Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Last Call: Virgin Galactic Gets the Go Ahead for Test Flights


“Do or do not... there is no try.”

Yoda, Star Wars: Empire Strikes Back

- Thankfully, Yoda does not work for Virgin Galactic or the FAA.  That story is below.

Market Musings From CNBC Stat Guru Juan Aruego

  • So much for having a two-day Dow rally in May. Today’s loss put the kibosh on that. The last time the Dow strung together multiple gains was April 24-27.
  • The selling was across the board in stocks. All ten S&P 500 sectors finished lower and just one Dow stock (Intel) closed up on the day.
  • Today’s sell-off didn’t have much volume behind it. The NYSE tallied just 3.5 billion shares, making one of the lightest days of the year.
  • Bond rally continues with 10-year Treasury note yield dropping to a new record low.
  • Vix spike: The Vix popped at the close and finished up nearly 15%. It was the biggest one day gain in almost three months. Commodities continue to wither.
  • The CRB fell to a fresh 20-month low driven by energy weakness

What Wall Street Is Talking About Tonight

MAY AGAIN BITES STOCK INVESTORS/WSJ – Jonathan Cheng: “For the third year in row, May has been a bête noire for U.S.. stock-market bulls. On Wednesday, the Dow Jones Industrial Average tumbled 160.83 points, or 1.3%, to 12419.86, while Treasury yields plunged to their lowest levels on record, amid a familiar mix of fears from the European debt crisis. Wednesday's stumble was the worst percentage decline for the Dow in seven weeks, extending a weak patch that began after the Dow rose to a 4½-year high on May 1. Since then, the Dow hasn't been able to string together even two straight days of gains.”

US 10-YEAR TREASURY YIELD HITS RECORD LOW OF 1.62%/Reuters: "The benchmark U.S. Treasury yield fell to its lowest level in at least 60 years on Wednesday as worries of contagion from Spain's ailing banks raised bids for low-risk investments. Yields on 10-year notes sank to a record low of 1.62 percent, down sharply from 1.73 percent in late U.S trading on Tuesday."

MORGAN STANLEY CEO TOLD EMPLOYEES FIRM WORKED '100% WITHIN THE RULES' IN FACEBOOK IPO/DJ – Brett Philbin: “-Morgan Stanley (MS) Chairman and Chief Executive James Gorman defended the securities firm's role in Facebook Inc.'s (FB) tumultuous initial public offering, telling employees internally that the firm worked "100% within the rules" and calling the steep decline in Facebook's stock "disappointing."  Gorman, in a weekly strategy meeting Tuesday, which was later webcast to employees, said "speculation of nefarious activity" surrounding the social networking company's IPO is untrue. Contrary to some reports, he said, he wasn't "aware of any dissent" among the underwriting firms regarding Facebook's IPO price of $38 a share.”

KAYAK DELAYS IPO/CNBC – Kayla Tausche: "Kayak's long awaited IPO is being delayed after Facebook’s IPO troubles, though Kayak’s IPO is still said to be  a possibility in q2 according to sources. At issue is the Morgan Stanley stigma putting off potential kayak investors."

RISING LEGAL COSTS PUSH TIVO INTO THE RED/Reuters: “TiVoInc reported a bigger-than-expected quarterly loss and forecast another loss for the current quarter as the maker of digital television recorders fights costly legal battles to protect its patents. The company faces rising legal costs as it fights patent lawsuits against a number of companies, including Verizon Communications Inc , Motorola Mobility Inc and Time Warner Cable Inc , related to its video recording technology.”

RIM SINKS, BUT PATENTS, NETWORK HAVE VALUE/AP – Peter Svensson: "…One way for RIM to stop the downward tailspin: It could sell itself to a competitor or financial firm. But who would step up to buy RIM —and why? … Chief executive, Thorsten Heins, says he can turn things around with the help of fresh smartphone software. Heins joined RIM four years ago and was most recently its chief operating officer. He replaced co-CEOs Balsillie and Mike Lazaridis in January after the company lost tens of billions in market value. "My charter from the board of directors is very clear: long-term value creation with RIM," Heins told The Associated Press in an interview at the company's headquarters in Waterloo, Ontario, earlier this month. Analysts give RIM only a slight chance of coming out of the crisis."

LIONS GATE POSTS $22.7-MILLION LOSS, BUT ITS OUTLOOK IS BRIGHT/LA Times: “Any Hollywood studio would kill to release "The Hunger Games" in theaters and the fourth "Twilight" movie on DVD within two months of each other, but doing so hurt Lions Gate Entertainment Corp.'s bottom line in the short run. The Santa Monica studio on Wednesday disappointed Wall Street as it reported a net loss of $22.7 million, or 17 cents a share, on $645.2 million in revenue during the quarter that ended March 31. The reason: $51 million in expenses related to its purchase of "Twilight" studio Summit Entertainment, as well as $53 million in costs to launch the blockbuster hit "The Hunger Games" at the end of the quarter. Lions Gate shares fell 7% in after-hours trading Wednesday because the results were far below analysts' estimates.”

FAA CLEARS VIRGIN GALACTIC SPACESHIP FOR TEST FLIGHTS/Reuters: “The U.S. Federal Aviation Administration has cleared SpaceShipTwo, a commercial six-passenger spacecraft owned by Virgin Galactic, to begin rocket-powered suborbital test flights, the company said on Wednesday. SpaceShipTwo manufacturer Scaled Composites of Mojave, California, received a one-year experimental launch permit on May 23 for test flights beyond the atmosphere, FAA spokesman Hank Price said.”

Economic Data

815am et  May ADP

830am et  (w/e 5/26)  Initial Claims    

830am et  1Q 2nd  Real GDP

830am et  1Q 2nd  GDP Prices                            

945am et  May Chicago PMI        

1100am et May KC Fed Survey


Before the bell:

Canadian Imperial, Joy Global (11a cc)

After the bell:

SAIC, Splunk

CNBC Guests

Curtis Arledge, BNY Mellon Investment Management (700a)

David Cote, Honeywell International CEO (710a)

Rep Tim Scott, R-SC (710a)

John Challenger, Challenger, Gray & Christmas CEO (730a)

Butch Harmon, Golf Coach (750a)

Joel Prakken, Macroeconomic Advisers Chairman (815a)

John Silva, Wells Fargo Securities Chief Economist (830a)

Fmr Gov James Gilmore, Fmr RNC Chair (835a)

Julie Wainwright, Fmr CEO (1000a)

Matthew Roberts, OpenTable CEO (1000a)

Peter Voser, Shell CEO (1150a)

Gary Smith, Ciena CEO (210p)

John Paci, Morgan Stanley Co-Head of Cash Trading (300p)

Rep Paul Ryan, R-WI (330p)

Colm Kelleher, Morgan Stanley Co-President of Institutional Securities (340p)

James Gorman, Morgan Stanley CEO (410p)

Jeffrey Joerres, ManpowerGroup CEO (500p)

Rep Carolyn, Maloney, D-NY (700p)

Follow Tom Rotunno on Twitter: @tomrotunno

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