Morning Report: January 24, 2011

Ahead of the Bell: Dow futures are trading down 56 points and S&P futures are trading down 8 points after euro zone ministers rejected an offer made by private bondholders to refinance Greece's debt. Greece is willing to pay 3.5% coupon, which is backed by the EU, but private institutions say they will accept a minimum of 4% rate for existing debt. Reports suggest Portugal will need additional funding from the EU and IMF. The chip maker sector is in focus today, following better than expected 4Q earnings result from Texas Instruments.

  • On the economic calendar today, the FOMC will begin its two-day meeting and conclude on Wednesday afternoon followed by a press conference. Fed watchers will be looking for any hints from the agency for a possible of QE3. President, Barak Obama will address the nation tonight on his annual State of the Union Address to a joint session of Congress, followed by a Republican rebuttal delivered by Indiana Governor, Mitch Daniels. Companies reporting earnings include Advanced Micro Devices, Air Products & Chemicals, AK Steel, Ashland, Baker Hughes, Coach, Cooper Industries, E.I. DuPont, EMC Corporation, Ethan Allen, Harley-Davidson, Johnson & Johnson, and KeyCorp. The dollar is up against the euro and down against the British pound and the Japanese yen. Crude oil is currently trading at $99 a barrel.  Gold is trading at $1,668.  
  • Yesterday, stocks drifted between positive and negative territory and ended the day mixed, as investors grew jittery, amid uncertainty surrounding Greek debt talks and whether Europe will be able to tame its debt crisis.
  • On CNBC today, Spencer Bachus, Chairman of the House Financial Services Committee, talked about the new Consumer Financial Protection Agency and the mortgage industry. Bachus said the way the agency is set up, it has sole responsibility in setting the price for some products and he disagrees with this approach.  He believes the agency should be like a commission with a board, comparable to the SEC. Bachus also believes the agency needs to be separate with safety and soundness for consumers and the economy. He pointed out, there were a lot of unregulated companies that were doing things they were not supposed to do that led up to the financial crisis, and the regulator fell asleep. Finally, Bachus said the mortgage industry is a prime example of this, there were a lot of fraud and abuse in the industry.
  • Happy Tuesday and have a nice day.  

Monday’s Close

DJIA down 11.66 pts/-0.09%/12,708.82

S&P up 0.62 pts/+0.05/1,316.00

Nasdaq down 2.53 pts/-0.09/2,784.17

Tuesday’s Futures

Dow Futures down 56.00 pts/-0.37%

S&P Futures down 8.40 pts/-0.51%

Nasdaq Fut down 9.58 pts/-0.37%

Overseas Markets

FTSE -0.83%

CAC 40 -1.16%

NIKKEI 225 +0.22%

HANG SENG +0.84%

Overseas:  World stock markets were down today.  European and Asian markets were down after the EU rejected an offer made by private investors to refinance Greece’s debt.      

Economic Reports:  FOMC Meeting Begins.

Top Headlines:    

  • Macy's (M) is suing Martha Stewart (MSO) for exclusivity rights to allow the company to sell certain Martha Stewart-branded products.
  • Watson Pharmaceuticals (WPI) announced it is buying the South East Asian generic drug business from India's Strides Arcolab for about $396 million.
  • Semtech Corporation (SMTC) said it plans on acquiring Canada's Gennum Corporation for $497 million (C$500 million).
  • The regulator for Fannie Mae and Freddie Mac advised Congress that forcing the two mortgage companies to write down loan principal would require another $100 billion.
  • Chesapeake Energy Corporation (CHK) announced it will reduce drilling activity this year after natural gas prices tumbled.
  • Intel Corporation (INTC) said it is acquiring Qlogic Corporation's InfiniBrand unit for $125 million to sure up its networking technology business.     

Commodities/Currency:

Gold:down $8.10 to $1,668.85

Oil:down 0.87 to $99.20

EUR/USD 1.3003 -0.0100

USD/JPY 77.3400  +0.3700

GBP/USD 1.5579 +0.0012

Volatility Index (VIX): As of the close of business Monday, January 23, the VIX is up 0.39 at 18.67

Companies Reporting Quarterly Earnings:     

Verizon (VZ): Q4 EPS of $0.52 misses by $0.01. Revenue of $28.4B (+8% Y/Y) in-line.

Kimberly-Clark (KMB): Q4 EPS of $1.28 misses by $0.02. Revenue of $5.2B (+2% Y/Y) in-line.

Brinker International (EAT): FQ2 EPS of $0.47 beats by $0.02. Revenue of $681.9M (+1.5% Y/Y) misses by $4.1M.

MGIC Investment (MTG): Q4 EPS of -$0.60 beats by $0.13. Revenue of $447M (+23.8% Y/Y) beats by $132M.

Quest Diagnostics (DGX): Q4 EPS of $1.19 beats by $0.13. Revenue of $1.88B (+3% Y/Y) beats by $20M.

Travellers (TRV): Q4 EPS of $1.48 misses by $0.02. Revenue of $6.3B (+0.5% Y/Y) beats by $70M.

Synovus Financial (SNV): Q4 EPS of $0.01 beats by $0.01.

Coach (COH): FQ2 EPS of $1.18 beats by $0.03. Revenue of $1.45B (+14.6% Y/Y) beats by $0.02B.

Harley-Davidson (HOG): Q4 EPS of $0.24 beats by $0.01. Revenue of $1.03B (+12% Y/Y) beats by $20M.

Regions Financial (RF): Q4 EPS of $0.09 beats by $0.02. Tier 1 Common ratio estimated at 8.5%, or 7.7% on Basel III basis.

Today’s Opening and Closing Bells:

Glowpoint, Inc. Celebrates Recent NYSE Amex Listing President and CEO Joe Laezza will ring the opening bell.

Edward T. McMahon, SVP of US Sales at NYSE Euronext will mark his retirement after seven years at the Exchange and over 30 years in the industry will ring the closing bell.