Futures Point Higher On MSFT, CAT Earnings

by: SA Editors
SA Editors
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Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures As of 8:52 AM EST

S&P 500: +1.80; 1,431.10
NASDAQ 100: +1.00; 1,792.25
Dow: +26.00; 12,567.00

International Indexes

NIKKEI 225: -0.21%; 17,421.93 (-36.37)
HANG SENG: -1.88%; 20,281.13 (-388.70)
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FTSE 100: -0.15%; 6,260.00 (-9.30)
CAC 40: -0.14%; 5,601.43 (-7.77)
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Commodity Futures (Reuters/Jefferies CRB)

Oil: +0.66%; $54.59 (+$0.36)
Gold: -0.52%; $651.00 (-$3.40)
Natural Gas: -0.01%; $6.90 (-$0.00)
Silver: -1.45%; $13.295 (-$0.195)

Breaking Newssee today's Wall Street Breakfast for earlier news

Durable Goods Orders Up 3.1%, Fall Short of Forecasts

Durable goods orders climbed 3.1% in December, falling short of economist forecasts of 3.9%, according to Commerce Department figures released today. Order gains were broad-based across most industries. Some highlights: Transportation goods rose 4.8%, its first increase since September and best since March; orders for motor vehicles rose 6.8%. Orders for electronics (excluding semiconductors) went up 1%, but computer orders fell 3.1%.
• Sources: Link to Goverment Release, MarketWatch, Wall Street Journal
• Related commentary: Economic Report Summary, Retail Sales Data: A Closer Look, The Dollar's Decline: Quite a Spectacle
• Potentially impacted stocks and ETFs: S&P 500 Index (NYSEARCA:SPY), NASDAQ 100 Trust Shares ETF (QQQQ), Diamonds Trust Series 1 ETF (NYSEARCA:DIA), iShares Russell 2000 Index ETF (NYSEARCA:IWM), iShares Lehman 1-3 Year Treasury Bond ETF (NYSEARCA:SHY), iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), iShares Lehman 20+ Year Treasury Bond ETF (NYSEARCA:TLT)

Caterpillar's Record Earnings Fall Short of Analyst Estimates; Stock Higher On '07 Revenue Guidance

Caterpillar reported record Q4 and 2006 results, but missed analysts' average estimate on the quarter for net income. However, Street beating revenue guidance for '07 seems to be compelling investors to buy CAT in pre-market trading, despite a disappointing net income forecast. Caterpillar-CAT-1yr-chart-01-25-07 Q4 net income rose 4% to $882 million, or $1.32/share on 14% revenue growth to $11b, compared to analysts' expectations of $1.34 to $1.35, on sales of $10.5b. Net income for '07 is seen between $5.20 to $5.70/share on flat to 5% higher sales of $41.5b to $43.6b. Analysts expected $5.54/share and $41.06b. CAT's net income for 2006 increased 28% to $3.54b on sales of $41.52b (+14%). In pre-market trading CAT's shares are up about 2%, last trading at $60.85, compared to its close yesterday of $59.63.
• Sources: Earnings press release, Bloomberg, MarketWatch
• Related commentary: Jim Cramer's Picks on Wall Street Confidential, Jan. 4, Jim Cramer's Take on CAT, Novartis and Caterpillar: When to Hold 'Em, When to Fold 'Em
• Potentially impacted stocks and ETFs: Caterpillar (NYSE:CAT). ETFs: DIAMONDS Trust, Series 1 (DIA), Industrial Select Sector SPDR (NYSEARCA:XLI), PowerShares Dyn Building & Construction (NYSEARCA:PKB), iShares Dow Jones US Industrial (NYSEARCA:IYJ)

Honeywell's Earnings Hit Their Mark, Revenue Tops Estimates

Honeywell International Inc. reported its fourth-quarter profit rose nearly 14%, powered by its strong aerospace division.hon By the numbers, Honeywell reported earnings of $585 million good for EPS of $0.72 versus earnings of $514 million (EPS of $0.61) during the same period last year. Revenue climbed 14% as well to $8.28 billion from $7.27 billion during the previous year period. Thomson consensus estimates had forecast EPS of $0.72 on net sales of $8.13 billion. The company predicts 2007 EPS will rise 13-17% to a range of $2.85-2.95, with revenue up about 5% to $33 billion. This is inline with Thomson consensus estimates of 2007 EPS of $2.93 on revenue of $32.65 billion. Shares are trading higher by $0.02 to $44.22 in premarket action.
• Sources: Press Release, Wall Street Journal, TheStreet.com, Bloomberg, AP
• Related commentary: Chinese Surveillance Industry Set to Expand Five-fold: How to Profit, Stock Picks for a Weak Dollar, Cramer's Take on HON
• Potentially impacted stocks and ETFs: Honeywell International Inc. (NYSE:HON). Competitors: United Technologies Corporation (NYSE:UTX), Raytheon Co. (NYSE:RTN), General Dynamics Corp. (NYSE:GD). ETFs: PowerShares Aerospace & Defense (NYSEARCA:PPA), iShares Dow Jones US Aerospace & Def. (NYSEARCA:ITA), Vanguard Industrials ETF (NYSEARCA:VIS)

Halliburton Net Falls 40% on Income Tax Charge; Demand for Services Remains Strong

Halliburton, the world's second-biggest oil-services provider, said this morning its net income fell 40% to $0.64/share ($658 million), down from $1.04/share ($1.1b) in Q4 2005, but higher than analyst consensus estimates of $0.61. This year's Q4 net included a $343 million for income taxes, while the 2005 figure includes a $381m income tax benefit. Net of these, 2006 vs. 2005 incomes would be $1b vs. $629m. Revenues were up 8% to Halliburton 26 01 2007 Chart$6.02b. Halliburton said its energy services group experienced weather-related activity decreases in Q4, but expects demand to remain strong in 2007. Oilfield profits were up 41% on a jump in producer spending on exploration, despite falling oil prices. Jeff Tillery of Pickering Energy Partners: "Prices were coming down, but it wasn't low enough, long enough for producers to really change behavior," noting U.S. and international drilling remained strong. In North America the number of natural gas rigs went up 5.2% in Q4. Competitor Schlumberger saw a 71% gain in income last week; Baker Hughes will report earnings on Feb. 15. Shares were up $0.26 (0.9%) to $30 in pre-market trading.
• Sources: KBR Announces Fourth Quarter and Full Year Results">Press Release, Wall Street Journal, MarketWatch, Bloomberg
• Related commentary: Halliburton's Problems Are Spreading Like Kudzu, Halliburton Company: Windfall of War, Falling Natural Gas Prices Haven't Affected Stocks (Yet)
• Potentially impacted stocks and ETFs: Halliburton Co. (NYSE:HAL), Schlumberger Ltd. (NYSE:SLB), Baker Hughes Inc. (NYSE:BHI). ETFs: iShares Dow Jones U.S. Oil & Gas Exploration/Production (NYSEARCA:IEO), iShares Dow Jones U.S. Oil Equipment & Services (NYSEARCA:IEZ), SPDR Oil & Gas Equipment & Services (NYSEARCA:XES)

Japan Dec. CPI Lower Than Expected, BoJ Hike Seen As Less Likely

Japan's December core CPI rose by just 0.1%, less than the 0.2% increase expected by economists and less than the 0.2% reading for Nov. Bank stocks were sold on the news as the overall market was influenced by selling in the U.S. The yen meanwhile continues to trade near four year lows against the dollar around ¥121.5/$1. A Japan-based Lehman Brothers economist comments, "This doesn't take a rate decision off the table, but it'll make it more difficult for the bank to explain the need for a hike. If we get a decent gross domestic product report in February, with solid consumption numbers, the BOJ could decide to move." Finance Minister Koji Omi says Japan's CPI data is stable and sharp price rises would not be good. Cheaper oil is being blamed for some of the pressure on prices, but a Bank of Japan policy maker says all board members agree that "prices will return to a rising path once the adjustment of crude oil prices is over." The BoJ's next rate decision meeting is Feb. 20.
• Sources: Bloomberg, BusinessWeek-AP
• Related commentary: BoJ Maintains 0.25% Target; Nikkei Up, Yen Hits Multi-year Lows, Nikkei Briefly Touches 6 Year High, But Japan ADRs Lag, The Yen's Slide: How Much Longer?
• Potentially impacted stocks and ETFs: Mitsubishi UFJ Fin. Grp. (NYSE:MTU), Mizuho Fin. Grp. (NYSE:MFG). ETFs: iShares MSCI Japan Index (NYSEARCA:EWJ), iShares S&P/TOPIX 150 (ITF), BLDRS Asia 50 ADR Index (NASDAQ:ADRA)

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Asian Headlines (via Bloomberg.com)

Asian Stocks Slide, Led by Taiwan Semiconductor on Earnings; Mizhuo Drops Asian stocks posted the biggest drop in two weeks after NEC Electronics Corp. said its third-quarter loss widened and Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) had its first profit decline in five quarters.

China Will Use Environmental Controls to Cool Economy, Central Banker Says China will tighten restrictions on factory emissions to reduce pollution and help prevent the economy from overheating, central bank Deputy Governor Wu Xiaoling said.

China Southern, China's Only A380 Customer, Plans for 12 Boeing Freighters China Southern Airlines Co. (NYSE:ZNH) may order as many as 12 Boeing Co. (NYSE:BA) 777 freighters, costing as much as $2.88 billion, to tap the country's growing air cargo demand, said Deputy General Manager Liu Xiaoxiao.

Dollar Gains Against Euro, Yen After Durable Goods Orders Rose Last Month The dollar rose a third straight day against the euro and approached a four-year high versus the yen after a government report showed U.S. durable goods orders accelerated last month.

European Headlines (via Bloomberg.com)

European Stocks Drop a Second Day, Paced by BHP, Rio Tinto, AstraZeneca European stocks fell for a second day after a drop in copper prices dragged BHP Billiton (NYSE:BHP) and Rio Tinto Group (RTP) lower and disappointing earnings in the U.S. heightened concern profit growth is slowing.

Nasdaq Won't Raise $5.3 Billion Takeover Offer for London Stock Exchange Nasdaq Stock Market Inc., the second- biggest U.S. stock exchange, won't raise its 2.7 billion-pound ($5.3 billion) offer for London Stock Exchange Plc.

Wallenberg Family's Investor AB Agrees to Buy Moelnlycke for $3.7 Billion Investor AB, the holding company of the Swedish billionaire Wallenberg family, agreed to buy Moelnlycke Health Care AB for 2.85 billion euros ($3.7 billion), beating two rival offers from private equity firms.

Porsche Profit Jumps, Buoyed by Volkswagen Contribution, as Sales Decline Porsche AG, the maker of the 911 Carrera sports car, said first-half profit surged because of a revaluation and hedges on its stake in Volkswagen AG (OTCPK:VLKAY).

Countrywide Shareholders Reject 3i's $2 Billion Takeover Offer as Too Low Shareholders of Countrywide Plc, the U.K.'s largest residential real estate broker, rejected 3i Group Plc's 1.02 billion pound ($2 billion) bid after some investors said it was too low.