Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are trading higher with the Euro Stoxx 50 up +1.27% and Sep S&Ps up +16.00 points. Commodities are higher and Treasuries and the dollar are weaker as contraction in Chinese manufacturing eased and after European manufacturing held steady in Aug. The Aug Euro-Zone PMI composite was unchanged at 51.1, stronger than expectations of a -1.1 point decline to 50.0. Continued speculation that the Fed will announce further stimulus measures as soon as Friday to bolster the economy is lifting stock prices as well. Bank stocks rose led by a 2.7% gain in UBS AG after Switzerland's biggest bank said it will eliminate 3,500 jobs to trim costs. European stock prices pared their advance after German investor confidence fell more than expected this month. The Aug German ZEW economic sentiment slumped -22.5 to a 2-1/2 year low of -37.6, weaker than expectations of -10.9 to -26.0.
- Asian stocks today closed higher with Japan up +1.22%, China +1.56%, Australia +2.23%, South Korea +4.09%, India +0.96%. Asian stocks closed higher, led by a rally in exporters, on speculation Fed Chairman Bernanke this Friday will announce additional measures to shore up the U.S. economy. Asian stocks also received a boost as contraction in Chinese manufacturing eased when the Aug China HSBC flash PMI manufacturing index rose +0.5 to 49.8. Raw material and energy producers advanced after the PMI data was released on speculation of increased demand for commodities.
- September S&Ps this morning are trading up +16.00 points on better0than-expected manufacturing data in Europe and China. The US stock market yesterday moved higher as speculation Fed Chairman Bernanke will announce additional stimulus measures on Friday offset concern the European debt crisis will worsen after German Chancellor Merkel rejected the issuance of common Euro-Zone bonds: Dow Jones +0.34%, S&P 500 +0.03%, Nasdaq Composite +0.15%. Bullish factors included (1) speculation that Fed Chairman Bernanke may signal this Friday at the Fed's annual symposium in Jackson Hole, Wyoming of additional measures to stimulate the economy, (2) the unexpected improvement in the Jul Chicago National activity index which rose to its best level in 4 months (+0.32 to -0.06 versus expectations of -0.02 to -0.48), and (3) the statement from Germany's Bundesbank in its monthly report that it expects "robust" global economic growth next year even as Europe's sovereign debt crisis clouds the outlook.
- Bearish factors included (1) weakness in bank stocks on concern the European sovereign debt crisis will be prolonged and limit banks' earnings after German Chancellor Merkel rejected the issuance of Euro-Zone common bonds, (2) the action by Goldman Sachs to cut its 2011 U.S. GDP forecast to 1.5% from a previous estimate of 1.7% on signs the recovery has stalled, (3) the increase in the percentage of U.S. mortgages that are overdue by 1 month to its highest level in a year after Q2 mortgage delinquencies rose +0.11 q/q to 3.46% of all mortgages, and (4) a San Francisco Fed research paper that suggests aging baby boomers may hold down U.S. stock values for the next two decades as they sell their investments to finance retirement.
- Alcoa (AA) rose 2.2% and Freeport-McMoRan (FCX) gained 2.1% in European trading as metal prices climbed on stronger-than-expected manufacturing data in China and Europe.
- September 10-year T-notes this morning are down -14.5 ticks. T-note prices yesterday finished lower after the stock market rallied and on supply pressures ahead of $99 billion in Treasury T-note auctions this week: TYU11 -6.5, FVU11 -3.2, EDZ11 -3.5. Bearish factors included (1) the unexpected improvement in the Jul Chicago National activity index which rose to its best level in 4 months (+0.32 to -0.06 versus expectations of -0.02 to -0.48), (2) reduced safe-haven demand for Treasuries after stock prices rose, and (3) supply pressures ahead of the Treasury's $35 billion auction of 2-year T-notes on Tue. Bullish factors included (1) speculation that Fed Chairman Bernanke this Friday at the Fed's annual symposium in Jackson Hole, Wyoming will announce a QE3 program to help stimulate the economy and (2) increased safe-haven demand for Treasuries on concern the European sovereign debt crisis will linger as credit default swaps to insure Euro-Zone government debt rose after German Chancellor Merkel said issuance of euro-zone common bonds to help resolve the debt crisis are "the wrong answer."
- The dollar index this morning is lower with the dollar/yen -0.20 yen and the euro/dollar +1.27 cents. The dollar index yesterday shed early losses and moved higher when the euro weakened after German Chancellor Merkel rejected the idea of using Euro-bonds to solve the European debt crisis: Dollar Index +0.085, USDJPY +0.253, EURUSD -0.00375. Bullish factors for the dollar included (1) weakness in the euro after credit-default swaps to insure the government debts of Euro-Zone nations rose when German Chancellor Merkel said euro-zone common bonds are "the wrong answer," which fueled speculation that her resistance to the euro-bond plan for the European debt turmoil will prolong the debt crisis, and (2) weakness in the yen which fell to a 1-week low against the dollar after Japanese Finance Minister Noda said the government will take decisive action if needed in foreign-exchange markets as he has become "more concerned" about the yen's appreciation. Bearish factors included (1) the action by Goldman Sachs to cut its 2011 U.S. GDP forecast to 1.5% from a previous estimate of 1.7% on signs the recovery has stalled and (2) speculation that Fed Chairman Bernanke may signal this Friday at the Fed's annual symposium in Jackson Hole, Wyoming of additional measures to stimulate the economy.
- Oct crude oil prices this morning are up +$1.23 a barrel and Oct gasoline is -0.45 of a cent per gallon. Crude oil and gasoline prices yesterday finished mixed as the prospects for the restart of Libyan crude oil production offset concern that Hurricane Irene will strengthen as it nears the U.S. mainland: CLV11 +$2.01, RBV11 -0.33. Bearish factors included (1) a reversal in the dollar after the dollar index erased early losses and closed higher and (2) the action by Libyan rebels to oust the Qaddafi regime from Tripoli, which may signal and end to Libya's civil war and a resumption of Libyan crude production. Bullish factors included (1) comments from Iranian OPEC Governor Ali Khatibi who said that OPEC "will react" if crude prices continue to slump and (2) concern that Hurricane Irene will continue to strengthen as it nears the U.S and disrupt crude operations in and around the Gulf of Mexico.
Global Financial Calendar
| Tuesday 8/23/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0845 ET | Former Fed Chairman Alan Greenspan delivers keynote address at the Innovation Nation Forum in Washington D.C. |
| 0855 ET | Redbook weekly retailer sales. |
| 1000 ET | Jul new home sales expected -0.6% to 310,000, Jun -1.0% to 312,000. |
| 1000 ET | Aug Richmond Fed manufacturing index expected -4 to -5, Jul -4 to -1. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1300 ET | Treasury auctions $35 billion 2-year T-notes. |
| Japan | |
| 0200 ET | Revised Jul Japan machine tool orders, previous +34.6%. |
| 1950 ET | Jul Japan corporate service price index, Jun -0.7% y/y. |
| France | |
| 0300 ET | Aug French PMI manufacturing, Jul -2.0 to 50.5. |
| 0300 ET | Aug French PMI services, Jul -1.9 to 54.2. |
| Germany | |
| 0330 ET | Aug German PMI manufacturing expected -1.0 to 51.0, Jul -2.6 to 52.0. |
| 0330 ET | Aug German PMI services expected -0.9 to 52.0, Jul -3.8 to 52.9. |
| 0500 ET | Aug German ZEW economic sentiment expected -10.9 to -26.0, Jul -6.1 to -15.1. Aug ZEW current situation, Jul +3.0 to 90.6. |
| Euro-Zone | |
| 0400 ET | Aug Euro-Zone PMI composite expected -1.1 to 50.0, Jul -2.2 to 51.1. |
| 1000 ET | Aug Euro-Zone consumer confidence expected -0.8 to -12.0, Jul -1.5 to -11.2. |
| United Kingdom | |
| 0600 ET | Aug UK CBI trends total orders expected -12, Jul -10. |
| Canada | |
| 0830 ET | Jun Canada retail sales expected +0.7% and +0.3% less autos, May +0.1% and +0.5% less autos. |
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