Morning Report: May 11, 2011

Ahead of the Bell: Dow futures are trading up 24 points and S&P futures are trading up 2 points following inflation data from China which showed the economy grew at a slower pace in April, lessening the need for further monetary tightening.  Also, traders will be focusing on the European sovereign debt crisis after more strikes in Greece, protesting austerity measures. Crude oil is currently trading about $103 a barrel.   

  • On the economic calendar today, the government will report the trade balance for March before the opening.  Economists are forecasting that the economy had a $47.8 billion trade deficit, wider than the $45.8 billion deficit reported in February.  Later in the afternoon, the Treasury will release its budget which is expected to be a negative $65 billion.  Minneapolis Federal Reserve Bank President Narayana Kocherlakota will be speaking on contingent planning for monetary policy to the Forecasters' Club of New York.  Also, Atlanta Federal Reserve Bank President Dennis Lockhart will be speaking on the economic outlook to the Council for Quality Growth in Atlanta.  And, Cleveland Federal Reserve Bank President Sandra Pianalto will be speaking on the economic outlook and monetary policy to the Harvard Clubs of Cincinnati.  Companies reporting earnings include Cisco Systems, Macy's, and Symantec. The dollar is up against the major currencies.  
  • Yesterday, the equity markets were up for a third straight day led by the technology and consumer discretionary sectors after Microsoft agreed to buy Skype for $8.5 billion.
  • On CNBC today, Doug Oberhelman Chairman and CEO of Caterpillar Inc, talked about global growth.  Oberhelman said Caterpillar had a great first quarter and the company is in the process of restaging things around as he is seeing good revival in the U.S.  Oberhelman also said, people want things like roads and bridges and Caterpillar is benefiting from this, he is seeing positive results as equipment delivers are increasing every month.  Oberhelman went on to say the economy is recovering slowly, the big problem is the higher energy prices, in the short term, $4 gas and diesel will not impact the company directly but long term it is a problem.  Oberhelman pointed out Caterpillar is benefiting from the weak dollar, the company is innovating everywhere and competitors are everywhere.  Oberhelman believes free trade is very important to the U.S. and Caterpillar.  Oberhelman wants the government to help spur growth, change the tax codes, address the debt ceiling, and congress must stop pointing fingers.     
  • Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 75.68 pts/+0.60%/12,760.36

S&P up 10.87 pts/+0.81%/1,357.16

Nasdaq up 28.64 pts/+1.01%/2,871.89

Wednesday’s Futures

Dow Futures up 24.00 pts/+0.19%

S&P Futures up 2.50 pts/+0.18%

Nasdaq Fut up 2.50 pts/+0.10%

Overseas Markets

FTSE +0.17%

CAC 40 +0.52%

NIKKEI 225 +0.46%

HANG SENG -0.19%

Overseas:  World stock markets were up today.  European and Asian markets were up on better than expected corporate results.   

Economic Reports:  International Trade expected to be -47.7 billion @8:30 a.m. and Treasury Budget expected to be -$65.0 billion @2:00 p.m.  

Top Headlines:    

  • Reports indicate major U.S. Banks are proposing to pay as much as $5 billion to settle with State and Federal agencies on improper mortgage foreclosure practices. 
  • AIG announced will move forward with its planned secondary offering of about 300 million shares, 200 million shares owned by the Treasury and 100 million owned by AIG for a total of $9 billion.
  • Boston Scientific (BSX) said CEO Ray Elliott will retire at the end of 2011 less than two years after taking the job in July 2009.  The company shares traded down on the news.
  • General Motors Co. (GM) announced it will invest about $2 billion in U.S. assembly and component plants which will create about 4,000 jobs at 17 facilities in eight states.
  • MBA reports mortgage applications were up 8.2% versus up 4% last week.  The thirty-year fixed mortgage rate decreased to 4.67% from 4.76%.

Commodities/Currency:

Gold:up $7.72 to $1,523.85

Oil:up $0.53 to $103.35



EUR/USD 1.4387 -0.0024

USD/JPY 81.0250  +0.1600

GBP/USD 1.6496 +0.0125

Volatility Index (VIX): As of the close of business Tuesday, May 10, the VIX is down 1.25 pts to 15.91

Companies Reporting Quarterly Earnings:   

Arcelor Mittal (MT): Q1 EPS of $0.69 beats by $0.21. Revenue of $22.2B (+27% Y/Y) in-line.

Teva Pharma (TEVA): Q1 EPS of $1.04 beats by $0.01. Revenue of $4.1B (+12% Y/Y) misses by $0.2B.

Today’s Opening and Closing Bells:

China Zenix Auto International (ZX) to celebrate the Company’s IPO listing on the NYSE, Chairman Jianhui Lai will ring the opening bell.    

Cypress Sharpridge Investments, Inc. to Celebrate Second Anniversary on the NYSE President and CEO Kevin Grant will ring the closing bell.