- Indices were up in the pre-market and rose higher after the open this morning on selected positive earnings, only to recede in the wake of a soft Philadelphia Fed reading. Traders seemed to be concentrating on the latter's prices paid component, which rose to its highest level since 1980. Crude futures were off their best levels before the open, but rose as markets fell post-Philly Fed. Financials were up across the board early this morning thanks to a raft of positive earnings reports and a second day of strength for the GSEs. FRE+17% and FNM+21 are up for a second day in a row on more enthusiasm for the Treasury's rescue plan despite the high cost projections. JPM+11.3% reported better-than-expected earnings, although the bank was less than positive in its outlook for the coming quarters. "Our expectation is for the economic environment to continue to be weak - and to likely get weaker - and for the capital markets to remain under stress," said CEO Dimon. "We remain conscious that since substantial risks still remain on our balance sheet." BLK+29% also beat the street; BLK's CEO noted that there are "very attractive opportunities for investors who have sophisticated risk management capabilities" despite the credit crunch. WB was about even mid morning after rising more than 20% with the rest of the sector; the WSJ reported that securities regulators are seeking information from the bank regarding its auction rate securities operations. This news helped bring some financial stocks off their highs, with the XLF trading +$0.45 after being up as much as $1.50. MGIC Investment jumped nearly 75% before reporting, only to fall off to a 30% gain after a larger than expected loss for an otherwise solid quarter. Fellow mortgage insurers PMI and RDN tracked MTG, rising sharply before the latter's report and then cutting gains; both names remain up significantly today. Elsewhere in financials Sanford Bernstein and the WSJ played down the chances of LEH+8% being taken private, although this commentary is not hurting the bank. MER+14.5% is consolidating yesterday's gains and heading higher after CNBC reported the bank would sell its 20% stake in Bloomberg for $4.5B, further aiding its capital position. Solar stocks are flagging JASO-5.6%, ESLR-2.2%, FPL-2.3% and FSLR-2% in the wake of a largely positive Q2 earnings report from SPWR-6.5% as investors show their disappointment that the company's outlook perhaps wasn't sunnier (SPWR guided cautiously for the coming quarter but exceeded estimates for Q4 and FY08). In other earnings news EBAY-16% is down after beating estimates, offering cautious guidance and getting multiple downgrades overnight. HOG+4% bested the Street and reaffirmed its already strong guidance. NUE-10% guided below estimates, warning that its downstream business is challenged by rising costs. In M&A, CATS+52.5% says it is being acquired by ONNN in an all-stock transaction valued at $115M.

- The USD was unable to gain much traction against the European pairs despite generally better headline earnings from US financials, led by JP Morgan. The EUR/USD remained pinned between its 200 and 100 hour moving averages of 1.5808 and 1.5897 through out the session. Dealers had noted that the USD failed to break some notable technical levels despite the drop in oil on Tuesday in through the European morning. However, the Philly's Fed prices paid component reverberated with earlier hawkish comments from ECB's Wellink that there may be no trade-off between inflation. Later in the morning, the IMF added that the global economy is in a "tough spot" between slowing growth and inflation pressures. The GBP/USD remains above the 2.0 level after holding its 200-day moving average at 1.9950.

- The JPY is softer equities remain in positive territory. European shares were up over 3% prior to the Philly Fed data and remain firmly in positive territory. EUR/JPY is back above the 167.50 level and EUR/CHF cross at 1.6150.

- The CAD and AUD are mildly firmer, as oil and gold end the NY morning nears session highs. The Bank of Canada noted that it saw inflation peaking at 4.3% in Q109, adding that it's current interest rate of 3.00% remains appropriate as risks are balanced to the economy.