Welcome to Monday’s Morning Coffee Break – U.S. markets this week start off behind the eight ball as markets come off their largest weekly losses in 4 months.  Market participants find themselves about to embark into the fast lane of earnings season with the S&P 500 at a low point not seen since last month on the September 4. The tech heavy NASDAQ is worse off sitting on a low not seen in 2 months.  Market participants will get a look into the retail space this morning at 8:30 a.m. when September Retail Sales Report is releases.  Analysts’ are for an increase of 0.7% on top of the previous increase in August’s 0.9% increase.

Also scheduled for 8:30 a.m. ET is the New York Fed’s Empire State Index of Manufacturing Activity report.  Analysts are looking for an index of -4 for the October, much improvement over the -10.41 in September.

In late morning market participants will receive August Business Inventories report.  Forecasts are for a 0.5% increase. The report is scheduled out at 10 a.m. ET

As traders start out their day – The Dow Jones  (DIA, quote) fair value is up by 35.15 to 13292.00, S&P 500 (SPY, quote) fair value is up by 5.31 to        1428.60 and the NASDAQ (QQQ, quote) fair value is coming in at 2726.75 up by 12.96 (as of 8:33 am)

Morning Coffee Break Global Markets Watch

Asia

Asian markets were split when came to the close of the first day back this week. China lead the way lower after reporting mix economic signals.  Traders became concern that China may not act soon to further loosen its economic policies and take a wait and see approach as not all the data was necessary horrible.

The fear setback into the market when data released overnight indicated an inline climb higher for consumer prices for the month of September and a severer drop than expected in producer price.

Japan’s market bounced off the last week’s oversold beaten up export stocks. Japan’s Telco company Softbank Corp did end the day lower as traders wait to hear details of the company’s acquisition plans for Sprint Corp (S, quote).

Euro Zone

Euro Zone equities are higher this morning as drug manufactures, banks and oil companies lead the way.  Euro Zone market participants are view the slew of data out of China in a different lights possibly on the better than expected export numbers out in the overnight session.  Standard Chartered PLC (SCBFF, quote) was one the banks leading the chart this morning.

Emerging Markets

Principal Financial Group (PFG, quote) announced today it will be buying Chilean pension manager AFP Cuprum. The deal is being reported as a $1.5 billion deal.  This is the latest efforts of PFG to expand into emerging markets.

Morning Coffee Break Companies To Watch

Earnings Watch

Citigroup (C, quote) kicks of the week for earning s with Citi’s earning numbers scheduled for 8 a.m. ET

Gannett (GCI, quote) is scheduled this morning as well.

Company Watch

Sprint (S, quote) is the Morning Coffee Break stocks to watch today.  Japan’s Softbank announced late Friday it was considering an investment in Sprint and confirmed it overnight that will be buying 70% of Sprint for $20 billion dollars.

Advanced Micro Devices (AMD, quote) according to reports surfacing early this morning the chipmaker is planning to announce a workforce reduction of as much as 30% this week. This news comes on the heels of an earnings report that disappointed the street by falling well short of estimates.  Intel (INTC, quote) is likely to be under pressure as well.  Intel report this Tuesday and Advanced Micro Devices could be an indication to what is come.

BlackRock (BLK, quote) shares are likely to be under the “Barron’s affect” as an article appeared in this weekend’s edition suggesting the BlackRock is improving its equity fund performance.  The article goes on to say that the BlackRock has plans to cut ETF fees.

Futures and Commodities Corner

Crude Oil

WTI crude oil prices fought back to the flat line after drifting lower during European session in early trading.  Energy traders are attempting to digest concerns over China’s economy and in turn the future demand for crude oil.  China’s mix economic data today coupled with the possibility of policy makers taking a wait and see approach have dampened the demand outlook for the crude oil.

Helping to place a bid under the commodity is the rising geopolitical tensions in the Middle East.  Fears over a disruption to supplies from the region are growing sending prices higher.

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 dropped to the lowest level in almost three weeks to the bottom of the consolidation channel on uncertainty over Spain’s wiliness to formally requesting a bailout from the euro zone.  This has uncertainty and possible fall out of not asking for help has been sending traders looking for safety in the U.S. dollar. The demand of the U.S. dollar has increased the green backs value and in turn has sent gold prices lower.

A Spanish bailout will allow the European Central Bank (ECB) to purchase Span’s bonds reducing the borrowing cost allowing a much need relief to the debt occurred in the country.

But problem lies with Spain being reluctant over the conditions on its budget and austerity measures.

A wave of technical selling further weighed after futures broke below a key support level.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	$91.95	+0.09	+0.10%
Gold	$1745.80	-12.20	-0.69%
Wheat	$847	-9.75	-1.14%
Corn	$739.00	-13.75	-1.83%
Live Cattle	$122.50	UNCH	UNCH
Lean Hogs	$78.375	UNCH	UNCH
Treasury Bond	149.2812	-0.2812	-0.19%
10yr Note	133.1875	-0.125	-0.09%
2yr Note	110.2188	UNCH	UNCH
U.S. Dollar Index	79.73	-0.01	-0.01%
			As of 8:30a.m. ET

The Morning Coffee Break Bottom Line

U.S. futures are suggesting a positive open this morning. Look for more the same this week as we move through the bottom half of the month.  Watch for the pattern of the money flowing into the markets pushing the them higher until the final hour or two when profits begin to be taken sending them lower. Watch for signs on the Euro Zone markets close – if they close higher it well help U.S. market maintain the momentum and of course watch the Currency Shares Euro Trust (FXE, quote) it’s has been good indicator on the direction of U.S. Markets.