Over the past two months, PMI data from Germany and France have prompted most experts to believe that Germany and France were recovering. The International Monetary Fund expressed its opinion that the UK would grow slowly this year, as has Bank of England governor Sir Mervyn King. Neither believes that the improvement will be robust, but it has begun, nonetheless.

The debate about the economies of Germany, France and the UK may be academic. The difference between a 0.1% drop in GDP and a 0.1% improvement will not be enough to improve employment, factory production or consumer spending. The ripple effect of the flat line of growth is that the fear of contagion to the U.S. and Chinese economies will come true. The IMF argued in favor of this pessimistic point of view last month as it cut GDP forecasts for most large nations, but data from Europe’s largest economies, the U.S. and China’s PMI argued that improvement would outrun the skeptics.

The recovery, particularly in China and the U.S., is supposed to take root this spring. U.S. tax breaks and improved job creation should increase consumer spending and business investment. The piles of cash held by large American companies will be put to work to invest in expansion. And China’s recent data on exports and factory activity have shown a pick up in the past month. The People’s Republic is so highly dependent on exports that some large part of the global economy has driven and will drive the improvement. As a matter of fact, China’s export machine is so large that it should be considered a proxy for global economic activity.

What has caused the sudden, deep concern about Europe? Probably economic predictions of a recovery got ahead of themselves. When the global economy is so delicate, it is easy for that to happen.

Douglas A. McIntyre

Fed president Richard Fisher says there is no need for QE3. (Reuters)

Panasonic posts a quarterly loss of $2.6 billion. (Reuters)

Martha Stewart Omnimedia (NYSE: MSO) says a provision in its deal with Macy’s (NYSE: M) would let it move ahead with its new JCPenney (NYSE: JCP) deal. (Reuters)

The U.S. plans to spend $2.8 billion to upgrade the F-16. (Reuters)

The Senate will pass a bill that makes it illegal for members of Congress to engage in insider trading. (WSJ)

Glencore and Xstrata may merge because of the rise in value of natural resources. (WSJ)

Bank “rainy day” funds may be run down by a need to boost earnings. (WSJ)

PetroChina (NYSE: PTR) will buy into Canadian shale assets to ensure future supply. (WSJ)

Corporate profits have risen but the portion paid out in taxes has fallen. (WSJ)

The Government Accountability Office says many hospitals overpay for devices. (WSJ)

The Obama Administration will accelerate the approval of wind farms off the East Coast. (WSJ)

Facebook will push advertisers to use its Sponsored Stories to increase its revenue. (WSJ)

Google (NASDAQ: GOOG) will try to add to the security of its Android mobile-device software to combat hackers. (WSJ)

The head of Dow Chemical (NYSE: DOW) says Europe is in a recession. (WSJ)

New York Times (NYSE: NYT) profits fall as digital revenue fails to grow enough to offset print. (WSJ)

CME Group (NASDAQ: CME) will set an insurance program to help farmers after the collapse of MF Global. (WSJ)

A St. Louis Federal Reserve report shows that startup growth has slowed. (WSJ)

Excess natural gas supplies could cause a price crash in the spring. (WSJ)

The Securities and Exchange Commission allows big banks to avoid some sanctions. (NYT)

The National Institute of Economic and Social Research says the UK will be in recession this year. (NYT)

Greek tax reform has not overcome the nation’s inability to collect taxes. (NYT)

China may put money into the European Stability Mechanism/European Financial Stability Facility to help the region. (FT)

In testimony before Congress, Bernanke expresses concern about the growth of the economy. (FT)

Greece faces more trouble in its effort to remain in the eurozone as its rescue falters. (Bloomberg)

Deutsche Bank will not take European Central Bank loans in a move to protect its reputation. (Bloomberg)

Douglas A. McIntyre

The chemicals giant reported earnings of $0.25 per share versus expectations of $0.30 EPS.  Too bad this was soft because many felt the bar was set low considering that it has raised prices and is claiming to have some pricing power.  Revenues rose 2.4% to $14.1 billion, also short of the $14.25 billion expected.

Sales in emerging markets reached a new record at $5 billion and total Volume declined 3%, but these were ex-divestitures.  China volume was up 12%, offsetting a weak -5% drop in Europe and a 2% drop in the United States.

Dow is not anticipating any sudden recovery in market conditions for the first quarter of the year, but it does see economic recovery gaining momentum in the second quarter and through the rest of 2012.

Dow shares are down 3.2% at $32.66 in the pre-market trading on almost 50,000 shares and the 52-week range is $20.61 to $42.23.  The current dividend yield is about 3%.

JON C. OGG

We have two homebuilder earnings due from Beazer Homes USA Inc. (NYSE: BZH) and PulteGroup, Inc. (NYSE: PHM).  Other key earnings to watch will be from the following: Blackstone Group L.P. (NYSE: BX); Boston Scientific Corporation (NYSE: BSX); CME Group Inc. (NYSE: CME); Dow Chemical Co. (NYSE: DOW); Genworth Financial Inc. (NYSE: GNW); Gilead Sciences Inc. (NASDAQ: GILD); International Paper Co. (NYSE: IP); Kellogg Co. (NYSE: K); MasterCard Inc. (NYSE: MA); Merck & Co. Inc. (NYSE: MRK); Royal Caribbean Cruises Ltd. (NYSE: RCL); Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT); Trimble Navigation Ltd. (NASDAQ: TRMB); Vertex Pharmaceuticals Inc. (NASDAQ: VRTX); YRC Worldwide Inc. (NASDAQ: YRCW).

We have included Thomson Reuters consensus estimates on each company.  On most we have included pricing data and/or other bits of color for traders to consider.

We have two different homebuilders on deck to report.  Beazer Homes USA Inc. (NYSE: BZH) is expected to post -$0.36 EPS on $211.4 million in sales and we would watch cancellation rates on contracts as well as the quality of the earnings.  Second is PulteGroup, Inc. (NYSE: PHM) with an expected positive earnings of $0.07 EPS on $1.14 billion in sales.  Pulte’s cancellation rates and quality of earnings will also have to be monitored.

Blackstone Group L.P. (NYSE: BX) will show private equity wealth and earnings in the morning.  The firm is expected to report earnings of $0.38 EPS on revenues of $986.75 million.

Boston Scientific Corporation (NYSE: BSX) has been down and out for longer than any current and past holder would like to consider.  Thomson Reuters has estimates of $0.08 EPS on $1.91 billion in sales.

CME Group Inc. (NYSE: CME) is expected to report earnings of $3.71 EPS and $754 million in sales before the market opens.  With a possibility of a state-relocation and the ongoing pressure of exchange mergers we would be watching this one.  At roughly $244.50, the 52-week trading range is $224.69 to $317.27.

Dow Chemical Co. (NYSE: DOW) is expected to turn in earnings of $0.30 EPS on $14.19 billion in sales.  The report is due in the morning.

Genworth Financial Inc. (NYSE: GNW) is expected to report earnings of $0.19 EPS on $2.58 billion in sales.  The shares are now up over 60% from the lows of the last year and the stock still remains pressured due to the mortgage insurance overhang that has been in place for quite some time.

Gilead Sciences Inc. (NASDAQ: GILD) has shocked the market by outperforming despite what appears to be a bad use of effort and capital in the large acquisition.  Still, shares hit a new 52-week high on Wednesday.  Thomson Reuters has estimates of $1.05 EPS and $2.18 billion in sales. 

International Paper Co. (NYSE: IP) is close to being within striking range of a 52-week high and it pays well above a 3% yield today.  Thomson Reuters has estimates of $0.61 EPS and $6.5 billion in sales.

Kellogg Co. (NYSE: K) is lagging and actually close to a 52-week low with shares around the $49.50 mark. The estimates are $0.63 on $2.99 billion in sales.  The bar is set very low here.

MasterCard Inc. (NYSE: MA) will show just what the interchange fee problems look like, but that is not fully reflected at all in current numbers.  The consensus estimates are $3.92 EPS and $1.73 billion in sales. With shares around $357 some are concerned over valuations here.

Merck & Co. Inc. (NYSE: MRK) is reporting early Thursday morning and the company’s higher dividend hike has shares trading very close to 52-week highs with a price of close to $38.70 andf a 52-week range of $29.47 to $39.43.  Estimates are $0.95 EPS and $12.53 billion in sales. To show just how low growth is the estimates of $3.76 EPS and $48.23 billion in sales for all of 2011 are only expected to be $3.83 EPS on $47.62 billion in sales for all of 2012.

Royal Caribbean Cruises Ltd. (NYSE: RCL) may or may not release.  With its rival’s disaster, we are not doing much legwork here.  Thomson Reuters has a projection of $0.15 EPS and $1.78 billion in sales.

Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) is key for hotel investors and this one is expected to post $0.57 EPS on $1.42 billion in sales. Starwood has over $1 billion in cash but is still trading at a high 3.7-times book value.

Trimble Navigation Ltd. (NASDAQ: TRMB) is not so widely watched on its own, but it is used as a barometer reading for Garmin.  Trimble estimates are $0.48 EPS and $419.10.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) has been in the news with new FDA approvals.  We have Thursday as the tentative date and estimates are $0.73 EPS and $523.66 million in sales.

YRC Worldwide Inc. (NASDAQ: YRCW) is set to report and it is a puzzlement as to how this stock is still alive.  On a reverse split basis the $12.83 price compares to a 52-week range of $7.94 to somewhere over $1,000.  The consensus is listed as -$6.97 EPS but we have no idea how these targets are composed on this company.

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JON C. OGG

The petrochemicals produced at the plant are targeted for sale in Asian countries such as Myanmar, Bangladesh, and parts of India where the products would be used to make goods like synthetic rubber. Petronas is expected to supply feedstock for the plants from equity investments in oil fields in Africa and Venezuela, leaving its own dwindling reserves of high-quality crude for refining into gasoline. The project is scheduled for completion in 2016.

Paul Ausick

Big users of natural gas, like chemical companies Dow Chemical Co. (NYSE: DOW) and E.I. du Pont de Nemours & Co. (NYSE: DD), want the price of natural gas to stay low. Producers like Exxon Mobil Corp. (NYSE: XOM) and Chesapeake Energy Corp. (NYSE: CHK) would like to see prices rise. And there’s at least one company that would like to help the producers boost prices — Cheniere Energy, Inc. (AMEX: LNG).

Cheniere’s original plan was to build an import facility in the Gulf of Mexico to convert liquefied natural gas (LNG) back to a gas and pipe it onshore for sale. The boom in shale gas production killed that idea, but the company’s plant at Sabine Pass is built and now the company wants to convert the plant to an export facility that would liquefy US-produced natural gas, load the LNG onto tanker ships, and send it to Japan or India or Korea where prices are nearer $13/tcf than $3/tcf.

The Wall Street Journal has a story today about resistance to Cheniere’s export plan because it would almost certainly raise domestic natural gas prices. Unlike oil, natural gas is primarily a regional product and its sale depends on pipelines connecting regional producers with regional customers. The development of liquefied gas plants has not yet had much impact on regional pricing, but if the US continues to find and develop shale gas reserves, producers will need to find additional markets.

Big consumers of domestic natural gas want the prices to remain low, and are gearing up for a campaign against US liquefaction facilities. The battle lines are being drawn over jobs, with Dow, for example, arguing that higher natural gas prices will lead to a loss of US manufacturing jobs. The energy companies argue that export facilities will create construction and production jobs.

The US Department of Energy is studying the issue and is expected to release a report in the next few weeks analyzing the effect of exports on domestic supplies and pricing. Depending on the conclusions of that report, one side will claim government interference in the market and the other will claim vindication. Stay tuned.

Paul Ausick

Netflix (NASDAQ: NFLX) warns that more subscribers will cancel and shares fall 24%. (Reuters)

Nearly 35% of News Corp. (NYSE: NWS) investors vote against James Murdoch as a member of the board. (Reuters)

Zynga will have its IPO in late November. (Reuters)

Amazon.com’s (NASADQ: AMZN) results could be hurt by the expense of the Kindle Fire. (Reuters)

The Federal Reserve may work to drive interest rates down again to help the home market. (Reuters)

The drop in BP’s (NYSE: BP) production has reached a bottom. (Reuters)

A judge turns down a Sprint-Nextel (NYSE: S) request to get internal documents from AT&T (NYSE: T). (Reuters)

Regulators examine more trades at SAC, some of which go back nine years. (WSJ)

Credit cards may use personal information to target advertising. (WSJ)

UBS (NYSE: UBS) profits fall. (WSJ)

More worries arise about an EU region recession. (WSJ)

Eastman Kodak (NYSE: EK) talks with hedge funds about financing. (WSJ)

Fedex (NYSE: FDX) predicts its holiday shipment volume will be strong. (WSJ)

Walmart (NYSE: WMT) reopens 13 stores in China. (WSJ)

Research In Motion (NASDAQ: RIMM) begins to lure app developers for the BlackBerry. (WSJ)

Dow Chemical (NYSE: DOW) to put $250 million into 11 universities over the next several years to bring in top students. (WSJ)

The FAA requests that tail parts on Boeing (NYSE: BA) 757s be checked. (WSJ)

Mattel buys children’s toy company HIT Entertainment. (WSJ)

Nokia (NYSE: NOK) has to quickly make new Microsoft (NASDAQ: MSFT) Windows-powered smartphones for the holiday season. (WSJ)

Morgan Stanley (NYSE: MS) to sell its subprime mortgage service company Saxon Mortgage Services. (WSJ)

Banks have few ways to make money on huge deposit pools. (NYT)

Greek bondholders resist plans for them to take 60% write-downs on the nation’s sovereign paper as a part of a restructuring. (FT)

U.S. mortgage bonds hit a six-month low on Obama’s home refinance program plans. (FT)

EU officials want more time to create a bailout facility. (Bloomberg)

Novartis (NYSE: NVS) to cut 2,000 people. (Bloomberg)

Banks in Italy and Spain may take the largest hits in an EU rescue plan. (Bloomberg)

Douglas A. McIntyre

If you look at the outstanding shares, it comes close to $4.55 per share.  Just this week it has also tendered for some $2.8 billion in notes due in 6 years and 7 years.

If you want to know what a good refinancing effort is, try this: noteholder modification that allows for more shareholder payments, and at a lower interest rate that will significantly add to the net earnings.  In short, the company’s capital structure is moving away from the old bondholders to the stockholders.

Shares are trading up over 10% at $30.20 on more than 7.5 million shares (about 150% of normal trading volume).  The current market cap is $17.2 billion and the share price compares to a 52-week trading range of $22.90 to $48.12.  This is the first day shares have been back above $30.00 since September 27 and the stock has not closed above $30.00 since September 20.  This was a $40 stock as recently as August 2.

The August 15, 2011 dividend was listed as $0.20 per share and that would generate a dividend yield of about 2.65% today.

The Dow Chemical Company (NYSE: DOW) is also down considerably from a year high of $42.23 to $27.30.  Its market cap is almost double that of LyondellBasell at over $32 billion and Dow also offers a 3.8% current dividend yield.

Eastman Chemical Co. (NYSE: EMN) is up 3% at $37.27, its 52-week high is $55.36, its market cap is $5.2 billion, and its implied dividend yield is about 2.9%.

JON C. OGG

Altera Corporation (NASDAQ: ALTR) Cut to Hold at Auriga.
Dow Chemical (NYSE: DOW) Started as Hold at Jefferies.
Dunkin Brands Group Inc. (NASDAQ: DNKN) Started as Hold at Argus.
HSBC Holdings plc (NYSE: HBC) target cut at Macquarie.
Itron Inc. (NASDAQ: ITRI) Cut to Underperform at BofA/ML.
Koninklijke Philips Electronics (NYSE: PHG) named as Bear of the day at Zacks.
Steven Madden Limited (NASDAQ: SHOO) named value stock of the day at Zacks.
Western Refining, Inc (NYSE: WNR) named Aggressive Growth stock of the day at Zacks.

JON C. OGG

American Capital Mortgage Investment Corp. (NASDAQ: MTGE) Started as Hold at Citigroup; Started as Outperform at Wells Fargo.
Applied Materials Inc. (NASDAQ: AMAT) Raised to Strong Buy at S&P Equity Research (late Monday call).
The Blackstone Group (NYSE: BX) Started as Buy at Ticonderoga.
Broadcom Inc. (NASDAQ: BRCM) Reiterated Buy with $46 target at Argus.
Dow CHemical Co. (NYSE: DOW) Started as Market Perform at Wells Fargo.
EI DuPont de Nemours & Co. (NYSE: DD) Started as Market Perform at Wells Fargo.
Fifth Third Bancorp (NASDAQ: FITB) Raised to Outperform at RBC.
Genworth Financial (NYSE: GNW) named Bear of the Day at Zacks.
Goldman Sachs Group Inc. (NYSE: GS) Started as Equal-Weight at Morgan Stanley.
Huntsman Corporation (NYSE: HUN) Started as Outperform at Wells Fargo.
J.P. Morgan Chase & Co. (NYSE: JPM) Raised to Buy at Stifel Nicolaus.
LyondellBasell Industries NV (NYSE: LYB) Started as Outperform at Wells Fargo.
Macy’s, Inc. (NYSE: M) named as Bull of the Day at Zacks.
McDonald’s Corporation (NYSE: MCD) Cut estimates but maintained Outperform at Credit Suisse.
SunPower Corporation (NASDAQ: SPWRA) Raised to Buy at Auriga.
Titan International Inc. (NYSE: TWI) named as value stock of the day at Zacks.
VeriSign Inc. (NASDAQ: VRSN) Raised to Buy at S&P Equity Research (late Monday call).

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