Barchart U.S. Morning Call
Friday, October 23, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is up +0.44% and Dec S&Ps are up 0.80 points (+0.07%). The main bullish factor overnight was the report from Amazon.com of stronger-than-expected earnings, which caused the stock to soar 14% in European trading. In addition, the German IFO October business climate index rose +0.6 to a new 1-year high of 91.9, indicating that German business confidence continues to steadily improve. Mining stocks such as BHP Billiton and Rio Tinto Group are higher as copper climbed by 1.2% to a new 1-year high and as other industrial metals prices are higher. The main bearish factor overnight was the UK Q3 GDP report of -0.4% q/q, which was substantially weaker than market expectations for an increase of +0.2%. The market had been expected the UK to climb out of recession in Q3, but UK GDP has now declined for 6 consecutive quarters. Meanwhile, the Asian stock markets today closed higher: Japan +0.15%, Hong Kong +1.71%, China +1.97%, Taiwan +0.54%, Australia +0.97%, Singapore +1.24%, South Korea +0.69%, Bombay +0.13%. South Korea-based Kia Motors rallied 6% after reporting stronger-than-expected earnings.
Overnight U.S. Stock News
December S&Ps this morning are trading slightly higher by +0.80 points on the positive Amazon earnings news. The US stock market yesterday recovered from early weakness and finished the day near its high (Dow +1.33%, S&P 500 +1.06%, Nasdaq Composite +0.68%). Bullish factors included (1) continued better-than-expected earnings reports, this time from AT&T, PNC, New York Times and McDonald's, (2) strength in insurance companies after Travelers jumped 7.7% when it boosted its quarterly dividend by 10% and said it may increase share buybacks as it benefited from fewer hurricanes and other catastrophes over the past year, (3) the larger-than-expected +1.0% increase in the Sep leading indicators which have now risen for six consecutive months, their longest stretch of gains in the last 26 years, and (4) the prediction from the Leuthold Core Investment Fund that US stocks are setting up for a year-end rally as stock prices will benefit going forward from "capitulation on the part of people who have been cautious."
Bearish factors included (1) the larger-than-expected increase in weekly US initial unemployment claims, (2) the unexpected decline in home prices in the Aug FHFA house price index, (3) comments from Boston Fed President Rosengren who said that the US economy is "at risk" of relapsing into recession next year after expanding the second half of this year, and (4) the prediction from Moody's Investors Service that rising delinquencies and an "expectation" of higher unemployment suggest credit-card write-offs will rise in coming months after credit-card loans at least 30 days delinquent, a signal of future losses, rose to 5.97% in Sep from 5.8% in Aug.
Today's Market Focus
December 10-year T-notes this morning are trading -8.5 ticks on the higher trade in global stocks and on supply overhang ahead of next week's T-note auctions. Dec T-note prices yesterday chopped on either side of unchanged throughout the day before finally closing down -1.5 ticks. Bearish factors for T-note prices yesterday included (1) the larger-than-expected increase in the Sep leading indicators which have now risen for six consecutive months (+1.0% versus expectations of +0.8%), and (2) supply pressures after the Treasury announced that it plans to sell a record $123 billion of notes and TIPS next week. Bullish factors included (1) the larger-than-expected increase in weekly US initial unemployment claims (+11,000 to 531,000 versus expectations of +1,000 to 515,000), (2) the unexpected decline in the Aug FHFA house price index (-0.3% m/m versus expectations of +0.3% m/m), and (3) comments from Boston Fed President Rosengren who said that the US economy is "at risk" of relapsing into recession next year after expanding the second half of this year.
The dollar index this morning is traidng slightly higher by +0.16 points with the dollar/yen up +0.38 yen and the euro/dollar up +0.08 cents. The dollar index yesterday traded higher throughout the day and finished with modest gains. Bullish factors for the dollar yesterday included (1) the 8.9% y/y growth in Q3 China GDP, the fastest pace in a year which fuels speculation that China will end fiscal and monetary stimulus as economic growth accelerates, which may reduce demand for higher-yielding assets, and (2) the prediction from UBS AG that central banks may act to weaken the euro if its gains persist ahead of next month's Group of 20 meeting. Bearish factors included (1) comments from Pacific Investment Management that a "disorderly decline" of the dollar, which would lead to the end of its reserve-currency status, cannot be ruled out, and (2) the prediction from Scotia Capital that the euro may reach $1.60 in three to six months as weakness in the dollar persists amid selling by central banks and as the worldwide economic recovery gathers momentum.
December crude oil prices this morning are trading +6 cents a barrel and Dec gasoline is trading -0.25 cents a gallon. Dec crude oil prices yesterday moved lower and closed down -$0.18 a barrel. December gasoline closed down -0.99 cent a gallon. Bearish factors included (1) the stronger dollar, (2) the larger-than-expected increase in weekly initial US unemployment claims, which signals a weak labor market that may keep fuel demand constrained, (3) comments from OPEC Secretary-General El-Badri that OPEC may decide to increase production at its meeting in Dec depending on prices and the elimination of floating crude storage, and (4) the -13% y/y drop in Japan crude oil imports from Apr-Sep, the biggest decline for the same period in the last 10 years, because of lower energy demand from factories after exports of Japanese manufactured goods slumped. Bullish factors included (1) the 8.9% y/y growth in Q3 China GDP, the fastest growth in over a year and a sign of increased energy consumption, and (2) the prediction from DekaBank that oil is "too cheap" and should rise to $88 a barrel in coming months as the euro strengthened to above $1.50.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) MSFT-Microsoft (BEST earnings consensus $0.32), SLB-Schlumberger (0.63), EXC-Exelon (0.96), HON-Honeywell International (0.72), TROW-T Rowe Price Group (0.46), IR-Ingersoll-Rand (0.61), DOV-Dover (0.48), FO-Fortune Brands (0.60), WHR-Whirlpool (0.78), IDXX-Idexx Labs (0.45), GHL-Greenhill (1.01), AVX-Avx Corp. (0.16), RGC-Regal Entertainment Group (0.11), GRA-WR Grace (0.83), IBOC-International Bancshares (0.40).
Global Financial Calendar
| Friday 10/23/2009 |
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| United States |
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| 0830 ET | Fed Chairman Ben Bernanke delivers an address at the Boston Fed's economic conference. |
| 1000 ET | Sep existing home sales expected +4.9% to 5.35 million, Aug -2.7% to 5.10 million. |
| 1130 ET | Fed Vice Chairman Donald Kohn speaks on a panel about supervision and regulation at the Boston Fed's economic conference. |
| France |
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| 0245 ET | Sep French consumer spending expected +0.6% m/m and -0.4% y/y, Aug -1.0% m/m and -1.3% y/y. |
| 0300 ET | Oct French PMI manufacturing expected +0.2 to 53.2, Sep +2.2 to 53.0. |
| 0300 ET | Oct French PMI services expected +0.7 to 53.9, Sep +2.3 to 53.2. |
| Germany |
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| 0330 ET | Oct German PMI manufacturing expected +0.5 to 50.1, Sep +0.4 to 49.6. |
| 0330 ET | Oct German PMI services expected +0.4 to 52.5, Sep -1.7 to 52.1. |
| 0400 ET | Oct German IFO business climate expected +0.7 to 92.0, Sep +0.8 to 91.3. Oct IFO current assessment expected +1.0 to 88.0, Sep +0.8 to 87.0. Oct IFO expectations expected +0.5 to 96.2, Sep +0.7 to 95.7. |
| Euro-Zone |
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| 0400 ET | Oct Euro-Zone PMI composite expected +0.5 to 51.6, Sep +0.7 to 51.1. Oct PMI manufacturing expected +0.7 to 50.0, Sep +1.1 to 49.3. Oct PMI services expected +0.4 to 51.3, Sep +1.0 to 50.9. |
| 0500 ET | Aug Euro-Zone industrial new orders expected +1.2% m/m and -22.5% y/y, Jul +2.6% m/m and -24.3% y/y. |
| 0515 ET | ECB Council member and Bundesbank President Axel Weber speaks at a panel discussion on "Monetary Policy in Times of Crisis" in Frankfurt. |
| United Kingdom |
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| 0430 ET | Preliminary Q3 UK GDP expected +0.2% q/q and -4.6% y/y, Q2 -0.6% q/q and -5.5% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1091.60 | 0.80 | 0.07% | 07:17:12 |
| DJIA (CBOT) (Z9) | 10043 | 5 | 0.05% | 07:17:03 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2501.61 | 11.05 | 0.44% | 07:12:45 |
| London UK FTSE Index | 5273.43 | 66.07 | 1.27% | 07:12:45 |
| German Dax Index | 5818.53 | 55.60 | 0.96% | 07:12:53 |
| French CAC 40 Index | 3858.73 | 37.88 | 0.99% | 07:12:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10283 | 16 | 0.15% | 03:00:13 |
| Hong Kong Hang Seng | 22590 | 379 | 1.71% | 04:01:30 |
| China CSI 300 Index | 3413 | 66 | 1.97% | 03:01:04 |
| Taiwan TAIEX Index | 7649 | 41 | 0.54% | 01:46:00 |
| Australian S&P 200 | 4859.4 | 46.6 | 0.97% | 01:47:04 |
| Singapore Str. Times | 2715.34 | 33.37 | 1.24% | 05:10:01 |
| South Korea KOSPI 200 | 214.73 | 1.48 | 0.69% | 05:03:27 |
| Bombay Sensex 30 | 16811 | 21.07 | 0.13% | 06:29:55 |
| Karachi KSE-100 | 9151 | -3 | -0.03% | 06:44:35 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.225 | -0.085 | -0.23% | 07:17:49 |
| Cash 10yr T-note Price | 101.130 | -0.110 | -0.34% | 07:27:31 |
| Cash 10yr T-note Yield | 3.454 | 0.041 | 1.20% | 07:27 |
| 5yr T-note (CBT)(Z9) | 115.242 | -0.0625 | -0.18% | 07:17:50 |
| Cash 5yr T-note Price | 99.260 | -0.085 | -0.27% | 07:27:31 |
| Cash 5yr T-note Yield | 2.415 | 0.057 | 2.43% | 07:27 |
| 30-yr T-bond (CBT)(Z9) | 119.13 | -0.07 | -0.18% | 07:17:31 |
| Cash 30yr T-bond Price | 103.275 | -0.185 | -0.55% | 07:23:00 |
| Cash 30yr T-bond Yield | 4.270 | 0.033 | 0.79% | 07:22 |
| Eurodollars (CME)(Z9) | 99.645 | -0.005 | -0.01% | 07:16:20 |
| Eurodollars (CME)(H0) | 99.430 | -0.015 | -0.02% | 07:15:03 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.31 | -0.07 | -0.05% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.500 | 0.005 | 0.01% | 03:25:34 |
| Bunds (Eurex) (Z9) | 121.01 | -0.18 | -0.15% | 07:12:23 |
| Euribor (Eurex) (Z9) | 99.19 | 0.00 | 0.00% | 07:12:22 |
| UK Gilts (Liffe) (Z9) | 118.15 | 0.51 | 0.43% | 07:12:25 |
| Short Stlg (Liffe) (Z9) | 99.35 | 0.02 | 0.02% | 07:09:01 |
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| Forex |
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| U.S. Dollar Index | 75.26 | 0.16 | 0.21% | 07:17:51 |
| US Dollar-Japanese Yen | 91.68 | 0.38 | 0.41% | 07:27:54 |
| EuroFX-US Dollar | 1.5041 | 0.0008 | 0.08% | 07:27:54 |
| US Dollar-Swiss Franc | 1.0057 | 0.0012 | 0.12% | 07:27:54 |
| British Pound-US$ | 1.6371 | -0.0253 | -2.53% | 07:27:54 |
| US$-Canadian Dlr | 1.0524 | 0.0049 | 0.49% | 07:27:51 |
| Yen (Globex) (Z9) | 1.0916 | -0.0041 | -0.41% | 07:17:49 |
| Euro FX (Globex) (Z9) | 1.5039 | 0.0015 | 0.10% | 07:17:53 |
| SwissFranc (Globex)(Z9) | 0.9945 | -0.0011 | -0.11% | 07:17:51 |
| British Pound(Glbx)(Z9) | 1.6372 | -0.0246 | -1.48% | 07:17:52 |
| Canadian$ (Globex)(Z9) | 0.9503 | -0.0036 | -0.38% | 07:17:53 |
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| Commodities |
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| Gold (Comex) (Z9) | 1061.5 | 2.9 | 0.27% | 07:17:41 |
| Silver (Comex) (Z9) | 17.710 | 0.165 | 0.94% | 07:17:33 |
| Copper (Comex) (Z9) | 304.0 | 4.2 | 1.38% | 07:17:52 |
| Crude Oil (Nymex) (Z9) | 81.25 | 0.06 | 0.07% | 07:17:49 |
| Gasoline (Nymex) (Z9) | 205.3 | -0.25 | -0.12% | 07:16:28 |
| Heating Oil(Nymex) (Z9) | 211.96 | -0.47 | -0.22% | 07:17:51 |
| NaturalGas(Nymex)(Z9) | 5.666 | 0.049 | 0.87% | 07:17:44 |
| Corn (CBOT) (Z9) | 409.50 | 6.00 | 1.49% | 07:17:05 |
| Soybeans (CBOT) (X9) | 1024.25 | 18.75 | 1.86% | 07:16:04 |
| Wheat (CBOT) (Z9) | 560.50 | 8.75 | 1.59% | 07:13:05 |
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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