Thursday, April 12, 2012

Barchart Morning Call 4/12

Barchart Morning Call
Overnight Developments
  • Global stock and commodity prices are trading generally higher today. June E-mini S&Ps are up 6.00 points (+0.44%), although the Euro Stoxx 50 is mildly lower by -0.19%. Bullish factors include supportive comments by Fed and BOJ officials. Federal Reserve Vice Chairman Janet Yellen Wednesday evening said that the outlook warrants the current "highly accommodative policy." She said that housing and the European debt crisis are among the "significant headwinds" that are holding back the U.S. economy. Meanwhile, Bank of Japan Governor Shirakawa said that the BOJ will pursue "powerful easing" to overcome deflation and put the economy on a sustainable growth path. There was some positive news in Europe today. Eurozone Feb industrial production unexpectedly rose by +0.5% m/m, which was stronger than market expectations of -0.2%. European industrial production was down -1.8% y/y. Italy today sold 4.88 billion euros of bonds, which was close to its maximum target of 5 billion euros and was considered a success. Royal Dutch Shell is down 3.8% today after the company found a "light Sheen" of oil between its Mars and Ursa production areas in the Gulf of Mexico and deployed an oil spill vessel.
  • Asian stocks today closed higher almost across the board: Japan +0.70%, Hong Kong +0.93%, China +2.00%, Taiwan +0.08%, Australia +0.81%, Singapore +1.08%, and India +0.77%. The South Korean stock market today closed -0.54% lower as the market waits for North Korea to launch its long-range rocket and possibly conduct a nuclear test as well.
Overnight U.S. Stock News
  • June E-mini S&Ps this morning are trading +6.00 points on support from the Yellen comments and the positive Eurozone industrial production data. The U.S. stock market on Wednesday showed a moderate recovery rally: Dow Jones +0.70%, S&P 500 +0.74%, Nasdaq Composite +0.84%. Bullish factors included (1) some relief on the European debt crisis as ECB Executive Board member Benoit Coeure said the ECB could revive its bond purchase program, which caused the 10-year bond yield to drop by 11 bp to 5.85% for Spain and by 16 bp to 5.52% for Italy, (2) news late Tuesday that Alcoa produced a profit of 9 cents versus the consensus for a 5-cent loss, (3) some positive economic news out of Japan (Feb machinery orders +4.8% versus the consensus of -0.8%) and China (March passenger-car sales rose +4.5%, which was stronger than the market consensus of +3.9%.), and (4) the Fed's Beige Book report that said that the U.S. economy grew at a "modest to moderate" pace in March. Bearish factors include (1) continued worries about whether U.S. economic growth is slowing based on last Friday's March payroll report of +120,000, (2) nervousness about North Korea's launch of a long-range rocket which could occur as early as today, and (3) nervousness about China's Q1 GDP report (released Thursday evening at 10 PM ET), which is expected to ease to +8.4% from +8.9% in Q4.
Today's Market Focus
  • June 10-year T-notes this morning are trading -1.5 ticks due to the higher trade in E-mini S&Ps. T-note prices on Wednesday closed mildly lower: TYM2 -8.5, FVM2 -3.25. T-notes fell back on Wednesday on reduced safe-haven demand with the upward rebound in stocks and with the decline in Spanish and Italian bond yields due to the ECB's implicit threat to start buying Spanish bonds again.
  • The dollar index this morning is trading down -0.229 points. USD/JPY is up -0.10 yen and EUR/USD is up 0.0028. The dollar is trading lower this morning on the higher trade in E-mini S&Ps and the successful Italian bond auction. The dollar index on Wednesday closed slightly lower: Dollar Index -0.096, USD/JPY +0.186, EUR/USD -0.00227. The dollar fell back on reduced safe-haven demand with the rebound in stocks and the ability of the ECB to cap the recent surge in Spanish and Italian bond yields with the comments from ECB Executive Board member Benoit Coeure.
  • May crude oil prices this morning are trading +0.48 cents a barrel and May gasoline is +0.03 cents per gallon. Energy prices continue to rally on short-covering and the improvement in stock prices. OPEC in its monthly report said today that, "The oil market is well-supplied. High prices cannot be justified by the current market fundamentals. Instead it is more them impact of geopolitical factors and a perceived shortage of oil, rather than the evidence of any actual or impending shortfall, that is keeping prices high." OPEC forecasts increasing production from non-OPEC members such as Russia and Canada. Crude oil prices on Wednesday rebounded moderately higher after the recent losses: CLK12 +1.68, RBK2 +0.0459. Bullish factors on Wednesday included (1) the upward rebound in stocks, (2) the Fed's Beige Book report saying that U.S. economic growth in March was "modest to moderate," and (3) doubts whether any progress will be made in the talks with Iran on Saturday about its nuclear program. Yesterday's weekly DOE report was bearish for crude oil but bullish for products. Crude oil inventories rose by another 2.8 million bbls, bringing the combined 3-week surge to 19 million bbl or 7.4%. Crude oil inventories are now 5.6% above their 5-year seasonal average, the highest since last September. Meanwhile, gasoline inventories fell by 4.3 million bbl for the fifth consecutive weekly decline. Gasoline inventories are now only 1.8% above their 5-year seasonal average. Distillate inventories fell by 4.0 million bbl and are now 0.5% below their 5-year seasonal average.
Today's U.S. Earnings Reports Earnings reports (sorted by mkt cap): GOOG-Google (consensus $9.63), FAST-Fastenal (0.34), JBHT-JB Hunt (0.52), CBSH-Commerce Bankshares (0.67), RAD-Rite Aid (-0.14).
Global Financial Calendar
Thursday 4/12/12
United States
0715 ET New York Fed President William Dudley speaks on regional and national economic conditions before the Center for Economic Development in Syracuse, NY.
0830 ET Weekly initial unemployment claims expected -2,000 to 355,000, previous -6,000 to 357,000. Weekly continuing claims expected -3,000 to 3.335 million, previous -16,000 to 3.338 million.
0830 ET Feb trade balance expected -$51.8 billion, Jan -$52.6 billion.
0830 ET Mar PPI expected +0.3% m/m and +3.1% y/y, Feb +0.4% m/m and +3.3% y/y. Mar PPI ex food & energy expected +0.2% m/m and +2.8% y/y, Feb +0.2% m/m and +3.0% y/y.
0830 ET USDA weekly export sales.
1030 ET DOE natural gas storage
1100 ET Treasury announces amount of 5-year TIPS (previous $12 billion) to be auctioned on Apr 19.
1300 ET Treasury auctions $13 billion 30-year T-bonds.
1230 ET Philadelphia Fed President Charles Plosser speaks on the economic outlook to the National Economists Club.
1300 ET Minneapolis Fed President Narayana Kocherlakota speaks to the White Bear Lake Area Chamber of Commerce.
1530 ET Fed Governor Sarah Bloom Raskin speaks on ?The State of he Economy? at the San Francisco Fed business and community leaders luncheon in Los Angeles.
1630 ET Weekly money supply report and Fed balance sheet.
n/a S&P 500 earnings: GOOG-Google ($9.64), FAST-Fastenal ($0.34).
0130 ET Mar French CPI (EU harmonized) expected +0.7% m/m and +2.3% y/y, Feb +0.5% m/m and +2.5% y/y.
0400 ET ECB publishes its monthly report for April.
0500 ET Feb Euro-Zone industrial production expected -0.3% m/m and -1.8% y/y, Jan +0.2% m/m and -1.5% y/y.
0700 ET ECB Executive Board member Joerg Asmussen speaks in Dublin at the Institute of International and European Affairs.
0900 ET ECB Executive Board member Peter Praet speaks at the Minsky Conference in New York.
0830 ET Feb Canada new housing price index expected +0.2% m/m, Jan +0.1% m/m and +2.4% y/y.
2200 ET Mar China industrial production expected +11.5% y/y, Feb +21.3% y/y.
2200 ET Q1 China GDP expected +1.9% q/q and +8.4% y/y, Q4 +2.0% q/q and +8.9% y/y.
2200 ET Mar China retail sales expected +15.0% y/y, Feb +18.1% y/y. provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

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