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 +0.68% and Sep S&Ps up +14.70 points. The dollar and Treasuries are weaker and commodities are mixed, with gasoline falling after Irene was downgraded to a post-tropical storm. According to Kinetic Analysis, a firm that predicts disaster effects, Hurricane Irene caused about $2.6 billion of damage, down from estimates as high as $14 billion last week. That helped insurance stocks to gain with Munich Re and Swiss Re Ltd., the world's biggest reinsurers, up more than 3%. Greece's ASE Stock Index surged 11%, led by a rally in Greek bank stocks, after EFG Ergasia Sa and Alpha Bank SA, the nation's second and third biggest banks, discussed a merger.
- Asian stocks today closed mixed with Japan up +0.61%, China down -1.67%, Australia +1.51%, South Korea +2.96%, India +3.58%. Asian stocks received a boost on the upbeat comments from Fed Chairman Bernanke in Jackson Hole, Wyoming who said he is "more optimistic" about the long-term prospects of the U.S. economy even amid challenges from the slumping housing market and financial-market volatility. Japanese stocks also gained after Finance Minister Noda was elected Prime Minister after the outgoing Prime Minister Kan resigned. Asian shipping stocks rallied after Nomura said it was "bullish" on the sector. China's Shanghai Stock Index closed lower on signs that tighter monetary policies will continue after bank stocks fell when the PBOC extended its reserve requirements to bank customers' margin deposits. Bank of America economist Lu Ting estimates that the move may drain 900 billion yuan ($141 billion) from the banking system over 6 months.
- September S&Ps this morning are trading up +14.70 points. The US stock market last Friday whipsawed higher and held its gains after Fed Chairman Bernanke indicated the economy isn't deteriorating enough to warrant any immediate stimulus: Dow Jones +1.21%, S&P 500 +1.51%, Nasdaq Composite +2.49%. The Nasdaq posted a 1-week high. Bullish factors included (1) comments from Fed Chairman Bernanke that indicate economic optimism when he said "it may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals," (2) the unexpected upward revision to Q2 U.S. personal consumption (+0.4% versus the previously reported +0.2%, and (3) low stock valuations that prompted hedge fund managers to purchase stocks after recent declines left stocks in the S&P 500 trading at 12.7 times reported earnings, more than 20% below their 5-decade average.
- Bearish factors included (1) the larger-than-expected downward revision to Q1 U.S. GDP (+1.0% q/q annualized versus expectations of +1.1% q/q annualized), (2) the unexpected upward revision to the Q2 core PCE deflator which matched its highest level in 3-years (+2.2% q/q versus the originally reported +2.1% q/q), and (3) initial disappointment that Fed Chairman Bernanke failed to announce any immediate stimulus measures to bolster the economy.
- Pfizer (PFE) rose 1.2% in European trading after the company's Crizotinib drug won approval for treatment against lung cancer.
- September 10-year T-notes this morning are down -11 ticks. T-note prices last Friday moved higher after Q1 U.S. economic growth was revised downward more than expected, although prices settled well off of their best levels after stock prices surged: TYU11 +9.5, FVU11 +4.7, EDZ11 +2.5. Bullish factors included (1) the larger-than-expected downward revision to Q1 U.S. GDP (+1.0% q/q annualized versus expectations of +1.1% q/q annualized) and (2) the reassurance from Fed Chairman Bernanke that "the Fed has a range of tools that could be used to provide additional monetary stimulus." Bearish factors included (1) the unexpected upward revision to the Q2 core PCE deflator which matched its highest level in 3-years (+2.2% q/q versus the originally reported +2.1% q/q) and (2) reduced safe-haven demand for Treasuries after the stock market rebounded from sharp losses and moved higher.
- The dollar index this morning is slightly weaker with the dollar/yen -0.01 yen and the euro/dollar +0.10 cents. The dollar index last Friday whipsawed lower after stocks reversed early losses and moved higher: Dollar Index -0.465, USDJPY -0.903, EURUSD +0.01069. Bearish factors included (1) the reversal in the equity market which recovered from early losses and rallied sharply, which reduced the safe-haven demand for the dollar, (2) the larger-than-expected downward revision to Q1 U.S. GDP, which is dollar negative, and (3) the Financial Times report that Euro-Zone officials will discuss a new version of Finland's collateral agreement with Greece, which boosted the euro on increased optimism that the second bailout package for Greece will go forward and keep them from default. Bullish factors for the dollar included (1) continued strong demand for dollars by European banks after the 3-month dollar Libor rate rose for the 24th straight day to a 1-year high of 0.32278% and (2) the action by Fed Chairman Bernanke to not announce any immediate new stimulus measures to aid the economy, which briefly boosted the dollar before surging stock prices undercut the greenback.
- Oct crude oil prices this morning are up +49 cents a barrel and Oct gasoline is -2.24 cents per gallon. Crude oil and gasoline prices last Friday settled mixed as a weak dollar was positive for crude but the failure by Fed Chairman Bernanke to announce additional stimulus measures undercut prices: CLV11 +$0.07, RBV11 -1.57. Oct gasoline posted a 3-week high but shed its gains and closed lower. Bearish factors included (1) the larger-than-expected downward revision to Q2 U.S. GDP, which indicates weakened energy consumption, (2) disappointment that Fed Chairman Bernanke failed to announce additional stimulus measures at his speech in Jackson Hole, Wyoming, and (3) weakness in gasoline after Hurricane Irene was downgraded to a Category 2 from a Category 3 hurricane. Bullish factors included (1) the weaker dollar, which encourages investment demand in commodities and (2) a reversal in stock prices which recovered steep losses to trade higher and lifted confidence in the economic outlook and energy demand.
Global Financial Calendar
| Monday 8/29/11 | |
|---|---|
| United States | |
| 0250 ET | Boston Fed President Eric Rosengren speaks on ?How Supervision Can Detect Failures Early? at a conference on bank regulation in Stockholm, Sweden. |
| 0830 ET | Jul personal spending expected +0.5%, Jun -0.2%. Jul personal income expected +0.3%, Jun +0.1%. Jul PCE deflator expected +2.7% y/y, Jun +2.6% y/y. Jul PCE core deflator expected +0.2% m/m and +1.4% y/y, Jun +0.1% m/m and +1.3% y/y. |
| 1000 ET | Jul pending home sales expected -0.5% m/m, Jun +2.4% m/m and +17.3% y/y. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| Germany | |
| n/a | Aug German CPI (EU harmonized) expected unchanged m/m and +2.5% y/y, Jul +0.5% m/m and +2.6% y/y. |
| Euro-Zone | |
| 0900 ET | ECB President Jean-Claude Trichet, Euro-Zone Finance Ministers? chief Jean-Claude Juncker and Monetary Affairs Commissioner Olli Rehn speak to the European Parliament?s economic committee on the Euro-Zone debt crisis. |
| Japan | |
| 1930 ET | Jul Japan jobless rate expected unchanged at 4.6%, Jun +0.1 to 4.6%. Jul job-to-applicant ratio expected 0.64, Jun 0.63. |
| 1930 ET | Jul Japan overall household spending expected -2.9% y/y, Jun -4.2% y/y. |
| 1950 ET | Jul Japan retail sales expected +0.5% m/m and +1.3% y/y, Jun +2.9% m/m and +1.2% y/y. |
| United Kingdom | |
| n/a | U.K. markets and government offices closed for Summer Bank Holiday. |
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