Morning Review - 072910

8/9/2019 Morning Review - 072910

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Nicholas Colas (Chief Market Strategist): 212 448 6095 or [email protected] Clark: 212 448 6085 or [email protected]

Beth Reed: 212 448 6096 or [email protected]

ManufacturingManufacturing activity improved in half of the Districts, while the other half (New York, Cleveland, Kansas City, Chicago, Atlanta, and Richmond) noted that the pace ofactivity had slowed or subsided. Bright spots included automobile production, demand for auto parts, aircraft parts and manufacturing, and semiconductor demand andsales growth. GMs unusual decision to forego traditional shutdowns around July 4th likely helped the auto sector in the period.

Steel production declined in the Chicago and Cleveland Districts, who also noted that capacity utilization remained below pre-recession levels.

Nonfinancial ServicesServices sector activity improved in most Districts since the June report. The five regions reporting on the transportation industry experienced gain in freighttransportation, while Boston noted a pickup in healthcare services, and 3 Districts (Philadelphia, Chicago, and St. Louis) saw increased business in the information

technology sector.

Real Estate and ConstructionFollowing the first time homebuyer tax credit expiration, the residential real estate market was sluggish across the country, and the outlook for the remainder of the yearwas grim. Many Districts expected home sales to weaken further, while construction activity softened from already low levels. Some builders said they are notintroducing new inventory unless they have a signed contract on a home.

Commercial and industrial real estate markets also struggled in all 12 Districts, with high vacancy rates exerting downward pressure on rents and construction activity

remaining subdued or diminishing further. The outlook for this particular sector ranged from further declines in activity to slow growth.


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U.S. EQUITIES

BA (-1.9%) reported second quarter earnings of $1.06 per share, topping estimates for $1.01, but trailing last years $1.41. The worlds second-largestairplane maker delivered fewer airplanes last quarter than Q2 2009 (114 versus 125), and revenue fell 9% to $15.6 billion. CVS (+3.1%) missed earningsand revenue estimates and trimmed its 2010 full-year profit forecast, saying it expects slower revenue growth at stores open at least a year. Sharesadvanced, however, after it announced a deal with Aetna. S (+0.2%) posted a wider quarterly loss than a year ago (25 cents per share versus 13 cents),but lost fewer monthly contract customers than expected and forecast growth in overall subscriber numbers for the remainder of 2010.

Important Conferences/Corporate Meetings Today:None

Important Earnings Today (with Estimates) From

Source: Thomson ONE

Three Day (High 1118.75; Low 1097.00):Prior Day SPX (High 1114.66; Low 1103.11; Close 1113.84):

S&P Futures

One Day (High 1115.75; Low 1099.25): ADP: $0.42 AMGN: $1.29 NLY: $0.62 AVP: $0.45 BLL: $1.29 CAB: $0.22 CRI: $0.32 CE: $1.04 TYC: $0.64

MOT: $0.06 NOV: $0.93 NBL: $0.74 PTV: $0.55 PAG: $0.28 QSFT: $0.24 RYN: $0.37 RTN: $1.19 WYNN: $0.38

CELG: $0.60 CME: $4.30 CL: $1.16 CNX: $0.67 DPS: $0.69 DRE: $0.27 EMN: $1.66 EXPE: $0.38 VTR: $0.69

XOM: $1.46 FSLR: $1.60 BEN: $1.48 GT: $0.04 GR: $1.07 IRM: $0.24 K: $0.94 LZ: $2.38 WM: $0.54

CLI: $0.70 MXIM: $0.31 MFE: $0.46 MJN: $0.62 MDP: $0.65 MET: $1.00 MWW: $-0.05 MCO: $0.44 XEL: $0.28

RGC: $0.17 RSG: $0.42 REV: $0.38 SBH: $0.21 LUV: $0.26 SHOO: $0.57 STRA: $2.56 SUN: $0.74 WEC: $0.69Source: Bloomberg


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FIXED INCOME

Source: Bloomberg

Todays Important Economic Indicators/Events: Durable Goods Orders: 1.0% Beige Book

Source: Bloomberg

Five-year notes sold much better than expected at the Treasurys $37 billion auction of the securities. The yield awarded was 1.796 percent, lower thanthe 1:00pm EST bid of 1.818 percent. Coverage was very strong, at 3.06 times, which was the highest so far this year and much higher than last yearsaverage of 2.58 times. The previous 2010 high was 2.80 times, set in January. Foreign demand was the best in 4 years, with indirect bids accounting for47 percent of total purchases.


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Morning Review - 072910

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