Barchart Morning Call 5/11

Barchart Morning Call

BC - 1 hr 11 mins ago

Overnight Developments

E-mini S&Ps are down -8.00 points (-0.59%) this morning on JPMorgan's $2 billion trading loss and weaker-than-expected Chinese retail sales and industrial production data. Commodity prices are trading lower across the board. The dollar is mildly higher by +0.13 points (+0.16%) on increased safe-haven demand. JPMorgan after Thursday's close publicly disclosed that it had a $2 billion trading loss on a synthetic credit securities position. JPMorgan's stock is down about 6% in European pre-market trading. European stocks are trading lower with the Euro Stoxx 50 down -0.73%, also undercut by the JPMorgan news, the Chinese economic data, and the fifth day of Greek attempts to form a government. The European Commission today released updated forecasts that the Eurozone economy in 2012 will decline by -0.3%, which was unchanged from its forecast in February. The Commission is forecasting a return to positive growth in 2013 with GDP growth of +1%. The Commission is forecasting GDP growth for this year of -4.7% for Greece, -1.8% for Spain, -1.4% for Italy, and -3.3% for Portugal. Italy today successfully sold 10 billion euros of Treasury bills, meeting its target and not running into any problems. Spanish Prime Minister Rajoy later today is expected to announce details of a new bank cleanup plan. The markets today are awaiting talks by Socialist Pasok Leader Venizelos with New Democracy leader Samaras to see if Pasok, New Democracy and Democratic Left can form a coalition government. Mr. Venizelos had positive talks yesterday with Democratic Left leader Kouvelis. Those three parties together easily have a working majority in Parliament that can create a government that intends to affirm the basic tenets of the bailout requirements and keep Greece in the Eurozone. China released several economic reports overnight. China's April CPI eased to +3.4% y/y from +3.6% y/y, which was in line with the market consensus. April industrial eased to +11.0% y/y from +11.6% y/y in March and was weaker than the market consensus of +11.7% y/y. April retail sales eased to +14.1% y/y from +15.2% in March and was weaker than market expectations of +15.1%. Asian stock markets today closed lower across the board: Japan -0.63%, Hong Kong -1.30%, China -0.76%, Taiwan -1.10%, Australia -0.24%, Singapore -0.70%, South Korea -1.51%, India -0.77%.

Overnight U.S. Stock News

June E-mini S&Ps this morning are trading -8.00 points (-0.59%) on the JPMorgan trading loss, weaker-than-expected Chinese economic data, and the ongoing Greek political turmoil. JPMorgan's stock is down about 6% due to the trading loss news and other large U.S. bank stocks are trading lower in European trading. US stocks on Thursday closed mixed: S&P 500 +0.25%, Dow Jones +0.16%, Nasdaq 100 -0.19%. The stock market found some support on a favorable unemployment claims report (initial claims fell 1,000 and continuing claims fell 61,000 to a new 3-3/4 year low) and on reports of some progress in Greece on forming a government.

Today's Market Focus

June 10-year T-notes this morning are trading +8 ticks on the lower trade in stocks and the news of JPMorgan's $2 billion trading loss. T-note prices on Thursday closed lower: TYM2 -4.5, FVM2 -1.5. Bearish factors included overhang from Thursday's 30-year bond auction and slightly reduced safe-haven demand with stocks stabilizing and with some reports of progress in Greece on forming a government. The dollar index this morning is trading mildly higher by +0.17 points. EUR/USD and USD/JPY are both virtually unchanged. The dollar index on Wednesday closed slightly higher: Dollar Index +0.14, EUR/USD +0.0007, USD/JPY +0.29. The dollar index on Thursday saw some continued support from the Greek situation and from the dollar-positive U.S. unemployment claims report. Yesterday's U.S. March trade deficit report was mildly bearish for the dollar since it expanded to -$51.8 billion, wider than the consensus of -$50.0 billion and substantially wider than Feb?s revised -$45.4 billion. The Bank of England yesterday ended its quantitative easing program, which was supportive for sterling. The BOE left its base rate unchanged at 0.50% as expected. June crude oil prices this morning are down $1.17 and gasoline is down 2.83 cents on general commodity market weakness tied to risk-off hedge fund dumping on the news of JPMorgan's loss. Crude oil and gasoline prices on Thursday closed mixed: CLM12 +0.27, RBM2 -0.0211. Crude oil on Thursday saw some short-covering after recent sharp losses. Oil prices were able to shake off the bearish news that Chinese April crude oil imports dropped to a 4-month low and OPEC's report that it is producing 8.3% more crude oil than it believes is necessary. The International Energy Agency today is scheduled to release its monthly report on the global petroleum market. Crude oil continues to labor under Wednesday's DOE report showing a new 21-1/2 year high in U.S. crude oil inventories.

Today's U.S. Earnings Reports Earnings reports (sorted by mkt cap): NVDA-Nvidia (consensus $0.15), ENS-Enersys (0.89).
Global Financial Calendar

Friday 5/11/12
United States
0830 ET	Apr PPI expected unchanged m/m and +2.1% y/y, Mar unchanged m/m and +2.8% y/y. Apr PPI ex food & energy expected +0.2% m/m and +2.8% y/y, Mar +0.3% m/m and +2.9% y/y.
0915 ET	Dallas Fed President Richard Fisher speaks on Too-Big-To-Fail in Fort Worth, TX.
0955 ET	Preliminary May University of Michigan U.S. consumer confidence expected -0.4 to 76.0, Apr +0.2 to 76.4.
Germany
0200 ET	German April final CPI expected unrevised at +0.1% m/m and +2.0% y/y. German final EU harmonized CPI expected unrevised at +0.2% m/m and +2.2% y/y.
United Kingdom
0430 ET	UK Apr PPI input (nsa) expected -0.9% m/m and +2.1% y/y, Mar +1.9% m/m and +5.8% y/y. UK Apr PPI output (nsa) expected +0.4% m/m and +2.9% y/y, Mar +0.6% m/m and +3.6% y/y. Apr PPI output core expected +0.2% m/m and +1.9% y/y, Mar +0.1% m/m and +2.5% y/y.
Euro-Zone
0500 ET	European Commission releases economic growth forecasts.
CHI
0130 ET	China Apr industrial production expected +12.1% y/y, Mar +11.9% y/y.
0130 ET	China Apr fixed asset investment (ex-rural) expected +20.4% y/y, Mar +20.9% y/y.
0130 ET	China Apr retail sales expected +15.1% y/y, Mar +15.2% y/y.

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