Morning Report: June 13, 2011

ELMONT, NY - JUNE 11:  Jockey Jose Valdivia, J...

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Ahead of the Bell: Dow futures are trading up 38 points and S&P futures are trading up 3 points despite various negative reports about possible continued tightening of monetary policy in China, Germany being at odds with ECB on the debt restructuring in Greece, and Japan having announced industrial orders were down significantly causing Asian markets to trade down.

  • On the economic calendar today, no reports are due today. Richmond Federal Reserve Bank President Jeffrey Lacker will be speaking on manufacturing in the new southern economy in Roanoke, Virginia. The dollar is down against the major currencies. Crude oil is currently trading at about $97 a barrel on a slowdown in the global recovery and an increase in supply from Saudi Arabia.
  • Last week, the equity markets closed down for a sixth straight week in a row. The Dow, S&P 500, and Nasdaq have been down 7 of the last 8 trading sessions. The markets last closed down on six straight weeks of losses in 2002 and the Dow closed below 12,000 for the first time since March 18, 2011. For the week, the Dow closed down 1.6%, the S&P 500 fell 2.2% and the Nasdaq declined 3.3%. Initial jobless claims data was higher than what economist had been expecting; however, the April trade deficit was better than expected.  China reported a smaller-than-estimated trade surplus as exports slowed giving further signs that global growth is declining. Germany demanded more private investors be brought in to purchase Greek debt. OPEC members did not agree to increase crude oil supplies at a meeting in Vienna, Austria, although Saudi Arabia committed to increasing its production output by 10 million barrels.  
  • The week ahead, a slew of economic data are on tap that will provide clues for what will happen in the second quarter. Economists downgraded their 2Q growth forecast to under 3%, although they are forecasting growth to pick up in the second half despite supply chain disruptions from the Japanese earthquake. Traders will be watching retail sales and industrial production. Industrial production was weak in April and is expected to be lower again because of the slowdown in the manufacturing sector. Jobless claims data due out on Thursday will be in focus as analysts predict the jobless number will fall slightly below 400,000. Investors will be watching the Fed after the central bank confirmed QE2 will end on June 30th as scheduled. Fed Chairman Ben Bernanke will be speaking on fiscal sustainability on Tuesday at the Committee for a Responsible Federal Budget Annual Conference. Treasury Secretary Tim Geithner will be testifying before the House Financial Services Committee on Wednesday.
  • On CNBC today, Jack Welch, former CEO of General Electric, talked about the current state of the economy.  Welch said he expects the economy will pick up in 3Q, GDP will increase and gasoline prices will drop. Welch spoke about green energy, which he supports. However, he pointed out that green energy policies allow regulations to be put in place that affect business and don’t make us as competitive as other countries. Welch said we are missing a fundamental overall strategy and vision for the country. He commented that the President needs to tell America where we are going and the administration should go back to a strategy to make America more productive, competitive and innovative.  
  • Long shot Ruler on Ice wins the Belmont Stakes beating favorites Animal Kingdom and Shackleford.
  • Happy Monday, have a nice day.  

Friday’s Close

DJIA down 172.45 pts/-1.42%/11,951.91

S&P down 18.20 pts/-1.40%/1,270.98

Nasdaq down 41.14 pts/-1.53/2,643.73

Monday’s Futures

Dow Futures up 38 pts/+0.33%

S&P Futures up 3.50 pts/+0.37%

Nasdaq Fut up 5.20 pts/+-0.23%

Overseas Markets

FTSE +0.38%

CAC 40 +0.30%

NIKKEI 225 -0.70%

HANG SENG +0.39%

Overseas:  World stock markets were down today. European markets are trading down on Euro zone debt crisis.  Asian markets were down on lower industrial orders in Japan as companies delay their capital spending.   

Economic Reports:  None for today, Producer Price Index, Retail Sales, Business Inventories, Consumer Price Index, Empire State Mfg Survey, Industrial Production, Housing Starts, Jobless Claims, Philadelphia Fed Survey, Consumer Sentiment, and Leading Indicators all due out this week.

Top Headlines:    

  • VF Corporation (VFC) announced it is acquiring The Timberland Company (TBL) for about $43 per share representing a total value of approximately $2 billion.
  • Allied World Assurance (AWH) announced it is acquiring Transatlantic Holdings (TRH) for about $8.5 billion.  Transatlantic holders will receive 0.88 Allied World common share.
  • Reports indicate President Obama will nominate Martian Gruenberg currently vice chairman of the FDIC to succeed Sheila Bair as head of the agency. 
  • Reports indicate four more financial firms are joining Maple Group Acquisition Corp., in a counterbid for TMX Group including Desjardins Financial Group, GMP Capital Inc., Dundee Capital Markets Inc. and Manulife Financial.
  • Ford Motor Corp ( F ) was ordered by an Ohio judge to pay nearly $2 billion in damages to thousands of dealerships in a 2002 class-action lawsuit..

Commodities/Currency:

Gold:down $5.10 to $1,526.85

Oil:down $1.32 to $97.98

EUR/USD 1.4356 -0.0157

USD/JPY 80.3350  -0.0550

GBP/USD 1.6282 -0.0090

Volatility Index (VIX): As of the close of business Friday, June 10, the VIX is up 1.09 pts to 18.86

Companies Reporting Quarterly Earnings:     

None as of yet.

Today’s Opening and Closing Bells:

Fortegra Financial Corporation Visits the NYSE Chairman, President and CEO, Richard Kahlbaugh will ring the opening bell.

Copa Holdings, S.A. Celebrates Five Years of Trading on the NYSE, Chairman Stanley Motta and Copa Airlines CEO Pedro Heilbron, CEO will ring the closing bell.

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