Morning Market Report - Jan-13-09

By The Greek - Economy & Markets:

Visit the front pages of Wall Street Greek and Market Moving News to see our current coverage of economic reports and financial markets.

Our morning report is back, and we plan for its availability in the pre-market . What began as "Morning Coffee" and "Wake Up Call" is here again regularly for your early morning market preparation. This morning: Ben Bernanke gets schooled; weekly sales take a dive; Germany approves stimulus; Russia asks the impossible; oil slides; trade deficit narrows; Citigroup (NYSE: C) loses market confidence; Sony (NYSE: SNE) takes entire Nikkei lower; Biden assures of responsible withdrawal from Iraq.

(Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK)

The market opened lower this morning as economic concerns hijacked news flow. However, since the break of trading shares have recovered. There remain hopes of a "January Effect," though its absence thus far has been logically attributed to a deteriorating economic situation. The most important driver of the day appears to be Ben Bernanke's address at the London School of Economics this morning.

Overseas Markets

Asia:

1. MSCI Asia APEX 50: -0.53%


2. Japan NIKKEI 225: -4.79%


3. Hong Kong Hang Seng: -2.17%


4. China CSI 300: -2.32%


5. India BSE SENSEX 30: -0.42%

Europe:

1. DJ Euro STOXX 50: -1.57%


2. UK FTSE 100: -0.87%


3. France CAC 40: -1.47%


4. Germany DAX: -1.41%

Economic Data & Analysis

The Chairman
Federal Reserve Chairman Ben Bernanke today addressed the London School of Economics (LSE), one of Europe's and the world's most admired centers of learning. The Chairman's topic of discussion was "The Crisis and Policy Response." It's gotten so big, it can now be referred to by one name, sort of like Madonna.

His discussion raised early concerns, as he failed to inspire confidence that the end might be in sight. Instead, he warned that future asset purchases might be necessary. Recall, that's what the TARP was slated for before the jumpy Hank Paulson sent it elsewhere.

Trade Deficit Narrows
The International Trade Deficit reportedly narrowed in November. That's a good thing right? Well, that depends on what the driver was. It was not changed by the revival of American industry last month, but by the decline of energy import prices and the dearth of American demand for any goods whatsoever.

ICSC Weekly Same-Store Sales
Today's regular release of retail weekly same-store sales data showed that business fell off a cliff since holiday shopping impetus disappeared. Year-to-year sales fell 2.2%, and sales declined 2.3% on a week-to-week basis. This is consistent with the chatter we're picking up from the retail space. Thus, we suggest steering clear of tempting stock prices as they seek to lure you into a potential valuation trap, at least by this analyst's eye.

President Seeks to Free Up TARP for Obama
Anything Obama can convince George to do before he takes office will weigh less heavily on his own legacy. While President Bush asks for the second half of the TARP funds, this allows Obama to freely request his own aid without facing criticism as his own spending tally mounts.

Treasury Budget - December
December's Treasury Budget will be reported at 2:00 PM ET. It's expected the report will show a counter-seasonal budget deficit for December. You see, the federal government usually posts an uncharacteristic surplus in December, as it collects tax payments. This time around, TARP and other federal spending allocated to save the economy will take even December's money away.

The Treasury Deficit is a mounting concern, and could very likely take down the American empire eventually. When we rely on foreigners to finance our spending at an increasing rate, and we do this in an increasingly fiery geopolitical environment, it's trouble brewing. What happens if the spigot ever gets turned off? Will Americans be capable of buying bonds like they did in WWII? It's something to think about.

Corporate News Drivers

Citigroup (NYSE: C) faced headwinds this morning as yesterday's asset sale spurred concern about Citi's future. Investors are starting to question Citi's long-term viability. We hope to have something more to say on this topic later today.

Sony (NYSE: SNE) shares started lower in Asia and kept the pace in the States as news broke that soft demand for electronics might drive Sony's first operating loss in 14 years. Japanese paper "The Nikkei" reported the electronics maker might lose $1.1 billion from operations this year. The report was so ill-received in Japan it drove the entire nation's market lower.

In other corporate news, Genentech (NYSE: DNA) and Abbott Laboratories (NYSE: ABT) present at the JPM Conference. The day's earnings schedule highlights news from CalAmp Corp (Nasdaq: CAMP), Infosys Technologies (Nasdaq: INFY), Insteel Industries (Nasdaq: IIIN), Life Partners Holdings (Nasdaq: LPHI), Linear Technology (Nasdaq: LLTC) and Majesco Entertainment (Nasdaq: COOL).

Commodities, Currencies, Fixed Income and Other

Oil prices started the day lower, but Saudi Arabia later announced that while January's production cuts were on target, a pending production cut to start in February would be greater than previously planned. That news has prices stabilizing this morning.

Meanwhile, the Ukraine is asserting that Russia's demands regarding gas routing is impossible to effect. Reports are that while pipelines are open, little gas is actually flowing through to parts of Europe. So, despite hopes that Southeastern Europe might avoid a winter freeze, concerns are now renewed.

Geopolitical & Global Affairs

Ban Ki-moon is in the Middle East, and he's saying, "Hey you guys, didn't you hear? We supreme decision-makers at the U.N. decided you have to stop fighting." He said that both Israel and Hamas must obey the will of the world and honor the ceasefire resolution. All we have to say is, if you're planning to head into Gaza itself, watch out Papa Smurf.

Vice President-Elect Biden was in Iraq today on a "surprise" visit. Is anybody surprised by these regular visits anymore? Just about every time a political head travels to the Middle East, he stops off in Iraq. I think everybody expects it by now!

Biden affirmed that the Obama administration will seek a responsible withdrawal of troops from Iraq, but he left out the part about then taking those troops to Afghanistan. So protesters can replace the "Stop the Iraq War" posters with "Stop the Afghan War" cards. This one is even more dangerous than the Iraqi endeavor, as we are likely to find ourselves engaged with al-Qaeda, Afghan warlords and Pakistani tribes that are allied with their neighbors against the foreigners (that's us).

In the late evening, Germany approved a 50 billion euro economic stimulus package that provides 36 billion this year. The DAX promptly responded by dropping 1.4%.


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