Welcome to Monday’s Morning Coffee Break – U.S. futures are suggesting a positive open this morning after Friday’s sharpest one day drop in nearly four months. Market participants will be starting the week off with no economic data releases putting the focus on earnings and U.S. politics. Headlines in the Euro Zone will have a stronger impact on U.S. markets as well.
Investors will be watching with only 15 days left before the United States elections on November 6, Republican challenger Mitt Romney and President Barack Obama are tied at the polls with 47% will be facing off tonight in their final televised debate at 9 p.m. ET.
As traders start out their day – The Dow Jones (DIA, quote) fair value is up by 6.49 to 13280.51, S&P 500 (SPY, quote) fair value is up by 0.76 to 1428.90 and the NASDAQ (QQQ, quote) fair value is coming in at 2671.92 up by 6.83 (as of 7:47 a.m.)
Morning Coffee Break Global Markets Watch
Asia
Overnight Asian markets were mixed as market participant sentiment remains fearful after disappointing U.S. earnings last week from McDonald’s (MCD, quote) and General Electric (GE, quote).
Canada
China investors are taken aback when Canada’s rejected Petroliam Nasional’s bid for a natural gas producer. The deal was reportedly for 5.18 billion in Canadian dollars or roughly $5.21 billion in U.S. dollars. Has China overstayed their welcome in Canada?
Euro Zone
Euro Zone markets ticked higher with banks taking the pole position, Spain’s Prime Minister won a regional election. With Prime Minister Mariano Rajoy winning Spain’s elections it opens the door for a formal Spanish bailout.
Emerging Markets
Russia
Rosneft (RNFTF, quote) announced today it has reached agreement to buy the entirety of oil venture TNK-BP from BP PLC (BP, quote) the acquisition will reshape the Russian oil industry. The deal is said to be in favor of the state owned giant.
The agreement is for a 50% stake in TNK-BP to the state owned Rosneft for $17.1 billion in cash plus shares in Rosneft in the amount of 12.84%. BP went on to say expects to get two seats on the board of Rosneft as part of the deal.
Morning Coffee Break Companies To Watch
Earnings Watch
Company Watch
BP, (BP, quote) BP has come a long way since the gulf disaster, streamlining the business and selling off assets with the latest move providing exposure to Russian oil could prove beneficial. The stock is up 0.12% in pre-market.
Futures and Commodities Corner
Crude Oil
WTI crude oil prices are trading higher this morning, after the results of the Spanish election this past weekend favors support for austerity measures and for a possible formal request for a bailout.
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.
For natural gas traders can gain exposure 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 tick higher in early trading hours as gold recovers a tiny fraction of the huge losses last week. Last week Friday’s economic data was on the soft side but slew of positive reports dominated the week most notably was the housing market
The positive economic reports in turn put pressure on gold prices as traders look toward more risk assets and if economic conditions continue to normalize we could see any rally in gold be short lived and continue to trade in a range into the end of the year.
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.
CurveAheadMarketStrategies.com Market Snap Shot
| Crude Oil | $90.14 | +0.9 | +0.10% |
| Gold | $1725.50 | +1.50 | +0.09% |
| Wheat | $881.25 | +8.75 | +1.00% |
| Corn | $764.75 | +3.25 | +0.43% |
| Live Cattle | $127.275 | UNCH | UNCH |
| Lean Hogs | $79.625 | UNCH | UNCH |
| Treasury Bond | 146.875 | -0.6875 | -0.47% |
| 10yr Note | 131.9844 | -0.4062 | -.031% |
| 2yr Note | 110.1016 | -0.0312 | -0.03% |
| U.S. Dollar Index | 79.65 | -0.04 | -0.05% |
| As of 8:57.m. ET |
The Morning Coffee Break Bottom Line
Earnings and the Euro Zone will drive U.S. markets in the first half of the session until the U.S. is trading on its own after the Euro Zone markets close. Today’s market action will set the tone for the week after coming off such a pounding on last week Friday.
As always keep an eye on Currency Shares Euro Trust (FXE, quote) it’s has been good indicator on the direction of U.S. Markets. Watch it close to day see if it begins to lose momentum.
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