Barchart U.S. Morning Call
Thursday, October 22, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -1.24% and Dec S&Ps are down -1.30 points. The dollar and Treauries are higher, while metals and crude oil are lower. Global stocks were pressured after China's GDP expanded at its fastest pace in more than a year, which fueled speculation that government stimulus measures will be removed, while some European company earnings disappointed. Ericsson AB, the world's biggest maker of mobile-phone networks, slumped 8% after it reported Q3 net income of 810 million kroner ($118 million), below market expectations of 1.97 billion kroner, while Credit Suisse AG, Switzerland's biggest bank by market value, fell 2.5% even after it reported Q3 net income of 2.35 billion Swiss francs ($2.33 billion), well ahead of analysts' estimates of 1.74 billion francs, as Citigroup said private banking results were mixed with "strong" new money inflows offset by narrowing margins. Limiting losses in European stocks was the larger-than-expected increase in the Oct French business confidence indicator which rose +3 to a 13-month high of 89, buoyed by demand from outside Europe and government support for the auto industry.
The Asian markets today closed lower with Japan -0.64%, Hong Kong -0.48%, China -0.65%, Taiwan -1.21%, Australia -0.53%, Singapore -0.39%, South Korea -1.56%, India -1.29%. China's Q3 GDP rose 8.9% y/y, near market expectations for a 9.0% increase and at its strongest pace in a year, while Sep China industrial production rose +13.9% y/y, also the fastest pace in more than a year, which puts pressure on Chinese policy makers to end their stimulus measures and raise interest rates or risk accelerating inflation. China's statistics bureau spokesman Li Xiaochao said that inflationary expectations are increasing in China as prices rise month-on-month, while former Morgan Stanley economist Xie warned that China is risking property-market "bubbles" to encourage growth. Finance companies in Japan tumbled on loan-loss concerns as Mitsubishi UFJ Financial Group, Japan's biggest publicly traded bank, dropped 3.1%, and Sumitomo Mitsui, Japan's second-largest bank by market value, fell 2.7%. Japan's Sep exports fell -30.7% y/y which while a smaller decline than the Aug drop of -36.0% y/y, is still the twelfth consecutive month of declining exports as demand for Japanese goods remains constricted as global economies emerge from recession.
Overnight U.S. Stock News
December S&Ps this morning are trading down -1.30 points. The US stock market yesterday extended its 7-month rally to a fresh 1-year high before falling apart late in the session and finishing the day lower (Dow -0.92%, S&P 500 -0.89%, Nasdaq Composite -0.59%). The S&P 500 Index rose to a 1-year high before collapsing into the close. Bearish factors included (1) yesterday's 20-tick sell-off in T-note prices, (2) the plunge in financial stocks late in the day which were trading higher until Rochdale Securities downgraded Wells Fargo to "sell" and said Wells Fargo's just announced better-than-expected Q3 earnings were boosted by mortgage-servicing fees rather than improving business trends and that the "most disturbing" thing about Wells Fargo's results was that loan losses seem to be accelerating, (3) weakness in retailers after Wal-Mart said it expects a "tough" holiday shopping season, (4) the drop in weekly US mortgage applications for the second straight week, indicating continued weakness in the housing market, (5) the report from the US Labor Department which said unemployment rose in 23 US states last month and hit record highs in Nevada, Rhode Island and Florida, signaling scant evidence of new hiring or job growth in the US economy, and (6) valuation concerns as the recent rally has left the S&P 500 Index trading at about 20.6 times trailing earnings, the highest since 2004.
Bullish factors included (1) an early rally in bank stocks on better-than-expected Q3 earnings from Morgan Stanley, Wells Fargo and US Bancorp, (2) the prediction from Merrill Lynch that US stocks are likely to extend their gains as investors shun record low yields in fixed-income markets and make stocks the "default asset class of choice," and (3) the Fed's Beige Book which reported "stabilization or modest improvements" in many area of the economy with "little or no" price pressures.
EBay (EBAY) sank 4.5% in pre-market trading after the company said Q4 earnings will be 38 cents to 40 cents a share, as the 39 cent midpoint range missed analysts' expectations of 40 cents.
Travelers (TRV) rose 2.2% in European trading after the company boosted its quarterly dividend 10% and said it may increase share buybacks after posting its first profit since 2007 on lower catastrophe costs.
Dow Chemical (DOW) climbed nearly 3% in pre-market trading after the company reported Q3 adjusted profit of 24 cents a share, better than the 10 cents expected by analysts.
Today's Market Focus
December 10-year T-notes this morning are trading up +0.5 tick. Dec T-note prices yesterday moved lower and closed down -20 ticks. Bearish factors for T-note prices yesterday included (1) hawkish comments from BOE Governor King who stated that interest rates will rise "at some point," suggesting the BOE may hike rates sooner than expected, (2) comments from San Francisco Fed President Yellen who said that the ability of the Fed to tighten monetary policy at the right time "shouldn't be in doubt," and (3) comments from Dallas Fed President Fisher who said that "we are issuing copious amounts of debt and we have to be mindful of the fact that we can issue too much." Bullish factors included (1) comments from former Fed Vice Chairman Ferguson that an increase in interest rates by the Fed would be "premature" as the economy is still fragile, (2) the Fed's Beige Book which reported that Fed banks observed "little or no" price pressures and that demand for bank loans was "weak or declining," and (3) comments from Dallas Fed President Fisher who said that China is "continuing" to buy US Treasuries and that US economic growth in 2010 will be "significantly below potential."
The dollar index this morning is higher with the dollar/yen +0.36 yen and the euro/dollar -0.46 cents. The dollar index yesterday slumped to a fresh 14-month low and closed lower. Bearish factors for the dollar yesterday included (1) the early rally in the S&P 500 Index to a 1-year high, which increases optimism that the global economic recovery is gathering steam and reduces demand for dollars as investors flock into higher-yielding currencies, and (2) the rally in the pound to a 5-week high against the dollar after comments from BOE Governor King that "it would be wise" to take into account the prospect of higher interest rates, which signals the BOE may begin to hike rates sooner than expected. Bullish factors included (1) comments from World Bank President Zoellick that the dollar is likely to remain the world's dominant reserve currency as recent dollar weakness can be attributed to a reversal of the appreciation of the dollar when investors sought a safe haven at the height of the financial crisis, and (2) comments from San Francisco Fed President Yellen that the Fed's ability to tighten policy at the right time "shouldn't be in doubt."
December crude oil prices this morning are down -97 cents a barrel and Dec gasoline is trading -2.92 cents a gallon. Dec crude oil prices yesterday rallied to a 1-year high and finished higher for the ninth time in the last ten sessions as they closed up +$2.25 a barrel. December gasoline rallied to a 1-1/2 month high and closed up +6.54 cents a gallon. Bullish factors included (1) the fall in the dollar index to a 14-month low, which bnefits most commodities priced in dollars, (2) the larger-than-expected decline in weekly gasoline inventories (-2.21 million bbl versus expectations of -1.5 million bbl), and (3) the prediction from Auerbach Grayson that crude oil is poised to top $100 a barrel after breaking out of a 5-month range to the upside. Bearish factors included (1) slack US gasoline demand after the DOE reported that US gasoline demand fell -3.3% last week to an average of 8.95 million bpd, the biggest one-week drop since May, (2) abundant crude oil supplies as US crude stockpiles are still 9.4% above their 5-year average, and (3) comments from Nigeria's Petroleum Minister that crude oil at $80 a barrel is a "little higher" than fundamentals deserve.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) T-AT&T (BEST earnings consensus $0.50), PM-Philip Morris (0.91), MRK-Merk (0.82), OXY-Occidental Petroleum (1.06), MCD-McDonalds (1.11), UPS-United Parcel Service (0.52), MMM-3M Co. (1.18), SGP-Schering-Plough (0.40), BMY-Bristol-Myers Squibb (0.51), AXP-American Express (0.37), AMZN-Amazon.com (0.50), EMC-EMC Corp. (0.21), UNP-Union Pacific (1.00), DOW-Dow Chemical (0.10), BNI-Burlington Northern Sante Fe (1.28).
Global Financial Calendar
| Thursday 10/22/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected +1,000 to 515,000, previous -10,000 to 514,000. Weekly continuing claims expected -22,000 to 5.970 million, previous -75,000 to 5.992 million. |
| 1000 ET | Sep leading indicators expected +0.8%, Aug +0.6%. |
| 1000 ET | Aug FHFA house price index expected +0.3% m/m, Jul +0.3% m/m. |
| 1030 ET | Boston Fed President Eric Rosengren speaks as a presenter on a panel about financial stability at the Boston Fed's economic conference. |
| 1100 ET | Treasury announces amounts of 5-year TIPS (previous $8 billion), 2-year T-notes (previous $43 billion), 5-year T-notes (previous $40 billion), and 7-year T-notes (previous $29 billion) to be auctioned Oct 26-29. |
| 1200 ET | Atlanta Fed President Dennis Lockhart speaks on early childhood education at a conference in Miami. |
| 1330 ET | New York Fed President William Dudley moderates a panel on the topic of monetary policy at the Boston Fed's economic conference. |
| 1600 ET | Chicago Fed President Charles Evans speaks on a panel about U.S. macroeconomic policy at the University of Michigan. |
| Japan |
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| 0030 ET | Aug Japan all industry activity index expected +0.4% m/m, Jul +0.5% m/m. |
| France |
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| 0245 ET | Oct French business confidence indicator expected +2 to 87, Sep +3 to 85. |
| Euro-Zone |
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| 0400 ET | Aug Euro-Zone current account (seasonally adjusted), Jul 6.6 billion euros. |
| United Kingdom |
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| 0430 ET | Sep UK retail sales expected +0.5% m/m and +2.8% y/y, Aug unchanged m/m and +2.1% y/y. |
| Canada |
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| 0830 ET | Aug Canadian retail sales expected +0.2% m/m and +0.5% less autos, Jul -0.6% and -0.8% less autos. |
| 1030 ET | Bank of Canada releases monetary policy report. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1076.80 | -1.30 | -0.12% | 07:16:46 |
| DJIA (CBOT) (Z9) | 9899 | -2 | -0.02% | 07:16:23 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2486.79 | -31.27 | -1.24% | 07:12:15 |
| London UK FTSE Index | 5204.55 | -53.30 | -1.01% | 07:12:15 |
| German Dax Index | 5753.46 | -80.03 | -1.37% | 07:12:20 |
| French CAC 40 Index | 3818.10 | -55.12 | -1.42% | 07:12:15 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10267 | -66 | -0.64% | 03:00:13 |
| Hong Kong Hang Seng | 22211 | -108 | -0.48% | 04:01:30 |
| China CSI 300 Index | 3347 | -22 | -0.65% | 03:01:14 |
| Taiwan TAIEX Index | 7608 | -94 | -1.21% | 01:46:01 |
| Australian S&P 200 | 4812.8 | -25.8 | -0.53% | 01:47:03 |
| Singapore Str. Times | 2681.97 | -10.58 | -0.39% | 05:10:05 |
| South Korea KOSPI 200 | 213.25 | -3.39 | -1.56% | 05:03:27 |
| Bombay Sensex 30 | 16790 | -219.43 | -1.29% | 06:29:56 |
| Karachi KSE-100 | 9154 | -94 | -1.01% | 05:42:29 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.010 | 0.005 | 0.01% | 07:17:12 |
| Cash 10yr T-note Price | 101.260 | -0.055 | -0.17% | 07:27:00 |
| Cash 10yr T-note Yield | 3.406 | 0.020 | 0.60% | 07:26 |
| 5yr T-note (CBT)(Z9) | 115.300 | 0.010 | 0.02% | 07:17:16 |
| Cash 5yr T-note Price | 100.030 | -0.020 | -0.06% | 07:27:00 |
| Cash 5yr T-note Yield | 2.355 | 0.013 | 0.57% | 07:26 |
| 30-yr T-bond (CBT)(Z9) | 119.30 | 0.05 | 0.13% | 07:17:02 |
| Cash 30yr T-bond Price | 104.240 | -0.060 | -0.18% | 07:26:30 |
| Cash 30yr T-bond Yield | 4.218 | 0.011 | 0.25% | 07:26 |
| Eurodollars (CME)(Z9) | 99.645 | 0.000 | 0.00% | 07:05:18 |
| Eurodollars (CME)(H0) | 99.430 | 0.000 | 0.00% | 07:16:25 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.38 | -0.31 | -0.22% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.495 | 0.000 | 0.00% | 07:05:00 |
| Bunds (Eurex) (Z9) | 121.19 | 0.03 | 0.02% | 07:12:19 |
| Euribor (Eurex) (Z9) | 99.19 | 0.02 | 0.02% | 04:39:39 |
| UK Gilts (Liffe) (Z9) | 117.78 | 0.02 | 0.02% | 07:12:15 |
| Short Stlg (Liffe) (Z9) | 99.33 | 0.01 | 0.01% | 07:11:26 |
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| Forex |
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| U.S. Dollar Index | 75.37 | 0.25 | 0.34% | 07:17:15 |
| US Dollar-Japanese Yen | 91.33 | 0.36 | 0.39% | 07:27:22 |
| EuroFX-US Dollar | 1.4971 | -0.0046 | -0.46% | 07:27:22 |
| US Dollar-Swiss Franc | 1.0091 | 0.0031 | 0.31% | 07:27:22 |
| British Pound-US$ | 1.6545 | -0.0064 | -0.64% | 07:27:22 |
| US$-Canadian Dlr | 1.0517 | 0.0088 | 0.88% | 07:27:22 |
| Yen (Globex) (Z9) | 1.095 | -0.0038 | -0.38% | 07:17:18 |
| Euro FX (Globex) (Z9) | 1.4975 | -0.0059 | -0.39% | 07:17:05 |
| SwissFranc (Globex)(Z9) | 0.9915 | -0.0042 | -0.42% | 07:15:54 |
| British Pound(Glbx)(Z9) | 1.6535 | -0.0096 | -0.58% | 07:17:19 |
| Canadian$ (Globex)(Z9) | 0.9511 | -0.0115 | -1.19% | 07:17:15 |
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| Commodities |
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| Gold (Comex) (Z9) | 1056.3 | -8.2 | -0.77% | 07:17:16 |
| Silver (Comex) (Z9) | 17.550 | -0.275 | -1.54% | 07:17:13 |
| Copper (Comex) (Z9) | 300.2 | -3.5 | -1.14% | 07:17:13 |
| Crude Oil (Nymex) (Z9) | 80.40 | -0.97 | -1.19% | 07:17:21 |
| Gasoline (Nymex) (Z9) | 203.62 | -2.92 | -1.41% | 07:10:34 |
| Heating Oil(Nymex) (Z9) | 211.02 | -2.44 | -1.14% | 07:14:51 |
| NaturalGas(Nymex)(Z9) | 5.766 | -0.027 | -0.47% | 07:16:31 |
| Corn (CBOT) (Z9) | 396.00 | -2.25 | -0.56% | 07:17:21 |
| Soybeans (CBOT) (X9) | 996.50 | -12.00 | -1.19% | 07:17:19 |
| Wheat (CBOT) (Z9) | 537.00 | -5.50 | -1.01% | 07:16:58 |
Recent articles from this author
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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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