June 10, 2009: Morning Call

June 10, 2009: Morning Call

Fair Value: SP500 – 942.15; NDX: 1501.77; DOW: 8760.76

Technical Levels:

SPX: 765, 788, 832, 875-880 support/ 935-943 resistance

Events:

07:00: MBA Mortgage Applications
08:20: ENER presents at Deutsche Bank Alternative Energy Conference
08:30: US Trade Balance (April): -28.9B
08:30: HD Analyst Day
09:00: MA presents at William Blair Conference
09:00: SPWRA presents at Deutsche Bank Alternative Energy Conference
10:00: NYB Annual Meeting
10:00: Fed’s Lacker speaks on the economy
10:15: AMAT presents at UBS Tech Conference
10:30: V presents at William Blair Conference
10:30: DOE Crude Oil and Gasoline Inventories
10:45: GE presents at Deutsche Bank Alternative Energy Conference
12:00: AGU Investor Day
12:15: Fed’s Duke speaks on community development
13:00: Treasury auctions 19 billion in 10 year notes.
13:00: YHOO presents at RBC Tech Conference
13:30: T presents at RBC Tech Conference
13:50: VRTX presents at Goldman Healthcare Conference
14:00: US Monthly Budget Statement (May): -175.0B
14:00: Fed’s Beige Book
14:30: CAT Annual Meeting
17:00: MSFT presents at RBC Tech Conference
18:30: NVLS presents at RBC Tech Conference
Post-market EPS: MW (0.00/459.3M)

Foreign Market Summary/Key Macro News/Commentary:

The S&P futures are trading 10 points above fair value while the NASDAQ futures are trading 13 points above fair value at 7:45am ET. Global equity and commodity markets are higher as another strong rally originates out of Asia. Asian markets closed sharply higher with markets in Hong Kong surging 4%, the biggest gain since May 27 and erasing a two-day decline of 3.3%. Banks and material stocks paced the rally in Hong Kong with Bank of China rallying 8.3% and Aluminum Corp of China gaining 8.8%. Producer and Consumer prices fell more than expected easing concerns about increased inflation and higher interest rates due to the significant fiscal stimulus programs. Other markets in Asia gained: Japan up 2.09%, Australia up 2.27%, Shanghai up 0.98%, South Korea up 3.57%, India up 2.25%). European markets are up 1.9% to 2.2% with commodity and financial sectors leading the gains. Advancers on the FTSE 100 lead decliners 19-1. Commodity prices are up 1.0% to 2.0% due to a weaker US dollar. The USD is down 0.50% against the Euro (1.415) on speculation that Russia will reduce holdings of US Treasuries (Note the recent trend is equity market are stronger when the US Dollar is weaker). Bond futures are down 15/32 ahead of the 10-year note auction.

Research Calls/Market Moving News:

RIMM (82.02): Research In Motion 6-month target increased to $96 from $85 at Goldman Sachs: The firm's checks indicate continued good product sales and raises its estimates to further above consensus. The rating remains Conviction Buy.

AAPL (142.72): Collins Stewart comments on iPhone production following checks:
Firm's checks indicate that iPhone production for the Jun quarter has been adjusted down to ~4.6M units from 5.2M units. Collins Stewart notes that the rolling forecast for the Sep quarter is 6.5-7.5M units, with the midpoint reflecting flat shipments y/y. Firm cautions that if the current build plans hold, they present a risk to Apple. Rating is buy with a target of $170

GOOG (453.62): DoJ still investigating Google's book search settlement – WSJ: Recall that the Journal reported back on 28-Apr that the DoJ had held discussions with Google about its proposed book-search settlement with the Authors Guild and the Association of American Publishers that allowed the company to make books available for free online. The paper now says that the DoJ's antitrust division has sent certain publishers formal requests for information about the settlement.

SINA (32.93): Sina reports Q1 non-GAAP EPS $0.23 vs Reuters $0.22: Company reports revenues of $73.8M vs Reuters $75.5M. Advertising revenues decreased 10% year over year to $43.2M, within the company's guidance of between $43.0M and $46.0M. Guides Q2 revenues to $85-89M vs Reuters $93.6M. Guides advertising revenues to be between $55M and $58M and non-advertising revenues to be between $30M and $31M. Citigroup and Pali Capital downgrade SINA shares due to the soft earnings. SINA shares are trading down 7.5% in the pre-market.

HD (24.35): Home Depot boosts adjusted EPS guidance range to (20%)-(26%) vs prior expectation of (26%)

Cash for Clunkers passes House, 298-199; Senate vote still pending - Detroit News: Objections from Senate appropriators and a group of Senators who say the House proposal doesn't do enough to improve fuel efficiency on the nation's highways still need to be overcome.

Obama administration to seek power for SEC to force banks to give shareholders votes on executive-pay packages – Bloomberg: People familiar with the matter say the proposal may be set out in an announcement on changing financial firms’ pay practices as soon as today. The "say-on-pay" votes, which would cover the range from salaries to bonuses and severance packages, would be nonbinding.

CBG (8.14): CB Richard Ellis (CBG) agrees to sell 13.44M Class A shares to Paulson & Company; also plans $50M Class A secondary offering through JPMorgan

Secondary Issuance: LHO (6.5 million share secondary), AMP (900 million dollar secondary), SGY (6 million share secondary).