Morning Report: May 13, 2011

Ahead of the Bell: Dow futures are trading up 13 points and S&P futures are trading up 2 points after Germany and France showed higher than forecasted economic growth as a result of higher exports fueled by domestic spending.  However, traders will be focusing on a report by the IMF which warned that the European debt crisis could spread to core EU countries and other emerging nations.  Commodities are trading higher including gold, silver and copper.  Crude oil is currently trading about $99 a barrel.

  • On the economic calendar today, the Labor Department will release April consumer price index before the market opens.  A preliminary reading, the consumer sentiment survey, will be out after the market opens.  Companies reporting earnings include Agilent Technologies, Dr. Reddy’s Labs, and Ivanhoe Mines.  The dollar is up against the euro and Japanese yen and down against the British pound.   
  • Yesterday, the equity markets recovered from earlier losses as the dollar retreated and materials companies moved higher after a report from the International Energy Agency said demand for crude oil would be lower than previously expected.
  • Reports indicate regulators looking into Greece's compliance with EU and IMF rescue package have found problems and were seeking deeper cuts to avoid the country from falling into further financial crisis.  Traders are concerned Greece might not be able to repay its 327 billion euro debt and will have to restructure forcing investors to take a loss.  
  • On CNBC this morning, Brian Belski, Oppenheimer Chief Investment Strategist, and Barbara Marcin, Gabelli Blue Chip Fund, spoke about the market.   Belski spoke about the market being in transition right now, looking for leadership in industrials, first quarter earnings are over, the sell side is very bullish, but buy side, institutional clients, are concerned with recent volatility in stocks and taking a net neutral position.   Marcin said she sees a very strong market, but the market is dealing with a lot of different factors, including the deficit and getting a new budget and that could make things very difficult in the next few weeks. The market is pointing to larger companies with good yields and paying dividends, possibly taking a buy and hold position.   
  • Happy Friday, have a nice weekend.  

Thursday’s Close

DJIA up +65.89 pts/+0.52%/12,695.92

S&P up +6.57 pts/+0.49%/1,348.65

Nasdaq up 17.98 pts/+0.63%/2,863.04

Wednesday’s Futures

Dow Futures up  +13.00 pts/+0.12%

S&P Futures up +2.40 pts/+0.18%

Nasdaq Fut down +3.25 pts/+0.08%

Overseas Markets

FTSE +0.73%

CAC 40 +0.46%

NIKKEI 225 -0.70%

HANG SENG +0.88%

Overseas:  World stock markets were mixed today.  European markets are up after a report showed Germany and France’s economy grew more than economists expected.  Asian markets were mixed.

Economic Reports:  Consumer Price Index expected to be 0.4% @8:30 a.m. and Consumer Sentiment expected to be 70.0 @9:55 a.m.   

Top Headlines:    

  • Yum Brands Inc (YUM) is offering to buy out most of the shares of China's Little Sheep restaurants that it does not already own for up to HK$4.56 billion ($586 million).
  • Reports indicate Google Inc. (GOOG) is close to settling allegations with the DOJ that it profited by accepting ads from online pharmacies that break U.S. laws
  • Bloomberg reports Leucadia National Corp., (LUK) and Centerbridge Capital Partners LLC are said to be in the bidding for Citigroup Inc.’s consumer lending unit.
  • Pfizer Inc. (PFE) said it has settled a third of the pending cases over its Prempro menopause drug and reserved $772 million to resolve claims the medicine causes breast cancer.
  • General Electric Co. (GE) plans to open a locomotive plant employing more than 500 people in Fort Worth, Texas. 

Commodities/Currency:

Gold:up $7.72 to $1,513.85

Oil:up $0.85 to $99.80



EUR/USD 1.4292 +0.0051

USD/JPY 80.6550  -0.3400

GBP/USD 1.6256 -0.0030

Volatility Index (VIX): As of the close of business Thursday, May 12, the VIX is down 0.89 pts to 16.06

Companies Reporting Quarterly Earnings:   

Dillard's (DDS): Q1 EPS of $1.27 beats by $0.36. Revenue of $1.46B (+1% Y/Y) in-line.

Agilent Technologies (A): FQ2 EPS of $0.74 beats by $0.09. Revenue of $1.7B (+32% Y/Y) beats by $0.07B.

Today’s Opening and Closing Bells:

Kosmos Energy Celebrates IPO on the NYSE Ambassador of Ghana to USA will ring the opening bell.

China Zenix Auto International Limited Celebrates IPO on the NYSE Jianhui Lai, Founder, Chairman and CEO will ring the closing bell.