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The Morning Report For Monday, May 7, 2012

Standing on the threshold of another week of trading, the S&P futures are trading lower. The Asian markets are selling off to the tune of 2.5% matching November lows (00:15 EDT), the Euro is trading on a three-month low and Oil is firmly below $100 per barrel. Francois Hollande defeated French President Nicolas Sarkozy to become the first Socialist in 17 years to control Europe's second-biggest economy.

For those who shut computers down after the closing bell at 4PM, Friday missed a further selloff in S&P futures. Just prior to 4:15, the front month S&P futures contract traded to a new low signifying the global disappointment on the US Employment situation.

There was a rumble that hit the street after the market closed Friday with the announcement of a secondary offering in AIG. Thankfully, I was still watching the market and able to capture a nice profit by shorting the stock. Not to be a conspiracy theory kind of person, but I am not the only person to notice how AIG has gone from $28 in March to close on Friday $32. The U.S. government agreed to sell $5 billion in AIG (3.84% common stock). The Federal government is looking to lighten its load and the Treasury Department said it would sell the stock back to the insurance company at $30.50 a share. After this sale, the Treasury Department still has a 63% stake in the company with a value of $30.7 billion.

Looking forward to this week, we have a relatively light Economic calendar, but there are many companies set to report earnings. With DISH reporting in the premarket today, keep your eyes on DTV. RAX and the hot stock, VVUS are reporting after the market closes. YHOO is structuring a deal to sell 15% - 25% of its stake in Alibaba and could have some action today.

For those intent on trading high beta stocks, the weakness in the Euro and bad employment situation in the US could have an impact on high flyers. Selling pressure could also come from those looking to generate cash in anticipation of buying the Facebook IPO set for May 18.

Make no bones about it that the hottest IPO in recent memory will suck the demand and liquidity out of high flying names like AAPL, with the $555 low is within reach, and AMZN, with a monster gap to fill after blowing the street away on earnings. Be very mindful when TV pundits call for a buying opportunity in AAPL weakness when every institution and private equity firm will switch gears and start gobbling up Facebook.

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