Morning Report: November 3, 2011

Ahead of the Bell: Dow futures are trading up 54 points and S&P futures are trading up 5 points. G-20 leaders will be meeting in France today, and Greece will be the focus following a decision by Prime Minister, George Papandreou to put the recently agreed upon rescue plan to a referendum. European leaders have asked Greece to make a decision as to whether it wants to stay in the European Union or not. Investors are concerned, if Greece defaults and exits the union, there will be spillover effects to other countries in the periphery including Italy and Spain.

  • On the economic calendar today, the Labor Department will release Weekly Jobless Claims before the market opens, and it is expected to be 400K versus 402K for the previous week. Productivity and Costs for 3Q will also be out before the markets opens, and is forecasted to be 2.5% compared with -0.7% for 2Q. Factory Orders for September will be out after the market opens, and is anticipated to be flat at -0.2%. ISM Non-Mfg Index will also be out after the markets opens, and is predicted to be 53.5 versus 53.0 for September. Atlanta Federal Reserve Bank President, Dennis Lockhart will make opening remarks at a conference on "What Should We Really Expect from Monetary Policy," in Atlanta. Companies reporting earnings include NYSE Euronext, Apache, ArcelorMittal, Beam Inc, Broadridge, CVS Caremark, DineEquity, Dolby Labs, Duke Energy, Kellogg, Public Storage, Rosetta Stone, Southern Union, Tower Intl, Visteon, World Wrestling Entertainment, and Yingli Green Energy. The dollar is up against the Japanese yen and down against the euro and British pound. Crude oil is currently trading at $93 a barrel. Gold is trading at $1,742.   
  • Yesterday, stocks recovered some of the losses from the previous trading sessions after Federal Reserve Chairman, Ben Bernanke said the central bank will use monetary tools if necessary to safeguard the economic recovery.
  • On CNBC today, Samuel Zell, Chairman of Equity Group Investments, LLC, talked about the housing market, Greece, regulation, taxes, and entitlements. Zell said the banks have been feeding distressed properties into the housing market which has allowed the banks to delay decisions and avoid any real pain. Zell believes if the banks had gone in and took the hits, like what happened in the early 1990’s, they would have cleared out the balance sheets and the housing market would be in better shape. Zell also believes the mess in Greece could apply to the US where people have been over promised and the country can’t deliver. We keep increasing entitlements, but haven’t determined where the revenue growth will come from. He would like to see the US get its fiscal house in order, extend the retirement age, cut spending and increase revenues, perhaps by reconfiguring the IRS tax code. Finally, Zell thinks we need to reform the regulatory agencies as they are scaring businesses.      
  • Happy Thursday, have a nice day.  

Wednesday’s Close

DJIA up 178.08 pts/+1.53%/11,836.04

S&P up 19.62 pts/+1.61/1,237.90

Nasdaq up 33.02 pts/+1.27/2,639.98

Thursday’s Futures

Dow Futures up 54.00 pts/+0.46%

S&P Futures up 5.50 pts/+0.45%

Nasdaq Fut up 5.58 pts/+0.25%

Overseas Markets

FTSE +0.35%

CAC 40 +1.34%

NIKKEI 225 -2.21%

HANG SENG -2.49%

Overseas:  World stock markets were mixed today.  European and Asian markets were down on renewed Greek troubles and uncertainty in the European Union.      

Economic Reports:  Jobless Claims expected to be 400K & Productivity and Costs expected to be 2.5% 8:30 a.m. Factory Orders expected to be -0.2% & ISM Non-Mfg Index expected to be 53.5 at 10:00 a.m.

Top Headlines:    

  • A Federal court has dismissed most parts of the law suit brought by Sprint ( S ) against AT&T (T) over its $39 billion acquisition of T-Mobile USA ,but has let one part of the case to go forward.
  • GlaxcoSmithKline (GSK) has settled with the DOJ its $3 billion investigation into charges the company sold drugs illegally and defrauded Medicaid.
  • An Illinois court has ruled that a lawsuit against Wells Fargo & Co., (WFC) can move ahead, it accuses the company of steering minority borrowers into risky mortgages.
  • Reports indicate PepsiCo Inc. (PEP) plans to buy Brazilian cookie maker Grupo Mabel for about 800 million reais or $520 million.     

Commodities/Currency:

Gold:up $3.10 to $1,742.85

Oil:up 0.61 to $93.12

EUR/USD 1.3796 +0.0084

USD/JPY 78.0160  -0.1010

GBP/USD 1.6013 +0.0085

Volatility Index (VIX): As of the close of business Wednesday, November 2, the VIX is down 2.03 at 32.74

Companies Reporting Quarterly Earnings:     

Lamar Advertising (LAMR): Q3 EPS of $0.04 misses by $0.03. Revenue of $297M (+4% Y/Y) beats by $5M.

Tyco Electronics (TEL): FQ4 EPS of $0.89 beats by $0.04. Revenue of $14.3B (+25% Y/Y).

Tenaris (TS): Q3 EPS of $0.55 beats by $0.26. Revenue of $2.5B (+23% Y/Y).

Western Refining (WNR): Q3 EPS of $1.37 beats by $0.09. Revenue of $2.3B (+44% Y/Y) beats by $0.1B.

Cimarex Energy Co (XEC): Q3 EPS of $1.49 beats by $0.01. Revenue of $420M (+15% Y/Y) misses by $5M.

Magna International (MGA): Q3 EPS of $0.94 misses by $0.05. Revenue of $6.9B (+21% Y/Y) beats by $0.2B.

Suncor Energy (SU): Q3 EPS of $1.14 beats by $0.29.

Canadian Natural Resource (CNQ): Q3 EPS of $0.65 beats by $0.01. Revenue of $3.29B (+8% Y/Y).

Fortress Investment Group LLC (FIG): Q3 EPS of -$0.82 misses by $0.74. Revenue of $195M (+20% Y/Y) beats by $35M.

Spectra Energy (SE): Q3 EPS of $0.38 misses by $0.01. Revenue of $1.12B (+10% Y/Y) misses by $30M.

Today’s Opening and Closing Bells:

New Media Strategies visits the NYSE to mark the first-ever “Social Media Day” at the NYSE.  Pete Snyder, CEO and Founder of New Media Strategies (NMS) will ring the opening bell.

Kimco Realty Celebrates 20 Years of Trading on the NYSE Co-Founder and Executive Chairman, Milton Cooper, and Vice Chairman, President and CEO, David Henry, will ring will ring the closing bell.