Wednesday, April 11, 2012

Barchart Morning Call 4/11

Barchart Morning Call
Overnight Developments
  • European stock and commodity prices this morning are generally trading higher on a rebound after several days of sharp losses. June E-mini S&Ps are trading up 10.40 points and the Euro Stoxx 50 is up 0.62%. Bullish factors include Alcoa's surprise profit reported after yesterday's close, positive economic reports from China and Japan, and an ECB hint that it might start buying Spanish debt. Alcoa is up 6% in European trading on its report of a 9-cent profit versus the consensus for a 5-cent loss. On the negative side, Tsunami alerts were issued today after a large 8.6-magnitude earthquake hit 268 miles off the coast of Indonesia's Aceh province. Tremors were felt as far away as Singapore and India. Indonesia's Jakarta Composite index fell by about 0.5% on the close and Thailand's SET Index fell 1%. There were no initial reports of any major damage.
  • The euro rallied about one-quarter cent this morning when ECB Executive Board member Benoit Coeure said that the ECB has the capacity to start buying Spanish bonds through its bond purchase program. The ECB has not purchased any bonds through that program for the past month. The 10-year Spanish bond yield fell by 14 bp this morning to 5.84% and the Italian yield is down by 19 bp at 5.49%. Germany today received bids for 4.11 billion euros of 10-year bonds at the auction, which was less than its target of 5 billion euros. The bonds were sold at a record low yield of 1.77%. Italy was able to sell 8 billion euros of 1-year bills today, which was its target. The Italian bill auction produced an average yield of 2.84%, which was far higher than 1.405% at the previous 1-year bill auction that was held just a month ago.
  • Asian stocks today closed mostly lower on carry-over weakness from Tuesday's sharp sell-off in U.S. stocks: Japan -0.83%, Hong Kong -1.06%, China +0.01%, Taiwan +0.21%, Australia -1.07%, Singapore -1.21%, India -0.26%. China's March passenger-car sales rose +4.5%, which was stronger than the market consensus of +3.9%. The rebound was a positive sign after weak auto sales in January and February caused concern about weaker Chinese consumer spending. Japan's Feb machinery orders rose +4.8%, which was stronger than the market consensus of -0.8%.
Overnight U.S. Stock News
  • June S&Ps this morning are trading 10.40 points higher on Alcoa's profit, the decline in Spanish and Italian bond yields, and positive economic reports from China and Japan. The U.S. stock market on Tuesday sold-off sharply: Dow Jones -1.65%, S&P 500 -1.71%, Nasdaq Composite -1.83%. Bearish factors included (1) technical long liquidation pressure after this year's Q1 rally, (2) continued downward pressure from last Friday's weak U.S. March payroll report of +120,000, (3) Tuesday's continued climb in Spanish and Italian bond yields, and (4) reports that North Korea is near completion on getting its long-range rocket ready to launch as early as Thursday.
Today's Market Focus
  • June 10-year T-notes this morning are trading -8 ticks on reduced safe-haven demand with the upward rebound in S&Ps and this morning's decline in Spanish and Italian bond yields. T-note prices on Tuesday closed moderately higher: TYM2 +14, FVM2 +7.5, EDU2 +0.5. T-note prices extended the rally that began last Friday after the weaker-than-expected March payroll report of +120,000. T-note prices received a continued boost on Tuesday from safe-haven demand with the continued sell-off in stocks and with concern continuing to rise about Spain and the European debt crisis.
  • The dollar index this morning is trading -0.32 points, USD/JPY is +0.20 yen and EUR/USD is -0.0060. The dollar is seeing some reduced safe-haven demand with the upward rebound in stocks and lower Spanish/Italian bond yields. The dollar index on Tuesday closed slightly higher: Dollar Index +0.138, USD/JPY -0.754, EUR/USD -0.00293. The dollar index saw a little strength yesterday from safe-haven demand with the sharp sell-off in stocks. However, the dollar sold off sharply against the yen due to post a new 1-month low. Bearish factors for USD/JPY included techical selling and yen strength after the Bank of Japan at its policy meeting that ended on Tuesday left policy unchanged and did not boost its asset purchase program.
  • May crude oil prices this morning are trading +0.56 cents a barrel and May gasoline is -0.14 cents per gallon. Crude oil prices this morning are seeing some carry-over strength from higher U.S. and European stocks, but the market is cautious going into today's weekly DOE inventory report. Crude oil prices on TUesday sold-off fairly with May crude oil edging to a new 2-month low and May gasoline edging to a new 5-week low: CLK12 -$1.17, RBK2 -0.0469. Bearish factors for crude oil on Tuesday included (1) the downshift in the economic outlook after last Friday's weak U.S. payroll report, (2) weakness in stocks, which helped cause general weakness in commodity prices, (3) the slightly higher close in the dollar index, and (4) expectations for a bearish DOE report today with an expected 2 million barrel increase in crude oil inventories to a new 22-year high.
Today's U.S. Earnings Reports Earnings reports (sorted by mkt cap): ADTN-Adtran (consensus $0.27), Titan Machinery ($0.53).
Global Financial Calendar
Wednesday 4/11/12
United States
0700 ET Weekly MBA mortgage applications, previous +4.8% with purchase mortgage sub-index +7.2% and refinancing sub-index +4.0%.
0730 ET Atlanta Fed President Dennis Lockhart will discuss the economy with reporters attending the Atlanta Fed?s financial market conference in Stone Mountain, GA.
0830 ET Mar import price index expected +0.9% m/m and +3.5% y/y, Feb +0.4% m/m and +5.5% y/y.
0930 ET Kansas City Fed President Esther George speaks at the Minsky Conference entitled ?Debt, Deficits and Financial Instability.?
1030 ET Boston Fed President Eric Rosengren speaks on a panel at the Atlanta Fed conference on ?Money Market Funds: Past Devils? Reformed into Future Angels??
1030 ET DOE Weekly Petroleum Status Report
1300 ET Treasury auctions $21 billion 10-year T-notes.
1400 ET Fed?s Beige Book.
1400 ET Mar monthly budget statement expected -$203.0 billion, Feb -$231.683 billion.
1700 ET St. Louis Fed President James Bullard delivers opening remarks at the Homer Jones Memorial Lecture at the St. Louis Fed.
1730 ET Fed Vice Chairman Janet Yellen speaks to the Money Marketeers of NYU on ?The Economic Outlook and Monetary Policy.?
0815 ET Mar Canada housing starts expected +202,000, Feb +201,100.
1950 ET Mar Japan domestic CGPI expected +0.4% m/m and +0.4% y/y, Feb +0.2% m/m and +0.6% y/y. provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

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