STOCKS NEWS US-Morgan Stanley upgrades exchange group to in-line

Stocks on the move [HOT-RTRS] Real-time Equity news [U E] [RESF/US]

U.S. stock market report [.N]
1107 ET 12Jan2009-Morgan Stanley upgrades exchange group to in-line
------------------------------------------------------------------------------

Morgan Stanley Monday upgraded the exchange sector to in-line, saying its
cautious view on the group had played out as a bearish volume outlook was being
increasingly discounted. "Muted earnings expectations, better visibility on
volume risk, and lower valuations make us more comfortable with the risk/reward
- and we expect core positives in the model (high free cash flow/return on
equity, low balance sheet risk) to help anchor valuations," it said.

IntercontinentalExchange (ICE.N) remains the sole exchange company Morgan
Stanley rates overweight, and the firm said it does not see sufficient
catalysts for a positive stance on the group. "Volume and competitive (market
share, pricing) risk factors may increase, particularly if macro woes persist
into 2010, presenting significant challenges to the fixed cost infrastructure
of exchanges," it said.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net
1101 ET 12Jan2009 Year-to-date losses cut into stocks recovery
------------------------------------------------------------------------------

A 2.5 percent year-to-date loss in the S&P 500 is cutting into its rebound
from the Nov. 21 bear market intraday low. At the close of 2008, the index had
recovered 20 percent but the recovery is now down to 17 percent.

The Dow is also off 2.6 percent for the year while the Nasdaq has dropped
1.2 percent in 2009.

(Reuters Messaging: rodrigo.campos.reuters.com@reuters.net)
1047 ET-12Jan2009 Susquehanna highlights ratio put spreads in retailers
------------------------------------------------------------------------------

Ratio put spreads in the retailers have become a popular strategy in recent
months as investors finance the purchase of protection or downside exposure
through the sale of a greater quantity of downside puts, said Susquehanna
Financial Group. Implied volatility in the SPDR S&P Retail Trust (XRT.P) has
seen a 15 point drop over the last 30 days. But volatility still remains high
when compared to levels seen in recent years. Susquehanna said with ratio put
spreads, investors look to maximize potential returns by combining fundamental
views with volatility and skew analysis. The ratio put spread involves buying
one put vs. selling a greater amount of a lower strike put. Through the sale of
more of the further out-of-the-money puts, the costs of the trade are
minimized, in some cases resulting in the trade setting up for a credit.

Reuters Messaging: doris.frankel.reuters.com@reuters.net