Barchart U.S. Morning Call
Friday, September 25, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.20% and Dec S&Ps are up +2.50 points. The dollar is weaker and commodity prices are stronger as the markets await the conclusion of the two-day G-20 meeting in Pittsburgh today. According to US officials, world leaders are uniting behind a plan to force banks to tie compensation more closely to risk and tighten capital requirements, while Treasury Secretary Geithner said there's a "strong consensus" to tackle global imbalances. World leaders may announce today that the Group of 20 nations is replacing the G-8 as the main forum for global economic coordination, reflecting a shift in power from rich countries to emerging markets. German consumer confidence rose to a 16-month high, signaling the economic recovery in Europe's largest economy may strengthen, after the Oct German GfK sentiment index increased +0.5 to 4.3. European banks continue to be reluctant to lend and demand for credit remains sparse after loans to households and companies in Europe rose +0.1% y/y in Aug, the slowest pace of loan growth since records began in 1991. The Aug Euro-Zone M3 money supply growth, used by the ECB as a gauge of future inflation, slowed to 2.5% y/y, the slowest pace of money supply growth in 14 years.
The Asian markets today closed mostly lower with Japan -2.64%, Hong Kong -0.13%, China -0.73%, Taiwan +0.29%, Australia +0.26%, Singapore -0.17%, South Korea -0.24%, India -0.53%. Worries that the G-20 may impose stricter financial market regulations are causing risk aversion and boosting the yen. The Japanese yen strengthened to a 7-1/2 month high against the dollar today on risk aversion and on speculation that Japanese exporters repatriated profits back home before the fiscal first half ends this month as they take advantage of the Apr 1 rule change that waives taxes on repatriated profits. Toyota, which gets 31% of its sales from North America, fell 2.6% on the stronger yen and the Executive Vice President of the automaker said today that "the yen should be a little weaker" and that the current level of 90 yen per dollar is "painful." Toyota, the world's largest automaker, forecasts a 450 billion-yen ($5 billion) net loss for the year ending Mar 2010. Japanese brokerages were weaker today led by the 16% plunge in Nomura after Japan's largest brokerage said it will sell a record 511.3 billion yen ($5.6 billion) of stock to fund expansion in the US, equivalent to almost 30% of the stock outstanding. Nikko Citigroup downgraded Nomura to "sell" from "hold" following the stock sale announcement. Japan Airlines fell 7.6% and plunged for a second day on concerns it will be broken up or forced to sell new shares under government plans after the Japanese government said the carrier will be reorganized under a government plan designed to avert bankruptcy.
Overnight U.S. Stock News
December S&Ps this morning are trading higher by +2.50 points. The US stock market yesterday closed lower for a second day (Dow -0.42%, S&P 500 -0.95%, Nasdaq Composite -1.12%). Bearish factors included (1) weakness in homebuilders after Aug US existing home sales unexpectedly declined, (2) the drop in banking stocks after the CEO of Deutsche Bank predicted that plans by world leaders to overhaul financial regulation in the banking industry will curb banks' profitability, (3) the slump in raw-material and energy producers after crude oil fell to a 5-week low and gold and copper prices slumped, and (4) the warning from former Fed Chairman Volcker that the Obama administration's proposed overhaul of financial rules preserves the policy of "too big to fail," and could lead to future bailouts.
Bullish factors included (1) the unexpected decline in weekly US initial unemployment claims, which fell to a 2-month low, (2) the action by Morgan Stanley to raise its year-end forecast for the S&P 500 Index to 1,050 from an earlier forecast of 900, and (3) the statement from the Managing Director of the IMF that his agency will raise its global economic growth forecasts for this year and next as the global econmy has been helped by government stimulus packages and record-low interest rates.
Research in Motion (RIM) sank 12% in pre-market trading after the company late yesterday forecast Q3 sales of $3.6 billion to $3.85 billion, short of analysts' estimtes of $3.91 billion.
Sara Lee (SLE) rallied 7.7% in European trading after Unilever agreed to buy its personal-care and European detergent unit for 1.28 billion euros ($1.88 billion).
Today's Market Focus
December 10-year T-notes this morning are trading up +3 ticks. Dec T-note prices yesterday moved higher after mid-morning and closed up +8.5 ticks at a 1-1/2 week high. Bullish factors for T-note prices yesterday included (1) the unexpected decline in US Aug existing home sales (-2.7% to 5.10 million versus expectatons of +2.1% to 5.35 million), (2) the prediction from Deutsche Bank AG that record foreclosures will depress US home prices by another 5% to 10% and keep the US housing market weak, and (3) strong demand for the Treasury's record $29 billion 7-year T-note auction after the bid-to-cover ratio rose to 2.79, higher than the 2.74 ratio seen at the last 7-year auction in Aug and indirect bidders purchased 61.7% of the auction, higher than the 61.2% they purchased at the last 7-year auction in August. Bearish factors included (1) the unexpected decline in weekly US initial unemployment claims to a 2-month low (-21,000 to 530,000 versus expectations of +5,000 to 550,000), and (2) a possible reduction in the safe-haven demand for Treasuries after the Fed shrunk its Term Auction Facility and Term Securities Lending Facility emergency liquidity programs because of "continued improvements" in financial markets.
The dollar index this morning is weaker with the dollar/yen -1.09 yen at a 7-1/2 month low and the euro/dollar +0.23 cents. The dollar index yesterday rallied sharply and finished higher on the day. Bullish factors for the dollar yesterday included (1) an increase in the safe-haven demand for dollars after the equity market tumbled when US Aug existing home sales unexpectedly declined, and (2) weakness in the euro after the Sep German Ifo business climate index rose less than expected. Bearish factors included (1) strength in the yen on speculation that Japanese companies will repatriate profits before next week's end of the fiscal first-half-year as the Japanese government announced it would waive taxes on repatriated profits from Apr 1 to help support the economy, and (2) reduced demand for dollars after the ECB said it will discontinue its 84-day dollar loans after Oct 6 due to "limited demand" and "improved conditions in funding markets."
November crude oil prices this morning are up +40 cents a barrel and Nov gasoline is trading -0.23 cent a gallon. Nov crude oil prices yesterday plunged for the second straight session and closed down -$3.08 a barrel. November gasoline closed down -7.18 cents a gallon. Nov crude posted a 1-1/4 month low and nearest futures Sep gasoline dropped to a 2-1/4 month low. Bearish factors included (1) a sharp rebound in the dollar index, (2) the -12.4% y/y decline in Aug Japan oil imports, a sign of weak energy demand in the world's second-largest economy, (3) the unexpected decline in Aug US existing home sales, raising concern that US energy demand will remain constrained as the housing market continues to struggle, and (4) technical selling and long liquidation after crude oil prices fell to a 1-1/4 month low. Bullish factors included (1) the prediction from Sanford C. Bernstein that oil prices will rise to $80 a barrel by early next year as the supply of oil from non-OPEC countries is likely to decline later this year, and (2) the prediction from PetroChina's planning institute that China's annual demand for gasoline and diesel may rise by 30% to 262 million metric tons (MMT) by 2015 from 202 MMT last year.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) KBH-KB Home (BEST earnings consensus -$0.67), CHTT-Chattem (1.21), AMN-Ameron International (0.53.), PKE-Park Electrochemical (0.18), AZZ-AZZ Inc. (0.69), GY-Gencorp (n/a).
Global Financial Calendar
| Friday 9/25/2009 |
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| United States |
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| 0830 ET | Aug durable goods orders expected +0.5% and +1.0% ex transportation, Jul +5.1% and +1.1% ex transportation. |
| 1000 ET | Final Sep U.S. University of Michigan consumer confidence expected +0.3 to 70.5, previous +4.5 to 70.2. |
| 1000 ET | Aug new home sales expected +1.8% to 441,000, Jul +9.6% to 433,000. |
| 1315 ET | Fed Reserve Governor Kevin Warsh speaks at the Chicago Fed's annual international banking conference. |
| France |
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| 0245 ET | Sep French consumer confidence indicator expected +2 to -37, Aug -2 to -39. |
| 0250 ET | Revised Q2 French GDP expected unrevised at +0.3% q/q and -2.6% y/y. |
| Euro-Zone |
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| 0400 ET | Aug Euro-Zone M3 money supply expected +3.1% 3-month avg and +2.7% y/y, Jul +3.4% 3-month avg and +3.0% y/y. |
| United Kingdom |
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| 0430 ET | Revised Q2 UK total business investment expected unrevised at -10.4% q/q and -18.4% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1046.80 | 2.50 | 0.24% | 07:27:19 |
| DJIA (CBOT) (Z9) | 9655 | 20 | 0.21% | 07:27:16 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2431.73 | 4.77 | 0.20% | 07:23:15 |
| London UK FTSE Index | 5108.32 | 29.05 | 0.57% | 07:23:15 |
| German Dax Index | 5602.78 | -2.43 | -0.04% | 07:23:16 |
| French CAC 40 Index | 3759.54 | 1.18 | 0.03% | 07:23:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10266 | -278 | -2.64% | 03:00:15 |
| Hong Kong Hang Seng | 21024 | -26 | -0.13% | 04:01:30 |
| China CSI 300 Index | 3059 | -22 | -0.73% | 03:01:07 |
| Taiwan TAIEX Index | 7345 | 21 | 0.29% | 01:46:00 |
| Australian S&P 200 | 4713.3 | 12.1 | 0.26% | 02:47:03 |
| Singapore Str. Times | 2662.82 | -4.61 | -0.17% | 05:10:01 |
| South Korea KOSPI 200 | 221.82 | -0.53 | -0.24% | 05:03:26 |
| Bombay Sensex 30 | 16693 | -88.43 | -0.53% | 06:29:56 |
| Karachi KSE-100 | 9664 | -50 | -0.51% | 06:46:42 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.560 | 0.030 | 0.08% | 07:27:58 |
| Cash 10yr T-note Price | 102.025 | 0.015 | 0.05% | 07:38:00 |
| Cash 10yr T-note Yield | 3.376 | -0.006 | -0.17% | 07:37 |
| 5yr T-note (CBT)(Z9) | 115.270 | 0.010 | 0.03% | 07:28:13 |
| Cash 5yr T-note Price | 100.000 | -0.015 | -0.05% | 07:38:00 |
| Cash 5yr T-note Yield | 2.375 | 0.010 | 0.42% | 07:37 |
| 30-yr T-bond (CBT)(Z9) | 120.31 | 0.06 | 0.16% | 07:27:59 |
| Cash 30yr T-bond Price | 105.150 | -0.030 | -0.09% | 07:38:00 |
| Cash 30yr T-bond Yield | 4.178 | 0.005 | 0.13% | 07:37 |
| Eurodollars (CME)(Z9) | 99.610 | 0.005 | 0.01% | 07:27:54 |
| Eurodollars (CME)(H0) | 99.400 | -0.005 | -0.01% | 07:27:54 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.04 | 0.22 | 0.16% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.505 | -0.015 | -0.02% | 05:44:30 |
| Bunds (Eurex) (Z9) | 121.30 | 0.18 | 0.15% | 07:23:05 |
| Euribor (Eurex) (Z9) | 99.30 | 0.00 | -0.01% | 04:32:49 |
| UK Gilts (Liffe) (Z9) | 117.88 | 0.35 | 0.30% | 07:23:06 |
| Short Stlg (Liffe) (Z9) | 99.48 | 0.00 | 0.00% | 07:22:01 |
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| Forex |
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| U.S. Dollar Index | 76.73 | -0.16 | -0.21% | 07:28:15 |
| US Dollar-Japanese Yen | 90.19 | -1.09 | -1.19% | 07:38:17 |
| EuroFX-US Dollar | 1.4689 | 0.0023 | 0.23% | 07:38:17 |
| US Dollar-Swiss Franc | 1.0286 | -0.0012 | -0.12% | 07:38:17 |
| British Pound-US$ | 1.6014 | -0.0045 | -0.45% | 07:38:17 |
| US$-Canadian Dlr | 1.0895 | 0.0002 | 0.02% | 07:38:16 |
| Yen (Globex) (Z9) | 1.1083 | 0.0124 | 1.24% | 07:28:13 |
| Euro FX (Globex) (Z9) | 1.4679 | 0.0026 | 0.18% | 07:28:02 |
| SwissFranc (Globex)(Z9) | 0.9723 | 0.001 | 0.10% | 07:28:09 |
| British Pound(Glbx)(Z9) | 1.6008 | -0.0052 | -0.32% | 07:28:01 |
| Canadian$ (Globex)(Z9) | 0.9172 | -0.0002 | -0.02% | 07:28:01 |
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| Commodities |
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| Gold (Comex) (Z9) | 997.9 | -1.0 | -0.10% | 07:28:13 |
| Silver (Comex) (Z9) | 16.270 | -0.025 | -0.15% | 07:28:03 |
| Copper (Comex) (Z9) | 271.8 | 0.9 | 0.31% | 07:28:10 |
| Crude Oil (Nymex) (X9) | 66.29 | 0.40 | 0.61% | 07:28:15 |
| Gasoline (Nymex) (X9) | 164.7 | -0.23 | -0.14% | 07:28:00 |
| Heating Oil(Nymex) (X9) | 171.97 | 0.89 | 0.52% | 07:26:38 |
| NaturalGas(Nymex)(X9) | 4.929 | 0.033 | 0.67% | 07:28:03 |
| Corn (CBOT) (Z9) | 336.00 | -0.50 | -0.15% | 07:27:24 |
| Soybeans (CBOT) (X9) | 921.75 | 2.25 | 0.24% | 07:27:43 |
| Wheat (CBOT) (Z9) | 471.75 | -1.25 | -0.26% | 07:27:20 |
Recent articles from this author
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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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