Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are stronger with the Euro Stoxx 50 up +2.70% and Dec S&Ps up +14.50 points. Treasuries are lower and most commodities surged, with crude oil up over $2 a barrel on optimism European leaders will solve the region's debt crisis. Treasury Secretary Geithner said European governments will use more force to resolve the financial crisis, while ECB Executive Board member Bini Smaghi said opting for a government default in the Euro-Zone would be "voting for suicide." European bank stocks and insurers climbed after the cost of credit default swaps to insure European government debt fell, while the euro erased an early rally after Spain and Italy sold bonds with yields that were higher than expected. European stocks also received a boost after the Oct German GfK consumer confidence remained unchanged at a 1-year low of 5.2, stronger than expectations of a -0.2 point decline to 5.0. The Aug Euro-Zone M3 money supply rose +2.3% 3-month avg and +2.8% y/y, greater than expectations of +2.0% 3-month avg and +2.0% y/y with the +2.8% y/y increase the biggest in 2 years.
- Asian stocks today closed higher with Japan up +2.82%, China +1.03%, Australia +3.64%, South Korea +5.19%, India +2.95%. Asian bank stocks and exporters rallied on optimism European leaders will agree on ways to stem the region's debt crisis, while energy and raw material producers gained as commodities climbed. China's National Bureau of Statistics reported that Chinese industrial companies' profits rose +28.2% in the first 8 months of 2011 from a year earlier to 3.2 trillion yuan ($500 billion), compared with a +28.3% gain from Jan-Jul of 2011.
- December S&Ps this morning are trading up +14.50 points. The US stock market yesterday settled higher on speculation European leaders will act to prevent the region's debt crisis from getting worse: Dow Jones +2.53, S&P 500 +2.33, Nasdaq Composite +1.35%. Bullish factors included (1) carry-over support from a rally in European bank stocks after BOF Governor Noyer told Journal du Dimanche that French banks have enough capital to withstand possible losses from Greek-related risks and (2) strength in financial stocks on speculation European leaders will come up with efforts to stem the region's debt crisis after an ECB official said the ECB may consider restarting covered-bond purchases along with further measures to ease monetary conditions.
- Bearish factors included (1) concern over contagion of the European debt crisis after credit default swaps to insure the government debts of France, Germany and Belgium all rose to records, (2) the warning from Treasury Secretary Geithner who said that failure to combat the Greek-led turmoil threatens "cascading default, bank runs and catastrophic risk," (3) comments from BOC Governor Carney who said the European banking system is "undercapitalized" and estimated that 1 trillion euros ($1.3 trillion) may be needed to resolve the European debt crisis, (4) comments from German Finance Minister Schaeuble who said Euro-Zone governments have no intention of raising the European Financial Stability Facility's volume above 440 billion euros, (5) the -2.3% decline in Aug U.S. new home sales to a 6-month low of 295,000, and (6) early weakness in technology stocks after Apple fell when JPMorgan Chase's analysts said several supply-chain vendors indicated over the past 2 weeks that Apple lowered Q4 iPad orders by 25%.
- Bank of America (BAC) climbed 2.1% in pre-market trading on carry-over support from a rally in European bank stocks.
- December 10-year T-notes this morning are down -11 ticks as global equity markets rally. T-note prices yesterday ratcheted lower throughout the day on reduced safe-haven demand as global stock markets rallied on speculation European leaders will step up efforts to solve the region's debt crisis: TYZ11 -20, FVZ11 -8.5, EDH12 +2.0. Bearish factors included (1) reduced safe-haven demand for Treasuries as the stock market rallied when an ECB official said the ECB may resume covered-bond purchases when it meets next week and after BOF Governor Noyer told the Journal du Dimanche that French banks have enough capital to withstand possible losses from Greek-related risks and (2) supply pressures ahead of the Treasury's $35 billion auction of 2-year T-notes on Tue. Bullish factors included (1) increased safe-haven demand for Treasuries on contagion concerns from the European debt crisis after credit default swaps to insure the government debts of France, Germany and Belgium all rose to records, (2) increased safe-haven demand after Treasury Secretary Geithner warned that failure to combat the Greek-led turmoil threatens "cascading default, bank runs and catastrophic risk," and (3) comments from St. Louis Fed President Bullard who said the long-term rate of U.S. economic expansion may be lower than anticipated in part because the house price bubble last decade created unrealistic expectations for growth.
- The dollar index this morning is slightly weaker with the dollar/yen +0.09 yen and the euro/dollar +0.10 cents. The dollar index yesterday posted a 7-1/4 month high on increased European debt concerns but fell back and closed lower on speculation European leaders will introduce measures to stem the region's debt crisis: Dollar Index -0.138, USDJPY -0.244, EURUSD +0.00337. Bearish factors included (1) reduced safe-haven demand for the dollar after equity markets rallied on speculation European leaders will put forth efforts to stem the region's debt crisis after an ECB official said the ECB may resume covered-bond purchases when it meets next week, (2) comments from BOF Governor Noyer who told the Journal du Dimanche that French banks have enough capital to withstand possible losses from Greek-related risks, and (3) dollar negative comments from St. Louis Fed President Bullard who said the long-term rate of U.S. economic expansion may be lower than anticipated in part because the house price bubble last decade created unrealistic expectations for growth. Bullish factors included (1) concern over contagion of the European debt crisis after credit default swaps to insure the government debts of France, Germany and Belgium all rose to records, (2) increased safe-haven demand for the dollar after BOC Governor Carney said the European banking system is "undercapitalized" and estimated that 1 trillion euros ($1.3 trillion) may be needed to resolve the European debt crisis, and (3) comments from ECB Council member Nowotny who told Market News International that he cannot exclude that the ECB will lower interest rates when it meets again next week.
- Nov crude oil prices this morning are up +$2.09 a barrel and Nov gasoline is +4.89 cents per gallon. Crude oil and gasoline prices yesterday rebounded from 1-1/2 month lows and settled higher on optimism that European leaders will resolve the region's debt crisis: CLX11 +$0.39, RBX11 +0.40. Bullish factors included (1) weakness in the dollar, (2) speculation that measures by European officials will stem the region's debt crisis and support economic growth and energy demand after an ECB official said the central bank may resume covered-bond purchases when they meet next week, and (3) comments from OPEC Secretary General Abdalla el-Badri who said Saudi Arabia and other Persian Gulf OPEC members that are currently exceeding their production quotas may start to pump less oil amid signs that Libya will "soon" resume output. Bearish factors included (1) concern that the European debt crisis will spread and slow down the global economy and cut energy demand after credit default swaps to insure the government debts of France, Germany and Belgium all rose to records and (2) comments from St. Louis Fed President Bullard who said "fundamental potential growth in the U.S. has been somewhat lower than previously thought," which signals reduced fuel demand.
Global Financial Calendar
| Tuesday 9/27/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int?l Council of Shopping Centers) weekly retailer sales. |
| 0855 ET | Redbook weekly retailer sales. |
| 0900 ET | Jul S&P/CaseShiller composite-20 home price index expected +0.1% m/m and -4.4% y/y, Jun -0.1% m/m and 4.5% y/y. |
| 1000 ET | Sep Richmond Fed manufacturing index expected -1 to -11, Aug -9 to -10. |
| 1000 ET | Sep U.S. consumer confidence expected +1.5 to 46.0, Aug -14.7 to 44.5. |
| 1130 ET | Weekly 4-week and monthly 1-year T-bill auctions. |
| 1230 ET | Atlanta Fed President Dennis Lockhart delivers a speech titled ?A discussion of the U.S. economy? to the World Affairs Council of Jacksonville Global Business Luncheon. |
| 1300 ET | Treasury auctions $35 billion 2-year T-notes. |
| 1320 ET | Dallas Fed President Richard Fisher speaks on ?Explaining Dissent: Why I Voted Against Operation Twist? at the Dallas Assembly Luncheon. |
| Germany | |
| 0200 ET | Oct German GfK consumer confidence survey expected -0.2 to 5.0, Sep -0.1 to 5.2. |
| Euro-Zone | |
| 0400 ET | Aug Euro-Zone M3 money supply expected +2.0% 3-mo avg and +2.0% y/y, Jul +2.1% 3-mo avg and +2.0% y/y. |
| United Kingdom | |
| 0600 ET | Sep U.K. CBI reported sales expected -15, Aug -14. |
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