Barchart Morning Call 10/25

Barchart Morning Call

Barchart.com - 25 mins ago

Overnight Developments

• European stocks this morning are trading slightly lower with the Euro Stoxx 50 down -0.04%. Dec S&Ps are down 2.20 points (-0.18%). The European summit on Sunday produced little hard news except that Germany and France have now officially rejected the idea of leveraging the EFSF by turning it into a bank and allowing it to borrow from the ECB. Regarding Greece, banks reportedly offered to take a loss of 40% on a voluntary Greek bond swap program, up from 21% in the original agreement but still less than the 50-60% haircut that European governments are now pursuing.
• Asian stocks today closed higher across the board on positive Chinese and Japanese economic news: Japan 1.90%, Hong Kong +4.14%, China +2.74%, Taiwan +2.97%, Australia +2.73%, Singapore +1.79%, South Korea +3.41%, Bombay +0.92%. Japanese stocks were boosted by new that Japanese Sep exports rose +2.4% y/y, stronger than expectations of +1% and just below August's +2.8% y/y gain. China's flash Oct purchasing managers index from HSBC/Markit rose by 1.2 points to a 5-month high of 51.1 from 49.9 in September, boosting Chinese and Hong Kong stocks.

Overnight U.S. Stock News

• December S&Ps this morning are down 2.20 points on a little disappointment that there wasn't more positive news from the weekend Eurozone summit. The US stock market last Friday rallied sharply: Dow Jones +2.31%, S&P 500 +1.88%, Nasdaq Composite +1.49%. Bullish factors included (1) optimism that Eurozone leaders may be headed toward a deal to solve the debt crisis, (2) a sharp 3.8% rally in European bank stocks, (3) bullish technicals with the new 11-week high in the S&P 500 index, (4) favorable earnings reports during the week, and (5) Fed Vice Chairman Janet Yellen's comment that a third round of quantatitive easing might become warranted. McDonald's rallied 3.7% and Honewell rallied 5.8% on positive earnings news.

Today's Market Focus

• December 10-year T-notes this morning are trading +2 ticks on the slightly lower trade in Dec S&Ps. T-note prices last Friday closed mixed: TYZ11 -1.5, FVZ11 +1, EDH12 -2.0. The main bearish factor was reduced safe-haven demand with the rally in stocks and optimism about a European debt crisis deal. The main bullish factor was optimism that the Fed might seriously consider additional stimulus measures after Fed Vice Chairman Janet Yellen last Friday said that a third round of quantatitive easing might become warranted. That followed Fed Governor Daniel Tarullo's comment last Thursday that the Fed should consider a program of buying mortgage securities.
• The dollar index this morning is trading up 0.134 points with USDJPY down 0.21 yen and EURUSD down 0.63 cents. The euro is lower on some disappointment on the lack of any positive announcements out of the weekend Eurozone meeting. USDJPY is lower despite ongoing threats by Japanese authorities regarding intervention. The dollar index last Friday slipped to a 5-week low while EURUSD closed just below its 6-week high. USDJPY dropped to a record low. Friday's closes: Dollar Index -0.024, USDJPY -0.051, EURUSD +0.0014. The euro continued to be boosted by progress toward a European debt crisis deal. Meanwhile, the yen continued to show strength on yen repatriation and on technicals.
• Dec crude oil prices this morning are up 21 cents and Dec gasoline is up 1.19 cents. Bullish factors center on today's positive economic reports from Japan and China, which boosted hopes for Asian fuel demand. Crude oil and gasoline last Friday closed higher: CLZ11 +$1.33, RBZ11 +0.0012. Crude oil last Friday was boosted by strength in the stock market and increased optimism about a European debt and stronger global economic growth. However, gasoline lagged the strength in crude oil since last week's death of Qaddafi will accelerate Libya's progress in restoring oil production, thus putting downward pressure on Brent crude oil prices and by extension U.S. gasoline prices, which have lately been more closely correlated with Brent crude oil than WTI. Crude oil prices last Friday also continued to see support from Wednesday's DOE report showing that u.S. crude oil inventories fell sharply by 4.73 million barrels to a 20-month low of 332.9 million barrels.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): CAT-Caterpillar (BEST earnings consensus $1.57), AMGN-Amgen (1.29), TXN-Texas Instruments (0.57), KMB-Kimberley-Clark (1.26), LO-Lorillard (2.03), VFC-VF Corp (2.57), ETN-Eaton (0.40), ROP-Roper Industries (1.08), WSH-Willis Group (0.37), NFLX-Netflix (1.07), PCL-Plum Creek Timber (0.30), RMD-Resmed (0.34).
Global Financial Calendar

Monday 10/24/11
United States
0830 ET	Sep Chicago Fed national activity index expected -0.21, Aug -0.45 to -0.43.
0845 ET	New York Fed President William Dudley speaks on the regional and national economy at Fordham University.
0900 ET	Dallas Fed President Richard Fisher speaks on challenges to economic growth at the Toronto Forum for Global Cities Fifth Annual Conference.
1100 ET	USDA weekly grain export inspections.
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
1700 ET	USDA weekly crop progress report for week ended Oct 23.
France
0300 ET	Oct French PMI manufacturing expected 48.0, Sep -0.9 to 48.2.
0300 ET	Oct French PMI services expected 50.4, Sep -5.3 to 51.5.
Germany
0330 ET	Oct German PMI manufacturing expected 50.0, Sep -0.6 to 50.3.
0330 ET	Oct German PMI services expected 49.9, Sep -1.4 to 49.7.
Euro-Zone
0400 ET	Oct Euro-Zone PMI composite expected 48.8 (mfg 48.0, services 48.5), Sep -1.6 to 49.1 (mfg 48.5, services 48.8).
0500 ET	Aug Euro-Zone industrial new orders expected unchanged m/m and +5.8% y/y, Jul -2.1% m/m and +8.4% y/y.
1800 ET	Jean-Claude Juncker, head of the Euro-Zone finance ministers, speaks at Zurich University about ?The Future of Europe.?

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