Trader Talk

Stronger Dollar and a Busy Week Ahead

The dollar is much stronger, stocks are weaker, as the Japanese have been selling yen overnight.

The bigger story is Italian 10-year debt yield, trading up over 2.6 percent, with a yield of 6.18 percent. Berlusconi insisted he would be staying on to guide the reform programs for the next 18 months.

Last day of the month: S&P 500 up 13.6 percent, if we close here still the best month for the S&P since 1974.


1) Very busy week:

a) Mario Draghi takes over the ECB this week and holds his first meetings later in the week, along with a press conference on Thursday. Markets are looking for direction on interest rate cut, and whether the ECB will continue to buy European sovereign bonds.

b) Two-day Fed meeting, with Bernanke holding a press conference on Wednesday. The Fed will also release it's Summary of Economic Projections.

c) October nonfarm payrolls on Friday (gain of about 90,000 jobs expected)

d) About 20 percent of the S&P 500 report earnings.

2) MF Global (MF) Global suspended at the NYSE for News Pending. The New York Federal Reserve had earlier suspended MF from doing business with them. MF became a primary dealer in Treasuries earlier this year. There are reports that Interactive Brokers will make a bid of about $1 billion for the U.S. futures brokerage. Not clear if they can avert bankruptcy.

3) We don't need any more money: Barclay's (BCS) became the latest European bank to report better than expected earnings, but more importantly said they did not need to raise additional capital to make higher capital targets.

4) Humana4) Humana tops easily estimates ($2.67 vs. $2.02 consensus) as the health insurer benefited from a 10 percent rise in Medicare membership and a lower medical cost ratio. Guidance ahead is mixed: the company’s 2011 outlook is raised well above Street expectations, while 2012 earnings guidance of $7.40-$7.60 remains quite conservative to the Street’s $7.79 consensus.

5) Cooper Tire5) Cooper Tire misses estimates ($0.27 vs. $0.29 consensus) as soaring raw material costs put severe pressure on margins. That dampened the tire maker’s strong sales growth and higher volumes, while its price hikes weren’t enough to cover its rising costs. CEO Roy Armes expects input costs to remain "volatile," but sees "signs of stabilizing." Costs are expected to fall less than 5 percent sequentially in its current quarter.

6) The Semiconductor Industry Association reported a 1.7 percent year-over-year decline in global semiconductor sales last month. Still, sales rose 2.7 percent sequentially from August. The organization cautions of "limited visibility" for the industry the rest of the year but also offers some optimism saying that "recent positive indicators and developments in the U.S. and Europe are encouraging."

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