Pre-market Summary

Monday, December 17, 2007

Futures indicate another lower beginning for the mkt this morning as carryover concerns about rising inflation, credit mkt turmoil and a weak showing from foreign mkts are among the factors weighing on sentiment. In the financial sector, Citigroup this morning downgraded numerous financial stocks. This followed an "in-depth review" of consumer, commercial real estate and C&I trends, which shows that credit outlook has deteriorated since Q3 earnings were reported. Specifically, the firm downgraded BAC, CFC, FHN, JPM, MTG, PNC, WB and WFC to Hold from Buy, and CMA, COF, MTB, RDN and USB to Sell from Hold. Some concerning comments from Moody's regarding bond insurers are also working to keep bullish enthusiasm in check. The ratings agency said it is considering cutting the triple-A rating for Financial Guaranty Insurance and XL Capital Assurance (XL). Moody's also affirmed its triple-A rating for MBIA (MBI) and CIFG Guaranty, but cut their outlooks to Negative. Dow futures are currently -57; Nasdaq futures are currently -6.8; S&P futures are currently -5.9. For technical levels of interest, click here... Separately, there is a big deal getting done. Ingersoll-Rand (IR) announced it will acquire Trane (TT) for $10.2 bln, or approx $47.81 per share, which is nearly a 30% premium over Friday's closing price. In economic news, futures showed a muted response to this morning's mixed data. Net long-term TIC flows came in well above expectations in Oct at $114.0 bln (consensus $50.0 bln), easily covering a downward revision in Sept to $15.4 bln from $26.4 bln. The NY State Empire Manufacturing Index came in at 10.3, compared to the expected reading of 21.0, while the third quarter Current Account Balance was -$178.5 bln, compared to the expected reading of -$183.0 bln... The Bond mkt is modestly higher in early trade as equity futures indicate a lower open for the stock market. The 10-yr is currently +08/32 to 4.201%. Note Treasury Secretary Paulson speaks this afternoon at 14:45ET on the govt's housing plan... In Commodities, Jan crude oil ($89.99 -1.28), which expires tomorrow, is selling off in morning trade... In Europe, mkts fell sharply, hitting their lowest levels in nearly three weeks, as inflation worries hit global mkts and dimmed expectations of further rate cuts in the U.S. FTSE is currently -1.5%; DAX is currently -1.3%; CAC is currently -1.4%. In Asia, mkts fell sharply on concern accelerating inflation will limit interest-rate cuts, threatening global growth. Nikkei closed -1.7%; Hang Seng closed -3.5%; Shanghai Composite closed -2.6%... Notable pre-market Calls include Downgrades: BAC, CFC, FHN, JPM, MTG, PNC, WB and WFC to Hold from Buy at Citi; CMA, COF, MTB, RDN and USB to Sell from Hold at Citi; UBS at CIBC... On the Earnings calendar, ADBE and SEH are confirmed to report today after the close... On the Economic calendar, nothing remains on the schedule for today.