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Before The Bell: UBS Says Ugly Year; Wal-Mart Makin' Moves


UBS surprised analysts with more losses. Wal-Mart is making some changes to lure more shoppers and be leaner and cleaner. Stock futures are lower this morning.

Morning Perspective: UBS Says Ugly Year

Bloomberg reports UBS (UBS), Europe's largest bank by assets, says fourth quarter write-downs due to subprime mortgages may be approximately $14 bln. The company also expects to record a net loss of $11.4 bln for the quarter, UBS said in a statement today, reflecting weak trading revenues in the Fixed income, Currencies, and Commodities (FICC) business. The figure is nearly double analysts' estimates, and the bank now expects the total loss attributable to shareholder to be approximately $4bln for full-year 2007. For context in the financial sector, read Professor Mike Shedlock's Bank Reserves Go Negative.

From the Bull Pen: A play in the financial sector may lie in Discover (DFS). Bulls see a breakout from the downtrend that started from the June high. Sell-stops below recent lows ($15).

From the Bear Cave: Bears see the $45 resistance level for UBS; buy-stops set above. Citigroup (C) is also an alternative; buy-stops above $30.

Wal-Mart Makin' Moves

The New York Times reported Wal-Mart (WMT) is eliminating dozens of positions and will shut down two divisions at its Arkansas headquarters. The company will close its product development and sourcing divisions in an effort to revamp its sluggish apparel unit and lure shoppers who are facing challenges originating from the deteriorating housing market and higher energy costs. Just yesterday, Wal-Mart announced its own economic stimulus package by cutting prices on thousands of items by 10% to 30%. Professor Kevin Depew mentioned Wal-Mart yesterday in his daily column Five Things You Need To Know.

From the Bull Pen: Retail specialist Professor Jeff Macke likes Costco (COST) for the long term. Sell-stops can be set below the 200-DMA ($62).

From the Bear Cave: Bears see the multi-year $50 resistance level in Wal-Mart and may choose to enter a downside play at that level with buy-stops above.

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

Another FOMC Wednesday rolls around as foreign markets are looking as red as Tom Coughlin's cheeks.

Asian trading closed with the Hang Seng -2.63%, Nikkei -0.99%, Sensex -1.84%, Taiwan -0.43% and Shanghai -0.90%.

A quick check across the pond finds the CAC -1.73%, DAX -0.67%, FTSE -0.76%, ATX -0.15%, Swiss Mkt. -0.11% and Stockholm -0.49%.

A Look At Commodities

Commodities are mostly higher. Crude oil is up +0.42 to 92.06. Gold is up +0.80 to 925.90. Silver is up +0.08 to 16.880. and copper is lower by -3.95 to 325.30.

The dollar index is down -0.183 to 75.360.

As of 8:35 AM EST, S&P futures are down 3.10 to 1359, and Nasdaq futures are low by 9.0 to 1803.

On the Radar


7:00 MBA Mortgage Applications: 7.5% vs. 8.3% Prior
8:15 ADP Employment Change: 130 k vs. 40 k cons.
8:30 GDP Annualized: 0.6% vs. 1.2% cons
8:30 Personal Consumption: 2.0% vs. 2.6% cons
8:30 GDP Price Index: 2.6% vs. 2.6% cons
8:30 Core PCE QoQ: 2.7% vs. 2.5% cons
2:15 FOMC Policy Statement

Click here for the full trading radar.

Happy FOMC Wednesday! Good luck!

No positions in stocks mentioned.

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