Morning Report: February 7, 2012

Ahead of the Bell: Dow futures are trading down 27 points and S&P futures are trading down 4 points. Greece's inability to reach a deal with its political leaders, and lack luster earnings from a few European companies are weighing on financial markets.  The EU has increased pressure on Greece to accept tougher fiscal policies, but investors are concerned if Greece is unable to agree to the stricter austerity measures, it might trigger contagion across the euro zone. 

• On the economic calendar today, December’s consumer credit will be out in the afternoon and is forecasted to be $7.0 B, compared with $20.4 B for November.  Federal Reserve Chairman, Ben Bernanke will be testifying on the economy to the Senate Budget Committee.  Companies reporting earnings include Belo Corporation, Coca-Cola, Emerson Electric, GlaxoSmithKline, Harman Intl, Southern Copper, Toyota, Hartford Fincl, Lincoln National, Ralcorp, Walt Disney, and Western Union. The dollar is down against the major currencies.  Crude oil is currently trading at $96 a barrel.  Gold is trading at $1,717.  


• Yesterday, stocks declined as the Greek government wrestled with stricter austerity measures and fiscal reform, to avoid a default, as the deadline set by the EU and IMF came and went without a deal with private bond holders.


• On CNBC today, Lawrence Korb, Former Assistant Secretary of Defense, and Ian Bremmer, Eurasia Group, talked about the crisis in the middle east and the impact on oil prices. Korb said there is a disconnect between Israel and the US on how to handle threats from Iran, and he doesn’t think Israelis will attack Iran with the assistance of the US.  There are several groups operating in Iran, so it is difficult to pinpoint which parties should be negotiated with and whether they actually have the power to make changes.  Bremmer believes oil prices near $100 does have some risk premium built in, but Saudi efforts to use their leverage to keep oil prices down is having some effect.  Bremmer went on to predict that geopolitics and oil prices will spike later in 2012 once the early posturing is done.


• To all Giants fans:  Following the Super Bowl Victory… Enjoy the ticker tape parade today!!!!


• Happy Tuesday and have a nice day.

Monday’s Close

DJIA down 17.10 pts/-0.13%/12,845.13

S&P down 0.57 pts/-0.04/1,344.33

Nasdaq down 3.67 pts/-0.13/2,901.99

Tuesday’s Futures

Dow Futures down 27.00 pts/-0.21%

S&P Futures down 4.40 pts/-0.42%

Nasdaq Fut down 10.58 pts/-0.25%

Overseas Markets

FTSE -0.56%

CAC 40 -0.63%

NIKKEI 225 -0.13%

HANG SENG -0.05%

Overseas:  World stock markets were down today.  European and Asian markets are down after Greece was unable to reach a deal with private bond holders on a debt swap.      

Economic Reports:  Consumer Credit expected to be $7.0 B at 3:00 p.m.

Top Headlines:    

• Reports indicate the SEC will soon put out a proposal of $2.7 trillion to stabilize the money-market fund industry, since the financial crisis, in a move to show confidence in the markets.


• BP Plc, (BP) raised its dividend after its earnings beat analyst estimates on higher crude prices.  The company is raising its fourth quarter dividend by 14 percent to 8 cents a share.


• Verizon Communications (VZ) announced it has formed a joint venture with Coinstar Inc., (CSTR) to offer streaming video service which will be available on its broadband network.


• CNBC reports Apple Inc. (AAPL) may announce a television product called the iTV as it focuses on next major product line. 


• Reports indicate the FTC is considering blocking the proposed $29.1 billion merger between Express Scripts and Medco Health Solutions (MHS).  Medco Health has no comments.      

Commodities/Currency:

Gold:down $7.10 to $1,717.85
Oil: down 0.71 to $96.20

EUR/USD 1.3122 -0.0002
USD/JPY 76.7665  -0.1900
GBP/USD 1.5815 -0.0005

Volatility Index (VIX): As of the close of business Monday, February 6, the VIX is up 0.66 at 17.76

Companies Reporting Quarterly Earnings:     

Coca-Cola (KO): Q4 EPS of $0.79 beats by $0.01. Revenue of $11B (+5% Y/Y) in-line.

Scotts Company (SMG): FQ1 EPS of -$1.18 beats by $0.04. Revenue of $211.2M (-8.3% Y/Y) beats by $6M.

NewJersey Resources (NJR): FQ1 EPS of $1.09 beats by $0.36. Revenue of $642.4M (-9.9% Y/Y) misses by $100M.

Mueller Industries (MLI): Q4 EPS of $0.34 in-line. Revenue of $491.4M (-6.7% Y/Y) misses by $56M.

DST Systems (DST): Q4 EPS of $1.05 beats by $0.09. Revenue of $457.3M (+7.6% Y/Y) beats by $21M.

Gartner (IT): Q4 EPS of $0.46 misses by $0.01. Revenue of $427.7M (+11.9% Y/Y) in-line.

Burlington Resources (BR): FQ2 EPS of $0.12 beats by $0.01. Revenue of $480M (+8.5% Y/Y) misses by $18M.

Church & Dwight Company (CHD): Q4 EPS of $0.53 beats by $0.02. Revenue of $731.1M (+11.3% Y/Y) beats by $37M.

Today’s Opening and Closing Bells:

Post Holdings Celebrates Successful Spinoff from Ralcorp Holdings, Inc. CEO William Stiritz will ring the opening bell.

Church & Dwight Visits the New York Stock Exchange for Analyst Meeting Chairman and CEO James Craigie will ring the closing bell.