Welcome to Friday’s Morning Coffee Break – As market participants prepare for the final session of week and as traders prepare to close out the first week of the 4th quarter traders find the markets walking a thin line. As of yesterday’s close U.S. markets appear to be on track for their first positive week in 3 weeks. However, as the aforementioned thin line markets could swing to either side on today’s non-Farm Payroll (NFP) report for September. The report could either push markets solidly in the green for the week or easily make it 4 weeks straight of weekly declines.
The U.S. Department of Labor will release the non-Farm Payroll today at 8:30 a.m. ET. Analysts are looking for payroll gains of 118K in September and a continued unemployment rate 8.1%. This report and the next will be key as they are the only two employment reports prior to the elections.
At 3 p.m. consumer credit results will be announced. Forecast are for $6.0 billion increase in credit from August.
The Dow Jones (DIA, quote)fair value is up by 31.64 to 13497.36, S&P 500 (SPY, quote) fair value is up by 2.95to 1458.30 and the NASDAQ (QQQ, quote) fair value is coming in at 2828.50 up by 6.35 (as of 8:29 am)
Morning Coffee Break Global Markets Watch
Asia
In overnight trading Asian stocks were broadly in the green as traders seek out commodity related companies sending prices higher. The NIKKEI lost ground on the failure of Japan’s Central Bank to initiate new monetary easing but fought back to positive territory and closed higher by 0.44% on the session.
China
China’s markets remain close for holiday.
Euro Zone
Euro Zone markets followed Asia markets higher this morning and began to however, as U.S. markets begin to come online ahead of the non-Farm Payroll (NFP) results at 8:30 a.m. today.
BP PLC (BP, quote) moved higher after the stock tumbled yesterday on disruptions to gas flows to Turkey.
Looking toward France most notable we find Total SA (TOT, quote) moved higher along with Italy’s ENI SpA. As all eyes are on the U.S and the NFP results.
Emerging Markets
Turning to the emerging markets of India equities snapped 4 day winning streak today as traders locked in profits ahead of the weekend. The Sensex, rallied an Incredible 479 points in previous 4 sessions to only fall by 139.64 points going into the weekend. Pressure came from banking & financials, telecom, technology and a healthcare sectors which comes as no surprise as these were leading markets higher all week. Coupled with shift in leadership and 70 point move higher in the Sensex in early trade on the announcement of India’s Cabinet’s approval to 49% FDI in insurance and pension suggest today’s move was pure profit taking. India’s President Pranab Mukherjee spoke at CHEM 2012 conference (Chemical Industry Conference) Stating that India has worked hard to turn around its economy and he believes India’s economy has bottom and is now in the process turning.
The rise of the machines occurred in India as well today with bad trade being placed by a brokerage house sending the NIFY into a tail spin of 899 points intraday. A similar to the U.S. Flash Crash in May, the NIFTY ended the session lower by 40.65 points on profit taking as well.
Morning Coffee Break Companies To Watch
Earnings
Constellation Brands (STZ, quote) is set to report quarterly earnings ahead of the opening bell.
Company Watch
Cisco Systems (CSCO, quote) is the Morning Coffee Break’s stock to watch today as the company promotes executives Rob Lloyd and Gary Moore to co-presidents. Analysts are looking at the two as possible successors to CEO John Chambers.
Zynga (ZNGA, quote) cuts its full year outlook. Traders are already apprehension about Zynga about the number of executive departures. To top off the mountain of worry the company said the current quarter is “challenging” citing poor performance for certain games.
Facebook (FB, quote) finally got some good news when a panel of judges approved Facebook’s request to consolidate several dozen law suites into one surrounding the public offering. This includes the suites against the NASDAQ and the underwriters.
Toyota ( TM, quote) Japan-China territorial disputes are taking their toll on the Japanese auto manufacture as it announced sales in China fell roughly 40% in September while sales are increasing for Toyota’s rivals.
Hewlett-Packard (HPQ, quote) should remain under pressure with many analysts looking for the stock price to continue to fall all the way into single digit numbers.
Futures and Commodities Corner
Crude Oil
WTI Crude oil price pullback in early trading today as traders turned their attention to U.S. non-Farm Payrolls report. Crude oil has been in price tug-a-war because of tensions in the Middle East and of course concerns about economic growth putting pressure on demand. Crude Oil will remain quiet until the NFP at 8:30 a.m. ET. To learn more about the energy patch 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.
Equity only readers can gain exposure to natural gas through the United States Natural Gas Fund (UNG, quote) ETF that seeks to replicate the performance, net of expenses, of natural gas. The trust will invest in futures contracts on natural gas traded on the NYMEX that is the near month contract to expire.
Gold
Gold prices pulled back in early trading today and are still on track to close the week out with a small gain as traders globally waited for the release of U.S. September’s non-Farm Payrolls.
Gold as well as silvers short term catalyst is the non-Farm Payroll results at 8:30 a.m. and will track the inverse of the U.S. dollar base on risk.
A stronger than expected NFP results would be a boost in risk appetite lifting gold prices.
However, weaker than excepted result supports the view of the FOMC to be aggressive in its stimulus and send gold and silver lower as risk falls to the sidelines and money flows back in to the U.S. dollar.
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.
The Morning Coffee Break Bottom Line
Focus today is the non-Farm Payroll and this one event will drive the opening and the trading through the afternoon. Even on positive NFP report look for profit taking at final hour of trading as traders lock in profits the first full week of the final quarter in 2012. Have a great weekend everyone….
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