Wake Up Call - Jan 5

Good Morning. This is your wake up call for Friday January 5, 2007. The time is 8:35 AM EST, and all major U.S. equity index futures are indicating another significantly lower open today after the December employment report. Nonfarm payrolls came in significantly higher than expectations, and previous data was revised higher as well. At 167,000, the rise in nonfarm payrolls exceeded the 115,000 consensus view significantly. Unemployment met expectations at 4.5%, but average hourly earnings exceeded expectations, rising by 0.5%, versus an expectation for a 0.3% increase. Combined, this data is threatening to markets in our view, as it indicates economic health with job growth and inflationary pressure with wage increases.

OVERSEAS MARKETS

Asia:
Hang Seng Index +0.93%; Shanghai/Shenzhen 300 +0.28%; NIKKEI 225 -1.51%; SET -3.09%; KRX 100 -0.51%

U.K. & Europe:
DJ STOXX 50 Index -0.45%; FTSE 100 -0.41%; CAC 40 -0.43%; DAX -0.55%; BUCHAREST BET +2.42%

KEY HEADLINE NEWS

• Renowned bond investor, PIMCO's Bill Gross, stated his expectation that the Federal Reserve would reduce interest rates by 100 basis points in 2007.
• China announced another increase to the reserve requirements for banks in an effort to cool lending and contain economic growth, as well as real estate and securities investment. The reserve rate will increase by 50 basis points, to 9% of bank deposits.
• European unemployment declined to a reported 7.6% rate, a record low, while an index measuring the confidence of executives and consumers slipped slightly to 110.1 in December, from 110.3 in November. The confidence result was near a six-year high.
• North Korea may be preparing for a second nuclear test, according to Defense Officials.
• Bird Flu appears ready to seek more than its first 15 minutes of fame, as the WHO issues a new warning.

Check back in later this morning for "Today's Morning Coffee," where we go into greater depth regarding the day's market-moving event schedule. (disclosure)