Welcome to Thursday’s Morning Coffee Break – U.S. markets struggled the first 3 sessions of the week as its on pace for the largest weekly move in 4 months. However, in today’s pre-market U.S. futures are pointing to bounce higher at the open as traders approached not only end of the week but the end of the 3rd quarter.U.S. futures are catching a bid on optimism surrounding the pending Spanish budget announcement. Although the Euro Zone has been the driving factor thus far this week until today when the market participants will receive the bulk of the week’s economic data today.
Yesterday CurveAheadMarketStrategies.com posted a thesis of a bounce and suggested position to consider. The post is located in the sites premium section that requires readers to register – registration is FREE. Remember the suggestion for consideration is strictly a trade and we will be exiting the trade as soon as momentum shows the first sign of slowing.
| Time | Event | Forecast | Previous |
| 08:30 | GDP (QoQ) | 1.7% | 1.7% |
| 08:30 | GDP Price Index (QoQ) | 1.6% | 1.6% |
| 08:30 | Continuing Jobless Claims | 3285K | 3272K |
| 08:30 | Initial Jobless Claims | 378K | 382K |
| 08:30 | Core Durable Goods Orders (MoM) | 0.3% | -0.6% |
| 08:30 | Durable Goods Orders (MoM) | -5.0% | 4.1% |
| 09:30 | Brazilian Bank lending (MoM) | 0.70% | |
| 09:50 | Bloomberg Consumer Confidence | -40.8 | |
| 10:00 | Pending Home Sales (MoM) | -0.7% | 2.4% |
| 10:30 | Natural Gas Storage | 76B | 67B |
| 11:00 | KC Fed Manufacturing | 5.00 | 8.00 |
| 13:00 | 7-Year Note Auction | 1.081% |
Morning Coffee Break Global Markets Watch
Asia
Emerging Markets of China lead the charge with 2.26% jump in the Shanghai Composite Index in the Asia’s overnight equity markets. Asian markets closed out the day in the green on reports that China injected record amounts of liquidity in the Chinese banking system.
Reports surfaced the People’s Bank of China injected a record 365 billion Yuan or roughly $58 billion U.S. dollars into the China’s banking system this week. The move comes just prior to end of the 3rd quarter and before next week’s Golden holidays.
China’s big winners in the banking sector are China Merchants Bank Co (+3.38%) and China Construction bank Corp (+2.08%). China Construction bank Corp. can be accessed on U.S. exchanges via China Construction bank Corp. (CICHY, quote) ADR.
Euro Zone – Spain
Reports from Spanish state news are coming out that Spain’s Castilla-La Mancha region plans to ask the Spanish government ofr 800 million Euros or $1 billion U.S. dollars in aid money. The aid money reportedly is needed to cover interest payments and some debt that is maturing.
Castilla-La Mancha request comes just hours before the expected 2013 budget announcement along with the region being the 5th regional government to ask for a bailout.
Rioters are in the streets once again over concerns of the austerity measures.
Emerging Markets
Indonesia and Philippines
In yesterday’s Morning Coffee Break we talked about how investors are seeking out growth in Southeastern Asia, specifically Indonesia and Philippines. The Philippines are known for some of the most friendly and happiest people on the globe and it’s this resource that is bringing the Philippines front and center on the world stage.
India has lost the lead to the Philippines as the world’s call center and outsourcing work. An industry that requires cheerful employee’s and clearly can charge a premium for such a happy workforce. The Philippines are not simply putting all their eggs in one basket either as they been having great success in r attracting sophisticated and high paying work such as animation design work for Hollywood film studios.
Morning Coffee Break Companies To Watch
Earnings Watch
McCormick (MKC, quote) and Discover Financial (DFS, quote) are two key companies reporting before the opening bell.
Reporting after the closing bell are Nike (NKE, quote) and Research In Motion (RIMM, quote) are both key companies to watch on the consumer front as well as the Hail Mary pass the CEO is throwing up on RIMM’s new handset. Be sure to listen to the conference call to see what RIMM says about not having the new handset ready for the Christmas shopping season.
Other noteworthy companies after the bell today are Micron Technology (MU, quote) and Accenture (ANC, quote).
Company Watch
Dish Network (DISH, quote) is preparing to launch a national broadband service next week. Keep an eye on how the service is provided. In the past Dish has partnered with third party companies to provide broadband.
Apple (AAPL, quote) UBS reduced fiscal first quarter iPhone unit shipment estimates, citing supply constraints.
Futures and Commodities Corner
Crude Oil
WTI Crude Oil is trading up in early electronic trading hovering near the 8 week low as markets remain focus on the Euro Zone and Spain’s austerity issues until the U.S. economic data begins to be released today. Growth commodities including crude oil will be pulled several direction as markets attempt to price in the debit crisis in Greece and Spain along with the slowing of Euro Zone growth and the outlook of the U.S. economy based on the fresh look weekly jobless claims, durable goods and natural gas inventories just name a few.
Price action also has been held hostage on concerns over Saudi Arabia pumping more oil than originally thought.
Be sure to check out the Daily Energy Report for a compressive look at the global energy markets by Tom Pawlicki.
Equity only readers can gain exposure to WTI Crude Oil through the United States Oil Fund (USO, quote) ETF that seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The USO will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.
Gold
Gold prices are climbing higher in early trading after touching a 2 week low in the previous session. Gold is moving higher while the U.S. dollar is moving lower on Euro Zone concerns surrounding Spain, Greece and 2 days of rioting over austerity as budgets are being prepared to be presented.
Money flow has been from gold to the ultimate safety asset the U.S. dollar but now if Spain can actually present its 2013 budget and clear the way for reforms and the possible request of formal bailout as soon as October. Keep an eye on the snap election by Catalonia as it the move has raised borrowing cost and saber-rattling.
Equity only readers gain exposure to the gold through the SPDR Gold Shares Trust (GLD, quote) ETF that seeks to replicate the performance, net of expenses, of the price of gold bullion. The GLD trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.
| Crude Oil | $90.87 | +0.89 | +0.99% |
| Gold | $1754.90 | +4.20 | +0.24% |
| Wheat | $876.00 | -2.25 | -0.26% |
| Corn | $720.75 | -4.00 | -0.55% |
| Live Cattle | $124.75 | UNCH | UNCH |
| Lean Hogs | $74.375 | UNCH | UNCH |
| Treasury Bond | 149.00 | +0.625 | +0.42% |
| 10yr Note | 133.4062 | -0.2344 | -0.18% |
| 2yr Note | 110.2109 | UNCH | UNCH |
| U.S. Dollar Index | 79.875 | -0.075 | -0.09% |
| As of 8:00a.m. ET |
The Morning Coffee Break Bottom Line
Markets should bounce here and depending the on the close we could see it carry over to the last day of the week and quarter as large fund managers jockey their end of quartier positions. Gold is likely to remain under pressure as well as growth commodities such oil. Keep an eye on Apple as drops in the past have been buying opportunities. Not sure how selling 8 million iPhones in pre-sales and one weekend are bad.
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