Barchart Morning Call 9/18

Barchart Morning Call

BC - Tue Sep 18, 7:00AM CDT

Overnight Developments

• Dec E-mini S&Ps this morning are trading mildly lower by -0.19%, undercut by a -1.25% drop in European stocks and a -1.04% sell-off in Chinese stocks. Chinese stocks were hurt by the China-Japan territorial dispute while European stocks continue to be undercut by slow progress by officials on the Eurozone debt crisis. Commodity prices are down -0.57% today as the long liquidation sell-off continues. Oct crude oil is down -0.49%, Dec gold is down -0.66%, Dec copper is down -1.00%, and agricultural prices are trading mostly lower. The dollar index is mildly higher by +0.14% while EUR/USD is down -0.37%. USD/JPY is down -0.11%. Dec 10-year T-notes are up 9 ticks.
• Spain today successfully sold 4.6 billion euros worth of 12-month and 18-month bills at lower yields than previous sales, which was a positive development. However, the markets are waiting to gauge investors' reception for Spain's sale of 4.5 billion euros worth of 3-year and 10-year bonds on Thursday, which will be a tougher sell.
• Spain's Deputy Prime Minister Soraya Saenz de Santamaria said today that Spain will consider a rescue if the conditions are acceptable. Spanish bond yields have recently been rising since Spain has dragged its feet on requesting a bailout from the ECB/ESM bond-buying program due to political considerations of not wanting to submit to Eurozone austerity supervision.
• The ZEW Sep index of German investor and analyst expectations improved to -18.2 from -25.5 in August, which was better than market expectations of -20. The ZEW Eurozone economic sentiment index showed a sharp improvement to -3.8 from -21.2 in August.
• The UK Aug CPI report +0.5% m/m and +2.5% y/y was in line with market expectations. The UK Aug core CPI eased to +2.1% y/y from +2.3% y/y in July.
• There were protests again today in China against Japan today as the dispute continues over the Diaoyu/Senkaku islands. The protests, which led to attacks over the weekend on some Japanese retail stores and factories, jeopardizes $340 billion in trade between the two countries, neither of which can afford to see exports slip.
• Prices for newly constructed homes in China rose in 35 of 70 cities surveyed in August, down from 49 cities in July. The deceleration in home prices is a helpful development since it means that Chinese officials may stop looking for ways to crack down on property price gains.
  Market Comments
  • Dec E-mini S&Ps this morning are down -2.75 (-0.19%) on continued long liquidation pressure after the QE3 rally and on lower European and Chinese stocks. The S&P 500 index on Monday fell back from Friday's 4-3/4 year high and closed slightly lower: S&P 500 -0.31%, Dow Jones -0.30%, Nasdaq 100 +0.04%. Bearish factors included (1) long liquidation pressure after the sharp rally seen in the past 3 months, and (2) the weaker-than-expected 4.5 point decline in the Sep NY Empire manufacturing index to -10.4 versus expectations for a 3.9 point rise to -2.0. The U.S. stock market was also undercut by a 2.45% sell-off in Chinese stocks on Monday on concern about protests in China over dispute islands with Japan that resulted in damage to some Japanese stores and factories. In addition, the Hong Kong central bank put curbs on mortgages in an effort to curb property price gains, which was bearish for property stocks.
  • Dec 10-year T-notes this morning are up 9 ticks on some increased safe-haven demand with this morning's sell-off in global stocks. Dec 10-year T-note prices on Monday closed mildly higher: TYZ2 +4.5, FVZ2 -0.5. T-notes saw some short-covering after last Friday's sharp sell-off and a small boost in safe-haven demand with Monday's weakness in stocks.
  • The dollar index this morning is slightly higher by +0.11 points (+0.14%) on some increased safe-haven demand with the lower trade in global stocks. EUR/USD is down -0.37% and USD/JPY is down -0.11%. The dollar index on Monday closed slightly higher: Dollar index +0.10 (+0.13%), EUR/USD -0.0002 (-0.02%), USD/JPY +0.32 (+0.41%). The dollar saw a little short-covering after last week's plunge on QE3, but failed to get any upside head of steam. EUR/USD was undercut after Eurozone finance ministers at their meeting on Friday/Saturday failed to agree on a timetable for the centralization of Eurozone banking regulation and only made modest progress on the ECB/ESM bond buying program, although the meeting did give the impression that Eurozone officials will be open to giving Greece more time to meet its deficit targets.
  • Oct WTI crude oil prices this morning are down -0.47 (-0.49%) on continued long liquidation pressure combined with the slightly higher dollar index. However, Oct gasoline is up +0.0097 (+0.33%). Oct crude oil prices on Monday fell sharply: CLV2 -2.38 (-2.40%), RBV2 -0.0723 (-2.40%). Crude oil prices ran into some heavy long liquidation pressure combined with the weaker-than-expected NY Empire index report. There was another round of speculation about whether President Obama will order a release of oil from the Strategic Petroleum Reserve. Oil futures prices on Monday saw a sharp and unexplained downdraft of as much as $4 per barrel, which some traders attributed to stop orders in a thinly traded market.
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): FDX-FedEx (Consensus:$1.41), CIM-Chimera Inv Corp (0.10), MANU-Manchester United (-0.09), CBRL-Cracker Barrel (1.30).
    Global Financial Calendar
    

    Tuesday 9/18/12
    United States
    0745 ET	ICSC (Int'l Council of Shopping Centers) weekly retailer sales.
    0830 ET	Q2 current account balance expected -$127.5 bln, Q1 -$137.3 billion.
    0855 ET	Redbook weekly retailer sales.
    0900 ET	July net long-term TIC flows, Jun +$9.3 billion.
    1000 ET	Sep NAHB housing market index expected +1 to 38, Aug +2 to 37.
    11:30 ET	NY Fed President William Dudley speaks on economic conditions before the Morris Count Chamber of Commerce in Florham Park, NJ.
    1130 ET	Weekly 4-week T-bill auction.
    1630 ET	API weekly U.S. oil statistics.
    1630 ET	NY Fed President William Dudley speaks on economic conditions before Montclair State University in Montclair, NJ.
    1915 ET	Richmond Fed President Jeffrey Lacker speaks on "Maximum Employment and Monetary Policy" in New York to Money Marketeers.
    Euro-Zone
    0200 ET	Aug EU27 new car registrations.
    0500 ET	Eurozone Sep ZEW economic sentiment index, Aug -21.2.
    Germany
    0500 ET	German Sep ZEW economic sentiment expected -20.0, Aug -25.5. Sep current situation, Aug 18.2.
    United Kingdom
    0430 ET	UK Aug CPI expected +0.5% m/m and +2.5% y/y, July +0.1% m/m and +2.6% y/y. Aug core CPI expected +2.1% y/y, July +2.3% y/y.
    0430 ET	Aug RPI expected +0.5% m/m and +3.1% y/y, July +0.1% m/m and +3.2% y/y. Aug RPI ex mortgage interest payments expected +3.2% y/y, July +3.2% y/y.
    Japan
    n/a	Bank of Japan 2-day meeting begins.

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