Barchart U.S. Morning Call
Thursday, October 01, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.41% and Dec S&Ps are down -5.60 points. The dollar is stronger today after European Union Monetary Affairs Commissioner Joaquin Almunia said EU officials will discuss the recent strength in the euro in preparation for the Group of Seven meetings in Istanbul this weekend, fueling speculation that G-7 officials will signal that further dollar weakness is unwelcome. Aug German retail sales unexpectedly declined -1.5% m/m, the biggest monthly fall in 17 months, as concerns about rising unemployment kept a lid on consumer spending. Those fears of increasing unemployment came to fruition after the Aug Euro-Zone unemploymnet rate rose to a 10-1/2 year high of 9.6%, while the IMF today predicted that the unemployment rate in the Euro-Zone will rise to 11.7% next year, higher than in the US or the UK. Limiting losses in global stocks was the IMF's upward revision for global economic growth next year to rise 3.1%, up from a July forecast of 2.5%, and its revision for global economic growth to contract -1.1% this year, less than the -1.4% projected in July. The IMF said that more than $2 trillion in stimulus packages and demand from Asia are pulling the global economy out of recession, although the rebound will be "sluggish, credit constained and, for quite some time, jobless." European stocks were also supported after the Sep Euro-Zone PMI manufacturing index was unexpectedly revised up +0.3 to a 16-month high of 49.3.
The Asian markets today closed mostly lower with Japan -1.53%, Hong Kong and China closed for holidays, Taiwan +0.48%, Australia -0.90%, Singapore -0.57%, South Korea -1.73%, India +0.05%. Japan's Q3 Tankan large manufacturers business conditions survey improved to -33 as expected from -48 in Q2, although large businesses plan to cut spending -10.8% this year, more than the -9.4% plannned three months ago. The capital spending plans are the worst for a September survey in at least 26 years as Japanese companies continue to worry whether overseas demand will reliably recover. The Sep China Purchasing Managers' Index rose +0.3 to 54.3, the fastest pace of growth in 17 months on stimulus spending and this year's record growth in new loans. The Chinese markets were closed today and will be closed for the next week for holidays.
Overnight U.S. Stock News
December S&Ps this morning are trading down -5.60 points. The US stock market yesterday sold-off early but recovered its losses into early afternoon, finally fading into the close and settling lower (Dow -0.31%, S&P 500 -0.33%, Nasdaq Composite -0.08%). Bearish factors included (1) the larger-than-expected loss of jobs in the Sep ADP employment change, raising concern that Friday's Sep nonfarm payrolls may be weak, (2) the unexpected drop in the Sep Chicago purchasing managers index, and (3) comments from former Fed Chairman Greenspan that he sees the US economy slowing next year as the surge in stocks comes to an end.
Bullish factors included (1) carry-over support from a rally in overseas markets after the IMF cut its prediction for worldwide bank writedowns by -15% to $3.4 trillion, citing improving credit markets and economic growth, (2) the unexpected upward revision to US Q2 GDP, (3) the statement from Fed Vice Chairman Kohn that low interest rates are likely warranted for an "extended period," (4) the prediction from Deutsche Bank AG that Q3 earnings for S&P 500 companies may top analysts' estimates because cost reductions are allowing them to improve margins, and (5) stock buying by fund managers on the last day of the quarter which went down as the biggest quarterly rally for the S&P 500 Index in a decade.
Microsoft (MSFT) fell 1% in European trading after Goldman Sachs removed the world's largest software company from its "conviction buy" list, citing "some degree of risk to" Q1 earnings.
Today's Market Focus
December 10-year T-notes this morning are trading up +1 tick. Dec T-note prices yesterday traded on both sides of unchanged throughout the day, finally closing up +1 tick. Bullish factors for T-note prices yesterday included (1) the larger-than-expected loss of jobs in the Sep ADP employment change (-254,000 versus expectations of -200,000), (2) the unexpected decline in the Sep Chicago purchasing managers index (-3.9 to 46.1 versus expectations of +2.0 to 52.0), (3) the prediction from RBS Securities that the yield on the 10-year T-note will be driven down to 3% by "ongoing stess on bank balance sheets, continued rises in loan charge-offs, problems in commercial real estate, and continued delevering of consumer balance sheets that are going to keep consumers saving, and spending less," and (4) the statement from Fed Vice Chairman Kohn that tight credit, low inflation and slack labor demand means the Fed can keep interest rates around zero "for an extended period." Bearish factors included (1) the unexpected upward revision to US Q2 GDP (-0.7% annualized versus expectations of -1.2%), and (2) hawkish comments from Philadelphia Fed President Plosser who said that the Fed should tighten credit "promptly" when necessary to avert a recurrence of the high US inflation during the 1970s.
The dollar index this morning is higher with the dollar/yen +0.33 yen and the euro/dollar -1.06 cents. Speculation that the G-7 will signal at this weekend's meeting in Istanbul that further dollar weakness is unwelcome is boosting the dollar today. The dollar index yesterday slumped and closed lower on the day. Bearish factors for the dollar yesterday included (1) the report from the IMF that showed the dollar's share of global currency reserves fell in Q2 to 62.8%, from 65% in Q1 as the euro's share of currency reserves rose to 27.6% from 25.9% and the yen's share rose to 3.1% from 2.9%, (2) strength in the yen on speculation that the BOJ may decide as soon as next month to let its emergency corporate debt buying programs expire, (3) the action by the IMF to lower its projection for global writedowns by 15% to $3.4 trillion, which dampened safe-haven demand for the dollar, and (4) the statement from Fed Vice Chairman Kohn that tight credit, low inflation and slack labor demand means the Fed can keep interest rates around zero "for an extended period," which may further weaken the dollar's interest rate differentials. Bullish factors included (1) an increase in the safe-haven demand for dollars after the equity market slumped, and (2) comments from Philadelphia Fed President Plosser who said that the Fed should tighten credit "promptly" when necessary to avert a recurrence of the high US inflation during the 1970s.
November crude oil prices this morning are down -62 cents a barrel and Nov gasoline is trading -1.43 cents a gallon. Nov crude oil prices yesterday moved sharply higher and closed up +$3.90 a barrel. November gasoline closed up +11.03 cents a gallon. Bullish factors included (1) the weaker dollar, (2) the unexpected decline in weekly DOE gasoline inventories (-1.66 million bbl versus expectations of +1.5 milliion bbl), (3) the larger-than-expected decline in the weekly refinery capacity rate (-1.0 to 84.6% versus expectations of -0.3 to 85.3%), which portends even less gasoline and distillate production in the weeks ahead, (4) the growth in Chinese manufacturing for the sixth straight month in Sep and the increase in Japanese industrial production for the sixth consecutive month in Aug, signaling strong energy demand, and (5) the unexpected upward revision to Q2 US GDP, indicating stronger US fuel consumption. Bearish factors included (1) the larger-than-expected increase in weekly DOE crude oil inventories (+2.80 million bbl versus expectations of +1.0 million bbl), and (2) the unexpected drop in the Sep Chicago purchasing managers index, which indicates a slowdown in energy demand.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) ACN-Accenture (BEST earnings consensus $0.61), GPN-Global Payments (0.65), STZ-Constellation (0.41), MXB-MSCI Inc. (0.28), BLUD-Immucor (0.25), RECN-Resources Connection (-0.03), ADY-American Dairy (0.40), SMSC-Standard Microsystems (0.00).
Global Financial Calendar
| Thursday 10/1/2009 |
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| United States |
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| 0730 ET | Sep Challenger job cuts, Aug -13.8% y/y. |
| 0830 ET | Weekly unemployment claims expected +5,000 to 535,000, previous -21,000 to 530,000. Weekly continuing claims expected +32,000 to 6.170 million, previous -123,000 to 6.138 million. |
| 0830 ET | Aug personal income expected +0.1%, Jul unchanged. Aug personal spending expected +1.1%, Jul +0.2%. Aug PCE deflator expected -0.6% y/y, Jul -0.8% y/y. Aug PCE core expected +0.1% m/m and +1.3% y/y, Jul +0.1% m/m and +1.4% y/y. |
| 0900 ET | Fed Chairman Ben Bernanke testifies at a House Financial Services Committee hearing as part of a series of sessions on financial regulation. |
| 1000 ET | Sep ISM manufacturing index expected +1.1 to 54.0, Aug +4.0 to 52.9. Sep ISM prices paid expected +1.0 to 66.0, Aug +10.0 to 65.0. |
| 1000 ET | Aug pending home sales expected +1.0% m/m, Jul +3.2% m/m. |
| 1000 ET | Aug construction spending expected -0.1% m/m, Jul -0.2% m/m. |
| 1100 ET | Treasury announces amounts of 10-year TIPS (previous $8 billion), 3-year T-note (previous $38 billion), 10-year T-notes (previous $20 billion) and 30-year T-bonds (previous $12 billion) to be auctioned Oct 5-8. |
| 1730 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economy, financial conditions and outlook at the Macon State College School of Business. |
| 1730 ET | Cleveland Fed President Sandra Pianalto speaks in current economic issues at the Market News International seminar. |
| n/a | Sep total vehicle sales expected 9.50 million, Aug 14.09 million. Sep domestic vehicle sales expected 7.20 million, Aug 10.20 million. |
| Japan |
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| 0100 ET | Sep Japan vehicle sales, Aug +2.3% y/y. |
| 1930 ET | Aug Japan jobless rate expected +0.1 to 5.8%, Jul +0.3 to 5.7%. Aug job-to-applicant ratio expected unchanged at 0.42, Jul -0.01 to 0.42. |
| 1930 ET | Aug Japan household spending expected -0.2% y/y, Jul -2.0% y/y. |
| Germany |
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| 0200 ET | Aug German retail sales expected +0.2% m/m and -0.8% y/y, Jul +0.7% m/m and -1.0% y/y. |
| 0355 ET | Revised Sep German PMI manufacturing expected unrevised at 49.6. |
| France |
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| 0350 ET | Revised Sep French PMI manufacturing expected unrevised at 52.5. |
| Euro-Zone |
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| 0400 ET | Revised Sep Euro-Zone PMI manufacturing expected unrevised at 49.0. |
| 0500 ET | Aug Euro-Zone unemployment rate expected +0.1 to 9.6%, Jul +0.1 to 9.5%. |
| United Kingdom |
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| 0430 ET | Sep UK PMI manufacturing expected +0.5 to 50.2, Aug -0.5 to 49.7. |
| 0430 ET | Bank of England releases quarterly credit conditions survey. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1047.30 | -5.60 | -0.53% | 07:15:36 |
| DJIA (CBOT) (Z9) | 9615 | -38 | -0.39% | 07:13:20 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2443.88 | -10.00 | -0.41% | 07:11:15 |
| London UK FTSE Index | 5105.75 | -28.15 | -0.55% | 07:11:15 |
| German Dax Index | 5659.96 | -15.20 | -0.27% | 07:11:22 |
| French CAC 40 Index | 3778.12 | -17.29 | -0.46% | 07:11:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9979 | -155 | -1.53% | 03:00:18 |
| Hong Kong Hang Seng | 20955 | 0 | 0.00% | 9/30/2009 |
| China CSI 300 Index | 3005 | 0 | 0.00% | 9/30/2009 |
| Taiwan TAIEX Index | 7545 | 36 | 0.48% | 01:46:01 |
| Australian S&P 200 | 4701.1 | -42.5 | -0.90% | 02:47:03 |
| Singapore Str. Times | 2657.44 | -15.13 | -0.57% | 05:10:01 |
| South Korea KOSPI 200 | 215.94 | -3.81 | -1.73% | 05:03:26 |
| Bombay Sensex 30 | 17135 | 7.71 | 0.05% | 06:29:56 |
| Karachi KSE-100 | 9301 | -48 | -0.52% | 05:44:54 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.240 | 0.010 | 0.03% | 07:16:10 |
| Cash 10yr T-note Price | 102.225 | 0.010 | 0.03% | 07:25:30 |
| Cash 10yr T-note Yield | 3.302 | -0.004 | -0.11% | 07:25 |
| 5yr T-note (CBT)(Z9) | 116.050 | 0.020 | 0.05% | 07:16:11 |
| Cash 5yr T-note Price | 100.095 | 0.000 | 0.00% | 07:19:30 |
| Cash 5yr T-note Yield | 2.312 | 0.000 | 0.00% | 07:19 |
| 30-yr T-bond (CBT)(Z9) | 120.99 | 0.02 | 0.05% | 07:16:11 |
| Cash 30yr T-bond Price | 107.250 | 0.010 | 0.03% | 07:25:30 |
| Cash 30yr T-bond Yield | 4.048 | -0.002 | -0.04% | 07:25 |
| Eurodollars (CME)(Z9) | 99.640 | 0.010 | 0.01% | 07:15:58 |
| Eurodollars (CME)(H0) | 99.385 | 0.010 | 0.01% | 07:16:12 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.31 | -0.03 | -0.02% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.505 | 0.010 | 0.01% | 05:52:41 |
| Bunds (Eurex) (Z9) | 121.85 | -0.03 | -0.02% | 07:11:16 |
| Euribor (Eurex) (Z9) | 99.26 | 0.00 | 0.00% | 02:29:22 |
| UK Gilts (Liffe) (Z9) | 118.61 | 0.05 | 0.04% | 07:11:01 |
| Short Stlg (Liffe) (Z9) | 99.43 | 0.00 | 0.00% | 07:11:14 |
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| Forex |
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| U.S. Dollar Index | 77.08 | 0.37 | 0.48% | 07:16:11 |
| US Dollar-Japanese Yen | 90.03 | 0.33 | 0.36% | 07:26:23 |
| EuroFX-US Dollar | 1.4535 | -0.0106 | -1.06% | 07:26:23 |
| US Dollar-Swiss Franc | 1.0444 | 0.0080 | 0.80% | 07:26:23 |
| British Pound-US$ | 1.5964 | -0.0018 | -0.18% | 07:26:23 |
| US$-Canadian Dlr | 1.0745 | 0.0050 | 0.50% | 07:26:23 |
| Yen (Globex) (Z9) | 1.1117 | -0.0045 | -0.45% | 07:15:55 |
| Euro FX (Globex) (Z9) | 1.4548 | -0.0097 | -0.66% | 07:16:19 |
| SwissFranc (Globex)(Z9) | 0.9592 | -0.0068 | -0.70% | 07:16:17 |
| British Pound(Glbx)(Z9) | 1.5973 | -0.0029 | -0.18% | 07:16:17 |
| Canadian$ (Globex)(Z9) | 0.9314 | -0.0050 | -0.53% | 07:15:54 |
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| Commodities |
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| Gold (Comex) (Z9) | 1005.7 | -3.6 | -0.36% | 07:16:17 |
| Silver (Comex) (Z9) | 16.620 | -0.038 | -0.23% | 07:14:55 |
| Copper (Comex) (Z9) | 279.3 | -2.6 | -0.92% | 07:15:46 |
| Crude Oil (Nymex) (X9) | 69.99 | -0.62 | -0.88% | 07:16:19 |
| Gasoline (Nymex) (X9) | 173.73 | -1.43 | -0.82% | 07:15:06 |
| Heating Oil(Nymex) (X9) | 181.4 | -1.84 | -1.00% | 07:16:07 |
| NaturalGas(Nymex)(X9) | 4.758 | -0.083 | -1.71% | 07:15:20 |
| Corn (CBOT) (Z9) | 342.50 | -1.50 | -0.44% | 07:14:18 |
| Soybeans (CBOT) (X9) | 924.00 | -3.00 | -0.32% | 07:13:50 |
| Wheat (CBOT) (Z9) | 452.50 | -5.00 | -1.09% | 07:15:37 |
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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