The PremiereTrade Market Wrap for 10/26/07

Consumer confidence fell to the level of 80.9 points in October, from the 83.4 points registered in September. The market consensus was a smaller decline to the level of 82.0 points. The decline in confidence was mostly due to the decreasing home prices.

Merrill Lynch and Wachovia are contemplating a merger. The merger approach, which came before Merrill's disclosure this week of a $7.9 billion third-quarter write-down for collateralized debt obligation investments, was viewed as "a major breach of corporate protocol. There is some speculation that Merrill's CEO could lose his job over the proposal since he didn't check with board members before the meeting.

Bank of America Corp. ( BAC) is leaving the wholesale mortgage business. Bank of America officials said that the company will stop offering home mortgages through brokers, eliminating 700 jobs.

Crude oil prices spiked above $92 a barrel on tensions in the Middle East and renewed concerns about supply. The United States announced new sanctions against Iran this week and a confrontation between the world's largest oil consumer and its fourth largest oil producer could upend markets.

In Forex News Today

The dollar fell to another new low against the euro in midmorning trading on speculation that U.S. interest rates might be cut again when the FOMC meets next week. The euro was lifted higher by a wave of negative economic reports this week from the United States, including a report that showed U.S. orders for durable goods dropped 1.7 percent in September.

The Aussie was helped by expectations that the Reserve Bank of Australia will raise rates next month. In contrast, weak U.S. durables goods data reinforced bets for a growth-boosting Fed cut on Oct. 31 from 4.75 percent. The rise in high-yielding commodity currencies, coupled with gains in Asian equity markets, helped boost risk appetite and encourage investors to put on carry trade bets funded by cheap borrowing in the Japanese yen. The latest Japanese inflation data showed ongoing deflation with the core annual rate remaining negative in September for the eighth consecutive month.

Higher-yielding currencies advanced against the yen as stock markets in Asia gained, boosting risk appetite. Analysts said this encouraged investors back into carry trades, in which the low-yielding yen is sold to fund the purchase of riskier, higher-yielding assets elsewhere.

Scheduled Economic Reports (Next Week)

Consumer Sentiment, Gross Domestic Product, Chicago PMI, Construction Spending, ISM Manufacturing Index, Vehicle Sales, Non-Farm Payrolls, and the Federal Open Market Committee meeting

In Earnings News

Countrywide Financial Corp. (CFC) posted a third-quarter loss of $1.2 billion, or $2.85 per share. Analysts forecast a loss of $1.28 per share. Countrywide also said they expect to be profitable in the fourth quarter.

Microsoft (MSFT) reported a profit up 23 percent to $4.29 billion, or 45 cents per share, as brisk sales of the new "Halo 3" video game, Windows and Office helped it breeze past Wall Street's expectations. Analysts expected a profit of 39 cents per share.

Waste Management Inc. (WMT) reported its third-quarter earnings fell 7 percent, missing Wall Street's expectations, on the impact of a labor stoppage and rising crude oil prices. Waste Management earned $278 million, or share, in the year-ago quarter.

Fortune Brands Inc. (FO), which makes consumer products ranging from Jim Beam bourbon to Moen faucets, said its third-quarter profit rose 38 percent with wine and spirits sales helping to offset a decline in sales of home products as the housing market slowed.

Scheduled Earnings Reports (Next Week)

Hertz, Kellogg, Loews, Winn Dixie, AirTran, DreamWorks Animation, Qwest Communications, Procter & Gamble, Sirius Satellite Radio, Brinks, MasterCard, Blockbuster, Credit Suisse, Eastman Kodak, Electronic Arts, World Wrestling Entertainment

Stocks in the News

Emulex Corp?s (ELX) fiscal first-quarter net income fell 32% to $10.2 million, or 12 cents a share, from a year earlier.

Wendy?s International (WEN) third-quarter profit was cut by better than half, weighed down by charges and the spin-off of Tim Horton's.

And Allegheny Energy (AYE) reported its third-quarter net income rose to $115 million, or 67 cents a share, from $110.2 million, or 65 cents.

The PremiereTrade Market Wrap for 10/24/07

Demand for previously owned homes fell more than expected in September amid continued problems in the mortgage market, with single-family sales hitting their lowest sales pace in nearly 10 years. Overall home resales declined to a 5.04 million annual rate. Inventories of homes rose 0.4%, which represents a 10.5-month supply at the current sales pace.

Japan's trade surplus climbed a higher-than-expected 62.7% in September from a year earlier, as continuing strong export growth to Asia and Europe offset weaker U.S. demand. Exports rose 6.5% in September from a year earlier.

Microsoft Corp. (MSFT) has withdrawn the two remaining appeals related to a European Union antitrust order that it now says it will stop fighting. The company has formally dropped an appeal against the 280.5 million euros ($364 million) in fines levied by the EU in July 2006.

Billionaire Warren Buffett believes investors should be ``cautious'' about China's stocks after the country's benchmark index more than doubled this year. Buffett this month said Berkshire had sold its stake in PetroChina Co., which has actually risen 76 percent this year.

Merrill Lynch & Co. (MER) reported its first quarterly loss in six years after a larger-than-forecast $7.9 billion of write downs for subprime mortgages and asset- backed bonds. Merrill?s third-quarter loss was $2.24 billion, or $2.82 a share.

In Forex News Today

The dollar was up against the euro and lower against the yen after Merrill Lynch's huge third-quarter losses were not as bad as investors had feared. Analysts said the dollar was helped by rising risk aversion, which encouraged investors to cut local market risk positions and switch back to dollars. Risk aversion also prompted the unwinding of yen-funded carry trades, in which investors borrow in a low-yielding currency to buy higher yielding assets elsewhere.

Analysts believe that in order to keep the bullish environment for high-yielding and emerging market currencies intact, US inflation rates and the asset backed security market needed to be watched carefully. They say the dollar is increasingly being used as a funding currency. However, if US inflation rises too quickly too early, potentially freezing further US interest rate cuts, the US will likely fall into recession, putting the entire global growth outlook at risk.

Scheduled Economic Reports (Wednesday)

Initial Jobless Claims (Week of October 20th), Durable Goods Orders (Sep), New Home Sales (Sep)

In Earnings News

Boeing (BA) reported that its third-quarter profit climbed 61 percent, thanks to higher commercial airplane deliveries and growth in its defense business. For the quarter ending Sept. 30, Boeing's profit rose to $1.1 billion, or $1.44 per share, up from $694 million, or 89 cents, a year ago.

General Dynamics Corp. (GD), the largest maker of armored vehicles for the U.S. military, said third-quarter profit gained 24 percent as it sold more blast-resistant trucks and armored transports for the war in Iraq. Profit from continuing operations climbed to $544 million or $1.34 a share, from $440 million, or $1.08, a year earlier

Taser International Inc. (TASR) reported its third-quarter profit more than doubled as sales surged and the company paid lower taxes. The company earned $6.2 million, or 9 cents per share. Analysts expected a profit of 5 cents per share on $23.7 million in revenue.

Scheduled Earnings Reports (Thursday)

Microsoft, DaimlerChrysler, Motorola, XM Satellite Radio, Frontier Airlines, Wendy?s International, Bristol Myers Squibb, Dow Chemical, Ericsson, Honda, Raytheon, US Airways

Stocks in the News

Amazon.com (AMZN) third-quarter earnings topped expectations, quadrupling from a year earlier to $80 million, or 19 cents a share.

Aflac (AFL) reported third-quarter profit rose to $420 million, or 85 cents a share, from $367 million, or 73 cents, in the year-ago period.

Children?s Place Retail Stores (PLCE) said that it has engaged Lehman Brothers as its financial adviser while it undertakes a review of its strategic options.

And Juniper Networks (JNPR) reported fiscal third-quarter profit rose 46% from the year-earlier period, amid strong sales of its networking equipment.

The PremiereTrade Market Wrap for 10/22/07

Nationwide, gasoline prices rose about 5 cents over the past two week. According to the Lundberg Survey, the average price of regular unleaded gasoline was $2.80 on Friday. The national average for mid-grade was $2.92 a gallon and premium gasoline was $3.03.

Microsoft Corp. (MSFT) agreed to observe key parts of a 2004 antitrust ruling upheld by an appeals court last month, cutting royalties for rivals and handing information over to open source developers.

Investment bank Bear Stearns Cos. (BSC) and Chinese bank Citic Securities Co. said they will form a strategic partnership that includes $1 billion in cross-investments and the creation of a new Asian joint venture.

Toyota (TM) said it sold 2.34 million vehicles globally in the July-September quarter, fewer than General Motors' (GM) tally, as its U.S. rival regained the lead in the race to be the world's top automaker.

In Forex News Today

The U.S. dollar fell to a six-week low on Monday vs. the Japanese yen as investors continued to shun equities and as a meeting of leading industrialized nations failed to rally support for the dollar.

Over the weekend, the Group of Seven leading industrialized nations called for China to accelerate the pace of the yuan's appreciation, but didn't make mention of recent dollar weakness. The G7 statement does not mention the weak dollar or the strong euro, dashing the hopes held by some in Europe that the group would say something to stop the slide in the dollar against the euro. Risk aversion was also a theme after Friday's loss on U.S. stock markets carried over to Asia and Europe on Monday, with declines in stock markets in Tokyo, Hong Kong, London and Frankfurt.

Interest rate expectations added to the dollar's problems. Lower rates bite into the returns on dollar-denominated assets and are therefore usually negative for a currency. Fed funds futures were pricing in a chance of about 90% for a quarter-point cut at the Fed's next policy meeting Oct. 30-31. Today, the implied chance is about 35%.

Scheduled Economic Reports (Tuesday)

Retail Chain Index (week of October 20th)

In Earnings News

Merck & Co. (MRK) posted a 62 percent increase in its third-quarter profit Monday, as the drugmaker's revenues increased by double digits, while lower administration and overhead costs offset more spending on research and development.

Hasbro Inc. (HAS), the nation's second biggest toymaker, said its third-quarter profit climbed 62 percent on higher sales led by its Transformers and Marvel brands and a favorable tax adjustment.

And Halliburton Co. (HAL) continues to benefit from placing greater emphasis on its operations in the Eastern Hemisphere, where expanding business helped the company post a 19 percent rise in third-quarter earnings.

Scheduled Earnings Reports (Tuesday)

Lockheed Martin, BP Plc, Amazon.com, Juniper Networks, New York Tines, 1-800-Flowers, BankUnited, JetBlue Airways, Level 3 Communications, Raymond James Financial, UAL Corp

Stocks in the News

Vonage Holdings (VG) disclosed that it is being sued by AT&T for alleged patent infringement.

Wal-Mart (WMT) said it was pulling animal toy sets from its shelves after discovering that they contained excessive levels of lead.

MoneyGram International (MGI) traded lower after Fitch Ratings downgraded its long-term issuer default rating and senior unsecured revolving-credit line.