Friday, March 26, 2010

Morning Note...

Happy Friday… Futures are slightly higher (+25bps) this morning as the Greek/Euro drama continues and perhaps comes to resolution.  As one trader & sports fan astutely noted this morning, this whole process is reminiscent of Brett Favre and his “will he/won’t he” continual dance with retirement.  So here’s the latest:  yesterday’s sell-off was sparked by comments from ECB President Jean-Claude Trichet that IMF involvement in the Greek solution would be “very, very bad.”  This weakened the euro currency, boosted the USD, and weighed on US equities, particularly dollar-denominated metal and energy sectors.  Overnight, Eurozone officials appeared to reach a deal on assistance for Greece in the form of a joint Euro-states/IMF arrangement.  Thus, now Trichet is saying he is “entirely content” with the joint EU-IMF deal and that he is “extraordinarily happy that the government of the Euro area was able to find a workable solution.”  He added: "I am confident that the mechanism decided today will normally not need to be activated and that Greece will progressively regain the confidence of the market."  Well there you go.  In US economic news, this morning’s final GDP revision settled Q4 growth at +5.6% quarter-over-quarter, which is lower than the +5.9% estimate.  Q4 Personal Consumption settles at +1.6% vs. the +1.7% estimate.  Note that U of Michigan Consumer Confidence is due at 10am today.  In corporate news, ORCL posted lighter-than-expected net income and earnings per share for the third quarter.  RadioShack (RSH) is higher pre-market on a NY Post article that speculates the company will be sold or may merge with Best Buy (BBY).  In news out of Washington, DC, the Obama Administration is to unveil an extension of Treasury and FHA programs aimed at further stemming foreclosures.  In Asia, there are a series of items out of China that I have taken directly from JPM Morning Research:

In China, a slew of headlines crossing overnight - 1) an adviser to the country’s central bank wrote in an opinion piece published today in the government-backed China Daily that “China may resume a managed float of its exchange rate, particularly if the uncertainty of the overall post-crisis economic situation diminishes,” 2) China’s central bank may “soon” raise its reserve ratio requirement for the third time this year to further drain liquidity, the China Securities Journal reported today, citing unnamed analysts, 3) China industrial company profit accelerated in the first two months of the year, and 4) China bank lending in March may hit 1 trillion yuan ($146 billion), a significant jump from 700.1 billion yuan in February, the China Securities Journal reported on Friday.

Looking forward, note that the Official Nonfarm Payrolls for March and the Unemployment Rate will be posted on a holiday – Friday, April 2nd (Good Friday).  I honestly can’t remember that happening, and markets should certainly be coiled one way or another for Monday April 5th’s trading.  I assume most traders will take some cue from Asian market action Sunday night April 4th.  We shall see.  Note that Osama bin Laden is back in the headlines today:

WASHINGTON - In a 74-second audio message released on Thursday, Osama bin Laden threatened to kill any Americans held by Al Qaeda if Khalid Shaikh Mohammed, the chief planner of the Sept. 11 attacks, is executed. American counterterrorism officials said they thought the recording, addressed to the American people and broadcast on Al Jazeera television, was authentic. Mr. bin Laden denounced the United States for imprisoning Qaeda members, "first and foremost among them the holy warrior and hero, Khalid Shaikh Mohammed," according to a translation by the Middle East Media Research Institute in Washington. "The White House declared that it wanted to execute them," Mr. bin Laden said. "The day the United States makes this decision, it will have made the decision to execute those of you who fall prisoner to us."

TIBX beats by 2c and acquires Netrics.  JPHQ ups NOK.  APP lower on earnings.  FINL beats by 13c.  SOMX prices 6M shares at $8.25/share.  PALM higher on BMOC upgrade.  BBY cut at FBRC.  FDP initiated Hold at CANT.  Washington Post reports that VZ is seeking limits on the FCC’s regulation of the internet.  CPWM is higher on earnings and increased fwd guidance.  JPHQ upgrades RIMM, COH, ANN, MNI, PGR, URBN.  COWN ups THQI.  Janney ups CAKE, PFCB.  CSFB ups SOLR, TSL.  JPHQ cuts BKE, CWTR, ROST.  UBSS cuts AUO, LPL.  WSJ “Heard on the Street” positive on COP. 

Asia higher overnight.  Europe slightly lower.  USD -45bps.  Oil +77bps.  Gold +44bps. 

S&P 500 PreMarket 8:30am (last/% change prior close/volume): 
PROGRESSIVE CORP       19.80    +6.51% 8239
RADIOSHACK CORP        23.20    +6.42% 30686
FIRST HORIZON NA        14.30    +3.17% 107374
MGIC INVT CORP            9.20      +3.14% 9000
VULCAN MATERIALS       49.69    +2.96% 200
HUNTINGTON BANC        5.65      +2.73% 44908
INGERSOLL-RAND           35.45    +2.69% 499
GENZYME CORP              52.30    +2.29% 23208
COACH INC                    39.55    +2.2 %  1400
TITANIUM METALS         16.25    +2.07% 1887
TENET HEALTHCARE       5.94      +2.06% 7540
AK STEEL HLDG              22.95    +2.05% 12005

Today’s Trivia:  Name the major companies associated with the following headquarters – Redmond, WA; Espoo, FINLAND; Bentonville, AR; Leiden, NETHERLANDS; Round Rock, TX; Framingham, MA
Yesterday's Answer:   Prior to 1972, Sri Lanka was known as Ceylon.   

Best Quotes:  “New York Helicopter Commute for $200 a Day Signals Revival 2010-03-26 04:00:00.0 GMT By Esmé E. Deprez

March 26 (Bloomberg) -- Liberty Helicopters Inc. is offering to fly weary commuters from New Jersey to Manhattan for about $200 a day, saving them 14 hours in traffic a week and signaling that Wall Street may have seen the worst of the recession. As many as six people at a time will travel above the Statue of Liberty, Governors Island and the Verrazano-Narrows Bridge during the trip of about 20 miles (32 kilometers) from Port Monmouth, New Jersey, to landing pads at West 30th Street and Pier 6 near Wall Street. Weekend service starts tonight and weekday runs begin next month. Liberty has already been approached by 150 potential clients after about a month of advertising, Patrick Day, a pilot and vice president of charter marketing, said in an interview in the cabin of a twin-engine Dauphin at the carrier’s base in Linden, New Jersey. The interest may reflect how far Wall Street has bounced back, said Robert Grotell, an independent transportation consultant in Port Jefferson, New York. “When an economy turns sour, corporate air transportation seems to be one of the first things that’s affected, and it’s usually one of the last things to come back,” Grotell said in a telephone interview. Corporate clients are responsible for about one-third of helicopter traffic in the New York area, which slid as much as 30 percent in 2009 from a year earlier, he said. “Maybe the economic turnaround is well under way,” Grotell said.

Liberty offered a commuter service in the 1990s. By the early 2000s it had evolved into a charter service with clients booking entire helicopters instead of single seats. Recently, Day started receiving requests for single-seat rides. The majority are Wall Street traders and people in the garment industry, he said. Day, who sports Prada aviator sunglasses and a black- leather bomber jacket with the company insignia, said he expects the service to grow from two daily flights each way to as many as five by May. He has hired six pilots to meet demand, bringing the total to 31. Volume may increase as much as 15 percent this summer after returning to pre-recession levels in March, he said. “People are starting to reserve their helicopters now for the summer earlier than they have in years past,” Day said. “Things are starting to look good again.” While other helicopter charters offer trips to the airport or the outer reaches of Long Island, Liberty’s daily commuter service faces no direct competition, according to Smith. Liberty, which will make about a $200 profit on each full commuter flight, is counting on the service to market the rest of the charter business, Day said. “You have guys that are getting overwhelmed on a Friday in June and they just can’t deal with the traffic,” Day said. “At 4 o’clock, I have a helicopter right there.”

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