Stock Market Update - Wednesday, Nov. 3, 2010 - Mixed Outlook

Stock Market Update

Wednesday, Nov. 3, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (NOV. 3, 4:10 PM EDT)

Dow Jones 11,215.13 +26.41 (+0.24%)
S&P 500    1,197.96 +4.39  (+0.37%)
Nasdaq     2,540.27 +6.75  (+0.27%)




Dow Jones 2:30 PM Averages: DJIA 11,127.04 DN 61.68
30 INDUS     11,127.04 DN   61.68 OR    0.55%
20 TRANSP     4,802.47 DN   16.15 OR    0.34%
15 UTILS        402.24 DN    4.41 OR    1.08%
65 STOCKS     3,872.04 DN   23.10 OR    0.59%

US DOLLAR FUTURES INDEX DXY: NOV. 3, 4:47 PM EDT: 76.36  0.36 (0.47%)
US COMMODITY PRICES: (NOV. 3, 4:50 PM EDT)
Crude Oil     85.08     + 0.46%
Natural Gas     3.84     - 0.83%
Gasoline     2.14     -
Heating Oil     2.33     + 0.25%
Gold     1348.09     - 0.69%
Silver     24.85     - 0.36%
Copper     3.79     - 1.23%

U.S. Dollar Drops - Stocks Gain Mixed
US Stocks ended its volatile session higher.
After the FOMC'S announcement the dollar declined and equities rapidly advance, within 10 minutes stocks declined against the US Dollar's rally. The volatility index VIX declined to 19.57 by 3:15 p.m. indicating a positive close ahead.

U.S. stock index futures extended meager gains on Wednesday morning after data showed U.S. private employers added more jobs in October than economists forecast. 

The dollar moved higher Wednesday hours before the Federal Reserve is expected to announce a big bond-buying program to support the weak US  economy.


A Policy Announcement from the FOMC:
FOMC: Fed Funds To Stay Exceptionally Low For Extended Period
Progress On Inflation Has Been Disappointingly Slow

The Federal Reserve Wednesday unveiled a controversial new plan to buy $600 billion in U.S. Treasurys through June, hoping to spur growth in a disappointingly slow U.S. economy.

After two days of discussions, Fed officials decided to go ahead with a much-anticipated program, saying they stand ready to purchase more government debt if the economy's persistent weakness leads prices to remain too low and unemployment too high.

The Fed's first $1.75 trillion bond-buying program, which ran from December 2008 to March, is credited with helping the economy when the U.S. was hit by a financial crisis and a deep recession. The latest move is more controversial because the economy is now growing -- albeit slowly -- and financial markets are no longer under severe stress.

By buying government bonds, the Fed aims to keep long-term interest rates low, hoping it will lead consumers to spend and companies to invest more, thus helping to propel the economy forward. Short-term interest rates were slashed close to zero in December 2008, so the Fed no longer has its traditional weapon to boost the economy.

The Fed said it expects to buy between $850 billion to $950 billion in Treasurys through the end of the second quarter of 2011.

Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. 

Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. 

Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. 

Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.  

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.

Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.  

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. 

The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month..



Fed To Buy $600B US Treasurys In Bid To Lift Weak Economy

The Federal Reserve Wednesday unveiled a controversial new plan to buy U.S. Treasurys, hoping to spur growth in a disappointingly slow U.S. economy.

  After two days of discussions, Fed officials decided to go ahead with a much anticipated program, saying they will buy $600 billion of U.S. government debt over the next eight months.

The Fed's policy-setting body said it stands ready to purchase more bonds if the economy's persistent weakness leads inflation to remain too low and unemployment too high.

The Fed's first $1.75 trillion bond-buying program, which ran from Dec. 2008 to March 2010, is credited with helping the economy when the U.S. was hit by a financial crisis and a deep recession. The latest move is more controversial because the economy is now growing -- albeit slowly -- and financial markets are no longer under severe stress.

By buying government bonds, the Fed aims to keep long-term interest rates low, hoping it will lead consumers to spend and companies to invest more, thus helping to propel the economy forward. Short-term interest rates were slashed close to zero in Dec. 2008, so the Fed no longer has its traditional weapon to boost the economy.

The Fed said it expects to buy between $850 billion to $950 billion Treasurys through the end of the second quarter of 2010. That's because in addition to the $600 billion, the Fed expects to buy about $35 billion a month to replace mortgage bonds in its portfolio that are being retired, a decision that was taken back in August.

The Fed will "continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary" to support the recovery.

Fed officials said the economic recovery that started in June 2009 and hit a stumbling block last summer continues to be slow. Consumer spending, while increasing gradually, continues to be constrained by a high unemployment rate. Inflation is likely to "remain subdued for some time."

Some 16 months after the recession officially ended, the unemployment rate is stuck close to 10% and prices remain very low as companies struggle to lure buyers. An underlying measure of inflation that's closely watched by the central bank rose just 1.2% in the year through September, the lowest level in nine years and below the Fed's informal goal of around 2.0%.

With unemployment seen staying too high and inflation too low for a long time, Fed officials stuck to their pledge to keep short-term interest rates at a record low for an "extended period." Financial markets see no chance of an increase in the rate banks charge each other for overnight loans for all of next year.

Central bank officials also gave their updated forecasts for the U.S. economy. While those will only be made public when the minutes of the FOMC meeting are released Nov. 24, they are certain to paint a worse picture compared to previous projections made in June, when the economy was seen expanding by almost 4.0% at the end of 2011 and unemployment falling to around 8.5%.

The economy grew at an annual rate of just 2.0% in the third quarter, after climbing 1.7% in the second quarter, levels that are too weak to bring unemployment down any time soon. The jobs report, due Friday, is expected to show that unemployment remained at 9.6% in October.

Economists inside and outside the Fed have warned the move could be ineffective because interest rates are already so low. Some say it could backfire, sparking new asset bubbles or higher inflation in the next few years.

Showing there's even dissent within the central bank, Kansas City Fed President Thomas Hoenig voted against the policy action, saying the risks outweigh the benefits.

Opposition to the bond purchases could grow in 2011. Three of five regional Fed bank president who will get to vote next year have raised doubts about the plan's potential to further help the economy: Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Philadelphia Fed President Charles Plosser.

THE US DOLLAR AND EURO AT TIPPING POINT
The Euro pared the overnight decline to reach a high of 1.4058, and the exchange rate held steady until the US Fed's announcement. The Euro is now at 1.41 and climbing The Bank of England is anticipated to maintain its current policy in November, and the rate decision could spark a bullish reaction in the British Pound.  

The dollar was flat against other major currencies in overnight and early morning trading. After the US market opened, the dollar rose in a constrained pattern within its support and resistance areas until the FOMC announcement. At that time it rallied and declined in a volatile manner down to its support of 76.22. At market close, the Implied Volatility was (1wk) on USD-based Majors: EUR (16.54%); GBP (13.08); JPY (14.36); CHF (15.89); CAD (13.38); AUD (17.43); NZD (16.22).  


In early morning trading the Dow Jones Industrial Average gained eight points to 11197 in early trading, while the Standard & Poor's 500-stock index gained less than one point to 1194 and the Nasdaq Composite edged down two points to 2532. S&P 500 futures rose 1.6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 18 points and Nasdaq 100 futures added 2 points.

Deep concern persists about the economy, and worries about high unemployment and deflationary risks will almost certainly drive the Federal Reserve to undertake a fresh round of stimulus when its policy meeting ends later Wednesday.


EQUITY REPORTS:

Qwest Communications International rose 0.6% after recording a third-quarter loss, though the company issued an optimistic revenue forecast and notched up a rise in adjusted profit that topped analysts' estimates. CenturyLink, which agreed to buy Qwest, edged up 0.2% ahead of its earnings report later in the day.

Garmin plunged 6.1% after the digital navigation device maker reported a 30% increase in earnings, though that number missed expectations and came amid weaker sales and margins.

CVS Caremark slipped 0.9% after the company reined in its full-year profit forecast, though the drugstore chain met earnings expectations.

MGM Resorts International gained 1.5% as the company's third-quarter loss narrowed amid sharply lower write-downs related to its struggling Las Vegas City Center complex.

Time Warner shed 0.4% after its earnings fell 21%, as the media giant took a hit related to debt redemptions, though adjusted earnings rose and handily topped analysts' estimates as revenue increased. The company also increased its profit target.

Aetna slipped 1.1% after earnings rose 53% as investment gains and lower medical costs offset continued declines in employer-based membership.

Wellpoint traded flat after third-quarter profit rose 1.2% following prior-year write-downs as claims costs rose, contrasting with a trend seen in much of the health-insurance industry this year.

U.S.-traded shares of French bank Societe Generale surged 4.1% after the French lender said its third-quarter net profit doubled due to lower bad loan provisions and growth in international retail banking.

GENERAL MOTORS ISSUES IPO

General Motors Company Commences $13 Billion Dollar Public Offering 

The estimated price range for the offering of common stock is $26.00 to $29.00 per share

General Motors Company (GM) announced today it has commenced a public offering. The offering will consist of 365 million shares of common stock to be sold by certain of its stockholders. The company will also issue 60 million shares of its Series B mandatory convertible junior preferred stock with a liquidation amount of $50 per share.

The public offering will reduce the U.S. and Canadian governments’ stakes in the largest U.S. car maker who will operate in a tax free environment up to $50 billion dollars. GM is working toward returning the $50 billion GM received in a taxpayer bailout last year.

For the U.S. to break even it needs to sell at an average price, before splits, of $131 a share, a person familiar with the matter said in September. The company had earnings before interest and taxes of $2.2 billion to $2.4 billion on revenue of about $34 billion for the three months that ended Sept. 30, 2010.

US FACTORY ORDERS, SERVICE SECTOR EXPAND 
MINOR GAIN SEEN
U.S. manufactured-goods orders increase by a better-than-expected 2.1% to $420.02 billion. ISM's index of service-sector activity for October moves to a reading of 54.3, and private-sector jobs in the U.S. rise by 43,000 last month.

AUTO MAKERS REPORT JUMPS IN NEW VEHICLE SALES
 Several major auto makers report significant jumps in new-vehicle sales in October amid stronger buying by American consumers. Ford, Honda and Nissan each report sales increases of more than 15%, while Chrysler says its sales of cars and light trucks climbed 37%.

US FACTORY ORDERS UP ON TRANSPORT SECTOR
MINOR GAIN SEEN
U.S. manufactured goods orders rise by 2.1% to $420.02 billion in September, the Commerce Department says. Economists surveyed by Dow Jones Newswires had expected overall factory orders would rise 1.6%.


MGM FILES FOR CHAPTER 11
Studio files for Chapter 11 bankruptcy protection, after cutting a deal with creditors that would forgive about $4 billion in debt and put it in the hands of Spyglass Entertainment co-founders Gary Barber and Roger Birnbaum.

TIME WARNER PROFIT FALLS 21%
Media and entertainment giant posts 3Q profit of $522 million, or 46c a share, after taking a big charge from redeeming debt, but adjusted earnings top estimates. Revenue rises 2% to $6.38 billion. Company raises 2010 profit-growth target. Shares down 2%.

CRUDE OIL:

U.S. Crude Oil: $ 85.08 per barrel 

OIL FUTURES: Nymex Crude Settles Up 79c At $84.69/Bbl

Oil prices settled higher Wednesday, hitting a fresh six-month high as the Federal Reserve's widely anticipated decision to stimulate the economy followed a bigger-than-expected decline in U.S. fuel inventories.

  Light, sweet crude oil for December delivery settled up 79 cents, or 0.9%, at $84.69 a barrel on the New York Mercantile Exchange. The contract is up 4% for the week after rising as high as $85.36 a barrel earlier in the session.

Brent crude oil on the ICE futures exchange settled 97 cents higher at $86.38 a barrel.

Oil Holds Minor Gain - Fuel Inventories Decline

DOE: US Refineries Ran At 81.8% Vs 83.7% Week Ago
DOE: US Distillate Stocks -3.568 Mln Bbl At 164.874 Mln Bbl

Crude futures went negative after surging to a six-month high of $85.36 a barrel following a U.S. Department of Energy report showing a 2-million-barrel fall in gasoline stockpiles and a 3.6-million-barrel decline in distillates, which include heating oil and diesel. Crude inventories climbed 2 million barrels.

Light, sweet crude for December delivery was recently up 29 cents, or 0.4%, at $84.19 a barrel. The contract earlier fell to $83.57 on the New York Mercantile Exchange. Brent crude on the ICE futures exchange gained 36 cents, or 0.4%, at $85.77 a barrel.

Front-month December reformulated gasoline blend-stock, or RBOB, recently traded up 1.25 cents, or 0.6%, to $2.1221 a gallon. December heating oil gained 2.09 cents, or 0.9%, to 2.3145 a gallon. 

NATURAL GAS:

US GAS: Futures Settle Down 3.4 Cents At $3.836/MMBtu

The U.S. Energy Information Administration is expected to report that 67 billion cubic feet of gas were added to storage during the week ended Oct. 29, according to the average prediction of 17 analysts and traders in a Dow Jones Newswires survey.

The EIA is scheduled to release its storage data Thursday at 10:30 a.m. EDT (1430 GMT).

http://tonto.eia.doe.gov/oog/info/ngs/ngs.html

PRECIOUS METALS:

US Gold: $ 1,333.
US Silver: $ 24.17


Gold futures traded near steady Wednesday as a little-changed dollar and anticipation of the Federal Open Market Committee meeting later Wednesday dominated the market. The most actively traded contract, for December delivery, was recently up 0.02%, or 60 cents, at $1,357.50 per troy ounce on the Comex division of the New York Mercantile Exchange.

Settlements (Ranges include Floor and Electronic trading):
London PM Gold Fix: $1,345.50; previous PM $1,351.00
Dec gold $1,337.80, down $19.30; Range $1,327.10-$1,364.80
Dec silver $24.436, down 43.6 cents; Range $23.935-$25.040
Jan platinum $1,627.00, down $21.9; Range $1,691.7-$1,723.10
Dec palladium $642.70, down $2.75; Range $631.10-$647.20

U.S. TREASURYS:

Treasurys gained in morning trades, pushing the yield on the benchmark 10-year note to 2.552%.The U.S. Treasury Department plans to hold auction sizes fairly steady as it sells $72 billion in debt next week to refund maturing securities.

The Treasury has in recent months been trimming auctions, lowering its borrowing capacity by $328 billion. But economic uncertainty has the Treasury focused on holding auction sizes steady this quarter to give it flexibility to adapt to changes in the U.S. fiscal situation.

On Monday, the Treasury estimated it would borrow $362 billion from October to December and $431 billion from January to March. First quarter borrowing traditionally spikes.

The Cusip numbers for the issues to be sold next week are:
3-year note: 912828PU8.
10-year note: 912828PC8.
30-year bond: 912810QL5.
.

U.S. BONDS:


3 Month     0.10%     0.00 (0.00%)
6 Month     0.15%     +0.01 (7.14%)
2 Year     0.33%     -0.01 (-2.94%)
5 Year     1.11%     -0.03 (-2.63%)
10 Year     2.57%     +0.01 (0.39%)
30 Year     4.04%     +0.14 (3.59%)

US SERVICE SECTOR MINOR GAIN

The Institute for Supply Management reported that its overall index of service sector activity for October moved to a reading of 54.3, from 53.2 in September. It had been expected to stand at 53.5. Numbers above 50 indicate growth and describe the breadth of the change, but not the magnitude.

The ISM also said that its business activity/production index for the non-manufacturing sector moved to 58.4, from 52.8, while its new orders index hit 56.7, from 54.9.

The ISM said in the report that hiring was stable, with the employment index coming in at 50.9, from 50.2. Meanwhile, service sector inflationary pressures jumped, with the prices index coming in at 68.3, after September's 60.1.

The non-manufacturing report is made up mostly of service sector activities, which comprise the majority of total U.S. economic output. The non-manufacturing sector's continued forward momentum is a positive for the economy, as was the continued rise in factory activity reported by the ISM on Monday.

HOUSING - FREDDIE MAC IN TROUBLE

Freddie Mac reported a third-quarter net loss of $2.5 billion and asked the US Treasury to provide a $100 million infusion. The government-held mortgage bank reported a smaller loss than last quarter amid a still troubled housing market. 

PRIVATE EMPLOYMENT MIXED
Private employers added 43,000 jobs in October compared with a revised loss of 2,000 jobs in September, according to a report by a payrolls processor.

The employment report from Automatic Data Processing on Wednesday morning showed private-sector employment increasing by 43,000, topping consensus estimates of a 22,000-job gain. The estimated change in employment for September was revised to a smaller drop of 2,000 instead of a decline of 39,000 first reported. Even so, ADP said the employment market remains "frustratingly stagnant." 

HOUSING MARKET - REPORT
Mortgage Purchase Applications Increase, while Refinance Applications Decline in Latest MBA Weekly Survey


The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending October 29, 2010.  The Market Composite Index, a measure of mortgage loan application volume, decreased 5.0 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 5.3 percent compared with the previous week.

The Refinance Index decreased 6.4 percent from the previous week. This is the third straight week the Refinance Index has decreased.  The seasonally adjusted Purchase Index increased 1.4 percent from one week earlier. The unadjusted Purchase Index increased 0.2 percent compared with the previous week and was 28.0 percent lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is up 0.1 percent.  The four week moving average is down 2.7 percent for the seasonally adjusted Purchase Index, while this average is up 0.8 percent for the Refinance Index.

The refinance share of mortgage activity decreased to 81.3 percent of total applications from 82.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.4 percent from 5.3 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.28 percent from 4.25 percent, with points increasing to 1.07 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  The effective rate also increased from last week. 

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.64 percent from 3.67 percent, with points increasing to 1.08 from 0.96 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week. 

If you would like to purchase a subscription of MBA’s Weekly Applications Survey, please contact MBA Research at (202) 557-2830 or mbaresearch@mortgagebankers.org or click here. 

The survey covers over 50 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

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Canadian Market:

Canadian Stocks Decline In Light Trading

Toronto stocks decline in early trading. Declines were lead in the materials sector as theUS dollar gained on the precious metals and oils.  The stock market was lower at midday Wednesday, dragged down by widespread weakness led by declines in gold and other resource stocks.

At 11:45 a.m. EDT, the S&P/TSX Composite Index was down 73.74 points, or 0.58%, at 12607.68 and declines led advances 785 to 570. Trading volume was 211.70 million shares. The S&P/TSX 60 Index was down 5.20 points, or 0.71%, to 722.26 points. .

Canadian small businesses reported a minor gain in confidence in the recent report issued this morning. Small business confidence rebounded after four consecutive declines to the highest level since May the Canadian Federation of Independent Business said its Business Barometer Index rose to 66.9 in October from 63.6 in September.

While that's still a "modest" reading compared with pre-recession levels, "it suggests a firming up of business owners' expectations," CFIB vice-president and chief economist Ted Mallett said in a report. "Not many small-and mid-sized enterprises (SMEs) are expecting high growth in the coming year, but even fewer are expecting significant declines."

The index typically ranges between 65 and 75 when the economy is growing.

"Taking into account the new readings, optimism appears to book-end the country, with higher-than-average levels in the far west and the Atlantic regions. Business owners in Manitoba and Prince Edward Island are the least optimistic," the report said.

  Website: http://www.cfib.ca  

Toronto Indexes: 3:PM EDT Composite Down 4.79

 S&P/TSX Composite   12676.63  off   4.79  or 0.0%
 S&P/TSX 60 Index      726.40  off   1.06  or 0.1%
 Financials            179.06  off   0.69  or 0.4%
 Materials             407.44  off   0.81  or 0.2%
 Energy                291.72  up    0.20  or 0.1%
 Industrials           106.97  off   0.60  or 0.6%
 IT                     29.20  off   0.10  or 0.3%

   Volume   Wednesday   Tuesday
   2-3                 76.6M      46.6M
   9:30-3             406.8M     336.9M


Toronto Most Actives At 3:15 PM EDT

Eastern Platinum                 13,668,046  1.83  up   0.02
Taseko Mines                     13,132,242  4.83  off  1.72
Denison Mines                    11,664,814  2.63  up   0.29
iShares Cdn S&P/TSX 60            7.096,862 18.26  off  0.01
Uranium One                       6,800,204  4.62  up   0.15
Horizons NYMEX Natural Gas Bull   5,949,436  2.92  off  0.06
Eldorado Gold                     5,540,388 18.71  up   0.62
Manulife Financial                5,492,576 12.87  up   0.25
Horizons NYMEX Crude Oil Bull     4,978,404  7.02  up   0.15
Crocodile Gold                    4,809,607  1.40  off  0.09

Quebec 3-Month T-Bill Average Yield Rises To 0.957%

Average yield on a C$175 million (US$173 million) auction of 91-day province of Quebec treasury bills was 0.957%, up from 0.945% at the previous auction of 91-day bills held Oct. 27. Average price was 99.762 versus 99.765. The bills mature Feb. 4, 2011.


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South American Markets:

BRAZIL:

Brazil Stocks Open Higher
Brazilian stocks opened higher Wednesday. The benchmark Ibovespa stock index opened at 72,097 points, up 0.75% from Monday's close of 71,560. Markets were closed Tuesday for a holiday in Brazil. 

Petroleo Brasileiro SA (PBR, PETR4.BR), Brazil's state-controlled oil company, jumped 1.82% to 26.83 Brazilian reais ($15.82). OGX Petroleo e Gas Participacoes SA (OGXP3.BR), the oil company controlled by Brazilian billionaire Eike Batista, gained 1% to BRL23.

Most Brazilian Blue Chips Gained in early trading.

Vale SA (VALE5.BR, VALE), the world's biggest iron-ore producer which, along with Petrobras, has the biggest weight on the index, rose 0.3% to BRL 48.47. MMX Mineracao e Metalicos SA (MMXM3.BR), the iron-ore producer also controlled by Batista, advanced 0.2% to BRL13.80.

Telephone giant Tele Norte Leste Participacoes SA (TNE, TNLP4.BR), or Oi, slipped 2% to BRL25.92, extending Wednesday's 11% decline.

Leading steel producer CSN (SID, CSNA3.BR) rose 1.85% to BRL28.70.

Rival Usiminas fell 0.2% to BRL21.46.

Minas Gerais utility Cemig (CIG, CMIG4.BR) was little changed, slipping 0.03% to BRL30.03.

Aircraft manufacturer Empresa Brasileira de Aeronautica (ERJ, EMBR3.BR), or Embraer, gained 1.71% to BRL12.50.

Government Ready To Ensure Currency Isn't Overvalued

Brazil's government is ready to take further steps necessary to ensure the Brazilian currency isn't overvalued, President Luiz Inacio Lula da Silva told reporters Wednesday.

Lula, as he's commonly called, spoke at the presidential palace, accompanied by President-elect Dilma Rousseff, his hand-picked successor.

Lula said the two will travel to the Group of 20 heads of state meeting in South Korea Nov. 11-12 to "fight" for Brazil's corner in the ongoing "currency war."

Lula has been Rousseff's mentor in government and was key to her election. But the incumbent said Rousseff would have to shape her own government, and would have to negotiate with all parties in Congress.




CHILE:

Chile Stocks Rise Above 5,000 Points To New Intraday High
Chile September Economic Activity Seen Surging
Chile's blue-chip Ipsa index rose sharply early Wednesday, breaking the 5,000 point-barrier to a record intraday high, as shares rose on strong corporate earnings.

In recent trading the Ipsa gained 0.8% to 5026.97, while market volume was still at a slim 18.5 billion Chilean pesos ($38.0 million), compared to volume of CLP96.38 billion the previous session.

Robust domestic demand and surging investments, which have fueled Chile's quick recovery from last year's recession -- its first in a decade-- and February's devastating earthquake, have also buttressed consumer-related companies.

"So far this [third quarter earnings] season we're seeing strong corporate results, which are mostly in line with market expectations and confirm the positive moment that Chile and its companies are living," said Rodrigo Mujica, analyst with local brokerage BCI Corridor de Bolsa.

Among gainers, fuel and forestry conglomerate Copec (COPEC.SN), which is the Ipsa's heaviest weighted shares, gained 2.7% to CLP9,780.00, energy holding company Enersis (ENERSIS.SN) rose 1.3% to CLP234.50, and department store La Polar (LAPOLAR.SN) increased 1.2% to CLP3,605.00.

Despite a four-day holiday weekend, which some expect to curb growth, most economists estimate Chile's economic activity surged robustly on the year in September.

Economic activity for September, as measured by the central bank's Imacec monthly activity index, likely grew 6.2% on the year, according to the median estimate of 11 analysts polled by Dow Jones Newswires. Estimates ranged from gains of 5.0% to 7%.

The central bank will publish the Imacec, which is considered a proxy for the country's gross domestic product because it encompasses 90% of the GDP's components, at 1230 GMT Friday.


Antofagasta 3Q Copper Output +4.1% On Quarter; Costs Rise As Moly Declines

Chilean miner Antofagasta PLC (ANTO.LN) Wednesday reported a 4.1% rise in third-quarter copper production compared with the second quarter and said costs rose, partly due to a decrease in molybdenum by-product credits.

MEXICO:

Mexico's Stocks Open Higher

Mexico's stocks continued breaking new ground at the opening Wednesday. The stock market's IPC index of leading issues was up 0.7% at 35,959 points around 10:25 a.m. EDT, after setting a new intraday high of 35,998.

Mexico's peso was also stronger against the U.S. dollar, quoted in Mexico City at MXN12.2790 compared with MXN12.3450 at the close Monday. The rate had moved below MXN12.30 Tuesday in international trading.

COLOMBIA:

Colombia's Foreign Debt Climbs To 21.1% Of GDP In July
Colombia's foreign debt, measured in relation to economic output, inched higher in July from a year earlier, fueled by an increase in private-sector bond sales.

Colombia's total foreign debt, including the government and the private sector, stood in July at 21.1% of gross domestic product, the central bank said Wednesday. The figure marks a slight increase from the same month a year earlier, when it stood at 20.8% of GDP.

The country's total foreign debt increased despite a decline in public sector debt, which dropped to 13.3% of GDP from 14.3% a year earlier. Private sector foreign debt, meanwhile, climbed to 7.8% of GDP from 6.5% in July 2009.

The country's total foreign debt in July came in at $60.54 billion, a 24.7% increase from a year earlier. The government's foreign debt was $38.1 billion, a 14% jump from a year earlier.

The country's debt measured in relation to GDP, however, only moved slightly higher thanks to faster economic growth. After posting a tepid 0.8% economic expansion last year, the country grew 4.5% in the second quarter of the year.

Finance Minister Juan Carlos Echeverry has said that the economy could grow between 5% and 6% this year.

The government has already tapped its limits for foreign debt sales this year, but could issue bonds to finance its 2011 budget.

Colombian bonds have benefited from an improved domestic economic outlook and the possibility that they may soon be granted investment-grade status by credit-rating agencies.

President Juan Manuel Santos is pushing a legislative package through Congress that could rein in the country's fiscal deficit, one of the main hurdles for Colombia to obtain the coveted investment-grade status that was lost a decade earlier.

The central government deficit, which excludes state-owned companies and local governments, is expected to close the year at 4.4% of economic output. For 2011, the government estimates it will drop to 4.1%. The Santos administration has said that one of its main policy goals is to reduce the central government's deficit to 1.5% in four years.


VENEZUELA:

Venezuela Resumes Putting Oil Money Into Social Fund
Venezuela Finance Minister Sees 2011 GDP Growth Above 2%

Amid rising oil prices and a growing economy, Venezuela is once again setting aside a portion of its income from oil sales for the Fonden development fund, an off-budget social spending vehicle favored by President Hugo Chavez.

Rafael Ramirez, president of state oil firm Petroleos de Venezuela SA, or PDVSA, said Wednesday that with Venezuelan oil prices sticking above $70 a barrel, the so-called Fonden tax has been re-imposed on all oil sales, which he said adds to a fixed amount PDVSA already provides to social projects.

The social projects include providing low-cost housing and discounted food at socialist-style supermarkets.

In 2009, officials indicated that extra funds were siphoned to Fonden whenever oil prices rose above $60 a barrel. It wasn't immediately clear whether the government has officially raised the minimum level to $70 a barrel.

In its earnings report for the first half of 2010, PDVSA said that during first six months it set aside $4.46 billion in the form of social spending, after devoting $386 million in the same period last year.

Between 2001 and 2010 PDVSA has contributed a total of $69 billion toward social projects, Ramirez said.

Some analysts have criticized the heavy social spending by PDVSA, saying it should instead use a portion of the funds on oil investment projects and new technology that could boost production and increase PDVSA's overall earnings.

PDVSA reported a net profit of $2.7 billion in the first half, a 14.4% decline from the same period last year.

____________________________________________________________
European Markets:

European stocks declined.The Stoxx Europe 600 index fell 0.4% to finish at 266.51..

LONDON:
FTSE 100                     5748.97    -8.46   -0.15%
FTSE 250                    10876.28   -51.22   -0.47%
DJ UK Smaller Companies       906.53    -3.88   -0.43%

London Stocks Close Lower
FTSE 100 closes lower, giving up the day's gains which were made following strong UK PMI services data and upbeat 3Q earnings from the likes of Admiral Group.Admiral Group shares close +2.7%.

Thursday's agenda includes the BOE policy announcement at 1200 GMT.

GERMANY:
The DAX 30 index dropped 0.6% to end at 6,617.80 after rallying to a fresh 2010 closing high in the previous session.

BMW AG Declined 1.4%
BMW's shares have surged 64% over the past 12 months, so investors saw the earnings release as an opportunity to take profits. BMW's third-quarter net profit soared to EUR874 million from EUR78 million in the same period a year ago. The firm also increased its earnings forecast for the current financial year.  

UK To Audit Google

'Significant Breach' Of Law

U.K. officials Wednesday ruled that Google Inc. (GOOG) broke the law by collecting data from wireless networks for its Street View mapping service, reflecting growing scrutiny in Europe of the U.S. Internet company's privacy practices.

UK October Services Sector Expanded 53.2 PMI Versus 52.8 In September

The U.K.'s dominant services sector expanded at a faster pace in October than September, boosted by higher levels of new business and activity, data showed Wednesday.

UK INFLATION RAISE SEEN
Shop Prices Rise Faster In October On Higher Commodity Prices-BRC

U.K. shop price inflation accelerated in October even though retailers didn't pass on the full impact of increases in food prices, a survey shows Wednesday.

WSJ: Santander UK Head To Become Lloyds Banking CEO
Antonio Horta-Osorio, a Portuguese native who guided Santander SA's (SANTANA.SN) expansion into the U.K. banking market, will take the top job at London rival Lloyds Banking Group PLC (LLOY.LN, LYG), Lloyds and Santander said Wednesday.

UK October Services 53.2 PMI Versus 52.8 In Sept
The U.K.'s dominant services sector expanded at a faster pace in October than September, boosted by higher levels of new business and activity, data showed Wednesday.

Cobham PLC Fell 9.5%
Aerospace and defense group Cobham PLC tumbled 9.5% after the company said it is continuing to experience delays and deferrals in the award of some U.S. defense and security contracts.

Next PLC Declined 2.2%
Retailer Next PLC fell 2.2% after its trading update disappointed investors and as Numis downgraded the stock to hold from buy, citing expectations for tougher competition in the sector.


GREECE:

Greece Halts Foreign Mail Delivery

has suspended international airmail for 48 hours after more than a dozen suspicious packages were sent to targets in Greece and across Europe.


FRANCE:

Societe Generale rose 1.9%.
The French bank said third-quarter net profit more than doubled to 896 million euros, beating market expectations, as revenue rose 5.5%. The bank also offered shareholders some reassurance that it wouldn't ask them for more money to comply with new capital rules.

____________________________________________________________
Asian Pacific Markets: 

Some Asian Markets are closed due to a Holiday .

JAPAN:

Mitsubishi UFJ In Talks To Buy RBS Project Finance Assets

In a move that would significantly ramp up its global presence, Mitsubishi UFJ Financial Group, Japan's largest bank, is in talks with the Royal Bank of Scotland Group to buy its project-financing business for about 4 billion pounds, according to people familiar with the matter.

CHINA:
Hong Kong's Hang Seng index broke the 24,000 mark to trade at its highest level since mid-2008, led by banks.


China Finds 100 Tons Gold Deposit In Inner Mongolia

A gold deposit with proven reserves of at least 100 metric tons has been found in Inner Mongolia, the state-controlled Xinhua News Agency reported Wednesday.

____________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(WEDNESDAY, NOV 3, 2010 4:30 PM EDT)

EUR/USD     1.4104     +0.0075 (0.53%)
USD/JPY     81.2900 +0.6200 (0.77%)
GBP/USD     1.6110     +0.0078 (0.49%)
CAD/USD     0.9941     +0.0029 (0.29%)
USD/HKD     7.7513     -0.0002 (0.00%)
USD/CNY     6.6758     -0.0017 (-0.03%)
AUD/USD     1.0002     +0.0016 (0.16%)

WORLD MARKETS SNAPSHOT:
(WEDNESDAY, NOV 3, 2010 4:30 PM EDT)

Shanghai     3,030.99     -14.45 (-0.47%)
Nikkei 225     9,159.98     +5.26 (0.06%)
Hang Seng Index     24,144.67     +473.25 (2.00%)
TSEC     8,293.90     -50.86 (-0.61%)
FTSE 100     5,748.97     -8.46 (-0.15%)
DJ EURO STOXX 50     2,830.43     -30.58 (-1.07%)
CAC 40     3,842.94     -22.78 (-0.59%)
S&P TSX     12,671.12     -10.30 (-0.08%)
S&P/ASX 200     4,722.60     +21.20 (0.45%)
BSE Sensex     20,465.74     +120.05 (0.59%) 


____________________________________________________________
MONDAY'S U.S. ECONOMIC CALENDAR:

7:30 a.m.
Oct Challenger Job-Cut Report

8:15 a.m.
Oct ADP National Employment Report Private Payrolls Forecast (expected +22000)

9:00 a.m.
U.S. Department of the Treasury's quarterly refunding announcement

10:00 a.m.
Sept. Manufacturers' Shipments, Inventories & Orders (M3) Total Orders (expected +1.6%), Orders, Ex-Defense (previous -0.5%), Orders, Ex-Transportation (previous +0.9%), Durable Goods 1st Est (previous -1.3%), Durable Goods Revised (previous -1.5%)

10:00 a.m.
Oct ISM Non-Manufacturing Report Non-Manufacturing PMI (expected 53.5), Non-Manufacturng Business Index (previous 52.8), Prices Index (previous 60.1), Employment Index (previous 50.2), New Orders Index (previous 54.9)

10:30 a.m.
Oct 30 EIA Petroleum Status Report Crude Oil Stocks (previous 366.21M), Crude Oil Stocks (Net Change) (expected +1.2M), Gasoline Stocks (previous 214.94M), (Net Change) (expected +200K), Distillate Stocks (previous 168.44M), (Net Change) (expected -800K), Refinery Usage (expected 84%)

2:15 p.m.

Nov FOMC interest rate decision Federal Funds Rate (Dir) (previous 0), Discount Rate (previous 0.75), Discount Rate Change (previous 0), FOMC Vote For Action (previous 8), FOMC Vote Against Action (previous 1), Federal Funds Rate Change High Range (previous 0.25), Federal Funds Rate Change Low Range (previous 0)

N/A
Oct Domestic Auto Industry Sales
____________________________________________________________
US STOCK MARKET SUMMARY, TUESDAY, NOV. 2, 2010:

Stocks:

U.S. stocks rose broadly as investors awaited the results of U.S. midterm elections. Stocks rose Tuesday as investors moved into riskier assets following a steep drop in the dollar, putting the Dow Jones industrial average near its highest point this year.

The Dow Jones industrial average rose more than 70 points in afternoon trading. The Dow has come close to ending above its high this year of 11,205 four times in the past two weeks. The S&P 500 is up 9, or 0.8 percent, at 1,194, while the Nasdaq composite is up 29, or 1.1 percent, at 2,534. The Russell 2000, the index that tracks smaller companies, rose 2 percent.

A two-day Federal Reserve meeting expected to yield more economic stimulus Wednesday. The energy sector led the broad climb as crude-oil futures rose to nearly $84 a barrel. "This is the culmination of these past few months' excitement about the election, third-quarter earnings and the Fed," said Bruce Bittles, chief investment strategist at Robert W. Baird.

Treasurys:

Treasurys maturing in the next five to 30 years rose Tuesday as investors who believe the Federal Reserve will launch another large scale bond-buying program Wednesday loaded up on U.S. government notes and bonds. Five-to-10-year Treasurys have been seen as the likely target of any quantitative easing by the Federal Open Market Committee, which began its highly anticipated two-day meeting Tuesday and will release its announcement Wednesday.

Forex:

The dollar was broadly lower after a surprise Australian interest rate increase sent investors scrambling into risk-sensitive currencies. "RBA kicked some people in the rear and got them going today," Brian Kim, currency strategist at UBS in Stamford, Conn., said Tuesday.



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