Overnight Developments
- Dec E-mini S&Ps this morning are down -0.27% as concerns about the U.S. fiscal cliff have caused a global sell-off in stocks. European stocks this morning are down -0.69% and Asian stocks closed lower across the board. Japanese stocks closed down -0.90%, Hong Kong closed down -0.85%, and China closed down -0.20%. Global stocks at least received a little support from slightly stronger-than-expected Chinese economic data. Commodity prices are down by -0.12% this morning with Dec crude oil down -0.45%, Dec gasoline +0.07%, Dec gold +0.26%, Dec copper -1.33% , and agriculture prices trading mostly lower. The USDA in today's WASDE report is expected to make relatively minor changes in its crop estimates. The dollar index is up +0.20% this morning on increased safe-haven demand, while EUR/USD is down -0.21%. Dec 10-year T-notes are up 8 ticks.
- President Obama today at 1:05 PM is due to make a statement at the White House about the economy and the fiscal outlook. The comments are not likely to be detailed, but the markets will be listening carefully to gauge the extent that President Obama may be willing to compromise on the fiscal cliff and possibly a grand bargain.
- China's economic data released last night was slightly stronger than expected. The Oct industrial production report of +9.6% y/y was stronger than market expectations of +9.4% and was up from +9.2% in Sep. The Oct retail sales report of +14.5% y/y was slightly stronger than market expectations of +14.4% and was up from +14.2% y/y in Sep. The Oct fixed asset investment (excluding rural) report of +20.7% y/y of +20.7% was stronger than market expectations of +20.6% and was up from +20.5% in Sep. Meanwhile, the Oct CPI rate of +1.7% y/y was weaker than market expectations of +1.9% y/y and Sep's report of +1.9% y/y, which gives the Chinese central bank a little more flexibility on monetary policy to either cut the reserve ratio or interest rates.
- China's Oct passenger-vehicle wholesale deliveries rose +6.4% to 1.3 million units, which was slightly stronger than market expectations of +1.28 million units and suggested that consumer demand for vehicles is holding up.
- Japan's Oct consumer confidence report of 39.7 was slightly stronger than market expectations of 39.5, although it was down from Sep's 40.1.
- The UK Sep visible trade deficit of -8.368 billion pounds was narrower than market expectations of -8.9 bln pounds, which was supportive for the British pound. The Sep non-EU trade deficit of -3.972 billion pounds was narrower than market expectations of -4.6 billion pounds.
- The Greek parliament on Sunday is expected to approve the 2013, which should satisfy most of the requirements necessary for Greece to receive its 31 billion euro bailout payment. However, Eurozone officials said yesterday that Eurozone approval is not likely to come until later in November when the final troika report is available.
- French Sep industrial production
fell -2.7% m/m, which was a much larger drop than market expectations of -1.0%.
Meanwhile, the French central bank said that France may be slipping into a
recession.
Market Comments- Dec E-mini S&Ps this morning are down -3.75 points (-0.27%) on continued fiscal cliff concerns and on overhang from the sell-off in European and Asian stocks overnight. U.S. stocks on Thursday closed sharply lower again on bearish factors including (1) concern about the fiscal cliff as the CBO released a report providing even more detail about the highly negative effects if the U.S. goes over the fiscal cliff, (2) concern about the apparent delay in a Greek deal until late November, (3) technical weakness with the new 3-month low in the S&P 500 index, and (4) a sharp 3.6% sell-off in Apple on Thursday. Closes: S&P 500 -1.22%, Dow Jones -0.94%, Nasdaq -1.545%. Weekly initial unemployment claims fell by -8,000 to 355,000 and continuing claims plunged by -136,000 to 3.127 mln on Hurricane Sandy distortions.
- Dec 10-year T-notes this morning are up 8 ticks on safe-haven demand and worries about the economy. Dec 10-year T-note prices on Thursday continued to rally and posted a new 3-month high on (1) safe-haven demand with the sell-off in stocks, and (2) expectations for weaker economic growth in coming months if the fiscal cliff is not resolved: TYZ2 +9, FVZ2 +2.75. In addition, demand was strong for Thursday's 30-year bond auction with a bid cover ratio of 2.77 that was higher than the 12-auction average of 2.65. In addition, foreign buying was strong with indirect bidders buying 45.4% of the auction, well above the 12-auction average of 33.6%.
- The dollar index this morning is up +0.17 points (+0.20%) on increased safe-haven demand with the sell-off in global stocks on fiscal cliff concerns. EUR/USD is down -0.0027 (-0.21%) and USD/JPY is down -0.24 (-0.30%). The dollar index closed little changed as safe-haven demand for the dollar was offset by worries about a possible U.S. recession from the fiscal cliff: Dollar index +0.03 (+0.04%), EUR/USD -0.0024 (-0.19%), USD/JPY -0.53 (-0.66%). The dollar index received a little support on the report that the Sep U.S. trade deficit narrowed to -$41.5 bln from a revised -$43.8 bln in August. The ECB at its policy meeting on Thursday left its refinancing rate unchanged at 0.75%, which was fully in line with market expectations. The Bank of England at its policy meeting left the base rate unchanged at 0.50%. The BOE also left its asset purchase plan at 375 billion pounds, which was disappointing to some stock market participants who had been hoping for an extension of the BOE's quantitative easing program, although it was bullish for GBP/USD.
- Dec WTI crude oil prices this morning are down -0.38 (-0.45%) on the higher dollar and worries about the economy. Dec gasoline is up +0.0017 (+0.07%). Dec crude oil and gasoline prices on Thursday closed moderately higher on some short-covering after Wednesday's extraordinary plunges of more than 4%. However, sentiment remains bearish for crude oil on worries about fuel demand if the economy goes off the fiscal cliff and on talk that the Obama administration may launch an aggressive last-ditch negotiating effort with Iran: CLZ2 +0.65 (+0.77%), RBZ2 +0.0184 (+0.71%).
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Today's U.S. Earnings Reports Earnings reports (ranked by market cap): COV-Covidien (Consensus:$1.00), AEE-Ameren (1.41), APO-Apollo Global (0.75), JCP-JC Penney (-0.07), LNT-Alliant Energy (1.30), MDVN-Medivation (-0.10), WCRX-Warner Chilcot (0.78), HHC-Howard Hughe (0.19), LPI-Laredo Petroleum (0.13), FWLT-Foster Wheeler (0.45), LORL-Loral Space (na), SPH-Suburban Propane (-0.79), MMS-Maximus (0.69), GEN-Genon Energy (0.03), BPT-PB Prud Bay (na), OPK-Opko Health (-0.03).
Global Financial Calendar
Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.Friday 11/9/12 United States 0830 ET Oct import price index expected unch m/m and -0.5% y/y, Sep +1.1% m/m and -0.6% y/y. 0830 ET USDA WASDE report. 0955 ET Preliminary Nov U.S. University of Michigan consumer confidence expected +0.3 to 82.9, Oct +4.3 to 82.6. 1000 ET Sep wholesale inventories expected +0.4%, Aug +0.5%. Japan 0000 ET Japan Oct consumer confidence expected 39.5, Sep 40.1. CHI 0030 ET China Oct industrial production, Sep +9.2% y/y. Oct retail sales expected +14.3% y/y, Sep +14.2% y/y. Oct fixed asset investment ex-rural, +20.5% year-to-date y/y. United Kingdom 0430 ET UK Sep visible trade balance expected -8.9 bln pounds, Aug -9.844 bln pounds. Sep non-EU trade balance expected -4.60 bln pounds, Aug -4.972 bln pounds. Sep total trade balance expected -3.2 bln pounds, Aug -4.169 bln pounds. Germany 0200 ET German final-Oct CPI expected unch from prelim of unch m/m and +2.0% y/y. Final-Oct CPI EU-harmonized expected unch from prelim of unch m/m and +2.1% y/y.
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