Thursday, December 13, 2012

Barchart Moring Call 12/13

Barchart Morning Call

Thu, 13 Dec 2012 07:00:00 -0600

Overnight Developments
  • Dec E-mini S&Ps and European stocks this morning are little changed. The U.S. stock market has taken in stride yesterday's FOMC outcome and is now focused on the fiscal cliff talks with only about two weeks left for an agreement. Asian stocks today closed mixed with Japan up +1.68%, Hong Kong down -0.26%, and China down -1.11%. Commodity prices are down -0.57% this morning with Jan crude oil down -0.47%, Jan gasoline down -0.36%, Feb gold down -1.26%, March copper down -1.31%, and agriculture prices mixed. The dollar index is up +0.13% and EUR/USD is down -0.08%. USD/JPY is up +0.29%. March 10-year T-note prices are unchanged.
  • Eurozone finance ministers today reached an agreement for the ECB to become the single bank supervisor for about 200 large Eurozone banks that have more than 30 billion euros of assets or that account for more than 20% of a nation's GDP. The key part of the agreement is that the European Stability Mechanism (ESM) will be able to provide direct aid to banks along with help from ECB bank supervisors. That will help to break the death spiral between large banks and sovereign governments. Eurozone officials anticipate that the legal framework will be in place by February and the new ECB supervision system will officially start in 2014. The UK will not be part of the ECB bank supervision system.
  • Eurozone finance officials today approved 49 billion euros of withheld bailout payments to Greece through Q1. Greece is expected to get the actual cash starting next week.
  • Tokyo Nov condo sales improved to -13.3% y/y from -14.4% in October.
  • The UK Dec CBI trends total orders manufacturing index improved to -12 from -21 in Nov and was a bit stronger than market expectations of -15. The report indicated less pessimism in the UK manufacturing sector.
  • Italy today successfully sold 4.224 billion euros of bonds, which was close to its intended target of 4.25 billion euros. A large piece of the package was the sale of 3.5 billion euros of 3-year bonds at a yield of 2.50%, down 14 bp from 2.64% yield on Italy's last 3-year bond sale in November. Italy's benchmark 10-year bond yield today fell by 2 bp to 4.63%.
    Market Comments
    • Dec E-mini S&Ps this morning are slightly lower by -0.50 points (-0.04%) as the focus has shifted to the slow progress on the fiscal cliff talks. On the positive side, Eurozone finance ministers today approved Greek bailout payments and EU finance ministers approved a European banking supervision plan. The S&P 500 index on Wednesday closed little changed on some buy-the-rumor sell-the-fact reaction to the Fed's new $45 billion per month Treasury purchase program. The markets also reacted a bit negatively to Mr. Bernanke's comment that the Fed cannot fully offset the damage if the U.S. economy goes over the fiscal cliff, even though Mr. Bernanke has made that comment before. Closes: S&P 500 +0.04%, Dow Jones -0.02%, Nasdaq -0.28%.
    • March 10-year T-notes this morning are unchanged. March 10-year T-note prices on Wednesday closed moderately lower on (1) a buy-the-rumor sell-the-fact reaction to the FOMC's announcement of its new Treasury security purchase program. In addition, the Fed's shift to threshold language on the unemployment rate and inflation increase the risks that the Fed might end up tightening sooner than its previous indication of later than mid-2015. Closes: TYH3 -11, FVH3 -1.75.
    • The dollar index this morning is slightly higher by +0.10 points (+0.13%). EUR/USD is slightly lower by -0.0010 (-0.08%). USD/JPY is up +0.24 (+0.29%). The dollar index on Wednesday closed mildly lower as the FOMC more than doubled its QE3 program to $85 billion from $40 billion per month. In addition, EUR/USD received support from the official announcement that the Greek bond buyback was successful and from expectations that Eurozone finance ministers today will approve the release of up to 44 billion euros of withheld Greek bailout aid. Closes: Dollar index -0.25 (-0.31%), EUR/USD +0.0069 (+0.53%), USD/JPY +0.74 (+0.90%).
    • Jan WTI crude oil prices this morning are down -0.41 (-0.47%) and Jan gasoline is down -0.0095 (-0.36%) on fiscal cliff concerns and the slightly higher dollar index. Jan crude oil and gasoline prices on Wednesday closed higher on the lower dollar and the Fed's hike in its QE3 program and was able to shake off a bearish DOE report. Crude oil inventories rose +843,000 bbl versus expectations for a 2-.5 mln bbl decline, gasoline inventories soared by +5 mln bbl versus expectations for a +2 mln bbl rise, and distillate inventories rose +2.986 mln bbl versus expectations for a rise of +1 mln bbl. The refinery rate fell 0.2 points but remained very strong at 90.4%. Closes: CLF3 +0.98 (+1.14%), RBF3 +0.0360 (+1.38%).
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      Today's U.S. Earnings Reports Earnings reports (ranked by market cap): ADBE-Adobe Systems (Consensus: $0.56), NDSN-Norson (1.03), PAY-Verifone Systems (0.76), PIR-Pier 1 Imports (0.25).
      Global Financial Calendar
      Thursday 12/13/12
      United States
      0830 ET Weekly initial unemployment claims expected unch at 370,000, previous was -25,000 to 370,000. Weekly continuing claims expected +5,000 to 3.210 mln, previous was -100,000 to 3.205 mln.
      0830 ET Nov PPI expected -0.5% m/m and +1.8% y/y, Oct -0.2% m/m and +2.3% y/y. Nov core PPI expected +0.2% m/m and +2.3% y/y, Oct -0.2% m/m and +2.1% y/y.
      0830 ET Nov retail sales expected +0.5% m/m, Oct -0.3% m/m. Nov retail sales ex-autos expected unch m/m, Oct unch m/m. Nov retail sales ex autos and gas expected +0.3% m/m, Oct -0.3% m/m.
      0830 ET USDA weekly Export Sales.
      1000 ET Oct business inventories expected +0.4% m/m, Sep +0.7% m/m.
      1100 ET Treasury announces 3, 5 and 7-year T-notes for Dec 17-19 and 5-year TIPS auction for Dec 20.
      1300 ET Treasury auction of $13 billion in 30-year T-bonds.
      0000 ET Tokyo Nov condo sales, Oct -14.4% y/y.
      1850 ET Japan Q4 Tankan large-manufacturers index, Q3 -3. Q4 large manufacturer outlook, Q3 -3. Q4 non-manufacturing, Q3 8. Q4 non-manufacturer outlook, Q4 5. Q4 large all-industry capex, Q4 +6.4% y/y.
      2330 ET Japan final-Oct industrial production, prelim +1.8% m/m and -4.3% y/y. Japan final-Oct capacity utilization, Sep -5.5% m/m.
      0400 ET ECB publishes Dec monthly report.
      0500 ET Eurozone Q3 labor costs, Q2 +1.6% y/y.
      United Kingdom
      0600 ET UK Dec CBI trends total orders expected -15, Nov -21. Dec CBI trends selling prices expected 8, Nov 8.
      2045 ET China Dec HSBC flash manufacturing PMI, Nov 50.5. provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

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