Futures ~30bps higher this morning as positive economic data coupled with the new year’s global deployment of cash continues to rally equities. Yesterday’s ISM was generally met with investor cheer, and all eyes will be on this morning’s 10am Factory Orders and this afternoon’s 2pm Fed Minutes release for more evidence to the upside. Also note that December Auto Sales will be released later today, the December ADP Employment Change is due at 8:15am tomorrow, Initial Jobless Claims are due Thursday, and the December Official Nonfarm Payroll release is set for Friday morning.
Europe ~80bps higher on aggregate despite higher that expected German unemployment. Asia higher overnight across the board. Oil -45bps. Gold -180bps. USD -20bps. In political news, Obama is back in today and will sign a $1.4 billion food safety bill into law. This morning’s Gartman Letter speculates on rising Wheat prices due to Australian floods. Reuters reports that bank borrowing continues to tick higher. Washington
In his evening note last night, BTIG’s Mike O”Rourke focused on the ISM release:
Whether it was the cash being redeployed for the New Year (likely) or investors playing catch up on positions, stocks opened up and staged a broad-based rally. The gains moderated slightly as the Dollar strengthened throughout the afternoon. Regardless, the S&P 500 posted its best performance since December 1st. The key economic data point today was the December ISM Manufacturing Report. The report posted its highest reading since May, and was an impressive report considering that 7 of the 18 industries reported contraction in December. There were a couple underlying data points of note. The much-watched New Orders – Inventories spread widened out in a positive manner to 9.1, after bouncing around above and below zero for 5 months. On the negative side was the Employment component, which, although still well within growth territory, downticked to its lowest reading since March. Norbert Ore, who chairs the survey for ISM, discussed watching for the handoff of the recovery from the Manufacturing sector to the Services sector over the next 6 months. The other notable aspect of the report was the focus upon rising commodity prices. According to ISM, in December 28 commodities were up in price, and Natural Gas was the only one down. Ironically, the only commodity in short supply was
Cocoa Powder, which was not up in price according to ISM's metrics. noted that this is the point in time to watch commodity prices to see if they will fuel additional pricing pressures. He noted the rise in commodity prices in 2006-2007 was strong but did not carry through to the consumer level as it was offset by productivity gains. Our observation is that the last thing investors will be expecting in this economy is additional productivity gains after companies cut to the bone during the recession. That being said, we do not think commodities will build upon 2010's gains, but we will be watching. Ore
WAG added to Conviction Buy list at GSCO. MOS earnings due after the bell. EBAY initiated Neutral at WEDB. Barron’s positive BAC. BP higher on news that the compensation payouts for the Gulf oil spill may be much lower than expected. ARG buys Conley Gas. NLY plans 75m share offering. CEG completes acquisition of Boston Generating power plants for $1.1 billion. Janney rates DKS a new buy. UBSS cuts MLM. DBAB ups CCL. MACQ ups ESS. WEFA cuts IR. ROTH ups QCOM. CSFB ups ROK. SWX cut at UBSS. WEFA cuts TROW. KBWI ups STI. BofAMLCO ups UHS. JPHQ ups VRNT. GLW COO retires. Cramer positive AA. JPHQ cuts AFFX. RL upgrade at CITI. SUSQ positive on Oil Sector. BARD ups HE. BLAIR ups SYNT. GSCO cuts CALX. JEFF cuts
EMS. OPCO cuts RPM.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
Best Quotes: Knight trader note…
Futures higher again in the early morning as a slew of positive data is anticipated for the upcoming releases. Today sees Factory Orders, FOMC Minutes, Consumer Confidence and Vehicle Sales. Market sentiment seems to be trending towards fundamental doubt, however the anticipation of positive prints for December unemployment and 4Q10 GDP have market participants not wanting to be on the sidelines for a January rally. Yesterday’s ISM was positive news as the market rallied on the strongest numbers since April 2010. Treasuries continue to sell off. We still maintain that the front end is oversold, but along with most market participants, we would not want to attempt to catch a falling knife. The selloff is more driven by fiscal issues within the
than expectations of a broad recovery, which should serve to anchor Fed Funds expectations for the year. US