Tuesday's Brew (Oct 31)

Enjoy your fresh morning coffee with our summary of the market outlook for the day and a medley of important information you should find useful. At 9:30 AM we will discover whether the market is going to bring a trick or treat this Halloween, but equity futures across the board are higher this morning ahead of the release of the consumer confidence index for October.

OVERSEAS NEWS & MARKETS

The Hang Seng and NIKKEI 225 indices were both up fractionally overnight. The FTSE 100 and DAX indices have extended the global cheer in early trading, as activity has been mostly news-driven by corporate earnings reports.

Global security and stability should strengthen from news that North Korea has agreed to return to six-party talks. However, we question China's motive. We wonder if China expects some payback for bringing North Korea to the table and seemingly calming the Sea of Japan. Perhaps China hopes to receive support in the U.N., as the global community efforts to sanction China's critical energy supplier, Iran. If so, this gift it has provided to the world may be a Trojan horse. Therefore, this security may be a false one.

ECONOMIC NEWS & DATA

Yesterday's consumer spending data came in about in line, but there remains a slew of economic pitfalls to overcome this week. Later this morning, the Conference Board's release of the consumer-confidence index for October will show just how afraid the consumer has become, or if he has remained brave. There is still concern that housing weakness might spread to consumer confidence and spending eventually. Economists surveyed by Bloomberg expect the reading to measure 108.0. The reading for September was 104.5.

Also today, the Labor Department will release the employment-cost index for the third quarter. Finally, in a reading we view less important, the Chicago purchasing managers will issue their report on U.S. manufacturing in October. Economist consensus expects a reading of 58.0, while September measured at 62.1.

COMMODITY MARKETS

Yesterday provided the steepest one-day decline in crude oil prices in over a year, as traders speculated that a warmer weather forecast for the near-term might carry through the greater of winter. This would impact demand, and likely fill inventory excess while cutting into pricing. Rumors surfaced that OPEC might consider a further production cut at its December 14th meeting, but prices were unaffected.

Iran remains on the burner, and we expect rhetoric and reaction from its government to exacerbate oil price volatility as the U.S. and its allies seek sanctions against the nuclear hopeful. Thus, we believe that near-term pricing weakness should swing back to strength before forming a long-term trend.

Uranium prices spiked as key producer, Cameco Corp., said a flood at a new mine in Canada will delay initial shipments by at least a year. Uranium serves as fuel for nuclear reactors. Approximately 16% of the world's electricity was generated by nuclear source in 2005, according to the World Nuclear Association, and it is expected to increase. A significant amount of new reactors are being built now and are planned for future construction.

STOCK NEWS

Scheduled to report earnings on Tuesday are Procter & Gamble, Valero Energy, Marathon Oil, Automatic Data Processing, Archer Daniels Midland, Loews Corp., PNC Financial Services Group, Entergy Corp., EOG Resources, Vornado Realty Trust, Qwest Communications and American Electric.

We hope you enjoyed "Today's Morning Coffee" and wish you a good day trading. Stay in touch with Wall Street Greek during the day, as we are likely to provide more "Speculative Trade" ideas during this busy earnings season. We are also preparing an in-depth research report, to be offered to subscribers soon, within a section of the site we intend to call "Stock of the Month."

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