Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are trading mixed with the Euro Stoxx 50 up +0.23% and Sep S&Ps up +2.50 points. U.S. Nasdaq futures are weaker as Apple declined 4.7% after CEO Steve Jobs resigned. The dollar and Treasuries are weaker and commodities are mixed, with gold extending yesterday's slide down to a 2-week low today after the CME raised its gold trading margins for the second time this month. Greece's ASE Stock Index tumbled to its lowest level since 1996 as the yield on the 10-year Greek bond climbed to a record 18.54% on concern that Finland's demand for collateral on loans to Greece jeopardizes a second bailout package and may trigger a default on 18 billion euros ($26 billion) of Greek bonds. Demand for dollars from European banks remains strong as the 3-month dollar Libor rate gained for the 23rd straight day to a 1-year high of 0.319% while the dollar Libor-OIS spread, a gauge of banks' reluctance to lend, widened to 23.5 bp, also the most in a year. Credit Agricole SA, France's second-largest bank by assets, jumped 5.9% and led European bank stocks higher after it reported Q2 profit of 339 million euros, far above analysts' estimates of 187 million euros. The Sep German GfK consumer confidence survey fell -0.1 to 5.2, an 11-month low and right on expectations, while the British pound fell to a 1-week low against the dollar after Aug UK CBI reported sales slumped to -14, weaker than expectations of -10 and its lowest level in 15 months.
- Asian stocks today closed mostly higher with Japan up +1.54%, China +3.34%, Australia +1.08%, South Korea +0.84%, India -0.85%. Asian stocks closed higher after U.S. reports on durable goods orders and home prices were better-than-expected, which eases concern the U.S. economy is slowing and boosts the earnings outlook for exporters. Japanese exporters received an additional boost as the yen fell to a 2-week low against the dollar. Supporting gains in Chinese stocks was a rally in bank stocks led by 2.4% jump in Bank of China after it reported first-half profits jumped 28% to a record 66.5 billion yuan. Chinese rail lines also rose on speculation the Chinese government is increasing fiscal spending after the Shanghai Securities News reported that China plans to spend over 2.3 trillion yuan for new subway lines and sewage treatment. Limiting gains in Chinese stocks was the action by UBS AG to cut its 2011 China GDP forecast to 9.0% from 9.3% and to lower its 2012 China GDP estimate to 8.3% from 9.0%, citing weaker prospects for expansion in developed economies,
- September S&Ps this morning are trading up +2.50 points. The US stock market yesterday traded mixed early and then rallied during the afternoon as better-than-expected Jul durable goods orders offset early weakness in technology stocks: Dow Jones +1.29%, S&P 500 +1.31%, Nasdaq Composite +0.88%. Bullish factors included (1) reduced concern about an economic slowdown after the stronger-than-expected Jul U.S. durable goods orders (+4.0% and +0.7% ex transportation versus expectations of +2.0% and -0.5% ex transportation) and (2) strength in homebuilders after the larger-than-expected increase in Jun FHFA house prices (+0.9% m/m versus expectations of +0.2% m/m).
- Bearish factors included (1) continued weakness in the U.S. housing market after the weekly MBA purchase mortgage sub-index fell -5.7% to its lowest level in 14-1/2 years, (2) reduced optimism that the Fed will increase its asset purchases after and a Washington Post article said that Fed Chairman Bernanke is unlikely to announce new stimulus plans this Friday at Jackson Hole, (3) concern the European debt crisis may worsen after the yield on Greek 2-year notes climbed to a record 41.77% on concern the second aid package to Greece won't go through if Finland sticks to its word and demands collateral for additional Greek aid, and (4) early weakness in technology stocks after Micron Technology tumbled after it reported a "significant shortfall" in demand for personal computers starting last month.
- Apple (AAPL) is down 4.2% in pre-market trading after CEO Steve Jobs resigned late yesterday.
- September 10-year T-notes this morning are down -3.5 ticks. T-note prices yesterday closed lower for a third day after Jul durable goods orders and Jun FHFA house prices rose more than expected, which reduced concern that the economy was slowing: TYU11 -24, FVU11 -8.5, EDZ11 +7.0. Bearish factors included (1) the stronger-than-expected Jul U.S. durable goods orders (+4.0% and +0.7% ex transportation versus expectations of +2.0% and -0.5% ex transportation), (2) the larger-than-expected increase in Jun FHFA house prices (+0.9% m/m versus expectations of +0.2% m/m), (3) reduced optimism that the Fed will increase its asset purchases after and a Washington Post article said that Fed Chairman Bernanke is unlikely to announce new stimulus plans this Friday at Jackson Hole, (4) the 2.71 bid-to-cover ratio for the Treasury's $35 auction of 5-year T-notes, weaker than the 2.79 average of the past 12 auctions and a sign of slack demand, and (5) supply pressures ahead of the Treasury's $29 billion auction of 7-year T-notes on Thursday. Bullish factors included (1) increased safe-haven demand for Treasuries on concern the European debt crisis may worsen after the dollar Libor-OIS spread, a gauge of banks' reluctance to lend, widened to a 1-year high of 22.93 bp, and (4) continued weakness in the U.S. housing market after the weekly MBA purchase mortgage sub-index fell -5.7% to its lowest level in 14-1/2 years.
- The dollar index this morning is lower with the dollar/yen +0.20 yen and the euro/dollar +0.27 cents. The dollar index yesterday strengthened on a larger-than-expected increase in Jul U.S. durable goods orders along with reduced speculation that Fed Chairman Bernanke will announce new stimulus plans this Friday at a Fed conference in Jackson Hole: Dollar Index +0.118, USDJPY +0.330, EURUSD -0.00269. Bullish factors for the dollar included (1) a Washington Post article that said Fed Chairman Bernanke is unlikely to announce new stimulus plans at this Friday's Fed conference in Wyoming, (2) the stronger-than-expected Jul durable goods orders, which signals economic strength and is dollar supportive, (3) the greater-than-expected decline in the Aug German IFO business climate to a 14-month low, which is euro negative, and (4) the increase in the 3-month dollar Libor rate for the 22nd straight day to 1-year high of 0.31428% as demand remains strong from European banks for dollars.
- Oct crude oil prices this morning are up +55 cents a barrel and Oct gasoline is +1.82 cents per gallon. Crude oil and gasoline prices yesterday settled mixed as a stronger dollar undercut prices while a larger-than-expected increase in Jul U.S. durable goods orders and an unexpected decline in weekly DOE crude inventories boosted the crude complex: CLV11 -$0.28, RBV11 +0.86. Bullish factors included (1) the larger-than-expected increase in Jul U.S. durable goods orders, which signals economic strength that benefits energy demand, (2) the unexpected fall in weekly DOE crude inventories (-2.21 million bbl versus expectations of a +1.75 million bbl build), and (3) strength in stock prices, which bolsters confidence in the economic outlook and energy demand. Bearish factors included (1) a stronger dollar, which reduces investment demand in commodities, (2) the unexpected build in weekly DOE gasoline inventories (+1.36 million bbl versus expectations of a -1.0 million bbl decline), (3) the unexpected increase in the refinery capacity rate which matched a 1-year high and bodes well for further increases in gasoline and distillate products (+1.2 to 90.3% versus expectations of unchanged at 89.1%), and (4) slack demand after US gasoline demand last week dropped -2% to 9.01 million barrels a day, the lowest level for this time of year since 2002.
Global Financial Calendar
| Thursday 8/25/11 | |
|---|---|
| United States | |
| 0830 ET | Weekly initial unemployment claims expected -3,000 to 405,000, previous +9,000 to 408,000. Weekly continuing claims expected -2,000 to 3.700 million, previous +7,000 to 3.702 million. |
| 1300 ET | Treasury auctions $29 billion 7-year T-notes. |
| 1630 ET | Weekly money supply report and Fed balance sheet. |
| Germany | |
| 0200 ET | Sep German GfK consumer confidence survey expected -0.2 to 5.2, Aug -0.1 to 5.4. |
| United Kingdom | |
| 0600 ET | Aug UK CBI reported sales expected -10, Jul -5. |
| France | |
| 1200 ET | Jul French jobseekers-net change, Jun +33,600. Jul total jobseekers, Jun 2,720,400. |
| Japan | |
| 1930 ET | Aug Tokyo CPI expected -0.2% y/y, Jul +0.5% y/y. Aug Tokyo CPI ex-fresh food expected -0.1% y/y, Jul +0.4% y/y. Aug Tokyo CPI ex food & energy expected -0.6% y/y, Jul +0.3% y/y. |
| 1930 ET | Jul Japan national CPI expected +0.1% y/y, Jun -0.4% y/y. Jul national CPI ex-fresh food expected -0.1% y/y, Jun -0.2% y/y. Jul national CPI ex food & energy expected -0.6% y/y, Jun -0.8% y/y. |
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