Morning Report: January 17, 2012

Ahead of the Bell: Dow futures are trading up 116 points and S&P futures are trading up 11 points after China reported better than expected GDP data, over shadowing Standard and Poor's downgrade of the euro zone rescue fund. The figures released by the Chinese government showed growth slowed less than anticipated in the last three months of 2011, to 8.9%, compared with a forecast of 8.6%.

  • On the economic calendar today, Empire State manufacturing survey for January will be out before the market opens, and is expected to be 10.50 compared with 9.53 for December. Companies reporting earnings include CitiGroup, First Republic, Forest Laboratories, M&T Bank, McMoran Exploration, New Oriental Education, and Wells Fargo. The dollar is down against the major currencies. Crude oil is currently trading at $100 a barrel.  Gold is trading at $1,663.  
  • Last week, talk of the euro zone downgrade spurred a selloff, but the equity markets managed to remain positive for the week. The Dow was up 0.5%, the S&P gained 0.9%, and the Nasdaq rose 1.4%. CNBC reported the Federal Reserve was considering more quantitative easing in the near future to boost economic growth. Economic reports for the week were a mixed bag, Michigan consumer sentiment for January was better than forecasted however, weekly initial jobless claims and retail sales were disappointing. Fourth quarter earnings season kicked off after Alcoa and JPMorgan reported results in line with expectations. Mitt Romney won the Republican Primary in New Hampshire but faces a tougher challenge in South Carolina.
  • The week ahead is expected to be volatile following Standard and Poor's downgrade of the European rescue fund and nine euro zone nations including France, Austria, Cyprus, Italy, Portugal, Spain,  Malta, Slovakia and Slovenia. The announcement comes after the markets were closed on Friday. Investors will try to balance improving economic data in the US and the deteriorating sovereign debt crisis in Europe. Banking stocks are expected to be under pressure.  Fourth quarter earnings season will get into full swing with a few big names due to report including, Bank of America, General Electric, Intel, Goldman Sachs, and Microsoft. Investors will get a slew of economic data including housing, manufacturing, consumer price index, and jobless claims. 
  • On CNBC today, Senator Pat Toomey, member of the Deficit Reduction Committee, talked about the Republican presidential nomination and the need to defend capitalism. Toomey said he is extremely disappointed with the attacks by Newt Gingrich on Mitt Romney, and likens them to attacking our capitalist system. Toomey believes this is the time to defend capitalism, it’s our system of living and the US’s way of having a flexible system that creates jobs. He went on to say that capitalism is the only system that is consistent with individual liberties, and the benefits of a capitalist economy far out way those of any other system. Toomey believes these attacks will ultimately hurt Gingrich’s chances at the nomination.   
  • Happy Tuesday, have a nice day and a wonderful week.  

Friday’s Close

DJIA down 48.96 pts/-0.39%/12,422.06

S&P down 6.41 pts/-0.49/1,289.09

Nasdaq down 14.03 pts/-0.51/2,710.67

Tuesday’s Futures

Dow Futures up 107.00 pts/+0.86%

S&P Futures up 11.40 pts/+0.80%

Nasdaq Fut up 24.58 pts/+0.98%

Overseas Markets

FTSE +0.74%

CAC 40 +1.36%

NIKKEI 225 +1.05%

HANG SENG +3.24%

Overseas:  World stock markets were up today. European and Asian markets were up on better than expected growth data from China.      

Economic Reports:  Today Empire State Mfg Survey expected to be 10.50 at 8:30 a.m., later in the week Producer Price Index, Industrial Production, Housing Market Index, Consumer Price Index, Housing Starts, Initial Jobless Claims, Philadelphia Fed Survey, Fed Balance Sheet, and Existing Home Sales.

Top Headlines:    

  • AIA Group Ltd partially owned by AIG (AIG) is expected to bid for ING Greop's Asian insurance unit which could be valued at about $6 billion.
  • Reports indicate federal regulators are investigating whether Standard and Poor's ignored its own standards when assessing mortgage securities.
  • Pembina Pipeline Corp. announced it is acquiring Provident Energy Ltd. (PVX) for about $3.2 billion Canadian (US$3.1 billion) in stock. 
  • Royal Bank of Scotland Group Plc (RBS) said it is selling its aircraft-leasing division to Sumitomo Mitsui Financial Group Inc. for about $7.3 billion.
  • FT reports Total (TOT), Statoil (STO), and Maersk Oil  are expected to bid for Anadarko Petroleum's (APC) Brazilian business which could be valued at about $3 billion.     

Commodities/Currency:

Gold:up $19.10 to $1,663.85

Oil:down 1.98 to $100.89

EUR/USD 1.2772 +0.0117

USD/JPY 76.8175  +0.0200

GBP/USD 1.5374 +0.0059

Volatility Index (VIX): As of the close of business Friday, January 13, the VIX is up 0.44 at 20.91

Companies Reporting Quarterly Earnings:     

Check Point Software (CHKP): Q4 EPS of $0.84 beats by $0.03. Revenue of $356.8M (+12% Y/Y) in-line.

Today’s Opening and Closing Bells:

Fortuna Silver Mines Visits the New York Stock Exchange President and CEO Jorge Ganoza will ring the opening bell.

Earthstone Energy Visits NYSE to Celebrate Recent Transfer to NYSE Amex from Nasdaq Ray Singleton, President, Chairman and CEO will ring the closing bell.