Morning Report: February 23, 2012

Ahead of the Bell: Dow futures are trading up 15 points and S&P futures are trading up 2 points after German business confidence rose more than expected and boosted expectations of avoiding a recession.  However, the European Commission warned economic output for the 17 member union will shrink, which may force the EC to revise its forecast. Computer makers will be in focus today following Hewlett Packard's disappointing 4th quarter earnings results and lowered guidance.



  • On the economic calendar today, the Labor Department will issue weekly initial jobless claims before the market opens and economists are forecasting a reading of 355K compared with 348K for the previous week.  FHFA House Price Index for December will be out after the market opens and it is anticipated to be 0.2% versus 1.0% for November.

  • Companies reporting earnings today include Kohl's, Target, IMAX, Public Storage, American International Group, Gap, Live Nation, and Salesforce.com. The dollar is up against the Japanese yen and down against the euro and British pound.  Crude oil is currently trading at $106 a barrel.  Gold is trading at $1,776.  

  • Yesterday, stocks fell globally for a second day in a row and commodities declined after reports suggest European and Chinese economies showed signs of declining growth.

  • On CNBC today, Stephen Roach, Morgan Stanley Asia non-executive chairman, talked about prospects for the US economy.  Roach said he is not prepared to give the US economy a green light on growth yet and pointed out that the last few quarters have been very disappointing.  Improvements have been minimal, debt is still high and savings still low, and the economy is pretty fragile.  He thinks the biggest problem is that a lot of damage was done during the build-up to the crisis including excess borrowing, insufficient saving, and underwater collateral and now consumers are struggling to repair their own balance sheets and not spending while they do so.  Discretionary income growth for consumers is still weak so when you get shocks to the economy, like higher gasoline prices, the cushion just isn’t there creating fears of a double dip recession.  

  • Tonight, Linsanity takes his talents to South Beach to visit King James and the Miami Heat. Tickets are currently running about $600 a seat and around $8,000 for court side.

  • Happy Thursday and have a nice day.

Wednesday’s Close


DJIA down 27.02 pts/-0.21%/12,938.67


S&P down 4.55 pts/-0.33/1,357.66


Nasdaq down 15.40 pts/-0.52/2,933.17


 


Thursday’s Futures


Dow Futures up 15.00 pts/+0.12%


S&P Futures up 2.40 pts/+0.09%


Nasdaq Fut up 5.58 pts/+0.19%


 


Overseas Markets


FTSE +0.20%


CAC 40 -0.08%


NIKKEI 225 +0.44%


HANG SENG -0.78%


 


Overseas:  World stock markets were up today.  European and Asian markets are up on better than expected business confidence numbers from Germany.


 


Economic Reports:  Initial Jobless Claims expected to be 355K at 8:30 a.m., FHFA House Price Index expected to be 0.2% at 10:00 a.m. and Kansas City Fed Manufacturing Index expected to be 9 at 11:00 a.m.


 


Top Headlines:    



  • Potash Corporation (POT), the world's largest fertilizer maker, said it is extending the temporary shutdown at two of its mines to reduce inventory due to weak demand.

  • CNBC reports Google (GOOG) will allow a “do-not- track” button to be embedded in its web browser, letting users restrict the amount of data that can be collected about them.

  • A US district Judge ruled BP Plc (BP) and Anadarko (APC) are responsible by law for polluting the water, because they owned the Gulf of Mexico well, allowing the government to seek fines.

  • A court in Shanghai rejected a request by the Shenzhen unit of Proview International Holdings Ltd. to halt sales of Apple Inc.’s (APPL) iPad tablet in the city.  

Commodities/Currency:


Gold:down $5.10 to $1,776.85
Oil: down 0.09 to $106.65

EUR/USD 1.3293 +0.0048
USD/JPY 80.0750  -0.1990
GBP/USD 1.5715 +0.0050


 


Volatility Index (VIX): As of the close of business Wednesday, February 22, the VIX is up 0.10 at 18.29


Companies Reporting Quarterly Earnings:     


Kohl's (KSS): Q4 EPS of $1.81 beats by $0.01. Revenue of $6.02B (-0.3% Y/Y) in-line.


American Tower (AMT): Q4 EPS of $0.51 beats by $0.21. Revenue of $653.1M (+20% Y/Y) in-line.


MetroPCS Communications (PCS): Q4 EPS of $0.25 beats by $0.08. Revenue of $1.24B (+16% Y/Y) in-line.


SXC Health Solutions (SXCI): Q4 EPS of $0.48 in-line. Revenue of $1.37B (+161% Y/Y) beats by $100M.


Tenaris (TS): Q4 EPS of $0.68 may not be comparable to consensus of $0.32. Revenue of $2.75B (+33.3% Y/Y).


Hormel Foods (HRL): FQ1 EPS of $0.48 in-line. Revenue of $2.04B (+6.1% Y/Y) in-line.


Foster Wheeler (FWLT): Q4 EPS of $0.39 misses by $0.05. Revenue of $1.13B (-6.8% Y/Y) misses by $70M.


IMAX (IMAX): Q4 EPS of $0.14 beats by $0.01. Revenue of $66.7M (-3.6% Y/Y) beats by $3M.


Berry Petroleum Company (BRY): Q4 EPS of $0.76 beats by $0.04. Revenue of $240M (+0.8% Y/Y) beats by $9M.


Today’s Opening and Closing Bells:


 


United States Commodity Funds Celebrates Listing on NYSE Arca Chief Investment Officer John Hyland will ring the opening bell.


 


H.E. Didier Reynders, Belgium’s Deputy Prime Minister and Minister for Foreign Affairs, Foreign Trade, and European Affairs, will ring the closing bell.