Wake Up Call - Feb 8

Good Morning. At 9:20 a.m. EST, the Dow Jones Industrials, S&P 500 and NASDAQ indices are all indicating a lower open to the day. It's a bit difficult to pin down a single reason today, but we can look to weak housing and sub-prime lending news from Toll Brothers and HSBC as key sources of concern. Also, geopolitical tension remains a serious issue, as Iran threatens to severely harm any attacker by various means.

Asia:
Hang Seng Index +0.27%; Shanghai/Shenzhen 300 +1.72%; NIKKEI 225 0.0%; BSE SENSEX 30 +0.06%; KRX 100 -0.38%; Ho Chi Minh -3.91%

U.K. & Europe:
DJ STOXX 50 Index -0.84%; FTSE 100 -0.38%; CAC 40 -0.87%; DAX -0.53%; Russian RTS Index -2.01%

KEY HEADLINE NEWS

• HSBC says the sub-prime market in U.S. is weaker than was expected, and blames rising rates, increased delinquencies and its own managers for writing risky loans.
• Toll Brothers compounds the news from HSBC, with its earnings report showing Q1 home-building revenue fell 19%. Raising the red flag, TOL also indicated that its backlog was 30% off its prior year level.
• The Bank of England and European Central Banks both kept interest rates steady today, but in a press conference scheduled for later, ECB President Jean-Claude Trichet is expected to signal a March rate hike. Shares across Europe are broadly lower as a result.
• Weekly initial jobless claims came in just slightly below expectations and right around the average of the past 12 months, indicating that the U.S. job market remains firm.
• Iran sternly warned today that any attacker against it would face a serious cost across the world. This should impact energy prices today, as the voices of Iran carry a more sincere ring to them than the braggadocio of Saddam Hussein's Iraq. Iran has been preparing and planning for an attack upon it for quite some time now, and has likely carefully prepared a retaliation strategy that is at least partly independent of its sovereign-based resources. It has also cemented dangerous alliances with Syria, North Korea and Venezuela, and less well-understood friendships with Indonesia and Malaysia.
• Pepsico reported earnings about in-line with estimates today, while raising its guidance. PEP shares are down about 1% in pre-market activity, as its guidance is still a penny below consensus levels, as compiled by Thomson Financial.
• Many of the nations' retailers reported January sales numbers today with mixed results.

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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. (disclosure)