September 11, 2009: Morning Call

September 11, 2009: Morning Call

Fair Value: SP500 – 1039.41; NDX: 1685.00; DOW: 9565

Technical Levels:

SPX: 875-880, 910, 953, 986 support/ 1044, 1110 resistance

Events:

Pre-market EPS: CPB (.26/1.5B)
05:30: HBC Analyst Meeting
08:30: US Import Price Index (August): 1.0% MoM; -16.0% YoY
08:35: AMGN presents at Thomas Weisel Healthcare Conference
10:00: US Wholesale Inventories (July): -1.0%
10:00: University of Michigan Confidence (Sep): 67.0
14:00: US Budget Statement (August): -152.0B


Foreign Market Summary/Key Macro News/Commentary:

The S&P and NASDAQ futures are flat with fair value at 7:30am ET. Asian markets closed higher excluding Japan (Japan down 0.66%, Hong Kong up 0.44%, Australia up 0.55%, Shanghai up 2.38%, South Korea up 0.48%, India up 0.29%). Shanghai outperformed on in-line Chinese retail sales data (15.4% vs. 15.3% YoY) and better than expected Industrial Production (12.3% vs. 11.8% consensus). New Yuan loans for August also exceeded expectations (410B vs. 320B Yuan). Banks and real estate sectors rallied across the region. Japan lagged on weaker than expected Q2 GDP (0.6% Q/Q vs. 0.9% Q/Q). European markets are trading up 0.60% to 1.2% marking gains in 5 of the last 6 trading sessions. Breadth is positive with 7 issues advancing for every 3 that are declining on FTSE 100.

Research Calls/Market Moving News:

BAC (17.22): Bank of America still in talks on how to compensate government for loss-sharing agreement – Reuters: In a 9-Sep letter to the chairman of the House Committee on Oversight and Government Reform, CEO Ken Lewis says the bank is confident it will resolve the issue. The bank is negotiating how much it needs to pay for an agreement in which the government said it would share losses on $118B of toxic assets.

AAPL (172.56): In interview, China Mobile chairman/CEO Wang Jianzhou says company still in talks to offer iPhone in China - Bloomberg

GS (174.87): Citibank increases their price target to 215 from 175.

AIG (37.85): Wells Fargo downgrades shares to underperform due to reliance on government support. The analyst said the “value of AIG’s businesses is less than its obligations to the government.”

SLB (58.43); SII (27.69): Goldman Sachs upgrades SLB; downgrades SII: Upgrade: Schlumberger (SLB) upgraded to buy from neutral. Downgrade: Smith International (SII) downgraded to neutral from buy

BBY (41.05): Best Buy downgraded to perform from outperform at Oppenheimer: Target increased however to $44 from $42. Firm notes shares are trading near peak valuations and sees little room for additional upside to forecasts in Q3 and Q4.

STLD (17.86): Steel Dynamics raises Q3 EPS guidance: Steel Dynamics now anticipates Q3 EPS $0.20-0.25; higher than the $0.10-0.20 provided on 22-Jul. Reuters consensus is $0.20. STLD says the order book continues to be solid, with bookings through October for flat-rolled products. The company additionally notes that the outlook for the fourth quarter remains uncertain.

WYNN (62.15): Wynn Resorts gets regulatory approval for Hong Kong IPO – WSJ: People familiar with the situation say WYNN can list its Macau casino operations in the city. One source says WYNN will sell a 20% stake in a $1B offering, and part of the proceeds will fund an expansion of Wynn Macau by adding a second casino there. JPMorgan Chase, Morgan Stanley, and UBS are joint bookrunners. A roadshow will begin 21-Sep, and listing is scheduled for 9-Oct.

GRMN (36.06): Garmin upgraded to buy from underperform at Bank of America Merrill Lynch: Price objective increased to $45 from $30.

ERTS (18.05): Electronic Arts downgraded to neutral from buy at Bank of America Merrill Lynch: Price objective cut to $19 from $26.

Home sales being boosted by rush to beat deadline for tax credit – WSJ: First-time home buyers closing deals by 30-Nov are eligible to receive up to $8K. If the deadline is not extended, which seems likely given a perceived need for governmental fiscal restraint, 1-Dec will bring a chance to see how much the housing market has truly recovered, and how much of the recent boom was merely carried out in an attempt by buyers to avail themselves of the credits.

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