Barchart U.S. Morning Call
Friday, October 09, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.15% and Dec S&Ps are down -0.60 points. The dollar is stronger while Treasuries and commodity prices are weaker after Fed Chairman Bernanke said late yesterady at a Board of Governors Conference in Washington that the Fed will be prepared to tighten monetary policy when the outlook for the economy "has improved sufficiently." European stocks weakened when Aug German exports unexpectedly fell -1.8% m/m when the market was looking for a +1.9% m/m increase, a sign that the recovery of Europe's largest economy remains fragile. Also undercutting stocks was comments from ECB President Trichet who said that while the Euro-Zone economy "is showing signs of stabilization" it will recover "very gradually," a sign that the ECB does not plan anytime soon in removing its emergency stimulus measures. Limiting losses in European stocks were the stronger-than-expected increases in Aug French industrial and manufacturing production, adding to signs that stimulus spending is helping the Euro-Zone emerge from recession. Also supporting European stock prices was the unexpected downward revision to the Sep German CPI (EU harmonised) which fell both -0.5% m/m and -0.5% y/y, a bigger decline than the initial estimate of -0.4% m/m and -0.4% y/y, indicating price pressures remain subdued.
The Asian markets today closed mostly higher with Japan +1.87%, Hong Kong +0.03%, China +5.29%, Taiwan +0.91%, Australia -0.33%, Singapore +0.06%, South Korea +2.16%, India -1.19%. China's banking regulator said it's too soon for the government to start winding down stimulus efforts because the economy "may face a bumpy road ahead." According to the World Bank, government spending on building projects has driven more than 80% of China's expansion this year, as private sector spending has yet to recover. Asian technology stocks were boosted today after the price of the benchmark dynamic random access memory chip gained 2.4% yesterday to the highest since Jun 2008, according to Dramexchange Technology, operator of Asia's biggest spot market for semiconductors. Japanese exporters also gained after the yen weakened when Aug Japan machine orders rose a smaller-than-expected +0.5% m/m.
Overnight U.S. Stock News
December S&Ps this morning are trading down -0.60 points. The US stock market yesterday rallied right from the opening and finished higher on the day (Dow +0.63%, S&P 500 +0.75%, Nasdaq Composite +0.64%). The S&P 500 Index posted a 2-week high. Bullish factors included (1) the larger-than-expected decrease in weekly initial unemployment claims which fell to a 9-month low, (2) a rally in retailers after the Sep ICSC chain store sales ex-WalMart unexpectedly increased for the first time in the last 13 months and Retail Metrics reported that sales of US chain stores open at least a year also rose last month, (3) strength in homebuilders and real-estate companies after Treasury Secretary Geithner said that housing markets are showing "broad signs" of improvement even though they haven't yet healed and comments from House Speaker Nancy Pelosi that Congress will consider extending the tax credit for first-time home buyers, and (4) optimism that Q3 earnings season will be better-than-expected after Alcoa kicked off results when it reported an unexpected Q3 profit of 4 cents a share, exceeding analysts' estimates for a 9-cent loss.
Bearish factors included (1) weakness in health insurance stocks after the Congressional Budget Office said an $829 billion overhaul of the health-care industry would reduce the federal deficit, raising concerns that the legislation will gain support and, if it passes, threaten the profits of managed care companies, (2) the prediction from Goldman Sachs that the US unemployment rate will probably rise to 10.5% by the end of 2010 and that it will take several years for the US labor market to return to "normal" mid-single-digit unemployment rates even if the economic and labor market recovery proves to be very strong, (3) the report from Reis Inc. that vacancies at US shopping centers in Q3 rose to a 17-year high of 10.3% as consumers cut spending and stores closed, and (4) comments from a former Fannie Mae executive who said that the Federal Housing Adminstration may require a government bailout because of $54 billion more in losses than it can withstand.
Newmont Mining (NEM) fell 1.2% in European trading after the price of gold fell and after the Australian Financial Review reported that Newmont might be preparing a hostile bid for Newcrest Mining.
Marriott International (MAR) rallied 1.0% after Bank of America Merrill Lynch upgraded the biggest US hotel chain to "buy" from "underperform," saying that revenues and earnings are bottoming for Marriott, "meaning it's time to own the stock."
Today's Market Focus
December 10-year T-notes this morning are trading down -3.5 ticks on hawkish comments from Fed Chairman Bernanke. Dec T-note prices yesterday traded weaker throughout the day and closed down -18 ticks. Bearish factors for T-note prices yesterday included (1) the larger-than-expected decline in weekly initial unemployment claims which fell to a 9-month low (-33,000 to 521,000 versus expectations of -11,000 to 540,000), (2) the report from the Congressional Budget Office that puts the fiscal 2009 US budget deficit at $1.4 trillion, the biggest deficit since 1945, and may lead to an increase in Treasury issuance and supply pressures as the government continues to borrow at a record pace, (3) the continued thaw in credit markets after the Fed reported that unsecured commercial paper outstanding climbed $67.6 billion (+5.5%) to a a seasonally adjusted $1.3 trillion in the week ended Oct 7, the highest since May 6 and the biggest percentage increase since the Fed began buying commercial paper directly from companies in October of last year, and (4) lackluster demand for the Treasury's $12 billion 30-year T-bond auction that had a bid-to-cover ratio of 2.37, lower than the 2.92 at last month's auction and lower than the 10-auction average of 2.42. Bullish factors included (1) a possible increase in the safe-haven demand for Treasuries after a former Fannie Mae executive said the Federal Housing Adminstration may require a government bailout because it has $54 billion more in losses than it can withstand, and (2) comments from Dallas Fed President Fisher it is not time for the Fed to tighten the money supply.
The dollar index this morning is higher with the dollar/yen +0.38 yen and the euro/dollar -0.41 cents. The dollar index yesterday slumped to a 14-month low and closed lower. Bearish factors for the dollar yesterday included (1) reduced safe-haven demand for the dollar as the equity market rallied on signs the economy is recovering after weekly US initial unemployment claims dropped to a 9-month low and US chain store sales in Sep increased for the first time in the last 13 months, and (2) the report from the Congressional Budget Office that the US government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, which may deter foreign investors from purchasing dollar assets. Bullish factors included (1) continued purchases of dollars by Russia's central bank in an attempt to slow the advance of the ruble, and (2) comments from ECB President Trichet who was trying to talk up the dollar when he said that the preference by US officials for a stronger dollar is "extremely important in the present circumstances."
November crude oil prices this morning are down -27 cents a barrel and Nov gasoline is trading -1.69 cents a gallon. Nov crude oil prices yesterday rallied sharply and closed up +$2.12 a barrel. November gasoline closed up +5.94 cents a gallon. Both Nov crude and Nov gasoline rose to 2-week highs. Bullish factors included (1) the slump in the dollar index to a nearly 14-month low, which boosts the prices of most commodities priced in dollars, and (2) the larger-than-expected decline in weekly initial unemployment claims to a 9-month low, stoking optimisim that fuel demand will rebound as the US economy recovers. Bearish factors included (1) the recommendation from JPMorgan Chase that investors should be short crude oil due to "elevated" global inventories and high spare capacity, and (2) the forecast from the US Climate Prediction Center that the weak El Nino that persisted through Sep will strengthen later this year, further dampening the impact of the Atlantic hurricane season.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) BLX-Banco Latinoamericano de Comerico Exterior, S.A. (BEST earnings consensus $0.39), CMN-Cantel Medical Corp. (0.22), LPHI-Life Partners Holdings (0.51).
Global Financial Calendar
| Friday 10/9/2009 |
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| United States |
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| 0830 ET | Aug trade balance expected -$33.0 billion, Jul -$32.0 billion. |
| 0830 ET | Atlanta Fed President Dennis Lockhart delivers welcome and opening remarks a the Atlanta Fed conference on "Short Selling: Costs and Benefits." |
| 1215 ET | Fed Vice Chairman Donald Kohn speaks at a Fed conference on "Monetary Policy Research and the Financial Crisis: Strengths and Shortcomings." |
| 1400 ET | St. Louis Fed President James Bullard speaks on the economy and monetary policy at St. Cloud State University's business school. |
| Germany |
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| 0200 ET | Aug German trade balance expected +12.0 billion euros, Jul +13.9 billion euros. Aug imports expected +0.9%, Jul -0.2%. Aug exports expected +1.7%, Jul +2.3%. |
| 0200 ET | Aug German current account expected +8,5 billion euros, Jul +11.0 billion euros. |
| 0200 ET | Revised Sep German CPI (EU harmonized) expected no change at -0.4% m/m and -0.4% y/y. |
| France |
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| 0245 ET | Aug French industrial production expected +0.3% m/m and -13.3% y/y, Jul +0.1% m/m and -13.0% y/y. |
| 0245 ET | Aug French manufacturing production expected +0.6% m/m and -13.9% y/y, Jul +0.6% m/m and -13.8% y/y. |
| United Kingdom |
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| 0430 ET | Sep UK PPI input prices expected -0.8% m/m and -6.8% y/y, Aug +2.2% m/m and -7.5% y/y. |
| 0430 ET | Sep UK PPI output prices expected +0.1% m/m and -0.1% y/y, Aug +0.2% m/m and -0.4% y/y. |
| 0430 ET | Sep UK PPI output core expected +0.2% m/m and +0.9% y/y, Aug +0.2% m/m and +0.7% y/y. |
| Canada |
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| 0700 ET | Sep Canadian net change in employment expected -7,500, Aug +27,100. Sep unemployment rate expected +0.1 to 8.8%, Aug +0.1 to 8.7%. |
| 1030 ET | Q3 Canadian business outlook future sales, Q2 +0.7%. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1063.20 | -0.60 | -0.06% | 07:12:23 |
| DJIA (CBOT) (Z9) | 9744 | -3 | -0.03% | 07:12:23 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2447.48 | -3.56 | -0.15% | 07:08:30 |
| London UK FTSE Index | 5158.74 | 4.10 | 0.08% | 07:08:30 |
| German Dax Index | 5723.48 | 6.94 | 0.12% | 07:08:30 |
| French CAC 40 Index | 3807.34 | 0.53 | 0.01% | 07:08:30 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10016 | 184 | 1.87% | 03:00:17 |
| Hong Kong Hang Seng | 21499 | 7 | 0.03% | 04:01:30 |
| China CSI 300 Index | 3164 | 159 | 5.29% | 03:01:02 |
| Taiwan TAIEX Index | 7572 | 69 | 0.91% | 01:46:01 |
| Australian S&P 200 | 4752.9 | -15.7 | -0.33% | 01:47:03 |
| Singapore Str. Times | 2652.51 | 1.56 | 0.06% | 05:10:01 |
| South Korea KOSPI 200 | 215.57 | 4.56 | 2.16% | 05:03:25 |
| Bombay Sensex 30 | 16643 | -200.88 | -1.19% | 06:29:56 |
| Karachi KSE-100 | 9769 | 28 | 0.28% | 06:49:22 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | #VALUE! | -0.035 | -0.09% | 07:12:53 |
| Cash 10yr T-note Price | 102.310 | -0.060 | -0.18% | 07:22:00 |
| Cash 10yr T-note Yield | 3.269 | 0.022 | 0.67% | 07:21 |
| 5yr T-note (CBT)(Z9) | 116.135 | 37.490 | -0.15% | 07:12:42 |
| Cash 5yr T-note Price | 100.165 | -0.065 | -0.20% | 07:20:00 |
| Cash 5yr T-note Yield | 2.265 | 0.043 | 1.93% | 07:19 |
| 30-yr T-bond (CBT)(Z9) | #VALUE! | 0.01 | 0.03% | 07:13:11 |
| Cash 30yr T-bond Price | 106.305 | -0.035 | -0.10% | 07:23:01 |
| Cash 30yr T-bond Yield | 4.094 | 0.006 | 0.15% | 07:22 |
| Eurodollars (CME)(Z9) | 99.620 | -0.010 | -0.01% | 07:07:33 |
| Eurodollars (CME)(H0) | 99.400 | -0.025 | -0.03% | 07:10:58 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.13 | -0.22 | -0.16% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.520 | 0.000 | 0.00% | 21:31:02 |
| Bunds (Eurex) (Z9) | 122.64 | -0.23 | -0.19% | 07:08:30 |
| Euribor (Eurex) (Z9) | 99.16 | -0.04 | -0.04% | 06:34:26 |
| UK Gilts (Liffe) (Z9) | 120.51 | -0.24 | -0.20% | 07:08:01 |
| Short Stlg (Liffe) (Z9) | 99.40 | -0.02 | -0.02% | 07:07:13 |
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| Forex |
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| U.S. Dollar Index | 76.06 | 0.10 | 0.13% | 07:13:21 |
| US Dollar-Japanese Yen | 88.77 | 0.38 | 0.43% | 07:23:31 |
| EuroFX-US Dollar | 1.4754 | -0.0041 | -0.41% | 07:23:31 |
| US Dollar-Swiss Franc | 1.0293 | 0.0034 | 0.34% | 07:23:32 |
| British Pound-US$ | 1.5991 | -0.0081 | -0.81% | 07:23:31 |
| US$-Canadian Dlr | 1.0446 | -0.0073 | -0.73% | 07:23:31 |
| Yen (Globex) (Z9) | 1.1272 | -0.0029 | -0.29% | 07:13:26 |
| Euro FX (Globex) (Z9) | 1.4756 | -0.0019 | -0.13% | 07:13:31 |
| SwissFranc (Globex)(Z9) | 0.9723 | -0.0016 | -0.16% | 07:13:25 |
| British Pound(Glbx)(Z9) | 1.5995 | -0.0067 | -0.42% | 07:13:08 |
| Canadian$ (Globex)(Z9) | 0.9552 | 0.0042 | 0.44% | 07:13:04 |
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| Commodities |
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| Gold (Comex) (Z9) | 1050.8 | -5.5 | -0.52% | 07:13:26 |
| Silver (Comex) (Z9) | 17.660 | -0.155 | -0.87% | 07:13:00 |
| Copper (Comex) (Z9) | 287.3 | -2.6 | -0.90% | 07:13:15 |
| Crude Oil (Nymex) (X9) | 71.42 | -0.27 | -0.38% | 07:13:27 |
| Gasoline (Nymex) (X9) | 176.28 | -1.69 | -0.95% | 06:59:05 |
| Heating Oil(Nymex) (X9) | 183.74 | -0.95 | -0.51% | 07:11:55 |
| NaturalGas(Nymex)(X9) | 4.99 | 0.027 | 0.54% | 07:13:25 |
| Corn (CBOT) (Z9) | 363.75 | -0.25 | -0.07% | 07:12:20 |
| Soybeans (CBOT) (X9) | 933.50 | -2.50 | -0.27% | 07:13:03 |
| Wheat (CBOT) (Z9) | 470.50 | -3.50 | -0.74% | 07:12:46 |
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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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