N AMERICAN MORNING BRIEFING: Analyst Ratings ChangesLast update: 12/15/2008 6:25:14 AM
DJIA Futures 8640.0 -24.0 -0.3%
S&P 500 Futures 881.6 -3.8 -0.4%
Nasdaq Futures 1210.7 -4.2 -0.3%
Above are as of 0550 ET
FTSE 100 4310.8 +30.5 +0.7%
Xetra DAX 4745.1 +81.7 +1.7%
CAC40 3239.3 +25.7 +0.8%
Above are as of 0550 ET
Nikkei 225 8664.7 +428.8 +5.2%
Hang Seng 15046.9 +288.6 +1.9%
Above are closing prices
SNAPSHOT: -Stocks seen flat; dollar lower against yen, euro and pound; Treasurys seen little changed; ICE Brent crude higher at $48.01; gold higher. -Watch for NY Fed Empire State survey at 0830 ET; Treasury international capital flows, in dollars at 0900 ET; Industrial Production at 0915; NAHB housing index at 1300 ET; two-day FOMC meeting beginning (interest rate decision expected around 1415 ET Tuesday). U.S. MARKETS OUTLOOK: U.S. stock futures are pointing to a flat to slightly lower open as investors remain cautious ahead of the FOMC meeting and interest rate decision due Tuesday, said Manoj Ladwa of U.K. spreadbettor TradIndex. "Markets are now negative, but may creep back into positive later Monday, as investors price in the 50bps expected rate cut," said Ladwa. "However, once the decision has been made I believe markets will fall again," he added. EQUITIES: The financial sector will be in the spotlight Monday after several European banks, including Natixis SA (12068.FR) and BNP Paribas SA (13110.FR) of France, Spain's Banco Santander SA (STD) and the U.K.'s Royal Bank of Scotland Group (RBS) outlined their exposure to Bernard L. Madoff Investment Securities LLC, the New York-based business that allegedly lost $50 billion in a giant pyramid scheme. Citigroup Inc. (C) said it "recently" arranged financing in excess of $8 billion to Dubai, just weeks after issuing a report that stated the emirate's economy was the most "vulnerable" amongst Gulf sheikdoms. At 0504 ET, Citigroup stock was up 3.0% in Frankfurt. Credit-card firms should also see active trading after The Wall Street Journal reported that U.S. federal regulators are poised to adopt tough restrictions to make it harder for such companies to raise interest rates on millions of existing customers. Elsewhere, Detroit's 'Big Three' will continue to be closely watched as investors await details on how funds allocated for the Troubled Asset Relief Program, or TARP, can be diverted to support the auto makers. At 0505 ET, General Motors Corp. (GM) stock was up 6.3% in Frankfurt, while Ford Motor Co. (F) shares were 8.4% higher. In the tech sector, Apple is drifting lower in Frankfurt following Goldman's Sachs' decision to cut its recommendation to neutral from buy. At 0525 ET the stock was down 1.2%. After Friday's closing bell, Fitch Ratings downgraded a number of homebuilders, citing the difficult housing environment and expectations that housing activity will be even more challenging than previously anticipated in 2009. Fitch cut KB Home (KBH) and D.R. Horton (DHI) to BB- from BB+, Lennar (LEN) and Pulte (PHM) to BB+ from BBB-, and Centex (CTX) and Ryland (RYL) to BB from BB+. FOREX: The dollar is lower in Europe Monday, benefiting little from increased optimism about a bailout plan for the battered U.S. automakers, which this time involves dipping into the $700 billion TARP kitty. By 0550 ET, the dollar was down in Europe at Y90.78, while the euro was up at $1.3471 and the pound had risen to $1.5001. BONDS: U.S. Treasurys are trading little changed from Friday's closing levels in London. The Fed is widely expected to cut its Fed Funds target rate by 50bp to 0.50%. 2-year/10-year benchmark yield spread at +181.0bp versus Friday's +180.5bp. 2-year note is unchanged at 100 30/32, yielding 0.765%, 10-year note down 1/32 at 110 7/32, yielding 2.575%. 30-year down 4+/32 at 128 even, yielding 3.05%. Corporate bonds: After opening tighter, spreads on European credit-derivative indexes moved wider amid extremely thin liquidity. "There has only been two prints on Crossover so far this morning ... bid/offer spreads are very wide," said a trader. At 0525 ET, the Markit iTraxx Crossover index, which measures the cost of default insurance on 50 mostly sub-investment-grade borrowers, stood at 1126 basis points, according to Markit, after opening around 1085 basis points. The move wider comes despite European stock markets posting gains on fresh hopes the White House will throw a lifeline to U.S. auto makers in an attempt to prevent the collapse of the ailing autos industry. COMMODITIES: Crude oil futures could vault above $50/bbl this week if buyers are heartened by the potential for an Organization of Petroleum Exporting Countries output cut or a U.S. auto sector bailout, said Stephen Schork of the Schork report. "We are prepared for the possibility that some misguided Detroit euphoria, coupled with a (likely) hawkish announcement out of OPEC this Wednesday will be the catalyst this week that shoves spot Nymex WTI back to the top of the current range in the mid $50s," he says. At 0515 ET, ICE January Brent traded up 160 cents at $48.01 a barrel, while Nymex January WTI traded up 181 cents at $48.09 a barrel. For gold to break higher, the precious metal needs to move above $835.3 a troy ounce, said FuturesTechs analysts, adding that gold opened and closed at the same level Friday and that suggests indecision between buyers and sellers. At 0519 ET, spot gold traded at $828.60 an ounce, up 0.9% from late Friday in New York, while silver was at $10.39/oz, up 1.6% from Friday's close. =======TODAY'S CALENDAR=======
0830 US Dec NY Fed Empire State Survey
0900 US Oct Tsy Intl Capital Flows
0915 US Nov Indus Production
1300 US Dec NAHB Housing Index
N/A US Dec Two-day FOMC meeting begins ============================== OTHER TOP STORIES OF THE DAY:
WSJ: GMAC WOOS INVESTORS AS IT SEEKS FED BACKING GMAC LLC is racing to raise $1.25 billion in fresh capital necessary for the Federal Reserve to begin backstopping the company's finances. GMAC is in talks with potential investors, including private-equity firms, according to people familiar with the matter.
WSJ: GOOGLE WANTS ITS OWN FAST TRACK ON THE WEB Google Inc. (GOOG) has approached major cable and phone companies that carry Internet traffic with a proposal to create a fast lane for its own content, according to documents reviewed by The Wall Street Journal.
WSJ: BANK OF AMERICA: REPORT ON CCB STAKE SALE NOT TRUE Bank of America Corp. (BAC) denied a report in Hong Kong's Chinese-language Apple Daily newspaper that said the U.S. bank is selling up to US$3.10 billion worth of shares in China Construction Bank Corp. (0939.HK)
BOEING, AIRBUS PLAN LOANS TO CUSTOMERS Boeing (BA) and Airbus (ABI.YY) are preparing to pump the world aviation market with billions of dollars worth of loans to carriers in 2009 to try to offset what is expected to be "a very, very tough" year for aircraft manufacturers, according to U.K. newspaper The Times.
WSJ: US DRILLING ACTIVITY SLOWING SHARPLY As oil and gas prices fall, drilling activity in the U.S. is slowing more than expected, battering shares of drilling companies, hurting economies in energy-producing states and sowing the seeds for supply shortages when the economy recovers.
BOJ TANKAN: CORP MOOD DECLINE FASTEST IN 34 YRS Business sentiment among Japan's largest manufacturers deteriorated over the past quarter at its fastest pace in more than three decades, highlighting how the global financial crisis is causing pain for the country's economy, the Bank of Japan's tankan survey showed Monday.
IEA SEES GLOBAL OIL PRODUCTION PEAKING IN 2020 - REPORT The International Energy Agency's chief economist believes global oil production will peak much earlier than expected due to a collapse in investment, The Guardian reports Monday.
GERMANY TO WAIT FOR OBAMA BEFORE STARTING NEXT STIMULUS - FT Germany will hold off on its next fiscal stimulus package until it has a better idea of U.S. President-elect Barack Obama's economic policies, the Financial Times reported Sunday, citing unnamed German officials.
CHINA NOV INDUS OUTPUT GROWTH LOWEST SINCE FEB 2002 China's industrial output growth slowed to its lowest level in nearly seven years in November, and analysts said they don't expect the slowdown to hit bottom until later next year when Beijing's plan to boost investment has an effect. By Isis Almeida, Dow Jones Newswires; 4420 7842 9375; isis.almeida@dowjones.com
Advanced Semiconductor ADR Target Cut To US$1.6 Vs US$1.8-GS
BE Aerospace Started At Hold By Societe Generale
Beckman Coulter Cut To Neutral From Outperform By Baird
Best Buy Raised To Buy From Neutral By PiperJaffray
Boeing Started At Sell By Societe Generale
Catalyst Pharma Ptnrs Started At Buy By Merriman Curhan
Cephalon Started At Buy By Goldman Sachs
Endo Pharma Started At Neutral By Goldman Sachs
Forest Laboratories Started At Neutral By Goldman Sachs
General Dynamics Started At Hold By Societe Generale
Gilead Sciences Started At Buy By Merriman Curhan
Goodrich Started At Sell By Societe Generale
Kansas City Southern Cut To Neutral From Buy By Goldman
King Pharmaceuticals Started At Neutral By Goldman Sachs
Lockheed Martin Started At Buy By Societe Generale
Neutral Tandem Raised To Outperform From Neutral By Baird
Northrop Grumman Started At Buy By Societe Generale
Sepracor Started At Sell By Goldman Sachs
Warner Chilcott Started At Neutral By Goldman Sachs
(END) Dow Jones NewswiresDecember 15, 2008 06:25 ET (11:25 GMT)
