Barchart Morning Call 8/24

Barchart Morning Call

BC - Fri Aug 24, 7:00AM CDT

Overnight Developments

• Sep E-mini S&Ps this morning are trading down -0.13% and the Euro Stoxx 50 is down -0.23%. EUR/USD weakened -0.33% after German lawmaker Kauder said Germany can't make more money available for Greece. Most Commodities are weaker with Oct crude down -0.44% and Sep copper down -0.82%, although grain prices are higher with Dec corn up +0.77% and Nov soybeans up +0.87%. Sep T-notes are up +4 ticks.
• Asian stocks closed lower after weekly U.S. jobless claims rose more than expected and as concern intensified that European leaders are making little progress on the debt crisis: Japan -1.17%, Hong Kong -1.25%, China -1.15%, Australia -0.79%, South Korea -1.38%, India -0.38%. Asian mining stocks and the Australian dollar also fell after RBA Governor Stevens said that Australia's mining investment boom will peak "within the next year or two."
• Volker Kauder, parliamentary caucus leader for German Chancellor Merkel's Christian Democratic Union, said Germany cannot extend funding for Greece and that Greece's exit from the euro would "not be a problem for the euro."
• German government spokesman Seibert said that future decisions on Greece will depend on the results of a review of the country's economic reform efforts by its international creditors. Greek Prime Minister Samaras is scheduled to meet with German Chancellor Merkel and French President Hollande this weekend to try to persuade them to allow Greece 2 more years to meet its deficit targets, which would allow Greece to spread its cutbacks to 2016 instead of 2014, as stated in its previous bailout agreement.
• U.K. Q2 GDP was revised upward to -0.5% q/q and -0.5% y/y from the originally reported -0.7% q/q and -0.8% y/y.
• Weekly Shanghai copper inventories rose +2,787 MT to 158,938 MT, their first increase in the last 3 weeks.
  Market Comments
  • Sep E-mini S&Ps this morning are down -1.75 points (-0.13%). The stock market on Thursday closed moderately lower: S&P 500 -0.81%, Dow Jones -0.88%, Nasdaq 100 -0.77%. Bearish factors included (1) continued long liquidation pressure after the S&P 500 index on Tuesday hit a new 4-year high, (2) the 4,000 rise in initial unemployment claims, (3) hawkish comments by St. Louis Fed President Bullard, who called the FOMC minutes "stale" due to the recent stronger economic data and thus downplayed the chances of QE3, (4) the weak Chinese PMI report of -1.5 points to 47.8, and (5) the generally weak Eurozone PMI indexes.
  • Sep 10-year T-notes this morning are up 4 ticks. T-note prices on Thursday extended Wednesday's sharp rally: TYU2 +12, FVU2 +3.75. Bullish factors included increased safe-haven demand with the fairly sharp sell-off in stocks and continued hopes for QE3 in September.
  • The dollar index this morning is up +0.24% with EUR/USD down -0.33% USD/JPY unchanged. The dollar index on Thursday extended the downside breakout and closed mildly lower: Dollar index -0.13 (-0.15%), EUR/USD +0.0036 (+0.29%), USD/JPY -0.08 (-0.10%). The dollar posted a new 2-month low and nearly took out the 3-month low posted in mid-June. EUR/USD posted a new 1-1/2 month high. The dollar continued to show weakness on the speculation about QE3. However, gains in EUR/USD were limited as Eurozone officials appear to have little idea at present about how to handle Greece.
  • Oct WTI crude oil prices this morning are down -42 cents a barrel (-0.44%) and Oct gasoline is up +0.0002 cent a gallon (+0.01%). Oct crude oil prices on Thursday rallied to a new 3-month high and Sep gasoline rallied to a new 4-month high but then fell on long liquidation pressure sparked by the weakness in stocks: CLV2 +0.58 (+0.60%), RBU2 +0.0339 (+1.18%). Crude oil prices were also hurt by the weak Chinese Aug manufacturing PMI report of -1.5 to 47.8 and the weak European PMI reports.
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): Madison Square (Consensus $0.20), Teekay Offshore (0.29), PSS-Collective Brand (0.23).
    Global Financial Calendar
    

    Friday 8/24/12
    United States
    0830 ET	July durable goods orders expected +2.5%, June +1.3%. July durable goods orders ex-transportation expected +0.5%, June -1.4%.
    Japan
    0345 ET	BOJ Governor Shirakawa holds a press conference.
    Euro-Zone
    0400 ET	Spain's cabinet meets followed by a news conference.
    United Kingdom
    0430 ET	Revised U.K. Q2 GDP, previous -0.7% q/q and -0.8% y/y.

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