MORNING COFFEE

Ford Sells Volvo.  Ford (F) confirmed reports that it has reached an agreement with Chinese auto manufacture Geely to sell it’s Volvo brand.  The deal is set to be completed in  Q2 2010.

Small Banks Need To Free Up Lending.  Treasury Secretary Timothy Geithner and President Obama told a group of small bank leaders at the White House yesterday that they'd better start lending more. Geithner said the real risk is that "banks are not lending enough and not going to provide the capital businesses need to grow for the economy to strengthen going forward."

Warren Buffett selling Moody’s.  Warren Buffett CEO of Berkshire Hathaway (BRKA/BRKB), cut its stake in Moody’s (MCO) for a sixth time since July, to 34%.  The rating agency has been struggling with profit declines, lawsuits and criticism from regulators. Warren Buffett's firm sold 87,992 shares on Dec. 18 at $26.77/share; Berkshire held 48M shares Berkshire at the end of June.

Microsoft Fined.  A federal appeals court upheld a ruling against Microsoft (MSFT) saying it must pay $290M to i4i Inc. for violating a patent related to XML functionality, and must remove the feature from its software by Jan. 11 or pull Microsoft Office from the selves.

Earnings

·  

    Micron Technology (MU) 9.71 +0.30, +3.19% pre market, reported earnings that beat estimates.  The 

    company reported earnings of 0.23 on revenues of 1.74

·   Cintas (CTAS) 29.68 Missed estimates reporting earnings of 0.39. on revenues of 885M.

·   Red Hat (RHT) 29.87 beat their earnings estimate by 0.01 reporting earnings of 0.17 per share.  Revenues 

    came in at 194M.

Today should be a relatively slow day prior to the Christmas Holiday since most traders have left for vacation and few earnings reports are to be released. Economic reports to be released are Personal Spending and the PCE numbers which will give insight into inflation.

·   Futures at 7:00: Dow +0.2% to 10433. S&P +0.4% to 1118. Nasdaq+0.3%.

    Crude +0.4% to $74.67. Gold -0.3% to $1,083.

    Treasurys are down a drop. The dollar is flat vs. euro, yen and pound.

·   Asia: Hang Seng +1.1% to 21329. Shanghai +0.8% to 3074. BSE +3.2%to 17231. Japan was closed.

·   Europe at midday: FTSE +0.8% to 5372. CAC +0.7% to 3925. DAX+0.4% to 5971.

CLOSING BELL

16:15 ET Dow 10464.93  +50.79, Nasdaq 2252.67  +15.01, S&P 1118.02  +3.97,

Broad based buying helped stocks hit a new 52 week high.  This was despite a lower than expected revised Q3 GDP number and a stronger dollar.

This session's trading volume wasn't very high; fewer than 1 billion shares exchanged hands on the NYSE. Low trading volume often enables stocks to move more than they ordinarily would during a day.  The low trading volume in part was due to many traders already leaving for the holiday vacation.


Micron Technology (MU) 9.41 +0.10 reported first quarter earnings of $0.23 per share. This was $0.16 better than the consensus. The stock rose 4% following the earnings release, but has pulled back and is trading 1.28% higher after hours at 9.53 +0.12.

Treasuries continue to fall.  The benchmark 10-year Note has fallen 18 ticks this session after it dropped more than one full point in the previous session. Its yield currently stands at 3.75% for the first time since August.  I can attribute this to the rating downgrade for Greece and the fear the other Eurozone counties with financial problems may also be downgraded.

Q3 GDP Revised Lower. The Bureau of Economic Analysis announced that the GDP grew at a 2.2% annual rate in the third quarter versus 2.8% in the second estimate. Economist had estimated that there would be no revision to the 2.8% growth previously reported.

Existing Home Sales Rise.  Sales increased 7.4% from October to a seasonally adjusted annual rate of 6.54 million units.  Economist has estimated 6.25 mln.  Median prices rose slightly to $172,600 from $172,200 in October and the supply of unsold homes dipped to 6.5 months from 7.0 months.  Part of the jump may be due to the first time buyer tax credit that was set to expire in November but was extended.  This could cause a decline in future months.

Advancing Sectors: Telecom (+1.0%), Materials (+0.7%), Tech (+0.6%), Energy (+0.5%), Consumer Staples (+0.4%), Health Care (+0.4%), Financials (+0.3%), Consumer Discretionary (+0.2%), Industrials (+0.1%)

Declining Sectors: Utilities (-0.7%)

MIDDAY LUNCH

12:00 ET Dow 10454.65  +40.81, Nasdaq 2246.33  +8.64, S&P 1116.56  +2.55,

Stocks Move Higher.  Stocks remain higher but off the session highs today. The Telcom sector is leading the way with gains of 1.1% today.

Despite a lower GDP number, stocks have managed to say in the green helped by the latest home sales figures.  November existing home sales came in higher than expected and showed a 7.4% increase.

Treasuries continue to fall.  The benchmark 10-year Note has fallen 20 ticks this session after it dropped more than one full point in the previous session. Its yield currently stands at 3.75% for the first time since August.  I can attribute this to the rating downgrade for Greece and the fear the other Eurozone counties with financial problems may also be downgraded.

Existing Home Sales Rise.  Sales increased 7.4% from October to a seasonally adjusted annual rate of 6.54 million units.  Economist has estimated 6.25 mln.  Median prices rose slightly to $172,600 from $172,200 in October and the supply of unsold homes dipped to 6.5 months from 7.0 months.

Part of the jump may be due to the first time buyer tax credit that was set to expire in November but was extended.  This could cause a decline in future months.

Jabil Circuit (JBL) 16.69 +1.57 reported fiscal first quarter earnings that topped the consensus estimate and issued upside guidance for its second quarter.  The company reported earnings of $0.32 per share 0.03 better than the Street consensus of $0.29.

Jabil issued upside guidance for Q2, sees EPS of $0.20-0.32 vs. $0.19 consensus.  The company expects revenues to range from $2.90 billion to $3.10 billion; the consensus expects $2.88 billion.

Q3 GDP revised.   The Bureau of Economic Analysis announced that the GDP grew at a 2.2% annual rate in the third quarter versus 2.8% in the second estimate.

MORNING COFFEE

Moody’s downgrades Greece.  Moody’s has followed both S&P and Fitch and lowered the debt rating on Greece as the country struggles to emerge from its economic crisis.  Moody’s noted the the government’s long term credit strength was “eroding materially”.  Moddy’s lowered the rating from A1 to A2.  It also issued a negative outlook.

Homeowners fall behind on payments.  The number of homeowners that fell behind on their mortgage payments, including the most credit worthy continues to climb.  This was the sixth straight quarterly increase in delinquent mortgages.  Those that fell behind on prime loans more than doubled.

Healthcare rallies on Senate bill.  Healthcare  stocks rallied yesterday as the Senate got the 60^th vote to approve the controversial healthcare bill.   The bill omits the provision for a government-run insurance plan, which would have put insurance companies at a disadvantage.

Banks pay to play.  A new report released asserts that banks that spent more on lobbying wre more likely to receive more government bailout funds.  The report also found that banks that had executives serving on Fed boards were more likely to receive TARP funs.

Stimulus money goes to Democratic districts.  A recent report shows that stimulus money meant to help boost the economy is not being distributed evenly.  The report shows that Democratic districts were far more likely to receive funds than Republican districts.  Critics says the Democrats are using the funds unfairly to buy votes.

Earnings

Jabil Ciruits (JBL) reported earnings after the bell of 0.32 which beat estimates.

·       

       Futures: Dow +0.35% to 10378. S&P +0.4% to 1112.50. Nasdaq +0.6%.
Treasurys: 30-year -0.45% to 116-11. 10-year -0.28%. 5-year -0.13%.
Euro flat vs. dollar. Yen +0.15%. Pound -0.1%. Loonie +0.4%.
Crude -0.7% to $73.23. Gold -0.3% to $1,093.

·     Asia: Nikkei +1.9% to 10378. Hang Seng +0.7% to 21092. Shanghai -2.3% to 3051. BSE +0.6% to 16692.

·     Europe at midday: FTSE +1.1% to 5350. CAC +0.7% to 3899. DAX+0.4% to 5953.

CLOSING BELL

Dow 10414.14  +85.25, Nasdaq 2237.66  +25.97, S&P 1114.05  +11.58,

The market started off strong in the early morning with broad based gains.  Helping the market was a weaker dollar and earning reports from last week.

What was notable is the later in the day the dollar recovered and turned it into a 

0.4% gain and the market still advanced.  For weeks now the market has reacted inversely to the dollar index.  The gain in the dollar can still be attributed to concerns in the Eurozone with the financial stability of some of the countries after the downgrade in Greece’s debt rating last week.

Commodities came under pressure on the stronger dollar, yet the material sector posted gains.  Most of the gains were due to Alcoa (AA) 15.73  +1.15 after being upgraded by Morgan Stanley.

Financial posted the largest gains rising 1.5% after Baron’s published an article that portrayed banks in a positive light.

Chattem (CHTT) 93.14 +23.16 was the biggest mover today after it was announced that Sanofi-Aventis (SYN) 39.07 -0.04 would purchase the company for 1.9 billion.  

Both Walgreen (WAG) 36.61 -0.03 and ConAgra (CAG) 21.83 -0.33 beat their earnings estimates this morning. Walgreen’s Reported earnings of 0.52 per shares the street was looking for 0.48.  ConAgra reported earnings of 0.52 and the street was looking for 0.47 per share. The company did miss their revenue projections.

Nearly 90% of its components were able to stage an advance.  Support for stocks drove Treasuries sharply out of favor.  The benchmark 10-year Note dropped more than one point to send its yield to a four-month high.  It closed with its yield near 3.68%.


Advancing Sectors: Financials (+1.5%), Consumer Discretionary (+1.3%), Materials (+1.2%), Energy (+1.1%), Tech (+1.1%), Health Care (+1.1%), Telecom (+0.9%), Consumer Staples (+0.8%), Industrials (+0.7%), Utilities (+0.4%)

Declining Sectors: (None)

MIDDAY LUNCH

Dow	10428.65	+99.76	(+0.96%)
Nasdaq	2237.23	+25.54	(+1.14%)
SP 500	1114.88	+12.41	(+1.11%)
10-yr Note	-33/32	3.66%
NYSE	Adv 2177	Dec 821	Vol 566 mln
Nasdaq	Adv 1730	Dec 958	Vol 1.18 bln

Broad based buying has led the markets higher today.  A weaker dollar helped the markets sustain their gains from last week.  The dollar has since recovered and is up 0.2%.

The commodity and materials sectors have been the leaders today.  The material sector is up 1.4% mostly on news that Morgan Stanley upgraded Alcoa (AA) 15.84 +1.26.

The NASDAQ reached a new 52 week high today.  Part of the rise today is based on an upgrade on Intel (INTC) 20.13 +0.50 by Barclays.

Chattem (CHTT) 92.98 +23.00 +32.80% is the biggest mover so far today after it was announced that Sanofi-Aventis (SYN) 39.17 +0.06 +0.15% would be purchasing the company for 1.9 billion. 

Both Walgreen (WAG) 36.66 +0.025 and ConAgra (CAG) 21.12 -0.039 beat their earnings estimates this morning. Walgreen’s Reported earnings of 0.52 per shares the street was looking for 0.48.  ConAgra reported earnings of 0.52 and the street was looking for 0.47 per share.  The company did miss their revenue projections.

MORNING COFFEE

Healthcare Bill Passes.  The Senate voted 60-40 along party lines to advance healthcare legislation in a procedural vote at 1:30AM Monday morning.  The Senate bill, is likely to form the core of any final bill, and leaves existing employer-based health-insurance benefits largely intact. Last-minute additions toughened restrictions on insurers, including barring them from denying coverage to children with pre-existing conditions. Insurers say the bill will increase costs, but note modest improvements.

Yelp says no to Google.  Yelp reportedly said no to an all-but-signed deal to be acquired by Google (GOOG) for about $550M plus earnouts over the weekend. 

Saab still has life.  GM said it received inquiries from "several parties" after announcing that it would be closing down Saab after negotiations with Spyker fell through of Friday. One of the inquiries was again from Spyker, which submitted a revised bid.

Sanofi-Aventis Buys Chattem.  Sanofi-Aventis (SNY) will acquire consumer healthcare firm Chattem (CHTT) for $1.9B, or $93.50/share in cash - a 34% premium to Friday's close. The transaction creates the world's No. 5 consumer healthcare company by revenues.  Chattem has over two dozen products, including Aspercreme, Icy Hot joint, Pamprin , Gold Bond and Unisom.

Earnings

ConAgra (CAG) Est. 0.47

Jabil Circuit (JBL) Est. 0.29     

Walgreen (WAG) Est. 0.48

·        Futures: Dow +0.3% to 10301. S&P +0.4% to 1102. Nasdaq +0.4%.

     Crude +0.7% to $74.95. Gold +0.3% to $1,114.70.   

     30-year Tsy -0.48% to 117-22. 10-year -0.21%. 5-year -0.11%.

     Euro flat vs. dollar. Yen flat. Pound -0.1%.

·         Asia: Nikkei +0.4% to 10183. Hang Seng -1.1% to 20948. Shanghai+0.3% to 3123. BSE -0.7% to 16601.

·         Europe at midday: FTSE +1% to 5249. CAC +0.7% to 3823. DAX +0.7%to 5870.

CLOSING BELL

Dow	10328.89	+20.63	(+0.20%)
Nasdaq	2211.69	+31.64	(+1.43%)
SP 500	1102.47	+6.39	(+0.58%)
10-yr Note	-17/32	3.54%
NYSE	Adv 1774	Dec 1242	Vol 3.16 bln
Nasdaq	Adv 1663	Dec 1094	Vol 2.86 bln

All three indices posted gains today led by the tech and financial sectors.

Research In Motion (RIMM) 69.99, +6.53 and Oracle (ORCL) 24.34, +1.46 and both announced yesterday after the market closed earnings results that exceeded analysts' expectations for the latest quarter.

Accenture (ACN) 41.37, -0.29 and Nike (NKE) 64.42, +1.17also reported earnings the beat estimates 

yesterday after the close.

Both tech stocks and financial stocks led the market today with respective gains of 1.6% and 1.4%. The two sectors were the best two performing sectors and combine to make up nearly 35% of the total weight in the S&P 500.    

Stocks came under pressure midday today as the dollar rallied against other currancies.  The rally could not 

be sustained and the dollar closed today unchanged.

Trading volume on the NYSE hit its highest level of the year by trading over 3 billion shares, but that was largely the result of this year's last quadruple witching options expiration. The S&P 500 is also due to be rebalanced. 

Advancing Sectors: Tech (+1.6%), Financials (+1.4%), Consumer Discretionary (+0.5%), Utilities (+0.5%), Energy (+0.3%), Health Care (+0.3%), Telecom (+0.2%), Materials (+0.1%)

Declining Sectors: Consumer Staples (-0.3%), Industrials (-0.2%)