Morning Update

Modestly Higher to Open Day after Yesterday's Fray

Stocks are poised to open slightly in the green following yesterday's sharp declines that came courtesy of exacerbated pessimism that the recent stimulus efforts, led by President Obama's economic package, will not be enough to stem the slide in the global recession. However, as the trading wears on, there will be plenty of possible economic catalysts to shape sentiment as traders await Obama's mortgage relief plan details, Fed Chief Ben Bernanke's speech on the Fed's balance sheet, and reports on industrial production and capacity utilization, along with the minutes from the Federal Reserve's last monetary policy meeting. On the equity front, Deere & Co. missed analysts' forecasts and provided disappointing guidance, while Comcast beat the Street's profit projections and raised its dividend. Treasuries are mixed amid the busy economic day. Overseas, markets are mostly lower.

As of 8:47 a.m. ET, the March S&P 500 Index Globex futures contract is 3 points above fair value, the Nasdaq 100 Index is 7 points above fair value, and the DJIA is 26 points above fair value. Crude oil is up $0.36 to $35.29 per barrel, and gold is down $3.80 at $963.00.

Deere & Co. (DE $33) reported fiscal 1Q EPS of $0.48, short of the $0.62 Reuters consensus, as revenues declined 1% to $5.1 billion. The farm equipment firm said ongoing higher material costs, the deepening global recession, and volatile foreign exchange rates put downward pressure on its financial results. The company said net sales of equipment operations increased 1% due in substantial part to the sound financial health of the US farm sector, helping agricultural machinery hold up well. DE suspended its 2Q outlook in light of highly uncertain conditions in the global economy, and issued full-year fiscal 2009 net income guidance below the Street's forecast.

Comcast (CMCSA $13) posted adjusted 4Q EPS rose 35% to $0.27, five cents above analysts' expectations, as revenues rose 9% to $8.8 billion. The company said it is pleased with its results as it met or exceeded all of its financial targets, despite a very difficult economic environment, demonstrating the strength of its subscription business. The company increased its annual dividend by 8% to $0.27 per share.

Housing data drops again

Kicking off a fully loaded economic day, housing starts and building permits continued to soften. Starts in January fell 16.8% to an annual rate of 466,000, below the Bloomberg estimate of 529,000. Building permits offered little to stoke any optimism for homebuilders as the more forward-looking indicator of homebuilding dropped 4.8% to an annual rate of 521,000, below of the forecast of 525,000. The drop in starts and permits may be welcome news on the Street as home prices are unlikely to stabilize while supply remains elevated at nine months for existing homes and 12 months for new homes in December (versus the 5-6 months that is considered normal).

Led by a 3.9% decline in industrial supplies and a 2.4% drop in petroleum, the Import Price Index fell 1.1% in January, just above an expected decline of 1.2%. Non-petroleum prices were down 0.8%. Treasuries pared some gains following the housing and import price data, but remain mixed.

Industrial production and capacity utilization will be reported later in the morning, and industrial production is expected to decline 1.5% in January, and capacity utilization is expected to be 72.4%. In response to slower consumer and business spending, manufacturers have been working down inventory levels to conserve cash, and are ordering fewer replacement goods.

President Barack Obama is expected to outline his estimated $50 billion foreclosure mitigation plan aimed at stemming the surge in foreclosures, which may subsidize reductions in mortgage payments for struggling homeowners. President Obama will deliver his plan in Phoenix at about 12:15 pm ET.

Beginning at 12:30 pm ET, Fed Chairman Ben Bernanke will speak at the National Press Club regarding the Fed's lending programs and its balance sheet, followed by a discussion about the economy and financial market conditions.

The minutes from the January FOMC meeting are expected at about 2 pm ET. Of particular interest will be the discussion behind Jeffrey M. Lacker's dissention with the Committee's decision to use targeted credit programs, preferring to expand the monetary base by purchasing U.S. Treasuries.

Europe under pressure as earnings reports are in focus

Stocks in Europe are in the red in afternoon action as the sharp sell off in the US on pessimism the recently announced stimulus efforts across the globe will not be enough the stem the slide in the global economy. Corporate profit reports are also in focus and are showing the negative impact of the global recession and financial crisis. Shares of French defense and aerospace equipment company Safran (SAFRY $19) are down 11% after saying it faces a "year of challenges" as the economic contraction hurts air transport demand and the company said its operating profit margin will decline this year. Dutch bank ING Groep (ING $7) is down over 5% after it reported a 4Q loss of 3.71 billion euros ($4.68 billion), the company's second-straight quarterly loss. The company added, "Given the intensity of the crisis, it is difficult to foresee whether ING will be in a position to pay a dividend in 2009." Meanwhile, Commerzbank (CRZBY $4), Germany's second-largest bank, is moving higher after posting a smaller-than-expected 4Q loss and saying it made a "good start" to 2009.

Elsewhere, the Bank of England released the minutes from its most recent monetary policy meeting, in which it reduced its main lending rate to 1.0%, the lowest since the central bank was founded in 1694. The minutes revealed the BoE agreed to conduct alternative measures to increase the money supply to combat the recession. "To the extent that further cuts in bank rate could not inject sufficient stimulus, the committee would need to use alternative policy measures," the minutes said. Therefore, the committee unanimously agreed to seek authority to conduct purchases of government and other securities, financed by the creation of central bank money.

Asia falls as economic pessimism persists

Stocks in Asia were broadly lower on fears that the global recession will last longer and be deeper than expected despite the flood of global economic stimulus. China's shares led the decline, falling almost 5%, while the Nikkei 225 Index dropped 1.5% in Japan, and the South Korean Kospi Index closed 1.2% lower. Drops in metal prices and the solid pressure on crude oil prices also contributed to the broad-based decline as the economic fears weighed on the prospects for demand in commodities. However, Hong Kong's Hang Seng Index bucked the trend and managed to finish 0.6% higher. Australian shares were 1.5% lower as building material company CSR (CSRLF $1) tumbled about 17% after warning of less profit due to lower demand for glass, insulation and plaster board amid the anemic housing environment. Also, Australian financial firm Westpac Banking Corp. (WBK $51) was lower after reporting a 2% drop in profit as bad debts outweighed increased fee income and its CEO said operating conditions will remain "difficult."