Morning Report: January 31, 2011

Ahead of the Bell: Dow futures are trading up 58 points and S&P futures are trading up 6 points after European Union leaders agreed to form a pact to move closer to a fiscal union, and signed off on a permanent rescue package for the region.  However, Greece's huge debt load might put a wrinkle in the positive news from the summit. Greece and private bondholders must come to a compromise on debt swap for the country to receive the next tranche of bail-out funding from the IMF and EU. 

  • On the economic calendar today, the employment cost index for the fourth quarter will be out before the market opens, and is expected to be 0.4% versus 0.3% for the previous quarter.  The S&P/Case-Shiller index for November will be out after the market opens and is forecasted to be -0.4% compared with -0.6% for the previous month.  The Institute of Supply Management will also release the Chicago PMI for December after market opens, it is anticipated to be 63.0 versus 62.5 for December.  The Conference Board will release the consumer confidence index for January, the projection is 68.0 compared with 64.5 for December.  Companies reporting earnings include AFLAC, American Electric Power, Archer Daniels Midland, CIT Group, Danaher, Exxon Mobil, Honda, McGraw-Hill, Oshkosh, Pfizer, Tyco, UPS, Valero Energy, Dolby Labs, and Manitowoc. The dollar is up against the Japanese yen and down against the euro and British pound.  Crude oil is currently trading at $101 a barrel.  Gold is trading at $1,738.  

  • Yesterday, stocks fell after European leaders sparred with Greece over a second rescue program.  Private investors and Greece were unable to reach an agreement over the weekend on the country’s debt swap.

  • On CNBC today, Chairman, President, and Chief Executive Officer, John Lechleiter of Eli Lilly & Company, talked about the company’s fourth quarter results.  Lechleiter said Eli Lilly will focus on brands that have not gone generic yet and they have received positive reports from drugs in the pipeline.  He pointed out, the company’s diabetes drug has been a good performer, but it is sad to see how many people have developed diabetes around the world.  Lechleiter also said Eli Lilly has a new diabetes medicine to be administered orally that is coming soon.  He added for Alzheimer’s patients, is an area that needs more progress.  We have to wait and see how the trials come out.  Eli Lilly reports Q4 EPS 87c vs. consensus 81c and revenue $6.05B vs. consensus $5.90B.  The company also reconfirms 2012 guidance.   

  • Happy Tuesday, have a nice day.  

Monday’s Close

DJIA down 6.74 pts/-0.05%/12,653.72

S&P down 3.32 pts/-0.25/1,313.01

Nasdaq down 4.61 pts/-0.16/2,811.94


Tuesday’s Futures

Dow Futures up 58.00 pts/+0.46%

S&P Futures up 6.40 pts/+0.48%

Nasdaq Fut up 9.58 pts/+0.39%


Overseas Markets

FTSE +0.93%

CAC 40 +1.30%

NIKKEI 225 +0.11%

HANG SENG +1.14%


Overseas:  World stock markets were up today.  European and Asian markets were up after EU leaders agreed on tougher austerity measures for the region.      


Economic Reports:  Employment Cost Index expected to be 0.4% at 8:30 a.m., S&P Case-Shiller Index expected to be -0.4% at 9:00 a.m., Chicago PMI expected to be 63.0 at 9:45 a.m., and Consumer Confidence expected to be 68.0 at 10:00 a.m.


Top Headlines:    

  • Reports indicate CIT Group (CIT) will stop providing financing to suppliers of Sears Holding Company (SHLD) until it evaluates the retailers financial status.

  • Avon Products Inc. (AVP) fired its vice chairman Charles Cramb in connection with probes into alleged bribery overseas. Cramb was previously the companies CFO.

  • Reports indicate the Treasury Department is investigating whether Freddie Mac bet against homeowners' ability to refinance their loans while it was making it more difficult for them to do so.    


Gold:up $8.10 to $1,738.85
Oil: up 1.38 to $100.16

EUR/USD 1.3195 +0.0052
USD/JPY 76.3550  -0.0200
GBP/USD 1.5779


Volatility Index (VIX): As of the close of business Monday, January 30, the VIX is up 0.87 at 19.40

Companies Reporting Quarterly Earnings:     

Eli Lilly (LLY): Q4 EPS of $0.87 beats by $0.07. Revenue of $6.05B (-2.3% Y/Y) beats by $60M.

Potlatch (PCH): Q4 EPS of -$0.04 misses by $0.19. Revenue of $109.9M (-24.8% Y/Y) misses by $8M.

MarineMax (HZO): FQ1 EPS of -$0.19 in-line. Revenue of $91.8M (-0.4% Y/Y) misses by $3M.

CIT Group (CIT): Q4 EPS of $0.17 beats by $0.18.

Tyco International (TYC): FQ1 EPS of $0.84 beats by $0.05. Revenue of $4.2B (-3.9% Y/Y) misses by $60M.

Mattel (MAT): Q4 EPS of $1.07 beats by $0.06. Revenue of $2.15B (+1.4% Y/Y) misses by $100M.

Helmerich & Payne (HP): FQ1 EPS of $1.32 beats by $0.17. Revenue of $732.6M (+23.2% Y/Y) beats by $5M.

Provident Financial (PROV): FQ2 EPS of $0.16 misses by $0.08.

Headwaters (HW): FQ1 EPS of -$0.31 may not be comparable to consensus of -$0.13. Revenue of $137M (+1.2% Y/Y) misses by $2M.

Today’s Opening and Closing Bells:

NGL Energy Partners Visits the NYSE CEO H. Michael Krimbill will ring the opening bell.


Executives from NYSE Liffe U.S. In Celebration of NYSE Liffe U.S. Being Named ‘Exchange of the Year’ by Risk Magazine will ring the closing bell.