Barchart Morning Call 9/9

Barchart Morning Call

Barchart.com - 2 mins ago

Overnight Developments

• Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.61% and Dec S&Ps down -6.30 points. The dollar index rose to a 1-3/4 month high and most commodities weakened on concern the global economic recovery is faltering. The euro slumped to a 5-3/4 month low against the dollar as concern grows over a Greek default as credit default swaps to insure Greek government debt climbed to a record high of 3,238 bp and the yield on the Greek 2-year note soared to a record high of 55.907%. G-7 finance ministers began a 2-day meeting in Marseille, France to discuss the European debt crisis and ways to bolster their economies. The Aug German CPI was revised slightly higher to unchanged m/m and +2.5% y/y from the previously reported -0.1% m/m and +2.4% y/y as energy costs increased. Limiting declines in European stocks was strength in French factory output after Jul French industrial production rose +1.5% m/m and +3.7% y/y, stronger than expectations of +0.4% m/m and +2.0% y/y. IMF Managing Director Lagarde said in a speech in London that the risk of recession outweighs the threat of inflation and monetary policies in advanced economies "should remain highly accommodative."
• Asian stocks today closed lower with Japan down -0.63%, CHina -0.18%, Australia +0.16%, South Korea -2.13%, India -1.74%. Japanese stocks closed lower after Q2 Japan GDP was revised down to -0.5% q/q and -2.1% annualized, weaker than the previously reported -0.3% q/q and -1.3% annualized. The yen fell to a 1-month low against the dollar on speculation G-7 finance ministers meeting in France may discuss coordinated currency intervention to curb yen strength. Despite the fall in Aug China CPI to +6.2% y/y from July's 3-year high of +6.5% y/y, Chinese stocks finished lower on concern that economic momentum is slowing after Aug China industrial production rose +13.5% y/y, weaker than expectations of +13.7% y/y.

Overnight U.S. Stock News

• December S&Ps this morning are trading down -6.30 points. The US stock market yesterday traded mixed into early afternoon and then tumbled after Fed Chairman Bernanke said that risks to the economy have grown: Dow Jones -1.04, S&P 500 -1.06%, Nasdaq Composite -0.78%. Bearish factors included (1) the unexpected increase in weekly initial unemployment claims (+2,000 to 414,000 versus expectations of -4,000 to 405,000), (2) concerns the European debt crisis is dragging European economic growth lower after the ECB cut its 2011 and 2012 Euro-Zone GDP forecasts and ECB President Trichet said the European economy faces "particularly high uncertainty and intensified downside risks," (3) the action by the OECD to slash its Q3 U.S. growth forecast to 1.1% from a May forecast of 2.9% and cut its Q4 U.S. growth forecast to 0.4% from 3.0% in May, and (4) comments from Fed Chairman Bernanke who said that he sees increasing risks to the economic outlook along with disappointment that he did not suggest any immediate stimulus measures to stimulate the economy.
• Bullish factors included (1) the smaller-than-expected Jul U.S. trade balance which narrowed to its lowest level in 3 months and is positive for Q3 U.S. GDP (-$44.8 billion versus expectations of -$51.0 billion), (2) strength in chipmakers after JPMorgan Chase said the industry look "attractive," (3) the larger-than-expected increase in Jul U.S. consumer credit which posted its biggest monthly gain in over 3 years (+$12.0 billion versus expectations of +$6.0 billion), and (4) speculation that the $300 billion stimulus plan proposed by President Obama will spur economic growth.
• Texas Instruments (TXN) fell 1.8% in pre-market trading after the company cut its Q3 profit forecast to 56 cents to 60 cents a share, weaker than analysts' estimates of 60 cents.

Today's Market Focus

• December 10-year T-notes this morning are down -1 tick. T-note prices yesterday finished higher after weekly U.S. initial unemployment claims unexpectedly rose along with carry-over support from a rally in German bunds to an all-time high after ECB President Trichet said threats to the European economy have "intensified" and inflation risks have eased: TYZ11 +12, FVZ11 +6.5, EDH12 +2.5. Bullish factors included (1) the unexpected increase in weekly initial unemployment claims (+2,000 to 414,000 versus expectations of -4,000 to 405,000), (2) carry-over support from the drop in the 10-year German bund yield to a record low 1.823% after the ECB cut its 2011 and 2012 Euro-Zone GDP forecasts and ECB President Trichet said the European economy faces "particularly high uncertainty and intensified downside risks," and (3) the action by the OECD to slash its Q3 U.S. growth forecast to 1.1% from a May forecast of 2.9% and cut its Q4 U.S. growth forecast to 0.4% from 3.0% in May. Bearish factors included (1) the smaller-than-expected Jul U.S. trade balance which narrowed to its lowest level in 3 months and is positive for Q3 U.S. GDP (-$44.8 billion versus expectations of -$51.0 billion) and (2) disappointment that Fed Chairman Bernanke did not suggests any immediate stimulus measures.
• The dollar index this morning is higher and at a fresh 1-3/4 month high with the dollar/yen +0.33 yen and the euro/dollar -0.68 cents at a 5-3/4 month low. The dollar index yesterday moved up to a 1-3/4 month high and settled sharply higher as the euro slumped to a 1-3/4 month low against the dollar when ECB President Trichet said "downside risks" to the Euro-Zone economy have intensified: Dollar Index +0.779, USDJPY +0.261, EURUSD -0.02167. Bullish factors included (1) comments from ECB President Trichet who said threats to the Euro-Zone economy have "intensified" and inflation risks have eased, which dampens the outlook for further ECB interest rate hikes, (2) the action by the ECB to cut its 2011 Euro-Zone GDP forecast to 1.4% to 1.8% from its previous estimate of 1.5% to 2.3%, and (3) the unexpected decline in Jul German exports for a second month, which is euro negative. Bearish factors included (1) comments from Fed Chairman Bernanke who said the Fed will weigh additional stimulus measures at its next FOMC meeting later this month and (2) the action by the OECD to slash its Q3 U.S. growth forecast to 1.1% from a May forecast of 2.9% and cut its Q4 U.S. growth forecast to 0.4% from 3.0% in May.
• Oct crude oil prices this morning are down -$1.20 a barrel and Oct gasoline is -3.35 cents per gallon. Crude oil and gasoline prices yesterday fluctuated between gains and losses and finally closed lower as economic concerns offset a larger-than-expected fall in weekly crude inventories and a tropical storm in the Gulf that may pose a threat to U.S. crude and refinery output: CLV11 -$0.29, RBV11 -2.28. Bearish factors included (1) the rally in the dollar index to a 1-3/4 month high, which discourages investment demand in commodities, (2) economic concerns after comments from ECB President Trichet who said "downside risks" to the Euro-Zone economy have intensified and from Fed Chairman Bernanke who said that he sees increasing risks to the economic outlook, and (3) the unexpected increase in weekly DOE gasoline and distillate inventories (gasoline +199,000 bbl versus expectations of a decline of -1.45 million bbl and distillates +709,000 bbl versus expectations of no change). Bullish factors included (1) the larger-than-expected decline in weekly DOE crude inventories (-3.96 million bbl versus expectations of -2.0 million bbl) and (2) the forecast for Tropical Storm Nate to strengthen in Mexico's Bay of Campeche and move into the Gulf of Mexico where it may pose a threat to U.S. crude and refinery output in the Gulf of Mexico.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): KR-Kroger (BEST earnings consensus $0.43), LULU-Lululemon Athletica (0.22), NSM-National Semiconductor (0.27), PNY-Piedmont Natural Gas (-0.12), BRC-Brady Corp. (0.61), IRET-Investors Real Estate Trust (0.01).
Global Financial Calendar

Friday 9/9/11
United States
1000 ET	Jul wholesale inventories expected +0.7%, Jun +0.6%.
1130 ET	San Francisco Fed President John Williams delivers opening remarks at his bank?s annual symposium on Asian Banking and Finance.
Japan
0100 ET	Aug Japan consumer confidence, Jul +1.7 to 37.0.
Euro-Zone
n/a	G-7 finance ministers and central bank chiefs begin 2-day meeting in Marseille, France.
Germany
0200 ET	Revised Aug German CPI (EU harmonized) expected no change at -0.1% m/m and +2.4% y/y.
0200 ET	Aug German wholesale price index, Jul -0.6% m/m and +8.2% y/y.
France
0245 ET	Jul French industrial production expected +0.4% m/m and +2.0% y/y, Jun -1.6% m/m and +2.3% y/y.
0245 ET	Jul French manufacturing production expected +0.6% m/m and +2.4% y/y, Jun -1.9% m/m and +3.3% y/y.
United Kingdom
0430 ET	Aug U.K. PPI input prices expected -1.5% m/m and +16.8% y/y, Jul +0.6% m/m and +18.5% y/y.
0430 ET	Aug U.K. PPI output prices expected +0.1% m/m and +5.9% y/y, Jul +0.2% m/m and +5.9% y/y.
0430 ET	Aug U.K. PPI output core prices expected +0.1% m/m and +3.4% y/y, Jul +0.3% m/m and +3.3% y/y.
Canada
0700 ET	Aug Canada net change in employment expected +20,000, Jul +7,100. Aug unemployment rate expected +0.1 to 7.3% , Jul -0.2 to 7.2%.
0815 ET	Aug Canada housing starts expected +200,000, Jul +205,100.
0830 ET	Q2 Canada labor productivity expected -0.6% q/q, Q1 +0.4% q/q.

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