Welcome to today’s Morning Coffee Break – Well it is November 15 the midpoint of the month and the results from the U.S. markets downright a mess you can even say they outright ugly.

At the halfway point in November Dow and S&P 500 have lost more ground they in previous month of October.  With yesterday’s close the Dow now will now start trading at its lowest level since June 26 2012 and the S&P 500 is at level not seen since July 25 2012 and we still have a half of month to go…

Look for media outlets to continue to focus on the fiscal cliff and news of the Euro Zone falling into a recession once again. However, there are several key economic data release today that could drive markets today.

Economic Data Release	Previous	Consensus
Consumer Price Index (MoM)	0.6%	0.1%
Consumer Price Index (YoY)	2.0%	2.1%
Consumer Price Index Core s.a	230.58
Consumer Price Index Ex Food & Energy (MoM)	0.1%	0.1%
Consumer Price Index Ex Food & Energy (YoY)	2.0%	2.0%
Consumer Price Index n.s.a (MoM)	231.41	231.33
Initial Jobless Claims	355.00K	375.0K
Continuing Jobless Claims	3.13M	3.21M

For complete global economic listing of events, scheduled times, and forecast please check out our economic calendar at the following link.  Or by clicking the Currency menu and then selecting Calendar.

As traders start out their day – The Dow Jones  (DIA, quote) fair value is down by 8.95 to 12526.00, S&P 500 (SPY, quote) fair value is up by 1.51  to 1354.00 and the NASDAQ (QQQ, quote) fair value is coming in at 2532.75 up by 2.48  (as of 8:21 a.m.)

 

Morning Coffee Break Companies to Watch

Retail names reporting earnings today are the name of the game as traders will be focusing on sector after yesterday’s disappoint Retail Sales results.

PetSmart (PETM, quote) -  is the Morning Coffee Break’s stock to watch this morning.  PETM reported Q3 profits of $0.75 per share and impressive 12 cents above estimates.

PETM’s same store sales were better than expected as well with a 6.5% print for the quarter. PETM also raised its earnings guidance for the year. The pet industry appears to be intact.

Diamond Foods (DMND, quote)  - finished filing restatements for the Q1 through Q3 fort this year.  The restatements come after an internal investigation found accounting errors for payments to walnut growers.

Limited Brands (LTD, quote) -  earned $0.26 per share two cents above estimates for Q3.LTD raised its full year guidance and its board authorized a new $250 million share repurchase program.  The company highlighted that its results were driven by strong sales in its Victoria’s Secret and Bath & Body Works divisions.

 

Morning Coffee Break Global Markets Watch

Asian Markets and Emerging Markets

During overnight trading China made move in the hopes to stimulate its economy by announcing it will be reducing the cost of its strongly regulated fuel prices for both gasoline and diesel.

China which is the second largest economy has been showing sings for the past several months that is it recovering will deferentially give the economy another shot in the arm by reducing the fuel cost.

China officials are looking for the lower retail gasoline and diesel prices not only help individuals but drive input cost lower across a wide spectrum of the country’s economy.  By reducing the input cost it should help reduce China’s inflation which is already roughly at a 3 year low.

If you recall China had printed its slowest Gross Domestic Product (GDP) results in Q3 since the 2009 but has been slowly recovery since September as infrastructure projects encourage spending and restocking.

The reduce in fuel is reportedly to be roughly 3.2% for gasoline and 3.4% for diesel affectively providing tax break 3.2% for families and 3.2%-3.4% reduce of input cost for goods and services.   This reduction helps China’s economy by reversing roughly half the fuel price increase of 6% back on September 11.

This move should be reflected in broad base of Chinese companies and as result should be seen in the iShares FTSE China 25 Index Fund (FXI, quote) ETF that seeks to  investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE China 25 Index.

We will look for more way to play the China recovery later in the day and week.

European Markets

For the second time the Euro Zone has fallen back into a recession from July through September since the global financial crisis began in 2009.  The Euro Zone depends heavily on the French and German economies to stay off economic contraction.  The two main pillars have faltered as Germany slows to snail’s pace and France unable to pick up the difference has forced the entire region contract.

When looking at the 17 counties that make up the Euro Zone’s Statistics Office Eurostat analysts are looking at an economic output as a whole has dropped 0.1% in Q3 after a Q2 drop of 0.2%.

With two contracting quarters under its belt the Euro Zone in an official recession once again.  Granted that Spain and Italy have been contracting for year already and Greece – Well Greece is in a downright depression scenario.

Look for the ripple effects as traders readjust their thinking in Europe and its $12 trillion shrinking economy.

 

Futures and Commodities Corner

Crude Oil

Overnight crude prices were slightly higher during European trading today on geopolitical tensions in the Middle East hit the fan after Israel assassinated a senior Hamas commander on Wednesday.

Be sure to check out the Daily Energy Report for a compressive look at the global energy markets including crude oil and natural gas by Tom Pawlicki.

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 prices are moving lower during the overnight Asia and the start of the U.S. trading hours today giving back all of the gains made in yesterday’s session.  The floor that was put in yesterday concerning the U.S. political divide over the fiscal cliff seems to be giving way this morning.

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	$86.65	+0.33	+0.38%
Gold	$1,716.90	-13.20	-0.76%
Wheat	$852.25	3.50	+0.41%
Corn	$726.00	+0.25	+0.03%
Live Cattle	$125.45	+0.025	+0.02%
Lean Hogs	$85.85	-0.20	-0.23%
Treasury Bond	151.75	-0.2812	-0.18%
10yr Note	133.9219	-0.125	-0.09%
2yr Note	110.2578	UNCH	UNCH
U.S. Dollar Index	81.21	+0.11	+0.14%
			As of 8:14 a.m. ET

The Morning Coffee Break Bottom Line

Look for U.S. markets continue into its slump as investors, traders and media outlets focus on the fiscal cliff. November is likely to continue on the current path as U.S. policymakers remain divided on to solve the fiscal cliff. Retail Sales index was a disappointment yesterday but there are clear winners out there still navigating these trouble times as they seize opportunities for growth, such as PetSmart.