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Before The Bell: AT&T Spooks Markets; Solid Defense


AT&T threw a bombshell into the markets yesterday before the closing bell. Defense is looking solid. Futures are mixed.

Morning Perspective: AT&T Spooks Markets

Just as the markets were recovering from a sell-off due to bankruptcy rumors at Countrywide Financial (CFC) yesterday and comments from AT&T's (T) CEO Randall Stephenson that threw a bombshell into the markets. AT&T's stock plunged over 9% at one point after Mr. Stephenson stated the company was seeing softness on the consumer side due to the effects of the economy. Stephenson was confident, however, that the company could achieve growth through an economic slowdown and was quick to point out the affected businesses accounted for less than 20% of the company's overall annual revenue. (WSJ) For more context on U.S. economic issues, read Minyan Satyajit Das' article Credit Crunch Has Bite.

From the Bull Pen: Bulls believing the market overreacted on AT&T may buy the stock on weakness; sell-stops below $36. A tertiary play is in Verizon (VZ); sell-stops below $40.

From the Bear Cave: Bears may attempt a downside play in Riverbed (RVBD); entry may be at $28 with buy-stops above.

Solid Defense

Bloomberg reports Lockheed Martin (LMT) and Northrop Grumman (NOC) may be the beneficiaries of President Bush's last defense budget. The last budget, which began in October, is $471.2 bln, or 12% more than 2007. Next month President Bush is expected to present to Congress a budget for fiscal 2009. Analysts expect the companies that will benefit the most are the ones that have programs that preceded the Bush administration and will continue long after. For more ideas read Todd's Ten Themes For 2008.

From the Bull Pen: Those bullish LMT and NOC may place sell-stops below $102 and $75 respectively.

From the Bear Cave
: Bears may see a downside opportunity in Boeing (BA) as the company is facing a number of headwinds in its combat systems and 787 Dreamliner. . Bears pressing the downside my place buy-stops above recent highs ($86).

Click on Minyanville's stocks to watch for more company-specific ideas.

Quick Check Around the World

Critters prepare to climb over the weekly hump as they find Asia mostly green and Europe skewed red.

Asian trading closed with the Hang Seng +1.86%, Nikkei +0.49%, Sensex -0.02%, Taiwan +1.53% and Shanghai +0.91%.

In Europe the CAC -0.93%, DAX -0.58%, FTSE -1.37%, Swiss Mkt. -0.02%, and Stockholm -1.99%

A Look At Commodities

Crude oil is lower by -0.26 to 96.08. Gold is up +0.50 to 880.70. Silver is higher by +0.527 to 15.707, and copper is higher by +1.00 to 328.35.

The dollar index is up by +0.203 to 76.313.

As of 8:50 AM ET, S&P futures are up by 1.20 points to 1398.20 and Nasdaq futures are lower by 0.75 to 1927.75.

On the Radar

MBA Mortgage Applications: 32.2% vs. -11.6% prior.

Click here for the full trading radar.

Happy Hump Day! Good luck!
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