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Solid Gains in the Pre to Kickstart 2011

Morning Notes

- Seeing nice strength in the premarket this morning
- China manufacturing PMI posted a decline m/m while non manufacturing PMI came in better m/m

Kickstart the New Year

- Shanghai Comp is closed today however so mkt reaction to comment on
- Nikkei is also closed
- Hang Seng is open and closed up 1.7%
- Eurozone manufacturing PMI came in better than expected
- German PMI came in lighter than expected
- Currencies and commodities markets seeing light volume- again, note that China, Japan, and the UK closed today
- Dollar is up small
- ISM Manufacturing and construction spending numbers out @ 10a ET
- S&P futures are up 10 handles from FV, trading above R4 pivot
- In corporate news, BAC agreed with Freddie and Fannie to resolve repurchase claims and the bank expects to take a $2B Q4 impairment charge for residential mtge loans sold by BAC affiliates directly to the GSEs; BAC is up 4.5% in the pre

Nonfarm Payrolls Sucked

Morning Notes
- Overseas markets were mixed
- Comments out of China suggesting a switch from its looser monetary policy to a “prudent” one next year
- Mixed comments around Greece where S&P warned about a possible downgrade whereas an ECB official said he sees solid improvements in the country
- ECB President Trichet said he does not see a euro crisis coming, basically supporting the currency
- Dollar showing weakness this morning; euro up
- Futures quiet ahead of Nonfarm Payrolls @ 8:30a ET
- Other economic items on the calendar for today: Factory Orders @ 8:30a; ISM @ 10a
- Nonfarm Private Payrolls: 50K vs. 140K; October revised up to 160K from 159K
- Nonfarm Payrolls: 39K vs. 130K; October revised to 172K from 151K
- Unemployment Rate: 9.8% vs. 9.6%; prior was 9.6%
- S&P futures sold off harshly upon data release
- Dollar and treasuries sold off as well
- S&P futures are now down 6.5 handles from FV, trading up against S3 pivot level

ECB President Trichet’s Not Helping Here

Morning Notes
- Overseas markets posting another day of solid gains
- ECB President Trichet begins conference at 8:30a ET- probably will not disclose any clear details around plan, and a simple reassurance of backing troubled nations may be good enough for the markets
- Nikkei closed up 1.8% as yen weakened and exporters were strong following yday’s US economic data
- Reuters report out speculating that China is mulling a $1.5 trillion investment in strategic industries, e.g., alt energy, biotech, adv materials, alternative fuel cars, and green technologies
- ECB left interest rates unc’d @ 1%, which was expected
- S&P futures were up about 5 handles from FV, but has pulled in since- after Trichet conference began
- Retails reported November same stores sales, almost all beat expectations, but names are trading mixed in the pre market, slightly skewed to the upside
- Initial Jobless Claims: 436K vs. 424K; prior revised up to 410K from 407K
- Continuing Claims: 4.27M vs. 4.2M; prior was 4.217M
- Now just awaiting Pending Home Sales @ 10a ET
- S&P futures continued to see weakness following commencement of ECB President Trichet’s press conference
- Trichet did not address an expanded bond purchasing program; did mention though that refinancing and special terms offers will continue at least through April 2011 as scheduled; all this pulling in the futures
- Euro also pulled in, dollar recovered as did Treasuries
- S&P futures are now up 2.5 handle from FV ahead of the open

Expecting a Quiet Friday, Though Remember Today is Options Expiration

Morning Notes

-       Mixed action in overseas markets

-       Fairly quiet in the o/n, no huge moves to the up or down side

-       China’s central bank raised reserve requirements (after their close)

-       Dollar down this morning

-       Commodities up, but have pulled in since and are down now along with the dollar

-       Better than expected earnings out of DELL last night

-       Still, S&P futures are down small in the pre after yesterday’s strong rally

-       Options expiration today so might see some vol

-       Note that there are no economic data releases scheduled for today

-       Expecting fairly quiet day overall

Slight Rebound After Yesterday’s Sell Off in the Market

Morning Notes
- Overseas markets are mixed
- China down big again today as rate hike speculation continues; rumors that PBOC could make a rate decision on Friday
- Also, China’s State Council confirmed it will use price controls to help prevent rising inflation
- Hang Seng and Shanghai Comp both down about 2%
- Nikkei, however, is up small
- European markets flat to up small
- More positive tone set in Europe as Irish Finance Minister to commence talks with IMF, EU, and ECB tomorrow to assess its financial situation
- There had been talks yesterday that Austria would withhold its contribution to the Greece bailout pkg because Greece did not adequately meet fiscal req.; however, more clarity on that today as Austrian Finance Minister said it was referring to the next tranche of the bailout pkg, which is being delayed by one month
- BOE minutes out today, no surprises there
- Dollar up small
- S&P futures up about 3.5 handles from FV, difficult to gauge direction as the action has been somewhat choppy, not on a pivot signal yet
- October CPI m/m: 0.2% vs. 0.3%; prior was 0.1%
- October CPI Ex Food & Energy: 0.0% vs. 0.1%; prior was 0.0%
- Housing Starts: 519K vs. 600K
- Building Permits: 550K vs. 570K
- S&P futures now ticking higher, up 5.75 handles from FV, approaching highs of the day

Inflation Fears are the Name of the Game

Morning Notes

-       Overseas mkts are all down this morning

-       Shanghai Comp fell the most, down -3.98%

-       JPY weak, adding more pressure to Nikkei

-       S.Korea increase interest rates (largely unexpected), stirring more fears of inflation resulting in further rate hikes (namely by the PBOC, as was speculated—and feared—last week going into the weekend)

-       Eurozone and UK CPI both came in worse than expected- further inflation fears here

-       German ZEW sentiment data came in better than expected

-       Debt concerns still lingering in Europe

-       Gold and crude both down

-       Dollar nicely bid, TLT as well

-       This morning on CNBC, NY Fed Pres. Dudley came out defending QE2, saying it is not geared at weakening the dollar

-       Decent amount of economic data coming out today starting with PPI @ 8:30a EST, Industrial Production and Capacity Utilization @ 9:15a, finally NAHB Housing Mkt Idx @ 10a

-       S&P futures down about 5.5 handles from FV ahead of data releases

-       October PPI m/m: +0.4% vs. 0.8%; prior +0.4%

-       October PPI Ex Food & Energy m/m: -0.6% vs. +0.1%; prior +0.1%

-       Futures not really reacting to PPI numbers

-       S&P futures down about 4.25 handles from FV, trading between the S4 and S3 pivot levels

Market Recovers After Weak Performance Last Week

Morning Notes

- Overnight recap:
- Asian markets mixed
- Japan GDP came in better than expected, pushing the Nikkei up 1%
- Note: Japan GDP number may be a one off due to strength in yen over the last few months (which could slow growth in upcoming qtrs)
- PBOC did not make any interest rate decision over the weekend, as was speculated, helping boost the Shanghai Comp
- Shanghai Comp also saw an end of day rally, closing up nearly 1%
- Hang Seng is down, however, about 80bps
- European markets are up
- Crude, gold, dollar are up this AM
- S&P futures are up nearly 6 handles from FV, trading at highs of premarket session
- On economic calendar for today: Advance Retail Sales as well as Empire Manufacturing at 8:30a EST; Business Inventories at 10a
- M&A activity adding positive tone to the markets as CAT is to acquire BUCY for $7.6B (32% premium) and EMC to acquire ISLN for $2.25B (29% premium)
- October Retail Sales: +1.2% vs. 0.7%; prior revised up to +0.7% from +0.6%
- October Retail Sales Ex Auto: +0.4% vs. +0.3%; prior revised up to +0.5% from +0.4%
- Empire Manufacturing: -11.14 vs. 14

- Market pushing lower after data releases

CSCO Will Make For Decent Action in the Market Despite Veterans Day Holiday

Morning Notes

-       European markets down this morning

-       ECB’s monthly bulletin suggested inflation on the rise, however growth is projected to exceed previous expectations

-       CSCO earnings weighing down European markets as well as domestic market

-       Asian markets are up however with strength attributed to Moody’s upgrade of China debt

-       China CPI data came in higher than expected (highest in two years), but not pushing Asian markets lower as I mentioned above that Moody’s upgraded China’s debt

-       Australian unemployment rate came in much higher than exp., hence weakness in their market

-       Gold up, oil up

-       G20 summit meeting began o/n

-       Dollar is up again today (fifth day in a row)

-       Euro at lows

-       S&P futures down about 8 handles from FV

-       CSCO earnings last night pushed market lower, particularly due to co.’s downside guidance (suggests slow spending in sector)

-       CSCO weighing down other big tech names, and hence Naz futures lower than S&P futures as Naz has more tech weightings

-       Note today is Veterans Day so U.S. bond mkt is closed; no items on economic calendar for today as well- may have made for light trading, however given CSCO’s earnings results, expecting decent action in the mkt today

Overseas Markets Lower As Dollar Gains Again

Morning Notes

-       Overseas markets down w/ exception of Nikkei, which was solidly bid as the yen moved lower

-       People’s Bank of China (PBOC) increased bank reserve requirements by 50bps, effective Monday

-       China’s trade balance showed surplus- will stir more FX policy criticisms

-       Gold down, silver down, dollar up again, treasuries down

-       S&P futures down a bit, about 1 handle from FV ahead of jobless claims number, trading between S3/R3 pivot levels (on no pivot signal)

-       Note as tomorrow is Veterans Day, we are receiving Initial Jobless Claims data a day early today

-       Also on economic calendar for today is Import Price Index and Trade Balance at 8:30a (same time as claims data)

-       30-yr bond auction at 1p should be of more interest than usual given yesterday’s sharp sell off in treasuries

-       Initial Jobless Claims: 435K vs. 450K; prior revised up to 459K from 457K

-       Continuing Claims: 4.301M vs. 4.3M, prior was 4.387M

-       Import Prices Ex Oil: +0.3%, prior +0.3%

-       Trade Balance: -$44B vs. -$45B; August revised down to -$46.5B from -$46.3B

-       Futures initially spiked on data, but has since dropped back to same level as prior to data release

-       G20 summit begins tonight EST, tomorrow in S.Korea

EU Debt Concerns Not Really A Concern

Morning Notes

-       Overseas markets are mixed this AM with Asian markets down (but on low volume) and European bourses up nicely

-       Shanghai Comp down with weakness attributed to worse than expected inflation number, which would result in tightening by Beijing

-       Nikkei weakness attributed to yen strength

-       Headlines that EU debt concerns may be weighing down markets, especially given light U.S. news front; however, European markets are all up and S&P futures are up in the pre market so renewed EU debt concern appears to be a mere excuse (not a major issue)

-       VOD and BCS in Europe reported today, which may be helping boost European mkts

-       Dollar down, gold up, oil up

-       Ahead on economic calendar today: Wholesale Inventories @ 10a EST; other than that, light news day again; in fact, it will be a light week

-       10-yr note auction results out @ 1p

-       S&P futures trading up about 2.5 handles from FV

-       Tight pivot levels on the futures today; we are currently trading around R3 on an unconfirmed R3 sell signal