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Tuesday, July 14, 2009

Morning Market Report

There's going to be a lot to look at today. First, with a very healthy day yesterday, market observers should be watching closely to see if the market can maintain that momentum. All major indeces were up yesterday at least 2% domestically. As I analyzed yesterday, the market movement seems to have occurred directly as a result of positive news by famed banking analyst Meredith Whitney. Whitney also predicted unemployment rates as high as 13%, but her positive banking outlook drove the market in its entirety.

The markets all look to open up marginally today. Johnson and Johnson announced earnings that beat estimates and reaffirmed their outlook for the year. Meanwhile, shares of CIT Group, the commercial lender, are also trading higher on the RUMOR that the government will back stop some of their debt. CIT has nearly a billion in bonds coming due in the next year that the financial services firm is having difficulty raising capital to pay.

After close, Intel, Taco Bell, KFC, Yum Brands, Altera, and Pizza Hut will all release their earnings as earning season starts in earnest. Finally, at 10 AM ET, business inventory numbers will be released.

Markets around the world were almost all up. In Asia, most had tremendous days. The Hang Seng in China was up 3.66%, the NIKKEI in Japan was up 2.34%, while the Straits Time Index in Singapore was up 1.96%. In Europe, the days weren't quite as good but still very positive. The FTSE in London was up .55%, the DAX in Germany was up .69%, and the Spanish index was up .63%.

Crude oil looks to open up above $60 per barrel, currently trading at $60.53. Meanwhile, currencies are fairly quiet at the open. The Dollar is trading just slightly higher against the Euro up .13%, down .38% against the British Pound, while it's up .12% against the Yen.

Meanwhile, Treasury Bonds are giving some back. Rates all look up at the open. The Ten Year is currently at 3.42%. Meanwhile, the spread between the 2 year and 10 year is now back at 2.5% since tightening to 2.4%. The spread measures the likelihood of future inflation. The U.S. Treasuries are following the lead of both the British and German debt which were both up today. Though, the German Bund were up only marginally, one and two basis points, while the British debt added between four and five basis points.

My Analysis:

There's a lot to watch today. CIT is a company to follow. The way the government treats their debt should be pre cursor for future struggling companies. There will also be lots of earnings to report. I'm also looking closely to see if the market forms a positive pattern. Though, any rally will be short lived if it is at the expense of higher treasury bond rates. The dynamics of the market appear very unclear and there will be much more to report after it closes.

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