Barchart U.S. Morning Call
Monday, October 19, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +1.31% and Dec S&Ps are up +6.80 points. European and US stock prices are higher on speculation for continued better-than-expected Q3 earnings results. The dollar and Treausuries are weaker, while metals prices are stronger. Nomura Holdings predicts that earnings at US companies will probably exceed analysts' Q3 expectations and support further gains in equities through the end of the year, while JPMorgan Chase upgraded Russian stocks and emerging-market energy companies to "overweight," saying valuations are "attractive" after crude oil rose above $78 a barrel. The British pound is weaker today afer the Sunday Times reported that Bank of England policy maker Posen said he may support an extension of the BOE's current 175 billion pound ($286 billion) asset-purchase program to help stimulate the economy.
The Asian markets today closed mostly higher with Japan down -0.21%, Hong Kong +1.23%, China +2.70%, Taiwan +0.47%, Australia -0.90%, Singapore +0.13%, South Korea +0.60%, India closed for holiday. The Bank of Japan said in its quarterly regional report today that "signs of picking up had appeared throughout the economy, although regional differences remained." BOJ Governor Shirakawa added that while the economy has started to "pick up," domestic demand remains weak and the policy board is concerned about risks to growth and prices, suggesting the BOJ may proceed slowly in removing stimulus measures and emergency liquidity programs. Japan's demand for services rose for the third straight month in Aug after the Aug tertiary index, which captures 63% of the economy, advanced 0.3 to 97.1, the highest level since Jan and signals Japan's recovery may be gaining strength. Chinese stocks strengthened on speculation that data released later this week will show China's Q3 GDP expanded at a 9% pace, its strongest level of growth since Q3 of last year.
Overnight U.S. Stock News
December S&Ps this morning are trading up +6.80 points. The US stock market last Friday retreated from its 1-year high and closed moderately lower (Dow -0.67%, S&P 500 -0.81%, Nasdaq Composite -0.76%). Bearish factors included (1) the larger-than-expected decline in the Oct US University of Michigan consumer confidence, (2) the slump in financial companies after Bank of America reported a $1 billion Q3 loss, reviving concerns about further US bank losses, (3) the recommendation from Blackrock to avoid bank stocks because loan defaults will increase and they are overpriced relative to earnings potential, and (4) weakness in mortgage insurance companies after MGIC Investment, the largest US mortgage insurer, posted its ninth straight quarterly loss after a record number of homeowners failed to meet mortgage payments.
Bullish factors included (1) the larger-than-expected increase in Sep US industrial production and the upward revision to Aug industrial production, (2) the larger-than-expected increase in Sep US capacity utilization which rose to a 7-month high, (3) the prediction from MKM Partners that the Fed will refrain from raising interest rates until the second half of next year "at the earliest," and (4) strength in energy producer after crude oil continued its rally up to a 1-year high.
Texas Instruments (TXN) is 1.5% higher in pre-market trading on speculation the company will report better-than-expected Q3 earnings later today.
Today's Market Focus
December 10-year T-notes this morning are trading down -8 ticks. Dec T-note prices last Friday traded mixed early and then rallied after mid-morning and finished the day up +11.5 ticks. Bullish factors for T-note prices last Friday included (1) the larger-than-expected decline in the Oct US University of Michigan consumer confidence (-4.1 to 69.4 versus expectations of -0.4 to 73.1), (2) the prediction from RBS Securities that demand from domestic households and banks will support the Treasury market and help to push 10-year yields down to 3.00% by year-end, (3) the prediction from Mizuho Securities that 10-year Treasury yields may fall below 3% this year as cash-rich US banks shift money to "plain" government debt that has suddenly become "juicier" due to cheap funding costs, (4) dovish comments from the usually hawkish Dallas Fed President Fisher who said that the US should not raise interest rates soon because unemployment is a worry and the economy faces the risk of deflation, and (5) an increase in the safe-haven demand for Treasuries after the stock market faltered. Bearish factors included (1) the larger-than-expected increase in Sep US industrial production and the upward revision to Aug (Sep +0.7% versus expectations of +0.2% and Aug revised up to +1.2% from +0.8%), and (2) the greater-than-expected increase in Sep capacity utilization which climbed to a 7-month high (+0.6 to 70.5 versus expectations of +0.2 to 69.8%).
The dollar index this morning is weaker with the dollar/yen -0.05 yen and the euro/dollar +0.24 cents. The dollar index last Friday settled higher. Bullish factors for the dollar last Friday included (1) weakness in the yen which fell to a 3-week low against the dollar after Japanese Vice Finance Minister Noda said the Japanese government may need to sell more bonds in the current fiscal year because of a tax revenue shortfall, which would widen the Japanese budget deficit and weaken the yen, (2) dollar short-covering after comments from Jean-Claude Juncker, chief of the Euro-Zone finance ministers, who said that the Euro-Zone finance ministers will discuss the euro's recent gains against the dollar at their upcoming meeting on Monday, and (3) the prediction from the Royal Bank of Scotland Group Plc that the dollar may strengthen, following a "bounce" in the British pound as the dollar has become oversold. Bearish factors included (1) the weaker-than-expected Aug long-term TIC flows report, which showed foreign appetite for US assets was weaker-than-expected, (2) the prediction from MKM Partners that the Fed will refrain from raising interest rates until the second half of next year "at the earliest," which would keep the dollar's interest rate differentials weak, and (3) the prediction from Harvard Professor Ferguson that the dollar will extend its drop versus the euro over the next two to five years, falling as much as 20% to an all-time low as the US budget deficit continues to widen.
November crude oil prices this morning are down -21 cents a barrel and Nov gasoline is trading down -1.29 cents a gallon. Nov crude oil prices last Friday rose to a 1-year high and finished higher for the seventh consecutive session as they closed up +$0.95 a barrel. November gasoline rallied to a 1-1/2 month high and closed up +3.44 cents a gallon. Bullish factors included (1) the larger than expected increase in Sep US industrial production which has risen for three straight months, a sign of increased fuel consumption and an indication that the US economy is on the mend, (2) the prediction from Standard Chartered Plc that crude oil may rise to $95 a barrel this year as demand for heating fuel kicks in and OPEC sticks to its output reductions, and (3) the statement from Nigeria's main rebel group that it plans to "resume its hostilities" against the country's oil industry and armed forces, which may shrink crude oil exports from Nigeria, Africa's largest crude exporting country. Bearish factors included (1) the rebound in the dollar index, (2) the sell-off in the equity market, and (3) profit-taking and long liquidation in the energy complex after prices had rallied for six straight session.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) AAPL-Apple (BEST earnings consensus $1.43), TXN-Texas Instruments (0.40), BBT-BB&T (0.25), BSX-Boston Scientific (0.14), WFT-Weatherford International (0.12), ETN-Eaton (0.90), HAS-Hasbro (0.92), STLD-Steel Cynamics (0.23), GCI-Gannett (0.40), BRO-Brown & Brown (0.29), ZION-Zions Bancorp (-1.43), IEX-Idex (0.35), UDR-UDR (-0.14), PKG-Packaging Corp. (0.25).
Global Financial Calendar
| Monday 10/19/2009 |
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| United States |
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| 1100 ET | Fed Chairman Ben Bernanke speaks on the financial crisis and the economic outlook at the Asia Economic Policy Conference. |
| 1300 ET | Oct NAHB housing market index expected +1 to 20, Sep +1 to 19. |
| 1300 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| Japan |
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| 0130 ET | Sep Japan nationwide department store sales, Aug -8.8% y/y. |
| Euro-Zone |
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| 1100 ET | Euro-Zone finance ministers meet in Luxembourg. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1088.80 | 6.80 | 0.63% | 07:08:47 |
| DJIA (CBOT) (Z9) | 9974 | 50 | 0.50% | 07:05:13 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2500.97 | 32.39 | 1.31% | 07:04:00 |
| London UK FTSE Index | 5260.51 | 70.27 | 1.35% | 07:04:00 |
| German Dax Index | 5821.79 | 78.40 | 1.37% | 07:04:02 |
| French CAC 40 Index | 3878.05 | 50.45 | 1.32% | 07:04:00 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10237 | -21 | -0.21% | 03:00:14 |
| Hong Kong Hang Seng | 22200 | 271 | 1.23% | 04:01:30 |
| China CSI 300 Index | 3329 | 87 | 2.70% | 03:01:04 |
| Taiwan TAIEX Index | 7751 | 36 | 0.47% | 01:46:01 |
| Australian S&P 200 | 4792.8 | -43.6 | -0.90% | 01:47:03 |
| Singapore Str. Times | 2711.7 | 3.58 | 0.13% | 05:10:01 |
| South Korea KOSPI 200 | 216.19 | 1.28 | 0.60% | 05:03:25 |
| Bombay Sensex 30 | 17326 | 0 | 0.00% | 10/17/2009 |
| Karachi KSE-100 | 9411 | -427 | -4.34% | 05:45:50 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.280 | -0.080 | -0.21% | 07:09:02 |
| Cash 10yr T-note Price | 101.155 | -0.090 | -0.28% | 07:18:00 |
| Cash 10yr T-note Yield | 3.445 | 0.034 | 0.98% | 07:17 |
| 5yr T-note (CBT)(Z9) | 115.255 | #VALUE! | -0.16% | 07:08:53 |
| Cash 5yr T-note Price | 99.295 | -0.060 | -0.19% | 07:17:31 |
| Cash 5yr T-note Yield | 2.392 | 0.040 | 1.72% | 07:17 |
| 30-yr T-bond (CBT)(Z9) | 119.05 | -0.13 | -0.34% | 07:08:53 |
| Cash 30yr T-bond Price | 103.265 | -0.150 | -0.45% | 07:15:01 |
| Cash 30yr T-bond Yield | 4.271 | 0.027 | 0.64% | 07:14 |
| Eurodollars (CME)(Z9) | 99.625 | -0.010 | -0.01% | 07:01:04 |
| Eurodollars (CME)(H0) | 99.385 | -0.010 | -0.01% | 07:08:55 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.83 | -0.05 | -0.04% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.490 | -0.010 | -0.01% | 23:33:14 |
| Bunds (Eurex) (Z9) | 121.15 | -0.31 | -0.26% | 07:04:01 |
| Euribor (Eurex) (Z9) | 99.15 | 0.00 | -0.01% | 03:21:51 |
| UK Gilts (Liffe) (Z9) | 118.39 | -0.25 | -0.21% | 07:03:50 |
| Short Stlg (Liffe) (Z9) | 99.38 | -0.01 | -0.01% | 07:04:02 |
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| Forex |
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| U.S. Dollar Index | 75.51 | -0.09 | -0.12% | 07:08:56 |
| US Dollar-Japanese Yen | 90.85 | -0.05 | -0.05% | 07:19:02 |
| EuroFX-US Dollar | 1.4929 | 0.0024 | 0.24% | 07:19:02 |
| US Dollar-Swiss Franc | 1.0144 | -0.0038 | -0.38% | 07:19:02 |
| British Pound-US$ | 1.6302 | -0.0054 | -0.54% | 07:19:02 |
| US$-Canadian Dlr | 1.0342 | -0.0027 | -0.27% | 07:19:02 |
| Yen (Globex) (Z9) | 1.1011 | 0.0003 | 0.03% | 07:09:01 |
| Euro FX (Globex) (Z9) | 1.4929 | 0.0032 | 0.21% | 07:08:52 |
| SwissFranc (Globex)(Z9) | 0.9866 | 0.0038 | 0.39% | 07:08:56 |
| British Pound(Glbx)(Z9) | 1.6288 | -0.0063 | -0.39% | 07:08:51 |
| Canadian$ (Globex)(Z9) | 0.967 | 0.0035 | 0.36% | 07:09:02 |
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| Commodities |
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| Gold (Comex) (Z9) | 1056.0 | 4.5 | 0.43% | 07:09:00 |
| Silver (Comex) (Z9) | 17.520 | 0.100 | 0.57% | 07:07:59 |
| Copper (Comex) (Z9) | 286.4 | 1.8 | 0.63% | 07:08:41 |
| Crude Oil (Nymex) (X9) | 78.32 | -0.21 | -0.27% | 07:08:59 |
| Gasoline (Nymex) (X9) | 196.64 | -1.29 | -0.65% | 07:08:46 |
| Heating Oil(Nymex) (X9) | 202.35 | -0.62 | -0.31% | 07:07:35 |
| NaturalGas(Nymex)(X9) | 4.802 | 0.021 | 0.44% | 07:08:48 |
| Corn (CBOT) (Z9) | 376.25 | 4.25 | 1.14% | 07:07:55 |
| Soybeans (CBOT) (X9) | 990.25 | 12.75 | 1.30% | 07:08:53 |
| Wheat (CBOT) (Z9) | 507.25 | 8.50 | 1.70% | 07:08:49 |
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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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