Morning Report: July 7, 2011

Ahead of the Bell: Dow futures are trading up 22 points and S&P futures are trading up 3 points despite the ECB raising interest rates from 1.25% to 1.50%. This is the second increase in rates during Europe’s lingering sovereign debt crisis. Ratings agencies, Moody's and S&P, have downgraded Portugal and Greece in recent days to junk status. EU officials have pushed back against the downgrades and traders are speculating the EU will step in and minimize the impact of the ratings agencies.

  • On the economic calendar today, the weekly jobless benefits report will be out before the market opens. Analysts expects 420,000 individuals filed new claims for unemployment versus 428,000 that were filed in the previous week. The ADP report will be out before the market opens and is expected to show that employers in the private sector added 60,000 jobs in June versus 38,000 in the previous month. Kansas City Federal Reserve Bank President Thomas Hoenig will be speaking to the Chickasaw Nation Business and Community Leaders lunch in Ada, Oklahoma. The dollar is down against the major currencies. Crude oil is currently trading at about $96 a barrel.
  • Yesterday, stocks finished higher in late trading ahead of the jobless claims data today despite an interest rate hike from China and a downgrade of Portuguese debt.       
  • On CNBC today, James Paulsen, chief investment strategist at Wells Capital Management, talked about the strength of the recovery. Paulsen said, historically no recovery has been smooth, but this is one of the most sluggish recoveries we have ever had. Despite that, he believes the economy is actually growing at 3% rather than 2%, but because of the weather and the Japanese disruption, GDP remains at 2%. Paulsen said our jobs creation so far this year has been double last year’s, and well above last year’s average. Paulsen pointed out we hit a soft patch this year with higher rates, gas and food prices, but we are at the same growth rate minus those factors. Paulsen went on to say we need to learn from the last recovery, the Saving and Loans problem of the early 1990’s, and we need to exit out of this debt slowly. He suggests that we need to stop worrying about getting it right now, and just be patient as this recovery will take time. By promoting growth, companies will have to start hiring.          
  • Today marks a historic day at the NYSE Euronext as shareholders are set to vote for the merger with the Deutsche Borse.  Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up 56.15 pts/+0.45%/12,626.02

S&P up 1.34 pts/+0.10%/1,339.22

Nasdaq up 8.25 pts/+0.29/2,834.02

Thursday’s Futures

Dow Futures up 22 pts/+0.36%

S&P Futures up 3.50 pts/+0.35%

Nasdaq Fut up 7.75 pts/+0.33%

Overseas Markets

FTSE +0.45%

CAC 40 +0.48%

NIKKEI 225 -0.11%

HANG SENG +0.06%

Overseas:  World stock markets were up today. European markets are trading up today after the ECB has given indications it might step in and resolve the Euro zone debt crisis. Asian markets were down following another interest rate increase from China.    

Economic Reports:  Jobless Claims expected to be 420K at 8:30 a.m.

Top Headlines:  

  • APAC Customer Services (APAC) said it is being acquired by One Equity Partners the private investment arm of JPMorgan (JPM) for about $470 million or $8.55 per share in cash.
  • International banks are holding another round of talks in Rome, Italy today aimed at finding a way to contribute to Greece's second bailout plan after an earlier French plan ran failed to gain support.
  • Facebook announced it will integrate Skype video chat into its social networking service after Google introduced a social networking service called Google+.
  • Walt Disney (DIS) CEO Robert Iger confirmed the owners of online video site Hulu are considering selling the company.  Potential buyers including Google, Microsoft, Yahoo, and others.
  • Reports indicate Blackstone Group (BX) is in talks to buy Kinetic Concepts Inc., (KCI), the deal could be worth about $5 billion.
  • The Bank of England is maintaining its benchmark interest rate at 0.50% and the Bank is holding asset purchase plan at  200 billion pounds.
  • The FDIC board voted unanimously to finalize the rule that regulators will be able to claw back some pay from top financial executives if their company were liquidated by the government under the Dodd-Frank Act.

Commodities/Currency:

Gold:down $2.90 to $1,526.85

Oil:up $0.59 to $97.26

EUR/USD 1.4281 -0.0035

USD/JPY 81.0150  +0.0700

GBP/USD 1.5982 -0.0022

Volatility Index (VIX): As of the close of business Wednesday, July 6, the VIX is up 0.29 pts to 16.35

Companies Reporting Quarterly Earnings: None as of yet.

Today’s Opening and Closing Bells:

City Harvest will visit the New York Stock Exchange.  To mark the occasion, Jilly Stephens, Executive Director of City Harvest, will ring the opening bell.    

LiquidityBook, LLC  in celebration of their participation in the NYSE Euronext Power Partners Program. Kevin Samuel, Senior Managing Partner together with Rick Goldenberg, Senior Managing Partner will ring the closing bell.