Friday's Brew - Closing Out 2006

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. Major equity indices opened lower today. Were it not the last day of the trading year, we would anticipate a light day. However, last minute divestiture of shares by individuals, for tax purposes, could lead trading to a higher level than it might otherwise reach for a holiday. The bond market will close at 2 PM EST, ahead of the holiday weekend.

OVERSEAS MARKETS

Activity overseas was relatively muted today, outside of mainland China. In Asia, the NIKKEI 225 Index was relatively unchanged, while the Hang Seng drifted 0.19% lower. Mainland Chinese shares rocketed higher as the state-run Xinhua News Agency announced that China will introduce wireless high-speed mobile-phone services next year, also known as 3G technology.

Across the pond, the U.K., German and Irish markets all closed early today for the holiday. European trading was relatively quiet, as the FTSE 100 Index closed down 0.32%, while the DJ STOXX 50 Index was down 0.33% through midday trading. We expect European shares to have a slow start to 2007, on tax-based profit taking. However, please review your relative tax laws, as they will play a significant role in the accuracy of this thesis.

ECONOMIC DATA & ANALYSIS

The only data set to be released Friday is the Conference Board's Help-Wanted Index for November. This index measures the amount of help-wanted advertising across 51 of the nation's newspapers, and is viewed as an indicator of labor market strength. Clearly, with the growing popularity of web-based ad postings, this metric is losing its value.

COMMODITY MARKETS

Coffee led all commodities lower earlier this morning but has since leveled off. This makes complete sense to us, as consumption has increased ten-fold in my household. In all seriousness, coffee supply has likely benefited from mild seasonal trends this year, we speculate.

Corn and sugar futures are both higher this morning, as growing ethanol demand continues to drive new demand for the commodities. Wheat on the other hand has suffered due to rising production out of China. China had historically been a net importer of grain, but is transitioning to a net exporter.

Crude oil is down 0.55% and natural gas is 1.06% lower, on mild weather forecasts for North America. The inventory report for natural gas is due out at 10:30 AM EST. Inventory is expected to fall, according to a Reuters poll. We continue to recommend purchase of these critical energy commodities ahead of an escalation of the Iranian nuclear issue. We believe President Bush is set to take military action by the end of 2007, as he set a challenge for his administration and the American people in his now famous "Axis of Evil" State of the Union Address. His legacy may hang on his ability to stop Iran from gaining a nuclear weapon, as his decisions on Iraq have clearly damaged his presidential record. For President Bush to complete an Iranian mission, we believe it must begin soon.

STOCKS IN THE NEWS

There are no earnings reports scheduled for Friday. Apple Computer shares are recovering sharply today, after it filed an SEC document exonerating "current management" and thus its iconic leader, Steve Jobs. However, we continue to believe the worst is yet to come for Apple, and its SEC filing is not the last word, the decision of regulators is. AAPL shares are up near 4% today in early trading.

You may have noticed a delay in the publishing of "Wake Up Call" today. Email recipients received their copy at 8:22 AM EST today, as we are beta testing distribution of the article. We intend for "Wake Up Call" to eventually be available only to subscribers through email and the premium site. "Today's Morning Coffee" will be available to all, but non-subscribers will receive copy post the open of the market, while subscribers will receive it pre-market. But don't worry! For the near-term, you will continue to receive all services, and we will provide adequate lead-time for you to plan accordingly. We apologize for the delayed delivery of "Today's Morning Coffee" today as we and Blogger experienced major technical problems this morning. We hope you found value in today's copy, and we wish you a good day trading. (disclosure)