the future of oil and gas technology. McClendon pointed out that America is spending about $400 billion in crude oil per year which is going to OPEC rich countries. McClendon proposes a three prong initiative. First, the current domestic natural gas and oil industry can improve with technology, increasing production, the industry has developed new technology that has revolutionized production of natural gas. Second, Chesapeake is investing in a public company to facilitate natural gas and liquid technology, newly discovered oil and gas technology and placing natural gas refueling stations throughout the country from coast to coasts. McClendon also said the U.S. has enough natural gas to drive this initiative forward. Third, Chesapeake is investing in a private company to create natural gas from bio products and convert natural gas into room temperature, tank-ready, liquid transportation fuel that can be blended with existing supplies of gasoline and diesel. McClendon went on to say the private sector has always move faster than the public sector. McClendon believes natural gas prices will not increase in the next ten years, we are the number one producer of oil and gas technology, we will be using American workers to transport goods and services using American produced energy.  
  • Happy Tuesday, have a nice day. 

Monday’s Close

DJIA down 151.44 pts/-1.20%/12,505.76

S&P down 24.31 pts/-1.81%/1,319.49

Nasdaq down 57.19 pts/-2.00/2,802.62

Tuesday’s Futures

Dow Futures down 29.00 pts/-0.19%

S&P Futures down 5.50 pts/-0.37%

Nasdaq Fut down 9.50 pts/-0.40%

Overseas Markets

FTSE -1.51%

CAC 40 -2.36%

NIKKEI 225 -1.43%

HANG SENG -3.06%

Overseas:  World stock markets were down today. European and Asian markets were down today on Euro zone debt contagion issue.    

Economic Reports:  International Trade expected to be $-42.7 B at 8:30 a.m.

Top Headlines:    

  • International Paper (IP) announced a tender offer for all outstanding shares of Temple-Inland (TIN) for $30.60 per share in cash. The offer represents a 46% premium expire at 5:00 p.m. NYC time on August 9, 2011.
  • NCR Corporation (NCR) announced it is acquiring Radiant Systems, Inc. (RADS) through a cash tender offer for $28.00 per share or about $1.2 billion. 
  • Hertz Global Holdings Inc (HTZ) said it is extending its tender offer for Dollar Thrifty Automotive Group (DTG) by about a month to August 5, 2011. 
  • Reports indicate Peabody Energy (BTU) and ArcelorMittal are likely to be the winning bidders with a $5 billion offer for Mcarthur Coal.

Commodities/Currency:

Gold:down $6.95 to $1,546.85

Oil:down $1.05 to $94.10

EUR/USD 1.3947 -0.0101

USD/JPY 79.6650  -0.5600

GBP/USD 1.5819 -0.0089

Volatility Index (VIX): As of the close of business Monday, July 11, the VIX is up 3.44 at 18.39

Companies Reporting Quarterly Earnings:     

Alcoa (AA) reports Q2 adjusted EPS 32c vs. consensus 34c, Q2 revenue $6.59B vs. consensus $6.32B.

Today’s Opening and Closing Bells:

Guggenheim Funds visits the NYSE. Chris Parisi, Senior Managing Director and National Sales Manager will ring the opening bell.    

Duke Energy Corporation (DUK) for a 50th Anniversary, Chairman, President, and CEO Jim Rogers and CFO and Group Executive Lynn Good will ring the closing bell.