Barchart Morning Call
Tue, 20 Dec 2011 07:00:00 -0600
Overnight Developments- Global stocks this morning are mixed with the Euro Stoxx 50 up +0.15% and Mar S&Ps up +9.60 points. The dollar and Treasuries weakened and commodities rose after German business confidence unexpectedly gained. The Dec German IFO business climate rose +0.6 to 107.2, stronger than expectations of -0.6 to 106.0. Stocks and the euro also received a boost after Spain sold 5.64 billion euros of 3-month and 6-month Treasury bills, more than the maximum target of 4.5 billion euros the Treasury had set for the sale. The British pound rose to a 1-week high against the dollar after Nov U.K. nationwide consumer confidence unexpectedly rose +4 to 40, stronger than expectations of unchanged at 36, while Dec U.K. CBI reported sales unexpectedly surged to 9, higher than expectations of -12 and its best level in 7 months. Limiting stock gains were the comments from European Commission President Barroso who said the sovereign-debt crisis is "worsening" conditions in the European labor market and after Fitch Ratings said the risk of downgrading the EFSF bail-out fund had increased and that the fund's AAA rating depends on France remaining AAA.
- Asian stocks today closed mixed with Japan up +0.49%, China -0.31%, Australia -0.18%, South Korea +0.90%, India -1.33%. Most Asian stocks rose as optimism about the outlook for the U.S. economy and resilient economic growth in Asia offset concern that China's real estate sector may be headed for a hard landing. Asian exporters advanced on strong earnings prospects after Richmond Fed President Lacker said the U.S. economy will grow 2.0% to 2.5% next year despite slowing global growth. Chinese property developers weakened and dragged the Shanghai Stock Index lower after SouFun, China's biggest real estate website, said property transactions will continue to fall in the first half of 2012. South Korea's Kospi Stock Index recovered some of Monday's losses and finished higher after the South Korean National Pension Service, the nation's largest investor, bought stocks yesterday and said it doesn't see further steep declines in equities.
- March S&Ps this morning are trading up +9.60 points. The US stock market yesterday erased an early rally and settled lower after bank stocks fell on concern over stricter international capital standards and after ECB President Draghi said risks to the economy remain: Dow Jones -0.84%, S&P 500 -1.17%, Nasdaq Composite -1.26%. The S&P 500, the Dow and the Nasdaq all posted 2-week lows. Bearish factors included (1) weakness in bank stocks after the WSJ reported that the Fed is expected to embrace a new global framework that requires big banks to hold extra capital, (2) comments from ECB President Draghi who said "substantial downside risks" to the economy remain and that the law forbids him from stepping up government bond purchases to stem the debt crisis, and (3) comments from House Speaker Boehner who said the U.S. House of Representatives will reject a Senate-backed bill that would have extended the payroll tax cut for workers for 2 months.
- Bullish factors included (1) the report from researcher ComScore that U.S. online spending for the holiday season has jumped +15% so far this year to $30.9 billion from a year earlier, (2) strength in homebuilders after the unexpected increase in the Dec NAHB housing market index which rose for a third month to a 19-month high (+2 to 21 versus expectations of unchanged at 20), and (3) reduced European debt concerns on speculation that European leaders were seeking additional funding of 200 billion euros through the IMF to help stem the region's debt crisis.
- Bank of America (BAC) rose 2.1% and Citigroup (C) climbed 1.7% in pre-market trading on carry-over strength from a rally in European bank stocks.
- March 10-year T-notes this morning are down -6.5 ticks. T-note prices yesterday posted an all-time high for a second day on increased safe-haven demand on concern the still unresolved European sovereign debt crisis will drag down the global economy: TYH2 +5, FVH2 +1.2, EDM2 -1.0. The 10-year T-note yield fell to a 2-1/2 month low of 1.800%. Bullish factors included (1) increased safe-haven demand for Treasuries on concern the European debt crisis will drag the global economy lower after ECB President Draghi said "substantial downside risks" to the economy remain, and (2) the action by the Fed to purchase $4.898 billion of Treasuries as part of its Operation Twist program to replace $400 billion of shorter maturities in its holdings of Treasuries with longer-term debt. Bearish factors included (1) the unexpected increase in the Dec NAHB housing market index which rose for a third month to a 19-month high (+2 to 21 versus expectations of unchanged at 20), (2) reduced European debt concerns on speculation that European leaders were seeking additional funding of 200 billion euros through the IMF to help stem the region's debt crisis, and (3) supply pressures ahead of the Treasury's $35 billion auction of 5-year T-note on Wed.
- The dollar index this morning is weaker with the dollar/yen -0.11 yen and the euro/dollar +0.68 cents. The dollar index yesterday finished slightly higher as action by European finance ministers to draw additional aid from the IMF was offset by comments from ECB President Draghi that substantial downside risks" to the economy remain: Dollar Index +0.113, USDJPY +0.698, EURUSD -0.00463. Bullish factors included (1) the slide in the yen to a 2-1/2 week low against the dollar after the death of North Korean President Kim Jong Il fueled safe-haven demand for the dollar on concern instability may increase in the region and (2) comments from ECB President Draghi that weakened the euro when he said "substantial downside risks" to the economy remain, which bolstered speculation the ECB may add to its emergency stimulus measures. Bearish factors for the dollar included (1) reduced European debt concerns on speculation European finance ministers will seek 200 billion euros in additional funding from the IMF, which may help stem the region's debt crisis, (2) hawkish comments from ECB President Draghi who said the ECB cannot overstep its mandate and increase bond purchases, and (3) comments from ECB Council member and Bank of France President Noyer who said carrying out "large scale" purchases of sovereign bonds are beyond the ECB's mandate, which suggest the ECB is not in favor of increasing its asset purchases and is euro supportive.
- Jan crude oil prices this morning are up +98 cents a barrel and Jan gasoline is +2.60 cents per gallon. Crude oil and gasoline prices yesterday fluctuated between gains and losses and settled higher as geopolitical concerns outweighed concern European leaders will be unable to stem the region's debt crisis: CLF12 +$0.35, RBF12 +0.21. Bullish factors included (1) reduced European debt concerns on speculation European finance ministers will seek 200 billion euros in additional funding from the IMF, which may help stem the region's debt crisis and sustain economic growth and energy demand, and (2) geopolitical concerns after Bank of America predicted that crude prices may surge by $40 a barrel if international sanctions halt crude supplies from Iran. Bearish factors included (1) the death of North Korean President Kim Jong Il, which prompted risk aversion as investors sold equity and commodity positions and moved into cash and (2) comments from ECB President Draghi who said "substantial downside risks" to the economy remain, which may keep economic growth and fuel demand weak.
Global Financial Calendar
| Tuesday 12/20/11 | |
|---|---|
| United States | |
| 0745 ET | ICSC (Int’l Council of Shopping Centers) weekly retailer sales. |
| 0830 ET | Nov housing starts expected +1.1% to 635,000, Oct -0.3% to 628,000. Nov building permits expected -1.4% to 635,000. Oct +9.3% to 644,000. |
| 0855 ET | Redbook weekly retailer sales. |
| 1130 ET | Weekly 4-week T-bill auction. |
| 1300 ET | Treasury auctions $35 billion 5-year T-notes. |
| Japan | |
| 0000 ET | Revised Oct Japan leading index CI, previous 91.5. Revised Oct coincident index CI, previous 90.3. |
| Germany | |
| 0200 ET | Jan German GfK consumer confidence survey expected -01 to 5.5, Dec +0.2 to 5.6. |
| 0200 ET | Nov German producer prices expected +0.1% m/m and +5.2% y/y, Oct +0.2% m/m and +5.3% y/y. |
| 0400 ET | Dec German IFO business climate expected -0.6 to 106.0, Nov +0.2 to 106.6. Dec IFO current assessment expected -0.7 to 116.0, Nov unchanged at 116.7, Dec IFO expectations expected -0.3 to 97.0, Nov +0.3 to 97.3. |
| United Kingdom | |
| 0600 ET | Dec U.K. CBI reported sales expected -12, Nov -19. |
| Canada | |
| 0700 ET | Nov Canada CPI expected +0.1% m/m and +2.9% y/y, Oct +0.2% m/m and +2.9% y/y. |
| 0700 ET | Bank of Canada Nov core CPI expected +0.1% m/m and +0.2% y/y, Oct +0.3% m/m and +2.1% y/y. |
No comments:
Post a Comment