Barchart U.S. Morning Call
Thursday, October 15, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.77% and Dec S&Ps are down -0.30 points. European and US shares are little changed ahead of more Q3 company earnings, while Asian stocks ended higher. The dollar fell to a new 14-month low and crude oil rallied to nearly a 1-year high. Inflation pressures in Europe continue to be muted after the Sep Euro-Zone CPI was unchanged m/m and fell -0.3% y/y, the fourth consecutive year-over-year decline. European stocks lost ground after Nokia Oyj, the world's biggest maker of mobile phones, dropped 7% after it reported an unexpected Q3 loss as demand slid. Nokia reported a loss of -559 million euros (-$833.9 million) when analysts were expecting a profit of 367 million euros. In its monthly bulletin released today, the ECB reiterated recent comments from ECB President Trichet that interest rates remain "appropriate," and that the Euro-Zone economy is stabilizing and is expected to recover at a gradual pace.
The Asian markets today closed mostly higher with Japan +1.77%, Hong Kong +0.51%, China +0.38%, Taiwan +0.19%, Australia +0.60%, Singapore +0.14%, South Korea +0.73%, India -0.21%. Chinese stocks were bolstered after the Ministry of Commerce reported that foreign direct investment jumped +18.9% m/m in Sep to $7.9 billion while Sep China home prices climbed +2.8% y/y. Home sales in China surged +73.4% in the first nine months of 2009 from a year earlier to 2.75 trillion yuan, with investment in property development accelerating +17.7%, which may prompt the PBOC to tighten credit in order to avoid creating an asset bubble in the property market. The Australian dollar rose to a 14-month high against the dollar today after RBA governor Stevens said that his central bank can't be "too timid" in raising interest rates now that the threat of an economic crisis has passed, signaling the RBA soon plans to add to last week's 25 bp rate hike to its overnight cash rate target, possibly as soon as next month.
Overnight U.S. Stock News
December S&Ps this morning are trading little changed and down -0.30 points. The US stock market yesterday rallied right from the opening and finished sharply higher (Dow +1.47%, S&P 500 +1.75%, Nasdaq Composite +1.51%). The S&P 500 Index posted a 1-year high. Bullish factors included (1) carry-over support from a rally in overseas markets after Chinese exports in Sep posted their smallest decline this year, fueling optimism that the global economy is strengthening, (2) the better-than-expected Q3 earnings from Intel which boosted technology shares and its forecast for Q4 sales that surpassed projections by as much as $1 billion, which is bullish because Intel's better-than-expected numbers show one of the first major companies to report a more sustainable recovery instead of heavy cost-cutting, (3) the better-than-expected earnings from JPMorgan Chase which lifted financial companies, (4) the better-than-expected Sep US retail sales which strengthened retailers, and (5) the larger-than-expected decline in Aug US business inventories which posted their biggest monthly decline this year and have fallen for twelve straight months, which may prompt a pickup in production as the value of goods US businesses have on hand fell to $1.31 trillion, the lowest since Dec 2005.
Bearish factors included (1) comments from Fed Governor Tarullo that US banks face the risk of further "sizable" credit losses, and (2) the minutes of the Sep 22-23 FOMC meeting in which some Fed members were open to expanding the Fed's $1.25 trillion MBS purchase program to stimulate the economy on concerns that the recovery may fade.
Lazard Ltd. (LAZ) fell nearly 7% in European trading after the stock was downgraded to "market perform" from "outperform" at Oppenheomer because of the death of Chairman and CEO Bruce Wasserstein.
Today's Market Focus
December 10-year T-notes this morning are trading down -4 ticks. Dec T-note prices yesterday traded weaker throughout the day and closed down -24 ticks at a 2-week low. Bearish factors for T-note prices yesterday included (1) reduced safe-haven demand for Treasuries after several better-than-expected Q3 company earnings reports pushed the S&P 500 Index up to a 1-year high, and (2) the stronger-than-expected Sep retail sales (-1.5% and +0.5% less autos versus expectations of -2.1% and +0.2% less autos). Bullish factors included (1) the smaller-than-expected increase in Sep import prices (+0.1% m/m and -12.0% y/y versus expectations of +0.2% m/m and -11.4% y/y), (2) comments from Fed Governor Tarullo that US banks face the risk of further "sizable" credit losses, (3) the minutes of the Sep 22-23 FOMC meeting in which Fed members discussed boosting the Fed's $1.25 trillion MBS purchase program, and (4) the surge in China's foreign-exchange reserves to a record $2.273 trillion at the end of Sep, which may prompt China to park more of its foreign-exchange reserves in Treasuries.
The dollar index this morning is trading at a fresh 14-month low with the dollar/yen +0.84 yen and the euro/dollar -0.42 cents. The dollar index yesterday dropped to a 14-month low and closed lower for the third straight session. Bearish factors for the dollar yesterday included (1) the rally in the S&P 500 Index to a 1-year high, reducing safe-haven demand for the dollar, (2) strength in the yen against the dollar after Japanese Vice Minister Naoki Minezaki said that dollar weakness is likely to continue and Japan shouldn't intervene in markets to halt gains in its currency, and (3) the prediction from Royal Bank of Scotland Group Plc that the dollar's decline may persist amid speculation that the Fed will keep interest rates near a record low for some time. Bullish factors included (1) euro-negative comments from ECB Council member Guy Quaden that employment in the Euro-Zone "probably" will fall "for some time" and that future growth may be "weaker" but "more stable," and (2) comments from French Finance Minister Lagarde that currency issues will have to be discussed by the G-20 as she sees signs that global imbalances need to be addressed, signaling further dollar weakness may bring about some form of action from the G-20.
November crude oil prices this morning are down -10 cents a barrel and Nov gasoline is trading +1.04 cents a gallon. Nov crude oil prices yesterday moved higher for the fifth straight day and closed up +$1.03 a barrel. November gasoline closed up +2.57 cents a gallon. Nov crude oil posted a nearly 1-year high and Nov gasoline posted a 1-month high. Bullish factors included (1) the fall in the dollar index to 14-month low, which increases demand for crude as a hedge against inflation, (2) the 15% y/y jump in Sep China crude imports, signaling increased demand, (3) the surge in the S&P 500 Index to a 1-year high, fueling optimism that the global economic recovery and fuel-demand growth will acclererate, (4) the report from the API that showed US Sep gasoline consumption rose to 9.06 million bpd, up +6.6% from a year earlier, and (5) the prediction from Sanford C. Bernstein that Russian crude oil production may fall next year as output from existing sites drops and fewer new developments start. A bearish factor is an expected increase in crude oil and gasoline stockpiles in Thursday's weekly DOE inventory report (delayed a day due to Monday's Columbus Day). Expectations for Thursday's weekly DOE inventories are for a +1.0 million bbl jump 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) GOOG-Google (BEST earnings consensus $5.42), IBM-International Business Machines (2.39), C-Citigroup (-0.29), GS-Goldman Sachs (4.18), BAX-Baxter International (0.97), PPG-PPG Industries (0.89), SWY-Safeway (0.29), LUV-Southwest Airlines (0.01), APH-Amphenol (0.43), HOG-Harley Davidson (0.24), PBCT-People's United Financial (0.08), AMD-Advanced Micro Devices (-0.44).
Global Financial Calendar
| Thursday 10/15/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected +1,000 to 522,000, previous -33,000 to 521,000. Weekly continuing claims expected -40,000 to 6.000 million, previous -72,000 to 6.040 million. |
| 0830 ET | Sep CPI expected +0.2% m/m and -1.4% y/y, Aug +0.4% m/m and -1.5% y/y. Sep CPI ex food and energy expected +0.1% m/m and +1.4% y/y, Aug +0.1% m/m and +1.4% y/y. |
| 0830 ET | Oct Empire manufacturing index expected -1.4 to 17.5, Sep +6.8 to 18.9. |
| 0945 ET | St. Louis Fed President James Bullard delivers welcoming remarks at his bank's conference on "Debt, Financial Markets, and Monetary Policy." |
| 1000 ET | Oct Philadelphia Fed manufacturing index expected -2.1 to 12.0, Sep +9.9 to 14.1. |
| 1615 ET | Treasury Secretary Timothy Geithner speaks at a conference hosted by The Economist. |
| Japan |
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| 0030 ET | Revised Aug Japan industrial production, previous +1.8% m/m and -18.7% y/y. |
| 0030 ET | Revised Aug Japan capacity utilization, previous +3.9% m/m. |
| 0100 ET | Monthly report from the BOJ. |
| Euro-Zone |
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| 0400 ET | ECB publishes monthly report for Oct. |
| 0500 ET | Sep Euro-Zone CPI expected +0.1% m/m and -0.3% y/y, Aug +0.3% m/m and -0.3% y/y. Sep core CPI expected +1.2% y/y, Aug +1.3% y/y. |
| 0725 ET | ECB President Jean-Claude Trichet speaks on "Lessons From the Crisis" at a conference in Frankfurt. |
| Canada |
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| 0830 ET | Aug Canadian manufacturing sales expected +1.0% m/m, Jul +5.5% m/m. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1087.40 | -0.30 | -0.03% | 07:15:53 |
| DJIA (CBOT) (Z9) | 9953 | 1 | 0.01% | 07:15:50 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2509.23 | 19.24 | 0.77% | 07:10:45 |
| London UK FTSE Index | 5259.00 | 2.90 | 0.06% | 07:10:45 |
| German Dax Index | 5868.03 | 13.89 | 0.24% | 07:10:53 |
| French CAC 40 Index | 3898.18 | 15.51 | 0.40% | 07:10:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10239 | 178 | 1.77% | 03:00:15 |
| Hong Kong Hang Seng | 21999 | 113 | 0.51% | 04:01:30 |
| China CSI 300 Index | 3240 | 12 | 0.38% | 03:01:11 |
| Taiwan TAIEX Index | 7710 | 15 | 0.19% | 01:46:01 |
| Australian S&P 200 | 4859.9 | 28.8 | 0.60% | 01:47:03 |
| Singapore Str. Times | 2712.15 | 3.67 | 0.14% | 05:10:01 |
| South Korea KOSPI 200 | 217.47 | 1.57 | 0.73% | 05:03:25 |
| Bombay Sensex 30 | 17195 | -35.91 | -0.21% | 06:29:54 |
| Karachi KSE-100 | 9846 | 41 | 0.42% | 05:46:51 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.010 | -0.040 | -0.11% | 07:15:53 |
| Cash 10yr T-note Price | 101.180 | -0.060 | -0.18% | 07:25:00 |
| Cash 10yr T-note Yield | 3.436 | 0.022 | 0.66% | 07:24 |
| 5yr T-note (CBT)(Z9) | 116.015 | #VALUE! | -0.04% | 07:15:51 |
| Cash 5yr T-note Price | 100.045 | -0.025 | -0.08% | 07:23:31 |
| Cash 5yr T-note Yield | 2.345 | 0.017 | 0.72% | 07:23 |
| 30-yr T-bond (CBT)(Z9) | 119.01 | -0.12 | -0.31% | 07:15:53 |
| Cash 30yr T-bond Price | 103.140 | -0.170 | -0.51% | 07:24:30 |
| Cash 30yr T-bond Yield | 4.294 | 0.031 | 0.72% | 07:24 |
| Eurodollars (CME)(Z9) | 99.650 | 0.010 | 0.01% | 07:15:27 |
| Eurodollars (CME)(H0) | 99.410 | 0.000 | 0.00% | 07:15:25 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 139.05 | -0.13 | -0.09% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.505 | -0.005 | -0.01% | 06:11:49 |
| Bunds (Eurex) (Z9) | 121.40 | -0.60 | -0.49% | 07:10:52 |
| Euribor (Eurex) (Z9) | 99.16 | -0.01 | -0.01% | 05:06:50 |
| UK Gilts (Liffe) (Z9) | 118.88 | -0.65 | -0.54% | 07:10:52 |
| Short Stlg (Liffe) (Z9) | 99.41 | 0.01 | 0.01% | 07:10:42 |
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| Forex |
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| U.S. Dollar Index | 75.53 | -0.02 | -0.03% | 07:15:51 |
| US Dollar-Japanese Yen | 90.28 | 0.84 | 0.93% | 07:25:54 |
| EuroFX-US Dollar | 1.4884 | -0.0042 | -0.42% | 07:25:54 |
| US Dollar-Swiss Franc | 1.0167 | 0.0017 | 0.17% | 07:25:54 |
| British Pound-US$ | 1.6252 | 0.0271 | 2.71% | 07:25:54 |
| US$-Canadian Dlr | 1.0311 | 0.0075 | 0.75% | 07:25:54 |
| Yen (Globex) (Z9) | 1.1089 | -0.0089 | -0.89% | 07:15:53 |
| Euro FX (Globex) (Z9) | 1.4892 | -0.0011 | -0.07% | 07:15:54 |
| SwissFranc (Globex)(Z9) | 0.9848 | 0.0004 | 0.04% | 07:15:52 |
| British Pound(Glbx)(Z9) | 1.6268 | 0.0304 | 1.90% | 07:15:54 |
| Canadian$ (Globex)(Z9) | 0.9708 | -0.0022 | -0.23% | 07:15:53 |
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| Commodities |
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| Gold (Comex) (Z9) | 1052.6 | -12.1 | -1.14% | 07:15:53 |
| Silver (Comex) (Z9) | 17.480 | -0.428 | -2.39% | 07:15:53 |
| Copper (Comex) (Z9) | 278.9 | -5.6 | -1.95% | 07:15:50 |
| Crude Oil (Nymex) (X9) | 75.08 | -0.10 | -0.13% | 07:15:51 |
| Gasoline (Nymex) (X9) | 186.79 | 1.04 | 0.56% | 07:15:47 |
| Heating Oil(Nymex) (X9) | 194.58 | 0.31 | 0.16% | 07:15:15 |
| NaturalGas(Nymex)(X9) | 4.47 | 0.034 | 0.77% | 07:15:51 |
| Corn (CBOT) (Z9) | 375.25 | -7.75 | -2.02% | 07:15:27 |
| Soybeans (CBOT) (X9) | 975.00 | -19.00 | -1.91% | 07:15:43 |
| Wheat (CBOT) (Z9) | 505.75 | -7.25 | -1.41% | 07:15:25 |
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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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