Morning Report: August 29, 2011

Ahead of the Bell: Dow futures are trading up 103 points and S&P futures are trading up 12 points following hurricane Irene’s destruction of the east coast. NYSE Euronext is open for business as usual today including New York Stock Exchange, NYSE Arca, NYSE Amex, NYSE Arca Options, NYSE Amex Options, and NYSE Liffe U.S. Most financial firms are also open for business. Reports indicate the anticipated cost to insurers of the storm is about $2.6 billion from a previous estimate of $14 billion last week.

  • On the economic calendar today, the July numbers on personal income and spending will be out before the market opens.  According to Briefing.com, economists expect personal income to rise by 0.3% and spending to increase by 0.5%. Pending home sales figures for June will be out after the market opens and are expected to fall 1.4%. Companies reporting earnings include Donaldson Co., and LDK Solar. The dollar is down against other major currencies.  Gold is trading at $1,819.   
  • Last week, the volatility continued as investors were looking for the Fed to provide additional stimulus to aid the economy. For the week, the Dow and S&P finished up more than 4%, and the Nasdaq rose 5.7%. Fed Chairman, Ben Bernanke, in his speech at an annual gathering of economists and central bankers in Jackson Hole, WY said the agency would do all it could to help boost the recovery. Most of the economic data for the week was disappointing, including revised 2Q GDP, and jobless claims, however, durable goods orders were a little better than expected. Earlier in the week, a 5.8 magnitude earthquake hit Mineral, VA and was felt all the way along the east coast, causing major disruptions in traffic and businesses. The Gaddafi regime collapsed after rebel forces took control of Tripoli.
  • The week ahead, Europe will be in focus since Greece's finance minister has taken a hard line with European banks over the country's rescue plan. A slew of economic data is due this week including Personal Income and Outlays, Pending Home Sales Index, S&P Case-Shiller Index, Consumer Confidence, FOMC Munities, Chicago PMI, Factory Orders, Jobless Claims, Productivity & Costs, and ISM Mfg Index. The most important economic data for the week will be the nonfarm payrolls report on Friday. According to economists surveyed by Thomson Reuters, job growth in August is expected to have risen by 80,000 in August. The job growth is projected from a drop of 25,000 to a gain of 160,000 and the unemployment rate is expected to be 9.1%. Fed Chairman Bernanke indicated he is looking for President Obama and Congress to implement fiscal policies to boost growth. Gas prices are expected to spike following the disruption caused by hurricane Irene. 
  • On CNBC today, Robert Doll, vice chairman of BlackRock Inc., talked about the merger of two of Greece’s banks EFG Eurobank Ergasias SA and Alpha Bank and the state of the economy. Doll said the merger is a good sign for the banking system; the write-off is good for the industry and might help stem the debt crisis in Europe. On Warren Buffet’s purchase of preferred shares in Bank of America, Doll said Buffet always seem to get good deals. Doll is not hot on the banking sector right now.  Doll pointed out we are not going into a recession, but the economy will be soggy for the while.  However, Doll is concerned about corporate earnings; investors don’t have much confidence in the market. Doll went on to say, the unemployment number will be the most important report this week, which will give us some indication if we are heading into a recession.    
  • Hope everyone and their families are doing well after hurricane Irene. Let us know you are ok. Happy Monday, have a nice day and wonderful week.

Friday’s Close

DJIA up 134.72 pts/+1.21%/11,284.54

S&P up 17.53 pts/+1.51/1,176.80

Nasdaq up 60.22 pts/+2.49/2,479.85

Monday’s Futures

Dow Futures up 103.00 pts/+0.91%

S&P Futures up 12.50 pts/+1.33%

Nasdaq Fut up 21.58 pts/+1.58%

Overseas Markets

FTSE -1.18%

CAC 40 +1.52%

NIKKEI 225 +0.43%

HANG SENG +1.51%

Overseas:  World stock markets were up today. European markets were up on consolidation of Greek banks.  Asian markets were up after Japan elected Yoshihiko Noda, head of Japan’s ruling party to succeed Prime Minister Kan as the yen continues to strengthen.      

Economic Reports:  Today, Personal Income and Outlays is expected to be 0.3% and 0.5% respectively at 8:30 a.m. & Pending Home Sales Index is expected to be -0.1% at 10:00 a.m. Later in the week, Consumer Confidence, Chicago PMI, Factory Orders, Jobless Claims, Productivity and Costs, ISM Mfg Index, and the Employment Situation on Friday..

Top Headlines:    

  • Venoco, Inc. (VQ) announced it received a proposal from Timothy M. Marquez, Chairman & CEO of the company, who owns about  50.3% of VQ, to acquire all of the outstanding shares for $12.50/share in cash.
  • Bloomberg reports JPMorgan (JPM), Wells Fargo (WFC), and Lone Star Funds have won bids for Anglo Irish Bank's ANGIB.UL $9.5 billion U.S. commercial real estate loan portfolio.  
  • The Federal Reserve said it plans on holding three public meetings on the proposed purchase of ING Direct online bank by Capital One Corp (COF) to determine benefits to the public.

Commodities/Currency:

Gold:up $21.10 to $1,885.85

Oil:up $0-65 to $85.56

EUR/USD 1.4498 +0.0001

USD/JPY 76.6451  +0.0150

GBP/USD 1.6390 +0.0022

Volatility Index (VIX): As of the close of business Friday, August 26, the VIX is up 0.38 at 43.05

Companies Reporting Quarterly Earnings:     None as of yet.

Today’s Opening and Closing Bells:

Deutsche Bank (DB) celebrates the 2011 Deutsche Bank Championship. Seth Waugh, CEO of Deutsche Bank Americas and defending champion golfer Charley will ring the opening bell.

Donaldson Company (DCI), a leading worldwide provider of filtration systems, visits the NYSE.  Bill Cook, Chairman President & CEO will ring the closing bell.