Morning Report: June 9, 2011

Ahead of the Bell: Dow futures are trading up 39 points and S&P futures are trading up 5 points following six straight sessions of losses after the Fed's Beige Book confirmed the economy is slowing as a result of higher energy and food prices and a supply disruption from the Japanese earthquake. Reports indicate the EU is close to offering Greece a second bailout package. Crude oil is currently trading about $101 a barrel after a contentious OPEC meeting yesterday.

  • On the economic calendar today, the Department of Labor will release its weekly initial jobless claims before the market opens. Economists are expecting jobless claims to rise slightly to 418,000. April trade balance data will be out before the open and economists are expecting a $48.7 billion trade deficit. Philadelphia Federal Reserve Bank President Charles Plosser will speak on the economic outlook to the Society of Business Economists in London. Federal Reserve Bank Vice Chair Janet Yellen will speak at Cleveland Federal Reserve Bank Policy Forum on housing. The dollar down against the major currencies.
  • Yesterday, stocks were down again on choppy trading as investors continue to worry about global growth, energy companies were up on higher crude oil prices. Also, Fitch Ratings warned U.S. ratings could be lowered if the government fails to honor payments on Treasury securities due on August 15.
  • On CNBC today, David Walker, Comeback American Initiative, talked about the debt ceiling issue and the economy. Walker said we have to address the debt ceiling issue as default is not an option and we need a compromise on comprehensive tax reform. He also said social security needs to be addressed. Walker attended the Yale Summit at the NYSE yesterday and the main topics at the Summit were double dip recession, the incredible debt load and how to deal with unemployment. He commented that we have a failure to act until crunch time, which is now.
  • Also on CNBC today, Mohamed El-Erian, PIMCO CEO and CIO, talked about the status of the economy.  El-Erian said he does not see another recession, even though the housing market is in a double dip, and he does not see a QE3 or additional stimulus. El-Erian said he is worried about a string of bad data from Brazil and China which is creating some pressure on corporate balance sheets, possibly risking the ability to sustain the economy’s current growth rate. El-Erian said PIMCO got out of Greece, Ireland, and Portugal early on.  El-Erian pointed out there is positive growth in technology due to innovation and improvements in manufacturing, but the labor market is affected by the credit and housing markets where we need to see inventory clear up and credit to flow more freely again. El-Erian said he is stunned how quickly consensus grow rates have dropped and that this is much more than a cyclical downturn.   
  • Happy Thursday, have a nice day. 

Wednesday’s Close

DJIA down 21.87 pts/-0.18%/12,048.94

S&P down 5.38 pts/-0.42%/1,279.56

Nasdaq down 26.18 pts/-0.97%/2,775.38

Thursday’s Futures

Dow Futures up 39 pts/+0.32%

S&P Futures up 4.90 pts/+0.38%

Nasdaq Fut up 7.75 pts/+0.35%

Overseas Markets

FTSE +0.02%

CAC 40 +0.07%

NIKKEI 225 +0.19%

HANG SENG +0.23%

Overseas:  World stock markets were mixed today.  European markets are trading down on fears of interest rate hikes.  Asian markets were down on concerns of further monetary policy tightening.

Economic Reports:  International Trade expected to be $-49.0 B. & Jobless Claims expected to be 418K @8:30 a.m.

Top Headlines:    

  • Bloomberg reports KKR & Co.,(KKR) is pursuing a minority investment in ING’s online bank.  General Electric (GE) and Capital One (COF) submitted bids last week for the bank.
  • Target (TGT) said it is raising its dividend 20% to 30 cents a share from 25 cents payable Sept.10 to holders of record as of Aug. 18.  after reviving profit growth for two straight years.
  • Reports indicate regulators are considering increasing the capital requirements for financial institutions in July over how much funds firms should hold to protect against potential losses, although there has been debate about what new thresholds would be applied.
  • Reports indicate the SEC is probing Goldman (GS) over transactions with Libya’s sovereign fund that may have violated laws including a $50 million fee Goldman agreed to pay the Libyan fund.
  • Citigroup ( C ) said hackers accessed over 200,000 customers accounts and viewed account numbers, email addresses, and contact information in the breach.
  • The bank of England maintains its benchmark interest rate at 0.50%. Also, the ECB left its benchmark interest rate unchanged at 1.25%.
  • The Senate rejected a proposal to repeal a part of the Dodd-Frank Act that addresses debit card fees that cost banks billions of dollars in annual revenue, putting pressure on banks yesterday while possibly helping some retailers.

Commodities/Currency:

Gold:down $2.10 to $1,535.85

Oil:up $0.48 to $101.22

EUR/USD 1.4595 +0.0017

USD/JPY 80.0950  +0.1850

GBP/USD 1.6413 +0.0018

Volatility Index (VIX): As of the close of business Wednesday, June 8, the VIX is up 0.70 pts to 18.76

Companies Reporting Quarterly Earnings:

J.M. Smucker Company (SJM): FQ4 EPS of $1.00 beats by $0.02. Revenue of $1.18B (+11% Y/Y) beats by $0.02B. Sees FY'12 EPS of $5.00-5.15 and revenues of $5.79B.

Today’s Opening and Closing Bells:

Fusion-io Celebrates IPO David A. Flynn, President and CEO, Co-founder Rick White & Stephen G. Wozniak, Chief Scientist and co-Founder of Apple Computer, Inc. will ring the opening bell.

Associated Estates Realty Corporation Visits the NYSE President and CEO Jeffrey I. Friedman will ring the closing bell.