Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks are trading sharply lower with the European Euro Stoxx 50 index down -2.63% and June S&Ps down -28.80 points. The dollar rose and Treasuries surged to a 3-1/4 month high on increased safe-haven demand, while commodities tumbled, with crude oil cascading down to a 2-week low, on concern a nuclear disaster is unfolding in Japan. Japanese Prime Minister Kan said "there is still a very high risk of further radioactive material escaping" after a third blast at the Fukushima Dai-Ichi nuclear power plant today sent radiation levels soaring to 8 times permitted levels outside the facility. European utility stocks plummeted on concern government officials will close existing nuclear power plants in Europe, while the euro fell against the dollar after as an unexpected decline in German investor confidence pressured stock prices further. The March German ZEW investor confidence fell -1.6 to 14.1, weaker than expectations of +0.1 to 15.8 and its first decline since October.
- The Asian stock markets today closed lower as Japan sank -10.55%, Hong Kong -2.86%, China -1.81%, Taiwan -3.35%, Australia -2.11%,Singapore -2.80%, South Korea -2.46%, India -1.47%. Japan's Nikkei 225 Stock Index posted its biggest 2-day drop since 1987 as the stock index collapsed to a 1-3/4 year low. Tokyo Electric Power Co.'s stricken nuclear power plant was hit by 2 more explosions today as workers struggle to avert a meltdown that may lead to more radiation leaks in the wake of the Mar 11 earthquake. Credit-default swaps on Japan's government debt soared 25.8 bp to a record 122.3 as concerns rise about Japan's finances in regard to reconstruction from the earthquake. Tokyo Electric Power, Asia's biggest power generator, sank the daily 25% limit while Sony, Japan's biggest exporter of consumer electronics tumbled 13% after the company halted production at some factories. The BOJ injected an additional 8 trillion yen to the financial system today on top of the record 15 trillion yen the central bank pumped into money markets yesterday as it attempts to stabilize financial markets.
- June S&Ps this morning are trading sharply lower by -28.80 points as the risk of radiation leaks in Japan increases. The US stock market yesterday tumbled on uncertainty over how much damage Japan's worst earthquake on record will do to the global economy: Dow Jones -0.43%, S&P 500 -0.60%, Nasdaq Composite -0.54%. The Dow, S&P 500 and the Nasdaq all posted 1-1/2 month lows. Bearish factors for stocks included (1) concern that earthquake damage to Japan, the world's third-largest economy, will hurt global economic growth, (2) a slump on commodity and energy producers as commodity prices moved lower on demand concerns, (3) weakness in communications stocks after Oppenheimner & Co predicted that the communications-equipment industry may be hurt by the Japanese earthquake as supplies from Japanese component makers are cut and network spending drops in the near term, and (4) a decline in insurance stocks after AIR Worldwide said the insurance industry may face claims of as much as 2.8 trillion yen ($34 billion) from the Japanese earthquake, although estimates don't include damage caused by the tsunami that followed the quake, which could make claims costs much higher.
- Bullish factors included (1) the fall in crude oil prices to a 2-week low, which eases concern that rising energy prices will derail the economy, (2) reduced concerns over the European sovereign-debt crisis after credit default swaps on European sovereign debt declined when European leaders over the weekend agreed on a retooled bailout plan for Europe's most indebted nations, which prompted a rally in European bank stocks after JPMorgan Chase raised its recommendation for European banks to "overweight" from "neutral," and (3) strength in solar stocks on speculation that renewable energy plants will win favor from global governments after explosions at 2 Japanese nuclear plants undercut confidence in nuclear power.
- General Electric (GE), which is in talks to sell nuclear reactors to India, lost 7.9% in pre-market trading on top of the 2.2% the stock lost yesterday.
- Exelon (EXC), owner of the largest group of US nuclear power plants, tumbled 2.8% in pre-market trading as nuclear power stocks globally come under pressure due to nuclear concerns in Japan.
- June 10-year T-notes this morning are trading up +24.5 ticks a a 3-1/4 month high as investors flock to the safety of Treasuries as global stocks plunge. T-note prices yesterday rallied to a 3-1/4 month high and closed higher on increased safe-haven demand as global equity markets tumbled: TYM11 +16, FVM11 +12.2, EDU11 +1.5. The yield on the 10-year T-note slipped to a 1-1/2 month low of 3.327%. Bullish factors included (1) increased safe-haven demand for Treasuries after world equity markets sold-off on concern that earthquake damage to Japan, the world's third-largest economy, will limit global economic growth, and (2) the Fed's action to purchase $7.56 billion of Treasuries as part of its QE2 asset-purchase program. Bearish factors included (1) speculation that Japanese insurance companies will sell their holdings of long-term US Treasuries to pay claims for earthquake damage, and (2) reduced safe-haven demand for Treasuries after credit default swaps on European sovereign debt declined when European leaders over the weekend agreed on a retooled bailout plan for Europe's most indebted nations, which eased concern the countries will be default on their debts.
- The dollar index this morning is stronger with the dollar/yen -0.26 yen and the euro/dollar -1.10 cents. The dollar index yesterday weakened for a second day after European Union leaders agreed over the weekend to expand the scope of their rescue fund in an attempt to quell the European debt crisis: Dollar Index -0.427, USDJPY -0.259, EURUSD +0.00894. Bearish factors included (1) strength in the euro after EU leaders over the weekend agreed to expand the scope of their rescue fund and allow officials to buy debt in primary markets, while also cutting the cost of bailout loans to Greece by extending the repayment period of Greek loans to 7-1/2 years from 3 years, and (2) early strength in the yen which rallied to a 4-monh high against the dollar on speculation Japanese domestic investors will repatriate yen back to Japan to pay for earthquake and tsunami damages. Bullish factors included (1) weakness in the yen which retreated from a 4-month high after the BOJ pumped a record 15 trillion yen ($183 billion) into money markets and doubled the size of its asset-purchase program in an attempt to stabilize financial markets which were hammered following the Japanese earthquake, and (2) increased safe-haven demand for the dollar after global equity markets tumbled.
- April crude oil prices this morning are trading down -$2.84 a barrel and April gasoline is -10.51 cents per gallon, both at fresh 2-week lows. Crude oil and gasoline prices yesterday fell to 2-week lows on speculation energy demand from Japan, the world's third-biggest economy, may decline after the strongest earthquake on record devastated its economy, but crude prices recovered their losses and finished mixed after Saudi Arabian troops entered Bahrain: CLJ11 +$0.03, RBJ11 -2.74. Bearish factors include (1) calculations from Japan's Petroleum Association that said last Friday's earthquake shut 29% of the country's domestic refining capacity, which signals reduced crude demand, (2) speculation that Japanese crude oil imports will drop as ports damaged by the quake and tsunami must be fixed before they can accept crude supplies, and (3) the tumble in global equity markets, which undercuts confidence in the global recovery and energy demand. Bullish factors included (1) the weaker dollar, and (2) the action by the Gulf Cooperation Council to send troops to Bahrain to protect "vital" oil installations, which fuels concern those violent protests in North Africa and the Middle East may be spreading to other oil-producing countries in the region.
Global Financial Calendar
| Tuesday 3/15/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0830 ET | Mar Empire manufacturing index expected +1.0 to 16.4, Feb +3.5 to 15.4. |
| 0830 ET | Feb import price index expected +0.9% m/m and +6.3% y/y, Jan +1.5% m/m and +5.3% y/y. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | Jan net long-term TIC flows expected +$55.0 billion, Dec +$65.9 billion. |
| 0900 ET | FOMC begins 1-day monetary policy meeting. |
| 1000 ET | Mar NAHB housing market index expected +0.1 to 17, Feb unchanged at 16. |
| 1000 ET | Treasury Secretary Timothy Geithner testifies to Senate Banking Committee on housing finance. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1415 ET | FOMC announces interest rate decision (expected no change to the 0.00% to 0.25% fed funds rate). |
| Japan | |
| 0200 ET | Revised Feb Japan machine tool orders, previous +73.7% y/y. |
| 1950 ET | Q1 Japan BSI large all industry business condition, Q4 was ?5.0. |
| 1950 ET | Q1 Japan BSI large manufacturing business condition, Q4 was ?8.0. |
| France | |
| 0230 ET | Feb French CPI (EU harmonized) expected +0.6% m/m and +1.9% y/y, Jan ?0.3% m/m and +1.9% y/y. |
| United Kingdom | |
| 0530 ET | Jan UK DCLG house prices expected +2.3% y/y, Dec +3.8% y/y. |
| Euro-Zone | |
| 0400 ET | EU finance ministers meet in Brussels. |
| 0600 ET | Q4 Euro-Zone employment, Q3 unchanged q/q and ?0.2% y/y. |
| Germany | |
| 0600 ET | Mar German ZEW survey economic sentiment expected +0.1 to 15.8, Feb +0.3 to 15.7. |
| Canada | |
| 0830 ET | Q4 Canada labor productivity expected +0.2% q/q, Q3 +0.1% q/q. |
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