Barchart U.S. Morning Call
Tuesday, September 29, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.16% and Dec S&Ps are down -1.70 points. European and US stocks are gyrating on either side of unchanged in uninspired trade. The Sep Euro-Zone economic confidence rose +2.0 to 82.8, its sixth consecutive monthly increase and a 1-year high, as the European economy continues to rebound from recession. The Aug German import price index decreased from a year earlier for the tenth consecutive month as inflation pressures continue to be scant. Russia's central bank, Bank Rossii, cut its refinancing rate effective tomorrow by 50 bp to 10% and lowered the repurchase rate on bank loans to 9% from 9.5% in an attempt to stimulate lending. Bank Rossii has slashed rates seven times since Apr 24, including a 25 bp cut just two weeks ago, as Russia recovers from its biggest economic contraction on record. French bank stocks rose led by a 2.5% gain in BNP Paribas SA, France's largest bank, after saying it will seek 4.3 billion euros ($6.3 billion) in a rights offer to help repay government funds. Undercutting European stock prices was the 2.6% fall in Siemens after its CEO said fiscal 2009 was a "tough" year and that order bookings in the year that ends this month will fall.
The Asian markets today closed mostly higher with Japan up +0.91%, Hong Kong +2.06%, China -0.01%, Taiwan +2.00%, Australia +1.62%, Singapore +1.30%, South Korea +0.88%, India +0.96%. The yen retreated from yesterday's 8-month high against the dollar after Japanese Finance Minister Fujii said today his government may act to stabilize the foreign-exchange market and denied that he supported a stronger yen, reversing earlier rhetoric when Fujii said the idea of a weaker yen helping the nation's exports is "absurd." The yen has gained about 16% in the past year, threatening Japan's export-driven economy by making Japanese products more expensive and eroding the value of overseas profits. Japan's Aug national CPI ex-fresh food slid -2.4% y/y, the sharpest drop since the data began in 1971 and heightens the risk that prolonged deflation may hamper Japan's recovery. In its quarterly monetary policy meeting today, the People's Bank of China (PBOC) said it will stick to a "moderately loose" monetary policy and guide loan growth to further cement its economic recovery. The PBOC did not signal any policy change and said China's economic rebound isn't solid and that the country still faces weak external demand.
Overnight U.S. Stock News
December S&Ps this morning are trading down -1.70 points. The US stock market yesterday rallied sharply and closed with strong gains (Dow +1.28%, S&P 500 +1.78%, Nasdaq Composite +1.90%). Bullish factors included (1) increased M&A activity in the drug and technology sectors after Xerox bought Affiliated Computer Services for $6.4 billion, Abbott Laboratories purchased Solvay SA's pharmaceutical unit for $7.1 billion, and Johnson & Johnson agreed to purchase an 18% stake in Crucell NV for $446 million, (2) a rally in insurance companies after Insurance Services Offices said US property and caualty insurers returned to an underwriting profit in Q2, making more on premiums than they paid in expenses and claims, and (3) strength in retailers after ICSC predicted that US holiday retail sales may rise 1% this year as consumer confidence improves.
Bearish factors included (1) the prediction from Pacific Investment Management that the US savings rate may exceed 8%, which will hurt consumer spending and weigh on the economic recovery, and (2) the prediction from Steve Forbes that the US recovery will be disappointing because small businesses are still having financing difficulties and will hold off on hiring.
MBIA (MBI) fell 4.4% in European trading after Standard & Poor's cut the world's largest bond insurer's credit ratings to BB- from BB, three steps below investment grade, citing continued losses related to the company's structured finance products.
Today's Market Focus
December 10-year T-notes this morning are trading unchanged. Dec T-note prices yesterday moved up to a 2-week high and closed up +6.5 ticks. Bullish factors for T-note prices yesterday included (1) the prediction from UBS that the rise in the yen to an 8-month high against the dollar will begin to weigh on Japanese stock prices and prompt Japanese investors to increase their purchases of US Treasuries, (2) the prediction from Goldman Sachs that yields on 10-year T-notes may fall below their current trading range low of 3.25% as inflation remains subdued, and (3) the contention by Guggenheim Capital Markets LLC that investors are moving out of the front end of the yield curve and into the long end of the curve in search of higher yields. Bearish factors included (1) reduced safe-haven demand for Treasuries after the stock market rallied, and (2) the prediction from the International Council of Shopping Centers (ICSC) that US holiday retail sales may rise 1% this year as consumer confidence improves, which may also limit the safe-haven demand for Treasuries.
The dollar index this morning is higher with the dollar/yen +0.20 yen and the euro/dollar -0.57 cents. The dollar index yesterday posted a 2-week high and finished higher. Bullish factors for the dollar yesterday included (1) comments from Japanese Finance Minister Fujii who said he was misinterpreted as supporting a stronger yen, which undercut the yen after it had jumped to an 8-month high against the dollar, and (2) euro-negative comments from ECB President Trichet who said a strong dollar is "extremely important" for the world economy and it is too early for the ECB to unwind emergency stimulus measures. Bearish factors included (1) the prediction from JPMorgan Chase that as Japan's trade surplus improves, and its interest rates are no longer a liability, there will be a "perfect storm" for yen strength that will push the yen to 85 per dollar by year-end, and (2) the prediction from DZ Bank AG that the euro may rally after the pro-business Free Democratic Party won enough votes to form the next German government as their policies may promote a stronger economic recovery.
November crude oil prices this morning are down -27 cents a barrel and Nov gasoline is trading -0.61 cent a gallon. Nov crude oil prices yesterday moved higher and closed up +$0.82 a barrel. November gasoline closed up +1.46 cents a gallon. Bullish factors included (1) the rally in the stock market, which fuels optimism that the economy is recovering and may improve energy demand, (2) the actions by Iran, the world's fourth-biggest oil producer, to test fire Shahab-3 missles that are capable of hitting Israel, which may increase tensions in the Middle East and threaten crude oil supplies, and (3) the prediction from the Commodity Weather Group that the US Northeast may have the coldest winter in a decade becasue of a weak El Nino in the Pacific ocean, which may lead to increased heating oil demand. Bearish factors included (1) the stronger dollar, and (2) overall demand concerns with US gasoline inventories 6.5% above the 4-year average for the period and distillate supplies 28% above the 5-year average and at a 26-1/2 year high.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) WAG-Walgreen (BEST earnings consensus $0.39), NKE-Nike (0.97), MU-Micron Technology (-0.19), DRI-Darden Restaurants (0.66), MDRX-Allscripts-Misys Healthcare Solutions (0.14), JBL-Jabil Circuit (0.08), THO-Thor Industries (0.23), CALM-Cal-Maine Foods (0.18).
Global Financial Calendar
| Tuesday 9/29/2009 |
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| United States |
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| 0745 ET | ICSC (Int'l Council of Shopping Centers) weekly retailer sales previous -2.0% w/w and +0.6% weekly y/y. |
| 0855 ET | Redbook weekly retailer sales, previous +0.3% month-to-date m/m and -2.3% month-to-date y/y. |
| 0900 ET | Jul S&P/CaseShiller composite-20 home price index expected -14.2% y/y, Jun -15.4% y/y. |
| 0950 ET | Dallas Fed President Richard Fisher speaks on the US economy at the TCU Business Network of Dallas Breakfast. |
| 1000 ET | Sep US consumer confidence expected +2.9 to 57.0, Aug +6.5 to 54.1. |
| 1300 ET | Weekly 4-week T-bill auction. |
| 1700 ET | ABC U.S. weekly consumer confidence, previous +3 to -46. |
| 1900 ET | Philadelphia Fed President Charles Plosser speaks on the Fed's role in the national and regional economy at the Lafayette College Economic Summit. |
| Germany |
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| 0200 ET | Aug German import price index expected +0.7% m/m and -11.4% y/y, Jul -0.9% m/m and -12.6% y/y. |
| 0400 ET | Sep German Bloomberg retail PMI, Aug -0.3 to 49.5. |
| France |
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| 0400 ET | Sep French Bloomberg retail PMI, Aug +1.3 to 47.3. |
| Euro-Zone |
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| 0400 ET | Sep Euro-Zone Bloomberg retail PMI, Aug -0.2 to 47.1. |
| 0500 ET | Sep Euro-Zone business climate indicator expected +0.29 to -1.92, Aug +0.49 to -2.21. Sep consumer confidence expected +1 to -21, Aug +1 to -22. Sep economic confidence expected +2.1 to 82.7, Aug +4.6 to 80.6. |
| 0500 ET | Jean-Claude Juncker, head of the Euro-Zone finance chiefs, speaks to the European Parliament's Economic and Monetary Affairs Committee. |
| United Kingdom |
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| 0430 ET | Revised Q2 UK GDP expected -0.6% q/q and -5.4% y/y, Previous -0.7% q/q and -5.5% y/y. |
| 0430 ET | Q2 UK current account expected -7.8 billion pounds, Q1 -8.5 billion pounds. |
| 0430 ET | Aug UK net consumer credit expected unchanged, Jul -0.2 billion pounds. |
| 0430 ET | Aug UK mortgage approvals expected 51,500, Jul 50,100. |
| 0430 ET | Revised Aug UK M4 money supply, previous +0.1% m/m and +12.6% y/y. |
| 1901 ET | Sep UK GfK consumer confidence survey expected +1 to -24, Aug unchanged at -25. |
| Japan |
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| 1915 ET | Sep Japan Nomura/JMMA manufacturing PMI, Aug +3.2 to 53.6. |
| 1950 ET | Aug Japan industrial production expected +1.8% m/m and -18.8% y/y, Jul +2.1% m/m and -22.7% y/y. |
| 2130 ET | Aug Japan labor cash earnings expected -4.0% y/y, Jul -5.6% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1057.30 | -1.70 | -0.16% | 07:13:33 |
| DJIA (CBOT) (Z9) | 9718 | -10 | -0.10% | 07:13:10 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2465.76 | -3.92 | -0.16% | 07:09:15 |
| London UK FTSE Index | 5143.37 | -22.33 | -0.43% | 07:09:15 |
| German Dax Index | 5706.40 | -29.91 | -0.52% | 07:09:24 |
| French CAC 40 Index | 3807.51 | -17.49 | -0.46% | 07:09:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10100 | 91 | 0.91% | 03:00:13 |
| Hong Kong Hang Seng | 21013 | 425 | 2.06% | 04:01:30 |
| China CSI 300 Index | 2972 | 0 | -0.01% | 03:01:15 |
| Taiwan TAIEX Index | 7430 | 145 | 2.00% | 01:46:01 |
| Australian S&P 200 | 4753.1 | 75.7 | 1.62% | 02:47:04 |
| Singapore Str. Times | 2663.31 | 34.06 | 1.30% | 05:10:01 |
| South Korea KOSPI 200 | 221.59 | 1.93 | 0.88% | 05:03:26 |
| Bombay Sensex 30 | 16853 | 159.91 | 0.96% | 06:29:56 |
| Karachi KSE-100 | 9475 | 66 | 0.70% | 05:43:46 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.240 | 0.000 | 0.00% | 07:14:24 |
| Cash 10yr T-note Price | 102.250 | -0.035 | -0.11% | 07:24:01 |
| Cash 10yr T-note Yield | 3.292 | 0.013 | 0.39% | 07:23 |
| 5yr T-note (CBT)(Z9) | 115.300 | -0.015 | -0.01% | 07:14:24 |
| Cash 5yr T-note Price | 100.045 | -0.020 | -0.06% | 07:20:31 |
| Cash 5yr T-note Yield | 2.345 | 0.013 | 0.57% | 07:20 |
| 30-yr T-bond (CBT)(Z9) | 120.99 | 0.05 | 0.13% | 07:14:15 |
| Cash 30yr T-bond Price | 107.310 | -0.035 | -0.10% | 07:23:31 |
| Cash 30yr T-bond Yield | 4.038 | 0.006 | 0.15% | 07:23 |
| Eurodollars (CME)(Z9) | 99.620 | 0.010 | 0.01% | 07:12:44 |
| Eurodollars (CME)(H0) | 99.360 | 0.005 | 0.01% | 07:14:24 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.37 | 0.06 | 0.04% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.500 | 0.000 | 0.00% | 03:46:40 |
| Bunds (Eurex) (Z9) | 121.56 | 0.00 | 0.00% | 07:09:24 |
| Euribor (Eurex) (Z9) | 99.28 | -0.02 | -0.03% | 06:23:32 |
| UK Gilts (Liffe) (Z9) | 118.03 | -0.08 | -0.07% | 07:08:50 |
| Short Stlg (Liffe) (Z9) | 99.44 | -0.05 | -0.05% | 07:08:02 |
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| Forex |
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| U.S. Dollar Index | 77.11 | 0.06 | 0.08% | 07:14:21 |
| US Dollar-Japanese Yen | 89.83 | 0.20 | 0.22% | 07:24:25 |
| EuroFX-US Dollar | 1.4565 | -0.0057 | -0.57% | 07:24:25 |
| US Dollar-Swiss Franc | 1.0386 | 0.0061 | 0.61% | 07:24:25 |
| British Pound-US$ | 1.5972 | 0.0090 | 0.90% | 07:24:25 |
| US$-Canadian Dlr | 1.0870 | 0.0024 | 0.24% | 07:24:24 |
| Yen (Globex) (Z9) | 1.1136 | -0.001 | -0.10% | 07:14:23 |
| Euro FX (Globex) (Z9) | 1.4563 | -0.0027 | -0.19% | 07:14:25 |
| SwissFranc (Globex)(Z9) | 0.9634 | -0.004 | -0.41% | 07:14:18 |
| British Pound(Glbx)(Z9) | 1.5974 | 0.0106 | 0.67% | 07:14:25 |
| Canadian$ (Globex)(Z9) | 0.92 | 0.0000 | 0.00% | 07:14:23 |
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| Commodities |
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| Gold (Comex) (Z9) | 991.9 | -2.2 | -0.22% | 07:14:23 |
| Silver (Comex) (Z9) | 16.120 | -0.075 | -0.46% | 07:14:19 |
| Copper (Comex) (Z9) | 269.5 | -3.3 | -1.19% | 07:14:21 |
| Crude Oil (Nymex) (X9) | 66.57 | -0.27 | -0.40% | 07:14:24 |
| Gasoline (Nymex) (X9) | 164.45 | -0.61 | -0.37% | 07:14:23 |
| Heating Oil(Nymex) (X9) | 171.84 | -0.13 | -0.08% | 07:14:23 |
| NaturalGas(Nymex)(X9) | 4.766 | -0.064 | -1.33% | 07:14:15 |
| Corn (CBOT) (Z9) | 341.25 | 2.50 | 0.74% | 07:13:38 |
| Soybeans (CBOT) (X9) | 921.50 | 2.00 | 0.22% | 07:13:38 |
| Wheat (CBOT) (Z9) | 458.50 | 2.75 | 0.60% | 07:13:22 |
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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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