Barchart Morning Call 7/16

Barchart Morning Call

BC - 1 hr 53 mins ago

Overnight Developments

• Sep E-mini S&Ps are trading slightly lower by -0.18% and the Euro Stoxx 50 is down -0.24% after news that the operation of the Eurozone ESM permanent bailout will be delayed until at least September 12 due to a delay by the German Constitutional Court. Stock prices are also being pressure by negative comments on the economy by the Chinese Premier. Commodity prices are mixed with crude oil down -0.46%, gold down -0.44%, copper down -0.76%, and agricultural prices trading mostly higher. Corn prices are sharply higher by 4.29% this morning as the hot and dry weather continues. The dollar index is up +0.28%. Sep 10-year T-notes are up 4 ticks.
• Asian stocks today closed mixed: Hong Kong +0.15%, China -2.08%, Taiwan -0.20%, Australia +0.56%, Singapore +0.11%, South Korea +0.26%, India -0.64%, Turkey -0.09%. Chinese stocks fell on worries about slower economic growth and earnings.
• China's Premier Wen Jiabao on Sunday said that "It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established." The China Securities Journal reported that stimulus measures may be announced after a State Council meeting on Wednesday. China reported last Thursday night that its Q2 GDP fell to a 3-year low of +7.6% from +8.1% in Q1.
• Germany's Federal Constitutional Court announced today that it will rule on the constitutionality of the ESM permanent bailout fund and the fiscal pact on September 12, meaning the ESM will be delayed from going into operation by at least two months. Moreover, that will only be a preliminary decision on whether to allow the ESM and the fiscal pact to go into effect while it deliberates on a final decision, which may not occur until late this year. The Eurozone still has the temporary EFSF to rely upon to provide bailout funds, but the delay in getting the ESM operational substantially raises the risks of the Eurozone unraveling.
• The June Eurozone CPI of -0.1% m/m and +2.4% y/y was in line with market expectations, while the June core CPI rose by the expected +1.6% y/y.
• The May Eurozone trade balance (seasonally adjusted) rose to 6.3 billion euros from April's revised 4.5 billion euros and was wider than market expectations of 5.0 billion euros.
  Market Comments
  • Sep E-mini S&Ps this morning are trading slightly lower by -2.50 points (-0.18%) due to the delay by the German Constitutional Court on its ESM ruling and on today's 2.08% sell-off in Chinese stocks. The stock market is mainly looking ahead to the semi-annual testimony by Fed Chairman Bernanke on Tuesday and Wednesday. The US stock market on Friday closed sharply higher: S&P 500 +1.65%, Dow Jones +1.62%, Nasdaq 100 +1.56%. Stocks rallied on Friday on technical buying and on the Q2 Chinese GDP report of a 3-year low of +7.6%, which was slightly below market expectations and sparked hopes for more aggressive Chinese economic stimulus. The banking sector received a boost from JPMorgan's Q2 results, which were better than feared. The market was able to shake off the 1.2 point decline to 72.0 in the U.S. consumer confidence index from the University of Michigan, which was weaker than market expectations of +0.3 to 72.5.
  • Sep 10-year T-notes this morning are up 4 ticks on the increased uncertainty about the ESM and the Eurozone debt crisis and on this morning's slightly lower trade in Sep E-mini S&Ps. Sep 10-year T-note prices on Friday closed mildly lower: TYU2 -3.5, FVU2 unch. T-note prices fell on reduced safe-haven demand with the sharp rally in stocks.
  • The dollar index this morning is trading up +0.23 points on increased safe-haven demand while EUR/USD is down -0.0063 (-0.51%) on the delay in the ESM ruling by the German Constitutional Court. USD/JPY is down -0.18 (-0.23%). The dollar index on Friday closed moderately lower: Dollar index -0.31 (-0.37%), EUR/USD +0.0046 (+0.38%), USD/JPY -0.13 (-0.16%). The dollar index lost ground on reduced safe-haven demand with the sharp rally in U.S. and European stocks. The Euro Stoxx 50 index last Friday closed up 1.39%. The 10-year Spanish bond yield closed last week down 29 bp at 6.62%, which was supportive for EUR/USD.
  • Aug WTI crude oil prices this morning are down -0.40 (-0.46%) on the higher dollar, the lower trade in Sep E-mini S&Ps, and the negative comments by Chinese Premier Wen Jiabao. Aug gasoline is slightly higher by +0.0015 (+0.05%). Crude oil and gasoline prices on Friday closed higher: CLQ2 +1.02 (+1.18%), RBQ2 +0.0099 (+0.35%). Bullish factors on Friday included (1) the sharp rally in U.S. and European stocks, which reflected improved economic sentiment, (2) hopes for Chinese economic stimulus to combat the 3-year low in the Chinese Q2 GDP rate of +7.6%, (3) expectations for a continued decline in U.S. oil inventories with U.S. refineries operating at a very high 92.7% of capacity, and (4) continued support from last Thursday's news that Obama administration slapped sanctions on more of Iran's companies that are involved in oil and weapons sales.
  • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit http://www.barchart.com/register/crbfms_usmc.php
    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): Citigroup (Consensus $0.89), JBHT-Hunt Transportation (0.66), CTAS-Cintas (0.60), BRO-Brown & Brown (0.31), GCI- Gannett (0.53).
    Global Financial Calendar
    

    Monday 7/16/12
    United States
    0830 ET	July Empire manufacturing index expected +1.71 to 4.0, June -14.80 to 2.29.
    0830 ET	June retail sales expected +0.2% mm, May -0.2% m/m. June retail sales ex-autos expected unchanged, May -0.4% m/m ex-autos. June retail sales ex auto and gas, May -0.1% m/m.
    1000 ET	May business inventories expected +0.2%, Apr +0.4%.
    1000 ET	IMF releases updates to global growth forecasts.
    1100 ET	USDA weekly grain export inspections.
    1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
    1600 ET	USDA Crop Progress
    1930 ET	Fed's George speaks on monetary policy.
    Japan
    n/a	Marine Day holiday.
    Euro-Zone
    0500 ET	Eurozone June CPI is expected unch m/m and +2.4% y/y, May -0.1%. June core CPI is expected +1.6% y/y, May -1.6% y/y.
    0500 ET	Eurozone May trade balance (sa) expected 5.0 bln euros, April 6.2 bln euros.

    Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.