June 9, 2009: Morning Call

June 9, 2009: Morning Call

Fair Value: SP500 – 938.87; NDX: 1488.66; DOW: 8762.69

Technical Levels:

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

Events:

Pre-market EPS: PBY (.07/497.6M); TITN (.13/161.3M)
08:30: NTRS presents at William Blair Growth Stock Conference
10:00: Wholesale Inventories (April): -1.1%
10:30: Treasury Secretary Geithner testifies to the Senate on the Treasury budget
11:30: AGU presents at RBC Mining Conference
12:15: BRCM presents at UBS Tech Conference
12:45: QCOM presents at UBS Tech Conference
12:45: GOOG presents at CSFB Media and Communications Conference
13:30: VMW presents at RBC Tech Conference
14:15: EBAY presents at CSFB Media and Communications Conference
16:30: API Crude Oil and Gasoline Inventories
17:00: ABC Consumer Confidence
22:00: Chinese Producer Price Index (May): -7.0%
22:00: Chinese Consumer Price Index (May): -1.4% YoY


Foreign Market Summary/Key Macro News/Commentary:

The S&P futures are trading 1 point above fair value while the NASDAQ futures are trading 5 points above fair value at 7:30am ET. European markets are flat to modestly higher (up 0.35%) after being up as much as 1.0% to 1.5% on the open. Technology stocks (NOK, STM) outperform in Europe after TXN guided Q2 earnings above current consensus. Asian markets closed lower (Japan down 0.80%, Hong Kong down 1.07%, Australia down 0.91%, South Korea down 1.5%, India up 3.1%). Technology stocks outperformed while commodity stocks underperformed. Softbank (9984.JP) gained after Apple (AAPL) halved the price of its entry-level iPhone 3GS. Resource stocks led Australia down. India bucked the trend lower with strong gains across the board and closing near a new relative high.

Research Calls/Market Moving News:

Treasury said to approve ten banks for TARP repayment – Bloomberg: Geithner is expected to announce the 10 banks at 10:30 this morning. JPM, GS, MS, AXP, STT are expected to be among the banks approved.

AAPL (143.85): Apple estimates increased at Goldman Sachs: The firm notes the lower priced iPhone 3G and MacBook offerings should draw low-end users, and sees the iPhone announcements as a positive for AT&T (T). AAPL C09 estimates increased to $5.31 from $5.25; c10 to $5.90 from $5.80. Target increased to $145 from $130; rating remains neutral.

TXN (19.77): Texas Instruments (TXN) guides Q2 EPS $0.14-0.22 vs prior $0.01-0.15 and Reuters $0.12, First Call $0.10.

NYX (29.47): NYSE Euronext wants regulators to treat dark pools like exchanges – Bloomberg: In written testimony to be delivered to the House Financial Services Committee today, an NYX executive says the current disparity in regulation puts exchanges at a competitive disadvantage to broker-owned systems like Goldman Sachs (GS)'s Sigma X.

Obama administration rethinking its approach to financial regulation – WSJ: People familiar with the matter say the White House has decided to aim for the more achievable political goal of tougher rules rather than regulatory consolidation. The ideas of merging the Commodity Futures Trading Commission and the SEC, or asking the Federal Reserve, FDIC, or the Office of the Comptroller of the Currency to cede their primary authority to supervise banks are probably off the table. The Fed is likely to be strengthened, and unregulated parts of Wall Street will still undergo regulation for the first time.

X (35.06); AKS (17.40); NUE (46.76): Morgan Stanley upgrades AKS, X, downgrades NUE: Upgrade: U.S. Steel (X) upgraded to overweight from equal-weight; target is $45. AK Steel (AKS) upgraded to equal-weight from underweight; target is $19. Downgrade: Nucor (NUE) downgraded to equal-weight from overweight

CBL (7.56): CBL & Associates plans 50M share secondary offering through Merrill Lynch and Wachovia, guides f09 FFO to $2.41-2.53 vs Reuters $2.96.

Appraisals wreaking havoc on real estate market – WSJ: The Journal reports that appraisals are becoming one of the most significant obstacles for people looking to sell their homes, refinance their mortgages or tap into their home-equity loans. The article notes that while during the housing boom appraisers complained of pressure from lenders to inflate home-value estimates, there are now concerns that the pendulum has swung too far in the other direction. According to the Journal, after suffering big losses, lenders are now pressing appraisers to be much more conservative, while the appraisal process itself has become significantly more complicated by the volatility in home prices, as well as the depressed number of comparable transactions.

HIG (14.79): Hartford Financial downgraded to hold from buy at Citi: Target cut to $19 from $21. Firm says it sees fewer catalysts outside of a continued market rally. The analyst believes that the expected Q2 reversal of unrealized losses has already been reflected in the stock.