Friday, February 26, 2010

Morning Note...

Futures essentially flat this morning after markets reversed nicely post-European close yesterday.  News is relatively light as much of the northeast gets belted by another round of snowstorms.  In U.S. economic news, the Q4 2009 GDP revision was better-than-expected, at +5.9% vs. the prior +5.7%.  Overseas, UK GDP rose higher than expected to +0.3% vs. the +0.1% expectation.  WSJ front page story discusses traders making career bets against the Euro.  According to Reuters, the Greek PM made comments to the effect that “the worst fears about Greece’s economy have been confirmed.”  Asian stocks were generally higher as Korean manufacturing confidence was higher, Japanese industrial production was higher, and India’s finance minister predicted 10% growth there.  Emerging market currencies and commodities are higher as a result.  In corporate news, AIG is trading down roughly 8% on their disappointing quarterly earnings release.  Last night, GPS beat estimates and raised their dividend.  Also, M&A activity continues in “fits & starts,” as private equity firm Thomas H. Lee acquires CKR, which own Hardee’s and Carl’s Jr., for $11.05/share ($619M total).  BCAP notes the deals of late:  obviously CCE was the M&A focus yesterday and privately-held Kettle Foods (potato chips) was sold last night to DMND for $615mm in cash.  So far, M&A over the past few months has included:  CHTT, BARE, THS/Sturm, CCE, SLE divestitures (to PG and ULVR), KFT/CBRY, Nestle/KFT Pizza, FMX, DMND/Kettle, FGXI.  Chicago Purchasing Manager’s Index is due at 9:45am.  February UMichigan Consumer Confidence is due at 9:55am, and January Existing Home Sales are set for release at 10am.  Note that today is month-end.  Keep an eye on the Euro, which continues to reflect pan-European sentiment.

I must admit that one of my greatest fears trading from Miami is “lack of feel” as it relates to NYC, which we’d all agree is the financial capital of the world.  Living in New York, I used to guess at what the markets would do from the mood on the subway, the feel of the city, or the weather.  Sounds silly, I know, but a dark gloomy day in NYC does seem to affect markets sometimes.  So, you can imagine my fear (no matter how “unbalanced” they may seem) when trading from sunny Florida each day.  However, as I sit in our NY office today, I can tell you – based on the amount of snow dumped here yesterday and this morning – that The City has a “sleepy” feel.  Thus don’t be surprised – as people dig out and drag themselves to work – if markets have a particularly sleepy start this morning.  (And, for what it’s worth, there are definitely fewer morning research emails in my inbox than normal.)  On that note, he’s an interesting anecdotal observation:  New York is a mess.  This is no blizzard, but I have seen more snow be much less disruptive here.  So what’s missing?  Plows… Why?  My first and most paranoid thought has been “wow…NYC and NYS really are in financial trouble…maybe there’s no overtime being paid…maybe there’s not enough gas for the plows…”  Of course, they may also be standing down and waiting for more snow later.  I’m not sure, and this is idle speculation at best…but the lack of municipal clean-up right now may be telling a bigger story than we know.

JPHQ ups LAMR.  OPCO ups VTAL.  UBSS ups EPB.  CITI cuts DYN, BARE.  GSCO cuts PETM, DPS.  STFL cuts CIEN.  PIPR cuts ORA, ORCC.  UBSS cuts EQY, PALM, MOT, TCO.  AGO higher on earnings.  ATHN lower on earnings and BARD, JMP downgrades.  GSCO ups AZN.  BIOS higher on earnings.  DBAB ups CHU.  CNP lower on earnings.  CROX -15% on earnings.  DECK beats and trades higher.  DRYS -5% on earnings. FCN misses by 2c.  LYG lower on impact of impairment charges.  NAVG lower on earnings.  NVTL misses and guides lower.  OVTI beats by 1c.  RST +12% on earnings.  SD misses by 7c. 

Asia mixed but generally higher.  Europe roughly 1% higher.  USD -5bps. Gold +30bps. Oil +90bps.

S&P 500 PreMarket (last/% change prior close/volume): 
AMERICAN INTERNA       25.25    -8.22%  1381665
FLUOR CORP                  43.10    -4.33%  47165
GAP INC/THE                 21.09    +3.43% 39773
PPG INDS INC                 62.68    +2.65% 100
CENTERPOINT ENER       13.74    -2.55%  5300
CARNIVAL CORP             34.96    -1.96%  32993
SOUTHWESTRN ENGY     43.78    +1.84% 1126
M&T BANK CORP            75.28    -1.70%  700
MOTOROLA INC             6.74      -1.61%  56737
BALL CORP                    53.94    +1.52% 188

Today’s Trivia:  A human’s “goosebumps” originated – like most things – with our primate ancestry.  What purpose did goosebumps serve in the animal kingdom?

Yesterday's Answer:   The 14 punctuation marks in English grammar are period, comma, colon, semicolon, dash, hyphen, apostrophe, question mark, exclamation point, quotation mark, brackets, parenthesis, braces, and ellipses.

Best Quotes:  “Here we go again.  Is there enough in the tank to get us to break out?  Equity strategist keeps belting out that the S&P should be in the 1200 range given the 4q09 EPS and current interest rates.  God bless him.   The hiccups in Europe will likely dent the European GDP, but globally it shouldn't have the big of an impact.  Lets face it appears to be all about China, and whether or not the US can keep from the double dip. (not sure if that is off the table yet).   Jamie Dimon’s comments last night should be taken as a positive.  JPM’s comments in regards to credit cards appears to signal that the upper echelon is still healthy and spending.   Reserves will continue to remain high, and CRE foreclosures will go up. AMG data showed Equities recorded their 2nd week in a row of inflows over 2.5bln.   If the market can stage a rally expect those numbers to continue to go up.   1112 is the month high.”  --trader note (BofAMLCO)

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