Morning Report: September 20, 2011

Ahead of the Bell: Dow futures are trading up 79 points and S&P futures are trading up 8 points despite Standard & Poor's downgrade of Italy to A from A+ and kept its outlook on negative citing lower growth and political uncertainty.  The downgrade will increase strains on the debt laden Euro zone and add pressure on policy makers to take more decisive action to resolve the financial crisis.  The Federal Reserve will begins its two-day meeting today, with a decision expected on Wednesday afternoon on operation twist.  Investors are speculating the agency will provide additional stimulus.                                          



  • On the economic calendar today, the Commerce Department will release its August housing starts and building permits data before the market opens.  Companies reporting earnings include AutoZone, ConAgra, Adobe Systems, and Oracle. The dollar is up against the Japanese yen and down against the euro and British pound. Crude oil is currently trading at $86 a barrel.  Gold is trading at $1,790.   

  • Yesterday, stocks fell, halting a five-day rally, and the euro weakened amid concerns Greece will fail to qualify for more financial aid needed to avoid default.

  • On CNBC today, Thomas Falk, Chairman and CEO of Kimberly-Clark, talked about the tax code, loop holes, and the current business environment.  Falk said we need comprehensive structural changes to the tax code.  Falk also said he made three suggestions to the Senate Finance Committee;  lower the corporate tax rate to 25% to where it is competitive with the rest of the world, get rid of the R&D and manufacturing incentives, and tax companies on their U.S. territory only.   He pointed out, foreign companies take advantage of our tax rate as they don’t have any repatriation taxes.   Falk went on to say, we need to make more long term structural changes to our business environment, by lower the tax rate and having less regulation.  He does not believe the “Buffet Tax” will solve the problem.  On the day to day operations of his company, Falk said, input cost has been a challenge including oil and raw materials.  Finally, he said the outlook it is not getting a lot worst, but it’s not improving either.                                             

  • Happy Tuesday, have a nice day.

Monday’s Close


DJIA down 108.08 pts/-0.94%/11,401.01


S&P down 11.92 pts/-0.98/1,204.09


Nasdaq down 9.48 pts/-0.36/2,612.83


 


Tuesday’s Futures


Dow Futures up 79.00 pts/+0.70%


S&P Futures up 8.30 pts/+0.73%


Nasdaq Fut up 20.58 pts/+0.89%


 


Overseas Markets


FTSE +1.33%


CAC 40 +1.22%


NIKKEI 225 -1.61%


HANG SENG +0.51%


 


Overseas:  World stock markets were up today.  European and Asian markets were up after debt discussions in Europe were positive and investors speculated the Fed will provide additional stimulus.


 


Economic Reports:  Housing Starts expected to be 0.592M at 8:30 a.m.


 


Top Headlines:    



  • Reports indicate the SEC is probing several hedge funds and other financial firms for possible insider trading before the U.S.  long-term credit rating was cut last month by S&P.

  • Bloomberg reports Transatlantic Holdings (TRH) which recently rejected an offer from Berkshire Hathaway (BRK.A/BRK.B) is considering a proposal by Validus Holdings Ltd (VR).

  • ConAgra Foods Inc. (CAG) announced it has officially withdrew its $94-a- share all cash offer for Ralcorp Holdings Inc. (RAH).

  • Reports indicate Samsung Electronics Company is considering legal action to ban sales of Apple's (AAPL)  iPhone, claiming Apple copied its design.    

Commodities/Currency:


Gold:up $14.10 to $1,790.85
Oil:up $0.89 to $86.59

EUR/USD 1.3685 +0.0010
USD/JPY 76.4950  -0.0700
GBP/USD 1.5698 +0.0005


 


Volatility Index (VIX): As of the close of business Monday, September 19, the VIX is up 1.75 at 32.73


Companies Reporting Quarterly Earnings:     


AutoZone (AZO): FQ4 EPS of $7.18 beats by $0.22. Revenue of $2.6B (+8.1% Y/Y) in-line.


ConAgra Foods (CAG): FQ1 EPS of $0.29 misses by $0.02. Revenue of $3.07B (+9.5% Y/Y) beats by $120M.


Today’s Opening and Closing Bells:


Latour Trading, LLC to celebrate their NYSE and NYSE Amex Equity Membership.  David Faucon, CEO along with employees and guests will ring the opening bell.


 


Leaders from the Center for Work-Life Policy (CWLP) “Winning the War for Talent in Emerging Markets: Why Women Are the Solution” (Harvard Business Review), co-written by Dr. Sylvia Ann Hewlett, Chairman and Founding President, CWLP, and Ripa Rashid, Executive Vice President, CWLP. will ring the closing.