Barchart Morning Call 1/30

Barchart Morning Call

BC - Wed Jan 30, 7:00AM CST

Overnight Developments

• March E-mini S&Ps this morning are trading unchanged ahead of today's FOMC meeting and GDP and ADP reports. European stocks are down -0.24% while Asian stocks closed higher almost across the board. Japan closed +2.28%, Hong Kong closed +0.71%, and China closed +0.48%. Commodity prices are trading moderately higher by +0.53%. March crude oil is up +0.33%, March gasoline is up +0.19%, Feb gold is up +0.17%, March copper is up +1.15%, and agriculture prices are trading mostly higher. The dollar index is down -0.19% while EUR/USD has continued higher and is up +0.39%. USD/JPY is up +0.60%. March 10-year T-notes are down 7 ticks on reduced safe-haven demand.
• The FOMC at its meeting today is unanimously expected to leave its policy unchanged with its QE3 program at $85 billion per month. The FOMC needs to maintain its insurance policy on the U.S. economy as Washington engages in its fiscal battle over the next three months capped by the return of the debt limit in mid-May. However, the minutes from the December FOMC meeting said that FOMC members generally expect QE3 to end somewhere between mid-2013 and the end of 2013. The FOMC's zero interest rate policy, by contrast, is still expected to last until 2015.
• Eurozone Jan economic confidence rose by 2.2 points to a 7-month high of 89.2 from 87.0 in December, which was 1.0 stronger than market expectations for an increase to 88.2. Dec was revised higher by +0.8 points to 87.8 from 87.0. The report provided some additional hopeful signs that the Eurozone economy has bottomed and is set to slowly improve this year.
• Spain's Q4 GDP fell -0.7% q/q (-2.8% annualized), which was worse than the Q3 rate of -0.3% q/q (-1.2% annualized) but generally in line with market expectations. On a year-on-year basis, Spain's GDP fell -1.8% in Q4 and by -1.4% for the full 2012 calendar year. The market consensus is that the Spanish economy will see another year of recession in 2013 with a GDP decline of -1.5%, but then improve to +0.4% in 2014.
• Japan Dec retail trade rose +0.1% m/m and +0.4% y/y, which was a bit weaker than market expectations of +0.4% m/m.
  Market Comments
  • March E-mini S&Ps this morning are trading unchanged as the market treads water ahead of today's FOMC meeting and GDP and ADP reports. The S&P 500 index on Tuesday shook off early weakness and rallied to a fresh 5-year high and closed higher on better-than-expected quarterly stock earnings results along with improved global economic sentiment. Closes: S&P 500 +0.51%, Dow Jones +0.52%, Nasdaq +0.04%. Strength in home prices bolstered confidence in the economic outlook after the Nov S&P/CaseShiller composite-20 home price index rose +5.5% y/y, the biggest increase in 6 years. Other bullish factors included a rally in European stocks after Italy's 6-month bill yields declined to a 3-year low of 0.73% and German Feb Gfk consumer confidence rose by +0.2 to 5.8, which reduced European sovereign debt concerns. Earnings results from U.S. companies were another positive for stocks with profits beating estimates at 75% of the 175 companies in the S&P 500 that have reported earnings so far this season. Prices dipped briefly mid-morning after U.S. Jan consumer confidence showed a larger-than-expected decline of -8.1 to a 14-month low of 58.6.
  • March 10-year T-notes this morning are down 7 ticks as the market sees additional weakness on reduced safe-haven demand. March 10-year T-note prices on Tuesday closed little changed as stock market strength reduced safe-haven demand for Treasuries and offset the larger-than-expected -8.1 point decline in U.S. Jan consumer confidence to a 14-month low. Another negative for T-note prices was the +5.5% y/y increase in the Nov S&P/CaseShiller home price index, the biggest y/y gain in 6 years. Closes: TYH3 unch, FVH3 +1.25.
  • The dollar index this morning is down -0.15 (-0.19%) on reduced safe-haven demand. EUR/USD is up +0.0053 (+0.39%) and USD/JPY is up +0.54 (+0.60%). The dollar index on Tuesday fell to a 2-week low on reduced safe-haven demand after the S&P 500 rose to a fresh 5-year high. EUR/USD climbed to a 13-3/4 month high after Italy successfully sold 8.5 billion euros of 6-month bills at 0.731%, the lowest rate in nearly 3 years, illustrating the containment of the European debt crisis. Closes: Dollar index -0.272 (-0.34%), EUR/USD +0.00366 (+0.27%), USD/JPY -0.135 (-0.14%).
  • March WTI crude oil this morning is up +0.32 (+0.33%) and March gasoline is up +0.0057 (+0.19%). Mar crude oil and gasoline Tuesday closed higher as a rally in the S&P 500 to a 5-year high boosted economic sentiment. Increased geopolitical concerns also helped propel Mar crude to a 4-1/4 month high and Mar gasoline to a 3-1/2 month high after Egypt's defense chief warned that continued political unrest could bring about the "collapse" of the state, which may slow or stop the flow of crude through the Suez Canal. Expectations for Wednesday's weekly DOE report are for a +2.5 million barrel increase in crude oil inventories, a +1.0 million barrel increase in gasoline inventories, a -500,000 barrel decline in distillate inventories, and a -0.3 point decline in the refinery utilization rate. Closes: CLH3 +1.13 (+1.17%), RBH3 +0.0354 (+1.20%).
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    Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): QCOM-Qualcom (consensus $1.12), COP-ConoccoPhillips (1.42), FB-Facebook (0.15), BA-Boeing (1.18), LVS-Las Vegas Sands (0.60), SO-Southern (0.40), PSX-Phillips (1.69), MPC-Marathon Petroleum (2.10), HES-Hess Corp (1.21), NOC-Northrop Grumman (1.74), AVB-Avalonbay (0.73), AMP-Ameriprise Financial (1.47), CTXS-Citrix Systems (0.84), ROK-Rockwell Automation (1.26), MUR-Murphy Oil (1.36), ADT-ADT Corp (0.42), WEC-Wisconsin Energy (0.41), TNDX-Yandex (0.28), SLG-SL Green Realty (0.21), NXPI-NXP Semiconductor, LLL-L-3 Communications (2.12), TSCO-Tractor Supply (1.03).
    Global Financial Calendar

    Wednesday 1/30/13
    United States
    0700 ET	Weekly MBA mortgage applications, previous +7.0% with purchase sub-index +2.5% and refi sub-index +7.7%.
    0815 ET	Jan ADP employment change expected +165,000, Dec +215,000.
    0830 ET	Q4 GDP expected +1.1% q/q annualized, Q3 +3.1% q/q annualized. Q4 price index expected +1.5%, Q3 +2.7%. Q4 core PCE expected +1.0%, Q3 +1.1%. Q4 personal consumption expected +2.1%, Q3 +1.6%.
    1030 ET	DOE Weekly Petroleum Status Report.
    1300 ET	Treasury auction of $29 billion in 7-year T-notes.
    1415 ET	FOMC releases post-meeting statement after 2-day policy meeting. No Bernanke press conference.
    United Kingdom
    0430 ET	UK Dec net consumer credit expected +0.2 bln pounds, Nov +0.1 bln pounds. Dec net lending secured on dwellings expected +0.5 bln pounds, Nov -0.2 bln pounds.
    0430 ET	UK Dec mortgage approvals expected +54,500, Nov 54,000.
    0430 ET	UK Dec M4, Nov -0.2% m/m and -2.8% y/y.
    1901 ET	UK Jan GfK consumer confidence survey expected -28, Dec -29.
    Euro-Zone
    0500 ET	Eurozone Jan economic confidence expected 88.2, Dec 87.0. Jan business climate indicator expected -1.00, Dec -1.12. Jan industrial confidence expected -13.5, Dec -14.4. Jan services confidence expected -9.0, Dec -9.8.
    Japan
    1815 ET	Japan Jan Markit/JMMA manufacturing PMI, Dec 45.
    1850 ET	Japan Dec industrial production expected +4.1% m/m and -5.6% y/y, Nov -1.4% m/m and -5.5% y/y.
    2030 ET	Japan Dec labor cash earnings, Nov -0.8% y/y.
    2300 ET	Japan Dec vehicle production, Nov -8.4% y/y.

    
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