August 6, 2009: Morning Call

August 6, 2009: Morning Call

Fair Value: SP500 – 1000.24; NDX: 1613.75; DOW: 9246.17

Technical Levels:

SPX: 832, 875-880, 910, 953 support/ 1002, 1044 resistance

Events:

Pre-market EPS: ATK (1.95/1.1B); BCE (.59/4.3B); BX (.09/341.9M); CNQ (1.09/1.7B); CMCSA (.26/8.8B); DTV (.43/5.1B); EP (.21/1.1B); HUN (-.13/1.9B); NDAQ (.47/368.5M)
07:00: US Retailers release July Same Store Sales
07:00: BOE Announces Interest Rate Decision: 0.50%
07:45: ECB Announces Interest Rate Decision: 1.0%
08:30: Initial Jobless Claims (August 1): 580,000; Continuing Claims: 6.25 million
08:30: CMCSA earnings call
10:30: EIA Natural Gas Storage Change
11:00: ICSC Chain Store Sales
11:00: BX earnings call
11:00: ATW earnings call
17:00: BZH earnings call
Post-market EPS: ACS (.97/1.6B); ASEI (.92/65.7M); BZH (-1.53/225.6M); CBS (.08/3.0B); EOG (.42/998.5M); PSA (1.21/395.4M)


Foreign Market Summary/Key Macro News/Commentary:

The S&P futures are trading 3 points above fair value and the NASDAQ futures are trading flat with fair value at 7:30am ET. Monthly retail sales and Initial Jobless Claims will likely set the tone in today’s session. Asian markets closed mixed (Japan up 1.3%, Hong Kong up 1.9%, Australia up 1.4%, Shanghai down 2.0%, India down 2.4%). Australia rallied after the unemployment rate was better than expected at 5.8% vs. expectations of 6%. China Mobile (941.HK) led Hong Kong reverse as people speculated a listing in Shanghai is forthcoming. Shanghai dropped led by Citic Securities (600030.CH), on concern the central bank may rein in lending. Commodity producers fell on lower metals and energy prices. European markets are up 1.0% to 1.2% as high levels of liquidity continue to fuel gains in risk assets. Gains are broad-based led by financial and consumer related sectors.


Research Calls/Market Moving News:

CSCO (22.17): Cisco Systems guides Q1 (Jul) revenue to be down 15-17% - conf. call: Note that Q4 revenue was down 17.6% versus guidance for a decline of 17-20%; recall guidance Q3 revenue was down 16.6% versus guidance for a decline of 15-20%. Most analysts on the street are modeled for Q1 revenues within the range of Cisco’s guidance.

PCLN (132.42): Piper Jaffray reiterates overweight rating and raises the price target to 150 ahead of the company’s earnings report on Monday. “We expect proforma EPS of $1.90 vs. the street's $1.75 and the company's $1.65-$1.75 guidance. • Competitor OTA results suggest Street bookings ests are overly conservative. • Over the last 8 quarters, Priceline has beaten the midpoint of its PF EPS guidance by 23% on average (see table on pg 2 for details). • Raising PT to $150 from $123, now based on 19x 2010E PF EPS of $7.75. We believe 19x PF EPS vs. 17x previously is justified given accelerating growth. Confident In Q2 Ests Based On OTA Competitor Results; Raising Q2 PF EPS To $1.90. Priceline is scheduled to report Q2 results on Monday (8/10), before market open; based on competitor OTA results, we expect material upside to Street consensus. Additionally, we believe Street estimates for the remainder of CY09 and CY10 are conservative and are raising our estimates above consensus.” Note: This research note hit First Call yesterday at 2:19pm and triggered a 3 point rally into the close. I point it out because the short-interest interest ratio in PCLN shares remains very high. As of July 15, 2009, short interest is 9.3 million shares compared to 10.6 million on June 30. PCLN float is 39 million shares.

COST (49.06): Costco reports Jul comps (7.0%) vs.First Call (7.0%): The company reports July revenues (5.1%) to $5.41B. US comps were (8%); international comps (5%). US comps (excluding the impact from gasoline deflation) were (2%); international (excluding the effects of foreign exchange) +6%; total comps (excluding aforementioned effects) (1%).

FCX (64.46): Freeport-McMoRan upgraded to buy from underperform at Bank of America Merrill Lynch: Price objective increased to $87 from $49.

MBI (5.53): MBIA reports Q2 diluted EPS $4.30 vs year-ago $7.14: Company reports revenues of $992.1M vs year-ago $3.35B. Total premiums earned $177.9M vs. $406.6M y/y. Book value/share $13.30 as of 30-Jun vs. $4.78 at 31-Dec. Shares are up 16%.

CSIQ (16.12): Shares are up 12% after in the pre-market after reporting EPS of 49 cents versus an expected loss of 9 cents. Revenues were 114.2 million vs. street at 95.3 million. The company boosts year view for shipments.

STEC (33.59): STEC increases the size of the secondary offering. According to Bloomberg, the company priced an additional 9 million shares at 31. Shares are trading down 3%.

JPM (41.78): JPMorgan Chase initiated buy at Deutsche Bank

GRMN (33.66): Garmin downgraded to underweight from neutral at JPMorgan
Downgraded based on price.

ENER (14.34): Energy Conversion downgraded to underweight from neutral at Piper Jaffray: Target reduced to $9 from $21. Weak commercial end markets and SIT acquisition risk are cited