Welcomes to today’s Morning Coffee Break – U.S. markets are coming of the largest single day gains since early September.  Depending on which analysts have the airways the move was due to an extreme oversold condition while others point to the growing confidence in a deal to avoid the fiscal cliff.

 

Market participants have just two full trading days left in the week ahead of the holiday.  U.S. markets are closed Thursday for Thanksgiving and are open only for a half of day on Friday.  Friday’s volume is surely to be extremely light making it hazardous for retail traders.

Key economic data today will see its third straight housing report and only economic data report as the October’s housing starts report is due out at 8:30.

Federal Reserve Chairman Ben Bernanke will give a speech at the Economic Club of New York today at 12:15 p.m.

As traders start out their day – The Dow Jones  (DIA, quote) fair value is down by -31.96  to 12727.00, S&P 500 (SPY, quote) fair value is down by -1.39  to 1382.80 and the NASDAQ (QQQ, quote) fair value is coming in at 2590.93 down by -3.43  (as of 8:47 a.m.)

 

Morning Coffee Break Companies to Watch

Hewlett-Packard (HPQ, quote) tops our list of company earnings schedule for before the bell.  Keep an eye on this one as it announced it was victim of fraud.

A few other noteworthy companies to keep an eye on are food/staples like Campbell Soup (CPB, quote), Heinz (HNZ, quote) and Hormel Foods (HRL, quote).

CurveAheadMarketStrategies.com favorite Salesforce.com (CRM, quote) is scheduled to report after the close of the bell.

Urban Outfitters (URBN, quote) missed earnings estimates by $0.01 but grew profit margins with inline revenues.  It will be interesting to see how the market views this retailer.  In the pre-market the stock ins up $0.03.

Morning Coffee Break Global Markets Watch

Asian Markets and Emerging Markets

China’s and Japan’s equity markets open to the upside in overnight trading only to lose ground and close in the red.  The region was unable to hold on to early gains as trader once again focused on the Euro Zone crisis when Moody’s rating agency downgraded France’s Aaa rating just ahead of the Euro Zone leaders decision concerning Greece’s bailout payment.

Two markets bucking the trend were Australia and S. Korea on hopes that U.S. leaders could actually agree and make a deal ahead the December 31^st fiscal cliff deadline.

European Markets

After news of a Moody’s rating agency downgrade of France’s Aaa rating to Aa1Euro Zone late Monday evening markets continue to trade mix as traders are ignoring the downgrade.

Since the downgrade analysts are already asking how long could French officials ignore as well as European and global investor France’s deteriorating finances?

One of several cited reasons for the downgrade were given but the follow quote sums it up –

“France’s resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding.”

The Euro moved lower against the U.S. Dollar initially and since has found its footing again, trading around the 1.2804 level

Futures and Commodities Corner

Crude Oil

Overnight crude prices began the session lower from the previous session’s 1 month high.  Risk appetite faltered after Moody’s rating agency downgraded France’s credit rating late Monday.

However, the downside was limited in account of escalating violence between Israel and Hamas militants in Gaza.  Traders are becoming more concerned about the growing conflict and the real possibility of disruption in supplies in region.

Due to technical difficulties’ Tom’s Daily Energy report will be out tomorrow.  However, please check of yesterday’s for an overall picture of the energy sector at the Daily Energy Report

U.S. 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 futures traded basically unchanged in early trading on speculation the U.S. leaders will reach some kind of a deal to solve pending fiscal cliff.

Gold is coming off a nearly $20 rally yesterday after Friday’s optimism press statement that progress to avoid  the U.S.’s deadline for  tax hikes and spending cuts and in turn sent the U.S. Dollar lower and lifting the price for dollar denominated commodities.

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	$88.83	-0.45	-0.05%
Gold	$1,731.00	-3.40	-0.02%
Wheat	$842.25	+0.50	+0.06%
Corn	$739.50	+.075	+0.10%
Live Cattle	$130.375	+.0225	+0.17%
Lean Hogs	$87.65	+0.225	+0.26%
Treasury Bond	151.2812	-0.1562	-0.01%
10yr Note	133.7969	-0.1094	-0.08%
2yr Note	110.25	+0.00	+0.00%
U.S. Dollar Index	80.92	+0.00	+0.00%
			As of 8:50 a.m. ET

The Morning Coffee Break Bottom Line

Coming off the largest single day gain in the U.S. markets since September 6^th is pulling back in the futures are suggesting a lower open.  Not unexpected after such a run in the previous session.  It’s the final hour of trading will be the “tell” and be the most import aspect to watch today.