Barchart's Morning Call 8/15

Barchart Morning Call

BC - Wed Aug 15, 7:00AM CDT

Overnight Developments

• Sep E-mini S&Ps this morning are down -0.20% and the Euro Stoxx 50 is down -0.30% on speculation the U.S. economy is growing enough for the Fed to avoid further stimulus measures. Commodity prices are mostly lower with Sep crude down -0.28% and Sep copper down -0.43%, while the grain markets are higher with Dec corn up +0.57% and Nov soybeans up +1.02%%. The dollar index this morning is stronger with EUR/USD down -0.28% and USD/JPY up +0.25% at a 4-week high. Sep T-notes extended Tuesday's declines as they weakened further by another -4 ticks to a 2-month low on reduced expectations for QE3.
• Asian stocks today closed lower led by a slide in steelmakers and mining companies after a director at Vale SA, the world's biggest ore producer, said China's "golden years" of economic expansion are over: Japan -0.05%, Hong Kong -1.18%, China -1.08%, Taiwan -0.15%, Australia -0.26%, Singapore -0.93%, South Korea and India closed for holiday.
• U.K. July jobless claims unexpectedly fell -5,900, better than expectations of a +6,000 increase as the Olympic Games created jobs. The July ILO unemployment rate also unexpectedly fell -0.1 to 8.0%, the lowest in a year.
• The minutes of the Aug 1-2 BOE policy meeting showed policy makers voted unanimously, 9-0, to keep their bond-purchase target unchanged and that they will assess the need for "other measures" in light of the impact of their new credit-boosting program.
• European Economic and Monetary Affairs Commissioner Rehn said Spain's government is considering a request for a sovereign bailout and that "the Spanish government has an open mind on the issue, but no decision has yet been made."
• The director of investor relations for Vale SA, the world's biggest ore producer, said China's "golden years are gone and we are not going to see the spectacular growth rates of 10% to 12% per year."
  Market Comments
  • Sep E-mini S&Ps this morning are down -2.75 points (-0.20%) and the Euro Stoxx 50 is off by -0.30% on reduced expectations for additional Fed stimulus measures. The stock market on Tuesday rallied to 3-1/4 month highs on better-than-expected U.S. July retail sales and stronger-than-expected German Q2 GDP but stocks erased their gains and closed mixed: S&P 500 -0.01%, Dow Jones +0.02%, Nasdaq 100 -0.03%. Other bullish factors included the minutes of last month's BOJ policy meeting which showed policy makers weren't ruling out any options to boost growth along with a fall in Greek, Spanish and Italian bond yields after Greece sold more than its maximum target of 3-month debt at auction. Stocks came off of their best levels in the afternoon after policy planning documents obtained by Bloomberg News showed the U.K. is pressing for the ECB to share power with national regulators as it takes over Euro-Zone bank supervision, which may compromise the ECB's reputation and perceived independence.
  • Sep 10-year T-notes this morning are down -4 ticks at a 2-month low. T-note prices on Tuesday closed lower as 10-year T-notes fell to a 1-1/2 month low after stronger-than-expected U.S. July retail sales bolstered stocks and reduced the safe-haven demand for Treasuries: TYU2 -15.5, FVU2 -6.5. Another factor that reduced safe-haven demand for T-notes was Greece's action to sell more than its maximum target of 3-month bills at auction, which eased European debt concerns.
  • The dollar index this morning is higher. EUR/USD is down -0.28% and USD/JPY is up +0.25% at a 4-week high. The dollar index on Tuesday closed higher as strong July U.S. retail sales reduced speculation the Fed will need to increase stimulus measures while the yen slid to a 3-1/2 week low against the dollar after minutes of the BOJ's July meeting signaled policy makers are considering ways to expand stimulus: Dollar index +0.048 (+0.06%), EUR/USD -0.02%, USD/JPY +0.01%. Dollar gains were limited on reduced safe-haven demand after stocks rallied to 3-1/4 month highs.
  • Sep WTI crude oil prices this morning are down 26 cents a barrel (-0.28%) and Sep gasoline is up +0.0087 of a cent per gallon (+0.29%). Crude oil and gasoline prices on Tuesday settled higher as stronger-than-expected U.S. retail sales and Q2 German GDP data bolstered the outlook for economic growth and energy demand: CLU2 +0.48 (+0.52%), RBU2 +0.0107 (+0.36%). Wednesday's weekly DOE inventory report is expected to show crude stockpiles fell -1.75 million bbl, gasoline supplies declined -2.0 million bbl, distillate inventories dropped -400,000 bbl and the refinery utilization rate slid -0.3 to 92.3% of capacity.
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): CSCO-Cisco Systems (Consensus $0.46), TJT-Target (1.02), DE-Deere & Co. (2.32), AMAT-Applied Materials (0.22), VIP-VimpelCom Ltd. (0.23), LTD-Limited Brands (0.48), A-Agilent Technologies (0.83), NTAP-NetApp (0.38), SPLS-Staples (0.22), PETM-PetSmart (0.66), NTES-NetEase (1.11), SINA-SINA Corp. (-0.02), ANF-Abercrombie & Fitch (0.17), CACI-CACI International (1.50), AFCE-AFC Enterprises (0.26).
    Global Financial Calendar
    

    Wednesday 8/15/12
    United States
    0700 ET	Weekly MBA mortgage applications, previous -1.8% with purchase sub-index -1.4% and refi sub-index -1.9%.
    0830 ET	July CPI expected +0.2% m/m and +1.6% y/y, June unch m/m and +1.7% y/y. July core CPI expected +0.2% m/m and +2.2% y/y, June +0.2% m/m and +2.2% y/y.
    0830 ET	Aug Empire manufacturing index expected -0.4 to 7.0, July +5.10 to 7.4.
    0900 ET	Jun net long-term TIC flows expected +$40.0 billion, May +$55.0 billion.
    0915 ET	July industrial production expected +0.5% m/m, June +0.4% m/m. July manufacturing production , June +0.7% m/m. July capacity utilization expected +0.3 to 79.2%, June +0.2 to 78.9%.
    1000 ET	Aug NAHB housing index expected unchanged at 35, July +6 to 35.
    1030 ET	DOE Weekly Petroleum Status Report.
    2000 ET	Minneapolis Fed President Narayana Kocherlakota speaks on the Fed's overview and the role of the board of directors.
    United Kingdom
    0430 ET	Bank of England meeting minutes from the Aug 1-2 policy meeting.
    0430 ET	UK July claimant count rate expected 4.9%, June 4.9%. July jobless claims change expected +6,000, June +6,100. July ILO unemployment rate expected 8.1%, June 8.1%. June employment change expected 165,000 3-mo/3-mo, May 181,000 3-mo/3-mo.
    0430 ET	UK June average weekly earnings expected +1.7% 3mo y/y, May +1.5% 3mo y/y. June weekly earning ex-bonus expected +1.9% 3mo y/y, May +1.8% 3mo y/y.

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