U.S. Preview

• The European DJ Stoxx 50 this morning up +0.90%. European exporters are seeing support after last week's sharp decline in the euro versus the dollar. BMW, for example, is up +3.4% this morning and Michelin is up +2.4%. UBS is up +3.6% this morning after UBS reaffirmed its earnings guidance even after its announcement that it will buy back up to $18.6 billion in auction-rate securities and take a $900 million charge. Asia-Pacific stocks today closed higher except for China and Hong Kong: Japan +1.99%, Hong Kong -0.12%, China -5.20%, Taiwan +1.62%, Australia +0.80%, Singapore +0.64%, South Korea +0.83%, Bombay +2.22%. Chinese stocks fell sharply today on inflation concerns with the stronger-than-expected producer price report (+10% y/y) and on Goldman Sachs' forecast for slower short-term Chinese GDP growth due to the Olympic Games and pollution and transportation restrictions.
• Focus factors - Market attention this week will focus on (1) the stock market as the S&P 500 index last Friday posted a new 1-1/2 month high on the recent plunge in oil prices and the resilience seen thus far in the US economy and in non-financial corporate earnings, (2) T-note prices which rallied last week as the decline in oil and commodities prices has caused inflation fears to fade and has reduced the pressure on the Fed to raise interest rates, (3) the dollar which has rallied very sharply in the past 2 months and soared last Friday as ECB President Trichet admitted Euro-Zone economic weakness and as the likelihood substantially abated for another ECB rate hike by year-end, (4) crude oil prices which fell by $9.90 per barrel last week to post a 3-1/2 month low, bringing the overall sell-off from the record high of $147.20 to $32.00 per barrel (–22%).
• US economic schedule - Tuesday brings the June US trade deficit report (expected wider at -$61.5 bln vs -$59.8 bln in May) and the June Treasury statement ($82.7 bln deficit expected). Wednesday brings the June import price report (expected +1.0% m/m and +20.9% y/y), July retail sales (expected +0.1% overall and +0.5% ex-autos), and June business inventories (expected +0.5%). Thursday brings weekly initial unemployment claims (expected –10,000), and the July CPI (expected +0.4% m/m overall and +0.2% m/m core). Friday brings the August NY Empire manufacturing index (expected +0.5 to –4.4), July industrial production (expected unchanged), and the preliminary-Aug US consumer confidence index from the University of Michigan (expected +0.8 to 62.0).
• Fed policy - Market expectations last week for Fed tightening over the next year abated by a few basis points as oil prices continued to decline (thus helping the inflation picture) and as the banking problems continued to emerge. The market is currently discounting the chances for a 25 bp rate hike at the next FOMC meeting on September 16 at only 18%. The market is fully discounting a 25 bp rate hike by February 2009, a 50 bp rate hike by June 2009, a 300 bp rate hike by August 2009, and a 100 bp rate hike by November 2009.

One Pick Each Week Could've Turned $5,000 into $1,000,000 in just 5 Years

Steve Sarnoff makes one pick each week. In both 2005 and 2007 - he picked 100% winners.

His recommendations are straight-forward, easy to understand, and they could help you turn just $5,000 into $1,000,000.

Click here to get all the details on this amazing offer

• September S&Ps this morning are trading +1.00 points on some carry-over support from higher global stocks. The US stock market last Friday rallied sharply and closed at a 1-1/4 month high (Dow +2.65%, S&P 500 +2.39%, Nasdaq Composite +2.48%).
• Bullish factors for stock prices last Friday included (1) the continued sell-off in crude oil prices to a 3-month low as crude oil has now tumbled over $33 a barrel since posting a record high last month, and (2) the overall sell-off in commodity prices as the dollar strengthened to a 5-1/2 month high, leading commodity prices sharply lower and raising speculation that lower costs will boost corporate profits. 
• Bearish factors for stock prices last Friday included (1) the 9.1% tumble in Fannie Mae after the beleaguered mortgage company reported a larger-than-expected Q2 loss of $2.3 billion and slashed its dividend to 5 cents from 35 cents a share, (2) the sell-off in energy and oilfield service companies as crude oil prices sank to a 3-month low, and (3) the sell-off in gold and mining stocks as the price of gold fell to a 3-1/2 month low on the back of the strengthening dollar.
• Gold stocks are higher this morning on this morning's $5.10 rally in gold prices. Newmont Mining is up +1.4% and Barrick Gold is up +1.7%.
• Oil companies are seeing support from higher oil prices this morning. Chevron is up +0.1% and ConocoPhillips is up +0.5%.
• UPS (UPS) is down -0.2% in European trading this morning after a report in the Sunday Telegraph that UPS held initial talks to buy TNT NV for 10 billion euros. TNT NV is Europe's second largest express-delivery service.
• Whole Foods Market (WFMI) may see some weakness today after Whole Foods recalled beef sold between June 2 and August 6 that apparently sickened 7 Massachusetts residents with E. coli bateria poisoning.
• Quest Communications (Q) may see some weakness today after news that workers at the company represented by the Communications Workers of America were authorized to call a strike when their contract expires on August 17.

Do you think the market is headed for a fall?

If you have a $500,000 portfolio, you should download the latest report by Forbes columnist Ken Fisher.

This must-read report includes his latest stock market prediction, plus research and analysis you can use in your portfolio right now.

Click here to download your report!

• September 10-year T-notes this morning are trading +6.5 ticks. September T-note prices last Friday gave up early gains and closed -9 ticks. Bearish factors for T-note prices last Friday included (1) the rally in the stock market, and (2) the prediction by PIMCO that the US government's effort to support Fannie Mae and Freddie Mac will lead to increased supply as the Treasury sells more debt to fund their rescue. Bullish factors for T-note prices last Friday included (1) the larger-than-expected increase in Jun wholesale inventories (+1.1% versus expectations of +0.6%), and (2) carryover strength from European debt prices as the German 10-year bund yield tumbled to a 2-1/2 month low on increased speculation that the ECB is done raising interest rates.
• The dollar is mildly lower this morning with the dollar/yen down -0.38 yen and the euro/dollar up +0.07 cents. The dollar index last Friday surged and closed at a 5-1/2 month high. Bullish factors for the dollar last Friday included (1) a continuation of last Thursday's sell-off in the euro after ECB President Trichet warned that economic growth will be "particularly weak" in the Euro-Zone, which raised speculation that the ECB is done raising interest rates, and (2) the rally in the dollar/yen to a 7-1/4 month high as the US stock market rallied sharply and encouraged yen carry trades. Bearish factors for the dollar last Friday included (1) the larger-than-expected increase in US Jun wholesale inventories, and (2) the prediction from PIMCO that the US government's efforts to support Fannie Mae and Freddie Mac will lead to larger Treasury issuance and a weaker dollar. 
• September crude oil prices this morning are trading +82 cents a barrel and September gasoline is trading +1.26 cents a gallon. The main bullish factor this morning is concern about possible oil supply disruptions from the Caspian Sea area after Russia's full-blown military assault in the breakaway region of South Ossetia. On the brighter side, the fire on BP's pipeline (800,000 barrels per day capacity) in eastern Turkey was extinguished today. That fire stemmed from a bombing last week by Kurdish rebels. September crude oil prices last Friday sold off sharply and closed -$4.82 a barrel and September gasoline closed -11.53 cents a gallon. Both September crude oil and gasoline posted 3-month lows last Friday. Bearish factors for crude oil prices last Friday included (1) the surge in the dollar to a 5-1/2 month high, reducing the appeal of commodities as an inflation hedge, and (2) the larger-than-expected increase in Jun US wholesale inventories, increasing concern that the US economy is continuing to slump as sales slow and inventories increase. Bullish factors for crude oil prices last Friday included (1) the prediction by Chatham House that crude oil may reach $200 a barrel within the next 5 years as inadequate investment in capacity means that demand will outpace supply and that excess capacity could fall to near zero in the "near future," and (2) last week's bombing of the Turkish pipeline by Kurdish militants which disrupted crude production in Azerbaijan.

Complimentary Market Forecasts!

VantagePoint's market forecasts are nearly 80% accurate.
Take a look at actual VantagePoint forecasts, and see for yourself
the difference VantagePoint forecasts will make in your trading!

Click here to see a recent forecast now.

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): SYY-Sysco (BEST earnings consensus $0.52 per share), FLR-Fluor (0.79), CG-Carolina Group (1.41), MDR-McDermott International (0.77), ETP-Energy Transfer (0.46), CCO-Clear Channel Outdoor Holdings (0.19), LINTA-Liberty Media (0.16), CPN-Calpine (0.16), DISCA-Discovery Holding (0.15), POM-Pepco Holdings (0.38), NUAN-Nuance Communications (0.21), AWK-American Water Works (0.35), CXO-Concho Resources (0.45), VAL-Valspar (0.49), NRP-Natural Resource Partners (0.41), TWTC-TW Telecom (0.02), HPT-Hospitality Properties Trust (0.74), RGNC-Regency Energy Partners (0.27), ES-EnegySolutions (0.12), MWE-Markwest Energy (0.37), VRX-Valeant Pharmaceuticals International (-0.05), CNO-Conseco (0.21), BKH-Black Hills (0.35), NRGY-Inergy LP (-0.44)

Morning Quote Board