MORNING COFFEE

Senate Approves Healthcare Bill.  The Senate approved President Obama's sweeping healthcare overhaul early this morning.  The bill extends health coverage to more than 30M uninsured and putts an end to refusing insurance to people with pre-existing medical conditions. The bill also gives subsidies to help the underprivileged pay for mandatory health insurance. Critics say the bill will drive up costs and increase the budget deficit.  Legal challenges are already in the works stating that the special deals some states received and the requirement that help get insurance or be fined are unconstitutional.

Warren Buffett buying ResCap?  Unconfirmed stories are circulating that Warren Buffett and Berkshire Hathaway (BRKA/BRKB) are in talks to purchase the troubled mortgage and loan servicer Residential Capital.  The company whose parent is GMAC has required repeated cash infusions to stay afloat.  Buffett and others are said to have large debt positions in ResCap, which is on the brink of dipping below the net worth of $250M it is required to have to stay in compliance with its loans.

Wells Fargo and Citigroup Pays Back TARP.  Wells Fargo (WFC) and Citigroup (C) repaid a total of $45B and exited TARP.  By doing this the companies will have more say over employee compensation and dividends. The Treasury still holds warrants to buy 110M shares in Wells Fargo. The paybacks bring the total amount of repaid TARP funds to $118B. 

Economic releases due out today are Continuing Claims 5170K est. and Durable Goods Orders +0.5%

The Stock market closes early today for Christmas and will be closed tomorrow.

·         Futures: Dow +0.2% to 10427. S&P +0.4% to 1119.50. Nasdaq +0.3%.
Feb. crude +0.3% to $76.90. Gold +0.9% to $1,104.
Treasurys are flat.
Euro +0.5% vs. dollar. Yen +0.4%. Pound +0.3%.

·         Asia: Nikkei +1.5% to 10537. Shanghai +2.6% to 3153. BSE +0.8% to 17361. Hong Kong was closed.

·         Europe at midday: FTSE +0.3% to 5387. CAC +0.1% to 3915. Frankfurt was closed.

CLOSING BELL

Dow	10466.4	+1.51	(+0.01%)
Nasdaq	2269.64	+16.97	(+0.75%)
SP 500	1120.59	+2.57	(+0.23%)
10-yr Note	+00/32	3.75%
NYSE	Adv 2161	Dec 847	Vol 786 mln
Nasdaq	Adv 1835	Dec 855	Vol 1.59 bln

A terrible New Home Sales numbers caused stocks to decline in the early morning, but a weaker dollar allowed stocks to rebound and squeak out a small gain for the day.  After hitting three month high yesterday the dollar lost 0.5% against competing foreign currencies.   

Personal Income and Spending rose for November but fell short of what economist had hoped for.  The report was ignored by the market and the market rose in early trading despite the report.

News that New Home Sales were off 11.3% from October sent stocks lower in a hurry.   New Home Sales now stand at an annual rate of 355,000 units, which was well below the consensus estimate of 438,000.  This level has not been seen since February 2009.  Additional bad news was that new home sales in October were revised down to an annual rate of 400,000 units from a previously reported rate of 430,000 units.

The Basic Material sector (+1.75%) and the Energy sector (+1.08%) were the two big winners in today’s session.

Cintas Corp (CTAS) 26.35 -3.33 -11.22% was a big looser today after reporting earnings that disappointed the Street.

Oil was higher today after reporting a larger than expected drawdown in inventories.  Oil ended the day at 79.59  +2.9%.

MIDDAY LUNCH

12:00 ET Dow 10464.21  -0.61, Nasdaq 2264.31  +11.64, S&P 1119.59  +1.57

The Financial sector has been the main drag on the market today.  Most sell is coming from the banks.

Large Cap is helping the NASDAQ stay in positive territory today.  Google (GOOG) 610.72 +9.60 Apple (AAPL) 201.95 +1.59 are each helping the tech sector today.  While Ebay (EBAY)23.97 +1.05 and Amazon (AMZN) 137.83  +4.08 are both doing their part to keep the market on the plus side.

Oil is higher at 76.51 +2.12 after a report showed a larger than expected drawdown in inventories.

Personal Income and Spending Rises. While both rose the each missed the economist estimates.   Personal Income for November rose 0.4%, economist were looking for a 0.5% rise in income.  Personal Spending rose 0.5%, estimates were for a 0.7% increase.

New Home Sales Stink.  New home sales sank 11.3% to a seasonally adjusted annual rate of 355,000 units, which was well below the consensus estimate of 438,000.  This level has not been seen since February 2009.  Additional bad news was that new home sales in October were revised down to an annual rate of 400,000 units from a previously reported rate of 430,000 units.

Consumer Confidence Revised Lower.  The final reading for the December University of Michigan Consumer Confidence report was revised down to 72.5 from 73.4.  The median estimate called for a slight pickup to 73.8. This indicates that consumers are still concerned about the economy.  This also could affect the retail sales numbers for the Christmas Holiday season.

• Micron Technology (MU) 9.95 +0.55, reported earnings that beat estimates. The company reported earnings of 0.23 on revenues of 1.74 

•Cintas (CTAS) 26.42 -3.25 Missed estimates reporting earnings of 0.39. on revenues of 885M.

• Red Hat (RHT) 31.29 +1.42 beat their earnings estimate by 0.01 reporting earnings of 0.17 per share.          Revenues came in at 194M. 

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)