September 1, 2009: Morning Call

September 1, 2009: Morning Call

Fair Value: SP500 – 1019.74; NDX: 1625.17; DOW: 9488.37

Technical Levels:

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

Events:

Pre-market EPS: RAIL (.10/70.1M)
02:00: German Retail Sales (July): 0.7% MoM; -1.2% YoY
03:45: Italian PMI Manufacturing (August): 46.2
03:50: French PMI Manufacturing (August): 50.2
03:55: German Unemployment Change: +30,000; 8.4% Unemployment Rate
03:55: German PMI Manufacturing (August): 49.0
04:00: Euro-zone PMI Manufacturing (August Final): 47.9
05:00: Euro-zone Unemployment Rate (July): 9.5%
10:00: US ISM Manufacturing (August): 50.5; Prices Paid: 58
10:00: US Construction Spending (July): -0.1% MoM
10:00: US Pending Home Sales (July): 1.6%
13:00: F August 2009 Sales and Revenue conf. call
15:30: MTW presents at Morgan Stanley CEO conference
16:30: API Crude Oil and Gasoline Inventories
17:00: ABC Consumer Confidence
21:30: Australia GDP (Q2): 0.6% QoQ; 0.7% YoY
Post-market EPS: ADCT (.14/280.04M); DCI (.30/407.4M); PAY (.18/202M)

Foreign Market Summary/Key Macro News/Commentary:

The S&P and NASDAQ futures are trading 6 points below fair value despite better than consensus Chinese, French, and Euro-zone PMI data. German employment data came in weaker than expected (Job losses of 1000 vs. consensus at +30,000). European markets reversed initial gains and are currently trading near the lows of the session, down between .80% and 1.4%. Markets moved lower following the release of the Euro-zone economic data at 3:55-4am this morning. The S&P futures moved 10 points lower at that time. Financial and commodity leveraged sectors are among the weakest. Healthcare and consumer staples are the strongest. Decliners on the FTSE 100 lead advancers 17-3. Asian markets closed modestly higher (Japan up 0.31%, Hong Kong up 0.75%, Australia up 0.80%, South Korea up 2.1%, Shanghai up 0.41%, India down 0.74%). Technology and mining companies were the biggest gainers following earnings from Hon-Hai Precision beat expectations and China’s manufacturing expanded at the fastest pace in more than a year.


Research Calls/Market Moving News:

BAC (17.59): Bank of America offers to repay part of its TARP bailout – WSJ: People familiar with the matter say the bank would like to repay most or all of the $20B of aid it got around year-end when it was deciding whether or not to go through with its purchase of Merrill Lynch. Repaying the money would mean the bank would no longer be an "exceptional" aid recipient, freeing it from the regulatory and pay-czar scrutiny that accompanies the designation. The bank is also negotiating to pay $300-500M to end a plan that would have had the government share its losses on a $118B pool of BofA and Merrill assets, much of it linked to mortgages.

RIMM (73.06); QCOM (46.42); MOT (7.18); NOK (14.01): Credit Suisse upgrades MOT, RIMM; downgrades NOK, QCOM: Upgrade: Motorola (MOT) upgraded to outperform from neutral; target increased to $9.50 from $7. Research In Motion (RIMM) upgraded to outperform from neutral; target increased to $95 from $76. Downgrade: Qualcomm (QCOM) downgraded to neutral from outperform; target remains $50. Nokia (NOK) downgraded to underperform from outperform; target is €8.50.

AIG (45.33): AIG shares cut to underperform from market perform at Sanford Bernstein. The firm cites valuation for the downgrade and notes that the current price does not reflect the possibility that the common equity is worth zero. Target is 10.

SVA (9.71): SVA is up another 15.5% on continued momentum and news story from South Korea’s Yonhap News agency saying that SVA has signed a deal with South Korea’s Boryung Pharmaceuticals to export 10 million doses of the company’s H1N1 vaccine.

RMBS (19.10): Samsung antitrust trial date has been changed to January 11, 2010 from September 10, 2009 because Samsung’s attorney’s health is in “grave condition.” RMBS shares are trading down 2 points in the pre-market.

Secondary Issuance: IMMU (20 million share shelf), HCN (5 million share secondary). AU (7.8 million share secondary).

EBAY (22.14): EBAY may sell Skype to private investors in a deal that may be announced today. The price talk is 2 billion. EBAY paid 2.6 billion for Skype

PBR (39.64): Petrobras upgraded to outperform from neutral at Credit Suisse:
The firm has raised estimates and their target price to $52 from $38. Lower costs, better results in Gas and Power and higher realization prices for refined products are cited for the upgrade