The PremiereTrade Market Wrap for 11/08/07

JDfn™ - The PremiereTrade Market Wrap

Federal Reserve Chairman Ben Bernanke, warning that higher inflation and weaker economic growth could be in store, told Congress that the central bank is keeping a close eye on the subprime mortgage crisis and recent spike in oil prices. But Bernanke also downplayed fears of a recession, saying that the Fed expected the economy to grow next year, albeit at a more moderate pace than in recent quarters.
The Labor Department reported that 317,000 applicants filed for jobless claims last week, down by 13,000 from the previous week. It was the lowest level since Oct. 9th. The bigger-than-expected improvement came even though benefit applications were boosted by almost 3,000 in California as a result of the wildfires that struck that state.
The European Central Bank left key interest rate unchanged at 4 percent, even as member nations are beset by rising inflation, a stronger euro and calls to follow interest rate cuts in the United States. The ECB's move followed the Bank of England's announcement that it was keeping its benchmark rate steady at 5.75 percent -- decisions that come at a time of mixed signals from both sides of the Atlantic.
Warmer weather, combined with ongoing housing market problems and higher gas prices, eroded retail sales for a second consecutive month in October - a trend that raises questions about the strength of this year's holiday shopping season. Overall, October same-store sales rose 1.6 percent, which was weaker than its initial forecast of a 2 percent rise.
Vonage Holdings Corp. (VG) said it was in talks with AT&T to settle a patent suit, the last of several filed against it by traditional phone companies. Vonage said it and AT&T are discussing settling the suit for $39 million.
Apple (AAPL) continues to make news and generate interest around the world. The company?s popular iPhone will go on sale in Germany and Britain on Friday, making its European debut four months after its launch in the United States.
In Forex News Today
The U.S. dollar was lower early Thursday, after Federal Reserve Chairman Ben Bernanke's testimony to Congress highlighted risks to both economic growth and price stability. The dollar has remained under severe pressure against most major currencies on expectations that the stumbling U.S. housing market and related credit-market problems will hurt economic growth, leading the Fed to cut interest rates further. A currency loses value against rivals when interest rates fall.
The U.S. dollar touched the weakest since 1981 versus the pound and the cheapest since 1995 against the Swiss franc as slowing growth dimmed the allure of U.S. assets. The dollar's decline started after the European Central Bank and the Bank of England kept their borrowing costs unchanged today.
The dollar also fell this week to an all-time low against the synthetic euro, a theoretical value for where the currency would have traded before its inception. The prior record was $1.4557 set in 1992. French President Nicolas Sarkozy told the U.S. Congress that the Bush administration must stem the dollar's plunge or risk a trade war. The rising competitiveness of U.S. exports helped shrink the nation's trade deficit to $57.6 billion in August, the smallest since January.
The yield advantage of two-year German bunds over comparable-maturity Treasuries widened, the most since April 2004. A widening spread boosts the appeal of European debt relative to that of the U.S. Europe's single currency will trade at $1.44 versus the dollar by year-end.
Scheduled Economic Reports (Friday)
Trade Gap (Sep), Import Prices (Oct), Consumer Sentiment (Nov)
In Earnings News
Ford Motor (F) trimmed losses in the third quarter to post near-break even operating results, despite a sharp drop in U.S. sales in the period. Ford lost only 24 million, or 1 cent a share.
Toll Brothers Inc. (TOL) said homebuilding revenue fell 36 percent in the fourth quarter as the excess supply of homes for sale continues to hamper recovery in the housing market.
Cablevision Systems Corp. (CVC) reported a wider net loss for the third quarter, but operating income rose 59 percent as more cable TV customers signed up for high-speed Internet and digital phone services.
Scheduled Earnings Reports (Friday)
Six Flags, Lions Gate Entertainment, Dominion Homes, IMAX, Liberty Media, Shoe Pavilion
Stocks in the News
American Express (AXP) has agreed to drop Visa Inc. from a lawsuit alleging Visa and MasterCard blocked the company from the U.S. bank-issued card business.
Rio Tinto Plc (RTP) was approached about a takeover deal by Australia-based miner BHP Billiton, but rejected the bid.
Cisco Systems (CSCO) reported a 37% jump in first-quarter profit. For the quarter ended Oct. 27th, the company posted net income of $2.2 billion or 35 cents a share.