Tuesday, January 15, 2013

Barchart Morning Call 1/15

Overnight Developments
  • March E-mini S&Ps this morning are trading mildly lower on debt ceiling concerns and a -0.48% sell-off in European stocks on a weak German GDP report. Asian stocks today closed mixed. Japan closed +0.72%, Hong Kong closed -0.14%, and China closed +0.70%. Commodity prices are mildly higher by +0.13%. Feb crude oil is down -0.10%, Feb gasoline is down -0.29%, Feb gold is up +0.55%, March copper is down -0.39%, grain prices are up about +0.6% on average, and livestock and softs are mostly lower. The dollar index is up +0.15%, EUR/USD is down -0.43%, and USD/JPY is sharply lower by -1.15%. March 10-year T-note prices are up 8.5 ticks.
  • Japanese preliminary Dec machine tool orders weakened to -27.5% y/y from -21.3% in Nov.
  • German Q4 GDP fell -0.5% q/q (-2.0% q/q annualized), according to a preliminary estimate from the German Federal Statistics Office. Overall German GDP growth in 2012 slid to +0.7% from +3.0% in 2011. Notably, German produced a budget surplus of 0.1% of GDP in 2012, an improvement from a 0.8% deficit in 2011.
  • The UK Dec CPI rose +0.5% m/m and +2.7% y/y, which was in line with market expectations. The Dec core CPI eased to +2.4% y/y from +2.6% in Nov and was weaker than market expectations of +2.6%. UK inflation remains above the BOE's limit of 2% and continues to discourage the BOE from further easing at this point.
  • The Eurozone Nov adjusted trade balance rose to 11.0 bln euros from a revised 7.4 bln euros in Oct and was larger than market expectations of 8.0 bln euros. The report was supportive for EUR/USD.
  • USD/JPY fell after Japan's economy minister Akira Amari said that Japan faces risks from an excessive decline in the yen. The yen has plunged by 13% in the past four months against a trade-weighted basket of currencies.
  • Spain today successfully sold 5.75 billion euros of bills, more than the target of 5.5 billion euros.
    Market Comments
    • March E-mini S&Ps this morning are down -4.25 points on the -0.48% sell-off in European stocks and on increased worries about the debt ceiling battle. The S&P 500 index on Monday closed mildly lower as concern rose about the debt ceiling battle after President Obama at a surprise press conference continued to indicate that he does not plan to negotiate with House Republicans over a debt ceiling hike, highlighting the impending battle that could easily result in at least a government shut-down. The Nasdaq index fell -0.46% on a sharp 3.6% sell-off in Apple on a report that Apple is curbing iPhone production due to weak demand. Closes: S&P 500 -0.09%, Dow Jones +0.14%, Nasdaq -0.46%.
    • March 10-year T-notes this morning are up 8.5 ticks on the lower trade in stocks and debt ceiling worries. March 10-year T-note prices on Monday closed mildly higher on some increased safe-haven demand with the impending debt ceiling battle.
    • The dollar index this morning is up +0.12 points (+0.15%) on increased safe-haven demand. EUR/USD is down -0.0057 (-0.43%). USD/JPY is sharply lower by -1.03 (-1.15%) as the Japanese government seems to be getting nervous about the extent of the yen's plunge in recent weeks. The dollar index on Monday closed slightly lower on continued technical weakness with the new 2-week low. EUR/USD closed higher despite a weaker-than-expected Eurozone industrial production report. Closes: Dollar index -0.08 (-0.09%), EUR/USD +0.0039 (+0.29%),USD/JPY +0.30 (+0.34%).
    • Feb WTI crude oil prices this morning are down -0.09 (-0.10%) and Feb gasoline is down -0.0079 (-0.29%). Feb crude oil and gasoline prices on Monday closed higher on the slightly lower close in the dollar index and on carry-over support from the reopening of the Seaway pipeline last Friday with an expanded capacity of 400,000 bpd (vs 150,000 bpd), which will help dampen inventories at the Cushing hub where WTI crude oil futures are priced. Crude oil and gasoline prices were able to rally even though increases are expected for tomorrow's DOE inventory report for crude oil, gasoline and distillates. Closes: CLG3 +0.58 (+0.62%), RBG3 +0.0146 (+0.53%).
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      Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): FRX-Forest Labs (consensus -$0.08), LLTC-Linear Tech (0.44), LEN-Lennar (0.44), CBSH-Commerce Bankshares (0.72), FULT-Fulton Financial (0.20), IRWD-Ironwood Pharmaceuticals (-0.48), PNFP-Pinnacle Financial (0.33), IBKR-Interactive Broker (0.21).
      Global Financial Calendar
      Tuesday 1/15/13
      United States
      0800 ETBoston Fed President Eric Rosengren speaks on the economic outlook at the Greater Providence Chamber.
      0830 ETJan Empire manufacturing index expected +8.1 to 0.0, Dec -2.9 to -8.1.
      0830 ETDec retail sales expected +0.2% m/m, Nov +0.3% m/m. Dec retail sales ex-autos expected +0.2% m/m, Nov unch m/m. Dec retail sales ex-auto and gas, Nov +0.7% m/m.
      0830 ETDec PPI expected -0.1% m/m and +1.4% y/y, Nov -0.8% m/m and +1.5% y/y. Dec core PPI expected +0.2% m/m and +2.1% y/y, Nov +0.1% m/m and +2.2% y/y.
      1000 ETNov business inventories expected +0.3% m/m, Oct +0.4% m/m.
      1230 ETPhiladelphia Fed President Charles Plosser speaks on the U.S. economic outlook at Simon School of Business in Rochester, NY.
      n/aWorld Bank released Global Economic Prospects report.
      1630 ETAPI weekly U.S. oil statistics.
      0200 ETGerman final-Dec CPI expected unrevised at +0.9% m/m and +2.1% y/y. Final-Dec EU-harmonized, Nov +1.0% m/m and +2.1% y/y.
      United Kingdom
      0430 ETUK Dec PPI input nsa expected unchanged m/m and +0.4% y/y, Nov +0.1% m/m and -0.3% y/y. Dec PPI output nsa expected unchanged m/m and +2.4% y/y, Nov -0.2% m/m and +2.2% y/y. Dec PPI output core nsa expected unchanged m/m and +1.5% y/y, Nov unch m/m and +1.4% y/y.
      0430 ETUK Dec CPI expected +0.5% m/m and +2.7% y/y, Nov +0.2% m/m and +2.7% y/y. Dec core CPI expected +2.6% y/y, Nov +2.6% y/y.
      0430 ETUK Dec RPI expected +0.4% m/m and +3.0% y/y, Nov unch m/m and +3.0% y/y. Dec RPI ex-mortgage interest payments expected +3.0% y/y, Nov +2.9% y/y.
      0500 ETEurozone Nov trade balance sa expected 8.0 bln euros, Oct 7.9 bln euros. Nov trade balance expected 10 bln euros, Oct 10.2 bln euros.
      1850 ETJapan Dec domestic CGPI expected +0.2% m/m and -0.7% y/y, Nov unch m/m and -0.9% y/y.
      1850 ETJapan Nov machine orders expected +0.3% m/m and -7.3% y/y, Oct +2.6% m/m and +1.2% y/y.

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