Morning Report: June 16, 2011

Ahead of the Bell: Dow futures are trading down 52 points and S&P futures are trading down 5 points as EU leaders continue to struggle to come up with a second rescue package for Greece. Germany wants private investors to participate in the negotiations. Protest and violence flared again in Greece against austerity measures. Reports indicate Greece's Prime Minister is looking to reshuffle his cabinet to get the votes needed to push through his austerity plan. Investors fear if Greece is allowed to default it will destabilize the entire Euro-zone region.

  • On the economic calendar today, initial jobless claims will be out before the market opens and economists are expecting weekly claims to fall to 421,000 from last week's reading of 427,000 claims. The Commerce Department will also release May housing starts and building permits data before the market opens, expected to be 547 million. The Federal Reserve Bank of Philadelphia will release its June manufacturing survey after market opens and it is forecasted to be 9.0. Crude oil is currently trading at about $94 a barrel. The dollar is up against the Euro and the Japanese yen and down against the British pound.
  • Yesterday, stocks resumed their downward trend following disappointing manufacturing and inflation data. Investors fear India and China will raise interest rates soon and discussions on Greek debt restructuring Greek continue.
  • On CNBC today, Stuart Schweitzer, Global Market Strategist, JPMorgan Chase & Co., talked about the equity markets and where he sees opportunities. Schweitzer said European banks have significant exposures and the overarching concern is the stability of the euro. Schweitzer said the European banking system has not done much to raise capital since the bottom of the financial crisis in 2009. U.S. banks have raised twice as much capital in that time. Schweitzer said a recovery in housing is critical to improving the economy, although he noted commodity prices are coming down which is positive. Schweitzer went on to say a lot of investors are sitting on the sidelines with a lot of cash and some equities are beginning to look attractive.
  • Sarat Sethi, Partner and Portfolio Manager, Douglas C. Lane & Associates, also spoke on CNBC today about the state of the equity markets. Sarat said about the uncertainty over the Euro-zone debt is the key reason markets are down and that we will see more stability once an agreement has been reached. Sarat noted we are seeing a slowdown in the U.S. right now, but multinational companies will benefit from a global recovery.  
  • Congratulations to the Boston Bruins on winning the Stanley Cup Championship over the Vancouver Canucks, happy Thursday, have a nice day. 

Wednesday’s Close

DJIA down 178.84 pts/-1.48%/11,897.27

S&P down  22.45 pts/-1.74%/1,265.42

Nasdaq down 47.26 pts/-1.76/2,631.46

Wednesday’s Futures

Dow Futures down 52 pts/-0.44%

S&P Futures down 5.50 pts/-0.40%

Nasdaq Fut down 7.75 pts/-0.35%

Overseas Markets

FTSE -1.18%

CAC 40 -1.26%

NIKKEI 225 -1.70%

HANG SENG -1.75%

Overseas:  World stock markets here up today. European and Asian markets are down on the Euro-zone sovereign debt crisis.  

Economic Reports:  Housing Starts expected to be 0.547M and Jobless Claims expected to be 420K @8:30 a.m. & Philadelphia Fed Survey expected to be 9.0 @10:00 a.m.

Top Headlines:   

  • Energy Transfer Equity (ETE) announced it is acquiring Southern Union (SUG) for $7.9 billion or $33.00 per share including approximately $3.7 billion of existing SUG debt.
  • Terex Corp., (TEX) said it is offering to buy Demag Cranes (DMGCF) for about 963 million euros ($1.4 billion) after raising its offer to 45.50 euros a share, up from a previous bid of 41.75 euros.
  • DG Fastchannel Inc ( DGIT) announced it is acquiring MediaMind Technologies Inc. (MDMD) for approximately $517 million or $22 per share in an all-cash transaction.
  • Citigroup Inc ( C ) said approximately 360,000 customers accounts were hacked, significantly more than what the bank had previously disclosed.
  • ADP, Inc., (ADP) announced it is investigating the impact of a system intrusion that occurred with one of its customers, this is the latest of a series of cyberattacks in recent months on companies.
  • The Hershey Company (HSY) said it is naming interim president and CEO, John P. Bilbrey its permanent President & CEO after David West left to become CEO of Del Monte.
  • J&J (JNJ) is exiting the medical devices stents market due to slumping sales and loss of market share.  The company said it will halt sales of its Cypher drug-coated stent by year end.
  • Collective Brands (PSS) announced its Chairman & CEO Matthew Rubel has resigned effective immediately to pursue other opportunities and the company has started the process to find  a replacement..

Commodities/Currency:

Gold:down $1.10 to $1,524.85

Oil:up $0.19 to $94.51

EUR/USD 1.4111 -0.0052

USD/JPY 80.7050  -0.2600

GBP/USD 1.6106 -0.0071

Volatility Index (VIX): As of the close of business Wednesday, June 15, the VIX is up 3.06 pts to 21.32

Companies Reporting Quarterly Earnings:

Pier 1 Imports (PIR): Q1 EPS of $0.12 beats by $0.01. Revenue of $334.6M (+9.2% Y/Y) in-line.

Smithfield Foods (SFD): Q1 EPS of $0.85 beats by $0.03. Revenue of $3.12B (+7.1% Y/Y) misses by $0.08B.

Today’s Opening and Closing Bells:

IBM Marks Centennial at the NYSE Chairman of the Board, President and CEO of IBM, Samuel J. Palmisano will ring the opening bell.

The National Hockey League Celebrates the Stanley Cup Final at the NYSE Gary Bettman, Commissioner of the NHL will ring the closing bell.