Barchart U.S. Morning Call
Tuesday, November 10, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is unchanged and Dec S&Ps are down -2.90 points. Treasuries are higher while the dollar and commodity prices are little changed. European stocks are gyrating on either side of unchanged after Credit Suisse upgraded European stocks and Nov German economic sentiment fell more-than-expected. Credit Suisse recommended investors increase their holdings in mainland European stocks, after they upgraded the region to "overweight" from "underweight," saying "Europe tends to outperform when interest rate expectations start to rise." Also benefiting European stock prices was comments from ECB Council member Yves Mersch who said "it would not be surprising" if the bank raises its economic growth forecasts next month along with a 3.9% gain in HSBC Holdings Plc after the lender sid Q3 profit was "significantly" higher than a year ago on lower loan loss provisions. Undercutting stock gains was the larger-than-expected decline in the Nov German ZEW economic sentiment survey which fell -4.9 to 51.1, more than market expectations for a -1.0 drop to 55.0 as the prospect of expiring government stimulus programs and rising unemployment crimped expectations for economic growth.
The Asian markets today closed mostly higher with Japan up +0.63%, Hong Kong +0.27%, China +0.23%, Taiwan +0.75%, Australia +1.26%, Singapore +0,53%, South Korea +0.45%, India -0.35%. Fitch Ratings today predicted that Japan is unlikely to experience a "rapid economic recovery" as a stronger yen, falling prices and unemployment weigh on growth. Fitch added that "the recovery process for Japan in 2010 is expected to be modest and fragile, since domestic economic conditions point towards a possibly extended period of deflation." Fitch Ratings currently has as AA rating and a stable outllook on Japan's long-term, foreign-currency borrowings, the third-highest grade. Japanese banks closed higher after Japanese Financial Services Minister Kamei said domestic banks won't be punished if their Tier 1 capital ratios fall briefly below 4%. China's Oct house prices jumped +3.9% y/y, the biggest gain in 14 months, adding to concern that record lending may create asset bubbles in China's economy.
Overnight U.S. Stock News
December S&Ps this morning are trading down -2.90 points. The US stock market yesterday surged throughout the day and finished on its high (Dow Jones +2.03%, S&P 500 +2.22%, Nasdaq Composite +1.97%). The Dow Jones Industrials climbed to a 13-month high and the S&P 500 Index rose to a 2-week high. Bullish factors included (1) carry-over support from a global stock market rally after the Group of 20 nations agreed to maintain economic stimulus measures following their weekend summit in Scotland, (2) the prediction from Federated Investors that stock prices will rise before central banks raise interest rates because markets anticipate economic expansion first, (3) strength in raw-material and energy producers after the slump in the dollar to a 15-month low boosted commodity prices, with gold jumping to another record high, (4) the rally in real-estate stocks after Zillow.com reported that the number of US homeowners who are underwater on their houses fell to 21% in Q3, down from 23% in Q2 as property values stabilized and some homes were lost to foreclosure, and (5) the quarterly Senior Loan Officer Survey in which the Fed said fewer banks tightened lending standards for companies and consumers in Q3 than the prior quarter.
Bearish factors included (1) the prediction from Gluskin Sheff & Associates that the US unemployment rate may rise to a post-WWII high of 13% in the aftermath of the recession, which would make this "the mother of all jobless recoveries," and (2) the prediction from Baring Asset Management that companies that surpassed recent earnings forecasts mostly by laying off workers and shutting plants won't be able to sustain those temporary earnings gains.
MBIA (MBI) plunged 13% in European trading after the world's largest bond insurer reported a Q3 loss of $727.8 million or $3.50 a share, far worse than analysts' estimates of a loss of $1.09 a share as the value of securities the company backs through the credit derivatives market slumped.
Fluor (FLR) declined 5.5% in pre-market trading as it lowered its full-year earnings forecast after it posted a Q3 profit of 89 cents a share, below analysts' estimates of 90 cents.
Today's Market Focus
December 10-year T-notes this morning are trading higher by +7.5 ticks. Dec T-note prices yesterday opened lower but climbed steadily throughout the day and closed up +3.5 ticks at 118-170. Bullish factors yesterday included (1) the prediction from Mizuho Asset in Tokyo that "the US will face a triple whammy of the recession, credit contraction and deflation," which will be good for Treasury prices, (2) strong overall demand for the Treasury's $40 billion 3-year T-note auction that had a bid-to-cover ratio of 3.33, the most since 1993, with stellar foreign demand after indirect bidders purchased a record 68.5% of the auction, and (3) the prediction from Morgan Kegan that this week's Nov refunding "should go well because foreign demand remains strong and the market needs the bonds." Bearish factors for T-note prices yesterday included (1) the US House approval of health-care legislation that would cost more than $1 trillion over 10 years, which may lead to an increase in government debt sales, (2) the quarterly Senior Loan Officer Survey in which the Fed said fewer banks tightened lending standards for companies and consumers in Q3 versus the prior quarter, and (3) reduced safe-haven demand for Treasuries after global stock markets surged when the Group of 20 stated they will maintain their economic stimulus measures.
The dollar index this morning is slightly higher with the dollar/yen +0.19 yen and the euro/dollar -0.25 cents. The dollar yesterday fell to a 15-month low and closed lower. Bearish factors included (1) the lack of any strong statement against recent dollar weakness by the Group of 20 at the conclusion of their weekend summit in Scotland, (2) the comment from the IMF that the dollar is still overvalued and that record low US interest rates are continuing to fund global "carry-trades, (3) strong Euro-Zone economic data which boosted the euro to a 2-week high against the dollar after Sep German exports and Sep German industrial production were stronger than expected, and (4) the prediction from Royal Bank of Scotland Group Plc that dollar weakness may take on a "life of its own" as 2009 draws to a close. Bullish factors included (1) the statement from BusinessEurope, the European employers' federation, that the euro has reached a "pain threshold for industry" in the Euro-Zone, and (2) the statement from the IMF that the euro's exchange rate "is on the strong side of its equilibrium."
December crude oil prices this morning are trading up +8 cents a barrel and Dec gasoline is trading +0.01 cent a gallon. Dec crude yesterday moved sharply higher and closed up +$2.00 a barrel. Dec gasoline yesterday closed up +5.75 cents a gallon. Bullish factors yesterday included (1) the arrival of Hurricane Ida into the Gulf of Mexico which shut down some US oil and gas production, (2) the slump in the dollar index to a 15-month low, and (3) the action by the Group of 20 finance ministers and central banks after their weekend meeting in Scotland to maintain their economic stimulus measures which may lead to an increase in energy demand. Bearish factors yesterday included (1) the prediction from PFC Energy that oil prices are probably at the "upper end" of their range and that if prices move substantially higher Saudi Arabia will raise its crude production because they are concerned about the health of the global economy, and (2) the report from the US Energy Department that says crude and fuel stockpiles held in non-government tanks in the 30 developed countries in the Organization of Economic Cooperation Development (OECD) rose to 2.76 billion barrels in Q3, close to the record 2.77 billion in 1998 when crude oil plummeted to $10 a barrel.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) TYC-Tyco International (BEST earnings consensus $0.53), CLWR-Clearwire (-0.43), HEW-Hewitt Associates (0.63), RAH-Ralcorp Holdings (1.25), ATO-Atmos Energy (-0.09), WTW-Weight Watchers (0.64), FOSL-Fossil (0.42), EM-Emdeon (0.18), AONE-A123 Systems (-0.36), FMCN-Focus Media (0.13), DSX-Diana Shipping (0.34), MBI-MBIA (-1.09), BOBE-Bob Evans Farms (0.48), JASO-JA Solar Holdings (0.04), SYUT-Synutra International (-0.12).
Global Financial Calendar
| Tuesday 11/10/2009 |
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| United States |
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| 0745 ET | ICSC (Int'l Council of Shopping Centers) weekly retailer sales, previous +0.1% w/w and +1.9% weekly y/y. |
| 0855 ET | Redbook weekly retailer sales, previous +1.9% month-to-date m/m and +0.7% month-to-date y/y. |
| 0915 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economic outlook at the Urban Land of Atlanta's conference on emerging trends in real estate. |
| 1000 ET | Nov IBD/TIPP economic optimism expected +0.8 to 49.5, Oct -3.8 to 48.7. |
| 1005 ET | San Francisco Fed President Janet Yellen speaks on the U.S. economic outlook at a conference in Phoenix, AZ. |
| 1115 ET | Boston Fed President Eric Rosengren speaks to the European Economics and Financial Centre in London. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1300 ET | Treasury auctions $25 billion 10-year T-notes. |
| 1530 ET | Fed Governor Daniel Tarullo speaks on resolution authority at the Institute of International Bankers conference. |
| 1700 ET | ABC U.S. weekly consumer confidence, previous +2 to -49. |
| 1930 ET | Dallas Fed President Richard Fisher speaks on the U.S. economic outlook at a dinner hosted by the Austin Headliners Club. |
| Japan |
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| 0000 ET | Oct Japan eco watchers survey current, Sep 43.1. Oct eco watchers survey outlook, Sep 44.5. |
| 0100 ET | Oct Japan machine tool orders, Sep -62.1% y/y. |
| 1850 ET | Sep Japan machine orders expected +4.1% m/m and -26.3% y/y, Aug +0.5% m/m and -26.5% y/y. |
| Germany |
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| 0200 ET | Revised Oct German CPI (EU harmonized) expected unrevised at +0.2% m/m and unchanged y/y. |
| 0500 ET | Nov German ZEW economic sentiment survey expected -1.0 to 55.0, Oct -1.7 to 56.0. Nov ZEW current situation survey expected +2.2 to -70.0, Oct +1.8 to -72.2. |
| France |
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| 0245 ET | Sep French industrial production expected +0.5% m/m and -9.2% y/y, Aug +1.8% m/m and -10.8% y/y. |
| 0245 ET | Sep French manufacturing production expected +1.2% m/m and -10.5% y/y, Aug +1.9% m/m and -11.5% y/y. |
| Euro-Zone |
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| 0330 ET | EU finance ministers hold meeting in Brussels. |
| 0500 ET | Nov Euro-Zone ZEW economic sentiment survey expected +1.1 to 58.0, Oct -2.7 to 56.9. |
| United Kingdom |
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| 0430 ET | Sep UK DCLG house prices expected -4.9% y/y, Aug -5.6% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1088.80 | -2.90 | -0.27% | 07:15:08 |
| DJIA (CBOT) (Z9) | 10172 | -20 | -0.20% | 06:58:59 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2488.54 | -0.09 | 0.00% | 07:10:00 |
| London UK FTSE Index | 5246.02 | 10.84 | 0.21% | 06:57:45 |
| German Dax Index | 5629.52 | 9.80 | 0.17% | 07:10:14 |
| French CAC 40 Index | 3784.44 | -1.05 | -0.03% | 07:10:00 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9871 | 62 | 0.63% | 02:00:13 |
| Hong Kong Hang Seng | 22268 | 61 | 0.27% | 03:01:30 |
| China CSI 300 Index | 3504 | 8 | 0.23% | 02:01:03 |
| Taiwan TAIEX Index | 7593 | 57 | 0.75% | 00:46:01 |
| Australian S&P 200 | 4733.6 | 58.7 | 1.26% | 00:47:03 |
| Singapore Str. Times | 2707.6 | 14.22 | 0.53% | 04:10:01 |
| South Korea KOSPI 200 | 208.23 | 0.94 | 0.45% | 04:03:24 |
| Bombay Sensex 30 | 16441 | -58.16 | -0.35% | 05:30:01 |
| Karachi KSE-100 | 8762 | -174 | -1.95% | 05:50:24 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.245 | 0.075 | 0.20% | 07:14:54 |
| Cash 10yr T-note Price | 101.125 | 0.080 | 0.25% | 07:25:01 |
| Cash 10yr T-note Yield | 3.455 | -0.030 | -0.87% | 07:24 |
| 5yr T-note (CBT)(Z9) | 116.275 | 0.045 | 0.12% | 07:14:09 |
| Cash 5yr T-note Price | 100.165 | 0.045 | 0.14% | 07:23:01 |
| Cash 5yr T-note Yield | 2.265 | -0.030 | -1.31% | 07:22 |
| 30-yr T-bond (CBT)(Z9) | 118.25 | 0.09 | 0.24% | 07:14:55 |
| Cash 30yr T-bond Price | 102.030 | 0.140 | 0.43% | 07:24:00 |
| Cash 30yr T-bond Yield | 4.373 | -0.026 | -0.59% | 07:23 |
| Eurodollars (CME)(Z9) | 99.715 | 0.010 | 0.01% | 07:15:01 |
| Eurodollars (CME)(H0) | 99.585 | 0.010 | 0.01% | 07:13:40 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 137.55 | 0.17 | 0.12% | 01:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.500 | 0.000 | 0.00% | 11/10/2009 |
| Bunds (Eurex) (Z9) | 121.64 | 0.31 | 0.26% | 07:10:13 |
| Euribor (Eurex) (Z9) | 99.28 | 0.01 | 0.01% | 06:33:33 |
| UK Gilts (Liffe) (Z9) | 117.07 | 0.29 | 0.25% | 07:10:03 |
| Short Stlg (Liffe) (Z9) | 99.36 | 0.00 | 0.00% | 06:59:04 |
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| Forex |
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| U.S. Dollar Index | 75.11 | 0.07 | 0.09% | 07:15:10 |
| US Dollar-Japanese Yen | 90.12 | 0.19 | 0.21% | 07:25:14 |
| EuroFX-US Dollar | 1.4975 | -0.0025 | -0.25% | 07:25:14 |
| US Dollar-Swiss Franc | 1.0093 | 0.0016 | 0.16% | 07:25:14 |
| British Pound-US$ | 1.6666 | -0.0093 | -0.93% | 07:25:14 |
| US$-Canadian Dlr | 1.0586 | 0.0033 | 0.33% | 07:25:14 |
| Yen (Globex) (Z9) | 1.1106 | -0.0008 | -0.08% | 07:15:12 |
| Euro FX (Globex) (Z9) | 1.4994 | -0.0002 | -0.01% | 07:15:14 |
| SwissFranc (Globex)(Z9) | 0.9924 | 0.0003 | 0.03% | 07:15:13 |
| British Pound(Glbx)(Z9) | 1.6673 | -0.0076 | -0.45% | 07:15:13 |
| Canadian$ (Globex)(Z9) | 0.9462 | -0.0023 | -0.24% | 07:15:08 |
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| Commodities |
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| Gold (Comex) (Z9) | 1099.0 | -4.4 | -0.40% | 07:15:12 |
| Silver (Comex) (Z9) | 17.295 | -0.270 | -1.54% | 07:15:12 |
| Copper (Comex) (Z9) | 294.6 | -2.4 | -0.81% | 07:15:14 |
| Crude Oil (Nymex) (Z9) | 79.33 | 0.08 | 0.10% | 07:15:14 |
| Gasoline (Nymex) (Z9) | 197.41 | 0.01 | 0.01% | 07:13:02 |
| Heating Oil(Nymex) (Z9) | 205.9 | 0.33 | 0.16% | 07:15:09 |
| NaturalGas(Nymex)(Z9) | 4.588 | -0.038 | -0.82% | 07:14:24 |
| Corn (CBOT) (Z9) | 385.50 | -0.50 | -0.13% | 07:14:45 |
| Soybeans (CBOT) (F0) | 974.00 | 2.00 | 0.21% | 07:15:14 |
| Wheat (CBOT) (Z9) | 514.75 | -5.25 | -1.01% | 07:11:48 |
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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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