Barchart U.S. Morning Call
Wednesday, September 30, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.01% and Dec S&Ps are up +4.10 points. The dollar fell and commodity prices rose as global stocks gained afer the IMF cut its prediction for worldwide bank writedowns by -15% to $3.4 trillion, citing improving credit markets and economic growth. European consumer prices fell more than forecast in September after the Sep Euro-Zone CPI estimate declined -0.3% y/y, its fourth straight decrease and exceeded the -0.2% y/y fall the market was expecting. UK consumer confidence jumped in Sep by the most since 1995 after the Sep UK GfK consumer confidence gained +9 to -16, the highest level since Jan 2008. In a sign that the liquidity crisis is easing, European banks bid for 75.2 billion euros ($110 billion) at the ECB's second 12-month auction of unlimited funds, less than the forecasted 137.5 billion euros and far below the 442 billion euros at the first auction in Jun, indicating banks' need for cash has dwindled. The ECB, which will offer banks 12-month loans for a third time on Dec 15, is flooding the system with money in an attempt to stimulate lending.
The Asian markets today closed mostly higher with Japan +0.33%, Hong Kong -0.28%, China +1.09%, Taiwan +1.07%, Australia -0.20%, Singapore +0.35%, South Korea -0.83%, India +1.63%. Asian markets received a boost today after Chinese manufacturing expanded for the sixth consecutive month in September. The China Sep PMI manufacturing index slipped -0.1 to 55.0 as government stimulus measures continue to boost the economy. The Chinese market was also supported by stock buying ahead of the week-long holiday that begins tomorrow. Aug Australian retail sales rose +0.9%, the first gain in three months, while technology stocks rose throughout the Asia-Pacific region after Micron Technology reported a narrower loss, boosting optimism a glut in the memory-chip industry is easing. Japanese manufacturers increased production for a sixth consecutive month in Aug, the longest stretch of gains in 12 years, after Japan Aug industrial production rose +1.8% m/m as stimulus spending by governments worldwide rekindled global trade.
Overnight U.S. Stock News
December S&Ps this morning are trading higher by +4.10 points. The US stock market yesterday gyrated in two-sided trade throughout the day before finally closing lower (Dow -0.48%, S&P 500 -0.22%, Nasdaq Composite -0.31%). Bearish factors included (1) the unexpected decline in Sep US consumer confidence, (2) the drop in energy producers after crude oil prices fell and after the Senate approved a measure to control greenhouse-gas emissions from refineries, factories and power plants by 20% through 2020, a deeper cut than approved by the House, and (3) comments from former Fed Chairman Volcker who said that unemployment at 9.7% will slow the pace of recovery from the US recession as consumers default on mortgages and consumer loans and that losses on commercial real estate loans will cause further losses for banks.
Bullish factors included (1) strength in homebuilders after the the July S&P/CaseShiller composite-20 home price index rose 1.2% in from Jun, its biggest increase in almost four years, (2) the prediction from Birinyi Associates that US stocks are in a bull market and profits will increase as the economy rebounds, bringing down PE ratios, (3) the action by Bank of America to boost its 2009 earnings forecast for the S&P 500 Index to $61.50 a share, +2.5% higher than a prior forecast of $60, as earnings at financial and technology companies recover faster than anticipated, and (4) comments from ECB Council member and Bundesbank President Axel Weber who said the international financial system has "stabilized."
Nike (NKE) rose 6.5% in pre-market trading after reporting Q1 profit of $1.04 a share, 7 cents better than analysts' estimated. Goldman Sachs upgraded Nike to "buy" from "neutral" following the earnings release.
Today's Market Focus
December 10-year T-notes this morning are trading down -4 ticks. Dec T-note prices yesterday rallied for the sixth straight session and closed up +3.5 ticks. Bullish factors for T-note prices yesterday included (1) the statement from Russia's central bank that it will maintain the share of US Treasuries in its international reserves at about 30%, reducing concerns that foreign central banks will cut their Treasury holdings due to the weak dollar and expanding US budget deficits, (2) the unexpected decline in Sep US consumer confidence (-1.4 to 53.1 versus expectations of +2.9 to 57.0), and (3) the statement from Bill Gross, who runs the world's biggest bond fund at PIMCO, that the US yield curve has been flattening due to the re-emergence of deflationary fears. Bearish factors included (1) the smaller-than-expected year-on-year decline in the July S&P/CaseShiller composite-20 home price index (-13.3% y/y versus expectations of -14.2% y/y), and (2) hawkish comments from Dallas Fed President Fisher who said the Fed will need to start boosting interest rates quickly and aggressively once the economy is back on firmer footing to prevent inflation from taking off.
The dollar index this morning is lower with the dollar/yen -0.61 yen and the euro/dollar +0.75 cents. The dollar index yesterday rallied for a second day as it posted a 2-1/2 week high, although it shed most of its gains and closed just slightly higher. Bullish factors for the dollar yesterday included (1) the statement from the First Deputy Chairman of Bank Rossii that Russia will maintain its share of US Treasuries in its international reserves, allaying concern that central banks will diversify away from the dollar and dollar assets, (2) the fall in the yen against the dollar after Japanese Finance Minister Fujji backtracked on recent rhetoric that he would tolerate a stronger yen and said the BOJ may intervene in foreign-exchange markets to stabilize abrupt currency moves, and (3) an increase in the safe-haven demand for the dollar after the stock market slumped when Sep US consumer confidence unexpectedly declined. Bearish factors included (1) the prediction from Goldman Sachs the Fed will be among the last of the major central banks to raise interest rates, putting a recovery of the dollar at risk, and (2) the action by UBS AG to raise its forecasts for the yen to 85 per dollar in one month and 90 yen in three months, up from an earlier forecast of 95 yen in one month and 100 yen in three months.
November crude oil prices this morning are up +$1.08 a barrel and Nov gasoline is trading +3.27 cents a gallon. Nov crude oil prices yesterday fluctuated on either side of unchanged the entire day and finally closed down -$0.13 a barrel. November gasoline closed down -0.93 cent a gallon. Bearish factors included (1) the rally in the dollar index to a 2-1/2 week high, (2) the unexpected decline in Sep US consumer confidence, raising concerns that US fuel demand will remain weak, and (3) expectations for another build in crude oil and its products when the weekly DOE inventory report is released Wednesday morning. Bullish factors included (1) the larger than-expected increase in the Sep Euro-Zone economic confidence to a 1-year high, which may help boost fuel demand in Europe as the economy recovers, and (2) the prediction by JPMorgan Chase that OPEC would likely cut crude oil supplies to keep prices at $60 a barrel in the event of a decline. Expectations for Wednesday's weekly DOE inventory report are for crude oil inventories to increase by +1.0 million bbl, gasoline stockpiles to rise +1.5 million bbl, distillates to gain +1.3 million bbl and the refinery capacity rate to fall -0.3 to 85.3%.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) WOR-Worthington Industries (BEST earnings consensus $0.04), ATU-Actuant (0.16), LWSN-Lawson Software (0.05), DMND-Diamond Foods (0.17), MIC-Macquarie Infrastructure Company LLC (-0.13), XRTX-Xyratex (0.17), VOL-Volt Information Sciences (-0.05).
Global Financial Calendar
| Wednesday 9/30/2009 |
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| United States |
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| 0700 ET | Weekly MBA mortgage applications for the week ended Sep 25, previous +12.8% with purchase sub-index +5.6% and refinancing sub-index +17.4%. |
| 0815 ET | Sep ADP employment change expected -200,000, Aug -298,000. |
| 0830 ET | Revised Q2 GDP expected -1.2% annualized, previous -1.0% annualized. Q2 personal consumption expected -0.9%, previous 1.0%. Q2 price index, previous unchanged. Q2 core PCE, previous +2.0% q/q. |
| 0945 ET | Sep Chicago purchasing managers index expected +2.0 to 52.0, Aug +6.6 to 50.0. |
| 1030 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economy, financial conditions and outlook at the University of South Alabama's Mitchell College of Business Center for Real Estate Studies. |
| 1235 ET | Fed Vice Chairman Donald Kohn will speak on a panel with ECB Governing Council member Athanasios Orphanides about central bank exit policies. |
| 1430 ET | Fed Governor Daniel Tarullo testifies at a Senate Banking subcommittee on international cooperation to modernize financial regulation. |
| Japan |
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| 0000 ET | Aug Japan vehicle production, Jul -31.9% y/y. |
| 0100 ET | Aug Japan housing starts expected -31.7% y/y, Jul -32.1% y/y. |
| 0100 ET | Aug Japan construction orders, Jul -42.8% y/y. |
| 1950 ET | Q3 Japan Tankan large manufacturers business conditions survey expected -33, Q2 -48. |
| 1950 ET | Aug Japan retail trade expected +0.3% m/m and -2.4% y/y, Jul +0.5% m/m and -2.4% y/y. |
| France |
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| 0245 ET | Aug French producer prices expected +0.2% m/m and -8.9% y/y. |
| Germany |
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| 0355 ET | Sep German unemployment change expected +20,000, Aug -1,000. Sep unemployment rate (seasonally adjusted) expected +0.1 to 8.4%, Aug unchanged at 8.3%. |
| Euro-Zone |
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| 0345 ET | ECB Executive Board member Lucas Papademos, along with fellow ECB Council members Axel Weber and Christian Noyer speak on a panel during the Eurofi Financial Forum in Goeteborg, Sweden. |
| 0500 ET | Sep Euro-Zone CPI estimate expected -0.2% y/y, Aug -0.2% y/y. |
| 1345 ET | ECB President Jean-Claude Trichet delivers a speech during the Eurofi Financial Forum. |
| Canada |
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| 0830 ET | Aug Canadian industrial product prices expected +0.5% m/m, Jul -0.5% m/m. |
| 0830 ET | Aug Canadian raw materials price index expected +3.0% m/m, Jul -3.8% m/m. |
| 0830 ET | Jul Canadian GDP expected +0.5% m/m, Jun +0.1% m/m. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1058.90 | 4.10 | 0.39% | 07:19:23 |
| DJIA (CBOT) (Z9) | 9703 | 30 | 0.31% | 07:18:17 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2474.31 | 0.08 | 0.00% | 07:14:30 |
| London UK FTSE Index | 5162.37 | 2.65 | 0.05% | 07:14:30 |
| German Dax Index | 5714.31 | 0.79 | 0.01% | 07:14:42 |
| French CAC 40 Index | 3826.77 | 12.67 | 0.33% | 07:14:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10133 | 33 | 0.33% | 03:00:15 |
| Hong Kong Hang Seng | 20955 | -58 | -0.28% | 04:01:30 |
| China CSI 300 Index | 3005 | 33 | 1.09% | 03:01:07 |
| Taiwan TAIEX Index | 7509 | 79 | 1.07% | 01:46:01 |
| Australian S&P 200 | 4743.6 | -9.5 | -0.20% | 02:47:04 |
| Singapore Str. Times | 2672.57 | 9.26 | 0.35% | 05:10:01 |
| South Korea KOSPI 200 | 219.75 | -1.84 | -0.83% | 05:03:26 |
| Bombay Sensex 30 | 17127 | 273.93 | 1.63% | 06:29:57 |
| Karachi KSE-100 | 9350 | -126 | -1.33% | 05:44:58 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.240 | -0.040 | -0.11% | 07:19:09 |
| Cash 10yr T-note Price | 102.205 | -0.050 | -0.15% | 07:29:31 |
| Cash 10yr T-note Yield | 3.309 | 0.018 | 0.56% | 07:29 |
| 5yr T-note (CBT)(Z9) | 115.260 | -0.060 | -0.11% | 07:19:39 |
| Cash 5yr T-note Price | 100.015 | -0.045 | -0.14% | 07:29:31 |
| Cash 5yr T-note Yield | 2.365 | 0.030 | 1.28% | 07:29 |
| 30-yr T-bond (CBT)(Z9) | 120.99 | -0.05 | -0.13% | 07:17:47 |
| Cash 30yr T-bond Price | 108.010 | -0.100 | -0.29% | 07:29:31 |
| Cash 30yr T-bond Yield | 4.035 | 0.017 | 0.43% | 07:29 |
| Eurodollars (CME)(Z9) | 99.620 | 0.000 | 0.00% | 07:18:38 |
| Eurodollars (CME)(H0) | 99.330 | -0.015 | -0.02% | 07:17:52 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.34 | -0.03 | -0.02% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.495 | -0.005 | -0.01% | 05:11:41 |
| Bunds (Eurex) (Z9) | 121.66 | -0.08 | -0.07% | 07:14:22 |
| Euribor (Eurex) (Z9) | 99.26 | -0.03 | -0.03% | 07:01:14 |
| UK Gilts (Liffe) (Z9) | 118.39 | 0.09 | 0.08% | 07:14:19 |
| Short Stlg (Liffe) (Z9) | 99.43 | 0.02 | 0.02% | 07:13:31 |
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| Forex |
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| U.S. Dollar Index | 76.54 | -0.52 | -0.67% | 07:19:36 |
| US Dollar-Japanese Yen | 89.48 | -0.61 | -0.68% | 07:29:43 |
| EuroFX-US Dollar | 1.4663 | 0.0075 | 0.75% | 07:29:43 |
| US Dollar-Swiss Franc | 1.0289 | -0.0074 | -0.74% | 07:29:43 |
| British Pound-US$ | 1.6087 | 0.0126 | 1.26% | 07:29:43 |
| US$-Canadian Dlr | 1.0729 | -0.0117 | -1.17% | 07:29:43 |
| Yen (Globex) (Z9) | 1.1176 | 0.0082 | 0.82% | 07:18:09 |
| Euro FX (Globex) (Z9) | 1.4663 | 0.0095 | 0.65% | 07:19:41 |
| SwissFranc (Globex)(Z9) | 0.9726 | 0.0081 | 0.84% | 07:19:33 |
| British Pound(Glbx)(Z9) | 1.6096 | 0.0158 | 0.99% | 07:19:20 |
| Canadian$ (Globex)(Z9) | 0.933 | 0.0103 | 1.12% | 07:19:28 |
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| Commodities |
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| Gold (Comex) (Z9) | 1003.6 | 9.2 | 0.93% | 07:19:39 |
| Silver (Comex) (Z9) | 16.465 | 0.287 | 1.77% | 07:19:24 |
| Copper (Comex) (Z9) | 280.4 | 7.5 | 2.73% | 07:19:24 |
| Crude Oil (Nymex) (X9) | 67.79 | 1.08 | 1.62% | 07:19:33 |
| Gasoline (Nymex) (X9) | 167.4 | 3.27 | 1.99% | 07:18:53 |
| Heating Oil(Nymex) (X9) | 174.85 | 2.19 | 1.27% | 07:15:57 |
| NaturalGas(Nymex)(X9) | 4.886 | 0.011 | 0.23% | 07:15:35 |
| Corn (CBOT) (Z9) | 338.25 | -2.75 | -0.81% | 07:18:39 |
| Soybeans (CBOT) (X9) | 922.50 | 5.50 | 0.60% | 07:17:11 |
| Wheat (CBOT) (Z9) | 449.00 | 1.50 | 0.34% | 07:13:15 |
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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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