Barchart U.S. Morning Call
Wednesday, October 21, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.76% and Dec S&Ps are down -6.30 points. Automakers are leading a decline in European stocks after PSA Peugeot Citroen tumbled 5.7% after Europe's second-biggest carmaker reported that Q3 revenue slid -7.7%. Deutsche Bank AG fell 4% even after Germany's biggest bank said Q3 profit more than tripled to 1.4 billion euros ($2.1 billion) as net income was boosted by tax credits and the resolution of tax audits related to prior years. Energy and raw-material producers weakened as crude oil prices fell and metals slumped, while the dollar weakened after Bank of England Governor King was quoted in a Scottish newspaper saying "it would be wise to take account" of the prospect of rising interest rates, signaling the BOE may begin to hike rates sooner than the market had expected.
The Asian markets today closed lower with Japan down -0.03%, Hong Kong -0.30%, China -0.25%, Taiwan -0.67%, Australia -0.16%, Singapore -0.68%, South Korea -0.41%, India -1.24%. China Mobile fell 1.3% after the world's biggest phone carrier by market value disappointed the market when it reported Q3 net income rose to 28.6 billion yuan ($4.2 billion), lower than market expectations of 29 billion yuan. BHP Billiton lost 1% as metals prices fell and Samsung, the world's biggest maker of liquid-crystal displays, dropped 2% after AT&T filed a complaint in federal court stating that Samsung and others were among those that "formed an international cartel illegally to restrict competition" in the LCD market in the US. On the positive side, Toshiba rose 3.6% after CLSA upgraded the stock to "buy" from "underperform," citing rebounding demand for flash memory and Japan Airlines jumped 5.9% after the Nikkei newspaper reported that a government panel recommended the airline receive 300 billion yen ($3.3 billion) in private and public funds, more than an earlier proposal for 150 billion yen.
Overnight U.S. Stock News
December S&Ps this morning are trading down -6.30 points. The US stock market yesterday gave up an early rally and closed lower (Dow -0.50%, S&P 500 -0.62%, Nasdaq Composite -0.59%). Bearish factors included (1) weakness in homebuilders after the smaller-than-expected +0.5% increase to 590,000 in Sep US housing starts (versus expectations of +2.0% to 610,000) and the unexpected 1.2% decline in Sep building permits, (2) the prediction from the National Retail Federation that US consumers will spend -3.2% less this holiday season from a year ago, and (3) the fall in energy and raw-material producers after a rally in the dollar caused commodity prices to drop.
Bullish factors included (1) the unexpected decline in the Sep PPI, which signals a lack of price pressures and is positive for the interest rate outlook, (2) comments from Senate Banking Committee Chairman Dodd who said that he will push to extend and expand the homebuyer tax credit, which may help the beleaguered US housing market, and (3) better-than-expected earnings reports from Apple and Caterpillar which supported an early rally in stock prices.
Yahoo! (YHOO) rose 4.8% in pre-market trading after reporting Q3 profit excluding some expenses of 15 cents a share, beating analysts' estimates of 13 cents.
Boeing (BA) fell 1% in pre-market trading ahead of the release of its Q3 earnings.
Today's Market Focus
December 10-year T-notes this morning are trading down -4.5 ticks. Dec T-note prices yesterday were well-bid throughout the day and closed up +13 ticks. Bullish factors for T-note prices yesterday included (1) the unexpected declines in the Sep PPI and core PPI (overall PPI -0.6% m/m and -4.8% y/y versus expectations of unchanged m/m and -4.3% y/y and core PPI -0.1% m/m and +1.8% y/y versus expectations of +0.1% m/m and +2.0% y/y), (2) the weaker-than-expected Sep US housing starts and building permits (housing starts +0.5% to 590,000 versus expectations of +2.0% to 610,000 and building permits -1.2% to 573,000 versus expectations of +2.8% to 595,000), (3) the slide in the stock market which increased the safe-haven demand for Treasuries, and (4) the prediction from RBC Capital Markets that the yield curve will continue to flatten because "the economy is not as strong as the equity market seems to portray and that inflation is not an issue right now." A bearish factor was the prediction from Barclays Plc that Treasury yields will climb as the Fed stops buying government securities and Treasury issuance increases to $2.5 trillion in 2010 from $2.1 trillion this year.
The dollar index this morning is weaker with the dollar/yen +0.12 yen and the euro/dollar -0.12 cents. The dollar index yesterday rebounded from a 14-month low and closed higher. Bullish factors for the dollar yesterday included (1) the weaker-than-expected Sep US housing starts report, which dragged equity prices lower and boosted safe-haven demand for dollars, and (2) comments from France's budget minister that the rise in the euro to a 14-month high against the dollar is hurting the Euro-Zone's competitiveness. Bearish factors included (1) comments from Japanese Finance Minister Fuji who said that he is reluctant to intervene in the foreign-exchange markets to halt the yen's gains, and (2) the prediction from Tokai Tokyo Securities that increased confidence in the global economy along with the likelihood that the Fed will maintain its accomodative monetary stance will increase demand for riskier assets at the expense of the dollar.
December crude oil prices this morning are down -97 cents a barrel and Dec gasoline is trading -2.66 cents a gallon. Dec crude oil prices yesterday rallied to a 1-year high early in the session before giving up its gains and moving lower the rest of the day and closing down -$0.84 a barrel. December gasoline rallied to a 1-1/2 month high before shedding its gains and closing down -0.29 cent a gallon. Bearish factors included (1) the upward rebound in the dollar index from an early a 14-month low, and (2) the weaker-than-expected Sep US housing starts report which undercut equity pricess and raised questions about the sustainability of an economic recovery and energy demand. Bullish factors included (1) comments from OPEC Secretary-General El-Badri that he sees "no shortage of oil in the market" and that OPEC won't consider raising oil production until the floating storage of crude oil stored in tankers anchored at sea disappears, and (2) the prediction from Goldman Sachs that the oil industry faces a worsening capacity crisis as the industry is currently working at 90% to 95% of available capacity which leaves "no buffer to any kind of supply shock" as demand recovers. Expectations for Wednesday's weekly DOE inventory report are for crude oil stockpiles to rise +1.5 million bbl, gasoline inventories to fall -1.5 million bbl, distillates to decline -1.5 million bbl. and the refinery capacity rate to climb +1.0 point to 81.9%.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) WFC-Wells Fargo (BEST earnings consensus $0.39), AMGN-Amgen (1.26), USB-US Bancorp (0.27), MS-Morgan Stanley (0.30), LLY-Eli Lilly (1.01), BA-Boeing (-2.10), MO-Altria Group (0.46), FCX-Freeport McMoRan (1.31), EBAY-Ebay (0.37), VMW-VMware (0.20), APD-Air Products & Chemicals (1.12), NOC-Northrop Grumman (1.18), KMP-Kinder Morgan Energy Partners (0.36), GENZ-Genzyme (0.43), NTRS-Northern Trust (0.81).
Global Financial Calendar
| Wednesday 10/21/2009 |
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| United States |
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| 0700 ET | Weekly MBA mortgage applications for the week ended Oct 16, previous -1.8% with purchase sub-index 5.0% and refinancing sub-index -0.1%. |
| 1200 ET | Richmond Fed President Jeffrey Lacker will speak at "Economics Made Easy: A Journalism Workshop" at the Richmond Fed. |
| 1300 ET | Fed Governor Daniel Tarullo speaks at the Exchequer Club of Washington D.C. |
| 1400 ET | Fed's Beige Book. |
| 1630 ET | Boston Fed President Eric Rosengren delivers welcoming remarks at the Boston Fed's 54th economic conference. |
| United Kingdom |
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| 0430 ET | Minutes of Oct 8 Bank of England policy meeting. |
| Japan |
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| 1950 ET | Sep Japan merchandise trade exports expected -29.7% y/y, Aug -36.0% y/y. Sep merchandise trade imports expected -38.0% y/y, Aug -41.3% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1083.10 | -6.30 | -0.58% | 07:11:57 |
| DJIA (CBOT) (Z9) | 9946 | -54 | -0.54% | 07:08:50 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2481.90 | -19.10 | -0.76% | 07:07:15 |
| London UK FTSE Index | 5186.61 | -56.79 | -1.08% | 07:07:15 |
| German Dax Index | 5751.16 | -60.61 | -1.04% | 07:07:23 |
| French CAC 40 Index | 3816.21 | -55.24 | -1.43% | 07:07:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10333 | -3 | -0.03% | 03:00:16 |
| Hong Kong Hang Seng | 22318 | -67 | -0.30% | 04:01:15 |
| China CSI 300 Index | 3369 | -8 | -0.25% | 03:01:23 |
| Taiwan TAIEX Index | 7702 | -52 | -0.67% | 01:46:01 |
| Australian S&P 200 | 4838.6 | -7.6 | -0.16% | 01:47:03 |
| Singapore Str. Times | 2692.55 | -18.54 | -0.68% | 05:10:01 |
| South Korea KOSPI 200 | 216.64 | -0.89 | -0.41% | 05:03:26 |
| Bombay Sensex 30 | 17009 | -213.84 | -1.24% | 06:29:56 |
| Karachi KSE-100 | 9248 | -321 | -3.36% | 05:43:17 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.160 | -0.045 | -0.12% | 07:12:22 |
| Cash 10yr T-note Price | 102.085 | -0.030 | -0.09% | 07:22:01 |
| Cash 10yr T-note Yield | 3.352 | 0.011 | 0.33% | 07:21 |
| 5yr T-note (CBT)(Z9) | 116.080 | #VALUE! | -0.09% | 07:12:13 |
| Cash 5yr T-note Price | 100.100 | -0.030 | -0.09% | 07:21:30 |
| Cash 5yr T-note Yield | 2.308 | 0.020 | 0.88% | 07:21 |
| 30-yr T-bond (CBT)(Z9) | 120.18 | -0.03 | -0.08% | 07:11:58 |
| Cash 30yr T-bond Price | 105.155 | -0.060 | -0.18% | 07:22:01 |
| Cash 30yr T-bond Yield | 4.176 | 0.011 | 0.25% | 07:21 |
| Eurodollars (CME)(Z9) | 99.645 | 0.005 | 0.01% | 07:11:10 |
| Eurodollars (CME)(H0) | 99.425 | -0.005 | -0.01% | 07:11:10 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.69 | 0.07 | 0.05% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.495 | 0.005 | 0.01% | 07:00:54 |
| Bunds (Eurex) (Z9) | 121.46 | -0.36 | -0.30% | 07:07:17 |
| Euribor (Eurex) (Z9) | 99.17 | 0.01 | 0.01% | 03:56:19 |
| UK Gilts (Liffe) (Z9) | 118.49 | -0.67 | -0.56% | 07:07:20 |
| Short Stlg (Liffe) (Z9) | 99.35 | -0.02 | -0.02% | 07:01:39 |
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| Forex |
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| U.S. Dollar Index | 75.47 | -0.09 | -0.12% | 07:12:20 |
| US Dollar-Japanese Yen | 90.89 | 0.12 | 0.13% | 07:22:24 |
| EuroFX-US Dollar | 1.4933 | -0.0012 | -0.12% | 07:22:24 |
| US Dollar-Swiss Franc | 1.0113 | -0.0005 | -0.05% | 07:22:24 |
| British Pound-US$ | 1.6573 | 0.0190 | 1.90% | 07:22:24 |
| US$-Canadian Dlr | 1.0555 | 0.0060 | 0.60% | 07:22:24 |
| Yen (Globex) (Z9) | 1.1006 | -0.0024 | -0.24% | 07:12:10 |
| Euro FX (Globex) (Z9) | 1.4927 | 0.0002 | 0.01% | 07:12:22 |
| SwissFranc (Globex)(Z9) | 0.9891 | 0.0015 | 0.15% | 07:12:18 |
| British Pound(Glbx)(Z9) | 1.656 | 0.0207 | 1.27% | 07:12:22 |
| Canadian$ (Globex)(Z9) | 0.9472 | -0.0047 | -0.49% | 07:12:05 |
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| Commodities |
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| Gold (Comex) (Z9) | 1053.0 | -5.6 | -0.53% | 07:12:22 |
| Silver (Comex) (Z9) | 17.400 | -0.158 | -0.90% | 07:11:42 |
| Copper (Comex) (Z9) | 290.4 | -2.8 | -0.95% | 07:12:22 |
| Crude Oil (Nymex) (Z9) | 78.15 | -0.97 | -1.23% | 07:12:22 |
| Gasoline (Nymex) (Z9) | 197.34 | -2.66 | -1.33% | 07:07:06 |
| Heating Oil(Nymex) (Z9) | 205.99 | -1.71 | -0.82% | 07:12:06 |
| NaturalGas(Nymex)(Z9) | 5.894 | -0.041 | -0.69% | 07:10:22 |
| Corn (CBOT) (Z9) | 382.50 | -2.00 | -0.52% | 07:12:20 |
| Soybeans (CBOT) (X9) | 981.75 | -0.75 | -0.08% | 07:12:21 |
| Wheat (CBOT) (Z9) | 515.75 | -1.75 | -0.34% | 07:12:03 |
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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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