Barchart U.S. Morning Call
Monday, September 14, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down 1.18% and Dec S&Ps are 8.60 points (-0.83%). Bearish factors include talk of overvaluation in global stock markets and China's threat of trade retaliation on US exports of chickens and auto products after President Obama slapped tariffs on US tire imports from China. The US over the weekend announced tariffs on $1.8 billion of tires from China in response to complaints by US unions about low prices on Chinese tires. Mining stocks such as BHP Billiton (-3.2%) are trading lower on today's sell-off in industrial metals prices. Societe Generale is down 3.4% this morning and Deutsche Bank is down 2.6% after Nomura cut its recommendations on the two stocks. Also, Moody's said today that UK banks are likely to suffer additional losses of at least 130 billion pounds, adding to the 110 billion pounds of losses seen already since the credit crisis began in 2007. The Russian central bank today cut its refinancing rate by 25 bp to 10.5% from 10.75% and cut the repurchase rate on central bank loans by 25 bp to 9.50% from 9.75% in an attempt to stimuluate the economy. The Russian central bank has been limited in its ability to cut interest rates by an inflation rate near 10% and by the threat of weakness in the ruble, which fell 35% in the second half of 2008. The Asian markets today closed lower nearly across the board: Japan -2.32%, Hong Kong -1.08%, China +1.71%, Taiwan -1.09%, Australia -1.41%, Singapore -1.54%, South Korea -1.11%, Bombay -0.31%. Japanese exporter stocks such as Sony, Honda and Toyota fell today on the appreciation in the yen during the Asian session, which makes Japanese exports more expensive.
Overnight U.S. Stock News
December S&Ps this morning are trading -8.60 points on valuation concerns and weak Asian and European stocks. The US stock market last Friday gave up an early rally and closed slightly lower (Dow -0.23%, S&P 500 -0.14%, Nasdaq Composite -0.15%). The S&P 500 Index posted an 11-month high before closing lower. Bearish factors included (1) valuation concerns after the 6-month rally pushed the valuation of the S&P 500 Index to nearly 19 times reported earnings, a 5-year high, and raised concerns that the recent rally has outpaced the prospects for future earnings, (2) weakness in energy producers after crude oil prices slumped, and (3) the warning from Morgan Stanley that the odds of a US-led "relapse" into global recession may be as high as one-in-three if any shock to the US economy adds to already-depressed consumer demand.
Bullish factors last Friday included (1) the larger-than-expected increase in the Sep US University of Michigan consumer confidence index, (2) carry-over strength from a rally in the Chinese stock market which was supported by larger-than-expectd increases in Aug China new-lending and industrial production, which may support a resumption of growth in the global economy, and (3) the fall in the 10-year T-note yield to a 2-month low, which may bolster the housing market.
Today's Market Focus
December 10-year T-notes this morning are trading -3 ticks on some long liquidation pressure after last week's rally, failing to get a boost today from lower global stocks. Dec T-note prices last Friday rallied to a 3-3/4 month high early in the session but then gave back most of their gains into the close to finally settle up +2.5 ticks. The 10-year T-note yield dropped to a 2-month low of 3.27% before closing little changed. Bullish factors for T-note prices included (1) the assertion by CRT Capital Group LLC that the Treasury market is cheap compared to other high grade bonds, corporate debt and mortgage securities as the spread between the 10-year T-note and Fannie Mae's current coupon 30-year fixed-rate mortgage bond is 94.7 bp, compared with an average of about 104.6 bp this year, and (2) dovish comments from Chicago Fed President Charles Evans who said inflation and inflation expectations are currently "under control," and from Fed Vice Chairman Donald Kohn who said a sharp increase in short-term interest rates is unlikely because of low inflation and a feeble world economy. Bearish factors included (1) the larger-than-expected increase in the Sep US University of Michigan consumer confidence (+4.5 to 70.2 versus expectations of +1.8 to 67.5), and (2) reduced safe-haven demand for Treasuries after the S&P 500 Index rallied to an 11-month high.
The dollar index this morning is trading +0.42 points with the dollar/yen up 0.14 yen and the euro/dollar down -0.27 cents. The dollar started out today's Asian session little changed but has since rallied. The dollar index last Friday closed lower for the sixth straight session and posted a new 11-1/2 month low. Bearish factors included (1) the rally in global stock markets that prompted reduced safe-haven demand for dollars as investors fled the greenback in search of higher-yielding assets, (2) the prediction from UniCredit SpA that the euro may climb to $1.53 by year-end as strength in global stock markets indicate investors are more willing to take on risk, and (3) the prediction from Morgan Stanley that the dollar's decline has further to run and may continue another 6% from current levels through 2010 as Fed tightening won't begin to support the dollar until 2011. Bullish factors for the dollar included (1) the prediction from Bank of Tokyo-Mitsubishi UFJ that the dollar may strengthen shortly as the recovery of the US economy drives up yields on fixed income assets, and (2) the strong foreign demand seen for the recent auctions of $70 billion in T-notes and T-bonds which shows that despite rising US deficits, foreign demand for US dollar assets has yet to wane.
October crude oil prices this morning are -67 cents a barrel and Oct gasoline is trading -1.87 cents a gallon. Bearish factors center on lower global stocks and worries about a weak economic rebound. Oct crude oil prices last Friday climbed up to a 1-1/2 week high before selling-off sharply and closing down -2.63 a barrel. October gasoline closed down -2.45 cents a gallon at a 1-1/2 month low. Bearish factors included (1) long-liquidation after crude prices had rallied for four straight sessions, (2) carry-over weakness from gasoline prices which tumbled to a 1-1/2 month low, and (3) the prediction from Bank of America-Merrill Lynch that oil prices may drop in the event of a warmer-than-average winter because heating-oil inventories in the US and Europe are ample. Bullish factors included (1) China's Aug crude oil imports rising +18% y/y to 4.2 million bpd, the second highest on record and an indication of strong demand, and (2) the larger-than-expected increase in the Sep US University of Michigan consumer confidence, spurring optimism that the economy will improve enough to increase fuel demand.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) PLL-Pall Corp. (BEST earnings consensus $0.52), SCMR-Sycamore Networks (-0.03), PSEC-Prospect Capital (0.37), PSEM-Pericom Semiconductor (0.05), EPHC-Epoch Holding (0.06).
Global Financial Calendar
| Monday 9/14/2009 |
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| United States |
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| 0835 ET | Fed Governor Elizabeth Duke speaks on "Regulatory Perspectives on the Changing Accounting Landscape" at the American Institute of Certified Public Accountants Annual Conference on Banking and Savings Institutions. |
| 1230 ET | Richmond Fed President Jeffrey Lacker speaks on "Choices in Financial Regulation" at a luncheon in Charlotte. |
| 1300 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1550 ET | San Francisco Fed President Janet Yellen speaks on the US economic outlook to the Certified Financial Analysts of San Francisco. |
| Japan |
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| 0000 ET | Revised Jul Japan industrial production, previous +1.9% m/m and -22.9% y/y. Revised Jul capacity utilization, |
| Euro-Zone |
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| 0500 ET | Q2 Euro-Zone employment, Q1 -0.8% q/q and -1.2% y/y. |
| 0500 ET | Jul Euro-Zone industrial production expected -0.2% m/m and -16.7% y/y, Jun -0.6% m/m and -17.0% y/y. |
| 0515 ET | European Commission issues economic forecasts for GDP and CPI, followed by press conference by EU Monetary Affairs Commissioner Joaquin Almunia. |
| Canada |
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| 0830 ET | Q2 Canadian capacity utilization rate expected 65.5%, Q1 69.3%. |
| United Kingdom |
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| 1901 ET | Aug UK RICS house price balance expected unchanged, Jul -8.1%. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1028.70 | -8.60 | -0.83% | 07:11:58 |
| DJIA (CBOT) (Z9) | 9464 | -67 | -0.70% | 07:08:58 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2416.32 | -28.89 | -1.18% | 07:07:30 |
| London UK FTSE Index | 4974.52 | -36.95 | -0.74% | 07:07:30 |
| German Dax Index | 5572.70 | -51.32 | -0.91% | 07:07:40 |
| French CAC 40 Index | 3697.14 | -37.75 | -1.01% | 07:07:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10202 | -242 | -2.32% | 03:00:16 |
| Hong Kong Hang Seng | 20932 | -229 | -1.08% | 04:01:30 |
| China CSI 300 Index | 3293 | 55 | 1.71% | 03:01:06 |
| Taiwan TAIEX Index | 7257 | -80 | -1.09% | 01:46:00 |
| Australian S&P 200 | 4531.1 | -65 | -1.41% | 02:47:03 |
| Singapore Str. Times | 2639.74 | -41.29 | -1.54% | 05:10:01 |
| South Korea KOSPI 200 | 213.42 | -2.39 | -1.11% | 05:03:25 |
| Bombay Sensex 30 | 16214 | -50.11 | -0.31% | 06:29:55 |
| Karachi KSE-100 | 9075 | 16 | 0.18% | 04:13:59 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 119.735 | -0.030 | -0.08% | 07:12:37 |
| Cash 10yr T-note Price | 102.050 | -0.055 | -0.17% | 07:22:00 |
| Cash 10yr T-note Yield | 3.367 | 0.020 | 0.60% | 07:21 |
| 5yr T-note (CBT)(Z9) | 115.275 | -0.015 | -0.03% | 07:12:30 |
| Cash 5yr T-note Price | 100.105 | -0.005 | -0.02% | 07:18:30 |
| Cash 5yr T-note Yield | 2.304 | 0.003 | 0.14% | 07:18 |
| 30-yr T-bond (CBT)(Z9) | 120.53 | -0.09 | -0.23% | 07:12:30 |
| Cash 30yr T-bond Price | 105.065 | -0.075 | -0.22% | 07:21:31 |
| Cash 30yr T-bond Yield | 4.193 | 0.013 | 0.32% | 07:21 |
| Eurodollars (CME)(Z9) | 99.575 | 0.000 | 0.00% | 07:12:18 |
| Eurodollars (CME)(H0) | 99.365 | -0.010 | -0.01% | 07:12:18 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.26 | 0.11 | 0.08% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.510 | 0.000 | 0.00% | 05:16:11 |
| Bunds (Eurex) (Z9) | 121.47 | -0.14 | -0.12% | 07:07:28 |
| Euribor (Eurex) (Z9) | 99.30 | -0.01 | -0.01% | 05:39:26 |
| UK Gilts (Liffe) (Z9) | 118.25 | 0.08 | 0.07% | 07:07:00 |
| Short Stlg (Liffe) (Z9) | 99.37 | 0.00 | 0.00% | 06:59:03 |
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| Forex |
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| U.S. Dollar Index | 77.02 | 0.42 | 0.54% | 07:12:36 |
| US Dollar-Japanese Yen | 90.85 | 0.14 | 0.15% | 07:22:41 |
| EuroFX-US Dollar | 1.4544 | -0.0027 | -0.27% | 07:22:41 |
| US Dollar-Swiss Franc | 1.0404 | 0.0020 | 0.20% | 07:22:40 |
| British Pound-US$ | 1.6528 | -0.0128 | -1.28% | 07:22:41 |
| US$-Canadian Dlr | 1.0907 | 0.0138 | 1.38% | 07:22:41 |
| Yen (Globex) (Z9) | 1.1016 | -0.0032 | -0.32% | 07:12:41 |
| Euro FX (Globex) (Z9) | 1.4539 | -0.0053 | -0.36% | 07:12:34 |
| SwissFranc (Globex)(Z9) | 0.9618 | -0.0033 | -0.34% | 07:12:08 |
| British Pound(Glbx)(Z9) | 1.6539 | -0.0147 | -0.88% | 07:12:24 |
| Canadian$ (Globex)(Z9) | 0.9165 | -0.0123 | -1.32% | 07:12:30 |
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| Commodities |
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| Gold (Comex) (Z9) | 997.2 | -9.2 | -0.91% | 07:12:34 |
| Silver (Comex) (Z9) | 16.390 | -0.310 | -1.86% | 07:12:34 |
| Copper (Comex) (Z9) | 279.8 | -4.9 | -1.70% | 07:12:16 |
| Crude Oil (Nymex) (V9) | 68.62 | -0.67 | -0.97% | 07:12:37 |
| Gasoline (Nymex) (V9) | 174.11 | -1.87 | -1.06% | 07:06:06 |
| Heating Oil(Nymex)(V9) | 172.25 | -0.83 | -0.48% | 07:05:28 |
| NaturalGas(Nymex)(V9) | 3.016 | 0.056 | 1.89% | 07:12:36 |
| Corn (CBOT) (Z9) | 315.75 | -4.00 | -1.25% | 07:12:36 |
| Soybeans (CBOT) (X9) | 896.50 | -6.50 | -0.72% | 07:12:00 |
| Wheat (CBOT) (Z9) | 460.25 | -7.00 | -1.50% | 07:00:28 |
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About the author
Get Barchart U.S. Morning Call delivered to your email inbox! Sign up for free here. Barchart U.S. Morning Call is written by the experienced members of the Commodity Research Bureau and the Barchart Research Team. Commodity Research Bureau (CRB) has been providing research to the financial and commodity community since 1934. If you have any questions for our analysts, please contact us at support@crbtrader.com. Sent every morning, "Morning Call" summarizes overnight global market news, along with a U.S. market forecast for the day ahead. It Includes upcoming earnings reports, a global financial calendar, and quote board overview of where the markets are standing.
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