Dow Jones North American Morning Briefing Friday, October 21, 2011 Today’s Calendar

SNAPSHOT

1:00 p.m. Minneapolis Fed President Kocherlakota speech at Harvard Club of Minnesota

Stocks seen higher with earnings in focus; euro rebounds ahead of summit, dollar mixed; Treasurys unchanged in thin trading; Nymex crude higher at $86.44, Brent crude lower at $109.55, gold higher at $1624.60

3:00 p.m. Federal Reserve Vice Chair Yellen speech at Financial Management Association N/A No major economic indicators scheduled.

Recent Analyst Ratings Actions China Medical Technologies Target Cut To US$5.50 Vs US$10.00 By MS China Water Utilities Sector Started At Positive By JPMorgan New York & Co Cut To Neutral From Buy By Janney Penn National Gaming Cut To Hold From Buy By Brean Murray Carret PETsMART Cut To Mkt Perform From Outperform By Wells Fargo Seagate Technology Raised To Outperform From Neutral By Baird Sound Global Started At Neutral, Target S$0.55 By JPMorgan Sterling Bancorp Cut To Neutral From Buy By Janney USG Corp Cut To Hold From Buy By S&P Capital IQ

WATCH FOR Earnings from General Electric, Verizon and McDonald’s.

OPENING CALL Stocks are expected to open slightly higher, supported by reasonable 3Q corporate earnings so far, said ETX Capital. Still, gains are likely to be limited ahead of this weekend’s meeting of euro-zone ministers. “Third-quarter earnings haven’t been that bad, but Europe is holding everyone back,” said Manoj Ladwa of ETX Capital.

EQUITIES The European Commission, the executive arm of the European Union, has extended the provisional deadline for when it plans to take a decision on the planned tie-up of Deutsche Boerse (DB1.XE) and NYSE Euronext (NYX) to Dec. 22 from Dec. 13, according to the Commission’s website. Following the move, Deutsche Boerse said that the extension by the follows its request for seven additional working days to provide a response to the EU’s formal statement of objections, which it received Oct. 5. Deutsche Boerse said it appreciates the Commission’s flexibility, as it prepares “a full and comprehensive response to the Commission” and its statement of objections, which “is substantial and a long document.” Deutsche Boerse and NYSE Euronext agreed to their $17.7 billion merger in February and won the backing of shareholders in July. A California District Court granted toy maker Mattel’s (MAT) request to dismiss MGA Entertainment’s antitrust claims, but left open the ability for the maker of the Bratz line of dolls to file an amended complaint. The ruling is the latest twist in a long-running copyright-infringement lawsuit that alleged Carter Bryant, a designer of Mattel’s Barbie line, came up with the concept of Bratz when he worked at Mattel in the late 1990s. Mattel has claimed Bryant violated his “inventions agreement” by taking the drawings for the dolls to MGA when he went to work there. The world’s largest private coal miner and steelmaker by output, Peabody Energy (BTU) and ArcelorMittal (MT), are inches from control of Australian coking coal miner Macarthur Coal (MCC.AU) after securing the backing of the company’s largest shareholder CITIC Group, the suitors said Friday.

Dow Jones North American Morning Briefing Friday, October 21, 2011 The Chinese state-owned investment group said it would accept the offer, which values Macarthur at $5 billion, within the next 24 hours, according to a statement from the suitors’ joint-venture body, PEAMCoal. Dril-Quip (DRQ) said Chairman and Chief Executive J. Mike Walker has retired and named a company veteran as his CEO successor. His departure brings to a close what until recently was a period of shared leadership at the manufacturer of offshore drilling equipment. Walker and Larry E. Reimert served as chairman and chief executive jointly until Reimert stepped down as CEO last year because of cancer. He died five months later, and Walker assumed both the CEO and chairman responsibilities on his own. General Motors (GM) has put the Chevrolet brand’s global advertising account into review, according to people familiar with the matter. Chevy is seeking to reduce the dozens of ad agencies it works with globally so it can get a “more consistent ad message around the world,” according to a person familiar with the matter. Consolidating agencies would also help GM save money, two people familiar with the situation said.

FOREX The euro rebounded off the day’s lows in European trading hours, as currency traders became content to hold within pre-existing tight ranges ahead of the weekend’s summit and ongoing uncertainty about a resolution to the euro-zone debt crisis. Meanwhile, sterling remained unaffected by U.K. September public finances data, which showed the U.K. borrowed less in September compared with the same month last year. By 0530 ET, the dollar was down at Y76.72, while the euro was unchanged at $1.3780 and the pound had risen to $1.5804.

BONDS Treasurys were unchanged in thin trading conditions as the market waited for any news or headlines ahead of the E.U. summit this weekend. U.S. trade was limited on weak volumes and while the Philly Fed survey came in stronger than expected, the market found it difficult to sell-off ahead of a “potentially volatile weekend” according to Nomura. Corporate bonds: European sovereign and corporate debt insurance costs were mixed in early trade as investors moved cautiously ahead of the European Union summit this weekend. Around 0245 ET, the SovX Western Europe index, which investors can use to buy or sell default protection on a basket of 15 sovereign borrowers, was three basis points wider at 334/338 basis points, according to data-provider Markit.

Dow Jones North American Morning Briefing Friday, October 21, 2011 COMMODITIES Crude-oil futures were mixed in rangebound trade, as traders took a cautious approach amid conflicting—hopeful and pessimistic—cues regarding Europe’s ability to manage its debt problems. Spot gold traded a touch higher in Europe, although the market remained largely in limbo as investors await progress on the European debt crisis in forthcoming days. Investors had been eyeing a weekend summit of the European Union and, while it had been widely expected to disappoint, news that a second summit will be held by Wednesday next week at the latest has boosted hopes of a comprehensive plan to tackle the crisis. “The markets appear to be feeling a little more positively after news of a second summit, however it’s likely they will just play it safe and probably tread water until more details emerge,” a London-based trader said.

Other Top Stories Of The Day Germany, France Delay Euro Rescue Plan Disagreement between Germany and France over virtually every point force the 27nation bloc to concede a much-anticipated summit of European Union leaders on Sunday won’t produce an agreement.

ECB Stark: Bigger EU Rescue Packages Pose Risk Of More Damage Increasingly large rescue packages for troubled euro-zone members may be more damaging than the sovereign debt problems they are designed to resolve, said Juergen Stark, member of the executive board at the European Central Bank.

Basis For Deal On Debt Crisis Found Says French Minister French Foreign Minister Alain Juppe Friday said negotiations on the region’s debt crisis have made progress, with a basis for agreement on several issues ahead of a series of high-level meetings.

Dow Jones North American Morning Briefing Friday, October 21, 2011 BOJ Shirakawa: Strains Over EU Debt Crisis Easing Slightly Bank of Japan Gov. Masaaki Shirakawa said Friday that financial market strain due to Europe’s sovereign debt crisis seems to be easing somewhat due to efforts by European Union officials to tackle the region’s problems.

Fitch Says Any EU Plan Won’t Solve Ratings Woes Any new deal to shore up the euro-zone likely won’t be enough to relieve pressure on the region’s sovereign ratings, though France’s AAA stamp is safe, a top executive at Fitch Ratings said.

ECB Nowotny: New Forecasts Will Prompt Rate Discussion The European Central Bank’s governing council will discuss interest rates again when it has new economic forecasts in December, Ewald Nowotny, a member of the ECB council, says.

WSJ: Top Lawmakers Push Debt Panel To Wrap Up Senate and House leaders are becoming more directly involved with the supercommittee responsible for delivering a sizable deficit-reduction plan by Thanksgiving, amid growing concern the panel’s members could be deadlocked.

WSJ: SEC Chief Draws A ‘Bright Line’ On Insider Trading Securities and Exchange Commission Chairman Mary Schapiro called insider trading a “problem of tremendous magnitude,” telling a roomful of hedge-fund managers that there is a “pretty bright line” separating stock research from illegal activity.

Kocherlakota: Fed Would Respond If Europe Crisis Spills Into US The head of the Minneapolis Federal Reserve said Thursday that the greatest threat posed by Europe’s sovereign debt crisis is a potential spillover to the U.S. financial system.

Dow Jones North American Morning Briefing Friday, October 21, 2011 German Ifo Business Index Falls To 16-Month Low German business confidence deteriorates for a fourth consecutive month in October, hitting a 16-month low as firms became more skeptical about the outlook for the next six months, the country’s Ifo research institute says.

Fed Officials Mull New Mortgage Bond Buys Federal Reserve officials are considering a new program of buying mortgage-backed securities to boost the ailing economy, though they appear unlikely to move swiftly in this direction.

Japan Approves Steps To Deal With Strong Yen The Cabinet of Japanese Prime Minister Yoshihiko Noda signs off on details for planned steps to deal with the soaring yen, as the currency’s strength threatens to derail the post-disaster recovery in the country’s export-driven economy, already shaken by the European debt crisis and the global slowdown.

Banco Santander Sells 35% Of US Unit For $1.15B MADRID (Dow Jones)—Banco Santander SA (STD) said Friday that it has reached a deal to sell 35% of its U.S. consumer finance unit for $1.15 billion, in an unexpected move to boost solvency at a time of uncertainty in the industry.

Today In Canada Earnings Scheduled Precision Drilling (PDS) 3Q, analysts expect earnings of 21 Canadian cents a share

Economic Indicators (all times EDT) Sept. consumer price index at 7 a.m.

Dow Jones North American Morning Briefing Friday, October 21, 2011 Stocks To Watch Celestica (CLS) posted a 3Q adjusted profit of 26 cents a share, just above analyst expectations Activist fund West Face Capital bought more shares of Hathor (HAT.T) and said the stock is worth more than where it’s trading

Calendar Items (all times EDT) Canadian Finance Minister Jim Flaherty to make an announcement in Ottawa at 10 a.m.