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Overnight Global News

Overnight U.S. Stock News

• September S&Ps this morning are trading +1.90 on lower oil prices this morning. The US stock market yesterday settled mixed (Dow +0.11%, S&P 500 +0.25%, Nasdaq Composite -0.36%).
• Bullish factors for stock prices yesterday included (1) the larger-than-expected drop in weekly unemployment claims, (2) the rally in energy shares as crude oil rallied +$5.62 a barrel yesterday for the third straight day of gains, and (3) the rally in coal producers as Peabody Energy, the largest US coal producer, rallied 5.9% and Massey Energy surged 6.8% after UBS raised their recommendation on the largest producer of coal in the Appalachian region to "buy" from "neutral," saying Massey's 29% price drop since June was overdone.
• Bearish factors for stock prices yesterday included (1) speculation that writedowns at financial firms will increase after Citigroup predicted Goldman Sachs, Morgan Stanley and Lehman Brothers will write down a combined $6.4 billion in Q3, (2) comments from former Fed Governor Meyer that the US economy is close to a recession with growth probably not exceeding 1% for the rest of this year, (3) the larger-than-expected decrease in July leading indicators for the biggest monthly drop in a year (July -0.7%), (4) the rise in the cost of protecting bank debt from default to a 5-week high after the Financial Times reported that Lehman Brothers failed to sell a 50% stake to Asian lenders who walked away from the deal after balking at Lehman's asking price, and (5) Goldman Sachs' prediction that the US, Japan, UK and the Euro-Zone are "either in recession or face significant recession risks in the months ahead."
• UAL (UAUA), the owner of United Airlines, is up +3.3% this morning on lower oil prices.
• GAP Inc (GPS) rallied 3.4% in after-hours trading yesterday after reporting better-than-expected Q2 earnings of 32 cents.
• Foot Locker (FL) is up +8.3% are the company provided 2008 earnings guidance of 85 cents a share, well above the analyst consensus of 71 cents

Today's U.S. Market Focus

• September 10-year T-notes this morning are trading -2.5 ticks on slightly higher S&Ps and European stocks. September T-note prices yesterday moved lower and closed -11 ticks. Bearish factors for T-note prices yesterday included (1) a larger-than-expected decline in weekly unemployment claims (-13,000 to 432,000 versus expectations of -10,000 to 440,000), and (2) long liquidation pressures after the month-long 4+ point rally in T-note prices. Bullish factors for T-note prices yesterday include (1) comments from former Fed Governor Meyer that "things have gotten worse and worse" in credit markets and the US economy is "teetering on the edge of recession," and (2) the larger-than-expected decline in July leading indicators for the biggest monthly drop in a year (-0.7% versus expectations of -0.2%).
• The dollar is trading moderately higher this morning with the dollar/yen up +0.85 yen and the euro/dollar down -0.42 cents. The dollar is seeing some short-covering after yesterday's sharp decline. The dollar index yesterday sold-off sharply and closed at a 1-week low. Bearish factors for the dollar yesterday included (1) concerns that writedowns at financial institutions will increase after Citigroup said Goldman Sachs, Morgan Stanley and Lehman Brothers will write down a combined $6.4 billion during Q3, (2) the largest monthly drop in US leading indicators (July -0.7% m/m) since Aug 2007, and (3) the drop in the dollar/yen to a 2-week low as the carry-trade continues to be unwound due to risk aversion on concern of continued credit-market losses. A bullish factors for the dollar yesterday was the larger-than-expected drop in US weekly unemployment claims.

• October crude oil prices this morning are trading -79 cents a barrel and October gasoline is trading -2.48 cents a gallon. Bearish factors this morning include the higher dollar, yesterday's reopening of BP's Baku-Tbilisi-Ceyhan pipeline, and the estimate by PetroLogistics that OPEC supply in August rose by 400,000 barrels per day (1.2%). October crude oil prices yesterday rallied sharply and closed +$5.62 a barrel and October gasoline closed +5.74 cents a gallon. October crude oil and gasoline both posted 2-1/2 week highs yesterday. Bullish factors for crude oil prices yesterday included (1) US-Russia tensions as the US-Poland signed a missile treaty and as Russia drags its feet on leaving Georgia, and (2) the drop in the dollar to a 1-week low. Bearish factors for crude oil prices yesterday included (1) comments from former Fed Governor Meyer that the US economy is close to a recession, increasing concern of reduced energy demand, and (2) the action by BP to shortly repoen its 1.0 million bbl a day Baku-Tbilisi-Ceyhan pipeline from Azerbaijan to Turkey's Mediterranean coast after it was shut down on Aug 5 due to a fire

Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): HNZ-HJ Heinz (BEST earnings consensus $0.66 per share), MLNM-Millenium Pharmaceuticals (0.05), FL-Foot Locker (0.01), CGI-Commerce Group (0.66), ANN-AnnTaylor Stores (0.48), SKIL-Skillsoft Plc (0.09)

Global Financial Calendar