Morning Report: January 27, 2012

Ahead of the Bell: Dow futures are trading up 22 points and S&P futures are trading up 2 points following better than expected quarterly earnings from Procter & Gamble.  The focus will once again be on Europe, as the European Union and International Monetary Fund are pressing Greece to implement stricter austerity measures and budget cuts before they agree to release the next tranche of aid to the debt laden nation.  Talks between private bondholders and Greece have stalled lately, and the country needs an additional 130-billion euros from the IMF to avoid a default.   

• On the economic calendar today, the Labor Department will release GDP for the final quarter of 2011 before the market opens, and it is forecasted to be 3.1% compared with 1.8% for the third quarter.  The Reuter's/University of Michigan's consumer sentiment index for January will be out after the market opens and is expected to be 74.0 compared with the same reading for December.  New York Federal Reserve President, William Dudley will deliver the regional economic press briefing on recession, federal stimulus, and regional schools.  Companies reporting earnings include A.O. Smith, Altria Group, Chevron, D.R. Horton, Ford Motor, Honeywell, Legg Mason, Newell Rubbermaid, NextEra Energy, Procter & Gamble, Provident Financial, and Southern Copper.  The dollar is up against the Japanese yen and down against the euro and British pound.  Crude oil is currently trading at $99 a barrel.  Gold is trading at $1,722.  


• Yesterday, stocks fell despite better than expected earnings and growth in durable-goods orders. The decline was due to policy makers squabbling over mounting cost to rescue Greece.


• On CNBC today, Jon Moeller, CFO of Procter & Gamble, talked about the company’s fiscal Q2 earnings results.  Moeller said the quarter was right in-line with expectations and organic growth was in-line with the company’s guidance.  Procter & Gamble reported adjusted Q2 EPS $1.10 vs. consensus $1.08 and revenue $22.1B vs. consensus $22.19B.  He also said the company experienced a significant increase in commodity costs and foreign exchange rates will impact this year’s earnings.  Moeller sees developing markets continuing to show strong growth and more consumer demand.  He added, Europe is difficult, but not the disaster some had expected.  Moeller went on to say, he expects the company to increase its dividend next year.  Moeller believes if the company executes its strategy the stock price will take care of itself.  Finally, Moeller said the company is hiring, but is exercising some caution in hiring growth.        


• Happy Friday and have a nice weekend

Thursday’s Close

DJIA down 22.33 pts/-0.18%/12,734.63

S&P down 7.62 pts/-0.57/1,318.45

Nasdaq down 13.03 pts/-0.46/2,805.28

Friday’s Futures

Dow Futures up 22.00 pts/+0.08%

S&P Futures up 2.40 pts/+0.39%

Nasdaq Fut up 6.58 pts/+0.25%

Overseas Markets

FTSE -0.25%

CAC 40 -0.14%

NIKKEI 225 -0.09%

HANG SENG +0.30%

Overseas:  World stock markets were mixed today.  European and Asian markets are up on optimism Greece will implement tougher austerity measures and receive the second round of funding from the IMF.      

Economic Reports:  GDP expected to be 3.1% at 8:30 a.m. and Consumer Sentiment expected to be 74.0 at 9:55 a.m.

Top Headlines:    

• Bloomberg reports a Brazilian prosecutor plans to file criminal charges against Chevron Corp (CVX) and some local managers in addition to the $11 billion lawsuit for the oil spill off the coast of Brazil.


• Reports indicate 3M Company's (MMM) board of directors are split on whether to extend the contract of CEO George Buckley when it expires next month.   


• A Federal Judge has asked BP Plc (BP) to indemnify Transocean Ltd (RIG) for damage claims related to the Gulf of Mexico oil spill.


• Reports indicate AIG is considering buying back its Asian unit, AIA Group Ltd which the company spun-off to pay for TARP, as confidence in its turnaround grows.       

Commodities/Currency:

Gold:up $1.70 to $1,722.85
Oil: up 0.38 to $99.23

EUR/USD 1.3137 +0.0031
USD/JPY 76.9930  -0.0800
GBP/USD 1.5709 +0.0016

Volatility Index (VIX): As of the close of business Thursday, January 26, the VIX is up 0.27 at 18.59

Companies Reporting Quarterly Earnings:     

Ford (F): Q4 EPS of $0.20 misses by $0.05. Revenue of $34.6B beats by $3.3B.

D.R. Horton (DHI): FQ1 EPS of $0.09 beats by $0.04. Revenue of $885.6M (+15.5% Y/Y) misses by $11.25M.

Amcol International (ACO): Q4 EPS of $0.43 in-line. Revenue of $233.6M (+6.5% Y/Y) misses by $3M.

American Electric Power Company (AEP): Q4 EPS of $0.40 in-line. Revenue of $3.4B (flat Y/Y) in-line.

Smith (A.O.) (AOS): Q4 EPS of $0.68 beats by $0.04. Revenue of $475.8M (+29% Y/Y) beats by $15M.

ALLIANCE GP (AHGP): Q4 EPS of $0.87 beats by $0.07. Revenue of $474.5M (+12% Y/Y).

Legg Mason (LM): FQ3 adj. EPS of $0.55 misses by $0.09. Revenue of $627M (-13.2% Y/Y) beats by $166.6M.

Columbus McKinnon (CMCO): FQ3 EPS of $0.33 beats by $0.09. Revenue of $142.8M (+11% Y/Y) beats by $3M.

IDEXX Laboratories (IDXX): Q4 EPS of $0.67 beats by $0.04. Revenue of $307.2M (+8.2% Y/Y) beats by $3.2M.

Graham (GHM): FQ3 EPS of $0.16 misses by $0.18. Revenue of $24.3M (+26.6% Y/Y) in-line.

OMNOVA Solutions (OMN): Q4 EPS of $0.14 beats by $0.08. Revenue of $301.4M (+58% Y/Y) beats by $15M.

Alliance Resource Partners L.P. (ARLP): Q4 EPS of $1.93 beats by $0.13. Revenue of $474.6M (+13.4% Y/Y) misses by $18M.

Universal Stainless & Alloy Products (USAP): Q4 EPS of $0.72 beats by $0.06. Revenue of $62.2M (+20.5% Y/Y) misses by $13M.

Honeywell (HON): Q4 EPS of $1.05 beats by $0.01. Revenue of $9.5B (+8% Y/Y) misses by $60M.

T. Rowe Price Group (TROW): Q4 EPS of $0.72 beats by $0.03. Revenue of $647.5M (-4% Y/Y).

Dominion Resources (D): Q4 EPS of $0.58 misses by $0.06.

Today’s Opening and Closing Bells:

NYSE Euronext, Save the Children and Executives of NYSE Euronext-listed companies will ring the opening bell. On the occasion of the World Economic Forum 2012 Annual Meeting, NYSE Euronext CEO Duncan Niederauer, NYSE Euronext Deputy CEO & Chief Technology Officer Dominique Cerutti, Save the Children International CEO Jasmine Whitbread and several CEO’s of companies listed on NYSE Euronext markets will open the U.S. market of NYSE Euronext remotely from Davos, Switzerland.

Winning Teams from The Innovation Challenge joined by NYSE-listed Corporate Sponsors AT&T, GE and SYNGENTA will ring the closing bell.