Barchart Morning Call 10/15

Barchart Morning Call

BC - Mon Oct 15, 7:00AM CDT

Overnight Developments

• Dec E-mini S&Ps are up +0.46% on the 1.02% rally in European stocks and optimism ahead of today's expected +0.8% increase in U.S. Sep retail sales. Asian stocks today closed mixed. Commodity prices are down -0.53% with Nov crude oil down -0.34%, Dec gold down -0.66%, Dec copper down -0.31%, and agriculture prices trading mostly lower. The dollar index is little changed this morning while EUR/USD is up +0.19%. Dec 10-year T-notes are down 0.5 tick.
• China's Sep CPI was reported Sunday night at +1.9% y/y, which was down from Aug's +2.0% and was in line with market expectations. The CPI report was positive and will give the Chinese government room to pursue more accommodative policies.
• China's Sep exports were reported on Saturday at +9.9% y/y, stronger than market expectations of +5.5% and Aug's report of +2.7%. That report gave the market some confidence that China's economy is holding its ground and is not collapsing due to weak global growth and weak exports. China's Sep imports rose +2.4% y/y, which was in line with market expectations and up from Aug's weak -2.6%. China's Sep trade surplus widened to $27.67 billion from $26.66 billion and was wider than market expectations of $20.54.
• China's Sep M2 was reported on Saturday at +14.8% y/y, up from Aug's +13.5% and stronger than market expectations of +13.7%.
• Iran's Foreign Ministry spokesman said that Iran is ready to enter talks to suspend its nuclear enrichment program in return for guaranteed supplies of 20% enriched uranium for its medical research reactor, according to a Press TV report on Sunday. However, few took Iran's statement seriously and saw the announcement simply as an effort to slow down EU foreign ministers, who are due to meet today and may agree on even tighter sanctions on Iran.
  Market Comments
  • Dec E-mini S&Ps this morning are up 6.50 points (+0.46%) on a 1.02% rally in the Euro Stoxx 50 index, the 9.9% y/y increase in Chinese Sep exports, and expectations for a strong U.S. retail sales report this morning. The S&P 500 index on Friday closed lower while the Dow and Nasdaq closed slightly higher: S&P 500 -0.30%, Dow Jones +0.02%, Nasdaq 100 +0.03%. Bullish factors included the 0.6% m/m rise in Aug Eurozone industrial production and the unexpected +4.8 point increase in the U.S. consumer confidence from the University of Michigan to a new 5-year high of 83.1. Bearish factors included the 0.72% sell-off in European stocks and concerns about U.S. declining bank profit margins after earnings reports from Wells Fargo and JPMorgan.
  • Dec 10-year T-notes this morning are down 0.5 tick. Dec 10-year T-note prices on Friday closed slightly higher: TYZ2 +1.5, FVZ2 +0.5. Bullish factors included the slightly lower close in the S&P 500 index, the -0.72% sell-off in European stocks, and the strong demand seen for the week's 3-year and 10-year auctions.
  • The dollar index this morning is slightly higher by +0.03 point (+0.03%). EUR/USD is up +0.0025 (+0.19%) on optimism about a more stable Eurozone debt crisis situation going into the EU Summit late this week. USD/JPY is up +0.24 (+0.31%). The dollar index on Friday closed slightly lower: Dollar index -0.11 (-0.14%), EUR/USD +0.0023 (+0.18%), USD/JPY +0.10 (+0.13%). EUR/USD closed mildly higher as S&P's 2-notch downgrade of Spain's debt rating only increased expectations for Spain to accept the ECB/ESM bailout program. The Spanish 10-year bond yield closed the week down 14 bp at 5.61% near a 5-month low.
  • Nov WTI crude oil prices this morning are down -0.31 (-0.34%) and Nov gasoline is down -0.0303 (-1.05%) on continued technical selling and expectations for reduced refinery disruptions. Nov crude oil and gasoline prices closed lower on Friday: CLX2 -0.21 (-0.23%), RBX2 -0.0628 (-2.12%). Bearish factors included long liquidation pressure in gasoline and the IEA's 100,000 bpd cut in its global oil demand estimate for both 2012 and 2013 due to weak global economic growth. The oil market continued to see bearish overhang from Thursday's report that U.S. oil production in the latest reporting week rose sharply by 1.2% to a new 17-1/2 year high and that gasoline consumption fell by -0.5% and is well below the 5-year average.
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): C-Citigroup (Consensus:$0.97), SCHW-Schwab (0.17), BCI-Gannett (0.53), BRO-Brown & Brown (0.35), PKG-Packaging Corp (0.56), VMI-Valmont Industries (2.05), ICUI-ICU Medical (0.68).
    Global Financial Calendar
    

    Monday 10/15/12
    United States
    0800 ET	NY Fed President Dudley speaks to NABE in NY.
    0830 ET	Oct Empire manufacturing index expected +6.41 to -4.00, Sep -4.56 to -10.41.
    0830 ET	Sep retail sales expected +0.8% m/m, Aug +0.9% m/m. Sep retail sales ex-autos expected +0.6% m/m, Aug +0.8% m/m.
    0830 ET	NOPA Sep soybean crush report.
    1000 ET	Aug business inventories expected +0.5% m/m, July +0.8% m/m.
    1100 ET	USDA weekly grain export inspections.
    1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
    1245 ET	Richmond Fed President Jeffery Lacker speaks on U.S. economy in Virginia.
    1310 ET	St. Louis Fed President James Bullard speaks on U.S. economy in St. Louis, MO.
    1600 ET	USDA Crop Progress
    Japan
    0030 ET	Japan final Aug industrial production, prelim -1.3% m/m and -4.3% y/y. Final-Aug capacity utilization, prelim +0.5% m/m

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