Morning Report: November 15, 2011

Ahead of the Bell: Dow futures are trading down 111 points and S&P futures are trading down 13 points this morning as the Italian 10-year bond yield crosses back over 7%, and economic data on growth in the Euro zone continues to weigh on investor sentiment.

  • On the economic calendar today, PPI which is expected to be -0.3%, Retail Sales, expected to be +0.4%, and the Empire State Manufacturing Index, expected to be -1.7, are all expected out at 8:30 this morning.  Companies reporting earnings include Agilent Technologies, Beezer Homes, Dick’s Sporting Goods, Home Depot, PVH Corp., Saks Inc., TJX Cos, and Wal-Mart Inc. The dollar is down against the Euro, the Japanese Yen and British pound.  Crude oil is currently trading at $98 a barrel. Gold is trading at $1,763.
  • The Euro zone economy grew just 0.2% in the third quarter, consistent with what had been reported in the first two quarters of 2011, but outlook for the fourth quarter is weighing on investors. Germany posted a 0.5% growth for the quarter, but the ZEW institute’s economic sentiment fell to -55.2 for November, which was much lower than October’s reading and missed economists’ expectations.
  • Markets were lower yesterday after Italy sold €3 billion in five-year bonds at 6.29%, the highest yield in fourteen years, and up almost a full percent from October’s offering, which was at 5.32%.
  • New York City Police have evicted the “Occupy Wall Street” protesters from Zuccotti Park overnight to clean the area.  Officials said the park had become a “health and safety issue.”
  • On CNBC today, Chairman, CEO and Founder of Gamco Investors Inc., Mario Gabelli was discussing where he sees opportunities for investors in today’s market. Gabelli said he sees the best opportunities are in the Middle East in companies that supply parts to Boeing. While he singled out this one sector, Gabelli also suggested investing in American energy technology, citing the risk that the Arab Spring protests could spread to Saudi Arabia, causing oil prices soar higher. If this happens Gabelli does not believe the American consumer will be able to handle the increased costs, and we will have to turn to alternatives to importing Arab oil.  

Monday’s Close

DJIA down 74.70 pts/-0.61%/12,078.98

S&P down 12.06 pts/-0.95%/1,251.79

Nasdaq down 21.53 pts/-0.80%/2,657.22

Tuesday’s Futures

Dow Futures down 111.00 pts/-0.92%

S&P Futures down 13.00 pts/-1.04%

Nasdaq Fut down 21.75 pts/-0.93%

Overseas Markets

FTSE -1.61%

CAC -2.48%

NIKKEI 225 -0.72%

HANG SENG -0.82%

Overseas:  World stock markets were lower today because of concerns about Europe.

Economic Reports:  PPI (expected to be -0.3%), Retail Sales (expected to be +0.4%), and the Empire State Manufacturing Index (expected to be -1.7) at 8:30 am

Top Headlines:    

  •   UBS has named Sergio Ermotti CEO.  Ermotti was named interim-CEO following the Swiss Bank’s $2 billion trading scandal, replacing Oswald Gruebel.
  •   The Bank of New York Mellon announced that it expects fourth quarter profit will be impacted by $80-100 million because of cost-cutting plans announced, which included shedding real estate, and outsourcing technology functions.
  •   U.S. District Judge Carl Barbier ruled yesterday that Alabama and Louisiana may seek damages from companies from the Deepwater Horizon oil spill last year.
  •   TransCanada Corporation announced that it supports the proposed legislation in Nebraska to move the Keystone XL pipeline project forward, allowing Nebraskans to play an important role in deciding the final route of the pipeline.

Commodities/Currency:

Gold:down $14.70 to $1,763.90

Oil:down $0.42 to $97.80

EUR/USD 1.3526 -0.0104

USD/JPY 76.95  -0.13

GBP/USD 1.5869 -0.0029

Volatility Index (VIX): As of the close of business Monday, November 14, the VIX is up 1.18 at 31.22

Companies Reporting Quarterly Earnings:

Staples (SPLS) Q3 EPS of $0.47 in-line. Revenue of $6.6B (+0.5% Y/Y) misses by $100M.

Home Depot (HD):Q3 EPS of $0.60 beats by $0.02. Revenue of $17.3B (+4.4% Y/Y) beats by $200M.

Covidien (COV):FQ4 EPS of $1.08 beats by $0.05. Revenue of $3.08B (+15% Y/Y) in-line

Today’s Opening and Closing Bells:

Ingram Micro Inc. visits the NYSE.To celebrate the occasion, representatives from the company will ring The Opening BellSM.

St. Jude Children’s Research Hospital visits the NYSE to help raise awareness for the lifesaving mission of St. Jude. In honor of the occasion, Chief Executive Officer Rick Shadyac and Patients of St. Jude Children’s Research Hospital ring The Closing BellSM.