Morning Report: January 18, 2012

Ahead of the Bell: Dow futures are trading up 40 points and S&P futures are trading up 5 points. Higher commodity prices and the anticipation of good earnings reports seem to be outweighing a World Bank’s warning to developing countries that the global economy will slump back into a downturn similar to the financial crisis of 2008 if the sovereign debt crisis in Europe does not get resolved. The report shows Europe could already be in a recession and the bank cut its global growth forecast to 2.5% for 2012 and 3.1% for 2013 from a forecasted 3.6% for each year, last June.

  • On the economic calendar today, the Bureau of Labor Statistics will report producer price index for December before the market opens, and is expected to be flat compared with 0.3% for November. Industrial production for December will be out after the market opens with its forecast to be 0.5% versus -0.2% for the previous month. The National Association of Home Builders will also report the housing market index for January after the market opens, it is anticipated to be in line with expectations for December at 21. Federal Reserve Governor, Daniel Tarullo will be testifying before the House Financial Services Subcommittee on the Volcker Rule. Companies reporting earnings include Amphenol, Bank of NY Mellon, Charles Schwab, Goldman Sachs, Kinder Morgan, PNC Financial, State Street, Taiwan Semiconductor, U.S. Bancorp, CLARCOR, and Sealy. The dollar is down against the euro and British pound and up against the Japanese yen.  Crude oil is currently trading at $101 a barrel.  Gold is trading at $1,655.  

  • Yesterday, stocks were up after China’s reported its growth rate rose more than expected, fueling speculation the government will easy monetary policy, and the Federal Reserve said  manufacturing in the New York region expanded at the fastest pace in nine months.

  • On CNBC today, James Stewart of The New York Times and Jim Paulsen of Wells Capital Management, talked about growth and the markets. Stewart said he saw surprising strength in the American economy towards to the end of 2011 driven by US consumer spending. He predicts a 30% increase in the US stock market this year and while he sees the US economy being driven by Europe, Stewart thinks continued good growth out of Asia could pull Europe out of its recession. Paulsen predicts increases of as much as 20% for the markets this year and hopes investors gain confidence in the US economy and return to the equity markets. Paulsen said 2011 was marked by earnings growth, but also higher anxiety. He sees increased valuations in the stock market for 2012 and some positives for the year driven by liquidity provision in Europe and the containment of their banking sector.   

  • Happy Wednesday, have a nice day.  

Tuesday’s Close

DJIA up 60.01 pts/+0.48%/12,482.07

S&P up 4.58 pts/+0.36/1,293.67

Nasdaq up 17.41 pts/+0.64/2,728.08

Wednesday’s Futures

Dow Futures up 40.00 pts/+0.33%

S&P Futures up 5.40 pts/+0.80%

Nasdaq Fut up 11.58 pts/+0.42%

Overseas Markets

FTSE +0.14%

CAC 40 +0.28%

NIKKEI 225 +0.99%

HANG SENG +0.30%

Overseas:  World stock markets were down today. European and Asian markets were down on after the world bank warned of a slowdown if the European debt crisis does not get resolved.      

Economic Reports:  Producer Price Index expected to be flat at 8:30 a.m., Industrial Production expected to be 0.5% at 9:15 a.m., and Housing Market Index expected to be 21 at 10:00 a.m.

Top Headlines:    

  • CNBC reports insurance companies could be on the hook for the Carnival Corp’s (CCL) Costa Concordia curse liner accident off the coast of Italy for about $800 million. 

  • Yahoo Inc. (YHOO) co-founder Jerry Yang has resigned from the board of directors, as the company is deciding whether to shed some of its assets in Asia or put itself up for sale. 

  • The SEC's inspector general David Kotz said he is stepping down at the end of the month. Kotz is most known for criticizing the agency for its failure to catch the Bernie Madoff Ponzi scheme.

  • Reports indicate BB&T Corp (BBT) and TD Bank a unit Toronto-Dominion Bank (TD) have submitted preliminary bids to buy BankUnited Inc. (BKU).

  • Reports indicate Sears Holdings Corp (SHLD) could be taken private by Bruce Berkowitz of Fairholme and Eddie Lampert.     


Gold:up $3.10 to $1,655.85
Oil:up 0.39 to $101.89
EUR/USD 1.2819 +0.0200
USD/JPY 76.8090  -0.0300
GBP/USD 1.5364 +0.0100

Volatility Index (VIX): As of the close of business Tuesday, January 17, the VIX is up 1.29 at 22.20

Companies Reporting Quarterly Earnings:     

Bank of New York Mellon (BK): Q4 EPS of $0.42 misses by $0.10. Revenue of $3.57B (-5.6% Y/Y) misses by $180M.

U.S. Bancorp (USB): Q4 EPS of $0.69 beats by $0.06. Revenue of $5.1B (+8.1% Y/Y) beats by $340M.

PNC Financial Svcs (PNC): Q4 EPS of $1.39 misses by $0.02. Revenue of $3.55B (-9.1% Y/Y) beats by $10M.

State Street (STT): Q4 EPS of $0.93 misses by $0.01. Revenue of $2.32B (+11.9% Y/Y) misses by $80M.

Northern Trust (NTRS): Q4 EPS of $0.70 beats by $0.02. Revenue of $955.6M (+6.6% Y/Y) misses by $16.75M.

Taiwan Semi (TSM): Q4 EPS of $1.22 beats by $0.04.

Today’s Opening and Closing Bells:

Mark Fisher, Dennis Gartman, Christopher Yeagley and the UBS ETRACS Team Visit the NYSE to Celebrate Recent Launches of the Risk ON ETN & Risk OFF ETN and will ring the opening bell.

Discover Financial Services Chairman and CEO David W. Nelms visits the New York Stock Exchange and will ring the closing bell.