Barchart U.S. Morning Call
Tuesday, October 13, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.11%, although Dec S&Ps are up +1.90 points. An unexpected decline in German investor confidence is dragging European stocks lower today on concern a recovery in Europe's largest economy may not be robust. The Oct German ZEW economic sentiment survey unexpectedly fell -1.7 to 56.0, its first decline in three months, while the market was expecting a +1.1 increase in the survey to 58.8. A weaker dollar today has propelled gold prices to another record high and crude oil to a 6-week high. Bank stocks are leading the fall in European stocks today with Lloyds Banking Group Plc down nearly 4% and Goldman Sachs down 2.1% after analyst Meredith Whitney downgraded Goldman, her only previous buy recommendation, to "neutral." The British pound fell to 6-month low against the euro after the British Chamber of Commerce recommended that England expand its asset-purchase program by 25 billion pounds ($39 billion) to revive the economy. An unexpected drop in the French consumer prices is limiting losses today as the Sep French CPI fell -0.2% m/m and -0.4% y/y, its fifth consecutive annual decline.
The Asian markets today closed mostly higher with Japan +0.60%, Hong Kong +0.79%, China +1.49%, Taiwan -0.04%, Australia +0.97%, Singapore -0.45%, South Korea -0.53%, India closed for holiday. Sep China car sales rose +84% y/y to 1.015 million units, the first time China'a monthly auto sales have exceeded 1 million, which may prompt the government to halt tax cuts and subsidies to prevent overcapacity. For the first nine months of this year, China's passenger-vehicle sales have risen 42% to 7.2 million units, with industrywide vehicle sales soaring 34% to 9.7 million. Raw material and energy producers led a rally in Asian stock markets as gold surged to a record and crude oil climbed to a 6-week high. Steel producers also moved higher after Goldman Sachs upgraded the sector and said "we are turning maximum bullish on Asian steel and on Japan in particular," adding "we expect Asian steel demand to surprise on the upside ion 2010, mainly due to rising steel intensity of Asian economies."
Overnight U.S. Stock News
December S&Ps this morning are trading up +1.90 points. The US stock market yesterday traded in positive territory into early afternoon when it shed most its gains and finished mixed (Dow +0.21%, S&P 500 +0.44%, Nasdaq Composite -0.01%). The S&P 500 Index climbed to a 2-week high. Bullish factors included (1) speculation that Q3 corporate earnings will continue to surprise to the upside and extend the current 7-month equity market rally, (2) the prediction from Clariden Leu AG that "the recession is over and the recovery is under way" and that last week's earnings show that analyst expectations can be surpassed and that the upside for stocks is not priced in yet, and (3) strength in commodity and energy producers after crude oil surged to a 6-week high and commodity prices gained on the back of a weak dollar.
Bearish factors included (1) comments from Homeland Security Secretary Napolitano who said it was "fair to say" terrorists with al-Qaeda-style beliefs are in the US, (2) the prediction from Gluskin Sheff & Associates that "right now the US economy is currently being held together by very strong tape and glue provided by the Fed, Treasury and Congress" and that once the stimulus is removed there will be little to boost growth, (3) the prediction from FBR Capital Markets that the four biggest US banks, Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, may have to take writedowns on $55 billion of mortgage-collection contracts after marking them up by $11 billion in Q2, and (4) comments from St. Louis Fed President Bullard who said that "labor markets are very weak" and that the US unemployment rate may top 10% as companies continue to cut jobs.
Goldman Sachs (GS) slipped 2.1% in pre-market trading after analyst Meredith Whitney downgraded her only previous "buy" recommendation to "neutral."
Intel (INTC) is 1.3% higher in European trading on speculation that its reported quarterly earnings later today will be better-than-expected.
Today's Market Focus
December 10-year T-notes this morning are trading unchanged. Dec T-note prices yesterday traded quietly and closed up +8 ticks as the cash market was closed for Columbus Day. Bullish factors for T-note prices yesterday included (1) comments from St. Louis Fed President Bullard who said that "labor markets are very weak" and that the US unemployment rate may top 10% as companies continue to cut jobs, and (2) a possible increase in the safe-haven demand for Treasuries after Credit Suisse Group AG said the volume of delinquent commercial mortgages jumped sevenfold last month to $22.4 billion, up from $3.2 billion a year earlier. Bearish factors included (1) the rally in European and US equity markets on increased confidence that the global economy is rebounding, which may limit the safe-haven demand for Treasuries, and (2) the report from Pacific Investment Management that showed borrowers have sold more than $1 trillion in US corporate bonds so far in 2009, the fastest pace on record, and may add to supply pressures as the corporate offerings compete with the increased issuance of Treasuries.
The dollar index this morning is lower with the dollar/yen -0.21 yen and the euro/dollar +0.83 cents. The dollar index yesterday weakened and closed lower. Bearish factors for the dollar yesterday included (1) the report from Barclays that showed global central banks boosted their foreign currency holdings by $413 billion in Q2 with the dollar's share of new global currency reserves only 37%, well below its 63% average since 1999, and Barclays' estimates that the dollar's share of new reserves probably shrank even further in Q3 as "the forces for continued diversification are still in place," and (2) the prediction from Standard Chartered that the dollar will decline to $1.55 per euro by year-end. Bullish factors included (1) the prediction from Bank of Tokyo-Mitsubishi UFJ that the dollar will "stabilize" as the Fed becomes more "hawkish" as it starts to signal it may withdraw stimulus measures, and (2) comments from St. Louis Fed President Bullard that "if part or most of the fall in output was a collapsed bubble, then today's output gap would be smaller than it appears," which signals he may favor raising interest rates sooner than expected because inflation risks may be greater than estimated.
November crude oil prices this morning are up +$1.04 a barrel at a 6-week high and Nov gasoline is trading +2.76 cents a gallon. Nov crude oil prices yesterday rallied for the third straight day and closed up +$1.50 a barrel. November gasoline closed up +3.10 cents a gallon. Nov crude oil posted a 6-week high and Nov gasoline posted a 3-week high. Bullish factors included (1) the weaker dollar, (2) the rally in European and US equity markets to 1-year highs, stoking optimism that increased confidence in a global economic recovery will boost oil demand, and (3) the action by Singapore's government to raise its 2009 GDP forecast to a contraction of 2.0% to 2.5%, stronger than an earlier forecast of a contraction of 4.0% to 6.0%, signaling increased energy consumption. Bearish factors included (1) the prediction from Purvin & Gertz that extended weather forecasts that call for a mild winter in Japan and the US may "portend to trouble ahead for oil prices" as distillate inventories will likely continue to grow, and (2) expectations for a build in weekly crude oil and gasoline stockpiles as refiners prepare for seasonal maintenance. Expectations for Wednesday's weekly DOE inventories are for a +1.0 million bbl build in crude stockpiles, a +1.5 million bbl rise in gasoline inventories, a -200,000 bbl drop in distillates, and the refinery capacity rate to be unchanged at 85.0%.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) JNJ-Johnson & Johnson (BEST earnings consensus $1.13), INTC-Intel (0.25), CSX-CSX Corp. (0.71), LLTC-Linear Technology (0.31), ALTR-Altera (0.19), DPZ-Domino's Pizza (0.15).
Global Financial Calendar
| Tuesday 10/13/2009 |
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| United States |
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| 0745 ET | ICSC (Int'l Council of Shopping Centers) weekly retailer sales, previous +0.3% w/w and +1.0% weekly y/y. |
| 0855 ET | Redbook weekly retailer sales, previous +0.4% month-to-date m/m and -2.2% month-to-date y/y. |
| 1000 ET | Oct IBD/TIPP economic optimism expected unchanged at 52.5, Sep +2.2 to 52.5. |
| 1300 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1315 ET | New York Fed President William Dudley speaks to the Institute of International Bankers Membership Luncheon. |
| 1345 ET | Fed Vice Chairman Donald Kohn speaks at the National Association for Business Economics' annual meeting. |
| 1700 ET | ABC U.S. weekly consumer confidence, previous +1 to -45. |
| France |
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| 0245 ET | Sep French CPI (EU harmonized) expected unchanged m/m and -0.2% y/y, Aug +0.6% m/m and -0.2% y/y. |
| United Kingdom |
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| 0430 ET | Sep UK CPI expected +0.3% m/m and +1.3% y/y, Aug +0.4% m/m and +1.6% y/y. Sep core CPI expected +1.7% y/y, Aug +1.8% y/y. |
| 0430 ET | Sep UK RPI expected +0.3% m/m and -1.5% y/y, Aug +0.5% m/m and -1.5% y/y, Aug +0.5% m/m and -1.3% y/y. Sep RPI ex mortgage interest payments expected +1.2% y/y, Aug +1.4% y/y. |
| 0430 ET | Aug UK DCLG house prices expected -6.0% y/y, Jul -8.3% y/y. |
| Germany |
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| 0500 ET | Oct German ZEW economic sentiment survey expected +1.1 to 58.8, Sep +1.6 to 57.7. Oct ZEW current situation survey expected +5.0 to -69.0, Sep +3.2 to -74.0. |
| Euro-Zone |
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| 0500 ET | Oct Euro-Zone ZEW economic sentiment survey expected +2.4 to 61.2, Sep +4.7 to 59.6. |
| Canada |
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| 0830 ET | Aug Canadian new housing price index expected +0.2% m/m, Jul +0.3% m/m. |
| Japan |
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| n/a | BOJ announces interest rate decision (0.10% benchmark rate expected unchanged). |
| 1950 ET | Sep Japan domestic CGPI expected +0.1% m/m and -7.9% y/y, Aug unchanged 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) | 1073.40 | 1.90 | 0.18% | 07:14:21 |
| DJIA (CBOT) (Z9) | 9835 | 16 | 0.16% | 07:13:09 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2454.30 | -2.59 | -0.11% | 07:09:45 |
| London UK FTSE Index | 5214.78 | 4.61 | 0.09% | 07:09:45 |
| German Dax Index | 5769.99 | -13.24 | -0.23% | 07:09:52 |
| French CAC 40 Index | 3838.83 | -6.97 | -0.18% | 07:09:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10077 | 60 | 0.60% | 03:00:16 |
| Hong Kong Hang Seng | 21467 | 168 | 0.79% | 04:01:30 |
| China CSI 300 Index | 3199 | 47 | 1.49% | 03:01:01 |
| Taiwan TAIEX Index | 7597 | -3 | -0.04% | 01:46:00 |
| Australian S&P 200 | 4785.7 | 45.9 | 0.97% | 01:47:03 |
| Singapore Str. Times | 2668.4 | -12.07 | -0.45% | 05:10:01 |
| South Korea KOSPI 200 | 213.1 | -1.13 | -0.53% | 05:03:26 |
| Bombay Sensex 30 | 17027 | 0 | 0.00% | 10/12/2009 |
| Karachi KSE-100 | 9686 | 44 | 0.45% | 05:44:58 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.175 | 0.000 | 0.00% | 07:14:51 |
| Cash 10yr T-note Price | 102.095 | 0.080 | 0.24% | 07:24:31 |
| Cash 10yr T-note Yield | 3.349 | -0.030 | -0.88% | 07:24 |
| 5yr T-note (CBT)(Z9) | 116.055 | 37.490 | -0.01% | 07:14:29 |
| Cash 5yr T-note Price | 100.100 | 0.060 | 0.19% | 07:15:31 |
| Cash 5yr T-note Yield | 2.308 | -0.040 | -1.71% | 07:15 |
| 30-yr T-bond (CBT)(Z9) | 120.07 | 0.03 | 0.08% | 07:14:51 |
| Cash 30yr T-bond Price | 105.010 | 0.145 | 0.43% | 07:23:31 |
| Cash 30yr T-bond Yield | 4.202 | -0.026 | -0.61% | 07:23 |
| Eurodollars (CME)(Z9) | 99.635 | 0.015 | 0.02% | 07:14:48 |
| Eurodollars (CME)(H0) | 99.400 | 0.020 | 0.02% | 07:14:05 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.09 | -0.04 | -0.03% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.510 | 0.020 | 0.02% | 04:17:03 |
| Bunds (Eurex) (Z9) | 122.37 | 0.07 | 0.06% | 07:09:35 |
| Euribor (Eurex) (Z9) | 99.18 | 0.02 | 0.02% | 06:01:18 |
| UK Gilts (Liffe) (Z9) | 120.27 | -0.27 | -0.22% | 07:09:34 |
| Short Stlg (Liffe) (Z9) | 99.41 | 0.00 | 0.00% | 06:58:16 |
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| Forex |
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| U.S. Dollar Index | 75.79 | -0.34 | -0.45% | 07:14:50 |
| US Dollar-Japanese Yen | 89.61 | -0.21 | -0.23% | 07:24:51 |
| EuroFX-US Dollar | 1.4856 | 0.0083 | 0.83% | 07:24:52 |
| US Dollar-Swiss Franc | 1.0210 | -0.0061 | -0.61% | 07:24:52 |
| British Pound-US$ | 1.5808 | 0.0009 | 0.09% | 07:24:53 |
| US$-Canadian Dlr | 1.0281 | -0.0068 | -0.68% | 07:24:52 |
| Yen (Globex) (Z9) | 1.1171 | 0.0031 | 0.31% | 07:14:51 |
| Euro FX (Globex) (Z9) | 1.4862 | 0.0075 | 0.51% | 07:14:52 |
| SwissFranc (Globex)(Z9) | 0.9805 | 0.0052 | 0.53% | 07:14:52 |
| British Pound(Glbx)(Z9) | 1.5813 | 0.0025 | 0.16% | 07:14:49 |
| Canadian$ (Globex)(Z9) | 0.9733 | 0.0066 | 0.68% | 07:14:52 |
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| Commodities |
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| Gold (Comex) (Z9) | 1069.0 | 11.5 | 1.09% | 07:14:52 |
| Silver (Comex) (Z9) | 18.035 | 0.215 | 1.21% | 07:14:48 |
| Copper (Comex) (Z9) | 287.9 | 2.2 | 0.77% | 07:14:47 |
| Crude Oil (Nymex) (X9) | 74.31 | 1.04 | 1.42% | 07:14:50 |
| Gasoline (Nymex) (X9) | 182.66 | 2.76 | 1.53% | 07:11:59 |
| Heating Oil(Nymex) (X9) | 192.53 | 3.09 | 1.63% | 07:14:43 |
| NaturalGas(Nymex)(X9) | 4.955 | 0.075 | 1.54% | 07:14:40 |
| Corn (CBOT) (Z9) | 381.75 | 0.50 | 0.13% | 07:14:34 |
| Soybeans (CBOT) (X9) | 1004.75 | 5.75 | 0.58% | 07:14:49 |
| Wheat (CBOT) (Z9) | 496.25 | 2.00 | 0.40% | 07:14:17 |
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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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