Morning Report: Economic Data Heavy Day

(Stocks in this article: NYSE: ABX, NYSE: PTR, NYSE: MER, NYSE: MAN, NYSE: RHI, NYSE: KFT, NYSE: ALU, Nasdaq: IACI, Nasdaq: WBSN, Nasdaq: GOOG, NYSE: DB)

Futures Prices are mildly positive this morning, on a day that promises to be filling on information. Call it Data Heavy Wednesday, as nine important economic reports reach the market. Data overload may overcome traders today, with the culmination at 2:15, when the FOMC makes its long anticipated rate decision and announcement.

Economic Checklist:

1. The Mortgage Bankers Association reported its weekly Purchase Applications, showing the continuation of a trend. Refinancings continued to drive application activity, as applications rose 3.8% driven by 9.2% higher refinancing activity on the lowest 30-year mortgage rates since May. Does this mean go out and buy Countrywide (NYSE: CFC) after its recent positive outlook spurred its shares to rocket last week? I would not touch these stocks ahead of the Fed action this afternoon. There's too much risk, but you might consider a play on volatility, using options to create a straddle position. It seems likely that today's action could drive sensitive shares sharply in either direction. Your risk is if data overload paralyzes traders and inactivity forces you to eat your likely hefty option premium.


2. ADP offered its Employment Report for October, showing a 106K increase in jobs during the month, versus a revised 61K rise in September. This bullish number does not support a Fed cut, but may not play a role in the Fed's last minute considerations either. Recently beaten down shares of Manpower (NYSE: MAN) and Robert Half Int'l (NYSE: RHI) should draw some capital from this news. I prefer the shares of MAN of the two, based on earnings expectations changes and price strength, but both trade a P/E ratios below their growth expectations. Since my long-term view remains negative on the economy, I would not stay long these shares for too long a period.


3. Q3 GDP Advance Report - GDP growth at 3.9% beat Bloomberg's consensus of economists' view for a 3.2% Real GDP increase. Despite concerns for Q4 and 2008, this bullish data makes it all the more difficult for the Fed to be overly aggressive regarding an ease. Forward looking Mishkin or not, the likelihood of a 50 point cut seems impossible now, while inaction seems even more possible. Considering bond yields odds-making was driven by the old news of credit woes (Merrill (NYSE: MER)) and housing trouble (existing home sales report), the "Growth Hoax" scenario I laid out last week seems all the more likely. Remember, in this scenario, dollar drop beneficiaries like gold and oil stocks, and low-quality shares, would give back their new found riches. I would sell Barrick Gold (NYSE: ABX) and other high flying gold stocks, and I would also unload PetroChina (NYSE: PTR) and other big oil names.

Market-Moving News

• CNN Money: Asian Markets Mixed


• Financial Times: London Equities Hold Steady


• CNBC: Mortgage Refinancings Rose Last Week


• ADP Employment Report October - Up 106K, Vs. Revised September 61K Rise


• Bloomberg: Q3 GDP Report (+3.9% Beats Consensus +3.2%)


• ECONOMIC REPORT: 9:45 October Chicago Purchasing Managers Index (Consensus 53.5)


• ECONOMIC REPORT: 8:30 Q3 Employment Cost Index (Consensus +0.9%)


• Platts: Crude Prices Stabilize in Europe


• DailyFX: Fed Move Promises Volatility


• Bloomberg: Bank of Japan Holds, Lowers Growth Outlook


• ECONOMIC REPORT: 10:00 September Construction Spending (Consensus -0.5%)


• ECONOMIC REPORT: 10:30 EIA Petroleum Status


• ECONOMIC REPORT: 2:15 FOMC Announcement


• ECONOMIC REPORT: 3:00 Farm Prices


• Bloomberg: European Inflation Hot


• TheStreet.com Earnings Calendar


• AP/Yahoo!: Kraft (NYSE: KFT) Feels Heat of Rising Foods Costs


• MarketWatch: Alcatel-Lucent (NYSE: ALU) Posts Loss, Cuts Jobs, Russo on Hot Seat


• IAC (Nasdaq: IACI) Profit Falls


• CNN Money: Deutsche Bank (NYSE: DB) Profit Jumps


• TheStreet: Websense (Nasdaq: WBSN) Bests Estimates


• AP/Yahoo!: Google (Nasdaq: GOOG) Social Network Search


• BBC: Monks Return to Burma Streets


• NBC11: Earthquake Hits Cali


• Economist: Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

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