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Barchart U.S. Morning Call

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Overnight Developments
  • Global stocks are mixed with the European Euro Stoxx 50 Index up +0.45% and Sep S&Ps up +5.70 points. The euro and Treasuries are little changed despite the action by Moody's Investors Service to downgrade Ireland's credit rating one notch to Aa2 from Aa1, citing the government's "gradual but significant loss of financial strength." European stocks and the euro also saw little reaction after the cost to insure debt payments from Hungary surged and the forint tumbled 2.6% against the euro when deficit-reduction talks with the IMF broke down. Credit-default swaps on Hungarian government debt jumped 45.5 bp to a 5-week high of 362 bp after the IMF and European Union declined to endorse Prime Minister Orban's plans to control the budget deficit as part of a 20 billion-euro ($25.8 billion) emergency bailout because "a range of issues remain open." The EU said that Hungary's government must make "tough decisions, notably on spending," to comply with deficit requirements. M&A activity boosted European stock prices after International power and GDF Suez climbed after GDF Suez, operator of Europe's largest natural-gas network, said it's in preliminary talks to combine some of its assets with International Power, creating an enlarged company majority-owned by GDF. Tomkins rallied 34% after Onex Corp., Canada's biggest publicly traded buyout firm, and the Canada Pension Plan Investment Board signaled they might bid 2.9 billion pounds ($4.4 billion) for Tomkins.

  • The Asian markets today closed mostly lower with Japan closed for holiday, Hong Kong down -0.79%, China +2.54%, Taiwan -0.19%, Australia -1.46%, Singapore -0.42%, South Korea -0.45%, India -0.15%. Asian stocks were undercut as concern deepened that the global economic recovery is faltering which may hurt exports and curb demand for Asian goods after US July University of Michigan consumer confidence tumbled to an 11-month low. The China Securities Journal said a report from the State Information Center said that China's export growth might slow over the rest of the year to less than half the pace of the first six months. The report states that China's exports between July-through-December may rise only +16.3% from a year earlier, slowing from the +35% y/y increase in the first half as the removal of tax rebates, weaker demand because of Europe's debt crisis, and comparisons with higher base levels leads to smaller increases. Still, the report predicts that China's exports for the full year of 2010 will climb 24.5% compared with a -16% decline in 2009.

Overnight U.S. Stock News
  • Sep S&Ps this morning are trading up +5.70 points. The US stock market last Friday moved sharply lower and settled at its lowest level in a week (Dow Jones -2.52%, S&P 500 -2.88%, Nasdaq Composite -3.11%). Bearish factors included (1) concerns that the economic rebound may slow after the Jul US University of Michigan consumer confidence fell more-than-expected and tumbled to an 11-month low (-9.5 to 66.5 versus expectations of -2.0 to 74.0), (2) weakness in banks and credit-card lenders on concern that new financial regulations about to be signed into law by President Obama will crimp earnings, and (3) weaker-than-expected earnings from Bank of America and Citigroup as revenue trailed analysts estimates and their loan books shrank, a sign that volatile markets and a slowdown in the economic rebound may be keeping borrowers away.

  • Bullish factors included (1) slack inflation pressures after the Jun CPI rose less-than-expected (-0.1% m/m and +1.1% y/y versus expectations of -0.1% m/m and +1.2% y/y), along with the Jun core CPI matching its smallest year-over-year increase since 1966 (+0.9% y/y), (2) continued strong Q2 corporate earnings as all but 3 of the 23 companies in the S&P 500 that have reported earnings since Jul 12 have topped forecasts for earnings-per-share, and (3) the decline in the 10-year T-note yield to a `-week low of 2.915%.

  • Google (GOOG) climbed 1.2% in European trading after a report in Barrons over the weekend said that shares of the company may rise as it expands its mobile-display advertising, broadens its reach with mobile phones and offers other services after acquiring companies.

  • Boeing (BA) rallied 1.4% in European trading after the United Arab Emirates ordered 30 of the company's 777-300ER aircraft in a deal worth $9.1 billion.

Today's Market Focus
  • September 10-year T-notes this morning are trading down -4 ticks. T-note prices last Friday traded mixed early and then rallied sharply mid-morning up to a 14-3/4 month nearest-futures high and held the bulk of those gains into the close and settled up +13.5 ticks at 123-065. The 10-year T-note yield slipped to a 1-week low of 2.915%. Bullish factors included (1) slack inflation pressures after the Jun CPI came in weaker-than-expected (-0.1% m/m and +1.1% y/y versus expectations of -0.1% m/m and +1.2% y/y) along with the gain in the Jun core CPI matching its smallest year-over-year increase since 1966 (+0.9% y/y), (2) the larger-than-expected decline in the Jul US University of Michigan consumer confidence which tumbled to an 11-month low (-9.5 to 66.5 versus expectations of -2.0 to 74.0), and (3) an increase in the safe-haven demand for Treasuries after the stock market sank. Bearish factors included (1) the prediction from Faros Trading that China will moves its foreign-exchange holdings away from US Treasuries and toward the liquid bond markets of Europe and Japan as China is "overweight" the dollar and wants to diversify its foreign-exchange holdings, and (2) comments from Richmond Fed President Lacker who said that recent economic reports showing an uneven recovery are consistent with "moderate" growth that may cause inflation to "drift upward" in coming quarters.

  • The dollar index this morning is little changed with the dollar/yen +0.56 yen and the euro/dollar +0.28 cents. The dollar index last Friday slumped to a 2-1/4 month low but erased its losses and closed higher. Bullish factors included (1) increased safe-haven demand for the dollar after the equity market tumbled, and (2) the larger-than-expected increase in the May net long-term TIC flows which shows continued strong demand for the dollar and dollar assets. Bearish factors included (1) the surge in the yen to a 7-1/2 month high against the dollar after the US 2-year T-note yield fell to an all-time low of 0.5765% which narrowed the yield spread between Japan and US notes and improved the yen's interest rate differentials, (2) the prediction from Faros Trading that the euro will gain toward its 200-day moving average of $1.3684 within 2 months as China moves its foreign-exchange holdings away from US Treasuries and toward the liquid bond markets of Europe and Japan, and (3) the statement from Deutsche Bank AG that the recent strength in the euro indicates that investors are becoming more concerned about the US economy and corporate earnings than they are about European sovereign debt.

  • August crude oil prices this morning are up +46 cents and August gasoline is +0.49 of a cent. Aug crude oil prices last Friday moved lower for a third day and closed down -$0.61 per barrel. Aug gasoline closed lower by -1.21 cents per gallon. Bearish factors included (1) the rebound in the dollar index which fell to a 2-1/4 month low but erased its losses and closed higher, (2) the larger-than-expected decline in the Jul US University of Michigan consumer confidence which tumbled to an 11-month low and raises concern about the sustainability of the economic recovery and energy demand, and (3) the slide in the equity market on concerns that the economy is slowing which would reduce energy demand. A bullish factor was the early drop in the dollar index to a 2-1/4 month low, which increased the investment demand for commodities.

Today's U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) IBM-International Business Machines (BEST earnings consensus $2.57), TXN-Texas Instruments (0.62), HAL-Halliburton (0.37), DAL-Delta Air Lines (0.67), NE-Noble (1.05), HAS-Hasbro (0.25), CCK-Crown Holdings (0.67), ZION-Zions Bancorporation (-0.52), EDU-New Oriental Education & Technical (0.23), IDC-Interactive Data (0.32), STLD-Steel Dynamics (0.24), BRO-Brown & Brown (0.27), TUP-Tupperware Brands (0.97).

Global Financial Calendar

Monday, 7/19/10
United States
0900 ETFed Governor Elizabeth Duke delivers welcoming remarks at a hearing on the Community Reinvestment Act.
1130 ETWeekly 3-mo and 6-mo T-bill auctions.
1300 ETJul NAHB housing market index expected -1 to 16, Jun -5 to 17.
0500 ETMay Euro-Zone construction output, Apr -0.3% m/m and -6.1% y/y.
0600 ETBundesbank publishes its monthly report.
n/aJapanese markets closed for Marine Day.

Morning Quote Board

Morning Quotes (ET)LastChg%chgUpdated
US Stock Futures
S&P (Globex) (U0)1068.805.700.54%07:13:18
DJIA (CBOT) (U0)10108490.49%07:12:35
European Stocks
Europe DJ Stoxx 502415.7010.820.45%07:11:30
London UK FTSE Index5195.2336.380.71%07:11:40
German Dax Index6073.0932.820.54%07:11:40
French CAC 40 Index3524.4924.330.70%07:11:30
Asian-Pacific Stocks
Japan Nikkei Index940800.00%7/16/2010
Hong Kong Hang Seng20091-159-0.79%04:01:30
China CSI 300 Index2682662.54%03:01:17
Taiwan TAIEX Index7650-15-0.19%01:46:00
Australian S&P 2004358.3-64.4-1.46%02:36:43
Singapore Str. Times2945.42-12.3-0.42%05:10:01
South Korea KOSPI 200225.32-1.02-0.45%05:03:24
Bombay Sensex 3017928-27.4-0.15%06:29:59
Karachi KSE-100 10202480.47%06:41:50
US Interest Rates
10yr T-notes (CBT)(U0)123.025-0.040-0.10%07:16:40
Cash 10yr T-note Price104.190-0.100-0.30%07:23:00
Cash 10yr T-note Yield2.9570.0361.22%07:22
5yr T-note (CBT)(U0)118.315-0.035-0.09%07:16:39
Cash 5yr T-note Price100.245-0.070-0.22%07:22:30
Cash 5yr T-note Yield1.7130.0462.76%07:22
30-yr T-bond (CBT)(U0)127.29-0.06-0.15%07:16:41
Cash 30yr T-bond Price107.050-0.150-0.44%07:19:00
Cash 30yr T-bond Yield3.9640.0260.65%07:18
Eurodollars (CME)(U0)99.4800.0200.02%07:16:21
Eurodollars (CME)(Z0)99.4300.0100.01%07:16:21
Asian & European Rates
10-yr JGBs (TSE) (U0)141.660.000.00%7/16/2010
Bunds (Eurex) (U0)128.69-0.47-0.36%07:11:36
Euribor (Eurex) (U0)98.95-0.02-0.02%05:52:35
UK Gilts (Liffe) (U0)121.13-0.18-0.15%07:11:41
Short Stlg (Liffe) U0)
U.S. Dollar Index82.48-0.01-0.01%07:16:40
US Dollar-Japanese Yen87.130.560.64%07:26:42
EuroFX-US Dollar1.29580.00280.28%07:26:42
US Dollar-Swiss Franc1.05280.00190.19%07:26:42
British Pound-US$1.5287-0.0013-0.13%07:26:42
US$-Canadian Dlr1.0521-0.0061-0.61%07:26:42
Yen (Globex) (U0)1.1491-0.0051-0.51%07:16:39
Euro FX (Globex) (U0)1.29610.00180.14%07:16:37
SwissFranc (Globex)(U0)0.9505-0.0022-0.23%07:16:39
British Pound(Glbx)(U0)1.5286-0.0015-0.10%07:16:41
Canadian$ (Globex)(U0)0.95020.00210.22%07:16:37
Gold (Comex) (Q0)1189.91.70.14%07:16:34
Silver (Comex) (U0)17.8100.0220.12%07:15:52
Copper (Comex) (U0)
Crude Oil (Nymex) (Q0)76.260.460.61%07:16:38
Gasoline (Nymex) (Q0)205.350.490.24%07:15:07
Heating Oil(Nymex) (Q0)202.090.960.48%07:15:15
Corn (CBOT) (Z0)402.00-5.25-1.29%07:16:25
Soybeans (CBOT) (X0)981.25-3.75-0.38%07:14:11
Wheat (CBOT) (Z0)619.003.000.49%07:14:34

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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

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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