The Dow jumped 132 points yesterday as there was a bout or renewed optimism about earnings which continued to escalate. Travelers (TRV) led the benchmark, soaring 7.7% on Q3 profits which more than quadrupled. Bellwether stocks like 3M and McDonalds (MCD) also beat up analysts estimates while Amazon (AMZN) impressed after the bell as their Kindle eBook reader is proving a real winner and outselling rivals. Wells Fargo's shares rebounded after investors took another look at the bank's third-quarter earnings from mortgage servicing rights.

Today's highlight thus far earnings wise has been Microsoft who, after the rollout of its new Windows 7, came in with an 8c beat on Street EPS estimates. Ingersoll-Rand, Whirlpool, Honeywell and Schlumberger have also reported better than expected numbers for Q3. So the song remains the same and looks like tech will be well supported today. Interesting that American Express said customers reduced spending 11% in the third quarter, sending its quarterly net down 21%. Commercial lender CIT is liable to be bid up on a DJ News report that they have reached a tentative agreement with the devil, aka Goldman Sachs, over a disputed $3bn financing agreement. The S&P 500 is now trading at its highest level relative to reported earnings in the last five years.

We've just had the US Existing Home Sales number which at +9.4% is a blowout on the +4.9% expected print.

Today's Market Moving Stories

• The Germany Ifo business climate index rose from 91.3 to 91.9, the seventh consecutive increase and the highest level since September 2008. What especially catches the eye is the fact that export expectations continued their upward trend despite a seemingly unstoppable euro exchange rate. Hence, until recently, there are absolutely no signs of a new "euro-sclerosis" which may befall export-dependent companies and act as a highly unwelcomed growth brake. I think that there are two major reasons for this pattern. First, new-order-to-inventory ratios in many countries are still at very favorable levels. Second, sentiment in the euro zone as the most important German export market improved further. However, given historical experience, it is absolutely clear that German companies are not Superman. If the euro exchange continues appreciating, this will hurt companies in a few months' time.
• While Eurozone October PMIs came in above expectations, thanks once again to a very strong French performance. The euro area factory index eventually breached the 50 threshold and rose to 50.7 vs. 49.3, the highest level since April 2008. The services PMI was up to 52.3 vs. 50.9. Positive news. Bottom line – while I acknowledge that the recent data points to a continuation of the recovery trend, I remain cautious on the growth outlook, and so will the ECB.
• Chicago Fed President Charles Evans stated that an exit strategy is not the Fed's primary concern, with the current focus (still) on policy accommodation due to the meaningful slack out in the economy. He added that inflation expectations are accordingly stable, and that he expects inflation to remain at around "1.5% over the next couple of years".