Morning Report: December 19, 2011

Ahead of the Bell: Dow futures are trading up 54 points and S&P futures are trading up 6 points after reports indicate North Korean leader, Kim Jong Il died of a heart attack, sparking concerns about who is in control of the country's nuclear program.  Traders are concerned the death of the North Korean leader might heighten fears and add to the instability in the region.  Investors are keeping a watchful eye on Europe for developments on the sovereign debt crisis, as EU finance ministers will pursue plans for tighter fiscal rules.



  • On the economic calendar today, the National Association of Home Builders will release its survey of housing market conditions for December after the market opens and is expected to be 20, in line with the previous month.  Richmond Federal Reserve Bank President, Jeffery Lacker will be speaking on the economic outlook to the Charlotte Chamber of Commerce in Charlotte, NC.  Companies reporting earnings include Red Hat Inc. The dollar is up against the major currencies.  Crude oil is currently trading at $93 a barrel.  Gold is trading at $1,591.  

  • Last week, stocks ended another volatile trading week, as investors remain worried about the debt crisis in Europe.  For the week, both the Dow and S&P dropped 2.8%, and the Nasdaq fell 3.4%.  The economic reports were slightly better than expected.  The inflation data was unchanged from the prior month at 3.4%, but consumer confidence remains weak.  Initial Jobless claims data was better than expected at 366K.  Retail sales grew less than expected in November, despite the hype of better sales on Black Friday and Cyber Monday.  The Senate voted to extend the payroll tax cut until February, however, the House of Representatives has rejected the bill.  The  Federal Reserve provided no further hints of stimulus measures for the rest of this year, but left the door open for possible monetary easing in the first quarter of  next year. 

  • The week ahead, Europe could be the Grinch that steals Christmas.  Investors are concerned that S&P will soon downgrade France and other EU countries, after the ratings agency put 15 members of the currency bloc on review earlier this month. Traders are anticipating the week to be a choppy one with light volume, as many market participants will be taking time off for the holidays. There are a number of reports on the economic calendar this week including the government's final reading on GDP, for the third quarter, a slew of housing data, durable goods orders, personal income and spending, and consumer sentiment. 

  • On CNBC today,  Bob Doll, Chief Equity Strategist at Blackrock, talked about the death of Kim Jong Il and Europe.  Doll said, when it comes to North and South Korea it’s always about uncertainty.  He is concerned with Jong Il’s successor, his 26 year old son Kim Jong Un.  We don’t know if he is ready to take control and lead the country and safe guard the country’s nuclear program.  Doll believes Europe is still in the spot light and while EU leaders made good progress at the European summit, they have a long way to go.  Doll also believes the ECB needs to step up and do more.  Europe will be the answer on where the markets go from here.       

  • Happy Monday, have a nice day and a wonderful week.  

Friday’s Close


DJIA down 2.42 pts/-0.02%/11,866.49


S&P up 3.91 pts/+0.32/1,219.66


Nasdaq up 14.32 pts/+0.56/2,555.33


 


Monday’s Futures


Dow Futures up 54.00 pts/+0.46%


S&P Futures up 6.40 pts/+0.55%


Nasdaq Fut up 14.58 pts/+0.63%


 


Overseas Markets


FTSE -0.07%


CAC 40 +0.68%


NIKKEI 225 -1.26%


HANG SENG -1.18%


 


Overseas:  World stock markets were down today.  European and Asian markets were down on concerns who will be the next leader of North Korea.      


 


Economic Reports:  Housing Market Index expected to be 20 at 10:00 a.m.


 


Top Headlines:    



  • Reports indicate talks over potential asset sales as part of AT&T Inc's ( T ) efforts to get approval for its $39 billion purchase of T-Mobile USA has gone cold.

  • Eldorado Gold Corp. (EGO) announced it is acquiring European Goldfields Ltd. for about C$2.5 billion ($2.4 billion) in cash and stock or approximately C$13.08 a share.

  • Bloomberg reports Exxon Mobil (XOM) is considering a bid for Britain’s Gulf Keystone which could be worth about 7 billion pound ($10.9 billion).

  • Prince Alwaleed bin Talal, the Saudi investor said he is buying a $300 million stake in Twitter Inc.    

Commodities/Currency:


Gold:down $7.10 to $1,591.85
Oil:up 0.38 to $93.91

EUR/USD 1.3015 -0.0026
USD/JPY 77.9030  -0.1600
GBP/USD 1.5500 -0.0046


 


Volatility Index (VIX): As of the close of business Friday, December 16, the VIX is down 0.82 at 24.29


Companies Reporting Quarterly Earnings:     


None as of yet.


Today’s Opening and Closing Bells:


Global Geophysical Services (GGS) visits the NYSE, President and CEO Richard Degner will ring the opening bell.


 


The DeGregorio Family Foundation for Research and Education for Stomach & Esophageal Cancer visits the NYSE and will ring the closing bell.