Thursday, March 19, 2009

March 19, 2009: Morning Call

March 19, 2009: Morning Call

Fair Value: SP500 – 791.37; NDX: 1208.24; DOW: 7442.50

Technical Levels:


SPX: 639, 676, 719 support/800, 823 resistance

Events:

Pre-market EPS: BKS (1.48/1.75B); CCL (.19/2.86B);); ROST(.76/1.73B); PLCE (.69/444.9M); FDX (.46/8.7B)
06:00: Euro-zone Industrial Production (Jan): -1.5% MoM; -13.4% YoY
08:30: Initial Jobless Claims
08:30: FDX earnings call
09:00: GE Investor Meeting
10:00: US Leading Indicators (Feb): -0.60%
10:00: Philly Fed (March): -40.0
10:30: EIA Natural Gas Storage Change
Post-market EPS: BBI (-1.66/252.0M); PALM (-.60/110.6M)


Foreign Market Summary/Key Macro News/Commentary:

The S&P futures are trading flat with fair value while the NASDAQ futures are trading 4 points above fair value at 8:15am ET. The futures are moving in tandem with European markets, which are up 2% near the highs of the session. Crude oil is trading above 50 for the first time since January 7. The dollar is down 1% against the Euro (after dropping 3.5% following yesterday’s Fed announcement) after the Fed pledged to purchase 1 trillion of bonds (300b of Treasuries, 700b of agency MBS). Financial and mining shares were amongst the leading groups, with insurers helped by Prudential plc (PRU.LN) results. Markets in Europe have been volatile. Asian markets close mixed (Japan down 0.33%, Hong Kong up 0.10%, Australia up 0.98%, India up 0.28%, South Korea 0.94%). Financials were helped by the Federal Reserve’s plan to buy longer-dated US Treasuries, but exporters suffered from stronger local currencies. Commodities producers led China up on optimism the country’s stimulus plan is working. BHP Billiton (BHP.AU) edged higher after saying it would issue $3.25B in bonds for general corporate purposes. Hong Kong reversed early declines and ended the day flat. China Huiyuan Juice (1886.HK) plunged (42%) after Beijing rejected Coca-Cola (KO)’s bid.


Research Calls/Market Moving News:

C (3.08): Citi plans reverse stock split: Citi says it proposes to effect a reverse stock split at any time prior to 30-Jun-10 at one of seven reverse split ratios, 1-for-2, 1-for-5, 1-for-10, 1-for-15, 1-for-20, 1-for 25 or 1-for-30, as selected by its board. The disclosure was made in the aforementioned registration statement, related to its offer to issue common stock in exchange for preferred and trust preferred securities.

C (3.08): Citibank said to commit 10 million dollars for a new executive suite – Bloomberg. Bloomberg is citing affidavits filed with New York’s Department of Buildings and a person familiar with the project.

ORCL (15.83): Oracle reports Q3 EPS $0.35 ex-items vs. Reuters $0.32: Company reports revenues of $5.45B vs. Reuters $5.45B. ORCL declares its first-ever quarterly dividend of $0.05. Oracle reports Q3 new software licenses $1.516B vs. consensus $1.45B. Oracle says each month of quarter was on track - conf. Call. Management makes the comment in response to a question on how the quarter progressed. They go on to note that they didn't see any noticeable trend shift from January to February; the close of the quarter is also said to have not seen any unusual activity. In response to a question on whether the company can eventually exceed 50% operating margins, President Catz said long-term, "sure".

FDX (43.05): FedEx reports Q3 EPS $0.31 vs. Reuters $0.46: Company reports revenues of $8.14B vs. Reuters $8.68B. Guides Q4 EPS to $0.45-$0.70 vs. Bloomberg .70 cents. FDX is implementing additional cost-reduction initiatives.

NKE (45.92): Nike reports Q3 EPS $0.99 ex-items vs. Reuters $0.79. Company reports revenues of $4.44B vs. Reuters $4.48B. For the 1H F10 Nike expects reported revenue to be below prior year levels citing tough comparisons.

NOK (11.84): Nokia (NOK) upgraded to outperform from neutral at Credit Suisse.

AA (5.48): Alcoa upgraded to overweight from neutral at JPMorgan: Firm also adds shares to its Focus List. The firm notes the removal of the overhang through the dividend cut and secondary offering.

SOHU (44.53): Oppenheimer downgrades to neutral. The firm notes that SOHU has filed to spin off its gaming division, which Oppenheimer sees as meaningfully dilutive to shareholders. Pali Research downgrades to sell and a 35 target.

NITE (17.39): Knight Capital downgraded to neutral from buy at Goldman Sachs: 6-month target cut to $17 from $20. The firm expects a sharp decline in profitability

TEX (10.07): Terex downgraded to market perform from outperform at Wachovia: Valuation range is $10-12. Estimates for Q1'09 and full year '09 are lowered due to reduced revenue expectations. Firm cites valuation for the downgrade.

MDR (14.23): McDermott estimates and target raised at UBS: Target raised to $17 from $13. EPS estimates for '09 and '10 are raised to reflect new contracts and higher margin assumptions. Rating is buy.

AAPL (101.52): China Mobile chairman says still in talks with Apple (AAPL) over iPhone – wires: Recall China Unicom (CHU) CEO Chang Xiaobing said his company was having the same talks 3-Mar.

ORLY (35.00): O’Reilly Automotive will replace Noble Corp. (NE) in the S&P 500

MT (17.68): ArcelorMittal may halt production at two or three Russian coal mines until markets improve – Bloomberg

BRCD (2.94): Brocade upgraded to outperform from sector perform at RBC Capital: Target increased to $4 from $3.50. Firm notes dissipating concerns over debt covenants, ample cash flow to service debt, a strong position in the Fibre Channel market, OEM relationships, and longer-term opportunity in HBAs.

1 comment:

marko said...

Joe Biden about reverse stock split (video):
watch for all!