European Trade: European markets rose strongly around the opening bell, moving in-line with the U.S. futures market. Earlier in the day the Asian equity indexes were also surrounded by positive momentum, with the Nikkei index and Asian markets closing the trading session up by as much as 2.5%.

For most of the session, the price action in equity markets on Thursday looked much like the day before. Markets in Europe and the US opened positively, buoyed by the BoA’s (BAC) TARP repayment and a better than expected US initial jobless claims report. But those gains were erased after a disappointing non-manufacturing ISM which, like its manufacturing counterpart, took a backward step. Equities then melted into the NY close following negative comments from Fed Governor Bullard, who said that high unemployment may not preclude the FOMC from tightening rates, leaving the S&P500 down 0.8%.

Financial institutions led the retreat in the S&P 500 as Bank of America Corp. prepared to sell more than $18 billion in equity to repay government bailout funds. While American Express (AXP) lost 5.3%, retailers Abercrombie and Fitch (ANF) and Macy’s (M) were also weak after reporting a drop in business last month as discounts failed to persuade shoppers to increase their spending on holiday presents.

On Monday, the Dubai crisis lost its grip on global markets. Risk aversion cooled down, allowing US equities to close in positive territory as financials led a late advance on hopes that possible fallout for US banks will be contained. Earlier, the market was trading cautiously on news of Iran’s ongoing nuclear ambitions and their seizing of a UK yacht, while a better than expected Chicago PMI was countered by mixed holiday-shopping results which sparked concerns about consumer spending. Outperforming sectors were Reits +4.4%, Banks +3.6% and Airlines +3.4 while Hospitals (1.9%), Tobaccos (1.6%) and Retail (1.4%) underperformed. How long before we hear talk of a Santa Claus rally?

Today’s Market Moving Stories

Traders clearly found much to be positive about in their weekend readings for markets, which begun the week on a very positive note Monday. Key European bourses reversed Friday’s losses and the S&P 500 hit another new high, lifted by solid gains in industrials, utilities and consumer cyclicals after the release of further Street-beating earnings reports and some positive broker commentary. And to top it off, Bloomberg is reporting that PIMCO, the world’s biggest bond fund, is considering starting up a stock fund. Apple (AAPL) was the star of the show after the bell eclipsing the expected $1.42 EPS with a $1.82 print. The stock was up 8% after hours.

The positive tone seen in equity markets has carried through to other markets. Commodities are up across the board, perhaps helped by Monday’s comments from China suggesting that data due later this week will affirm that it is on track to achieve its growth target of 8% for this calendar year. Credit spreads have narrowed and the VIX has closed at a new low. In FX markets we have seen a further general weakening in the Dollar, with the stand-out performers being the Kiwi and the Aussie Dollars. The former is up an especially impressive 2.2% over the last 24 hours and is now up 52.9% against the US Dollar since risk attitudes turned positive in early March.

By Boyd Erman

As Xstrata Plc (XSRAF.PK) drops its phantom bid for Anglo American Plc (AAUKY.PK), and Kraft Inc. (KFT) decides whether to go ahead with the takeover it says it plans for Cadbury Plc (CDSCF.PK), the spotlight is falling on the U.K. Takeover Panel's so-called "put up or shut up rule."

Groundhog day at the New York Stock Exchange as UBS (UBS) legend Art Cashin got to wear his new “Dow 10,000” hat after a slew of stellar Q3 earnings reports and better than expected retail sales numbers. But maybe it might be illustrative and enlightening to compare and contrast where we are now versus March 29th, 1999 as Cody Willard at Fox Business has done:

“The first time we crossed this 10k threshold, the biz headlines included Microsoft (MSFT) defending itself against Netscape/DoJ, the Fed Funds rate was at 4.75%, unemployment was at 4.4%, our national public debt stood at about $6.5 trillion and Lil Timmy Geithner was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers. Summers was his mentor, but other sources call him a Rubin protégé.

US equity markets closed modestly in the red Tuesday. But, continuing the theme seen in Q2, Johnson & Johnson (JNJ) reported better-than-expected earnings on slightly worse-than-expected revenues, leading the healthcare sector lower on the day. Consumer cyclicals took some heart from the latest weekly chain store sales report from the ICSC, which showed sales up modestly for a third consecutive week. This was despite the fact that the latest IBD/TIPP economic optimism index showed that consumer sentiment had fallen to its lowest level since July.

Consumer (and of course tech) stocks have taken further heart today from Intel’s (INTC) Q3 earnings report, which was released after the close last night. Equity futures have rallied strongly as the company reported better than expected earnings and revenues, together with a forecast for Q4 which also handily beat market expectations. Note the high end of the company’s guidance for the next quarter would have margins better than that of the tech bubble. In sympathy with Intel’s mega impressive numbers, Euro tech names STMicroelectronics NV (STM) (Europe’s biggest chipmaker) advanced 3.8% and Infineon (IFX) (the second-largest chip maker) mirrored that rise.

The Dow broke out to a new 52-week high yesterday with the S&P 500 not far behind it in light trading. The major support came from tech names after upgrades by Deutsche Bank of the semi conductor sector and Barclays of the hardware space while the VIX declined to 23, a one-year low.

More importantly and raising a few eyebrows today is news that the day before they report earnings, Goldman Sachs (GS) was cut to Neutral by the now independent uber bank analyst Meredith Whitney. Recall her “buy” call just before last quarter’s results was right on the money (and of course her now famous call on Citibank (C) in 2007 when she foresaw a dividend cut and said they were in big trouble). Expect some softness on the back of this as when the Laura Croft of financial analysts speaks, folks listen.

Alcoa (AA), the largest US aluminium producer, on Wednesday posted an adjusted third-quarter income from continuing operations of $0.04 cents a share. Analysts estimated a loss of $0.09 cents a share. Revenue was $4.62 billion, beating analysts’ estimates of $4.51 billion.

But one thing to highlight is the “better than expected” results fallacy. Who are these dodgy analysts who keep getting exceeded?

• Fed probed on Lehman dealings. A court-appointed examiner is investigating whether the Fed improperly cut in front of other creditors in Lehman's $613B bankruptcy. Creditors are outraged that the Fed, which lent Lehman $46B last September just before it went under, were paid back promptly and in full, while they've languished in bankruptcy courts hoping to recoup at least some of their losses. Generally, government agencies, including the Fed, can't be held legally accountable for their actions, though it's not clear that the sovereign immunity principle extends to bankruptcy law.
• Comcast, NBC in talks. Wall Street is largely discounting Comcast's (CMCSA) nuanced denial that it's courting NBC Universal (GE), which left plenty of room for interpretation ("while we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate"). In one scenario favored by Comcast, the two would form a new JV led by Comcast with a 51% stake. Potential sticking points include Comcast's desire to spend as little cash as possible vs. GE's need for money, and Vivendi's 20% stake in NBCU. Investors, who have long pressed Comcast to send more cash their way, aren't likely to be keen on a deal. CMCSA fell 7.2% Thursday, but recovered after-hours. Commenting to reporters on the rumor Friday, GE CEO Jeff Immelt said, "Discussions are ongoing whether it is an IPO or another partnership."
• CIT launches debt swap. CIT Group (CIT) unveiled its debt exchange, asking bondholders to slash at least $5.7B in unsecured debt for either new secured bonds maturing in 4-8 years, preferred shares, or a combination. Sources say creditors holding bonds closest to maturity would receive proportionally more new debt than equity in an effort to achieve some equality, and not pit one group of bondholders against another. Should the exchange fail, CIT will seek court protection through a prepackaged bankruptcy, which it says offers less value to creditors than its proposal.
• Blindsided, BofA ponders options. Sources say Bank of America (BAC) is considering a temporary fill-in for departing CEO Ken Lewis to keep the bank on course while more-permanent candidates mature, yet another sign of how Lewis' sudden resignation blindsided the board. BofA meets today to decide on a course of action, and who will sit on the nominating committee. Sources say the government will have a say in the final selection. There are any number of directions the board could take, with some thought to favor an insider (Sallie Krawcheck, chief risk officer Greg Curl?), and others leaning toward a brand-name outsider (Alan Schwartz, Jerry Grundhofer, Heidi Miller?).
• Bernanke suggests regulation by committee. As expected, Ben Bernanke urged lawmakers Thursday to put the Fed in charge of regulating the largest U.S. financial institutions, but in a nod to critics worried about the Fed's immense power, Bernanke suggested a council of regulators - led by the Treasury - collaborate in monitoring systemic risk. "We have never supported, and the administration has never supported, a situation in which the Fed would be some kind of untrammeled super-regulator," he said (testimony). While many have praised the Fed's efforts to tame the crisis, it's also been criticized for not seeing it coming. As a result, even some of its biggest supporters in Congress predict the Fed's role as a watchdog going forward will be more modest than originally thought.
• U.K. tells Xstrata to put up or shut up. U.K.'s Takeover Panel gave Xstrata (XSRAF.PK) until Oct. 20 to formalize its June 'merger of equals' offer for Anglo American (AAUKY.PK) or walk away for six months. Unless Xstrata has a change of heart about paying a premium or surrendering more than 50% of the combo, it may be difficult to avoid walking away given the broad lack of enthusiasm from Anglo shareholders. "We have reaffirmed our conclusion that Xstrata's proposal is not in the interests of our shareholders," Anglo chief John Parker reiterated today.
• Northrop hands Boeing stunning defeat. Northrop Grumman (NOC) beat out Boeing (BA) for a $3.8B contract to maintain and service the U.S. Air Force's fleet of KC-10 refueling tankers. Analysts said the win was a "stunning upset" for Northrop, given that Boeing has been servicing the KC-10 since its introduction. Boeing said it will review the decision before deciding whether to appeal to the GAO. NOC +5.4% after hours. BA -0.7%.
• Car sales retreat. After two red-hot months of cash-for-clunkers sales, carmakers posted tepid numbers Thursday. GM said its sales dove 45%, Chrysler reported a 42% drop, sales were down 20% at Honda (HMC), 13% at Toyota (TM) and 7% at Nissan (NSANY). Ford's (F) sales fell just 5%, capping a 5% gain for Q3 - its first positive quarter in four years. Hyundai, which has been gaining momentum throughout the recession, was the best performer at +27%. In aggregate, sales dropped 23% from last year and 41% from August.
• Sept. ISM Manufacturing Index came in at 52.6%, short of the consensus of 54%, but still the fifth straight month of expansion (+50%). While the growth rate moderated slightly vs. August's 52.9%, the recovery broadened as the number of industries reporting growth increased from 11 to 13.
• Initial Jobless Claims rose 17K to 551,000, worse than 530,000 consensus forecast. Continuing claims declined by 70K to 6,090,000. Goldman Sachs subsequently downward adjusted its forecast for today's NFP number to -250K vs. a previous -200K and consensus of -175K.
• Aug. Pending Home Sales rose 6.4% from July, well ahead of consensus of +1%. Sales were 12.4% higher vs. last year. The index is now at its highest level since March 2007. The rise "shows buyers are returning to the market and signing contracts," NAR's Lawrence Yun said, adding that some deals aren't closing due to "complex new appraisal rules."
• August Construction Spending: +0.8% to $941.9B/year vs. consensus of -0.1%, and 11.6% below the year-ago estimate. July estimate revised to $934.6B. In the first eight months, spending was $629.5B, 11.9% below the same period in 2008.

Earnings: Thursday After Close

• Accenture (ACN): FQ4 EPS of $0.63 (ex-charge) in-line. Revenue of $5.15B (-14%) in-line. Took charge accounting for $0.24/share; increases annual dividend 50% to $0.75; increases share buyback by $4B. Shares -1.3% AH. (PR)
• Corel Corp. (CREL): Q3 EPS of $0.27 beats by $0.09 (one estimate). Revenue of $47M (-28%) vs. $48.5M. Shares -0.7% AH. (PR)
• Global Payments (GPN): FQ1 EPS of $0.71 beats by $0.06. Revenue of $441M (+9%) vs. $425M. Shares -1.6% AH. (PR)
• Immucor (BLUD): FQ1 EPS of $0.30 beats by $0.05. Revenue of $83M (+14%) vs. $78M. Sees full-year EPS of $1.10-1.17 vs. $1.11. Shares +4.3% AH. (PR)

Today's Markets

Asia markets dropped strongly Friday in reaction to Thursday's U.S. losses. Europe stocks are lower, and futures are down ahead of the NFP number at 8:30 (see today's calendar below).

1. Buy palladium , sell platinum.
2. Buy a basket of palladium and platinum, sell South African Rand.

Duration:

Historically it has acted as a hedge against inflation - as inflation goes up, the price of gold goes up along with it. The five highest years of inflation in the U.S. from the end of World War II were 1946, 1974, 1975, 1979, and 1980. During those five years, the average real return on stocks, as measured by the Dow, was minus (-12.33%), while the average real return on gold was 130.4%.

As Canaccord Adams analysts Wendell Zerb, Eric Zaunscherb and Nicholas Campbell pointed out in their "Junior Mining Weekly" report, the real trend has been juniors merging with each other. In a couple of recent cases (Klondex Mines Ltd. (KLNDF.PK) and Northern Continental Resources Inc.) junior companies actually outbid senior companies for assets. That is not the way the game is supposed to be played.

With the economic news relatively light this week the big focus will be on earnings with some 28% of the S&P 500 slated to report including 10 heavyweight Dow components (3M (MMM), American Express (AXP), AT&T (T), Boeing (BA), Cat (CAT), Coke (KO), Dupont (DD), Merck (MRK), Microsoft (MSFT), and Pfizer (PFE)). Financials reporting this week include Morgan Stanley (MS) and Wells Fargo (WFC). Other bellwethers of the US economy and household names to watch out for include Apple (AAPL) and Coca-Cola (Tues), Pfizer (Weds), and McDonald's (MCD).

On June 17, Xstrata proposed a $39-billion merger of equals with Anglo American that would create a mining giant to better rival BHP Billiton (BHP), the world's largest diversified miner. However, five days later Anglo-American's board of directors rejected the offer, saying it was "totally unacceptable,” and would dilute Anglo’s “unique exposure” to platinum, iron ore and diamond markets.

Equity markets finished down again last week with the Dow Jones off 1.2% and the FTSE 100 down 2.2%. World indices had been on the back foot from the very start of the week due to a bearish World Bank report where they downgraded their forecasts for global economic prospects. Wednesday’s US Federal Reserve interest rate decision caused little movement as they left the target rate at between 0 and 0.25% as expected. It was a high volume week with the economic data a shade better than expected on average. But consumers are saving the stimulus as the savings ratio has now climbed to a 15 year high, not good news when the consumer is 70% of the economy. Two of the big winners on the week were the car rental giants Hertz (HTZ) and Avis (CAR) after positive comments from Hertz CEO Mark Frissora who sees US and European demand stabilising and said that the outlook for summer bookings had improved.

Oil’s rally showed further signs of stalling as Brent Crude Oil slipped 0.8% to 69 (taking the bid out of energy stocks). Gold had a volatile week and ended up 0.5% at 940. The US dollar lost some ground as improving economic sentiment dented haven demand and traders moved into the seemingly riskier Euro. EURUSD rose 0.9% to back over 1.40 at 1.4067. GBPUSD gained 0.16%.

• Novartis, Elan in talks. Novartis (NVS) is reportedly in talks to buy parts of Elan (ELN), including its key multiple sclerosis drug Tysabri and Alzheimer's disease drug pipeline, but a final deal is still 'some way off.' Earlier this year, Elan said it was open to a merger or sale, and on June 10 said it expects to complete a strategic transaction 'in the near term.' Premarket: NVS -1.4%, ELN +1.9% (7:00 ET).
• Anglo seeks merger defenses. Sources say Anglo American (AAUK) is building its defenses against a merger offer from Xstrata (XSRAF.PK) by engaging in early stage negotiations with Chinalco (ACH) and at least one unidentified Middle Eastern investor to inject hundreds of millions of dollars into Anglo's Brazilian iron ore business. Anglo is also reportedly renewing its efforts to bring Sir John Parker in as its new chairman.
• UBS nearing tax settlement? According to Swiss newspaper reports, UBS (UBS) will pay 3-5B Swiss francs ($2.77-4.62B) in the next two weeks to settle a U.S. tax probe, and is under pressure by the Swiss central bank to sign the deal in order to bring stability back to the Swiss banking sector. However, some following the case are skeptical the U.S. government would drop its probe without major concessions from Switzerland. Shares -2.8% premarket (7:00 ET).
• Vodafone mulls T-Mobile bid. Vodafone (VOD) is reportedly considering a bid to buy T-Mobile UK (DT) in a move that would shake up the U.K. mobile phone market and potentially face resistance from regulators. The deal would create a company with around 35M subscribers, or about half of the U.K. mobile market. T-Mobile UK has underperformed for several years, and JPMorgan has been appointed to advise parent company Deutsche Telekom on strategic options for the business.
• DoJ extends Oracle-Sun review. The Department of Justice extended its review of Oracle's (ORCL) proposed acquisition of Sun Microsystems (JAVA). The government's 30-day period to review the deal expired Friday, but the Justice Department requested both companies provide more information before it gives any sort of acquisition approval. Though the extension is unusual, an Oracle representative said the investigation is expected to end soon and that discussions with the Justice Department had been positive.
• GM accepts product liability. Under pressure from more than a dozen state attorneys general and several consumer-advocacy groups, General Motors agreed to assume legal responsibility for injuries caused by vehicle defects after GM emerges from bankruptcy. Under GM's original bankruptcy plan, future car-accident victims seeking to sue GM would have been treated as unsecured creditors and forced to fight over GM's old bankruptcy estate. Car-accident victims with pending lawsuits and those who won damages against GM before it filed for bankruptcy will still be unable to bring claims against the new GM.
• GM holds back-up talks on Opel. Belgian and Chinese bidders may sign non-binding agreements to buy General Motors' Opel unit as a fallback to the carmaker's proposed deal with Magna International (MGA). RHJ International and Beijing Automotive Industry Holding Co. have gotten involved as the Magna talks slow down.
• Watson Wyatt/Towers Perrin merger. Consulting firms Towers Perrin Forster & Crosby and Watson Wyatt Worldwide (WW) plan to merge in an all-stock deal valued at around $3.5B, seeking to cut costs as clients pare back discretionary spending. Watson Wyatt shareholders will get 50% of the shares in the combined company, to be named Towers Watson & Co. Watson CEO John Haley will be chairman and CEO of the combined company, while Tower CEO Mark Mactas will serve as president and COO.
• Porsche claims VW blackmail. Porsche's chairman Wolfgang Porsche accused Volkswagen (VLKAY.PK) of attempting to blackmail the debt-ridden company into accepting a reworked merger plan, reigniting an ongoing dispute between the two firms. Porsche rejected the Monday deadline he claimed Volkswagen had imposed, saying "ultimatums do not belong in the 21st century. We won’t be blackmailed." Volkswagen denied it had issued an ultimatum.
• Madoff faces the music. Madoff goes to court today to be sentenced, and is expected to receive an effective life term. On Friday, the judge in Madoff's criminal case ruled Madoff's multiple houses and apartments will be sold to raise money to pay back victims of his $65B Ponzi scheme, along with Madoff's Mercedes Benz and VW cars, boats and trailers. Ruth Madoff will retain $2.5M and give up her claims to more than $80M in assets.
• Five more failed banks. Five more banks were seized by regulators, bringing this year's total failures to 45. All told, the five banks held assets worth around $1.04B.

Today's Markets

• In Asia, Nikkei -1% to 9,783. Hang Seng -0.4% to 18,529. Shanghai +1.6% to 2,975. BSE +0.1% to 14,786.
• In Europe at midday, London +0.6%. Paris +1.3%. Frankfurt +1.2%.
• U.S. futures: Dow +0.3%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $69.82. Gold +0.2% to $942.30.

Monday's Economic Calendar

• 3:00 PM Farm Prices
• Notable earnings after Monday's close: APOL, HRB

Seeking Alpha editor Eli Hoffmann contributed to this post.