Barchart U.S. Morning Call
Friday, October 02, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -1.10% and Dec S&Ps are down -2.30 points, both at 3-week lows. Global stocks are lower today on a continuation of yesterday's meltdown on fears that rising unemployment will derail the global economic recovery. The US unemployment rate may climb to a 26-1/2 year high of 9.8% when the US Sep payrolls figures are released this morning. The markets are expecting a -175,000 monthly loss of jobs, but late yesterday Goldman Sachs predicted that US job losses in Sep will widen to -250,000, citing "disappointing" data. The dollar is higher, which has dragged commodity prices lower, while 10-year Treasuries climbed to a 5-month high on increased safe-haven demand. US bank stocks may be under pressure today following an FDIC report that showed the number of US banks that can't collect on at least 20% of thier loans climbed to an 18-year high, signaling that more bank failures and losses could slow an economic recovery. Also undercutting stocks is an article in the WSJ today in which bank analyst Meredith Whitney says the US economic recovery will falter as banks continue to curb lending to small companies. Whitney said small company's "access to credit is being denied at an accelerating pace" and that while large companies have no problem obtaining loans, small businesses "have never had a harder time." The Aug Euro-Zone PPI fell -7.5% y/y, the eighth straight monthly year-over-year decline, showing that price pressures at the wholesale level still remain non-existent. Stress tests on the European Union's biggest banks showed they could withstand an even deeper recession and that under current EU economic forecasts for 2009 and 2010, the largest banks in the region would maintain an average Tier 1 capital ratio "well above" 9%. European financial institutions have posted $498 billion in losses since the start of the credit crunch in mid-2007, less than half the $1.08 trillion in losses reported in the US.
The Asian markets today closed mostly lower with Japan -2.47%, Hong Kong -2.77%, China, South Korea and India closed for holiday, Taiwan -1.77%, Australia -2.11%, Singapore -1.99%. Japanese automakers sank as Toyota closed down 3.7% and Honda Motor fell 3.4%, after US auto sales slumped following the end of the "cash for clunkers" rebate program. Japanese exporters also fell amid concerns a stronger yen will reduce the value of repatriated overseas sales. The yen moved higher today following the global stock market slide, which boosted demand for the currency as a refuge. Japan's jobless rate unexpectedly dropped to 5.5% in Aug from 5.7% in July as the number of employed rose by 290,000, the first increase since Jan, while the job-to-applicant ratio, a leading indicator of employmemt trends, was unchanged at 0.42, the first time the indicator has stopped falling since Jan 2008. Another positive for the Japanese economy was the unexpected increase in Japan's Aug household spending which climbed +2.6% y/y, the biggest jump in 19 months.
Overnight U.S. Stock News
December S&Ps this morning are trading down -2.30 points. The US stock market yesterday moved sharply lower throughout the day and finished with large losses (Dow -2.09%, S&P 500 -2.58%, Nasdaq Composite -3.06%). The S&P 500 Index tumbled to a 3-week low. Bearish factors included (1) the larger-than-expected increase in weekly initial unemployment claims, (2) the unexpected decline in the Sep ISM manufacturing index, which raises concerns about the sustainability of an economic recovery, (3) the report from the American Bankers Association that showed US delinquency rates rising to records in Q2 for bank cards, home equity loans and home equity lines of credit, and (4) comments from Fed Chairman Bernanke that "banks have not returned to normal lending," and that US economic growth next year probably won't be strong enough to "substantially" bring down the jobless rate, which may remain above 9% at the end of 2010.
Bullish factors included (1) the stronger-than-expected Aug personal income and spending with Aug personal spending increasing at the strongest pace in nearly 8 years, (2) the stronger-than-expected increase in Aug US pending home sales, (3) the unexpected increase in Aug construction spending which rose at its fastest pace in 11 months, and (4) the drop in the yield on the 10-year T-note to a 4-1/4 month low of 3.17%, which should benefit consumers and the housing market.
Accenture (ACN) dropped 1.5% in pre-market trading after the world's second-largest technology-services company forecast sales in Q1 will be as much as $5.5 billion, lower than analysts' estimates of $5.65 billion, and that revenue for the fiscal year ending Aug 31 will be as much as $21.8 billion, below analysts' estimates of $22.2 billion.
Apple (AAPL) climbed 1.1% in pre-market trading after it was upgraded to "buy" from "neutral" at UBS AG, which cited "higher iPhone expectations."
Today's Market Focus
December 10-year T-notes this morning are trading up +8 ticks and have posted a new 5-month high as lower global equity markets increase demand for Treasuries. Dec T-note prices yesterday rallied for the eighth consecutive session as they rose sharply and closed up +30 ticks at a 4-1/2 month high. The 10-year T-note yield tumbled to a 4-1/4 month low of 3.17%. Bullish factors for T-note prices yesterday included (1) the larger-than-expected increase in weekly initial unemployment claims (+17,000 to 551,000 versus expectations of +5,000 to 535,000), (2) the decline in the August core PCE deflator, the Fed's preferred inflation measure, to a 8-year low of +1.3% y/y, (3) the unexpected decline in the Sep ISM manufacturing index (-0.3 to 52.6 versus expectations of +1.1 to 54.0), (4) an increase in the safe-haven demand for Treasuries after the equity market faltered, and (5) the prediction from RBC Capital Markets that the 10-year T-note yield's break below its former range low of 3.26% may now push the yield down to a targeted 61.8% Fibonacci retracement level of 3.09%. Bearish factors included (1) the stronger-than-expected Aug personal income (+0.2% versus expectations of +0.1%) and Aug personal spending which had its largest monthly increase in nearly 8 years (+1.3% versus expectations of +1.1%), (2) the unexpected decrease in weekly continuing unemployment claims which fell to their lowest level in 5-1/2 months (-70,000 to 6.090 million versus expectations of +32,00 to 6.170 million), (3) the unexpected increase in Aug construction spending which rose at its fastest pace in 11-months (+0.8% versus expectations of -0.1%), and (4) the larger-than-expected increase in Aug US pending home sales (+6.4% m/m versus expectations of +1.0% m/m).
The dollar index this morning is higher with the dollar/yen -0.26 yen and the euro/dollar -0.10 cents. The dollar index yesterday recovered Wednesday's losses and closed higher. Bullish factors for the dollar yesterday included (1) the fall in the euro to a 2-1/2 week low after ECB Prsident Trichet said "disorderly movements" in exchange rates have "adverse implications" for economies, signaling the ECB would not welcome further dollar weakness, (2) the unexpected decline in Aug German retail sales which had its biggest decline in 17 months and raised questions about the strength of an European economic recovery, (3) the prediction from former top Japanese currency official Utsumi that the yen will weaken to 100 per dollar over the next "few months" as economic fundamentals don't support further yen gains, and (4) comments from Fed Chairman Bernanke that he doesn't see an "immediate risk" to the US dollar's status as the world's main reserve currency. Bearish factors included (1) a decline in the safe-haven demand for the dollar on the IMF's hike in its global economic growth forecast to 3.1% from a July forecast of 2.5%, and (2) the prediction from Royal Bank of Scotland Plc that declines in the dollar may be less dependent on stock market prices and that "provided equities don't slide too far, the dollar may remain on a weaker path."
November crude oil prices this morning are down -$1.05 a barrel and Nov gasoline is trading -2.76 cents a gallon. Nov crude oil prices yesterday whipsawed on both sides of unchanged during a volatile session and finally closed up +$0.21 a barrel. November gasoline closed up +0.63 cent a gallon. Both Nov crude and Nov gasoline rallied to 1-week highs. Bullish factors included (1) the biggest monthly increase in US Aug personal spending in nearly 8 years, suggesting a possible improvement in fuel demand, (2) the IMF's hike in its global economic growth forecast for next year to 3.1% from a July forecast of 2.5%, (3) the action by Deutsche Bank AG to raise its 2010 crude oil price forecast to $65 a barrel from a previous forecast of $55 a barrel because of OPEC production discipline and a tighter demand and supply balance, and (4) the unexpected upward revision to the Sep Euro-Zone PMI manufacturing index to a 16-month high, signaling increased energy consumption. Bearish factors included (1) the rebound in the dollar, (2) the unexpected decline in the Sep ISM manufacturing index, indicating slowing energy demand, and (3) carry-over negative sentiment from the plunge in natural gas prices which were undercut when US natural gas inventories surged to a record 3.589 trillion cubic feet.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) MTRX-Matrix Service(BEST earnings consensus $0.23), UCBH-UCBH Holdings (-0.68).
Global Financial Calendar
| Friday 10/2/2009 |
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| United States |
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| 0815 ET | Boston Fed President Eric Rosengren speaks on inflation and financial markets at the Greater Boston Chamber's Financial Services Forum. |
| 0830 ET | Sep nonfarm payrolls expected -175,000, Aug -216,000. Sep unemployment rate expected +0.1 to 9.8%, Aug +0.3 to 9.7%. Sep manufacturing payrolls expected -55,000, Aug -63,000. Sep hourly earnings expected +0.2% m/m and +2.6% y/y, Aug +0.3% m/m and +2.6% y/y. Sep average weekly hours expected unchanged at 33.1, Aug unchanged at 33.1. |
| 1000 ET | Aug factory orders expected unchanged, Jul +1.3%. |
| 1635 ET | Dallas Fed President Richard Fisher speaks on the global economy at Duke University. |
| United Kingdom |
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| 0200 ET | Sep UK nationwide house prices expected +0.7% m/m and -0.3% y/y, Aug +1.6% m/m and -2.7% y/y. |
| 0430 ET | Sep UK PMI construction expected +0.4 to 48.1, Aug +0.7 to 47.7. |
| Euro-Zone |
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| 0500 ET | Aug Euro-Zone PPI expected +0.4% m/m and -7.6% y/y, Jul -0.8% m/m and -8.5% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1025.10 | -2.30 | -0.22% | 07:19:51 |
| DJIA (CBOT) (Z9) | 9442 | -29 | -0.31% | 07:19:49 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2384.74 | -26.58 | -1.10% | 07:14:45 |
| London UK FTSE Index | 4999.99 | -47.82 | -0.95% | 07:14:45 |
| German Dax Index | 5516.68 | -37.87 | -0.68% | 07:14:59 |
| French CAC 40 Index | 3677.59 | -43.18 | -1.16% | 07:14:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9732 | -247 | -2.47% | 03:00:17 |
| Hong Kong Hang Seng | 20375 | -580 | -2.77% | 04:01:30 |
| China CSI 300 Index | 3005 | 0 | 0.00% | 9/30/2009 |
| Taiwan TAIEX Index | 7412 | -133 | -1.77% | 01:46:01 |
| Australian S&P 200 | 4601.7 | -99.4 | -2.11% | 02:47:03 |
| Singapore Str. Times | 2604.53 | -52.91 | -1.99% | 05:10:01 |
| South Korea KOSPI 200 | 215.94 | 0 | 0.00% | 10/1/2009 |
| Bombay Sensex 30 | 17135 | 0 | 0.00% | 10/1/2009 |
| Karachi KSE-100 | 9455 | 154 | 1.66% | 06:45:06 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.920 | 0.080 | 0.21% | 07:19:59 |
| Cash 10yr T-note Price | 103.310 | 0.070 | 0.21% | 07:28:31 |
| Cash 10yr T-note Yield | 3.153 | -0.026 | -0.81% | 07:28 |
| 5yr T-note (CBT)(Z9) | 116.275 | 0.050 | 0.13% | 07:19:52 |
| Cash 5yr T-note Price | 101.010 | 0.040 | 0.12% | 07:29:31 |
| Cash 5yr T-note Yield | 2.156 | -0.027 | -1.23% | 07:29 |
| 30-yr T-bond (CBT)(Z9) | 122.35 | 0.15 | 0.38% | 07:19:58 |
| Cash 30yr T-bond Price | 110.005 | 0.170 | 0.49% | 07:28:31 |
| Cash 30yr T-bond Yield | 3.928 | -0.028 | -0.70% | 07:28 |
| Eurodollars (CME)(Z9) | 99.645 | 0.010 | 0.01% | 07:16:41 |
| Eurodollars (CME)(H0) | 99.425 | 0.010 | 0.01% | 07:18:01 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.61 | 0.30 | 0.22% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.510 | 0.005 | 0.01% | 04:05:04 |
| Bunds (Eurex) (Z9) | 122.62 | 0.30 | 0.25% | 07:14:59 |
| Euribor (Eurex) (Z9) | 99.25 | 0.00 | 0.01% | 04:45:16 |
| UK Gilts (Liffe) (Z9) | 119.89 | 0.52 | 0.44% | 07:14:37 |
| Short Stlg (Liffe) (Z9) | 99.44 | 0.00 | 0.00% | 07:08:02 |
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| Forex |
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| U.S. Dollar Index | 77.21 | 0.02 | 0.02% | 07:19:55 |
| US Dollar-Japanese Yen | 89.34 | -0.26 | -0.29% | 07:30:00 |
| EuroFX-US Dollar | 1.4536 | -0.0010 | -0.10% | 07:30:00 |
| US Dollar-Swiss Franc | 1.0398 | -0.0009 | -0.09% | 07:30:00 |
| British Pound-US$ | 1.5851 | -0.0105 | -1.05% | 07:30:00 |
| US$-Canadian Dlr | 1.0918 | 0.0079 | 0.79% | 07:30:00 |
| Yen (Globex) (Z9) | 1.1199 | 0.0053 | 0.53% | 07:19:45 |
| Euro FX (Globex) (Z9) | 1.4541 | 0.0007 | 0.05% | 07:19:59 |
| SwissFranc (Globex)(Z9) | 0.9628 | 0.002 | 0.21% | 07:19:35 |
| British Pound(Glbx)(Z9) | 1.5857 | -0.0089 | -0.56% | 07:19:30 |
| Canadian$ (Globex)(Z9) | 0.9169 | -0.0055 | -0.60% | 07:18:57 |
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| Commodities |
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| Gold (Comex) (Z9) | 997.8 | -2.9 | -0.29% | 07:19:51 |
| Silver (Comex) (Z9) | 16.255 | -0.185 | -1.13% | 07:19:27 |
| Copper (Comex) (Z9) | 268.8 | -5.0 | -1.81% | 07:19:31 |
| Crude Oil (Nymex) (X9) | 69.77 | -1.05 | -1.48% | 07:19:29 |
| Gasoline (Nymex) (X9) | 173.03 | -2.76 | -1.57% | 07:19:39 |
| Heating Oil(Nymex) (X9) | 180.37 | -2.37 | -1.30% | 07:19:15 |
| NaturalGas(Nymex)(X9) | 4.459 | -0.007 | -0.16% | 07:20:00 |
| Corn (CBOT) (Z9) | 336.75 | -3.75 | -1.10% | 07:15:57 |
| Soybeans (CBOT) (X9) | 910.25 | -7.75 | -0.84% | 07:19:56 |
| Wheat (CBOT) (Z9) | 448.25 | -4.50 | -0.99% | 07:15:41 |
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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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