January 25, 2012

Morning Trend – US SPH futures are down 3 handles and the NDH futures are up 19 handles this morning. The 10-year T-Note is up 2 ticks the yield at 2.05% The dollar is higher with the Euro trading @ $1.2957 Gold is down~$9.5@ ~$1654.5z. Crude is down 70c trading ~ $98.85. The vix closed at 18.91 Vix futures are up .25 at 21.45.

International Trend – European markets are lower with Germany down .4%, France -.5%, the UK is -.6%. European markets are being led lower by technology -2.2%, health care -1.2%, and financials -1%, consumer goods are slightly higher.. Euro Debt: is wider with Italy out 13bps (6.27%), and Spain is in 1bp @(5.38%) Asian Markets: Japan +1.1%, HK closed, AUZ +1.1% Emerging Markets: China closed, India +.5%, Korea +.1%, Russia is +.5% and Brazil +.15%

Technical Trend: The SPX slipped .1% to 1314.65 ending its 5-day winning streak. Stocks continue to look extended to us but the markets are giving back little. Apple’s earnings were nothing short of astronomical and that may give a boost to sentiment. We are looking for a move that could take us to 1330-1350 and would turn more aggressive sellers at those levels should we get there. Near-term support is at 1300 and the 20-day at 1286. The 50-200 day moving averages are just less than 7 points from a golden crossover which has bullish implications. The vix at 18.91 remains constructive for stocks as long as we stay below 23.50.

Economic Reports: MBA Mortgage Applications for w/e Jan. 20 -5.0%. Pending Home Sales for Nov. est. -1.0%. FOMC rate decision – rates to stay at 0.25%. DOE Crude Inventories w/e Jan. 20 est. +1450K, Distillate -125K, Gasoline est. 2000K.

U.S. stock-index futures declined as disappointing forecasts from Advanced Micro Devices Inc. and Nvidia Corp. overshadowed record profit from Apple Inc.
AMD fell 4 percent after projecting lower sales than some analysts estimated. Nvidia sank 3.6 percent after the maker of graphics processors cut its fourth-quarter revenue outlook. Apple climbed 7.5 percent after quarterly earnings more than doubled. Illumina Inc. soared 40 percent after Roche Holding AG made a $5.7 billion hostile bid for the company.
Standard & Poor’s 500 Index futures expiring in March slid 0.3 percent to 1,307.3 as of 8:15 a.m. in New York, while Dow Jones Industrial Average futures lost 45 points, or 0.4 percent, to 12,581. Contracts on the Nasdaq-100 Index, where Apple is the biggest stock with a 15 percent weighting, advanced 0.6 percent to 2,451.50.

Apple Inc.’s quarterly profit more than doubled as surging demand for the iPhone and iPad cemented its role as the most valuable technology company and ramped up pressure on rivals Google Inc. and Samsung Electronics Co.
Net income of $13.1 billion in the period that ended Dec. 31 ranked among the highest quarterly profits on record, putting Apple in the same league as energy companies such as Exxon Mobil Corp. and Russia’s Gazprom OAO, data compiled by Bloomberg show. Per-share profit of $13.87 for the period was more than Apple earned in any full year before 2010.
Apple sold 37 million iPhones in the period, with customers snapping up the new 4S model that went on sale in October, a week after the death of co-founder Steve Jobs. Record revenue vaulted Apple ahead of Hewlett-Packard Co. as the world’s biggest computer maker by sales and quelled concern that the company’s allure may dim as it embarks on a new era with Chief Executive Officer Tim Cook at the helm. (Bloomberg)

European stocks fell for a second day after Ericsson AB and Novartis AG posted earnings that missed analysts’ estimates.
Ericsson, the world’s largest maker of wireless networks, plunged 14 percent after reporting fourth-quarter net income that missed analysts’ estimates. Novartis, Europe’s biggest drugmaker by sales, declined 3.5 percent. ARM Holdings Plc climbed 4.3 percent after Apple Inc. posted quarterly profit that more than doubled.
The benchmark Stoxx Europe 600 Index slipped 0.6 percent to 254.5 at 1:37 p.m. in London. The gauge has still risen 4.1 percent so far this year amid signs that the U.S. economy is recovering and as investors speculated that the euro area will contain its debt crisis and China will reduce curbs on lending. (Bloomberg)

European Union officials have stepped up pressure on Greece and its creditor banks in a complex game of three-way brinkmanship, signalling that they will allow a Greek default to run its course unless both sides accept more pain.
Austria's finance minister Maria Fekter said patience with Athens is exhausted. "Greece has failed its austerity targets by a wide margin. The Greeks have made decisions, but they weren't implemented. They have agreed to austerity measures, but costs haven't come down. This situation has caused great consternation," she said at a meeting of EU finance minister in Brussels.
"We're sending a direct message to Greece that the community expects more. We're not pleased and only when there's a written message on the table in front of us, can further assistance be discussed," she said.(Telegraph)

Europe must show more resolve to fix the debt crisis as officials race to draft rules governing the euro and bridge widening difference over how to keep Greece’s finances afloat, said delegates at the World Economic Forum.
“We can’t wait too long,” said Peter Voser, chief executive officer of Royal Dutch/Shell Plc. “It’s two minutes before midnight.”
Executives and officials are meeting in Davos, Switzerland as bond markets show signs of stabilizing after the European Central Bank last month pumped three-year emergency funding into a banking system that was in danger of seizing up. At the same time, governments, investors and the International Monetary Fund are split on how to restructure Greek debt less than two months before a potential default. (Bloomberg)

President Obama warned the nation Tuesday that the decades-old promise of a secure and rising middle class is under threat because of growing disparities between the rich and everyone else in America.
In an election-year State of the Union message that will likely serve as the template for the months of campaigning ahead, Obama outlined a series of steps that he believes will reinforce the tentative economic recovery, including proposals to eliminate tax incentives for companies to move jobs overseas, to make college more affordable and to expand help for credit-worthy homeowners looking to refinance mortgages at historically low interest rates. (Washington Post)

U.S. Commandos freed two kidnapped aid workers, an American woman and a Danish man, in a pre-dawn raid in Somalia that ended their three months of captivity in the war-torn country.
Jessica Buchanan, 32, and Poul Hagen Thisted, 60, were rescued today and have been taken to a safe location unharmed, Defense Secretary Leon Panetta said in a statement on the U.S. Defense Department’s website. The U.S. Africa Command, which has U.S. military responsibility for the continent, said in a statement that nine kidnappers were killed in the assault.(Bloomberg)

The global economy is slowing sharply and is at far greater risk of recession than was thought just months ago, with Europe’s debt crisis creating “fertile ground” for a rapid collapse, the International Monetary Fund warned Tuesday.
In a sobering trio of reports on growth, public debt and financial stability, the agency described global trade and investment as waning and depicted the world as perhaps one shock away from a serious downturn. The epicenter of the economic turmoil remains the euro zone, where political leaders have not committed the money needed to prop up weakened governments and banks, thereby threatening to create a cycle of “self-perpetuating pessimism” that could undermine the recovery, the IMF said.(Washington Post)

Roche Holding AG offered $5.7 billion in a hostile bid for Illumina Inc. to bolster sales of gene-mapping equipment and services. The target’s shares climbed above the bid price as investors speculated Roche will have to raise it.
Roche today proposed paying $44.50 a share for Illumina, 18 percent more than yesterday’s closing price. It will put the offer directly to shareholders after the San Diego-based company was “unwilling to participate in substantive discussions,” Roche, the world’s biggest maker of cancer drugs, said in a statement. (Bloomberg)

The U.K. economy shrank more than economists forecast in the fourth quarter as manufacturers cut output and services stagnated, leaving Britain on the brink of another recession
Gross domestic product fell 0.2 percent from the third quarter, when it increased 0.6 percent, the Office for National Statistics said in London today. The median forecast of 33 forecasts in a Bloomberg survey was for a drop of 0.1 percent. Public-sector strikes over pensions on Nov. 30 had “some impact” on GDP in the quarter, the statistics office said.

German business confidence rose for the third month in a row in January, according to the much-watched Ifo index released Wednesday, suggesting a widely-predicted European recession may not be as bad as feared.
The index's increase to 108.3 points from 107.2 in December exceeded market expectations for a reading of 107.5. Business managers' assessment of how things are now slipped, but the part of the survey that measures future expectations rose. That is a sign that Germany, Europe's largest economy, may show moderate rowth this year despite the debt crisis that is pushing some countries back into recession. (AP)

UniCredit SpA, Italy’s biggest bank, offered to buy back as much as 3 billion euros ($3.9 billion) of Tier 1 and Tier 2 bonds as part of its plan to boost capital.
“The purpose of the invitation is to support UniCredit’s strategy for optimizing its capital structure,” the Milan-based lender said in a statement today. The buyback “will generate profits and thereby increase core Tier 1 capital,” it said.(Bloomberg)

Google will soon know far more about who you are and what you do on the Web.
The Web giant announced Tuesday that it plans to follow the activities of users across nearly all of its ubiquitous sites, including YouTube, Gmail and its leading search engine.
Google has already been collecting some of this information. But for the first time, it is combining data across its Web sites to stitch together a fuller portrait of users.
Consumers won’t be able to opt out of the changes, which take effect March 1. And experts say the policy shift will invite greater scrutiny from federal regulators of the company’s privacy and competitive practices. (Washington Post)

Boeing says its fourth-quarter net income jumped 20 percent as it delivered more planes and a brisk commercial aircraft business offset a flat quarter for defense.
The Boeing Co., based in Chicago, posted a net income of almost $1.4 billion Wednesday, or $1.84 per share. That's well above Wall Street expectations of $1 per share. Revenue was $19.56 billion, also better than expected.
Boeing delivered 128 commercial planes during the quarter, up from 116 a year ago. Profits from commercial planes jumped 56 percent.(AP)

United Technologies Corp. said Wednesday its fourth-quarter profit rose nearly 11 percent, propelled by growth in its aerospace businesses. Total revenue increased 1 percent.
The manufacturer of elevators, jet engines, heating and cooling equipment and other industrial products said Wednesday that net income in the October-December period was $1.33 billion, or $1.47 per share. That's up from $1.2 billion, or $1.31 per share, in the same quarter in 2010.
Revenue grew to $14.97 billion from $14.86 billion.
Analysts polled by FactSet were expecting earnings per share of $1.46 and revenue of $15.06 billion.(AP)

ConocoPhillips, the U.S. oil company that plans to spin off its refining business this year, said fourth-quarter profit rose as higher oil prices and asset sales made up for lower production.
Net income climbed to $3.39 billion, or $2.56 a share, from $2.04 billion, or $1.39, a year earlier, Houston-based ConocoPhillips said in a Business Wire statement today.
ConocoPhillips plans to spin off its refining business in the second quarter so it can focus on finding and producing oil and natural gas. The company is in the midst of a three-year plan to sell $15 billion to $20 billion of assets by the end of 2012 to fund share repurchases and position itself for future growth. (Bloomberg)

Medical device and drugmaker Abbott Laboratories says its profit increased more than 12 percent in the fourth-quarter on double-digit sales growth of its top-selling drug Humira.
Abbott reported net income of $1.62 billion, or $1.02 per share, for the last three months of 2011. That's up from $1.44 billion, or 92 cents per share, in the prior-year period.
Excluding one-time items the company earned $1.45 per share. Analysts polled by FactSet expected $1.44 per share.
Revenue rose to $10.4 billion. Analysts expected revenue of $10.6 billion.(AP)

WellPoint Inc.'s fourth-quarter earnings sank 39 percent as medical claims soared because of its Medicare Advantage business, but the health insurer raised its quarterly dividend and it forecast earnings growth in 2012.
The performance was a rare miss of Wall Street expectations. WellPoint's full-year earnings outlook also came in short of analysts' estimates. The Indianapolis company's stock sank more than 6 percent, or $4.40, to $65 in premarket trading Wednesday.(AP)

US Airways Group Inc. said Wednesday its net income fell 35 percent in the last three months of 2011 as rising passenger revenue wasn't enough to offset a steep increase in fuel prices.
The airline's results still beat Wall Street's expectations. The stock rose nearly 5 percent in premarket trading.
The Tempe, Ariz., company said Wednesday that it earned $18 million, or 11 cents per share, in the fourth quarter. That compares with $28 million, or 17 cents per share, a year earlier. Excluding charges, it earned 13 cents per share in the most recent quarter.(AP)

Textron Inc. forecast higher 2012 profit than analysts estimated as demand for its Cessna aircraft recovers and Bell helicopter sales grow.
Earnings from continuing operations excluding one-time items will be $1.80 a share to $2, the Providence, Rhode Island- based company said in a statement today. The average of nine analysts’ estimates compiled by Bloomberg was $1.67.

General Dynamics Corp., the maker of Abrams battle tanks and Gulfstream business aircraft, said fourth-quarter profit fell 17.3 percent because of charges at its aircraft completions business.
Net income fell to $603 million, or $1.68 a share, from $729 million, or $1.91 a share, a year earlier, General Dynamics said today in a statement. It missed the profit estimate of $1.99 a share, the average of 23 analysts surveyed by Bloomberg. Sales rose 6.3 percent to $9.15 billion.

Delta says it earned $425 million in the fourth-quarter as it raised prices in the critical holiday season while reducing flying to keep costs low.
The Atlanta airline said its profit amounted to 50 cents per share. Excluding one-time gains and losses, it earned 45 cents per share in the most recent quarter. In the same period a year earlier, it earned just $19 million, or 2 cents per share.
Revenue rose 8 percent to $8.4 billion. Fuel expenses rose 5 percent. Other costs were flat. The money it made to fly a passenger a single mile rose 12 percent due to higher fares. (AP)

Swiss drug maker Novartis AG reported a 47 percent drop in its fourth-quarter net profit Wednesday, citing a slate of exceptional costs from the ending of clinical trials to manufacturing problems and layoffs.
The Basel-based company said its net profit reached $1.21 billion in the fourth quarter, compared with $2.32 billion in the same period in 2010. Sales rose four percent to $14.78 billion in the Oct.-Dec. period. (AP)

Specialty glass maker Corning Inc. says its profit slumped 53 percent in the fourth quarter but its revenue rose 7 percent on stronger sales of glass for flat-screen televisions, computers and mobile devices.
The world's largest maker of liquid-crystal-display glass reported Wednesday that its net income fell to $491 million, or 31 cents per share, in the October-December period. That's down from a robust $1.04 billion, or 66 cents per share, a year earlier.
Excluding special items, earnings were 33 cents a share. That matches Wall Street expectations. (AP)