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Before The Bell: Ugly Earnings; Ugly Homes


Bulls worried with gloomy news from AIG and Dell.

Morning Perspective: A Glum Couple

A couple of earnings disappointments are weighing on stock futures this morning. AIG (AIG) shocked investors when it reported a loss of -$1.25 per share completely missing Wall Street estimates of $0.60. According to Reuters, analysts said the woes of the world's largest insurer were symptomatic of broader concerns in the financial sector.

Meanwhile shares of Dell (DELL) are getting pressured. The world's second-largest computer maker reported earnings of $0.31 per share below consensus estimates of $0.36. Revenues came in at $15.9 billion vs. $16.3 billion consensus. CFO Donald Carty said the company no longer provides guidance but did cite softness in spending by IT customers. Read Todd's Random Thoughts.

From the Bull Pen: Bulls can look to plays in the consumer staples sector such as Wrigley (WWY); sell-stops below $59.

From the Bear Cave: Bears expect this earnings news to weigh on the markets and can play the downside using the SPY; buy-stops above the 50-day (138.85).

No One Home

Bloomberg reports vacant homes in the U.S. are climbing to the highest levels since 1970. According to the U.S. Commerce Department, nearly 200,000 newly constructed single family homes are sitting vacant, the most since the agency began keeping track in 1973. Further, about 370,000 new homes are still for sale due to people backing out. With more supply coming into the market, analysts at Deutsche Bank believe home prices may fall at least 8% in the U.S. and by as much as 26% from 3Q of 2007. For context, read Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Aside from housing, bulls may find defensive plays more appealing such as Campbell (CPB): near-term sell-stops below $32. Another option is General Mills (GIS); sell-stops below $56.

From the Bear Cave: Bears see plenty of downside for Toll Brothers (TOL); buy-stops above yesterday's high (23.75). Another choice is the iShares Real Estate ETF (IYR); near-term buy-stops above $68.

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed with the Hang Seng -1.06%, Nikkei -2.32%, Sensex -1.38%, Taiwan -0.58% and Shanghai +1.14%.

Glancing across the pond we find the CAC -1.24%, DAX -1.43%, FTSE -0.84%, ATX -0.56%, Swiss Mkt. -1.39% and Stockholm -0.89%.%.

As of 8:45 AM EST, S&P futures are lower by 13 points to 1352 and Nasdaq Futures are down by 12 points to 1771.

A Look At Commodities

Commodities are mixed. Crude oil is down -0.39 to 102.20. Gold is higher +0.80 to 968.10. Copper is lower -0.35 to 386.00. and Silver is off -0.205 to 19.425.

The dollar index is higher +0.131 to 73.852.

On the Radar


Personal Income: 0.3% vs. 0.2% cons.
Personal Spending: 0.4% vs. 0.2% cons.
PCE Deflator (y/y): 3.7% vs. 3.5% cons
PCE Core (m/m): 0.3% inline
PCE Core (y/y): 2.2% inline

9:45 Chicago Purchasing Manager: 49.7 cons
10:00 U. of Michigan Confidence: 70.0 cons

Happy Friday! Good luck and have a great day!
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No positions in stocks mentioned.

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