October 28, 2008: Morning Call

October 28, 2008: Morning Call

Fair Value: SP500 – 848.41; NDX: 1173.80; DOW – 8161


Technical Levels:

SPX: 848-850 support/ 998, 1098-1100 resistance

NASDAQ: 1423 support /1640-1650, 1890 resistance:

Events:

Pre-market EPS: ASH (.09/2.24B); BP (2.38/107.6B); BYD (.19/443.9M); CHKP(.43/200.0M); ETR (2.49/4.31B); MAS (.18/2.58B); MHP (1.23/2.15B); MLM(1.64/546.4M); OXY (2.73/6.66B); PCX (-.17/471.4M); SII (.98/2.74B); RCL(1.66/2.05B); SAP (.60/3.98B); X (7.21/7.19B); WHR (1.69/4.96B); VLO(1.50/37.56B)
08:00: Former Fed Chairman Volcker speaks on the economy
09:00: S&P/Case Shiller Home Price Index (August): -16.6% YoY
10:00: Consumer Confidence (October): 52.0
10:00: Richmond Fed Manufacturing Index (October): -23
10:00: Treasury’s Paulson speaks on financial markets
13:30: BOE’s Besley speaks on monetary policy
14:00: X earnings call
17:00: ABC Consumer Confidence
Post-market EPS: BXP (1.19/351.3M); CTX (-1.11/1.3B); CEPH (1.22/494.0M); FISV(.83/1.07B); FLS (1.76/1.11B); LNC (1.16/2.65B); MCK (1.04/26.27B);MTW(.80/1.25B)


Foreign Market Summary/Key Macro News/Commentary:

SP futures are trading 24 points above fair value while the NASDAQ futures are trading 37 points above fair value at 7:30am, as global indexes rebound from yesterday’s sharp declines. The FOMC begins a regularly scheduled 2-day meeting today, with the decision on interest rates due at 14:15 ET tomorrow. Oct Consumer Confidence will be released at 10 ET. Former Fed Chairman Volcker speaks at 8 ET. Asian markets closed sharply higher with the Nikkei gaining 6.4% and Hong Kong surging 14.3%. Hong Kong’s Financial Secretary said the government would act to support the stock market if needed. The yen has moved lower on speculation that the Japanese central bank will start selling the currency. European markets are up 3.5% near the session highs on strength in commodity and energy related shares following BP’s earnings. Volkswagen (VOW.GR) rose strongly for a second day up over 100% at one point, briefly surpassing Exxon (XOM) as the worlds largest company by value. Shares pared initial gains before moving higher and remain close to the highs for the session. 83 members of the FTSE 100 are higher. BP (BP.LN), Publicis Groupe (PUB.FP) and TeliaSonera (TLSN.SS) all gained after Q3 results. TomTom (TOM2.NA) has given back initial gains after lowering guidance with Q3 results.

Impact Research Calls/Market Moving News:

CSCO (16.09): Cisco Systems (CSCO) added to Conviction Buy List.

SPRWA (60.75); ESLR (2.39); ENER (28.38); UBS downgrades solar shares: SPRWA, ESLR, ENER, SOLR: Firm checks indicate lower solar than previously anticipated for '08/'09. Firm also lowers its '09 solar module price estimate. SPRWA downgraded to sell from neutral. ESLR, ENER, SOLR downgraded to neutral from buy. Estimates are lowered for FSLR, WCH.GR, SWV.GR, STP, LDK, and YGE. Most preferred picks are FSLR, WCH.GR, LDK.

EBAY (14.53); YHOO (11.58); AMZN (49.58); eBay (EBAY), Yahoo! (YHOO), Amazon (AMZN), Google (GOOG) initiated at Credit Suisse: AMZN tp $60, EBAY tp $19 and YHOO tp $14 initiated neutral. GOOG initiated outperform, tp $400.

SII (26.49): Smith International reports Q3 EPS $1.01 ex-items vs Reuters $0.98: Company reports revenues of $2.85B vs Reuters $2.72B.

MA (126.35); V (56.59); DFS (9.68): Discover Financial confirms $2.75B antitrust settlement agreement with Visa (V) and MasterCard (MA): Under the terms of the settlement agreement, Discover is expected to receive up to $2.75B in the settlement of its lawsuit against Visa and MasterCard. Discover will receive approximately $862M of the settlement in the current fiscal quarter and up to approximately $472M per quarter in 2009. Conference call on 28-Oct at 8:30 a.m. ET. 866.362.4820 or 617.597.5345. pw: 13604805.

Big oil outperforming amid carnage in energy prices: In a "Heard on the Street" column, the Journal notes that big oil is not as dependent on liquid capital markets and lofty energy prices. The article points out that companies such as ExxonMobil (XOM) also benefit from their more diversified and lower cost portfolios. The column also discusses the ability of well-capitalized companies to take advantage of the dislocations in the market via M&A.