Barchart U.S. Morning Call
Thursday, November 05, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.57% although Dec S&Ps are up +0.70 of a point. The Bank of England raised its bond purchase plan by a less than expected 25 billion pounds ($41 billion), the third increase since Mar, bringing the total amount of bond pruchases to 200 billion pounds as policy makers try to assure a recovery through quantitative easing, The BOE also kept its key benchmark rate at a record low of 0.5%, as expected. The unexpected decline in Sep Euro-Zone retail sales is undercutting European stock prices with sales dropping -0.7% m/m and -3.6% y/y, the 16th consecutive month of year-over-year declines. Consumer spending in Europe continues to be held back amid concerns of rising unemployment, with the Euro-Zone unemployment rate rising to 9.7% in Sep, the highest in a decade. The European Commission forecast two days ago that the jobless rate will reach 10.9% in 2011, which would be the most since at least 1995.
The Asian markets today closed mostly lower except for China which closed up +0.30% and at a 2-month high. Japan closed down -1.29%, Hong Kong -0.63%, Taiwan -0.66%, Australia -0.71%, Singapore -0.73%, Soth Korea -1.77%, India +0.95%. China's stocks bucked the trend of lower Asian stock markets as they rallied for a fifth day. Transportation stocks led the rally today as railroad companies surged after China's deputy director of the State Council's Development Research Center said exports may return to growth at the end of this year and may grow by 8% to 10% in 2010. China's exports had plunged as the financial crisis slowed global trade with China's Sep exports falling -15.2% y/y. Leading the way lower in the rest of the Asian markets was the 2.9% drop in Samsung Electronics as Asia's biggest maker of chips and mobile phones fell after South Korea's finance minister said its "unclear" whether the economic rebound will be sustained and that South Korea remains "too dependent" on external demand.
Overnight U.S. Stock News
December S&Ps this morning are trading up +0.70 of a point. The US stock market yesterday rallied during the morning but then faded in the afternoon to close mixed (Dow Jones +0.31%, S&P 500 +0.10%, Nasdaq Composite -0.09%). Bullish factors included (1) the post-FOMC statement that said the Fed plans to keep interest rates at a record low for an "extended period," (2) strength in health insurers and health-care service companies on speculation that victories by Republicans in Tuesday's elections will bolster opposition to legislation overhauling health care, (3) a rally in energy and raw-material producers as the weaker dollar prompted a rally in crude oil and metals, (4) the Oct ISM non-manufacturing index which unexpectedly fell but was construed as bullish after its new orders sub-index rose +1.4% and its order backlog sub-index increased +2.0%, both of which are viewed as forward-looking leading indicators, and (5) the prediction from Federated Investors that the S&P 500 Index will rally to 1,200 by the end of the year as investors start putting money back into the market because "stocks are undervalued and the economic fundemantals and corporate earnings fundamentals are getting so much stronger."
Bearish factors included (1) the 1.5% slump in the S&P 500 Financials Index after a House bill to curb credit-card rates raised concern about future bank earnings along with the prediction from bank analyst Meredith Whitney that the biggest US banks may face declining values on mortgage bonds when the Fed starts to wind down its $1.25 trillion purchase program, (2) the slightly larger-than-expected -203,000 loss of jobs in the Oct ADP employment change, (3) the unexpected decline in the Oct ISM non-manufacturing index (-0.3 to 40.6 versus expectations of +0.6 to 51.5), and (4) the prediction from Pacific Investment Management that the slump in US housing prices is unlikely to end before the middle of next year as recent statistics that show a rise in home prices is being distorted by government efforts to reduce foreclosures.
Cisco (CSCO) gained 3% in European trading after the company said Q1 profit for the quarter ended Oct 24 excluding stock compensation and some other costs was 36 cents a share, beating analysts' estimates of 31 cents. The company also said it was expanding its stock repurchase program by $10 billion.
Whole Foods Market Inc. (WFMI) sank over 8% in European trading after the natural-food grocer forecast full-year earnings of $1.10 a share at most, trailing analysts' estimates of $1.11.
Today's Market Focus
December 10-year T-notes this morning are trading up +6.5 ticks. Dec T-note prices yesterday whipsawed lower after the FOMC announcement and finished the day down -10.5 ticks at 117-265. Bearish factors included (1) the Fed's post-FOMC statement that said while Fed members acknowledged that the economy is improving, interest rates will remain low for an "extended period," which pressured Treasury prices on concerns that long-term inflation expectations may rise, (2) a continued steepening of the yield curve as the 2-year/10-year yield spread widened to a 4-month high as the Fed's commitment to keep short-term rates at record lows prompts investors to push longer-term rates higher to compensate for inflation risks, and (3) supply pressures as the Treasury announced it will sell a record $81 billion of notes and bonds at next week's Nov quarterly refunding. Bullish factors for T-note prices yesterday included (1) the unexpected decline in the Oct ISM non-manufacturing index (-0.3 to 50.6 versus expectations of +0.6 to 51.5), and (2) the prediction from Pacific Investment Management that Treasury prices will gain as low inflation encourages continued strong demand for the Treasury's debt auctions.
The dollar index this morning is higher with the dollar/yen -0.33 yen and the euro/dollar -0.08 cents. The dollar yesterday weakened to a 1-week low and finished the day lower. Bearish factors included (1) the post-FOMC statement that stated the Fed intends to keep interest rates low for an "extended period," which will continue to weaken the dollar's interest-rate differentials, and (2) the prediction from Helaba Landesbank Hessen-Thueringen that the euro may receive a boost from a lack of Fed rate "signals." Bullish factors centered on a possible increase in the safe-haven demand for the dollar on concern that an economic recovery may be less than robust after the Oct ADP employment change showed employers cut more jobs than expected and the Oct ISM non-manufacturing index unexpectedly declined.
December crude oil prices this morning are trading down -43 ents a barrel and Dec gasoline is trading -1.42 cents a gallon. Dec crude yesterday rallied to a 1-week high and closed higher by +$0.80 a barrel. Dec gasoline yesterday closed up +1.23 cents a gallon. Bullish factors yesterday included (1) the slump in the dollar index to a 1-week low, (2) the unexpected decline in weekly crude oil inventories (-3.94 million bbl versus expectations of a +1.5 million bbl increase), (3) the unexpected decline in weekly gasoline inventories (-287,000 bbl versus expectations of a +400,000 bbl gain), (4) the unexpected decline in the refinery capacity rate which fell to its lowest level in 7 months (-1.2 to 80.6% versus expectations of +0.1 to 81.9%) and also signal further production cuts in gasoline and distillate products in the weeks ahead as refiners cut production, and (5) the World Bank's hike in its 2009 economic growth forecast for China to 8.4% from an earlier estimate of 7.2%, which may indicate increased energy demand and consumption. Bearish factors yesterday included (1) the prediction from Strategic Energy & Economic Research that the drop in crude oil inventories was due to slack demand from refiners who "don't want to have excess supplies of crude on hand," and not from an increase in demand, and (2) comments from Libya's top oil official who said that OPEC may keep production quotas unchanged when it meets next month as "there are no signs demand is getting stronger."
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) CVS-CVS Caremark (BEST earnings consensus $0.64), DTV-DirecTV Group (0.39), SBUX-Starbucks (0.21), TWC-Time Warner (0.76), ATVI-Activision Blizzard (0.04), PSA-Public Storage (0.61), CAH-Cardinal Health (0.43), CTL-CenturyTel (0.81), CBS-CBS Corp. (0.22), SLE-Sara Lee (0.18), CI-Cigna (1.03), HK-Petrohawk Energy (0.12), DPS-Dr Pepper Snapple Group (0.49), BAP-Credicorp (1.35), NVDA-Nvidia (0.10), CLR-Continental Resources (0.23).
Global Financial Calendar
| Thursday 11/5/2009 |
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| United States |
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| 0830 ET | Weekly unemployment claims expected -8,000 to 522,000, previous -1,000 to 530,000. Weekly continuing claims expected -47,000 to 5.750 million, previous -148,000 to 5.797 million. |
| 0830 ET | Preliminary Q3 nonfarm productivity expected 6.5%, Q2 +6.6%. Q3 unit labor costs expected -4.2%, Q2 5.9% |
| 1100 ET | Oct ICSC chain store sales, Sep +0.1% y/y. |
| United Kingdom |
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| 0430 ET | Sep UK industrial production expected +1.2% m/m and -10.3% y/y, Aug -2.5% m/m and -11.2% y/y. |
| 0430 ET | Sep UK manufacturing production expected +1.0% m/m and -9.7% y/y, Aug -1.9% m/m and -11.3% y/y. |
| 0700 ET | BOE announces interest rate decision (no change expected to the 0.50% benchmark rate; asset purchase target expected to be raised by 50 billion pounds to 225 billion pounds). |
| 1800 ET | G-20 finance ministers and central bankers meet in St. Andrews, Scotland. |
| Euro-Zone |
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| 0500 ET | Sep Euro-Zone retail sales expected +0.2% m/m and -2.4% y/y, Aug -0.2% m/m and -2.6% y/y. |
| 0745 ET | ECB announces interest rate decision (no change expected in 1.00% 2-week refinancing rate). |
| 0830 ET | ECB President Jean-Claude Trichet speaks at monthly press conference. |
| 2330 ET | ECB Executive Board member Jose Manuel Gonzalez-Paramo speaks at a seminar in London organized by the European Economics & Financial Centre. |
| Canada |
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| 0830 ET | Sep Canadian building permits, Aug +7.2% m/m. |
| 1000 ET | Oct Ivey purchasing managers index expected -3.7 to 58.0, Sep +6.0 to 61.7. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1047.70 | 0.70 | 0.07% | 07:16:09 |
| DJIA (CBOT) (Z9) | 9789 | 4 | 0.04% | 07:14:53 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2406.22 | -13.79 | -0.57% | 07:11:45 |
| London UK FTSE Index | 5079.61 | -28.28 | -0.55% | 07:11:45 |
| German Dax Index | 5424.02 | -20.21 | -0.37% | 07:11:54 |
| French CAC 40 Index | 3658.30 | -12.03 | -0.33% | 07:11:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9717 | -127 | -1.29% | 02:00:13 |
| Hong Kong Hang Seng | 21479 | -136 | -0.63% | 03:01:30 |
| China CSI 300 Index | 3464 | 10 | 0.30% | 02:01:09 |
| Taiwan TAIEX Index | 7417 | -50 | -0.66% | 00:46:01 |
| Australian S&P 200 | 4508 | -32.1 | -0.71% | 00:47:03 |
| Singapore Str. Times | 2629.35 | -19.29 | -0.73% | 04:10:01 |
| South Korea KOSPI 200 | 203.52 | -3.66 | -1.77% | 04:03:26 |
| Bombay Sensex 30 | 16064 | 151.77 | 0.95% | 05:29:55 |
| Karachi KSE-100 | 9112 | -43 | -0.47% | 05:49:58 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.010 | 0.065 | 0.17% | 07:16:50 |
| Cash 10yr T-note Price | 100.265 | 0.000 | 0.00% | 07:26:30 |
| Cash 10yr T-note Yield | 3.524 | 0.000 | 0.00% | 07:26 |
| 5yr T-note (CBT)(Z9) | 116.125 | 0.055 | 0.15% | 07:16:50 |
| Cash 5yr T-note Price | 100.035 | 0.035 | 0.11% | 07:26:01 |
| Cash 5yr T-note Yield | 2.352 | -0.023 | -0.99% | 07:25 |
| 30-yr T-bond (CBT)(Z9) | 118.13 | 0.10 | 0.26% | 07:16:48 |
| Cash 30yr T-bond Price | 101.160 | -0.050 | -0.15% | 07:26:30 |
| Cash 30yr T-bond Yield | 4.409 | 0.009 | 0.21% | 07:26 |
| Eurodollars (CME)(Z9) | 99.700 | 0.005 | 0.01% | 07:16:29 |
| Eurodollars (CME)(H0) | 99.535 | 0.015 | 0.02% | 07:16:24 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 137.60 | -0.36 | -0.26% | 01:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.505 | 0.000 | 0.00% | 11/5/2009 |
| Bunds (Eurex) (Z9) | 121.10 | -0.15 | -0.12% | 07:11:53 |
| Euribor (Eurex) (Z9) | 99.25 | 0.02 | 0.02% | 04:26:38 |
| UK Gilts (Liffe) (Z9) | 116.82 | -0.33 | -0.28% | 07:11:54 |
| Short Stlg (Liffe) (Z9) | 99.36 | -0.01 | -0.01% | 07:11:31 |
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| Forex |
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| U.S. Dollar Index | 75.78 | 0.13 | 0.18% | 07:16:50 |
| US Dollar-Japanese Yen | 90.39 | -0.33 | -0.37% | 07:26:55 |
| EuroFX-US Dollar | 1.4854 | -0.0008 | -0.08% | 07:26:55 |
| US Dollar-Swiss Franc | 1.0175 | 0.0015 | 0.15% | 07:26:55 |
| British Pound-US$ | 1.6620 | 0.0066 | 0.66% | 07:26:55 |
| US$-Canadian Dlr | 1.0622 | -0.0006 | -0.06% | 07:26:54 |
| Yen (Globex) (Z9) | 1.1068 | 0.0054 | 0.54% | 07:16:52 |
| Euro FX (Globex) (Z9) | 1.4843 | -0.0052 | -0.35% | 07:16:47 |
| SwissFranc (Globex)(Z9) | 0.9826 | -0.0039 | -0.40% | 07:16:47 |
| British Pound(Glbx)(Z9) | 1.6604 | 0.0015 | 0.09% | 07:16:53 |
| Canadian$ (Globex)(Z9) | 0.9406 | -0.0019 | -0.20% | 07:15:53 |
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| Commodities |
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| Gold (Comex) (Z9) | 1090.2 | -2.2 | -0.20% | 07:16:52 |
| Silver (Comex) (Z9) | 17.425 | -0.030 | -0.17% | 07:16:32 |
| Copper (Comex) (Z9) | 296.7 | -2.8 | -0.93% | 07:15:53 |
| Crude Oil (Nymex) (Z9) | 79.97 | -0.43 | -0.53% | 07:16:53 |
| Gasoline (Nymex) (Z9) | 199.85 | -1.42 | -0.71% | 07:16:44 |
| Heating Oil(Nymex) (Z9) | 207.4 | -1.62 | -0.78% | 07:16:10 |
| NaturalGas(Nymex)(Z9) | 4.72 | -0.005 | -0.11% | 07:16:02 |
| Corn (CBOT) (Z9) | 382.75 | -1.25 | -0.33% | 07:16:20 |
| Soybeans (CBOT) (F0) | 994.50 | -4.50 | -0.45% | 07:15:56 |
| Wheat (CBOT) (Z9) | 516.50 | -4.50 | -0.86% | 07:14:43 |
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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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