Before the Open (Oct 9)

Good morning. Happy Wednesday.
The Asian/Pacific markets closed mixed. Japan, India and China did well. Hong Kong, Malaysia and New Zealand did poorly. Europe is currently mostly down. Italy and Spain are doing great. Belgium, Amsterdam, Switzerland and Greece are performing the worst. Futures here in the States point towards a small gap up open for the cash market.

The dollar is up. Oil and copper are down. Gold and silver are down.
Rumor is Obama will officially nominate Janet Yellen as Ben Bernanke’s replacement. Yellen is known to be dovish, so you can expect more QE and low rates for a long time. The market popped on the news – likely due to 1) the uncertainty being lifted and 2) the expectation the punch bowl won’t be removed soon – in fact it’ll probably be removed too late, but Wall St. doesn’t care about that right now.
The market got clobbered yesterday. The Nas dropped 2%; the small caps followed behind with a 1.7% loss; the Dow, which has lagged ever since the re-balancing, held up the best with a 1% drop. Depending on which index you followed, it was either the worst day in two months or as long as five months.
Many indicators had weakened the last couple weeks, and now they’re worse off. From a technical standpoint it’s better for them to completely washout and print extreme levels than to reverse now.
I’m still of the belief an agreement in Washington will result in a knee-jerk rally that will get sold into. The market market needs to feel more pain. There needs to be more losses. Perhaps the August lows need to be taken out. Then the market can right itself and rally to a new high into the end of the year.
This is what I’ve been thinking…that an agreement won’t suddenly solve the market’s issues. The market needed to come down anyways, and the circus in DC is just an excuse.
Stock headlines from barchart.com…
Halliburton (HAL -0.73%) was upgraded to “Outperform” from “Market Perform” at Raymond James.
Piper Jaffray downgraded Ralph Lauren (RL -1.98%) to “Neutral” from “Overweight” on a pullback in apparel spending.
Family Dollar Stores (FDO -1.67%) reported Q4 EPS of 86 cents, better than consensus of 84 cents.
Fastenal (FAST -0.93%) reported Q3 EPS of 40 cents, below consensus of 41 cents.
Costco Wholesale (COST -1.06%) reported Q4 EPS of $1.40, below consensus of $1.46.
CNBC reports that President Obama will announce Janet Yellen’s nomination for Fed Chairman on Wednesday at 3 pm EST.
The Nikkei reported that Panasonic (PCRFY +0.86%) said it will stop production of plasma television panels near the end of fiscal year 2013 and completely withdraw from the business.
Berkshire Hathaway reported a 2.8% passive stake in Goldman Sachs (GS -0.78%) .
Knight Transportation (KNX -0.84%) fell almost 6% in after-hours trading after it lowered its Q3 EPS view to 18 cents-20 cents from 22 cents-24 cents and lowered its Q4 EPS view to 20 cents-23 cents from 22 cents-25 cents.
Husky Energy (HUSKF -0.99%) was upgraded to “Neutral” from “Sell” at Goldman Sachs.
Yum! Brands (YUM +0.34%) slid over 7% in after-hours trading afyer it reported Q3 EPS of 85 cents, weaker than consensus of 93 cents, and said Q3 same-store sales declined 11% in China.
Alcoa (AA -0.38%) rose over 3% in after-hours trading after it reported Q3 adjusted EPS of 11 cents, well ahead of consensus of 6 cents, and reaffirms its 2013 global aluminum demand growth forecast of 7%.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
7:00 MBA Mortgage Applications
10:00 Wholesale Trade
10:30 EIA Petroleum Status
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM FOMC minutes
Notable earnings before today’s open: COST, FAST, FDO, PGR, RPM
Notable earnings after today’s close: RT, VOXX
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers