Tuesday, February 1, 2011

Morning Note...

Futures ~60bps higher this morning as earnings continue to impress and the Egyptian unrest appears to be settling somewhat.   (Although the Jordanian PM resigned – it may only be coincidental but the main concern in Egypt is the unrest spreading to other oil producing nations, like Saudi Arabia, in particular.)   Volumes remain slightly lower than historical averages (7.8B combined vs. 8.1B year-avg), which is understandable given Middle Eastern concerns and lofty market levels.  The VIX has also dipped back below 20.  On the earnings front, bellwether global shipper UPS reported $1.08 vs. the consensus $1.05 estimate and expects to increase their buyback in 2011.  Elsewhere, much-maligned BP is trading slightly lower on earnings (weak volume outlook) and the announcement it would be selling two refineries, and despite the fact it will be re-instating their dividend.  Agriculture giant ADM reported a 29% jump in net income and beat earnings and revenue estimates – despite higher food prices, demand is still strong.  In global macro news, China’s PMI was worse than expected, at 52.9 vs. the 53.5 consensus, and Eurozone (10% vs. 10.1%/e) and German (-10k vs. -13k/e; 7.4% rate is lowest since November 1992) unemployment were both slightly better than expected.  U.K. and German PMI results were also better than expected, and Europe is currently trading over 1% higher on aggregate.  In Asia, markets were mixed to slightly higher overnight.  In general, commodity stocks continue to show strength on the back of Asian and European growth in particular.  Oil -60bps after recent surge.  Gold +55bps.  USD -45bps.  EURUSD 1.3754.  Note that construction spending and ISM Manufacturing data is due for a 10am release today.  (Expectations are for the 18th consecutive month of growth.)  Auto Sales are also due later today. 

ALB upgrade at JPHQ.  IP upgrade at CITI.  UBSS cuts PCL.  JEFF cuts EXP.  OPCO ups VLO.  JEFF ups PLD.  GSCO cuts DISCA.  GSCO cuts SNI.  EMN lower on earnings.  MTW over 10% higher on earnings beat from strength in crane business.  ARMH higher on earnings beat.  BIDU +8% on earnings and Mizuho upgrade.  LXK +7% on earnings.  AMD +3% after recent INTC design flaw.  NVLS +4% on earnings and guidance.  EMR reports in line.  BHP, HL, PAL, RIO all higher on global growth.  

S&P 500 PreMarket 8:30am (last/% change prior close/volume):

Today’s Trivia:  How many films were released in America in 2009, and how did this compare to ~10 years ago in 2000?

Yesterday’s Answer:  558 films were released in America in 2009.  479 were released in 2000. 

Best Quotes:  from a trader’s desk…

This was an eye opener: in front of employment data friday, in order to see unemployment rate back at 6% we would need to create 9.5mm jobs immediately and then add 125k new jobs each month to keep pace with population growth (not going to happen). If we could created 425k jobs/month it wold take past 2020 to get back to 6%. Say we could add 325k/months wed be in 2030 before we saw it. (data from gartman report).