Barchart Morning Call 1/9

Barchart Morning Call

BC - 1 hr 52 mins ago

Overnight Developments

• March E-mini S&Ps this morning are trading unchanged, supported by Alcoa's favorable China outlook but undercut by the weak German industrial production report of +0.2% m/m. European stocks are slightly higher by +0.10%. Asian stocks today closed mostly higher with Japan up +0.67%, Hong Kong up +0.46%, and China up +0.03%. Commodity prices are down -0.12%. Feb crude oil is down -0.20%, Feb gasoline is down -0.80%, Feb gold is down -0.07%, and March copper is up +0.29%. Agriculture prices are narrowly mixed. The dollar index is up +0.26%. EUR/USD is down -0.24% while USD/JPY is up +0.52%. March 10-year T-notes are unchanged.
• Alcoa after yesterday's close reported Q4 EPS of 6 cents per share, which was in line with market expectations. Alcoa's Q4 revenue of 5.9 billion beat the market consensus of $5.6 billion. Alcoa's CEO said that Alcoa believes that aluminum demand in China will grow by 11% this year on stimulus spending announced by China's new leadership.
• The German industrial production report of +0.2% m/m and -2.9% y/y was weaker than market expectations of +1.0% m/m. Oct was revised stronger to -2.0% m/m and -3.0% y/y from -2.6% m/m and -3.7% y/y. The report highlighted the toll that the Eurozone recession is having on the German economy. GBP/USD is down -0.21% this morning.
• The UK trade report showed a mildly larger deficit than expected and was mildly bearish for the pound. The Nov visible trade deficit of -9.164 billion pounds was wider than the expected -9.0 billion pounds, but was at least down from Oct's report of -9.487 billion pounds.
  Market Comments
  • March E-mini S&Ps this morning are unchanged. Alcoa's positive outlook for China is a supportive factor for stocks this morning, but Germany's industrial production report of +0.2% was weaker than expected. The S&P 500 index on Tuesday closed mildly lower for the second session on long liquidation pressure sparked by nervousness ahead of earnings season and the debt ceiling battle in February. Closes: S&P 500 -0.32%, Dow Jones -0.41%, Nasdaq -0.20%. U.S. Nov consumer credit rose +$16.045 bln, stronger than market expectations of +$12.8 bln. The Eurozone Dec economic confidence index rose by 1.3 points to 87.0 from 85.7 in Nov, which was stronger than market expectations for a +0.6 point increase to 86.3.
  • March 10-year T-notes this morning are unchanged ahead of today's 10-year T-note auction. March 10-year T-note prices on Tuesday closed moderately higher on (1) some increased safe-haven demand with the sell-off in stocks, and (2) strong demand for the 3-year T-note auction with a bid cover ratio of 3.62, up from 3.36 in Dec and above the 12-auction average of 3.55. However, foreign demand f or the 3-year was weak with indirect bidders taking 28.4% of the auction, below the 12-auction average of 30.5%. Closes: TYH3 +9, FVH3 +4.
  • The dollar index this morning is mildly higher by +0.21 (+0.26%). EUR/USD is down -0.0032 (-0.24%), and USD/JPY is up +0.45 (+0.52%). The dollar index on Tuesday closed slightly higher on the continued slide in the stock market. EUR/USD fell on mixed Eurozone economic data and on continued worries about the outside chance for an ECB rate cut on Thursday. Closes: Dollar index +0.09 (+0.11%), EUR/USD -0.0036 (-0.27%), USD/JPY -0.74 (-0.84%).
  • Feb WTI crude oil prices this morning are down -0.19 (-0.20%) and Feb gasoline is down -0.0233 (-0.80%) on the higher dollar and worries ahead of today's weekly DOE report, which is expected to show inventory increases for crude oil and products. Feb crude oil and gasoline prices on Tuesday closed mixed. Crude oil prices were pressured by the API report of a 2.4 mln bbl rise in crude oil inventories, mildly stronger than the consensus for a 2.0 mln bbl rise for today's DOE report. API gasoline inventories rose sharply by 7.9 mln bbl, well above the DOE consensus of +2.5 mln bbl. Gasoline was supported by a leak and shut-down of the Motiva Enterprises 325,000 bpd refinery at Port Arthur, TX. Closes: CLG3 -0.04 (-0.04%), RBG3 +0.0170 (+0.61%).
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    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): STZ-Constellation (consensus $0.55), PSMT-Pricesmart (0.62), TXI-Texas Industries (-0.31), HELE-Helen of Troy (1.14), AZZ-AZZ Inc (0.61), RT-Ruby Tuesday (-0.06%).
    Global Financial Calendar

    Wednesday 1/9/13
    United States
    0700 ET	Weekly MBA mortgage applications, previous -10.4% with the purchase sub-index down -10.5% and refi index -10.4%.
    1030 ET	DOE Weekly Petroleum Status Report.
    1300 ET	Treasury auction of $21 billion in 10-year T-notes.
    United Kingdom
    0430 ET	UK Nov visible trade balance expected -9.0 bln pounds, Oct -9.539 bln pounds. Nov non-EU trade balance expected -42. bln pounds, Oct -4.532 bln pounds. Nov total trade balance expected -3.0 bln pounds, Oct -3.644 bln pounds.
    Germany
    0600 ET	German Nov industrial production expected +1.0% m/m and -2.9% y/y, Oct -2.6% m/m and -3.7% y/y.

    
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