Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are higher with the Euro Stoxx 50 up +0.40% and Dec S&Ps up +7.40 points at a 1-week high. The dollar and Treasuries weakened and commodities rose as global stock markets rallied for a second day. The main bullish factor was strong demand for an Italian government debt sale where Italy sold 7.5 billion euros of 3-year notes with a 1.5 bid-to-cover ratio, up from a 1.35 bid-to-cover at a previous sale. European finance ministers are meeting today in Brussels to discuss the debt crisis and how to boost the European Financial Stability Facility. The dollar and Treasuries were undercut after Fitch Ratings late yesterday affirmed its top AAA grade for the U.S. but lowered its outlook for the long-term rating of the U.S. to negative from stable due to "declining confidence that timely fiscal measures necessary to place U.S. public finances on a sustainable path will be forthcoming," making the probability of a downgrade greater than 50% over the next 2 years. Also limiting gains in European stocks was the -1.1 point decline in Nov Euro-Zone economic confidence to 93.7, greater than expectations of a -0.9 point decline to 93.9 and its lowest level in 2 years.
- Asian stocks today closed mostly higher with Japan up +2.30%, China +1.37%, Australia +1.08%, South Korea +2.50%, India -0.98%. Asian stocks rose for a second day, led by sharp gains in European and U.S. equity markets, as strong U.S. retail sales underpinned exporters, while optimism European leaders will stem the region's debt crisis lifted financial stocks. Strong Japanese retail sales also lifted Japanese stocks after Oct Japan retail trade increased +1.4% m/m and +1.9% y/y, stronger than expectations of +0.6% m/m and +0.7% y/y. Rising joblessness limited stock gains however, after unemployment in Japan rose more than expected when the Oct Japan jobless rate jumped +0.4 to 4.5%, higher than expectations of +0.1 to 4.2%, while the Oct job-to-applicant ratio remained unchanged at 0.67 and failed to increase for the first time in 5 months.
- December S&Ps this morning are trading up +7.40 points at a 1-week high. The US stock market yesterday finished sharply higher after U.S. Thanksgiving retail sales climbed to a record and optimism increased that European leaders were taking the necessary steps to alleviate the region's debt crisis: Dow Jones +2.59%, S&P 500 +2.92%, Nasdaq Composite +3.52%. The Nasdaq posted a 1-week high. Bullish factors included (1) a rally in retailer stocks after the National Retail Federation reported that U.S. retail sales during the Thanksgiving weekend rose +16% to a record $52.4 billion, (2) strength in bank stocks after the Welt am Sonntag reported that German Chancellor Merkel and French President Sarkozy are planning a stability pact, which may help stem the European debt crisis, and (3) strong gains in energy and metal producers as crude oil and metals prices rallied sharply.
- Bearish factors included (1) the warning from Moody's Investors Service that the "rapid escalation" of the European debt crisis threatens all of the region's sovereign ratings, (2) the action by the OECD to cut its 2011 GDP forecast for its 34-member countries to 1.9% from 2.3% predicted in May and the cut to its 2012 GDP forecast to 1.6% from 2.8%, saying "the euro-area crisis represents the key risk to the world economy, and (3) the weaker-than-expected Oct U.S. new home sales (+1.3% to 307,000, slightly weaker than expectations of a -1.0% decline to 310,000).
- American Airlines (AMR) plunged 38% in pre-market trading after the holding company for American Airlines filed for bankruptcy protection.
- Hewlett-Packard (HPQ) rose 1.5% in European trading after the company was raised to "outperform" from "sector perform" at RBC Capital.
- December 10-year T-notes this morning are down -6.5 ticks. T-note prices yesterday slumped to 2-week low early on reduced safe-haven demand after U.S. Thanksgiving retail sales climbed to a record, but prices erased their losses and settled higher on concerns European leaders may fail to stem the region's debt crisis: TYZ11 +2, FVZ11 +3.0, EDH12 +2.5. Bullish factors included (1) increased safe-haven demand for Treasuries after Moody's Investors Service warned that the "rapid escalation" of the European debt crisis threatens all of the region's sovereign ratings, (2) the action by the OECD to cut its 2011 GDP forecast for its 34-member countries to 1.9% from 2.3% predicted in May and the cut to its 2012 GDP forecast to 1.6% from 2.8%, saying "the euro-area crisis represents the key risk to the world economy, and (3) the Fed's action to buy $4.68 billion of Treasuries as part of its Operation Twist program to replace $400 billion in shorter maturities with longer-term securities in its attempt to keep long-term rates low. Bearish factors included (1) carry-over weakness from a plunge in German bunds after the German 10-year bund yield shot up to a 3-1/4 month high of 2.344%, (2) reduced safe-haven demand for Treasuries after stocks rallied sharply when the National Retail Federation reported that U.S. consumers spent a record $52.4 billion during the Thanksgiving holiday weekend, and (3) speculation that European leaders will resolve the region's debt crisis after the Welt am Sonntag reported that German Chancellor Merkel and French President Sarkozy are planning a stability pact.
- The dollar index this morning is lower with the dollar/yen -0.16 yen and the euro/dollar +0.30 cents. The dollar index yesterday settled sharply lower on reduced safe-haven demand when stocks rallied on strong Thanksgiving weekend retail sales along with euro strength on optimism European leaders are close to resolving the region's debt crisis: Dollar Index -0.423, USDJPY +0.278, EURUSD +0.00821. Bearish factors for the dollar included, (1) reduced safe-haven demand for the dollar when stocks rallied sharply after the National Retail Federation reported that U.S. consumers spent a record $52.4 billion during the Thanksgiving holiday weekend, (2) strength in the euro on optimism European leaders will resolve the region's debt crisis after the Welt am Sonntag reported that German Chancellor Merkel and French President Sarkozy are planning a stability pact and (3) the unexpected increase in Dec German GfK consumer confidence to a 6-month high, which is euro positive. Bullish factors included (1) increased safe-haven demand for the dollar after Moody's Investors Service warned that the "rapid escalation" of the crisis threatens all of the region's sovereign ratings and (2) increased safe-haven demand for the dollar after the OECD cut its 2011 GDP forecast for its 34-member countries to 1.9% from 2.3% predicted in May and cut its 2012 GDP forecast to 1.6% from 2.8%, saying "the euro-area crisis represents the key risk to the world economy.
- Jan crude oil prices this morning are down -10 cents a barrel and Jan gasoline is +1.57 cents per gallon. Crude oil and gasoline prices rallied sharply yesterday after U.S. Thanksgiving retail sales surged to a record, the dollar fell and France and Germany planned a stability pact to stem the European debt crisis: CLF12 +$1.44, RBF12 +6.92. Jan crude posted a 1-week high. Bullish factors included (1) the weaker dollar, which encourages investment demand in commodities, (2) data from the National Retail Federation that showed American consumer spent a record $52.4 billion during the Thanksgiving holiday weekend, which portends economic strength and is supportive for energy demand, and (3) a report from the German newspaper Welt am Sonntag that German Chancellor Merkel and French President Sarkozy are discussing a stability agreement among Euro-Zone members that may stem the region's debt crisis. Bearish factors included (1) the action by the OECD to cut its 2011 GDP forecast for its 34-members to 1.9% from a 2.3% forecast in May, which signals reduced fuel consumption and (2) the statement from Libya's National Oil Corp. that Libya's oil output now exceeds 750,000 barrels a day and its second-biggest refinery is operating at full capacity.
Global Financial Calendar
| Tuesday 11/29/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | Sep S&P/CaseShiller composite-20 home price index expected -0.1% m/m and -3.0% y/y, Aug -0.1% m/m and 3.8% y/y. Q3 S&P/CaseShiller composite-20 home price index expected -3.1% y/y, Q2 -5.9% y/y |
| 1000 ET | Nov consumer confidence expected +4.2 to 44.0, Oct -6.8 to 39.8. |
| 1000 ET | Sep FHFA house price purchase only index expected +0.1% m/m, Aug -0.1% m/m. Q3 FHFA house price purchase only index, Q2 0.6% q/q. |
| 1130 ET | Fed Vice Chairman Janet Yellen speaks on the global economic recovery at the San Francisco Fed?s annual Asia Economic Policy Conference. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1215 ET | Fed Governor Sarah Bloom Raskin moderates panel discussions at the San Francisco Fed?s annual Asia Economic Policy Conference. |
| 1230 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economy to the University of Georgia?s Terry College of Business Economic Conference. |
| 1630 ET | San Francisco Fed President John Williams speaks to reporters at the San Francisco Fed?s annual Asia Economic Policy Conference. |
| 1900 ET | Minneapolis Fed President Narayana Kocherlakota speaks to reporters before a speech titled ?Making Monetary Policy? at the Stanford Institute for Economic Policy Research. |
| 2000 ET | Minneapolis Fed President Narayana Kocherlakota speaks on ?Making Monetary Policy? at the Stanford Institute for Economic Policy Research. |
| United Kingdom | |
| 0200 ET | Nov U.K. nationwide house prices expected unchanged m/m and +1.3% y/y, Oct +0.4% m/m and +0.8% y/y. |
| 0430 ET | Oct U.K. net consumer credit expected +0.5 billion pounds, Sep +0.6 billion pounds. |
| 0430 ET | Oct U.K. mortgage approvals expected +51,800, Sep +51,000. |
| 0430 ET | Oct U.K. M4 money supply, Sep -0.4% m/m and -1.7% y/y. |
| 1901 ET | Nov U.K. GfK consumer confidence survey expected -1 to -33, Oct -2 to -32. |
| Euro-Zone | |
| 0500 ET | Nov Euro-Zone business climate indicator expected -0.30, Oct -0.18. |
| 0500 ET | Nov Euro-Zone economic confidence expected -0.9 to 93.9, Oct -0.2 to 94.8. |
| 1930 ET | ECB Executive Board member Juergen Stark delivers a speech on ?Globalization and Monetary Policy: From Virtue to Vice?? organized by the Globalization and Monetary Policy Institute of the Dallas Fed. |
| n/a | Eurozone finance ministers meet in Brussels. |
| Japan | |
| 1815 ET | Nov Japan Markitt/JMMA manufacturing PMI, Oct +1.3 to 50.6. |
| 1950 ET | Oct Japan industrial production expected +1.1% m/m and -1.0% y/y, Sep -3.3% m/m and -3.3% y/y. |
| 2030 ET | Oct Japan labor cash earnings expected -0.2% y/y, Sep -0.4% y/y. |
| 2300 ET | Oct Japan vehicle production, Sep -4.5% y/y. |
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