Morning Report: February 3, 2011

Ahead of the Bell: Dow futures are trading up 21 points and S&P futures are trading 2 points. Greece is dominating the headlines again and currently negotiating with the troika (EC, ECB, and IMF), to receive its next round of rescue funds.  The country reached a tentative agreement with private bondholders on an existing debt swap and also said its 2011 budget deficit will be smaller than expected, both of which could help negotiations this weekend.     

• On the economic calendar today, the Labor Department will release January’s nonfarm payroll employment numbers before the market opens, economists expected a reading of 135K versus 200K for December, as the hiring boosts from the holiday shopping season winds down.  Factory orders for November will be out after the market opens and it is anticipated to be 1.5%, compared with 1.8%.  ISM Non-Mfg Index for January will also be out after the market opens with a forecast of 53.3 versus 52.6 for the previous month.  Companies reporting earnings include AON, Beam, Booz Allen & Hamilton, Clorox, Domtar, Estee Lauder, MoneyGram, OneBeacon Insurance, Simon Property, Spectrum Brands, Tyson Foods, Weyerhaeuser, and Brown & Brown. The dollar is down against the major currencies.  Crude oil is currently trading at $96 a barrel.  Gold is trading at $1,756.  


• Yesterday, markets were mixed after Fed Chairman, Ben Bernanke, said the economy has shown signs of improvement, but remains vulnerable to shocks, and he is urging congress to reduce the long-term deficit of the country.  


• On CNBC today, Richard Bernstein, CEO of Richard Bernstein & Associates and Edward Keon, Managing Director & Portfolio Manager for Quantitative Management Associates, talked about the state of the economy and jobs.  Bernstein said people get too caught up with the details from the jobs report since every employment cycle has ups and downs.  He pointed out that he is starting to see some troubling weakness in corporate profits and blames a slowdown in emerging markets, Europe, and the dollar.  Bernstein also said while we have had a huge rebound in the past few quarters, he predicts the market will decline as we shift back to the household sector and see more negative surprises.  Keon, by contrast, sees growth slowing this year, but thinks companies will continue to beat estimates and thinks we are playing catch up to corporate profits from last year.   


• Happy Friday. Have a nice day, a wonderful weekend, and enjoy the Super Bowl.

Thursday’s Close

DJIA down 11.05 pts/-0.09%/12,705.41

S&P up 1.45 pts/+0.11/1,325.54

Nasdaq up 11.41 pts/+0.40/2,859.68

Friday’s Futures

Dow Futures up 21.00 pts/+0.17%

S&P Futures up 2.40 pts/+0.15%

Nasdaq Fut up 8.58 pts/+0.35%

Overseas Markets

FTSE +0.52%

CAC 40 +0.38%

NIKKEI 225 -0.51%

HANG SENG +0.08%

Overseas:  World stock markets were up today.  European and Asian markets were up on optimism Greece might be able to secure the next round of bailout funds from the IMF and ECB.      

Economic Reports:  Nonfarm Payroll expected to be 135K at 8:30 a.m., Factory Orders expected to be 1.5% and ISM Non-Mfg Index expected to be 53.3 at 10:00 a.m.

Top Headlines:    

• The Senate approve new rules with a 96-3 vote to ban Congress from trading in stocks with non public information.  The bill now goes to House of Representatives for approval.


• News Corporation (NWS.A) has named Bloomberg LP executive, Lex Fenwick, to head up its Dow Jones & Co. business, which owns The Wall Street Journal.


• Sunoco's (SUN) CEO Lynn Elsenhans plans on stepping down and its CFO is expected to lead the firm.  Sunoco also announced a share buyback program, and boosts its dividend by 33%.     

Commodities/Currency:

Gold:down $3.10 to $1,756.85
Oil: down 0.11 to $96.25

EUR/USD 1.3163 +0.0017
USD/JPY 76.2670  +0.0700
GBP/USD 1.5833 +0.0027

Volatility Index (VIX): As of the close of business Thursday, February 2, the VIX is down 0.41 at 18.14

Companies Reporting Quarterly Earnings:     

Aon Corporation (AON): Q4 EPS of $0.97 beats by $0.01. Revenue of $2.99B (+3% Y/Y) misses by $10M.

Zoltek Companies (ZOLT): FQ1 EPS of $0.28 beats by $0.23. Revenue of $47M (+42.9% Y/Y) beats by $11M.

Sirona Dental Systems (SIRO): FQ1 EPS of $0.91 beats by $0.01. Revenue of $258.1M (+9.6% Y/Y) beats by $2M.

Macerich (MAC): Q4 FFO of $0.87 in-line. Revenue of $217.76M (+7% Y/Y) beats by $23.3M.

Moneygram International (MGI): Q4 EPS of $0.04 may not be comparable to consensus of $0.21. Revenue of $321.8M (+6.1% Y/Y) misses by $3M.

Spectrum Brands (SPB): FQ1 EPS of $0.69 beats by $0.09. Revenue of $848.8M (-1.4% Y/Y) misses by $32M.

Weyerhaeuser (WY): Q4 EPS of $0.14 beats by $0.07. Revenue of $1.6B (-2.9% Y/Y) beats by $10M.

Today’s Opening and Closing Bells:

AVG Technologies Celebrates IPO on the New York Stock Exchange CEO JR Smith to will ring the opening bell.

DoubleLine Capital Celebrates Recent Listing of DoubleLine Opportunistic Credit Fund Ron Redell, President, joined by Jeffrey Sherman, Portfolio Manager will ring the closing bell.