SMF Notes Market Summary for Tuesday, June 19, 2012

End of Day Market Summary for: Tuesday, June 19, 2012
Dow 30 Industrials 12,837.33 +95.51 +0.75%
S&P 500 1,357.98 +13.20 +0.98%
Nasdaq 100 2,620.83 +28.31 +1.09%
Nasdaq Composite 2,929.76 +34.43 +1.19%
Russell 2000 786.43 +13.90 +1.80%
S&P Midcap 400 938.05 +10.03 +1.08%
S&P 100 620.91 +5.62 +0.91%

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Biotechnology
Symbol Last Change Volume Open High Low Percent Trade Date
HGSI 13.28 +0.08 2,325,320 13.24 13.38 13.20 +0.61% 2012-06-19
IBB 127.99 +1.76 701,538 127.15 128.73 127.05 +1.39% 2012-06-19
AMGN 73.02 +1.00 4,557,251 72.02 73.28 71.82 +1.39% 2012-06-19
CELG 67.62 +1.69 3,579,605 66.28 67.63 66.01 +2.56% 2012-06-19
GILD 50.73 +0.52 4,462,200 50.37 51.05 50.25 +1.04% 2012-06-19
VRTX 57.23 -0.54 1,848,933 58.04 58.77 56.87 -0.93% 2012-06-19
TEVA 38.00 +0.05 7,939,938 38.03 38.21 37.83 +0.13% 2012-06-19

SMF Notes Microsoft: ISI's quick thoughts on MSFT's tablet announcement last night (29.84 ) -Update-

ISI notes the new tablet, named Surface, will come in two models (e.g., Windows RT and Windows 8 Pro) and MSFT suggested pricing would be competitive with comparable tablets. From a hardware perspective, ISI believes key differentiators for both tablets will be their VaporMg cover/keyboard (adds ~3.5mm thickness) which also serves as a full multi-touch keyboard and connectivity options (e.g., USB port, microSD, etc.) While ISI believes Surface will appeal to users looking for a Windows tablet capable of running Windows-based productivity software (e.g., Office, Photoshop, etc.), firm does not see it altering competitive dynamics in the tablet market. In ISI's view, AAPL's unparalleled ecosystem (e.g., 225k+ iPad apps, iCloud, iTunes, etc.) provide a sustainable advantage and remain comfortable with its CY12 and CY13 iPad estimates of 64.3mil and 80.0mil units.

SMF Notes Overnight Summary -- Markets slightly lower; weaker than expected German ZEW takes air out of markets

The Asian markets probably closed yesterday a bit inflated as the underlying bid came from the short-lived relief from the Greek elections. As such, the Asian markets drifted lower today. Otherwise, the region saw a relatively quiet night. Things were also quiet in Europe, and markets began to drift higher, until the German ZEW data came in well below expectations and knocked the indexes and the euro lower in a knee jerk reaction. Spain offered ~EUR3 bln in short term paper, still seeing strong bid to cover ratio despite record high yields. Reports out of France suggest the nation will impose a 3% tax on dividends beginning this summer. Overall, most of the equity markets are little changed, except for the FTSE, which is seeing strength in Consumers and Basic Materials. Bonds and commodities are relatively quiet tonight. Spanish 10 yr yields have drifted back below 7%.

SMF Notes Eod Market Internals Summary For Min. Jun. 18: SPX +0.14%, DJX -0.20%, COMPQ +0.78%, NDX +0.83%; Closing TRIN readings settle mixed, mkt. breadth ends with positive-to-flat ratios as exchange trading vols. drop to well below avg. following Friday's qtrly. expiry. induced surge

NYSE:
EoD Volume: 707.4M vs. the 50d moving avg. @ 832.2M
Closing A/D Line: +532 (+1.4:1)
Closing TRIN: Bearish Reading @ 1.46

NASDAQ:
EoD Volume: 1.556B vs. the 50d moving avg. @ 1.715B
Closing A/D Line: +22 (+1:1)
Closing TRIN: Bullish Reading @ 0.50

SMF Notes Early Floor Talk: Early bid as Europe holds gains; Spanish bond yields tick lower following auction

Futures are higher this morning, after a mixed performance overseas. S&P futures are +6 vs. fair value and DJ futures are +51 vs. fair value.

Europe is holding modest gains (DAX +0.5%, CAC +0.4%, FTSE +1.0%, IBEX +1.6%). Spanish bond yields have pulled back below the 7.0% level (now -11 bps at 6.97%), after the country successfully auctioned $3 bln in 12-month bills. German ZEW data came in well below expectations and knocked the indexes and the euro lower in a knee jerk reaction.

Asian markets gave back some of yesterday's gains in a relatively quiet session (Hang Seng -0.1%, Shanghai -0.7%, Nikkei -0.8%).

In U.S. corporate news, there are a few earnings of note. ORCL is +5% after reporting results early -- co beat EPS ests and announced a $10 bln stock buyback. FDX is -1.6% after beating current quarter earnings ests but issuing disappointing guidance. WAG is +2% after reporting earnings that were roughly in-line, and announcing a 45% equity stake in Alliance Boots for $6.7 bln in cash and stock, which is expected to be accretive. Additionally, WAG increased its dividend to $0.275/share to $0.222/share. JEF is +2.4% after beating on the top and bottom lines.

There are a few pieces of housing data this morning, with May Housing Starts and Building Permits due at 8:30 ET. Today marks the start of a two-day Fed meeting, which will conclude with the policy statement and press conference tomorrow.

SMF Notes Asian Markets Close: Nikkei -0.8%, Hang Seng -0.1%, Shanghai -0.7%, Sensex +0.9%

The major Asian bourses finished mostly lower as markets pulled back following Monday's gains following the Greek election results. The Reserve Bank of Australia's most recent Monetary Policy Meeting Minutes were released overnight and suggested "there was clear evidence suggesting a softening in global conditions." The central bank also noted growth in China slowed "a little further." Looking at the currencies...USDCNY weakened to 6.3552 while USDJPY is weaker at 78.90. In Japan, the Nikkei closed -0.8% as steel names saw heavy selling. AK Steel issued a disappointing forecast during yesterday's U.S. trade and that weighed on Osaka Steel and Mitsubishi Steel Manufacturing which fell 7.3% and 4.0% respectively. Heavyweight Fast Retailing slid 1.4% after being downgraded at JP Morgan.

In Hong Kong, the Hang Seng finished -0.1% as stocks pulled back after yesterday's gains. Real estate developer China Overseas Land & Investment fell 3.3% while Tsingtao Brewery tumbled 7.8% after one of the largest shareholders sold a $193.3 mln stake at a discount.

In China, the Shanghai Composite settled -0.7% as cement and coal stocks led to the downside. Zhejiang Jianfeng fell 1.9% to lead cement shares lower while coal-based China Shenhua Energy slipped 0.8%.

In India, the Sensex closed +0.9% as energy and financials paced the advance. Heavyweight Reliance Industries surged 2.6% while State Bank of India added close to 1.0%.

SMF Notes  European Markets Update: FTSE +1.0%, CAC +0.5%, DAX +0.6%

The major European bourses trade near their best levels of the session as Spanish yields ease from yesterday's levels. Markets are awaiting the formation of a Greek coalition government with reports suggesting an announcement may come at some point today. The formation of a coalition government in Greece is ongoing with reports suggesting one could be as formed as early as today. Eurozone (-20.1 actual v. -5.7 expected) and German (-16.9 actual v. 3.8 expected) ZEW Economic Sentiment readings missed estimates while British CPI (2.8% YoY) and RPI (3.1% YoY) both saw cooler than expected readings. Looking at the currencies...EURUSD is stronger at 1.2615 while GBPUSD is flat at 1.5665. In Britain, the FTSE is +1.0% as commodity-related names and financials lead the way. Eurasian Natural Resources and Vedanta Resources are up 2.6% and 2.2% respectively to pace the sector's advance. Royal Bank of Scotland is the top performer among financials, trading up 1.8%.

In France, the CAC is +0.5% as technology is the top performing sector. Alcatel-Lucent is up 3.2% and STMicroelectronics is higher by 2.3%. Automakers are also strong with Renault up 2.7%.

In Germany, the DAX is +0.6% despite underperformance from the financials. Deutsche Bank and Allianz are among just a handful of names in negative territory, holding respective losses of 0.9% and 0.1%. Steelmaker Salzgitter is among the top performers, sporting a 1.5% gain.

SMF Notes JPM JPMorgan Chase: Jamie Dimon House Financial Services Hearing (35.43 +0.81) -Update-

Mr. Dimon backs rule to exempt foreign units from swap rules... a couple of questions surrounding the fact that the business was being run in London, asking 1) why were the jobs there and 2) why move that excess capital to the trading desk in London rather than being made as loans in the U.S.... Notes Freddie Mac and Fannie Mae were the biggest financial disasters in the U.S.... says if regulators did their job the system would be healthier... says are protected against rising rates... says the taxpayers have never been at risk; says one Fed regulator said the bank could bare $80 bln of losses before there would be any impact to taxpayers

SMF Notes Today's biggest point gainers/losers

Biggest point gainers: CF (178.66 +7.75), GWW (187.60 +6.22), ALXN (98.68 +4.62), WYNN (104.07 +3.74), SXCI (101.82 +3.26), WXS (61.84 +3.22), FDX (91.50 +2.99), GS (96.57 +2.94), BWA (68.79 +2.85), BLK (176.16 +2.71), PXD (89.69 +2.64), AGU (86.37 +2.58), SM (49.15 +2.50), IOC (68.90 +2.46), MLNX (73.96 +2.43), SPG (151.70 +2.39), HOT (53.60 +2.38)

Biggest point losers: EQIX (169.93 -5.18), IHS (101.67 -4.17), JCP (21.90 -2.43), WES (43.28 -2.12), WAG (30.03 -1.93), 245515 (30.03 -1.93), DECK (47.80 -1.63), IDCC (27.64 -1.44), AAP (69.34 -1.35), FFIV (101.49 -1.22), REGN (115.80 -1.13), HCP (42.50 -1.12), ADM (30.29 -1.00), BKS (14.30 -0.94)

SMF Notes Yields slipping off highs

2-yr -1.2 bps @ 0.286%
3-yr +0.5 bps @ 0.383%
5-yr +1.5 bps @ 0.702%
7-yr +2.3 bps @ 1.078%
10-yr +3.2 bps @ 1.610%
30-yr +3.6 bps @ 2.697%

SMF Notes Market Update: Stocks Ascend Ahead of FOMC Meeting

The major equity averages are up with strong gains ahead of tomorrow's FOMC policy statement and press conference with Fed Chairman Bernanke... Anticipation that the Fed will unveil some sort of additional stimulus measure has helped improve stock market sentiment, such that the major equity averages are all sporting gains on the order of 1% or more. Meanwhile, the dollar is down about 0.7% against a basket of major foreign currencies... Most of the dollar's decline has come against the euro, which was last quoted with a 0.8% gain at $1.269. While conditions in Europe remain precarious, many participants were pleased to see Spain's debt yields ease back, suggesting at least temporary and partial relief of strains to the country's banking system... Quelled concerns regarding eurozone conditions seem to be especially beneficial for shares of domestic banks and diversified financial services firms, many of which have large investments and meaningful relationships with entities across the Atlantic. Comments from JPMorgan Chase (JPM 35.40, +0.78) CEO Jamie Dimon during a testimony to the House Financial Services Committee did nothing to disrupt the sector's ascent; as a group, Financials are boasting gains of about 2%... Leadership from Financials has helped lift the S&P 500 comfortably above its 50-day moving average. The broad market measure hasn't closed above that key technical line in more than a month. The effort comes without help from defensive-oriented issues like Consumer Staples, Utilities, and Telecom, which have all lagged since the early going... Amid strength in stocks Treasuries have traded with weakness, such that the yield on the benchmark 10-year Note is once again narrowly above 1.60%. Also a traditional safe haven, gold has given up an early morning gain to trade with a 0.4% loss at $1620 per ounce, despite the dollar's drop. Oil prices have pushed up to $83.85 per barrel for a 0.7% gain, however. Dow +1.0%, Nasdaq +1.2%, S&P 500 +1.1%

SMF Notes ADBE Adobe Systems beats by $0.01, beats on revs; guides Q3 EPS in-line, revs below consensus; guides FY12 in-line (32.89 +0.26)

Reports Q2 (May) earnings of $0.60 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.59; revenues rose 9.9% year/year to $1.12 bln vs the $1.11 bln consensus. Co issues mixed guidance for Q3, sees EPS of $0.56-0.61, excluding non-recurring items, vs. $0.61 Capital IQ Consensus Estimate; sees Q3 revs of $1.075-1.125 bln vs. $1.13 bln Capital IQ Consensus Estimate. Co issues in-line guidance for FY12, sees EPS of $2.40-2.46, excluding non-recurring items, from its prior targeted range of $2.38 to $2.48, vs. $2.44 Capital IQ Consensus Estimate. For fiscal year 2012, the company narrowed its annual revenue growth target to a range of six to seven percent, versus its prior target range of six to eight percent, and inline with consensus of +6.7%.

SMF Notes  JBL Jabil Circuit reports EPS in-line, revs in-line; guides Q4 EPS, revs below consensus (19.42 +0.41)

Reports Q3 (May) earnings of $0.64 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.64; revenues rose 0.5% year/year to $4.25 bln vs the $4.29 bln consensus. Co issues downside guidance for Q4, sees EPS of $0.54-0.66, excluding non-recurring items, vs. $0.67 Capital IQ Consensus Estimate; sees Q4 revs of $4.1-4.35 bln vs. $4.39 bln Capital IQ Consensus Estimate. "We are delighted with the outstanding performance of our Diversified Manufacturing Services sector overall and we are actively expanding our capacity in order to meet the growing demands of numerous customers and products. The ramp-up of new products, combined with specific customer challenges and muted end-markets give us plenty to focus on in the fourth fiscal quarter. We believe success in the fourth quarter will set the stage for a brisk fiscal 2013 and a continuation of record setting years."

SMF Notes ONXX Onyx Pharma to hold conference call tomorrow (June 20) at 7pm ET to discuss FDA Advisory Committee recommendation for Kyprolis (44.26 +0.18)

Onyx is seeking accelerated approval for Kyprolis for the treatment of patients with relapsed and refractory multiple myeloma who have received at least two prior therapies, including a proteasome inhibitor and an immunomodulatory agent (IMiD).