Washington & The Economy

Good morning. We start out the new month and quarter with a negative bias as Wall Street waits for a final resolution to the bailout bill in Congress and reviews the latest data on the economy.

The latest word from Washington is that the Senate plans to vote on its own version this evening along with some changes including an increase of FDIC insurance to $250,000, an extension of renewable energy tax cuts, and a two-year extension of tax breaks for individuals. At this point, expectations are that the bill will pass, but doubt still remains that will hold true. In addition, the SEC and Financial Accounting and Standards Board will provide guidance on the fair value measurement of assets later this week which many think is very important right now and prevent future write-downs at financial institutions who are currently recording assets at fire sale prices.

As for the economy, ADP said that private payrolls fell 8,000 and they revised August's report down 37,000. Challenger also reported that layoff announcements totaled 95,094 jobs in September vs. 88,736 in August with expectations of additional job losses in October. In addition, mortgage applications fell 11% and refinancing applications fell 35% last week as long-term interest rates climb back above 6%.

Premarket gainers: NCC, GOOG, TMA, FNM, FRE, SFI, ETFC, LYG, IRE, PMI, SPWRA, NUAN, FITB, AGM, FTP, SOLF, YGE, CSIQ, ENER, & LAB.

Premarket losers: XRTX, SOLR, DRYS, QGEN, AMD, AEG, ATU, DAI, F, BSX, SOV, FTEK, VIP, PDX, TKS, ALV, THC, UBS, & DRYS.

After the opening bell, we have the ISM Manufacturing and Construction Spending reports at 10:AM and the weekly EIA Petroleum Status report a half-hour later. Automakers also are due to report monthly auto sales for September and they are expected to be fairly ugly.

As you probably could expect, a lot of yesterday's gains are being blamed on end of the quarter portfolio games and not a significant change in sentiment or technicals. Indeed, doubt, mistrust, and negativity rules in the wake of no big bailout for Wall Street and at a minimum we have to be prepared to see some tough trading out there for the rest of the week ahead of Friday's jobs report. October tends to be a choppy trading month anyway and, given the current environment, there's little reason to think that this month will be any different.

Go make it a great day!