Barchart U.S. Morning Call
Thursday, November 12, 2009
by Barchart Research Team of Barchart.com
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Overnight Global News
The European DJ Stoxx 50 this morning is down -0.06% and Dec S&Ps are down -4.00 points. The dollar is stronger and Treasuries and most commodities are lower, although gold still managed to post another all-time high of $1,123.40 an ounce. Positive developments for European stocks are the +0.3% m/m increase in Sep Euro-Zone industrial production, its fifth consecutive monthly increase, along with the ECB's monthly bulletin for Nov that revised up their growth outlooks. ECB forecasters now expect economic growth in the Euro-Zone to expand 1.0% in 2010, up from 0.3% predicted three months ago, and now forecast the economy will contract 3.9% this year, less than the 4.5% contraction forecast in Aug. The ECB said price pressures will stay "subdued" as they forecast inflation to average +0.3% in 2009 and +1.2% in 2010, little changed from their Aug predictions, but their long-term inflation expectations eased to +1.92% from +1.98%. Undercutting stock prices is the 4.5% decline in Maersk after the owner of the world's largest container shipper reported a net 3.86 billion kroner ($778 million) loss in the first nine months of the year, wider than analysts' estimates of a 3.62 billion-krone loss as freight carrying prices and volumes fell.
The Asian markets today closed mostly lower with Japan down -0.68%, Hong Kong -1.01%, China +0.12%, Taiwan +0.04%, Australia -0.19%, Singapore -0.52%, South Korea -1.62%, India -0.91%. Speaking at a press briefing with counterparts from the Asia-Pacific Economic Cooperation (APEC) group, Treasury Secretary Geithner said there are "early signs" of a global economic rebalancing and that Asia is "leading the world" back to recovery. In a joint statement APEC finance ministers reiterated a pledge to maintain stimulus effects "until a durable recovery in private demand is secured." Also speaking at the APEC summit was Japanese Parliamentary Secretary of Finance Furumoto who said that Japan supports a strong dollar and doesn't intend to reduce its holdings of US Treasuries or buy more gold. In a speech in Beijing today, Chinese Premier Wen Jiabao said the world faces a gradual and uneven recovery and that "the worst is over." He added that China will "continue opening up, cooperating and shouldering its responsibilities" to help restore stable global growth.
Overnight U.S. Stock News
December S&Ps this morning are trading down -4.00 points. The US stock market yesterday had a see-saw day and closed moderately higher (Dow Jones +0.43%, S&P 500 +0.50%, Nasdaq Composite +0.74%). The Dow Jones Industrials and the S&P 500 Index rose to 13-month highs and the Nasdaq Composite climbed to a 14-month high. Bullish factors included (1) carry-over support from a rally in Asian and European equity markets after China's Oct industrial production expanded by the most in 1-1/2 years and Japan's Oct machinery orders gained more than twice the amount expected, which fueled global growth optimism, (2) a rally in homebuilders after Toll Brothers was upgraded by Wells Fargo to "outperform" from "market perform" when the largest luxury US homebuilder said orders surged 42% in fiscal Q4 and cancellations slowed, and (3) comments from Dallas Fed President Fisher who said that US economic growth and inflation may persist below ideal levels into 2011, which he said makes the Fed's current interest-rate stance "appropriate."
Bearish factors included (1) the prediction from Zisler Capital Partners that "a crisis of unprecedented proportions is approaching" in the US commercial real-estate market as building owners may default on $500 billion to $750 billion of mortgage debt, or 54% of the $1.4 trillion in loans that will come due in 4 years, which will cause many regional and community banks to end up insolvent as they reduce the value of their debt holdings, (2) weakness in commodity and energy producers after the dollar rebounded from a 15-month low and caused commodity prices to fall, and (3) comments from ECB Council member Wellink who said that the world economy is "fragile" and the financial and real economy have a long way to go before they fully recover.
Green Mountain Coffee Roasters (GMCR) fell nearly 9% in European trading after saying it probably will earn 15 cents a share at most in Q1, less than analysts' estimates of 23 cents.
Wal-Mart (WMT) fell 1% in pre-market trading despite reporting Q3 profit od 84 cents a share, better than analysts' estimates for 81 cents and raising its full-year profit forecast to $3.57 to $3.61 a share, up from a previous forecast of $3.50 to $3.60 a share. Wal-Mart however, did drop its Q4 profit estimate to $1.08 to $1.12 a share, lower than analysts' estimates for profit of $1.12.
Today's Market Focus
December 10-year T-notes this morning are trading down -4 ticks. Dec T-note prices yesterday rallied to a 1-month high and closed up +14.5 ticks at 119-010. Trading in cash Treasuries was closed yesterday for the Veterans Day Holiday. Bullish factors for T-note prices yesterday included (1) dovish comments from Dallas Fed President Fisher who said "looking into 2010 and perhaps to 2011, the most likely outcome is for growth to be suboptimal, unemployment to remain a vexing problem and inflation to be subdued," which indicates that Fisher, a notable Fed hawk, may support keeping Fed policy extremely accommodative for an extended period, and (2) comments from ECB Council member Wellink who said that the world economy is "fragile" and the financial and real economy have a long way to go before they full recover. Bearish factors yesterday included (1) the rally in the S&P 500 Index to a 13-month high which diminishes the safe-haven allure of Treasuries, and (2) supply concerns with Thursday's $16 billion 30-year T-bond auction, the final leg of the Treasury's record $81 billion Nov quarterly refunding operation.
The dollar index this morning is higher with the dollar/yen -0.06 yen and the euro/dollar -0.62 cents. The dollar yesterday rebounded from an early slump to a 15-month low and closed higher on the day. Bullish factors included (1) comments from Treasury Secretary Geithner who said that a strong dollar is "very important" to US economic health, (2) weakness in the British pound after BOE Governor King said a weaker pound should help the U.K. economy, and (3) a possible increase in the safe-haven demand for the dollar after comments from ECB Council member Wellink who said that the world economy is "fragile" and the financial and real economy have a long way to go before they fully recover. Bearish factors included (1) the prediction from BNP Paribas SA that the dollar may extend declines as recent Fed speak is "dovish" and shows that policy makers are concerned that unemployment will continue rising, and (2) comments from Dallas Fed President Fisher who said that US economic growth and inflation may persist below ideal levels into 2011, which makes the Fed's current interest-rate stance "appropriate."
December crude oil prices this morning are trading down -69 cents a barrel and Dec gasoline is trading -1.25 cents a gallon. Dec crude yesterday traded higher through mid-morning when it shed most of its gains as the dollar strengthened and finally closed up +$0.23 a barrel. Dec gasoline yesterday closed up +1.53 cents a gallon. Bullish factors yesterday included (1) OPEC's hike in its 2010 global oil demand forecast for a third month to 85.07 million bpd, +40,000 bpd more than its October estimate, (2) the +19% m/m increase in Oct China crude oil imports to 19.34 million tons, its second-highest total ever as Oct China industrial production soared +16.1% y/y, the largest increase in 1-1/2 years and an indication of strong energy demand, and (3) comments from Qatar's energy minister who said that that the crude oil market is "very comfortable" and OPEC is unlikely to increase production quotas when it meets next month. Bearish factors yesterday included (1) the rebound in the dollar index which closed higher after falling to a 15-month low, (2) the drop in OPEC's compliance with its output cuts to 60% in Oct, down 62% in Sep as crude prices near a 1-year high encouraged cartel members to cheat and increase production above their quotas, and (3) expectations that weekly crude supplies rose when the DOE releases its weekly inventory report Thursday. Expectations for Thursday's weekly DOE inventory report (released a day later due to Veterans Day) are for crude oil stockpiles to rise +1.0 million bbl, gasoline inventories to fall -400,000 bbl, distillate supplies to drop -800,000 bbl, and the refinery capacity rate to rise +0.1 to 80.7%.
Today's U.S. Earnings Reports:
Earnings reports (confirmed releases, sorted by mkt cap) WMT-Wal-Mart Stores (BEST earnings consensus $0.81), DIS-Walt Disney (0.41), KSS-Kohls (0.61), JWN-Nordstrom (0.38), URBN-Urban Outfitters (0.35), GES-Guess? (0.50), ACM-Aecom Technology (0.46), ATK-Alliant Techsystems (2.06), MPEL-Melco Crown Entertainment Limited (-0.09), CZZ-Cosan Limited (0.08), CPA-Copa Holdings (0.96), WGL-WGL Holdings (-0.33), SPH-Suburban Propane (-0.57), NJR-New Jersey Resources (-0.13), CRI-Carter's (0.67).
Global Financial Calendar
| Thursday 11/12/2009 |
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| United States |
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| 0330 ET | Treasury Secretary Timothy Geithner meets APEC Finance Ministers in Singapore. |
| 0700 ET | Weekly MBA mortgage applications (delayed one day due to Veterans Day) for the week ended Nov 6, previous +8.2% with purchase sub-index -1.8% and refinancing sub-index +14.5%. |
| 0830 ET | Weekly unemployment claims expected -2,000 to 510,000, previous -20,000 to 512,000. Weekly continuing claims expected -49,000 to 5.700 million, previous -68,000 to 5.749 million. |
| 1300 ET | Treasury auctions $16 billion in 30-year T-bonds. |
| 1400 ET | Oct monthly budget statement expected -$162.5 billion, Sep -$46.6 billion. |
| Euro-Zone |
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| 0400 ET | ECB releases its monthly report for Nov. |
| 0500 ET | Sep Euro-Zone industrial production expected +0.5% m/m and -14.1% y/y, Aug +0.9% m/m and -15.4% y/y. |
| 1400 ET | ECB President Jean-Claude Trichet delivers keynote speech at a conference titled "The Transatlantic Marketplace; Challenges and Opportunities, Beyond 2009." |
| Canada |
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| 0830 ET | Sep Canadian new housing price index expected +0.2% m/m, Aug +0.1% m/m. |
| Japan |
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| 2330 ET | Revised Sep Japan industrial production, previous +1.4% m/m and -18.9% y/y. Revised Sep capacity utilization, previous 2.3% m/m. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
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| S&P (Globex) (Z9) | 1092.30 | -4.00 | -0.36% | 07:11:45 |
| DJIA (CBOT) (Z9) | 10222 | -37 | -0.36% | 07:13:51 |
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| European Stocks |
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| Europe DJ Stoxx 50 | 2492.75 | -1.60 | -0.06% | 07:08:45 |
| London UK FTSE Index | 5265.42 | -1.33 | -0.03% | 07:08:45 |
| German Dax Index | 5667.16 | -1.19 | -0.02% | 07:08:59 |
| French CAC 40 Index | 3809.79 | -4.60 | -0.12% | 07:08:45 |
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| Asian-Pacific Stocks |
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| Japan Nikkei Index | 9804 | -67 | -0.68% | 02:00:13 |
| Hong Kong Hang Seng | 22398 | -230 | -1.01% | 03:01:30 |
| China CSI 300 Index | 3500 | 4 | 0.12% | 02:01:12 |
| Taiwan TAIEX Index | 7671 | 3 | 0.04% | 00:46:01 |
| Australian S&P 200 | 4747.9 | -9.1 | -0.19% | 00:47:03 |
| Singapore Str. Times | 2726.24 | -14.19 | -0.52% | 04:10:01 |
| South Korea KOSPI 200 | 206.67 | -3.41 | -1.62% | 04:03:29 |
| Bombay Sensex 30 | 16696 | -153.57 | -0.91% | 05:30:00 |
| Karachi KSE-100 | 8924 | 8 | 0.09% | 05:44:03 |
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| US Interest Rates |
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| 10yr T-notes (CBT)(Z9) | 118.290 | -0.040 | -0.11% | 07:13:58 |
| Cash 10yr T-note Price | 99.135 | 0.105 | 0.33% | 07:22:31 |
| Cash 10yr T-note Yield | 3.444 | -0.039 | -1.13% | 07:22 |
| 5yr T-note (CBT)(Z9) | 116.290 | -0.030 | -0.08% | 07:13:38 |
| Cash 5yr T-note Price | 100.170 | 0.040 | 0.12% | 07:19:30 |
| Cash 5yr T-note Yield | 2.261 | -0.027 | -1.17% | 07:19 |
| 30-yr T-bond (CBT)(Z9) | 119.01 | -0.11 | -0.29% | 07:13:36 |
| Cash 30yr T-bond Price | 101.310 | 0.170 | 0.52% | 07:23:30 |
| Cash 30yr T-bond Yield | 4.381 | -0.032 | -0.72% | 07:23 |
| Eurodollars (CME)(Z9) | 99.715 | -0.005 | -0.01% | 07:12:46 |
| Eurodollars (CME)(H0) | 99.620 | -0.005 | -0.01% | 07:11:34 |
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| Asian & European Rates |
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| 10-yr JGBs (TSE) (Z9) | 138.49 | 0.63 | 0.46% | 01:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.490 | 0.000 | 0.00% | 11/12/2009 |
| Bunds (Eurex) (Z9) | 121.69 | -0.02 | -0.02% | 07:08:39 |
| Euribor (Eurex) (Z9) | 99.27 | 0.00 | 0.00% | 11/11/2009 |
| UK Gilts (Liffe) (Z9) | 117.65 | 0.08 | 0.07% | 07:08:52 |
| Short Stlg (Liffe) (Z9) | 99.36 | 0.00 | 0.00% | 06:52:43 |
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| Forex |
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| U.S. Dollar Index | 75.24 | 0.18 | 0.23% | 07:13:56 |
| US Dollar-Japanese Yen | 89.81 | -0.06 | -0.07% | 07:24:00 |
| EuroFX-US Dollar | 1.4925 | -0.0062 | -0.62% | 07:24:00 |
| US Dollar-Swiss Franc | 1.0123 | 0.0044 | 0.44% | 07:24:00 |
| British Pound-US$ | 1.6553 | -0.0021 | -0.21% | 07:24:00 |
| US$-Canadian Dlr | 1.0528 | 0.0079 | 0.79% | 07:24:00 |
| Yen (Globex) (Z9) | 1.1139 | 0.0014 | 0.14% | 07:14:00 |
| Euro FX (Globex) (Z9) | 1.4941 | -0.0021 | -0.14% | 07:13:57 |
| SwissFranc (Globex)(Z9) | 0.989 | -0.0019 | -0.19% | 07:13:26 |
| British Pound(Glbx)(Z9) | 1.6574 | 0.0021 | 0.13% | 07:13:57 |
| Canadian$ (Globex)(Z9) | 0.9529 | -0.0028 | -0.29% | 07:13:56 |
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| Commodities |
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| Gold (Comex) (Z9) | 1116.0 | 1.4 | 0.13% | 07:13:56 |
| Silver (Comex) (Z9) | 17.495 | -0.042 | -0.24% | 07:13:49 |
| Copper (Comex) (Z9) | 295.2 | -1.4 | -0.47% | 07:13:55 |
| Crude Oil (Nymex) (Z9) | 78.59 | -0.69 | -0.87% | 07:13:49 |
| Gasoline (Nymex) (Z9) | 198.02 | -1.25 | -0.63% | 07:12:38 |
| Heating Oil(Nymex) (Z9) | 203.71 | -1.87 | -0.91% | 07:10:26 |
| NaturalGas(Nymex)(Z9) | 4.444 | -0.059 | -1.31% | 07:13:43 |
| Corn (CBOT) (Z9) | 388.25 | -5.75 | -1.46% | 07:14:00 |
| Soybeans (CBOT) (F0) | 967.50 | -4.50 | -0.46% | 07:13:34 |
| Wheat (CBOT) (Z9) | 527.00 | -4.75 | -0.89% | 07:10:25 |
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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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