Good Morning Cautious Outlook for today

Wednesday, June 18, 2008

Futures are trading slightly above session lows. Futures were already pointing to a negative start, and then extended their losses following the release of earnings reports from FedEx (FDX) and Morgan Stanley (MS). Northwest Airlines was the latest company to take action because of the record high fuel costs. The airline is reducing fourth quarter 2008 capacity by 8.5% to 9.5% compared to the previous year. Tesoro ests and tgt cut to $21 at Credit Suisse following updated earnings guidance (22.80 ) -Update- Credit Suisse notes that TSO released an 8-K that provided updated guidance for 2Q08 and 2008. Firm says TSO's realized margins will be depressed by the co's exposure to heavy ends, which have lagged the significant run in crude prices this quarter. Based on co's guidance revisions, firm is adjusting their 2Q08 EPS est downwards from $1.41 to $0.25 (consensus $0.86) while their FY08 EPS est goes from $1.51 to $0.27 (consensus $1.66). Firm is also lowering their tgt from $25 to $21. Firm notes TSO's borrowings under its credit facility were $305 mln as of May 31, 2008, down from $545 mln on March 31, 2008. The co expects to reduce inventory by 3 mln barrels for 2Q08.