Barchart U.S. Morning Call
Friday, October 30, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.14% and Dec S&Ps are down -3.30 points. An unexpected decline in Sep German retail sales for a second month is dragging European stocks lower today along with the expected +0.1 rise in the Sep Euro-Zone unemployment rate to 9.7%, a 10-3/4 year high. Sep German retail sales fell -0.5% m/m and -3.9% y/y when market expectations were for a +1.0% m/m gain. Average Q2 wages in Germany fell -1.2% y/y after companies reduced working hours to cut costs during the economic slump. With employers cutting back on hours instead of firing employees, workers have less income for spending. European Union leaders say it's too early to withdraw emergency stimulus measures put in place to counter the recession, according to a draft statement from the conclusion of today's 27-nation summit in Brussels. The European Union leaders backed away from imposing a target date for exiting from stimulus programs "until the recovery is fully secured," according to the statement. Inflation in the Euro-Zone continues to be muted after the Oct Euro-Zone CPI estimate fell an as expected -0.1% y/y, its fifth consecutive monthly decline,
The Asian markets today closed mostly higher with Japan +1.45%, Hong Kong +2.29%, China +1.03%, Taiwan -0.21%, Australia +1.50%, Singapore +0.71%, South Korea -0.42%, India -0.97%. The Peoples Bank of China said on its web site today that China will sustain its economic rebound this quarter and growth is likely to top the government's 8% target for 2009. Today's comments contrast with the PBOC's July report, which described China's economy as being in a "critical" phase and facing many uncertainties. Chinese stocks also received a boost after Bank of China, the country's third-largest lender, rose 5.8% when it reported Q3 profit of 21.1 billion yuan ($3.09 billion), beating analysts' estimates of 20.52 billion yuan. The Bank of Japan said today it will stop buying corporate debt at the end of the year, as global central banks begin to phase out emergency measures taken at the height of the financial crisis. BOJ Governor Shirakawa also said they will only extend a program providing unlimited collateral-backed loans to banks one last time through Mar of 2010. Japanese stocks received a boost today after the Sep Japan jobless rate unexpectedly declined -0.2 to 5.3%. The market had been expecting a +0.1 increase to 5.6%.
Overnight U.S. Stock News
December S&Ps this morning are trading down -3.30 points. The US stock market yesterday opened higher and continued higher throughout the day, erasing Wednesday's sharp losses and finishing with solid gains (Dow Jones +2.05%, S&P 500 +2.25%, Nasdaq Composite +1.84%). Bullish factors included (1) the stronger-than-expected US Q3 GDP of +3.5% q/q (versus expectations of +3.2% q/q), which showed the US economy returning to growth from four straight quarters of contraction, (2) the larger-than-expected decline in weekly US continuing unemployment claims which tumbled to a 7-month low (-148,000 to 5.797 million versus expectations of -18,000 to 5.905 million), (3) strength in raw-materials and energy producers after crude oil and metals rallied sharply, and (4) the prediction from PNC Wealth Management that "Q4 will be the Waterloo of the bears," because the global economic recovery will gain traction and revenue growth will pick up as the recovery holds.
Bearish factors included (1) the prediction from Nobel prize-winning economist Joseph Stiglitz that the US economy faces "serious bumps" ahead that are likely to slow the pace of growth and that the economy won't be expanding quickly enough to reduce unemployment, (2) the prediction from Encima Global that economic growth in the US will slow after the rebound in Q3 and will enter "a very gloomy period" of high unemployment, (3) the statement by Moody's Investors Service that it is planning a review of US home-loan securities that will likely lead to "significant" rating changes based on the view that property prices won't bottom until Q3 2010, which may lead to increased writedowns of the securities by the banks and financial institutions, and (4) the 17-tick sell-off in T-note prices and the 9 bp rise in the 10-year T-note yield, which may crimp housing demand as mortgage rates move higher.
NYSE Euronext (NYX) fell 1.5% in European trading after reporting a -28% drop in Q3 profit as revenue from equity trading dropped and European competitors took market share.
Today's Market Focus
December 10-year T-notes this morning are trading higher by +8.5 ticks. Dec T-note prices yesterday moved lower and traded in negative territory the entire day before settling down -17 ticks at 117-230. Bearish factors for T-note prices yesterday included (1) the larger-than-expected increase in US Q3 GDP (+3.5% versus expectations of +3.2%), (2) the bigger-than-expected decline in weekly US continuing unemployment claims which tumbled to a 7-month low (-148,000 to 5.797 million versus expectations of -18,000 to 5.905 million), (3) reduced safe-haven demand for Treasuries after the stock market rallied, and (4) the last day of the Fed's $300 billion quantitive easing program, which takes a big buyer out of the Treasury market. Bullish factors centered on (1) decent demand for the Treasury's $31 billion 7-year T-note auction that had a bid-to-cover ratio of 2.65 (vs the 8-auction of 2.52) and indirect participation of 59.3% (well above the 8-auction of 49.2%), and (2) some post-auction relief as the Treasury's $123 billion auction package concluded.
The dollar index this morning is weaker with the dollar/yen -0.38 yen and the euro/dollar +0.11 cents. The dollar index yesterday gave back Wednesday's gains and then some as it finished the day sharply lower. Bearish factors included (1) reduced safe-haven demand for the dollar as the stock market ralled sharply on the US Q3 GDP report, (2) strength in the euro after hawkish comments from ECB Council member and Bundesbank President Axel Weber that "we won't wait until employment picks up or unemployment rates fall to tighten," and (3) the recommendation from Royal Bank of Scotland Group Plc that the euro's strengthening trend remains intact and investors should buy the euro when it weakens. Bullish factors included (1) the report from Market News International that the ECB will increase pressure on the US to strengthen the dollar at the upcoming Group of 20 meeting in Scotland, and (2) comments from Jean-Claude Juncker, leader of the Euro-Zone finance ministers, that continued gains in the euro are "unwelcome" and would hurt European exports.
December crude oil prices this morning are trading down -43 cents a barrel and Dec gasoline is trading -0.39 cent a gallon. Dec crude oil prices yesterday rebounded from a 2-week low posted in the overnight electronic session and moved higher the entire day, finally closing up +$2.41 a barrel. Dec gasoline yesterday closed up +4.30 cents. Bullish factors yesterday included (1) the weaker dollar, (2) the stronger-than-expected US Q3 GDP and the drop in continuing unemployment claims to a 7-month low, which shows the economy is recovering and spurred optimism that US fuel demand may increase, and (3) the unexpected decline in Oct German unemployment, which indicates the German economy is on the mend and may lead to increased energy consumption in Europe. The main bearish factor was the comment by the CEO of Royal Dutch Shell that a "quick recovery" in energy demand and prices is unlikely as the outlook "remains very uncertain" given forecasts that global crude demand will fall the most this year since 1980.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) CVX-Chevron (BEST earnings consensus $1.48), D-Dominion Resources (0.91), DUK-Duke Energy (0.38), SPG-Simon Property Group (0.37), SWN-Southwestern Energy (0.34), AOC-AON Corp. (0.66), PGN-Progress Energy (1.19), ITT-ITT Corp. (0.90), CMI-Cummins (0.38), EL-Estee Lauder (0.34), WY-Wyerhaeuser (-0.47), UPL-Ultra Petroleum (0.51), NYX-NYSE Euronext (0.46), CEG-Constellation Energy Group (1.07), JAVA-Sun Microsystems (-0.26), AEE-Ameren (0.99), BJS-BJ Services Co. (0.02).
Global Financial Calendar
| Friday 10/30/2009 |
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| United States |
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| 0830 ET | Sep personal income expected unchanged, Aug +0.2%. Sep personal spending expected -0.5%, Aug +1.3%. Sep PCE deflator expected -0.5% y/y, Aug -0.5% y/y. Sep PCE core expected +0.2% m/m and +1.3% y/y, Aug +0.1% m/m and +1.3% y/y. |
| 0830 ET | Q3 employment cost index expected +0.4%, Q2 +0.4%. |
| 0945 ET | Oct Chicago purchasing managers index expected +2.9 to 49.0, Sep -3.9 to 46.1. |
| 1000 ET | Final Oct US University of Michigan consumer confidence expected +0.6 to 70.0, preliminary Oct -4.1 to 69.4. |
| 1000 ET | Milwaukee Oct purchasing managers index expected -1.0 to 57.0, Sep 58.0. |
| 1130 ET | Treasury Secretary Timothy Geithner attends an award ceremony in Chicago. |
| Japan |
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| 0100 ET | Sep Japan housing starts expected -36.3% y/y, Aug -38.3% y/y. |
| 0100 ET | Sep Japan construction orders, Aug -25.2% y/y. |
| Germany |
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| 0200 ET | Sep German retail sales expected +1.0% m/m and -2.2% y/y, Aug -1.5% m/m and -2.6% y/y. |
| France |
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| 0345 ET | Sep French producer prices expected -0.3% m/m and -8.1% y/y, Aug +0.4% m/m and -8.5% y/y. |
| Euro-Zone |
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| 0600 ET | Oct Euro-Zone CPI estimate expected -0.1% y/y, Sep -0.3% y/y. |
| 0600 ET | Sep Euro-Zone unemployment rate expected +0.1 to 9.7%, Aug +0.1 to 9.6%. |
| Canada |
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| 0830 ET | Aug Canadian GDP expected unchanged m/m, Jul unchanged m/m. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1058.30 | -3.30 | -0.31% | 07:13:43 |
| DJIA (CBOT) (Z9) | 9874 | -29 | -0.29% | 07:13:43 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2460.15 | -3.39 | -0.14% | 07:09:00 |
| London UK FTSE Index | 5151.15 | 13.43 | 0.26% | 07:09:00 |
| German Dax Index | 5562.04 | -25.41 | -0.45% | 07:09:02 |
| French CAC 40 Index | 3704.31 | -9.71 | -0.26% | 07:09:00 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 10035 | 144 | 1.45% | 03:26:57 |
| Hong Kong Hang Seng | 21753 | 488 | 2.29% | 04:01:30 |
| China CSI 300 Index | 3280 | 33 | 1.03% | 03:01:06 |
| Taiwan TAIEX Index | 7340 | -16 | -0.21% | 01:46:01 |
| Australian S&P 200 | 4643.2 | 68.5 | 1.50% | 01:47:04 |
| Singapore Str. Times | 2651.13 | 18.82 | 0.71% | 05:10:01 |
| South Korea KOSPI 200 | 206.81 | -0.87 | -0.42% | 05:03:26 |
| Bombay Sensex 30 | 15896 | -156.44 | -0.97% | 06:29:57 |
| Karachi KSE-100 | 9159 | -10 | -0.11% | 06:50:16 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 117.315 | 0.085 | 0.23% | 07:13:25 |
| Cash 10yr T-note Price | 101.075 | 0.060 | 0.19% | 07:23:01 |
| Cash 10yr T-note Yield | 3.475 | -0.023 | -0.65% | 07:22 |
| 5yr T-note (CBT)(Z9) | 116.015 | 0.065 | 0.17% | 07:14:02 |
| Cash 5yr T-note Price | 99.265 | 0.035 | 0.11% | 07:21:01 |
| Cash 5yr T-note Yield | 2.412 | -0.023 | -0.96% | 07:20 |
| 30-yr T-bond (CBT)(Z9) | 119.02 | 0.12 | 0.32% | 07:13:27 |
| Cash 30yr T-bond Price | 103.030 | 0.115 | 0.35% | 07:23:01 |
| Cash 30yr T-bond Yield | 4.314 | -0.021 | -0.49% | 07:22 |
| Eurodollars (CME)(Z9) | 99.675 | -0.005 | -0.01% | 07:13:49 |
| Eurodollars (CME)(H0) | 99.475 | 0.000 | 0.00% | 07:06:19 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 137.99 | -0.01 | -0.01% | 02:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.495 | 0.000 | 0.00% | 07:10:45 |
| Bunds (Eurex) (Z9) | 121.61 | 0.40 | 0.33% | 07:08:54 |
| Euribor (Eurex) (Z9) | 99.23 | 0.00 | 0.01% | 06:24:27 |
| UK Gilts (Liffe) (Z9) | 118.36 | 0.21 | 0.18% | 07:09:03 |
| Short Stlg (Liffe) (Z9) | 99.39 | -0.01 | -0.01% | 07:08:57 |
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| Forex |
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| U.S. Dollar Index | 75.91 | -0.03 | -0.04% | 07:13:51 |
| US Dollar-Japanese Yen | 91.03 | -0.38 | -0.41% | 07:24:03 |
| EuroFX-US Dollar | 1.4834 | 0.0011 | 0.11% | 07:24:03 |
| US Dollar-Swiss Franc | 1.0182 | -0.0008 | -0.08% | 07:24:03 |
| British Pound-US$ | 1.6539 | -0.0009 | -0.09% | 07:24:03 |
| US$-Canadian Dlr | 1.0677 | 0.0012 | 0.12% | 07:24:03 |
| Yen (Globex) (Z9) | 1.0996 | 0.0068 | 0.68% | 07:13:52 |
| Euro FX (Globex) (Z9) | 1.4834 | -0.001 | -0.07% | 07:13:43 |
| SwissFranc (Globex)(Z9) | 0.983 | 0.0003 | 0.03% | 07:12:55 |
| British Pound(Glbx)(Z9) | 1.6529 | -0.0015 | -0.09% | 07:14:01 |
| Canadian$ (Globex)(Z9) | 0.9359 | -0.0020 | -0.21% | 07:13:42 |
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| Commodities |
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| Gold (Comex) (Z9) | 1045.8 | -1.3 | -0.12% | 07:13:59 |
| Silver (Comex) (Z9) | 16.615 | -0.040 | -0.24% | 07:13:27 |
| Copper (Comex) (Z9) | 301.9 | -1.1 | -0.36% | 07:12:46 |
| Crude Oil (Nymex) (Z9) | 79.44 | -0.43 | -0.54% | 07:13:49 |
| Gasoline (Nymex) (Z9) | 202.09 | -0.39 | -0.19% | 07:11:58 |
| Heating Oil(Nymex) (Z9) | 206.5 | -1.37 | -0.66% | 07:12:57 |
| NaturalGas(Nymex)(Z9) | 5.039 | -0.023 | -0.45% | 07:13:59 |
| Corn (CBOT) (Z9) | 378.75 | -0.75 | -0.20% | 07:13:58 |
| Soybeans (CBOT) (X9) | 983.50 | -2.00 | -0.20% | 07:13:02 |
| Wheat (CBOT) (Z9) | 505.50 | 1.75 | 0.35% | 07:13:13 |
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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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