Wake Up Call - Dec 26

Good Morning. This is your wake up call for Tuesday December 26, 2006. Equity index futures indicate a mixed open this morning on what is expected to be a light but potentially volatile holiday trading week.

Crude oil appears set to be a strong negative catalyst for markets today, after Iran remains boisterously defiant to U.N. sanctions passed on Friday. Oil has already risen 1% in overseas trade, and we expect it could test $65 this week. Iran reacted rather harshly over the weekend, threatening to use any weapon in its arsenal to defend itself, including oil. At the same time, Iran's leaders vowed to continue with the enrichment of uranium. With the American detention of Iranian military officials visiting Iraq on invitation of the Iraqi government and a second U.S. aircraft carrier fleet likely headed to the Persian Gulf soon, the situation appears set to escalate. So, despite anticipated strong holiday retail data, we believe the oil catalyst will dictate the direction of equity markets today. Look for "Today's Morning Coffee" to be published later this morning, as well as "The Greek's Week Ahead." (disclosure)