Morning Report: February 27, 2012

Ahead of the Bell: Dow futures are trading down 51 points and S&P futures are trading down 6 points after G20 finance leaders concluded their meeting in Mexico by telling Europe, if they want additional funds from the rest of the world, it must commit more of its own money.  Moody's is reviewing Greece's latest bail-out package, as the debt laden nation could still go bankrupt.  Crude oil will be in focus today, following higher gas prices at the pump.  Crude is currently trading at $108 a barrel.



  • On the economic calendar today, the national association of retailers will release its pending home sales index for January and it is expected to be 1.5% compared with -3.5% for December.  Companies reporting earnings today include Lowes, UniSource Energy, and Visteon. The dollar is up against the major currencies. Gold is trading at $1,766.  

  • Last week, the Dow flirted with 13K, and the other indices traded higher after EU finance ministers agreed to provide Greece with its second round of rescue funds.  For the week, the Dow gained 0.3%, the S&P 500 climbed 0.3%, and the Nasdaq rose 0.4%.  The economic data for the week was better than expected, led by initial jobless claims and housing data, more signs the employment situation and the housing sector are improving.  Michigan consumer sentiment index rose much more than expected to its highest level since February 2011. However, the PMI data showed some signs of weakness.  Fourth quarter earnings season is winding down and a few retailers including Sears Holding and the GAP reported disappointing year end results.  Computer makers, Hewlett Packard and Dell also reported below expectations fourth quarter earnings. The situation in Iran remains very volatile, as crude oil prices continues to rise.

  • The week ahead: stocks will react to headlines from Europe, after Greece began its bond swap program.  The ECB has been credited for forging the Greek deal and initiating the rally in the euro and the equity markets.  There will a slew of economic data this week, but investors will focus on a few notable reports including auto sales, chain store sales, and ISM manufacturing data.  Federal Reserve Chairman, Ben Bernanke is scheduled to give his semiannual testimony before the House Financial Services on Wednesday, on monetary policy. The tensions in the middle east, between Iran and Israel, has been driving crude oil prices higher.  On Friday West Texas Crude closed about $110 a barrel, as prices sky rocket at the pump. 

  • On CNBC today, Chairman of Berkshire Hathaway Inc., Warren Buffett, talked about the economy, markets, and taxes.  Buffett said our market system has worked well for over two hundred years and it is working well right now.  He added that it’s not worth getting pessimistic on the US.  Investors should be investing in land, buildings and single family homes, or buying companies that invest in these assets.  Buffett expects the housing market to come back this year, as the economy gets better and does not feel oil prices will derail the recovery.  Buffett went on to say, the tax issue in the US is an important one that must be solved. As a country, we are taking in too little and spending too much and we can’t solve our deficit  problem only through growth.  Comprehensive tax reform is necessary.   

  • The Artist wins 5 awards at the 84th annual Academy Awards.

  • The Act of Valor was the top movie at the box office this weekend.

  • Happy Monday, have a nice day, and a wonderful week.

Friday’s Close


DJIA down 1.74 pts/-0.01%/12,982.95


S&P up 2.28 pts/+0.17/1,365.74


Nasdaq up 6.77 pts/+0.23/2,963.75


 


Monday’s Futures


Dow Futures down 51.00 pts/-0.39%


S&P Futures down 6.40 pts/-0.48%


Nasdaq Fut down 11.58 pts/-0.42%


 


Overseas Markets


FTSE -0.85%


CAC 40 -1.16%


NIKKEI 225 -0.14%


HANG SENG -0.88%


 


Overseas:  World stock markets were down today.  European and Asian markets are down after G20 nations rebuffed calls from the euro zone to boost international lending.      


 


Economic Reports:  Today,Pending Home Sales Index, later in the week, Durable Goods Orders, S&P Case-Shiller HPI, Consumer Confidence, GDP, Chicago PMI, Fed Beige Book, Motor Vehicle Sales, Initial Jobless Claims, Personal Income and Outlays, and ISM Mfg Index.


 


Top Headlines:    



  • The trial to decide who should pay for the Gulf of Mexico oil spill has been delayed by a week to allow BP (BP) to cut a deal with businesses and individuals affected by the disaster.

  • Reports indicate Blackstone Group LP (BX) is expected to announce a $2 billion equity investment in Cheniere Energy Partners, as it bets on natural-gas exports. 

  • Berkshire Hathaway (BRK.A) CEO Warren Buffett has identified his successor, but did not disclose by name in his annual letter to shareholders.

  • Reports indicates Sprint Nextel Corp's (S) board has rejected a deal to acquire MetroPCS Communications (PCS) despite an endorsement from CEO Dan Hesse.     

Commodities/Currency:


Gold:down $5.10 to $1,766.85
Oil: down 1.33 to $108.47

EUR/USD 1.3399 -0.0047
USD/JPY 80.6950  -0.3050
GBP/USD 1.5844 -0.0028


 


Volatility Index (VIX): As of the close of business Friday, February 24, the VIX is down 0.51 at 17.31


Companies Reporting Quarterly Earnings:     


Lowe's (LOW): Q4 EPS of $0.29 beats by $0.06. Revenue of $11.6B (+11% Y/Y) beats by $260M.


AES (AES): Q4 EPS of $0.23 beats by $0.01. Revenue of $4.27B (+1% Y/Y) beats by $800M.


UniSource Energy (UNS): Q4 EPS of $0.22 misses by $0.04. Revenue of $344M (-3.7% Y/Y) beats by $8M.


Visteon (VC): Q4 EPS of -$0.51 may not be comparable to consensus of $0.94. Revenue of $1.86B (-1.1% Y/Y) in-line.


Today’s Opening and Closing Bells:


 


The Committee Encouraging Corporate Philanthropy Celebrates International Corporate Philanthropy Day at will ring the opening bell.


 


Imation President and CEO Mark Lucas will ring the closing bell.