Welcome to today’s Morning Coffee Break –despite losses last week U.S. markets are firmly in the green as market participants head into the last week of September and the final week of the 3rd quarter. Markets are in the green as well for the 3rd quarter putting markets on target to be the best year since 2009.
U.S. futures however, today are lower as traders focus on Euro Zone sovereign debt crisis creating fear in growth commodities and money flow once again returning to the U.S. dollar for safety.
The U.S. and global economic calendar starts out slow today with the U.S. Dallas Fed Manufacturing Business Index at 10:30 a.m. E.T., during the overnight today consumer data will be released in the Euro Zone.
Looking to the Morning Coffee Break’s earnings front, traders will find out how homebuilder Lennar (LEN, quote) will has been doing before the bell. At the end of the trading session traders will aslo get a look at Red Hat software provider (RHT, quote) and payroll processor Paychex (PAYX, quote).
Christine Lagarde, MF Director is in the U.S. today and is scheduled to speak at the Washington’s Peter Institute For International Economics at noon E.T.
Morning Coffee Break Global Markets Watch
Asia
Overnight Asian markets ended broadly lower with growth commodity related companies pushing markets lower as the Standard & Poor’s rating agency downgraded the agency’s 2012 economic outlook for the region. The agency cited the reason for its downgrade was the slowdown in emerging market giant China coupled with continued problems in the Euro Zone and a weaker U.S. economic recovery.
Standard Poor’s also cut China’s GDP outlook for growth was lowered from 8% to 7.5% along with Japan’s outlook to 2%, Singapore’s lowered to 2.1% and South Korean’s forecast was moved lower to 2.5%.
Emerging Markets
India equities fell slightly on what seems to be profit taking Monday after Mulayam Singh Yadav-led Samajwadi Party’s support to the Congress resulted in UPA government. Sending the NIFTY and Sensex higher by 400 points last week Friday on what appear to be an exit of the Trinamool Congress as the UPA appears to be confident to bring life to the sluggish Indian economy. Reports are already surfacing that the new cabinet is considering a bailout package for the state electricity boards.
Morning Coffee Break Companies To Watch
Toyota Motor (TM, quote) will be increasing its green vehicle lineup as it will be announcing plans for 21 new hybrids over the next three years, a new electric car this year, and a fuel cell vehicle by 2015.
Apple (AAPL, quote) remains in the news on a variety of stories about the iPhone 5 release. All Things Digital is reporting the iPhone 5 case scratches very easily. An interesting article in the WSJ indicates Apple allotted relatively few phones to retail partners like Best Buy (BBY, quote) and RadioShack (RSH, quote).
Futures and Commodities Corner
Crude Oil
WTI crude oil prices moved to the lowest level since the beginning of August in the start of the final week of September as well as the final week in the 3rd quarter as the U.S. dollar strengthens. Price also came under pressure all last week and into this week on future contract expirations and mostly on speculation of a U.S. Strategic Petroleum Reserve release. Comments from Saudi Arabian oil officials did not help prices when officials announced rising inventories.
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 lower during European morning hours today, as price continues to move off the seven month high on fears global growth move investors into the safety of the U.S. dollar. Spain remaims at the center of Euro Zone fear as they get ready to be bailed out.
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.
The Morning Coffee Break Bottom Line
Look for the risk off trade to continue until the final days of the quarter where we could see a move higher on window dressing. This the Monday after expiration and typically a down in the early part of the session as traders readjusts positions. Look for headlines to drive markets as no economic data is due out today.
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