Barchart U.S. Morning Call
Thursday, September 17, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.49% and Dec S&Ps are up +1.00 point, both at 11-1/4 month highs. The dollar's slump continues as the dollar index tumbled to a 11-3/4 month low which boosted gold to a fresh 1-1/2 year high. Banks in Ireland rallied sharply after the Irish government detailed plans to purge banks of toxic assets. Bank of Ireland Plc rose 15% and Allied Irish Banks surged 25% after Ireland's National Asset Management Agency announced a proposal to spend 54 billion euros ($80 billion) buying real-estate loans in which the agency proposes to pay a 30% discount on the 77 billion-euro book value of the loans. Europe's trade surplus increased for a fourth straight month in July as exports rose +4.1% m/m, adding to signs the Euro-Zone is starting to emerge from recession. The Jul Euro-Zone trade surplus rose ro 6.8 billion euros ($10 billion), the largest since 2004, from a 2.3 billion euro surplus in Jun. The euro currency rallied to an 11-1/2 month high after the data was released.
The Asian markets today closed mostly higer with Japan +1.69%, Hong Kong +1.71%, China +1.90%, Taiwan +0.50%, Australia +1.39%, Singapore -0.07%, South Korea +0.81%, India +0.20%. China's Shanghai Composite Index jumped to a 1-month high, led by gains in commodity producers, while Japanese stocks rose after a survey showed Japan's manufacturers turned optimistic for the first time in almost two years. The Q3 Japan BSI large manufacturing business condition jumped to 15.5 from a Q2 level of -13.2. The 15.5 reading in Q3 is the highest since the survey began in 2004, with a reading above zero signaling optimists outnumber pessimists. The Bank of Japan as expected kept its benchmark overnight lending rate unchanged at 0.1% and maintained their emergency lending programs to banks and companies. While describing the economy as "showing signs of recovery," an upgrade from the "stopped worsening" assessment made last month, the BOJ said that it still sess "downside" risks to growth.
Overnight U.S. Stock News
December S&Ps this morning are trading higher by +1.00 point. The US stock market yesterday rallied after mid-morning and finished on its high (Dow +1.12%, S&P 500 +1.53%, Nasdaq Composite +1.45%). The S&P 500 Index posted an 11-1/4 month high. Bullish factors included (1) scant inflation pressures after the Aug CPI posted its sixth consecutive monthly contraction in annual prices and the Aug core CPI fell to a 5-1/2 year low, (2) the larger-than-expected increase in Aug industrial production as US industrial production posted its first back-to-back increase in nearly 2 years, fueling speculation that the US economy has returned to growth, (3) a rally in mining stocks and metals companies after gold prices soared to a 1-1/2 year high, (4) an advance in newspaper companies after TNS Media Intelligence, a New York-based researcher, said advertising is showing signs of improvement this quarter from last year, (5) strength in homebuilders after the Sep NAHB housing market index rose to a 1-1/2 year high, and (6) the shrinkage in the Q2 US current account balance, the broadest measure of trade, to its smallest deficit since 2001.
Bearish factors included (1) a report from the Medley Global Advisors, a consulting firm used by hedge funds, that there is support within the Fed for tightening monetary policy as soon as next week's FOMC meeting, and (2) weakness in US phone companies after UBS AG downgraded Verizon Communications to "neutral" from "buy," saying the wireline market continues to worsen and is unlikely to improve until 2010.
Nucor (NUE) rallied 2.2% in re-market trading after Citigroup upgraded the second-largest US steel priducer to "buy" from "hold" on expectations the company may return to profit in Q4.
Oracle (ORCL) fell over 2% in pre-market trading after the company announced late yestetday that sales of database programs fell to $711 million in the period ended Aug 31, lower than analyst estimates of $826 million.
Today's Market Focus
December 10-year T-notes this morning are trading down -5.5 ticks. Dec T-note prices yesterday gyrated on either side of unchanged throughout the day before they faded into the close and settled down -9.5 ticks. Bearish factors included (1) the larger-than-expected increase in Aug US industrial production and the upward revision to July industrial production (Aug +0.8% versus expectations of +0.6% and July +1.0% versus the previously reported +0.5%), (2) weakened international demand for long-term US asssets after the Jul net long-term TIC flows increased by +$15.3 billion (versus expectations of +$65.0 billion), (3) the report from the Medley Global Advisors, a consulting firm used by hedge funds, that there is support within the Fed for tightening monetary policy as soon as next week's FOMC meeting, and (4) the warning from former Fed Chairman Greenspan that if US lawmakers hamper the Fed's efforts to rein in its monetary stimulus, that inflation might "swamp" the bond market. Bullish factors for T-note prices yesterday included (1) the benign Aug CPI that fell -1.5% y/y, the sixth straight contraction in annual consumer prices along with the +1.4% y/y gain in Aug CPI core prices, the smallest annual increase in 5-1/2 years, (2) the assertion from Goldman Sachs that 10-year T-note yields "risk" a decline toward 3% as the underlying inflation rate is likely to set new lows, and (3) the prediction from Credit Suisse Group AG that the Japanese government may increase its purchases of US Treasuries if policy coordination with the US is needed to stem the dollar's decline.
The dollar index this morning is weaker and at a 11-3/4 month low with the dollar/yen +0.30 yen and the euro/dollar +0.14 cents at an 11-1/2 month high. The dollar index yesterday extended its recent downleg to a new 11-3/4 month low. Bearish factors for the dollar included (1) the rally in the yen to a 7-month high against the dollar after Japan's incoming finance chief, Hirohisa Fujii, said that he doesn't support a "weak yen," (2) the smaller-than-expected increase in Jul US net long-term TIC flows, indicating weakened international demand for dollar assets, (3) the warning from former Fed Chairman Greenspan that the US must rein in its "very dangerous" level of debt, citing the increased issuance of Treasuries undermining the dollar, and (4) the safe-haven demand for the dollar being sapped by the surge in the S&P 500 Index to an 11-1/4 month high. A bullish factor was the euro-negative comment from European Union Economic and Monetary Affairs Commissioner Joaquin Almunia who warned about "risks of regression" in the Euro-Zone's recovery saying "we are not yet in a situation where we can say economic activity can maintain itself."
October crude oil prices this morning are down -14 cents a barrel and Oct gasoline is trading -0.42 cent a gallon. Oct crude oil prices yesterday moved higher for a second day and closed up +$1.58 a barrel. October gasoline closed up +5.91 cents a gallon. Bullish factors included (1) the plunge in the dollar index to an 11-3/4 month low, which benefits most commodity prices, (2) the larger-than-expected decline in weekly crude oil inventories which fell to their lowest level since Jan (-4.73 milliion bbl versus expectations of -2.5 million bbl), (3) the API report that US gasoline consumption in Aug climbed +1% to 9.23 million bpd, the third straight monthly increase, and (4) a continued improvement in the US economic data which shows the economy pulling out of recession which may spur an increase in US fuel demand. Bearish factors yesterday included (1) the larger-than-expected increase in weekly distillate inventories which rose to a 26-1/2 year high of 167.7 million bbl (+2.24 million bbl versus expectations of +1.25 million bbl), and (2) the decision by Nigeria's main rebel group to extend its cease-fire by 30 days and not attack any of Nigeria's oil infrastructures or oil installations.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) FDX-FedEx (BEST earnings consensus $0.58), DFS-Discover Financial Services (0.03), IHS-IHS (0.60), PALM-Palm (-0.24), MLHR-Herman Miller (0.19), CMTL-Comtech Telecommunications (0.21).
Global Financial Calendar
| Thursday 9/17/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected +5,000 to 555,000, previous -26,000 to 550,000. Weekly continuing claims expected +12,000 to 6.100 million, previous -159,000 to 6.088 million. |
| 1000 ET | Sep Philadelphia Fed manufacturing index expected +3.8 to 8.0, Aug +11.7 to 4.2. |
| 1100 ET | Treasury announces amounts of 1-year T-bills (previous $27 billion), 2-year T-notes (previous $43 billion), 5-year T-notes (previous $39 billion) and 7-year T-notes (previous $28 billion to be auctioned Sep 22-24. |
| United Kingdom |
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| 0430 ET | Aug UK retail sales expected +0.1% m/m and +2.7% y/y, Jul +0.4% m/m and +3.3% y/y. |
| Euro-Zone |
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| 0500 ET | Jul Euro-Zone trade balance expected 6.4 billion euros, Jun 4.6 billion euros. |
| 0500 ET | Jul Euro-Zone construction output, Jun -1.1% m/m and -8.8% y/y. |
| Canada |
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| 0700 ET | Aug Canadian CPI expected +0.2% m/m and -0.6% y/y, Jul -0.3% m/m and -0.9% y/y. |
| 0700 ET | Aug Bank of Canada CPI core expected +0.1% m/m and +1.6% y/y, Jul unchanged m/m and +1.6% y/y. |
| 0830 ET | Aug Canadian leading indicators, Jul +0.4%. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1064.50 | 1.00 | 0.09% | 07:15:24 |
| DJIA (CBOT) (Z9) | 9744 | 19 | 0.20% | 07:15:33 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2485.69 | 12.21 | 0.49% | 07:11:30 |
| London UK FTSE Index | 5163.63 | 39.50 | 0.77% | 07:11:30 |
| German Dax Index | 5730.67 | 30.41 | 0.53% | 07:11:41 |
| French CAC 40 Index | 3831.34 | 17.55 | 0.46% | 07:11:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10444 | 173 | 1.68% | 03:00:15 |
| Hong Kong Hang Seng | 21769 | 366 | 1.71% | 04:01:30 |
| China CSI 300 Index | 3320 | 62 | 1.90% | 03:01:05 |
| Taiwan TAIEX Index | 7477 | 37 | 0.50% | 01:46:01 |
| Australian S&P 200 | 4714.9 | 64.5 | 1.39% | 02:47:03 |
| Singapore Str. Times | 2672.6 | -1.82 | -0.07% | 05:10:01 |
| South Korea KOSPI 200 | 222.31 | 1.78 | 0.81% | 05:03:27 |
| Bombay Sensex 30 | 16711 | 34.07 | 0.20% | 06:29:54 |
| Karachi KSE-100 | 9223 | 86 | 0.94% | 04:17:45 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.720 | -0.055 | -0.15% | 07:16:31 |
| Cash 10yr T-note Price | 101.080 | -0.015 | -0.05% | 07:26:30 |
| Cash 10yr T-note Yield | 3.475 | 0.006 | 0.16% | 07:26 |
| 5yr T-note (CBT)(Z9) | 115.020 | -0.040 | -0.13% | 07:16:38 |
| Cash 5yr T-note Price | 99.200 | -0.025 | -0.08% | 07:23:00 |
| Cash 5yr T-note Yield | 2.456 | 0.017 | 0.69% | 07:22 |
| 30-yr T-bond (CBT)(Z9) | 118.72 | -0.03 | -0.08% | 07:16:39 |
| Cash 30yr T-bond Price | 103.305 | -0.040 | -0.12% | 07:26:01 |
| Cash 30yr T-bond Yield | 4.265 | 0.007 | 0.17% | 07:25 |
| Eurodollars (CME)(Z9) | 99.525 | -0.015 | -0.02% | 07:16:33 |
| Eurodollars (CME)(H0) | 99.300 | -0.020 | -0.02% | 07:16:11 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.59 | -0.21 | -0.15% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.525 | -0.010 | -0.01% | 07:04:59 |
| Bunds (Eurex) (Z9) | 120.38 | -0.38 | -0.31% | 07:11:40 |
| Euribor (Eurex) (Z9) | 99.23 | -0.03 | -0.03% | 05:40:10 |
| UK Gilts (Liffe) (Z9) | 117.13 | -0.36 | -0.31% | 07:11:40 |
| Short Stlg (Liffe) (Z9) | 99.47 | 0.00 | 0.00% | 07:10:55 |
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| Forex |
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| U.S. Dollar Index | 76.26 | 0.01 | 0.01% | 07:16:40 |
| US Dollar-Japanese Yen | 91.23 | 0.30 | 0.33% | 07:26:42 |
| EuroFX-US Dollar | 1.4723 | 0.0014 | 0.14% | 07:26:42 |
| US Dollar-Swiss Franc | 1.0333 | 0.0012 | 0.12% | 07:26:42 |
| British Pound-US$ | 1.6539 | 0.0046 | 0.46% | 07:26:42 |
| US$-Canadian Dlr | 1.0644 | -0.0015 | -0.15% | 07:26:41 |
| Yen (Globex) (Z9) | 1.0968 | -0.0038 | -0.38% | 07:16:41 |
| Euro FX (Globex) (Z9) | 1.4711 | -0.0011 | -0.07% | 07:16:41 |
| SwissFranc (Globex)(Z9) | 0.9677 | -0.0027 | -0.28% | 07:16:41 |
| British Pound(Glbx)(Z9) | 1.6534 | 0.0042 | 0.25% | 07:16:41 |
| Canadian$ (Globex)(Z9) | 0.9403 | 0.0024 | 0.26% | 07:16:41 |
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| Commodities |
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| Gold (Comex) (Z9) | 1017.5 | -2.7 | -0.26% | 07:16:39 |
| Silver (Comex) (Z9) | 17.375 | -0.055 | -0.32% | 07:16:38 |
| Copper (Comex) (Z9) | 290.7 | -3.0 | -1.02% | 07:16:32 |
| Crude Oil (Nymex) (V9) | 72.37 | -0.14 | -0.19% | 07:16:40 |
| Gasoline (Nymex) (V9) | 184.41 | -0.42 | -0.23% | 07:14:36 |
| Heating Oil(Nymex)(V9) | 183.1 | 0.52 | 0.28% | 07:15:33 |
| NaturalGas(Nymex)(V9) | 3.757 | -0.003 | -0.08% | 07:16:40 |
| Corn (CBOT) (Z9) | 339.75 | 3.50 | 1.04% | 07:16:35 |
| Soybeans (CBOT) (X9) | 955.75 | 5.25 | 0.55% | 07:16:31 |
| Wheat (CBOT) (Z9) | 474.75 | 7.50 | 1.61% | 07:14:29 |
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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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