Morning Report: May 16, 2011

Ahead of the Bell: Dow futures are trading down 25 points and S&P futures are trading down 3 points.  Investors will be paying special attention to the Eurozone debt crisis on renewed worries over Greece.  The EU and the IMF are seeking deeper austerity measures from the government of Greece, although the situation could change due to the head of the IMF, Dominique Strauss-Kahn, having been charged with assault in New York over the weekend. Traders will be watching commodities including gold, silver, and copper as stocks seem to be moving in tandem with commodities.  Crude oil is currently trading about $97 a barrel. 

  • On the economic calendar today, Empire State Mfg Survey will be out before the bell.  According to Briefing.com, the regional reading on manufacturing is forecast to have slipped to 18 in May from 21.7 in April.  The National Association of Homebuilders is scheduled to release its housing data for May after the opening and is expected to remain unchanged at 16.  Companies reporting earnings include J.C. Penney, Lowe's, and Valspar Corp.   The dollar is up against the euro and Japanese yen and down against the British pound.
  • Last week, stocks followed commodities which were very volatile.  The equity markets were down for two straight weeks.  Crude oil dropped below $100 a barrel, or 2.5%.  Also, April CPI numbers were up as a result of cost of living in the U.S. driven by higher energy cost.  Eurozone sovereign debt crisis surfaced again as Greece is looking to restructure its debt and there is a possibility Greece could default on its 327 billion bailout package it received from the EU.  China’s central bank announced it is raising banks’ reserve requirements by 0.5% effective May 18.   
  • The week ahead investors will be focusing on commodities and stocks as the volatility from the prior week is expected to continue.  Crude oil is expected to dominate the headlines as investors will be keeping a close eye on continuing damage from rising flood waters along the Mississippi, which threatens to disrupt oil refineries.  Traders will be watching the European sovereign debt crisis including Greece, Portugal, and Ireland.  European finance ministers and IMF officials are due to meet on Tuesday to discuss new austerity measures for Greece.   Investors will be focusing on the week’s economic data including April housing activity, Empire State Survey, the Philadelphia Fed survey, industrial production, and leading indicators.  Companies reporting earnings include Hewlett-Packard, Dell, Wal-Mart, Home Depot, TJX , Target, Deere, Gap, and Sears.
  • On CNBC today, Tim Armstrong, Chairman & CEO of AOL, talked about advertising rates and rising profits.  Armstrong said AOL is focused on competing for internet content and space.  Armstrong spoke about AOL’s acquisition of The Huffington Post, which he said has been great acquisition for AOL and is helping AOL compete for content business as the company has gotten an influx of new customers.  The advertising business has been great for the company and AOL is launching new and innovative products trying to engage users and  consumers.  Armstrong also commented about the advertising space, saying the auto business is back and almost every sector has returned except for healthcare.  Armstrong went on to say the digital migration of consumers is moving forward and we have to focus on this segment.  Armstrong believes AOL has a huge opportunity to get more consumers, has a great brand and is one of the most successful businesses in its space.
  • K.J. Choi wins The Players Championship in a playoff after David Toms.  Happy Monday, have a nice day.  

Friday’s Close

DJIA down 100.17 pts/0.79%/12,595.75

S&P down 10.88 pts/-0.81%/1,337.77

Nasdaq up 34.57 pts/-1.21%/2,828.47

Monday’s Futures

Dow Futures down 25.00 pts/-0.25%

S&P Futures down 3.70 pts/-0.26%

Nasdaq Fut down 3.75 pts/-0.16%

Overseas Markets

FTSE -1.17%

CAC 40 -0.89%

NIKKEI 225 -0.94%

HANG SENG -1.36%

Overseas:  World stock markets were down today. European markets are trading down led by financial companies.  Asian markets were lower on volatile commodities and concerns over global economic growth. 

Economic Reports:  Today, Empire State Mfg Survey expected to be 20 @8:30 a.m., later in the week, Housing Starts, Industrial Production, Jobless Claims, Existing Home Sales, Philadelphia Fed Survey, and Leading Indicators, later in the week International Trade, Treasury Budget, Producer Price Index, Retail Sale, Jobless Claims, Business Inventories, Consumer Price Index, Consumer Sentiment. 

Top Headlines:    

  • NASDAQ  and IntercontinentalExchange (ICE) announced that following discussions with the Antitrust Division of the DOJ they are withdrawing the joint proposal for NYSE Euronext.
  • A consortium of Canadian banks and pension funds have proposed a $3.72 billion offer for TMX Group Inc. opposing planned merger with the LSE.
  • TPG Capital announced it is acquiring PRIMEDIA Inc. (PRM).  Under the terms of the agreement, holders of the outstanding common shares of PRIMEDIA will receive $7.10 per share in cash.
  • Joy Global Inc. (JOYG) announced it is acquiring LeTourneau Technologies Inc. from Rowan Companies, Inc. (RDC) for $1.1 billion in cash.
  • Sony Corp (SNE) announced it will partially restart its online gaming service after hackers breeched the site and accessed accounts for millions of users.  Sony said customers will not be able to use their credit cards at this time.
  • Bloomberg reports BP Plc  is seeking to buy out its Russian partner TNK-BP  as a planned share swap with state-controlled OAO Rosneft expires today.  The new offer may be worth about $30 billion.  

Commodities/Currency:

Gold:down $3.72 to $1,491.85

Oil:down $1.74 to $97.89



EUR/USD 1.4115 -0.0001

USD/JPY 80.7450  -0.1550

GBP/USD 1.6182 -0.0005

Volatility Index (VIX): As of the close of business Friday, May 13, the VIX is up 1.04 pts to 17.07

Companies Reporting Quarterly Earnings:   

Lowe's (LOW): Q1 EPS of $0.34 misses by $0.02. Revenue of $12.18B (-1.6% Y/Y) misses by $0.3B.

Today’s Opening and Closing Bells:

Brazilian-American Chamber of Commerce will visit the NYSE, Fabio Barbosa, President of Banco Santander (STD)  Osmar Chohfi-Brazilian Consulate will ring the opening bell.    

Kyle Washington, Co-Chairman of Seaspan Corporation (SSW) will ring the closing bell.

                                                                                                                                                                                        


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