Welcome to Friday’s Morning Coffee Break – U.S. equity futures are suggesting lower open on final session of the week, weak Google (GOOG, quote) results dampened investor expectations for the remaining earnings season, especially those names in the tech sector.Market sentiment remains under pressure on let downs from Microsoft Corp. and Google Inc. Especially after the Google premature earnings release in the mid trading followed by ramped speculation on a huge miss. With more “blue chip” names reporting today such as General Electric Co. (GE, quote) and McDonald’s Corp (MCD, quote), market participants will no doubt be cautious ahead of the releases.

Adding to the mix today will the only U.S. economic data point – Existing Home Sales scheduled for release at 10:00 a.m. ET.  Analysts are looking for $4.73 million in sales down from the previous month of $4.82 million in sales.

Across the pound market participants will be watching for any signs, smoke signals or hints from the second day of the European Union summit.  Expectations are for little news or progress announcements. Thus if we do get some breaking news it could move markets.

As traders start out their day – The Dow Jones  (DIA, quote) fair value is down by -18.94 to 13467.00, S&P 500 (SPY, quote) fair value is down by 3.79 to 1448.50 and the NASDAQ (QQQ, quote) fair value is coming in at 2725.25 down by 13.32 (as of 7:03 a.m.)

 

Morning Coffee Break Global Markets Watch

Asia

Overnight Asian markets were broadly lower on the session as Asia stocks traded in tight range going into the weekend with the majority of the indexes posting solid weekly gains after markets posted solid gains the session prior on key Chinese data showed GDP grew by 7.4%.  Thursday’s rally was pinned on the hopes second largest economy will continue to improve. Friday’s slight sell off is likely profit taking from on a strong week of gains.

Canada

In a surprise decision yesterday Canada's broadcast regulator blocked the sale of Astral Media Inc. (AAIAF, quote) to BCE Inc.'s (BCE, quote) for 3 billion dollars ($3.06, USD).  The Canadian Radio-television and Telecommunications Commission decision was based on the two Montreal based companies would gain to much influence over both English and French language stations.

Euro Zone

European equities move lower this morning, as market participants focus on the second of a two day European summit in Brussels.  U.S.  Tech sector earnings also pressured sentiment as tech behemoth Google’s earnings disappointed the street.

Euro Zone markets have been basically in a hold pattern these past few weeks as investors assess the situation with Greece and Spain. The Euro Zone is sitting at critical juncture as leaders determine the future of the region. Until some clarity can be provided the Euro Zone markets  are likely to trade in a range before the next leg up.

Emerging Markets

Latin America - Brazil

Vale SA (VALE, quote), an Brazilian iron ore mining company continues show signs of recovery in Q3.  Heavy rains affected Vale’s production 2012 start.  Vale is the world's largest producer of iron ore which is the main ingredient in steel production.  According to Vale’s filling release the company iron production was up by 4.2% to 83.9 million metric tons.

Vale should play a key role in the restocking of steel in China as the country ramps up its economic growth once again.

Morning Coffee Break Companies To Watch

Earnings Watch

General Electric (GE, quote) analysts’ estimates are for $0.36 a share in earnings.

McDonald’s (MCD, quote) analysts’ estimates are for $1.48 a share in earnings.

Company Watch

Google (GOOG, quote) released its third quarter earnings much earlier than expected by mistake through a third party printer yesterday . Both earnings per share and sales were significantly lower than analysts had expected sending the stock lower by as much as 10% before being halted around 1:30 p.m. and resumed trading at 3:20 p.m.  Now that investors head Mr. Page on the conference call  and the night to think about what was said and the actual results Google is our stock to watch today.

Futures and Commodities Corner

Crude Oil

WTI crude oil faltered during beginning of the Euro Zone session trading hours when U.S. dollar clawed its way higher in overnight FOREX trading. Adding support are concerns over the disruptions to a North American pipeline.  Keystone pipeline was shutdown Thursday for 3 days when TransCanada found what they are calling a “small anomaly”.  The pipeline is key source of crude oil for Midwest and Gulf Coast refineries.

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 are down for the second day in a row as investors are disappointment over U.S. economic data pushing high the U.S. dollar as money flows back once again to safety.  The U.S. dollar’s also gain support as traders look to the European Union Summit’s last day and are coming to the conclusion the new out of the summit has no ground breaking results for the banking sector rather more disappointment.

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	$92.31	+0.21	+0.23%
Gold	$1735.60	-9.10	-0.52%
Wheat	$879.50	+11.00	+1.27%
Corn	$766.75	+6.00	+0.79%
Live Cattle	$128.05	UNCH	UNCH
Lean Hogs	$78.85	UNCH	UNCH
Treasury Bond	146.5938	+0.2188	+0.115%
10yr Note	132.0938	+0.1094	+0.8%
2yr Note	110.1328	-0.0078	-0.01%
U.S. Dollar Index	79.565	0.14	+0.18%
			As of 8:50.m. ET

The Morning Coffee Break Bottom Line

Watch for traders to take profits into the close ahead of the weekend.  Look for China plays and China will need to restock stockpiles of steel and iron ore.  Miners exposed to this should do well as we go into the final months of the year.

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.