Overnight Developments

• European stocks are lower with the European DJ Stoxx 50 down -0.03% and Dec S&Ps down -2.60 points. The euro retreated from a 1-week high against the dollar and Treasuries strengthened after German investor confidence tumbled. The Sep German ZEW economic sentiment survey fell for the fifth consecutive month and by a larger-than-expected -18.3 to a 19-month low of -4.3 as budget cuts across the Euro-Zone and slowing global growth clouded the outlook for Europe’s largest economy. Declines in utility stocks also pressured stock prices with E.ON sliding 3.0% after Germany’s biggest utility was downgraded to "hold" from "buy" at UniCredit SpA, which cited uncertainty on nuclear power plant extensions. Aug UK consumer prices unexpectedly rose +3.1% y/y, the same pace as July, and the sixth straight month prices have exceeded the government’s 3.0% limit as higher costs from airfare to food stoked price pressures.
• The Asian markets today closed mixed with Japan down -0.24%, Hong Kong +0.17%, China +0.09%, Taiwan +0.51%, Australia +0.25%, Singapore -0.59%, South Korea -0.15%, India +0.72%. Japanese stocks fell as the yen climbed to a fresh 15-year high against the dollar after Japanese Prime Minister Kan beat his rival Ozawa in a party vote today, reducing the likelihood the government will intervene in the foreign-exchange markets to weaken the yen. China’s yuan gained after the PBOC fixed the reference rate at 6.7378 per dollar, the highest since a peg against the dollar was scrapped in July 2005, on speculation the Chinese government will allow faster appreciation of the yuan to head off US trade sanctions. The action by the European Commission to raise its Euro-Zone GDP estimate yesterday for this year to 1.7% from 0.9% gave support to Asian equity markets on optimism that demand for Asian exports will remain strong. Asian bank stocks rallied for a second day after regulato rs agreed to give banks as long as 8 years to comply with new capital requirements and after Zhu Min, former deputy governor of the PBOC and current vice president of Bank of China Ltd. said that banks in Asia have high capital ratios and will be able to avoid the degree of fundraising needed elsewhere to meet the new international standards.

Overnight U.S. Stock News

• Dec S&Ps this morning are down -2.60 points. The stock market yesterday gapped higher and traded in positive territory the entire day and finished moderately higher (Dow +0.78%, S&P 500 +1.11%, Nasdaq Composite +1.93%). The Nasdaq rose to a 2-1/2 month high and the S&P 500 and the Dow both rallied to 1-month highs. Bullish factors included (1) carry-over support from stronger-than-expected Chinese economic data and comments from China’s Premier Wen Jiabao who said that China’s economy is in "good shape," which eases concern that the global economy will lapse back into recession, (2) a rally in bank stocks after the Basel Committee on Banking Supervision reached a compromise that doubles capital requirements for banks while giving them until 2019 to meet the buffer requirements to withstand future crisis, (3) carry-over strength from a rally in European equity markets after the European Commission raised its economic growth forecast for the Eur o-Zone this year to 1.7% instead of a previously projected 0.9%, (4) gains in raw-materials and energy producers as the slumping dollar pushed most commodities higher, with crude oil climbing to a 1-month high, (5) strength in chipmakers after research firm Gartner Inc. predicted that semiconductor equipment spending will double in 2010, (6) the smaller-than-expected US budget deficit in Aug as the economic recovery generated more tax revenue for the Treasury (-$90.5 billion versus expectations of -$100.0 billion), and (7) the prediction from CLSA Ltd. that US stock prices are "screamingly cheap" and will rally at least 30% in the next 12 months as the cheapest valuations in decades lure investors.
• Bearish factors included (1) the statement from IMF Managing Director Strauss-Kahn that the global economy may not generate much employment growth in coming years, and (2) the prediction from well-known bank analyst Richard Bove that legislators who don’t understand the banking industry and a sense of "mass hysteria" led to the passage of financial-reform law that will hurt US consumers.
• Campbell Soup (CPB) fell 2.3% in European trading after Goldman Sachs cut the stock to "sell" from "neutral" as they downgraded the packaged foods industry to "cautious" from "neutral," citing a mixed outlook for US sales, margin risks and valuations.

Day Trader: Click here to ready the complete Morning Call.

Overnight Developments

• European stocks are little changed with the European DJ Stoxx 50 up +0.03% and Sep S&Ps are up +3.50 points. The market‘s attention is focused on speeches later today from Fed Chairman Bernanke and ECB President Trichet from the Fed’s annual symposium at Jackson Hole, Wyoming. Losses in European banks are undercutting European stock prices today with Banca Papolare di Milano down 5% after the Italian bank reported Q2 net income of 20.1 million euros, lower than analysts’ estimates of 41.6 million-euros, and Credit Suisse Group AG predicted that earnings estimates for 2010-12 will likely be revised down by 10 to 15% following the bank’s “very weak set of results.” Commerzbank AG slumped 2.6% after Handelsbatt said the bank plans to sell new shares as early as next month to pave the way for an exit by the German government. Limiting losses in European markets was the upward revision to Q2 UK GDP figures to +1.2% q/q and +1.7% y/y, higher than the initi al estimate of +1.1% q/q and +1.6% y/y, and shows the British economy expanding by its biggest amount since 2001.
• The Asian markets today closed mostly higher with Japan up +0.95%, Hong Kong -0.07%, China +0.30%, Taiwan +0.43%, Australia +0.32%, Singapore +0.44%, South Korea +0.06%, India -1.25%. Japanese stocks closed higher and the yen weakened against the dollar after Japanese Prime Minister Kan said the government is ready to take “bold” action in the currency market to stem the yen’s advance. Kan said he expects the BOJ to implement monetary policy “swiftly,” and that he plans on meeting with BOJ governor Shirakawa soon after he returns from the US. July Japan consumer prices excluding fresh food fell -1.1% y/y, their 17th consecutive monthly decline, while July Japan overall household spending rose +1.1% y/y, lower than expectations for a +1.5% y/y increase, and signals that Japan’s economic recovery may be faltering. On the bright side, Japan added 210,000 jobs in July from a month earlier, the most since Jan, while the unemployment dropped -0.1 to 5.2% , its first decline in 6 months as the job-to-applicant ratio rose to 0.53, meaning there are 53 job openings for every 100 job candidates, the most since March 2009.

Overnight U.S. Stock News

• Sep S&Ps this morning are up +3.50 points. The stock market yesterday fluctuated on both sides of unchanged until early afternoon when it ailed off into the close and finsihed just above its low (Dow -0.74%, S&P 500 -0.77%, Nasdaq Composite -1.07%). Bearish factors included (1) renewed concerns over Europe’s sovereign-debt crisis after El Economista reported that a Spanish court ruled Spain’s method of auditing sales tax was illegal and voided 5.1 billion euros ($6.48 billion) in value-added taxes collected in past years, which fuels concern about Spain’s fiscal stability, (2) concerns the US economic recovery is continuing to weaken after the Kansas City Fed said that manufacturing in its area slowed in Aug, with no companies reporting m/m increases, and (3) the prediction from Societe Generale that stocks are headed for their third bear market since 2000 as the global economy contracts and because “there is still too much hope” among investors t o suggest that stock prices will hit bottom any time soon.
• Bullish factors included (1) the larger-than-expected decline in weekly initial unemployment claims (-31,000 to 473,000 versus expectations of -10,000 to 490,000), (2) strength in raw materials and energy producers after a weak dollar prompted an advance in the prices of most commodities, and (3) the prediction from Kansas City Fed President Hoenig who said that he still expects the US economy to expand by about 3% this year, in line with his forecast from a month ago.
• J. Crew Group (JCG) fell 6.5% in pre-market trading after the clothing retailer cut its full-year earnings forecast to $2.35 a share at most, lower than a previous forecast of as much as $2.45.
• Omnivision Technologies (OVTI) dropped 4.1% in pre-market trading after the company reported Q1 sales of $193.1 million, below analysts’ extimates of $204.1 million.

Day Trader: Click here to read the complete Morning Call.

Overnight Developments

• European stocks are higher with the European DJ Stoxx 50 up +0.45% and Sep S&Ps up +1.00 point. Better-than-expected earnings results are leading European stocks higher as Credit Agricole, France’s largest bank by branches, jumped 3.8% after it reported Q2 net income of 279 million euros, beating analysts’ estimates of 318 million euros, while L’Oreal, the world’s biggest cosmetics maker, surged 6.6% after it reported first-half net income increased 21% from last year to 1.32 billion euros. Also boosting European stocks was the +0.1 point increase in the Sep German GfK consumer confidence survey to an 11-month high of 4.1 as stronger economic growth and declining unemployment in Germany boosted income expectations. Loan growth grew in Europe in July as the economic recovery gathered steam after the ECB reported a +0.9% y/y increase in loans to Euro-Zone households and companies in July, the fastest pace in 13 months, which suggests the economy may not lose as much momentum as some economists forecast.
• The Asian markets today closed mixed with Japan up +0.69%, Hong Kong -0.11%, China +0.25%, Taiwan -0.61%, Australia +0.83%, Singapore -0.02%, South Korea -0.27%, India +0.26%. Japanese exporters rallied and led Japanese stocks higher as the yen weakened against the dollar. The Asahi newspaper reported today that the Japanese government may ask the BOJ to ease monetary policy further as part of an economic stimulus package, while the Nikkei English news reported that Japanese Prime Minister Kan told business leaders he is in contact with the Finance Ministry and the central bank on the possibility of currency intervention. The yen has risen 15% this year and Suzuki Motor Corp. Chairman Suzuki said the strengthening currency poses an “extremely grave” situation and will have a “very big impact” on profit.

Overnight U.S. Stock News

• Sep S&Ps this morning are up +1.00 point. The stock market yesterday sold off early but recovered its losses the rest of the session and finished higher (Dow +0.20%, S&P 500 +0.33%, Nasdaq Composite +0.84%). The S&P 500, Dow and Nasdaq all fell to 1-1/2 month lows but erased their losses and finished higher. Bullish factors included (1) speculation that the recent plunge in equity prices overshot the potential damage from a slowdown in the economy, (2) strength in homebuilders, despite the plunge in Jul new home sales to a record low, after Toll Brothers rallied when it unexpectedly reported its first quarterly profit since 2007 as writedowns declined, and (3) a supportive interest rate picture that keeps stock valuations low and benefits consumers and businesses after the yield on the 10-year T-note fell to a 1-1/2 year low of 2.42%.
• Bearish factors included (1) carry-over weakness from a fall in European stocks after S&P cut Ireland’s long-term sovereign credit rating one step to AA-, its lowest since 1995, and raised its estimate for recapitalizing the Irish banking system to as much as 50 billion euros ($63 billion) from a previous estimate of 35 billion euros, which renews concern over the European sovereign-debt crisis, (2) the weaker-than-expected Jul durable goods orders (+0.3% versus expectations of +3.0%), and the unexpected decline in Jul durable goods orders ex transportation which had its biggest drop in 1-1/2 years (-3.8% versus expectations of +0.5%), (3) the unexpected plunge in Jul new home sales which fell to their lowest level since records began in 1963 (-12.4% to 276,000 versus expectations of unchanged at 330,000), and (4) the unexpected decline in the Jun FHFA house price index (-0.3% m/m versus expectations of +0.1% m/m).
• Schlumberger (SLB), the world’s biggest oilfied-services contractor, rose 1% in European trading after crude oil prices gained.

Day Trader: Click here to read the complete Morning Call.

Overnight Developments

• European stocks are higher with the European DJ Stoxx 50 up +0.90% and Sep S&Ps up +5.50 points. An increase in M&A activity is boosting European and US stocks today with Old Mutual Plc up over 4% after it said it might sell 70% of its Nedbank Group Ltd. banking unit to HSBC Holdings. Metals producers are higher as well with gains of 2% for Rio Tinto Group and BHP Billiton Ltd. amid speculation that a proposed mining tax in Australia might be scrapped or diluted after Australia’s general election failed to deliver a majority government for the first time in 70 years. A negative factor for European stock prices is the larger-than-expected -0.6 point decline in the Aug Euro-Zone PMI composite to 56.1, which signals the pace of the recovery might have peaked.
• The Asian markets today closed mostly lower with Japan down -0.68%, Hong Kong -0.44%, China -0.07%, Taiwan +0.61%, Australia -0.04%, Singapore -0.36%, South Korea -0.42%, India +0.04%. The yen climbed to near a 1-3/4 month high against the euro and pressured Japanese stocks along with last Friday’s comments from ECB Council member Weber who said that the ECB should continue with its emergency funding measures until at least year-end, which fueled speculation about the sustainability of Europe’s economic recovery and its demand for Asian exports. Japanese Prime Minister Kan and BOJ Governor Shirakawa spoke today about the economy and the strength of the yen and the yen rallied after Chief Cabinet Secretary Dengoku said that there was "absolutely no" discussion of intervention in the currency markets to slow the yen’s rise against the dollar. On the positive side, Japan’s 3 major shipping companies closed higher after the Nikkei English news reported that the companies are considering increasing their earnings outlook for 2010 as they were able to increase shipping rates on some routes.

Overnight U.S. Stock News

• Sep S&Ps this morning are up +5.50 points. The stock market last Friday traded in negative territory into early afternoon but then recovered into the close to finish mixed (Dow -0.56%, S&P 500 -0.37%, Nasdaq Composite +0.04%). The S&P 500 and the Dow posted 1-month lows. Bearish factors included (1) carry-over weakness from the slide in European stocks after the French government cut its GDP estimate for next year to 2.0% from 2.5% along with comments from ECB Council member Weber who said the ECB should keep its emergency funding measures in place through year-end along, which fueled speculation the global recovery may be faltering, (2) JPMorgan Chase’s cut in its US Q4 GDP forecast to 2.0% from 3.0%, (3) JPMorgan Chase’s cut in its GDP for China to +9.8% from 10% for 2010 and to 8.6% from 8.8% for 2011, citing a near-term "loss of momentum" in the US and global recoveries, and (4) the prediction from Strategic Research Partners that current combined profit estimates for 2011 S&P 500 companies’ of $96 a share is too optimistic and that profits will be only $87 a share as revenue growth trails forecasts in a slow recovery.
• Bullish factors included (1) comments from ECB Council member Honohan who said he sees a "stronger tone" to the European economy, which may help sustain the global economic recovery, (2) the prediction from HSBC Global Asset Management that global stocks stand a "decent chance" of a rally in Q4 as investors are "overly pessimistic" about the outlook for economic growth, and (3) the drop in the 10-year T-note yield to a 1-1/3 year low of 2.53%.
• Newmont Mining (NEM) rose 1% in European trading on speculation that BHP Billiton’s hostile takeover offer for Potash of Saskatchewan will increase other companies’ takeover attempts in the basic-resources industry.
• Cumberland Pharmaceuticals (CPIX) fell 2.4% in pre-marlet trading after the drugmaker said the FDA extended its review of its application for the use of the drug Acetadote in patients with acute liver failure.

Day Trader: Click here to read the complete Morning Call:

Overnight Developments

• Global stocks are mixed with the European Euro Stoxx 50 Index down -0.89% and June S&Ps up +6.40 points. European stocks retreated and were led lower by losses in energy producers and oil service companies as the US opens up criminal and civil investigations into BP Plc’s Gulf of Mexico oil spill. Prudential Plc, the UK’s biggest insurer, fell nearly 3% after its $35.5 billion takeover attempt of American International Group’s Asian unit collapsed, while Aegis Group Plc slipped 3.1% after the world’s largest independent buyer of advertising space was downgraded to “sell” from “hold” at Deutsche Bank AG. Also undercutting European stock prices was the larger-than-expected +0.9% m/m increase in April Euro-Zone PPI, the biggest monthly gain in 1-3/4 years, as a weaker euro made imports more expensive and energy costs rose.
• The Asian markets today closed mostly lower with Japan down -1.12%, Hong Kong -0.13%, China +0.49%, Taiwan -1.28%, Australia -0.73%, Singapore +0.45%, India +1.02%. Most Asian stock markets fell and the yen droppped to a 2-week low against the dollar after Japanese Prime Minister Hatoyama said he will resign, less than 2 months before elections, which raises uncertainty after the future direction of the Japanese economy. The next prime minister will inherit an economy that’s dependent on exports and remains within the throes of deflation that the BOJ has failed to stop. With consumer spending slowing in Q1, the reliance on trade leaves Japan vulnerable to any slump in overseas demand stemming from Europe’s debt crisis. Australia’s Q1 GDP rose +0.5% q/q, its fifth straight quarterly increase, as government stimulus spending helped counter consumer demand that weakened. Policy makers expect Australia’s economic growth to almost double in he next 2 years, as China’s de mand for resources spurs a mining investment boom.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +6.40 points. The US stock market yesterday shook off early weakness and rallied into early afternoon, but then plummeted into the close and finished on its low (Dow Jones -1.11%, S&P 500 -1.72%, Nasdaq Composite -1.54%). Bearish factors included (1) concerns that the global economy may begin to slow after China’s May purchasing managers index slowed more than forecast (-1.8 to 53.9 versus expectations of -1.2 to 54.5) (2) weakness in bank stocks after the ECB said in its bi-annual Financial Stability Report that Euro-Zone banks may see another 90 billion euros in net writedowns this year on loans and securities and will need to make provisions for losses of about 105 billion euros next year, (3) the plunge in the euro to a 4-year low against the dollar after the April Euro-Zone unemployment rate unexpectedly rose +0.1 to a 12-year high of 10.1%, and (4) geopolitical concerns after AFP reported that Lebanon fired on Isr aeli warplanes that were flying over its airspace.
• Bullish factors included (1) optimism the US economy may be able to overcome the negative effects of the European debt crisis after the May ISM manufacturing index fell less than expected (-0.7 to 59.7 versus expectations of -1.0 to 59.4), (2) the unexpected increase in April construction spending which had its largest monthly increase since June 1998 (+2.7% m/m versus expectations of unchanged), and (3) the prediction from the chief equity strategist at JPMorgan Chase who said that the 5-week decline in the S&P 500 Stock Index is consistent with a temporary pullback within a bull market.
• JPMorgan Chase (JPM) climbed 1.6% in pre-market trading after UBS upgraded the stock to “buy” from “neutral.”
• Joy Global (JOYG) rose 2.7% in pre-market trading after Goldman Sachs raised its recommendation on the stock to “buy” from “neutral.”

Click here to get the full version and your own Free e-mail of Morning Call