Morning Report: January 12, 2011

Ahead of the Bell: Dow futures are trading up 68 points and S&P futures are trading up 8 pointsfollowing successful bond auctions in Italy and Spain. The European Central Bank will be in focus today. The agency kept its key interest rate unchanged, after it cut rates at its last meeting. Investors will watch for hints from ECB President, Mario Draghi, who will hold a press conference after the meeting. China reports its inflation rate eased to a fifteen month low in December, but food prices remain a risk as the government considers boosting growth.

  • On the economic calendar today, the Labor Department will release weekly initial jobless claims before the market opens and is expected to be 375K, compared with 372K for the previous week. The retail sales report for December will also be out before the market opens and is expected to show growth of 0.4%, versus 0.2% for November. Business inventors for November will be out after the market opens and is expected to be 0.5%, compared with 0.8% for October. The US treasury will released its budget for December in the afternoon, the consensus is $-79.0B versus $-137.3B for November. Companies reporting earnings include MGIC Invest, MSCI Inc., and Shaw Communication Inc. The dollar is up against the yen and down against euro and British pound.  Crude oil is currently trading at $102 a barrel. Gold is trading at $1,655.  
  • Yesterday, stocks were mixed as gains in the financial and technology sector helped the market recover from an early slump spurred by growing fears Europe may slip into a recession.
  • On CNBC today, Senator Robb Portman of Ohio, and former OMB director, talked about taxes and balancing the budget. Portman said everyone wants to raise revenues, but asked: how do we do it, maybe we could broaden the tax base? He also said he was frustrated with the super committee and not satisfied with the results of the deficit reduction committee. Portman is concerned that the nation lacks a consensus on how to generate revenues, by cutting spending or restructuring the tax code. He pointed out that officials need to do something about the debt before the election, as it is growing, and he would like to see a balanced budget this year. He went on to say, the nation is totally non-competitive right now globally, every country in the world has restructured their tax code, and the US is losing out. We need to get rid of tax loop-holes. Finally, he said both parties need come up with a solution to address the growing debt, entitlements, and taxes.
  • Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA down 13.02 pts/-0.10%/12,449.45

S&P up 0.40 pts/+0.03/1,292.48

Nasdaq up 8.26 pts/+0.31/2,710.76

Thursday’s Futures

Dow Futures up 68.00 pts/+0.66%

S&P Futures up 8.40 pts/+0.33%

Nasdaq Fut up 15.58 pts/+0.65%

Overseas Markets

FTSE +0.36%

CAC 40 +1.24%

NIKKEI 225 -0.74%

HANG SENG -0.30%

Overseas:  World stock markets were mixed today. European and Asian markets were mixed on better than expected bond auction results from Italy and Spain, and China’s inflation subsided a little.       

Economic Reports:  Initial Jobless Claims expected to be 375K, Retail Sales expected to be 0.4% at 8:30 a.m., Business Inventories expected to be 0.5 at 10:00 a.m., and Treasury Budget expected to be $-79.0B at 2:00 p.m.

Top Headlines:    

  • Regions Financial Corp. (RF) announced it is selling Morgan Keegan & Company, Inc. and related affiliates to Raymond James Financial Inc., (RJF) for $930 million.
  • Chevron Corp (CVX) warned its 4Q earnings will be significantly below the previous quarter as a result in a short fall in production. 
  • Royal Bank of Scotland (RBS) plans on cutting 3,500 jobs and close its equities and advisory business to reduce risk, and focus on its domestic and retail business.      

Commodities/Currency:

Gold:up $13.10 to $1,655.85

Oil:up 1.32 to $102.19

EUR/USD 1.2758 +0.0048

USD/JPY 76.8660  -0.0200

GBP/USD 1.5354 +0.0027

Volatility Index (VIX): As of the close of business Wednesday, January 11, the VIX is up 0.36 at 21.05

Companies Reporting Quarterly Earnings:     

None as of yet.

Today’s Opening and Closing Bells:

Pretium Resources Inc. (PVG), a gold exploration company headquartered in Vancouver, British Columbia, visits the NYSE. President and CEO Robert Quartermain will ring the opening bell.

Rouse Properties, Inc. Celebrates Debut as Regional Mall REIT President and CEO Andrew Silberfein will ring the closing bell.