Morning Note

Futures +100bps on continued USD weakness, better-than-expected retail same store sales data, AA’s solid earnings beat last night, and “not horrible” Initial Jobless Claims. See quote section below for BTIG’s same store sales summary. Initial Jobless Claims were 521k versus 540k expected, and Continuing Claims are 6.040M versus 6.105M expected. The metals sector (AWC, BHP, CENX, FCX, AKS, MT, RTP, STLD, X) is bid higher this morning on both AA’s earnings and Gold’s recent surge. Blackstone’s Wein says both gold and the S&P500 will touch 1200 in 2009…

Across the pond, both the ECB and BofE left rates unchanged. A bit further overseas, Australia – fresh on the heels of its interest rate hike – showed further signs of economic recovery by posting job gains for the month. When was the last time anyone saw a positive jobs number? This is adding to the Aussie $ and Kiwi $ strength against the USD. Interesting comments from Fred Hickey’s most recent (10/5/09) Hi Tech Strategist piece: “since late March, the Fed has spent $291B of the $300B authorized, and that buying program will be completed by the end of this month…the bond market, and the economy, has become dependent on this weekly juice injection.” As always, can the government continue to float such massive amounts of debt, particularly is the Fed pulls back its purchases? Great editorial in this morning’s WSJ (pg A17) on USD weakness:

“As the pound slid in the 1950s and ‘60s and the British Empire crumbled, the corporations that prospered were the ones that borrowed pounds aggressively in order to expand abroad. Though British equities rose in pound terms, they generally underperformed gold and foreign equities. At the end of the empire, the giant sucking sound was from British capital and jobs moving offshore as the pound sank…No countries have devalued their way into prosperity, while many – Hong Kong, China, Australia today – have used stable money to invite capital and jobs...If stocks double but the dollar loses half its value, who beyond Wall Street are the winners and losers? There’s been a clear demonstration this decade. The S&P nearly doubled from 2003 to 2007. Those who borrowed to buy won big time. Rich people got richer, seeing their equity bottom line double. At the same time, the dollar’s value was cut nearly in half versus the euro and other stable measures. Capital fled, undercutting job growth. Rent, gasoline, and food prices rose more than wages…Equity gains provide cold comfort when currencies crash…Measured in euros (a more stable ruler than the ever-weakening dollar), US real per capita GDP is down 25% since 2000, while Germany’s is up 4%...”

ARO raises Q3 guidance and posts +19% same store sales vs. +12.7% expected. MSCO raises VIP tgt to $24 from $21. PEP trading higher on earnings. AA beats by 13c and beats on revenues. BARD ups ADBE. UBSS ups ABB. DBAB ups ANSS. TD & Scotia ups AUY. Cramer positive COV. DAI says US truck mkt has bottomed. DDSS higher on completion of distribution and supply agreement for European countries. KAUF ups EBAY. GYMB raises Q3 guidance but warns on same store sales. HOTT reports better than expected SSS and FBRC raises tgt. LLL cut at GSCO. M better than expected SSS. MG IPO priced at $12.50. MOS initiated OP at RBCM. JPHQ ups MWW. KEYB cuts NCR. OMER IPO prices at $10. GSCO ups RAX. RINO files for $150M mixed shelf offering. SCSC guides revenue higher. JPHQ ups SYT. DBAB ups CLX. GSCO ups RAX. MSCO ups ASBC, TCB. CITI cuts MTA. CSFB cuts E. BARD cuts BRCM.

Asia higher overnight. Europe +1% this morning. USD -54 bps. Oil +114bps. Gold +81bps.

Brightpoint News:

PreMarket Brightpoint Activity (yest close/premkt/% change/volume):

PreMarket S&P 500 Activity (last/% change prior close/volume):

LIZ CLAIBORNE 5.98 +15.0 % 129448

ALCOA INC 15.07 +6.13% 5485114

ABERCROMBIE & FI 34.15 +4.56% 250092

LIMITED BRANDS 18.60 +4.32% 26600

AK STEEL HLDG 19.67 +4.18% 20150

TENET HEALTHCARE 5.90 +4.06% 4600

US STEEL CORP 44.25 +3.9 % 81560

JACOBS ENGIN GRP 45.85 +3.8 % 100

TITANIUM METALS 10.14 +3.47% 8184

ITT CORP 51.22 +3.41% 100

MCGRAW-HILL COS 27.00 +3.29% 1920

AMERICAN CAPITAL 3.24 +3.18% 28086

NORFOLK SOUTHERN 45.80 +3.13% 200

GAMESTOP CORP-A 27.05 +3.09% 2050

EATON CORP 57.57 +3.02% 300

Today’s Trivia: With regards to electrical charges, what do AC and DC stand for, and what is the difference between them?

Yesterday's Answer: According to Jon Krakauer’s new book about Pat Tillman, al-Qaeda means “training base” in Arabic.

Best Quotes: “Better Than Expected (14)

Costco September Comps up 1.0% - better than (1.1%)

(Reported Yesterday – CFO – “Fiscal 2009 results were negatively impacted by on-going softness in U.S. sales, primarily the result of a weak economic environment; higher employee benefit costs, mainly consisting of higher health care eligibility and usage; and lower U.S. dollar amounts of international profits as a result of weaker foreign currencies.")

Macy's, Inc. Same-Store Sales Down 2.3% in September - better than (4.8%)

(Co. says although total sales down 8.5%, online sales were up 14.8%, y/y)

Dillard's Sept Same-Store Sales Fell 6.0% - better than (10.0%)

(Sept Sales fell 9% y/y to $519.3M)

Limited Brands reports September SSS up 1.0% - better than (3.4%)

(Total Sales $654.8M Vs $673.4M, y/y)

Abercrombie & Fitch Sept Same-Store Sales Fell 18.0% - better than (21.2%)

(Total Sales decreased 10% to $248.2M, y/y)

Aeropostale reports September SSS up 19.0% - better than 12.3%

(Co. boosts forecasts; 3Q View To EPS 84c-EPS 85c)

American Eagle reports September comparable SSS were flat - better than (4.6%)

(Co. Raises 3Q View To EPS 24c-EPS 26c)

Wet Seal Sept. Same-Store Sales Declined 4.5% - better than (7.3%)

(Sees 3Q Same-Store Sales Within Initial Guidance)

Hot Topic Sep. Comps Down 4.0% - better than (6.9%)

(Reported yesterday – Net Sales $59.3M, down 2.5% y/y)

Children's Place Sept. Comparable Retail Sales Up 4.0% - better than (3.5%)

(Net Sales $174.7M, up 9%, y/y)

Bon-Ton Stores Sept Same-Store Sales Dn 4.8% - better than (7.0%)

(President – “We entered October with inventories fresher than in the prior year and we believe we are strongly positioned for the holiday shopping season.”)

Stage Stores Sept Same-Store Sales Fell 5.6% - better than (7.0%)

(Total Sales $113M, fell 2.4%)

Fred's September SSS up 3.3% - better than (0.8%)

(Net Sales increased 4% to $166.6M from $160.5M)

Zumiez September SSS down 0.8% - better than (1.6%)

(Reported Yesterday - Total Sales Rose 8.4% y/y to $36.5M)

In-Line

BJ's Wholesale Sept Same-Store Sales Fell 0.5% in-line with expectations

(Sept Sales $928M Vs $891.1M, y/y)

Worse Than Expected (3)

Gap Inc. Sept. Same-Store Sales Fell 1.0% - worse than (.7%)

(Net Sales $1.33B vs. $1.34B, decreased 1%, y/y)

Buckle Sept Comp Sales Up 5.1% - worse than 6.1%

(Net Sales increase 10.1% to 80.1M vs. $72,8M, y/y)

Stein Mart reports September SSS down 5.4% - worse than (4.5%)

(Net Sales $101.9M vs. 112M, down 9% y/y)

News & Notes

American Apparel September Comparable Store Sales Decline 15.0%