Wall Street Greek: WEDNESDAY’S MARKET: Global Braking is Poorly Timed

Many are attributing the daily decline to a handful of earnings warnings, but I’m considering international factors today. I know, I know, it’s rare that traders over there dictate our day. However, today the Chinese Central Bank kept from adding funds to markets and the benchmark money market rate jumped the most since July. Add to that disturbance the fact that the European Central Bank (ECB) said it’s going to tighten its rules when stress testing banks, and you have friction against a market that was clearly extended. With so much paper profit on the table, and given the time of year, we continue to suggest taking some funds off the table and reconsidering gold (for various reasons).

Wednesday’s Market

Market ETF	October 23	Year-to-Date
SPDR S&P 500 (NYSE: SPY)	-0.6%	+22.4%
SPDR Dow Jones (NYSE: DIA)	-0.4%	+17.7%
PowerShares (Nasdaq: QQQ)	-0.8%	+25.6%

Stocks are down today believe it or not, and the blame is being attributed by most to companies like Caterpillar (NYSE: CAT). But CAT’s troubles are well documented at this point, so we have to call that a reach. As you can see here, year-to-date gains are tempting to take and lock in for the year, and many PMs are doing so.

Economic Events

ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior Period	Expected	Actual
WEDNESDAY
International Trade Prices
-Imports	0.2% R	+0.2%	+0.2%
-Exports	-0.5%	-0.1%	+0.3%
FHFA House Price Index	+1.0%	+0.8%	+0.3%
Mortgage Activity	+0.3%		-0.6%
EIA Petroleum Status
-Crude Oil Inventory	+4.0 M		+5.2 M
-Gasoline Inventory	-2.6 M		-1.8 M

-R symbolizes “revised”

Prices rose, but that’s good news illustrating economic growth. That would be the optimist’s scenario. The pessimistic scenario is that prices are rising because fiat currency is being devalued. You decide! I think it’s a little of both at this point, and I expect each factor to play a more important role moving forward as well. Yes, that’s a veiled warning. Interestingly, housing prices did not quite keep up, but if memory does not fail me, the Case Shiller data showed otherwise. In any event, the data is so old it does not even matter. Take note of the Petroleum Status Report data, because I’ll be referencing it again shortly.

Overseas Markets

EUROPE	CLOSE	ASIA/PACIFIC	CLOSE
EURO STOXX 50	-0.9%	NIKKEI 225	-2.0%
German DAX	-0.3%	Hang Seng	-1.4%
CAC 40	-0.8%	S&P/ASX 200	-0.3%
FTSE 100	-0.3%	Korean KOSPI	-1.0%
Bloomberg GCC 200 Mideast	-0.0%	BSE India SENSEX	-0.5%

Storm clouds are gathering, but they’re manmade, created today by the central banks of two of the most important markets in the world, China and Europe. The brakes have been applied, and it sure would seem early for those two markets. Now, it’s difficult to say whether it’s early or late based on China economic data, because it is so suspect. Empty cities say it’s early; and empty cities say it’s late. That was not a writing error friend; empty cities dictate stimulus, but too much stimulus created cities for people who did not live there yet. China went down that lonely road in order to keep people working for some future decade’s growth. Eventually, somebody is going to have to pay.

Commodity Markets (12:30)

WTI Crude	-1.6%
Brent Crude	-1.5%
NYMEX Natural Gas	+1.1%
RBOB Gasoline	-2.0%
Gold Spot	-0.4%
Silver Spot	-0.4%
COMEX Copper	-2.0%
CBOT Corn	+1.1%
CBOT Wheat	+0.5%
CBOT Soybeans	+0.9%
ICE Cocoa	-2.1%
ICE Sugar	-0.6%
ICE Orange Juice Conc.	+3.2%
CME Lumber	-2.2%
CME Live Cattle	+0.0%

I’m a man of my word, and I told you I would reference that Petroleum Report again. It’s the reason oil prices are so deeply lower today. Oil inventories are building as economic data (yesterday’s employment data) shows a slowing of business expansion. So, oil prices and relative distillates should decline in price; well that’s what you see here.

Corporate Events

Investors are fretting Caterpillar (NYSE: CAT), save Jim Chanos, my fellow Greek-American who happens to be loudly short the stock. Broadcom (Nasdaq: BRCM) is another name posting disturbing data today, but we can find good news for you as well. Boeing (NYSE: BA) for one has posted another great number today and its shares are continuing to climb. The lesson learned is beware those attributing broader market activity to one data point; it’s too easy to do and too likely to be faulty.

HIGHLIGHTED EPS REPORTS
Company	Ticker
WEDNESDAY
WellPoint	NYSE: WLP
Federal-Mogul	Nasdaq: FDML
Boeing	NYSE: BA
Molex	Nasdaq: MOLX
Caterpillar	NYSE: CAT
Norfolk Southern	NYSE: NSC
Mastech	NYSE: MHH
Dr. Pepper Snapple	NYSE: DPS
Bristol-Myers Squibb	NYSE: BMY
FBR	Nasdaq: FBRC
B/E Aerospace	Nasdaq: BEAV
Six Flags Entertainment	NYSE: SIX
Northrop Grumman	NYSE: NOC
Lumber Liquidators	NYSE: LL
The Medicines Co.	Nasdaq: MDCO
American Electric Power	NYSE: AEP
Lithia Motors	NYSE: LAD
NASDAQ OMX	Nasdaq: NDAQ
Allegheny Technologies	NYSE: ATI
Wyndham Worldwide	NYSE: WYN
US Airways	NYSE: LCC
Lorillard	NYSE: LO
JAKKS Pacific	Nasdaq: JAKK
Commercial Metals	NYSE: CMC
Brinker Int’l	NYSE: EAT
Prologis	NYSE: PLD
TripAdvisor	Nasdaq: TRIP
Forrester Research	Nasdaq: FORR
Tractor Supply	Nasdaq: TSCO
Famous Dave’s	Nasdaq: DAVE
AvalonBay Communities	NYSE: AVB
Lam Research	Nasdaq: LRCX
MKS Instruments	Nasdaq: MKSI
Varian Medical	NYSE: VAR
Corelogic	Nasdaq: CLGX
Skechers USA	NYSE: SKX
E*TRADE	Nasdaq: ETFC
Angie’s List	Nasdaq: ANGI
KKR Financial	NYSE: KKR
Cheesecake Factory	Nasdaq: CAKE
Akamai Technology	Nasdaq: AKAM
AT&T	NYSE: T
Teradyne	NYSE: TER

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
Stereotaxis (Nasdaq: STXS)	+41%
JAKKS Pacific (Nasdaq: JAKK	+26%
Apollo Group (Nasdaq: APOL)	+23%
iGo, Inc. (Nasdaq: IGOI)	+18%
Mastech (NYSE: MHH)	+20%
Federal-Mogul (Nasdaq: FDML)	+20%
China Mobile Games (Nasdaq: CMGE)	+18%
Sharps Compliance (Nasdaq: SMED)	+14%
Flagstar Bancorp (NYSE: FBC)	+13%
Corning Incorporated (NYSE: GLW)	+13%
BIGGEST LOSERS	% Drop
Repros Therapeutics (Nasdaq: RPRX)	-30%
Datalink (Nasdaq: DTLK)	-24%
Capitol Acquisition Corp. II (Nasdaq: CLACU)	-20%
Internet Gold Golden Lines (Nasdaq: IGLD)	-19%
Sify Technologies (Nasdaq: SIFY)	-19%
Cree (Nasdaq: CREE)	-17%
B Communications (Nasdaq: BCOM)	-15%
Pacific Biosciences of California (Nasdaq: PACB)	-17%
Monarch Casino & Resort (Nasdaq: MCRI)	-15%
Altera (Nasdaq: ALTR)	-13%

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