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24 September 2010

THE ECONOMIC MONITOR U.S.
Free Edition
MARKETS AT A GLANCE

INSIDE THE REPORT

Stock recommendations and price targets from top brokerage firms Forecasts on Economic Indicators Important Events Scheduled on September 27.

U.S. stocks notched their fourth week of gains on Friday. The Dow Jones industrial average gained 197.84 points, or 1.86 percent, to end at 10860.26. The 10-year Treasury note fell 10/32, its yield rising to 2.60 percent from 2.56 percent on Thursday. Against the yen, the dollar was unchanged at 84.33 . Spot gold hit an all-time high of $1,299.95 an ounce and was bid at $1,298.30 an ounce at 1416 GMT, against $1,293.50 late in New York on Thursday. U.S. crude oil futures rose sharply on Friday, lifted above $76 a barrel.

Economic Events

 

Menthol Report Subcommittee of the Tobacco Products Scientific Advisory Committee (0900 1300 ET/GMT) Sixty-second session of the WHO Regional Committee for the Americas (Sep. 27 to Oct. 1).

Corporate Events
STOCK INDICES

Cal-Maine Foods first quarter fiscal 2011 result and Palatin Technologies will announce fiscal year 2010 fourth quarter results

INDEX DJIA* Nasdaq* S&P 500* DJ Total Stock Market* Russell 2000* Global Dow* NYSE Composite* Nasdaq 100* DJ Transportation Avg* S&P 100* * CLOSING VALUES

LAST 10860.26 2381.22 1148.67 11991.77 671.01 1953.32 7301.04 2023.84 4515.01 519.34

CHNG 197.84 54.14 23.84 262.6 22.17 30.69 159.53 41.69 132.08 9.88

% CHNG 1.86 2.33 2.12 2.24 3.42 1.6 2.23 2.10 3.01 1.94

Breaking News

New CEO for HSBC First obstacle cleared in BHP Potash bid Brazil basks in record Petrobras deal Ellison says microchip firms could be good fit India, RIM working on glitches in email access: Source Durable orders rise in August Economy still "very tough": Geithner Japan suspected of yen intervention US House panel backs China currency bill

CURRENCIES
INDEX Euro (EUR/USD) U.K. Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.3489 1.5824 84.26 PRIOR 1.3319 1.5676 84.33

All prices are at 04:39PM EDT

FUTURES
SETTLE Crude Oil (Oct) Natural Gas (Nov) Gold (Dec) Copper ( Dec) Wheat (Dec) 76.59 4.02 1298 362.75 720 CHANGE 1.41 -0.136 1.7 3.7 22.75

All prices are at 04:39PM EDT

THE ECONOMIC MONITOR - U.S.
COMPANY NEWS ECONOMY NEWS

New CEO for HSBC
HSBC's top management seems shaken after a boardroom row has left the bank. Stuart Gulliver, the head of investment banking will replace the existing chief executive Michael Geoghegan, while Finance Director Douglas Flint is to take over as chairman.

Durable orders rise in August
The U.S. Commerce Department said that new orders for long-lasting U.S. manufactured goods excluding transportation rose in August. Orders excluding transportation rose 2.0 percent after falling by 2.8 percent in July. However, overall orders dropped 1.3 percent, the largest decline in a year, after a 0.7 percent increase in July. Markets had expected orders to fall 1.0 percent. Durable goods inventories rose 0.4 percent after increasing 0.6 percent in July. Shipments declined 1.5 percent last month.

First obstacle cleared in BHP Potash bid
The first regulatory obstacle gets cleared by BHP Billiton in its bid for Canada's Potash Corp, though still contingent on other regulatory approvals. The company said it received antitrust clearance from the U.S. Federal Trade Commission to proceed with its $39 billion hostile bid for the world's largest fertilizer maker.

Economy still "very tough": Geithner
In a meeting at Hispanic Chamber of Commerce, Treasury Secretary Timothy Geithner said that America's economy remained "very tough" and that key sectors such as construction were still struggling. "It is a very tough economy still," he said. "Parts of the economy are still very hard ... anyone in construction knows that," he said in brief remarks.

Brazil basks in record Petrobras deal
Brazil state oil company Petrobras sold $70 billion in shares at a higherthan-expected price, a record deal that could make the country one of the top global energy exporters. The deal is part of Petrobras' $224 billion investment plan over the next five years to exploit the so-called subsalt area, a reserve discovered off Brazil's southern coast in 2007. It contains up to 50 billion barrels of difficult-to-extract but high-quality crude under a thick layer of salt four miles (7 km) beneath the ocean's surface. President Luiz Inacio Lula da Silva told a gathering of business leaders at the Sao Paulo stock exchange that the transaction should provide billions of dollars for investment that will propel Brazil closer to its dream of developed-world status. "God has been very generous with the Brazilian people, who have long waited for the chance to be as respected in the world as we are today," Lula said to cheers and applause.

Gold riding high
Gold rallied to record highs in market on Friday, with spot prices knocking on the door of $1,300 an ounce due to increase in jobless claims and weaker-than-expected. December-delivery gold on the Comex in New York gained 1.4 percent this week at $1,295.20 an ounce. Spot gold was at record high of all-time high of $1,298.25 an ounce and was bid at $1,297.70 an ounce at 0917 GMT.

REGULATORY NEWS

Ellison says microchip firms could be good fit
Software giant Oracle Corp’s CEO Larry Ellison said the company is keen to make more acquisitions to bolster its technology. Oraclefounder Ellison responded to a question from an analyst at an event that he was more interested in acquiring companies with attractive technology than companies that provide services, like Accenture. Oracle reiterated it plans to invest $4 billion on research and development in fiscal 2011 despite the tepid economy.

Japan suspected of yen intervention
Market experts raised their doubt on Japan once again as the yen slide against the dollar this Friday. They suspect that the Japanese authorities intervened for a second time this month to try to prevent the currency's strength from worsening a faltering recovery. Traders in Tokyo reckoned a sharp yen drop was likely due to intervention, though the fall happened at levels where authorities were not expected to act. Japan spent an estimated 2 trillion yen ($23 billion) last Wednesday to combat a rise in the currency to a 15-year high against the dollar.

India, RIM working on glitches in email access: Source
India and Research in Motion have hit technical snag in their talks on access to corporate email from blackberry phones. But access to the messenger services is satisfactory, a government source said on Friday. "Messenger service is working fine, so far. We are getting manual reports, we are satisfied," the source said.

US House panel backs China currency bill
In a move likely to increase trade tensions with China, as the congressional panel turned up the pressure on China over the yuan. The House of Representatives Ways and Means Committee backed the legislation on a voice vote and cleared the way for the full House to take it up next week. If the bill gets approved then that would let the United States slap duties on goods from countries with undervalued currencies. Economists believe China enjoys an unfair trade advantage by undervaluing the yuan against the dollar by as much as 25 percent to 40 percent, hurting U.S. exports and employment. "We will carefully examine any proposals put forward by Congress, but we have not taken a position on the legislation," a Treasury spokesman said after the committee vote. "China's persistent manipulation is a major distortion in the international marketplace," Levin, a Democrat, said. China's undervalued currency "has a major impact on American workers and therefore American jobs. That's what this is really all about."

Hertz says not to raise offer for Dollar Thrifty
Hertz Global Holdings said it would not raise further its offer for Dollar Thrifty , a day after rival Avis Budget outbid it again in the battle for gaining control over the smaller car rental firm. On Thursday, Avis Budget raised its bid to about $1.51 billion, or $52.71 per share, based on Avis' last closing price, but refused to include a break-up fee. In a statement, Hertz said its raised bid earlier this month -- currently worth about $1.44 billion -- was its "best and final" offer.

THE ECONOMIC MONITOR - U.S.
MARKET BRIEFING

ECONOMIC INDICATOR WATCH (27 SEPT)

U.S. stocks notched their fourth week of gains on Friday, as investors used an increase in business spending to revive the September rally after three days of losses. The Dow Jones industrial average gained 197.84 points, or 1.86 percent, to end at 10860.26. The Standard & Poor's 500 Index climbed 23.84 points, or 2.12 percent, to finish at 1,148.67. The Nasdaq Composite Index jumped 54.14 points, or 2.33 percent, to close at 2,381.22. For the week, the Dow was up 2.4 percent, while the S&P 500 was up 2.1 percent and the Nasdaq was up 2.8 percent. U.S. Treasuries fell on Friday as news businesses spent heavily in August dented bond investors' confidence the Federal Reserve would need to buy debt to help the economy. The government said total orders for long-lasting goods fell in August. But what grabbed attention was what the report said about business spending: orders excluding non-defense capital goods and aircraft rose sharply. The 10-year Treasury note fell 10/32, its yield rising to 2.60 percent from 2.56 percent on Thursday. The 30-year bond fell 26/32, its yield rising to 3.78 percent from 3.74 percent on Thursday. The dollar fell against a basket of currencies on Friday to its lowest level since February as stronger-than-expected data in Europe and a drop in U.S. durable goods orders hurt demand for the greenback. The dollar also fell to its lowest in more than a week against the yen. Earlier it rose on talk Japan had again tried to weaken its currency. It reversed gains against the yen as doubts crept in about a new Japanese intervention. Against the yen, the dollar was unchanged at 84.33 . It fell to 84.12 yen its lowest since September 15. The euro rose 1.2 percent at $1.3471 while an index of the dollar against six major currencies, slid 0.8 percent to 79.281, its lowest level since February. Gold rallied to record highs in Europe on Friday, with spot prices knocking on the door of $1,300 an ounce, as expectations grew that further quantitative easing may lead to increased volatility in the currency markets. Spot gold hit an all-time high of $1,299.95 an ounce and was bid at $1,298.30 an ounce at 1416 GMT, against $1,293.50 late in New York on Thursday. U.S. gold futures for December delivery hit a record $1,301.60 an ounce and were later at $1,299.60 an ounce, up $3.30. Silver also reached its strongest in 30 years at $21.45 an ounce, tracking gains in gold. Spot gold prices are struggling to take out resistance at the $1,300 an ounce level, but remain firmly underpinned by expectations of further weakness in the dollar, which slipped 1 percent versus the euro on Friday. U.S. crude oil futures rose sharply on Friday, lifted above $76 a barrel by a sliding dollar as investors continued to bet the Federal Reserve would pump money into the financial system to support the economy. On the New York Mercantile Exchange, November crude rose $1.31, or 1.74 percent, to settle at $76.49 a barrel. It traded from $74.66 to $76.68, the highest intraday price since the $77.99 struck on Sept. 14. For the week, crude futures rose $2.83, or 3.84 percent, the biggest percentage rise since they jumped $2.97, or 3.91 percent, in the week to July 23.

National Activity Index (August)
Forecast : N/A Prior : 0.00
Federal Reserve Bank of Chicago will release its National Activity Index for the month of August at 08:30 EDT. The previous month data showed that the economic activity rebounded in July. The Chicago Fed National Activity Index returned to its historical average of zero in July, up from –0.70 in June. The index’s three-month moving average, CFNAI -MA3, edged lower to –0.17 in July from –0.12 in June. Productionrelated indicators made a contribution of +0.43 to the index in July, up from –0.16 in June. Total industrial production increased 1.0 percent in July after edging lower 0.1 percent in June. In addition, manufacturing production rose 1.1 percent in July after decreasing 0.4 percent in the previous month, and manufacturing capacity utilization increased to 72.2 percent in July from 71.4 percent in June.

Midwest Manufacturing (August)
Forecast : N/A Prior: 81.4
Federal Reserve Bank of Chicago will release its midwest manufacturing for the month of August at 12:00 EDT. The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 2.2% in July, to a seasonally adjusted level of 81.4 (2007 = 100). Revised data show the index fell 0.2% in June to 79.6. The Federal Reserve Board's industrial production index for manufacturing (IPMFG) increased 1.1% in July. Regional output in July rose 13.1% from a year earlier, and national output increased 8.1%. The Midwest's automotive output was up 27% in July relative to its year-ago level; more than double the nation's auto output 12.5% gain. The Midwest's machinery sector production went up 0.9% in July after increasing 0.5% in June. The Midwest resource sector's output ticked down 0.1% in July after declining 0.4% in June.

Building Permits Rate Change (August)
Forecast : N/A Prior – :1.8 %

Build Permits numbers (August)
Forecast : N/A Prior : 0.569 mln
U.S. department of Commerce is expected to release building permits rate change and numbers for the month of August. Sales of new singlefamily houses in July 2010 were at a seasonally adjusted annual rate of 276,000. This is 12.4 percent (±10.8%) below the revised June rate of 315,000 and is 32.4 percent (±8.7%) below the July 2009 estimate of 408,000. The median sales price of new houses sold in July 2010 was $204,000; the average sales price was $235,300. The seasonally adjusted estimate of new houses for sale at the end of July was 210,000. This represents a supply of 9.1 months at the current sales rate.

THE ECONOMIC MONITOR - U.S.
NEXT TRADING DAY MARKET PERFORMANCE

ECONOMIC EVENTS
Menthol Report Subcommittee of the Tobacco Products Scientific Advisory Committee (0900 1300 ET/GMT) The subcommittee will receive a presentation and discuss the timelines and structure of the Tobacco Products Scientific Advisory Committee's required report to the Secretary of Health and Human Services regarding the impact of use of menthol in cigarettes on the public health. Sixty-second session of the WHO Regional Committee for the Americas (Sep. 27 to Oct. 1).

DJIA

CORPORATE EVENTS
Cal-Maine Foods will announce its first quarter fiscal 2011 financial results, analysts expect the company to report a profit of $0.117 per share, against $0.160 reported for the corresponding period a year ago. The company primarily engaged in the production, grading, packing and sale of fresh shell eggs, posted net sales of $222.1 million for the fourth quarter of fiscal 2010, compared with net sales of $213.6 million for the same quarter a year ago. The Company reported net earnings of $21.0 million, or $0.88 per basic share, for the fourth quarter of fiscal 2010 compared with net earnings of $10.3 million, or $0.43 per basic share, for the same period last year. Palatin Technologies will announce fiscal year 2010 fourth quarter results. A biopharmaceutical company focused on discovering and developing targeted, receptor-specific small molecule and peptide therapeutics, reported a net loss of $2.0 million, or ($0.02) per share in third quarter against net income of $0.1 million, or $0.00 per share for the same period in 2009. Total revenues in the quarter was at $2.6 million, compared to $5.2 million for the same period in 2009. Loss for the third quarter, compared to the net income for the quarter ended March 31, 2009, was due to a decrease in the recognition of revenue under our agreements with AstraZeneca.

A. Stocks opened strongly higher Friday, with the Dow industrials up more than 100 points, with Wall Street found reason for cheer in a report on U.S. manufacturing in August. The Dow Jones Industrial rose 142.66 points to 10,805.08. B. The Dow Jones jumped 188 points, or 1.8%, to 10,851. All 30 of the measure's components rose, led by a 4.7% jump in Caterpillar Inc. shares, a 3.7% climb in Alcoa Inc. and a 3.3% increase in Cisco Systems Inc. shares. Stocks surged to their fourth straight weekly gain, with the Dow Jones Industrial Average and the S&P 500 Index both on track for their best September in more than half a century after data showing a rebound in demand for U.S. capital equipment. Up 2.4% for the week, the Dow industrials added 197.84 points, or 1.9%, to end at 10,860.26, its best performance since September 1.

C.

ECONOMIC CALENDAR
DATE MON 09/27 EDT 0830 1200 TIME TBA TUE 09/28 0745 0855 0900 0900 0900 1000 1000 1000 1000 1700 INDICATOR Chicago Fed Index Chicago Midwest (Aug) Building Permits ICSC/GS Report ww Redbook mm S&P CS 20 mm sa S&P CS 20 mm nsa S&P CS 20 yy Consumer Conf (Sep) Richmond Fed Mfg (Sep) Mfg Shipments Service Revenues ABC CCI F’CAST NA NA NA NA NA NA NA 3.20% 54 NA NA NA NA PRIOR NA 81.4 NA NA NA 0.30% 1% 4.20% 53.5 11 11 -10 NA

CORPORATE RESULTS
DATE - 27/September2010
COMPANY NAME EVENT

Cal-Maine Foods Palatin Technologies

Q1 2011 Q4 2010

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