Barchart U.S. Morning Call
Friday, September 18, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is flat and Dec S&Ps are up +1.00 point. The dollar is higher and metals prices are mostly lower, especially copper, after Shanghai copper stockpiles expanded to a 5-year high and LME copper inventories rose for the 16th consecutive day, signaling adequate supply and weak demand. As a result, mining companies and raw-material producers are weaker. German producer prices rose for the first time in 11 months in Aug as energy costs increased. Despite rising +0.5% m/m, Aug German producer prices fell -6.9% y/y, the fifth straight month of year-over-year declines, indicating inflation pressures are virtually non-existent. The UK posted a -16.1 billion-pound ($26.3 billion) deficit in Aug, its biggest deficit for any Aug since records began in 1993 as the recession decimated tax revenue and welfare costs soared. The IMF expects Britain's deficit to exceed 13% of GDP next year, the most in the Group of 20 nations.
The Asian markets today closed mostly lower with Japan down -0.70%, Hong Kong -0.67%, China -3.63%, Taiwan +0.66%, Australia -0.56%, Singapore -0.92%, South Korea +0.01%, India +0.18%. Aiful Corp., Japan's third-largest consumer lender by revenue, plunged 27% and led Japanese consumer lenders lower after it said it will try to reschedule debt payments after being shut out of credit markets. Japan's consumer finance companies are grappling with falling revenue after the government capped interest rates they can charge and forced repayments to customers for overcharged interest. Japan's Financial Services Minister said he'll determine if Aiful's funding woes are specific to the company, or are an industry-wide issue, as consumer lenders brace for tougher regulations that will take effect in Jun. BOJ Deputy Governor Yamaguchi warned against the BOJ keeping its emergency credit programs for "a long time" because they might hamper a recovery in the financial industry, signaling the BOJ is warning markets that it is inclined to unwind the emergency measures sooner rather than later.
Overnight U.S. Stock News
December S&Ps this morning are trading higher by +1.00 point. The US stock market yesterday rallied into mid-morning when it shed its gains and retreated into the close and finished slightly lower (Dow -0.08%, S&P 500 -0.31%, Nasdaq Composite -0.30%). The S&P 500 Index posted an 11-1/4 month high before closing lower. Bearish factors included (1) concerns that the stock market's recent rally has outpaced prospects for earnings growth as valuations on stocks in the S&P 500 have reached their most expensive level in five years, (2) the prediction from former Fed Chairman Volcker, who's now an economic advisor to President Obama, that "it will be a long slog--a matter of years--with the risk of relapse along the way" before the economy returns to pre-recession levels, and (3) the statement from Bank of America that the US labor market remains "in a severe bleeding mode" and is lagging "well behind" the rest of the economy and that the US unemployment rate won't peak until Q1 of next year.
Bullish factors included (1) the unexpected decline in weekly US initial unemployment claims to a 2-month low, indicating a slowdown in layoffs, (2) the larger-than-expected increase in the Sep Philadelphia Fed manufacturing index which grew at its fastest pace in 2 years, (3) the rise in Aug US housing starts to a 9-month high, and (4) the report from the Fed that showed Q2 US household wealth rose by $2 trillion, marking the first gain since Q3 of 2007 due to the biggest quarterly jump in stock prices since 1998 and the first increase in home values in more than 2 years, which may lead to a boost in confidence of the US consumer and prompt stronger spending and consumption.
Freeport-McMoRan (FCX) fell 1.2% in European trading after copper prices slid as LME copper inventories increased for the 16th stright dy to a 3-3/4 month high and Shanghai copper stockpiles climbed 7% this week to the highest since Apr 2004.
Procter & Gamble (PG) rose 1.3% in pre-market trading after Citigroup upgraded the company to "buy" from "hold" and lifted its price estimate on the world's largest consumer-goods gampany to $66 from $54, saying the company "is readying itself to become more aggressive in order to win back lost market share."
Charles Schwab (SCHW) dropped 3.8% in pre-market trading after Goldman Sachs cut its recommendation for the largest independent brokerage to "sell" from "neutral," citing concern that low interest rates may hamper the company's revenue growth.
Today's Market Focus
December 10-year T-notes this morning are trading down -1 tick. Dec T-note prices yesterday shook off early losses as they moved higher and closed up +16.5 ticks. Bullish factors for T-note prices yesterday included (1) the drop in the employment sub-index of the Sep Philadelphia Fed manufacturing index to -14.3 from -12.9 in Aug, signaling continued labor market weakness, (2) the drop in the prices received sub-index of the Sep Philadelphia Fed manufacturing index to -10.6 from -1.5 in Aug, indicating a lack of price pressures, and (3) a possible increase in the safe-haven demand for Treasuries after Standard & Poor's said it may downgrade $578 billion of securities linked to corporate debt because of changes in how the securities are rated. Bearish factors included (1) the unexpected decline in weekly US initial unemployment claims which fell to a 2-month low (-12,000 to 545,000 versus expectations of +5,000 to 555,000), (2) the larger-than-expected increase in the headline Sep Philadelphia manufacturing index which rose to a 2-year high (+9.9 to 14.1 versus expectations of +3.8 to 8.0), and (3) the prediction from RBS Securities that 10-year T-note yields will rise to 3.60% ahead of next week's record $112 billion note auctions after failing to remain below resistance at 3.30%.
The dollar index this morning is higher with the dollar/yen +0.24 yen and the euro/dollar -0.32 cents. The dollar index yesterday fell for the third straight session and posted a new 11-3/4 month low. Bearish factors for the dollar included (1) reduced safe-haven demand for dollars as the S&P 500 Index rose to an 11-1/4 month high after US weekly initial unemployment claims unexpectedly declined to a 2-month low and the Sep Philadelphia Fed manufacturing index rose more-than-expected to a 2-year high, and (2) the action by BNP Paribas SA to revise its dollar forecast lower saying the dollar will slide to 85 yen by year-end, lower than an earlier estimate of 93 yen. Bullish factors included (1) the prediction from MIG Investments SA that the dollar is poised for a rebound as there are a broad range of commodities that suggest their recent rallies may be on the verge of exhaustion, and (2) the statement from BlackRock that the dollar remains the preferred currency for investors seeking to protect wealth.
October crude oil prices this morning are down -66 cents a barrel and Oct gasoline is trading -1.62 cents a gallon. Oct crude oil prices fluctuated on either side of unchanged yesterday and closed down -$0.04 a barrel. October gasoline closed up +0.29 cent a gallon. Both Oct crude and Oct gasoline posted 2-week highs. Bullish factors included (1) continued dollar weakness after the dollar index fell to a fresh 11-3/4 month low, which prompts investors to purchase crude and other commodities priced in dollars as an inflation hedge, and (2) the continued stream of better-than-expected US economic data which shows the US economy pulling out of recession and may lead to an improvement in US energy demand. Bearish factors yesterday included (1) the prediction from energy consultant Oil Movements that OPEC will export 22.57 million bpd in the four weeks to Oct 3, up +0.9% from the prior four week period as cartel members continue to overproduce from their quotas, and (2) the fall in Jul Euro-Zone construction output which has declined on a year-over-year basis for 17 straight months and indicates weakened energy demand in Europe.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) FMCN-Focus Media Holding Limited (BEST earnings consensus $0.17), CEDU-ChinaEdu Corp. (n/a), UCBH-UCBH Holdings (-0.68).
Global Financial Calendar
| Friday 9/18/2009 |
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| United States |
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| n/a | No scheduled economic reports or speaking events at this time. |
| Japan |
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| 0100 ET | Revised Jul Japan leading index CI, previous 83.0. Revised coincident index, previous 89.6. |
| 0100 ET | Monthly report from the Bank of Japan. |
| Germany |
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| 0200 ET | Aug German producer prices expected +0.2% m/m and -7.2% y/y, Jul -1.5% m/m and -7.8% y/y. |
| France |
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| 0245 ET | Revised Q2 French wages expected no change at +0.4% q/q. |
| Euro-Zone |
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| 0400 ET | Jul Euro-Zone current account, Jun -5.3 billion euros. |
| United Kingdom |
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| 0430 ET | Aug UK public sector net borrowing expected +17.6 billion pounds, Jul +8.0 billion pounds. |
| 0430 ET | Aug UK M4 money supply expected +0.8% m/m and +13.8% y/y, Jul +1.5% m/m and +14.5% y/y. |
| Canada |
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| 0830 ET | Jul Canadian wholesale sales, Jun +0.6% m/m. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1063.80 | 1.00 | 0.09% | 07:18:45 |
| DJIA (CBOT) (Z9) | 9743 | 6 | 0.06% | 07:19:28 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2485.62 | 0.02 | 0.00% | 07:15:30 |
| London UK FTSE Index | 5169.74 | 5.79 | 0.11% | 07:15:30 |
| German Dax Index | 5737.30 | 6.16 | 0.11% | 07:15:35 |
| French CAC 40 Index | 3840.17 | 4.90 | 0.13% | 07:15:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10371 | -73 | -0.70% | 03:00:15 |
| Hong Kong Hang Seng | 21623 | -145 | -0.67% | 04:01:30 |
| China CSI 300 Index | 3200 | -120 | -3.63% | 03:01:09 |
| Taiwan TAIEX Index | 7527 | 49 | 0.66% | 01:46:01 |
| Australian S&P 200 | 4693.2 | -21.7 | -0.46% | 02:47:04 |
| Singapore Str. Times | 2647.91 | -24.69 | -0.92% | 05:10:01 |
| South Korea KOSPI 200 | 222.34 | 0.03 | 0.01% | 05:03:24 |
| Bombay Sensex 30 | 16741 | 30.19 | 0.18% | 06:29:54 |
| Karachi KSE-100 | 9437 | 213 | 2.31% | 03:45:28 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.585 | -0.010 | -0.03% | 07:20:25 |
| Cash 10yr T-note Price | 102.000 | -0.005 | -0.02% | 07:30:31 |
| Cash 10yr T-note Yield | 3.385 | 0.002 | 0.05% | 07:30 |
| 5yr T-note (CBT)(Z9) | 115.170 | -0.010 | -0.01% | 07:20:29 |
| Cash 5yr T-note Price | 100.005 | -0.015 | -0.05% | 07:27:01 |
| Cash 5yr T-note Yield | 2.371 | 0.010 | 0.43% | 07:26 |
| 30-yr T-bond (CBT)(Z9) | 120.47 | -0.01 | -0.03% | 07:20:23 |
| Cash 30yr T-bond Price | 105.215 | -0.005 | -0.01% | 07:30:00 |
| Cash 30yr T-bond Yield | 4.166 | 0.001 | 0.02% | 07:29 |
| Eurodollars (CME)(Z9) | 99.540 | 0.000 | 0.00% | 07:15:01 |
| Eurodollars (CME)(H0) | 99.340 | 0.000 | 0.00% | 07:04:20 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.55 | -0.04 | -0.03% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.510 | -0.015 | -0.02% | 03:23:59 |
| Bunds (Eurex) (Z9) | 120.73 | 0.27 | 0.22% | 07:15:27 |
| Euribor (Eurex) (Z9) | 99.23 | 0.01 | 0.01% | 06:01:50 |
| UK Gilts (Liffe) (Z9) | 117.42 | 0.31 | 0.26% | 07:15:28 |
| Short Stlg (Liffe) (Z9) | 99.49 | 0.02 | 0.02% | 07:09:45 |
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| Forex |
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| U.S. Dollar Index | 76.46 | 0.28 | 0.36% | 07:20:36 |
| US Dollar-Japanese Yen | 91.32 | 0.24 | 0.26% | 07:30:36 |
| EuroFX-US Dollar | 1.4710 | -0.0032 | -0.32% | 07:30:36 |
| US Dollar-Swiss Franc | 1.0299 | 0.0016 | 0.16% | 07:30:36 |
| British Pound-US$ | 1.6367 | -0.0087 | -0.87% | 07:30:36 |
| US$-Canadian Dlr | 1.0711 | 0.0064 | 0.64% | 07:30:36 |
| Yen (Globex) (Z9) | 1.0951 | -0.0025 | -0.25% | 07:20:06 |
| Euro FX (Globex) (Z9) | 1.4702 | -0.0045 | -0.31% | 07:20:35 |
| SwissFranc (Globex)(Z9) | 0.9714 | -0.0019 | -0.20% | 07:20:34 |
| British Pound(Glbx)(Z9) | 1.6357 | -0.009 | -0.55% | 07:20:35 |
| Canadian$ (Globex)(Z9) | 0.9331 | -0.0063 | -0.67% | 07:19:43 |
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| Commodities |
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| Gold (Comex) (Z9) | 1015.0 | 1.5 | 0.15% | 07:20:34 |
| Silver (Comex) (Z9) | 17.160 | -0.105 | -0.61% | 07:20:32 |
| Copper (Comex) (Z9) | 286.3 | -3.3 | -1.14% | 07:20:11 |
| Crude Oil (Nymex) (V9) | 71.81 | -0.66 | -0.91% | 07:20:35 |
| Gasoline (Nymex) (V9) | 183.5 | -1.62 | -0.88% | 07:17:12 |
| Heating Oil(Nymex)(V9) | 182.28 | -1.81 | -0.98% | 07:11:25 |
| NaturalGas(Nymex)(V9) | 3.558 | 0.1 | 2.89% | 07:20:33 |
| Corn (CBOT) (Z9) | 327.75 | -1.25 | -0.38% | 07:20:01 |
| Soybeans (CBOT) (X9) | 951.00 | -2.00 | -0.21% | 07:20:34 |
| Wheat (CBOT) (Z9) | 461.75 | 0.00 | 0.00% | 07:20:32 |
Recent articles from this author
- Barchart U.S. Morning Call - Thursday, March 18, 2010
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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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