Monday, August 10, 2009

August 10, 2009: Morning Call

August 10, 2009: Morning Call

Fair Value: SP500 – 1008.01; NDX: 1618.75; DOW: 9335.01

Technical Levels:

SPX: 875-880, 910, 953, 986 support/ 1044 resistance


Pre-market EPS: ALD (.13/87.3M); DISH (.67/2.9B); HOC (.27/1.0B); SYY (.49/9.1B); PCLN (1.75/575.4M)
04:30: Euro-zone Sentix Investor Confidence (August): -25.8 (actual: -17.0)
08:30: PCLN earnings call
10:15: JNPR presents at Pacific Crest Technology Conference
11:00: INTC presents at Pacific Crest Technology Conference
12:30: CTSH presents at Pacific Crest Technology Conference
13:00: YHOO presents at Pacific Crest Technology Conference
13:30: BRCM presents at Pacific Crest Technology Conference
17:30: FLR earnings call
22:00: Chinese Fixed Urban Investment (July): 34.0%
22:00: Chinese Producer Price Index (July): -8.3% YoY
22:00: Chinese Consumer Price Index (July): -1.6% YoY
22:00: Chinese Retail Sales (July): +15.0% YoY
22:00: Chinese Industrial Production (July): 11.5% YoY; 7.7% YTD
Post-market EPS: FLR (.91/5.8B); MDR (.37/1.5B); SF (.46/224.8M)

Foreign Market Summary/Key Macro News/Commentary:

The S&P and NASDAQ futures are both 5 points below fair value in a quiet news morning. Asian markets closed higher (Japan up 1.08%, Hong Kong up 2.72%, Australia up 0.11%, Shanghai down 0.30%, India down 0.99%). Aluminum Corp (2600.HK) and China Mobile (941.HK) rose when China said it would maintain policies aimed at encouraging domestic spending and China Shenhua Energy (1088.HK) rose on better-than-expected preliminary results. Exporters were lifted by a weaker yen in Japan, which enjoyed a broad-based rally. Rio Tinto (RIO.AU) fell in Australia on accusations published over the weekend that it illegally used information about China’s steel sector for six years. European markets are down 0.50% to 0.75% with basic material, financial, and healthcare stocks leading the decline. Lloyds Banking Group (LLOY.LN) fell on talk it may seek to raise up to £15B through a share sale. WirtschaftsWoche reported that SAP (SAP.GR) considering bidding for TIBCO Software (TIBX).

Research Calls/Market Moving News:

RIMM (77.09): Research In Motion downgraded to neutral from buy at UBS: Target reduced to $88 from $90. Shares downgraded on valuation with the firm also noting the potential for a new data centric AAPL device at VZ.

PCLN (131.32): reports Q2 pro forma EPS $2.02 vs Reuters $1.79: Company reports revenues of $603.7M vs Reuters $573.5M. Guides Q3 pro forma EPS to $2.70-2.85 vs Reuters $2.57.

AAPL (165.51): Apple added to short term buy list at UBS: Target raised to $170 from $160.

BBY (39.75): Best Buy downgraded to neutral from buy at Goldman Sachs .

AAPL (165.51): NY Times says it is far from clear how much revenue there will be from Apple iPhone apps: Media brands are jumping onto the iPhone but the firms acknowledge they are all trying to figure out the revenue side of the equation as they go. Some executives say they are more concerned with exposure through the iPhone than with revenue while others say they do not believe in running mobile applications as a loss leader.

China July car sales +64% y/y to 1.09M vehicles – WSJ: The semiofficial China Association of Automobile Manufacturers reports: passenger vehicle sales +71% to 832,600. Commercial vehicle sales +44% to 253,000.

Barron's says timberland may be one of the world's most overvalued asset classes: Noting the rise in value of timberland since the mid-1990's and only a 0.5% decline in the first half of 2009, Barron's notes that timber prices could be vulnerable to a 50% drop in the next few years. Such a drop would hurt timber REITs like Plum Creek Timber (PCL) and Potlatch (PCH) as well as Weyerhaeuser (WY) with its 2M acres of forest. Dividends at PCL and PCH are not generated from operations and thus could be vulnerable. Rayonier (RYN) could be better due to its more diversified business.

TIBX (8.47): TIBX shares are up 10% on rumors that SAP may buy the company.

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