Wake Up Call - Jan 24

Good Morning. The time is 9:45 and major U.S. and European equity markets are broadly higher, after Asia mostly advanced as well. It appears investors digested the president's State of the Union address well. We expected him to keep commentary on foreign policy low-key, avoiding alarming phrases such as "axis of evil," and we believe the president made the most of a very difficult situation. We will provide a more detail analysis in "Today's Morning Coffee."

Asia:
Hang Seng Index +0.25%; Shanghai/Shenzhen 300 +1.13%; NIKKEI 225 +0.57%; BSE SENSEX 30 +0.49%; KRX 100 +1.35%; Ho Chi Minh -2.34%

U.K. & Europe:
DJ STOXX 50 Index +0.78%; FTSE 100 +1.29%; CAC 40 +0.85%; DAX +0.75%; Russian RTS Index +0.72%

KEY HEADLINE NEWS

• It is our pleasure to provide readers with the Transcript of the President's State of the Union Address from last evening.
• The President's speech highlighted health care, energy and Iraq, as expected. President Bush attempted to woo the angry Democrats back with a sincere heartfelt plea, but much of the commentary returned by Democrats after the speech seemed focus on a lack of cooperation before their newly gained majority, and expressed a grudgeful distaste for the handling of Iraq. We believe that after the warmth of the patriotic address fades, this government will have difficulty accomplishing anything over the next two years. However, we were impressed with the continued effort to reduce gasoline consumption, but the timeline is not aggressive enough in our view. Wall Street Greek has gone on the record for years recommending our government spend billions on alternative energy initiatives rather than on fixing the Middle East, and let them drown in their oil! At least then, our enemies and friends in the region will have to face the true source of their problems and stop blaming the United States as the source of all. We admit, this view is naive due to other interests, but it retains some truth.
• Weekly Mortgage Applications slipped this week after rising last week. Higher rates were generally blamed for the decrease, but Wall Street Greek previously discussed the sales efforts of mortgage brokers, real estate agents and home builders. We published our opinion that salesmen would paint a rosy picture for skeptical buyers, using the "it will be better next year" sales pitch to win over customers on the fence. We previously noted that we anticipated a short term uptick in housing, before a second leg lower in 2007. Now, we must also note that economic data has been very encouraging since our view was expressed, and this may help soften the downward trend we anticipate in 2007.
• U.K. economic growth in the fourth-quarter, measured by GDP, rose 0.8% from Q3, marking the strongest growth for the region since 2004. The pace of annual growth rose to 3.0% from 2.9%. However, we believe the chances of a February hike in rates by the Bank of England are decreased, as the minutes of the last meeting showed the January hike only passed on a vote of 5 to 4.
• A bunch of high-profile corporate earnings were reported last night and this morning: Advanced Micro Devices (AMD) shares are down over 6% after its report; Yahoo! (YHOO) is up near 6% after announcing it will speed its "Project Pajama"; Broadcom (BRCM) is up about 2.5% after announcing an earnings restatement and a charge on options; ConocoPhillips (COP) is flat after its EPS report.

We urge you to read our section within the sidebar, entitled "Headline News", for further important information for traders and investors. Check back in later this morning, as "Today's Morning Coffee" will outline in greater detail the day's activity in overseas and commodity markets, and provide economic data & analysis and stock specific news.

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