Stocks are up as the dollar is rallying modestly; oil prices are down. Warren Buffett told CNBC that he has no bets against the dollar and stocks are more attractive now than a year ago.
This has been a week of reversals: remember that just a short while ago, the dollar rally was creating a decline in commodity stocks, and a modest rally in small caps and techs.
This week, that all changed: the S&P is down 1.5 percent, but the small-cap Russell 2000 is down twice as much (3.7 percent), the tech-heavy Nasdaq is down 2.9 percent, while the Amex Oil Index (a basket of large-cap oil stocks) is up 5.4 percent.
The Street continues to believe that some kind of federal intervention in Fannie Mae and Freddie Mac is inevitable, and continues to believe that the market will rally when this announcement is made.
1) Lehman Bros. trading up 9 percent after state-run Korea Development Bank said Lehman was a possible acquisition candidate for the bank. If so, this would make Ladenburg Thalmann's Richard Bove call yesterday particularly prescient; he said the company could be the target of a (hostile) takeover.
2) Three retail companies reported earnings and guidance that was surprising for its lack of surprises:
a) Aeropostale came in inline with expectations, as was guidance for the third quarter.
b) Gap was roughly in line, but more importantly they reaffirmed their full year guidance. Same store sales were down 10 percent from a year ago.
c) Foot Locker up 15 percent pre-open, as earnings beat and they raised the lower end of their guidance by five cents. Up 8 percent pre-open.
3) The CFTC gave NYSE Euronext the right to open a new futures exchange, NYSE Liffe, on September 8. NYSE futures trading. Some gold and futures contracts will begin trading at that time; the NYSE purchased the CBOT's precious metals business earlier this year from the CME.
This is something the NYSE has sought for some time, and it comes as competition is expanding. Electronic Communication Network BATS recently filed to become an Exchange and compete directly against the NYSE and the Nasdaq.
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