Barchart Morning Call 2/2

Barchart Morning Call

Barchart.com - 1 hr 44 mins ago

Overnight Developments

• Global stocks this morning are mixed with the Euro Stoxx 50 down -0.22% and Mar S&Ps down -0.60 of a point. The dollar and Treasuries are higher while most commodities weakened with crude oil at a 1-1/4 month low as Greece struggles to reach an agreement with bondholders on cutting its debt burden. The euro came off of its low after Chinese Premier Wen Jiabao said China is still researching the best way to participate in the European Financial Stability Facility. The euro also received a boost after France sold 7.96 billion euros of 6, 8, and 10-year debt at the top of its planned range while Spain sold 4.56 billion euros of bonds maturing between 2015-17, just above its maximum target of 4.50 billion euros. German bunds rallied after Dec Euro-Zone PPI fell -0.2% m/m, a bigger than decline than expectations of -0.1% m/m, while European stocks were undercut after Jan U.K. PMI construction fell -1.8 to 51.4, weaker than expectations of -0.7 to 52.5.
• Asian stocks today closed higher with Japan up +0.76%, China +2.36%, Australia +1.00%, South Korea +1.28%, India +0.76%. Asian stocks moved higher as manufacturing gained in the U.S. and Europe, which boosts confidence the global economy is recovering. Asian carmakers rallied after U.S. vehicle sales in Jan rose +11% y/y, while Chinese automakers were boosted after Daiwa securities predicted a "double-digit" gain this year in China's vehicle sales. Chinese stocks also received a lift after Premier Wen Jiabao said the government will support small companies with a 15 billion-yuan ($2.4 billion) fund, extend preferential tax policies for small companies until 2015 and ask banks to increase tolerance for bad loans to these businesses. The yen held near a 3-month high against the dollar despite warnings from Japanese Finance Minster Azumi who said that "speculative moves are increasing in the market and we can't overlook them," which may signal Japan is close to resuming foreign-exchange intervention to stem the yen's gains.

Overnight U.S. Stock News

• March S&Ps this morning are trading little changed, down -0.60 of a point. The US stock market Wednesday rallied sharply and settled higher after strength in global manufacturing activity reduced economic growth concerns and optimism increased that Greek debt-swap talks would soon be resolved: Dow Jones +0.66%, S&P 500 +0.89%, Nasdaq Composite +1.22%. The Nasdaq posted a 10-3/4 year high. Bullish factors on Wednesday included (1) reduced economic growth concerns as global manufacturing activity expanded last month after the Jan ISM manufacturing index rose +1.0 to 54.1, its best level in 7 months, the Jan German PMI expanded at its fastest pace in 6 months (51.0), the Jan U.K. PMI rose to its best level in 9 months (+2.4 to 52.1), India's Jan manufacturing activity grew at the fastest pace in 8 months (+3.3 to 57.5) and the Jan China PMI unexpectedly expanded (+0.2 to 50.5), (2) a decline in Spanish, Italian and Portuguese government bond yields on optimism that Greek debt-swap talks would soon be resolved, and (3) strength in technology stocks as Microsoft rose 1.2% and Hewlett-Packard gained 2.8%, which boosted the Philadelphia Semiconductor Index to a 6-1/2 month high.
• Bearish factors included (1) the smaller-than-expected increase in the Jan ADP employment change along with the downward revision to Dec (Jan +170,000 versus expectations of +182,000 and Dec revised down to +292,000 from the originally reported +325,000) and (2) the larger-than-expected increase in the Jan ISM prices paid sub-index which jumped to a 4-month high (+8.0 to 55.5 versus expectations of +2.5 to 50.0).
• Qualcomm (QCOM) rose 4.8% in pre-market trading up to a 12-year high after the company raised its full-year earnings-per-share forecast to $3.36 to $3.56 from an earlier prediction of $2.80 to $3.00 a share on strength in its phone shipments to India and China.

Today's Market Focus

• March 10-year T-notes this morning are up +4 ticks. T-note prices on Wednesday retreated on reduced safe-haven demand as stocks rallied after global manufacturing activity expanded and on optimism that the Greek debt-swap talks would soon be resolved: TYH2 -8.5, FVH2 -1.5, EDM2 +2.5. Bearish factors included (1) reduced safe-haven demand for Treasuries after stocks rallied sharply as strength in global manufacturing eased concern the European debt crisis will curb economic growth after the Jan ISM manufacturing index rose +1.0 to 54.1, its best level in 7 months, the Jan German PMI expanded at its fastest pace in 6 months (51.0), the Jan U.K. PMI rose to its best level in 9 months (+2.4 to 52.1), India's Jan manufacturing activity grew at the fastest pace in 8 months (+3.3 to 57.5) and the Jan China PMI unexpectedly expanded (+0.2 to 50.5), (2) the larger-than-expected increase in the Jan ISM prices paid sub-index which jumped to a 4-month high (+8.0 to 55.5 versus expectations of +2.5 to 50.0), and (3) a decline in Spanish, Italian and Portuguese government bond yields on optimism that Greek debt-swap talks would soon be resolved. Bullish factors Wednesday included (1) the smaller-than-expected increase in the Jan ADP employment change along with the downward revision to Dec (Jan +170,000 versus expectations of +182,000 and Dec revised down to +292,000 from the originally reported +325,000) and (2) the action by the Fed to purchase $1.746 billion of Treasuries as part of it Operation Twist program to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an effort to keep borrowing costs low.
• The dollar index this morning is higher with the dollar/yen -0.07 yen and the euro/dollar -0.67 cents. The dollar index on Wednesday fell to a fresh 1-1/2 month low and settled lower on reduced safe-haven demand as strength in global manufacturing activity boosted stocks along with optimism that progress was being made in Greek debt-swap talks: Dollar Index -0.366, USDJPY -0.057, EURUSD +0.00765. Bearish factors Wednesday included (1) strength in the euro after the Jan German PMI was revised up to a 6-month high of 51.0, (2) reduced safe-haven demand for the dollar as stocks rallied on economic optimism after Jan China manufacturing activity unexpectedly expanded and the Jan ISM manufacturing index expanded at its fastest pace in 7 months, (3) strength in the yen which rallied to a 3-month high against the dollar, and (4) optimism that Greek debt-swap talks would be soon resolved after people with knowledge of the debt talks said creditors negotiating with Greece may get a sweetener tied to a revival in economic growth that would ease the impact of accepting a lower interest rate on the new bonds. A bullish factor was speculation that Japan may intervene in currency markets to curb the yen's gains if it strengthens further against the dollar.
• Mar crude oil prices this morning are down -$1.00 a barrel at a 1-1/4 month low and Mar gasoline is -2.27 cents per gallon. Crude oil and gasoline prices on Wednesday traded on either side of unchanged and finally settled mixed as a weaker dollar and strong global manufacturing activity offset a larger-than-expected increase in weekly DOE supplies and a plunge in U.S. gasoline demand: CLH12 -$0.87, RBH12 +0.13. Bullish factors included (1) the slump in the dollar index to a 1-1/2 month low, which boosts investment demand in commodities, and (2) strength in global manufacturing activity which may boost worldwide energy demand after the Jam ISM manufacturing index expanded at its fastest pace in 7 months, the Jan German PMI climbed to its best level in 6 months, India's Jan manufacturing activity grew at the fastest pace in 8 months and China's PMI unexpectedly expanded last month. Bearish factors included (1) the larger-than-expected increase in weekly DOE crude supplies (+4.18 million bbl to a 3-month high of 338.9 million bbl versus expectations of +2.7 million bbl), (2) the surge in weekly DOE gasoline supplies to their highest level in 11 months (+3.02 million bbl to 230.1 million bbl versus expectations of +500,000 bbl), (3) slack demand after U.S. gasoline demand in the week ended Jan 27 fell -1.6% to 7.97 million barrels a day, the lowest in 10-1/3 years.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): MRK-Merck (BEST earnings consensus $0.95), MA-Mastercard (3.91), DOW-Dow Chemical (0.31), GILD-Gilead Sciences (1.05), NOV-National Oilwell Varco (1.30), AGN-Allergan (1.00), VIAB-Viacom (1.05), SE-Spectra Energy (0.49), CMI-Cummins (2.24), K-Kellogg (0.62), BX-Blackstone Group LP (0.40), CME-CME Group (3.67), GR-Goodrich (1.57), CAH-Cardinal Health (0.76), WYNN-Wynn Resorts Ltd. (1.29), IP-International Paper (0.61).
Global Financial Calendar

Thursday 2/2/12
United States
0730 ET	Jan Challenger job cuts, Dec +30.6% y/y.
0830 ET	Weekly initial unemployment claims expected -6,000 to 371,000, previous +21,000 to 377,000. Weekly continuing claims expected -19,000 to 3.535 million, previous +88,000 to 3.554 million.
0830 ET	Q4 non-farm productivity expected +0.8%, Q3 +2.3%. Q4 unit labor costs expected +0.8%, Q3 -2.5%.
0900 ET	Chicago Fed President Charles Evans speaks to reporters in Chicago.
1000 ET	Fed Chairman Ben Bernanke testifies before the House Budget Committee on the state of the U.S. economy.
1030 ET	Jan ICSC chain store sales, Dec +3.5% y/y.
1630 ET	Weekly money supply report and Fed balance sheet.
1915 ET	Dallas Fed President Richard Fisher speaks on the economy and Fed policy at the Headliners Club of Austin Famous Austinites Dinner.
United Kingdom
0430 ET	Jan U.K. PMI construction expected -0.7 to 52.5, Dec +0.9 to 53.2.
Euro-Zone
0500 ET	Dec Euro-Zone PPI expected -0.1% m/m and +4.3% y/y, Nov +0.2% m/m and +5.3% y/y.
0600 ET	European Parliament votes on resolution on Iran?s nuclear program and votes on a Euro bond resolution.
CHI
2000 ET	Jan China non-manufacturing PMI, Dec +6.3 to 56.0.

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Barchart Morning Call - 8/31

Barchart Morning Call

Barchart.com - 1 hr 19 mins ago

Overnight Developments

• Global stocks this morning are weaker with the Euro Stoxx 50 down -0.85% and Dec S&Ps down -11.00 points. The dollar and Treasuries rose while commodities declined on concern that European leaders will struggle to raise funds to contain the region's debt crisis. The euro fell and credit default swaps to insure European government debt rose after the yield on Italian 5-year notes surged 17 bp to 5.92%, the highest in 14 years. The euro also weakened after the Xinhau news agency reported that China can't play the role of "savior" in Europe's debt crisis. European banks led stock losses with BNP Paribas SA, Societe Generale SA and Credit Agricole SA all dropping more than 5%. Stock prices remained under pressure after the Oct Euro-Zone CPI estimate unexpectedly remained at a 3-year high of 3% and after the Sep Euro-Zone unemployment rate unexpectedly increased +0.1 to match a 13-year high of 10.2%. European debt concerns seemed to have affected Sep German retail sales which rose +0.4% m/m and +0.3% y/y, weaker than expectations of +1.0% m/m and +1.6% y/y. The OECD urged G-20 governments and central banks to "act decisively" to restore confidence as it cut its growth estimates for the U.S. economy to 1.7% this year and 1.8% next year from a May projection of 2.6% and 3.1% this year and next. The OECD also lowered its Euro-Zone GDP estimates to 1.6% in 2011 and +0.3% in 2012 from a previous estimate of 2.0% for each year.
• Asian stocks today closed lower with Japan down -0.69%, China -0.51%, Australia -1.27%, SOuth Korea -1.03%, India -0.56%. The yen plunged to a 2-3/4 month low against the dollar after Japan intervened in the currency market for the third time this year in a unilateral intervention. Japanese Finance Minister Azumi said the move was carried out to combat "one-sided speculative moves that don't reflect the economic fundamentals of our economy." Japan had sold 4.51 trillion yen in Aug to combat the yen's strength, the largest monthly amount since Mar 2004. Chinese stocks closed lower, led by losses in producers of property materials and property developers, after Premier Wen Jiabao said the government should "firmly" maintain property curbs.

Overnight U.S. Stock News

• December S&Ps this morning are trading down by -11.00 points. The US stock market last Friday traded in the red most of the day and settled mixed as concern EU leaders haven't done enough to stem the region's debt crisis offset an increase in consumer confidence: Dow Jones +0.18%, S&P 500 +0.04%, Nasdaq Composite -0.05%. Bullish factors included (1) reduced labor costs with the smaller-than-expected increase in the Q3 U.S. employment cost index which posted its smallest gain in 10 months (+0.3% versus expectations of +0.6%), (2) the smaller-than-expected increase in the Sep PCE core deflator (unchanged m/m and +1.6% y/y versus expectations of +0.1% m/m and +1.7% y/y), (3) the as-expected +0.6% increase in Sep personal spending, which shows consumer spending remains relatively healthy, and (4) the larger-than-expected increase in the final Oct U.S. University of Michigan consumer confidence which climbed to a 3-month high (+3.4 to 60.9 versus expectations of +0.5 to 58.0).
• Bearish factors included (1) carry-over weakness from a slide in European stocks after weak demand for an Italian bond auction drove up 10-year Italian bond yields 15 bp, (2) the statement from Fitch Ratings that the European agreement on a 50% haircut on Greek bonds "would be viewed by the agency as a default event under its Distressed Debt Exchange criteria," and (3) the smaller-than-expected increase in Sep U.S. personal income, (+0.1% versus expectations of +0.3%), which may prompt a decline in consumer spending as income growth remains stagnant.
• Chevron (CVX) slipped 1.3% in pre-market trading as crude oil fell and after Bank of America cut the stock to "neutral" from "buy."

Today's Market Focus

• December 10-year T-notes this morning are up +11.5 ticks as stocks slide. T-note prices last Friday settled higher on reduced price pressures along with an increase in safe-haven demand on concern European officials may need to take further steps to stem the region's debt crisis: TYZ11 +25, FVZ11 +12, EDH12 +3.0. Bullish factors included (1) the smaller-than-expected increase in the Q3 U.S. employment cost index which posted its smallest gain in 10 months (+0.3% versus expectations of +0.6%), (2) the smaller-than-expected increase in Sep U.S. personal income (+0.1% versus expectations of +0.3%), which may prompt a decline in consumer spending as income growth remains stagnant, (3) the smaller-than-expected increase in the Sep PCE core deflator (unchanged m/m and +1.6% y/y versus expectations of +0.1% m/m and +1.7% y/y), and (4) increased demand for Treasuries after Fitch Ratings said that part of the European plan to stem the region's debt crisis amounts to a Greek default. Bearish factors included (1) the as-expected +0.6% increase in Sep personal spending, which shows consumer spending remains relatively healthy and (2) the larger-than-expected increase in the final Oct U.S. University of Michigan consumer confidence which climbed to a 3-month high (+3.4 to 60.9 versus expectations of +0.5 to 58.0).
• The dollar index this morning is stronger with the dollar/yen +2.07 yen and the euro/dollar -1.40 cents. The yen plunged to a 2-3/4 month low against the dollar following Japan's intervention in the currency market to stem the yen's strength. The dollar index last Friday settled slightly higher as the euro weakened after an increase in Italian borrowing costs raised concern EU leaders haven't done enough to stem the region's debt crisis: Dollar Index +0.188, USDJPY -0.153, EURUSD -0.00416. Bullish factors included (1) a weaker-than-anticipated Italian bond auction after only 7.93 billion euros out of a maximum target of 8.5 billion-euros were purchased, (2) weaker-than-expected Sep French consumer spending, and (3) the weaker than expected Sep Japan industrial production, which is yen negative. A bearish factor was the weaker-than-expected Sep U.S. personal income, which may inhibit growth as weak income growth prompts consumers to cut back on spending.
• Dec crude oil prices this morning are doen -68 cents a barrel and Dec gasoline is -1.14 cents per gallon. Crude oil and gasoline prices last Friday settled lower on global economic growth concerns along with dollar strength: CLZ11 -$0.64, RBZ11 -5.98. Bearish factors included (1) the -4.0% m/m decline Sep Japan industrial pr0duction, nearly double the decline that was expected and an indication of weak energy demand in the world's third-largest oil consumer and (2) the stronger dollar, which diminishes investment demand for commodities. A bullish factor was the larger-than-expected increase in the final Oct U.S. University of Michigan consumer confidence, which may signal that consumer spending and fuel demand may be sustained.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): APC-Anadarko Petroleum (BEST earnings consensus $0.66), L-Loews (0.54), HCP-HCP Inc. (0.48), ALL-Allstate (0.09), HUM-Humana (2.03), AVB-AvalonBay Communities (0.48), CNA-CNA Financial (0.10), HLF-Herbalife Ltd. (0.76), FMC-FMC Corp. (1.35), BWP-Boardwalk Pipeline Partners LP (0.24), UDR-UDR Inc. (-0.11), SM-SM Energy (0.69), SBAC-SBA Communications (-0.24), PRE-PartnerRe Ltd. (1.45), MDU-MDU Resources Group (0.37), CCO-Clear Channel Outdoor Holdings (0.05).
Global Financial Calendar

Monday 10/31/11
United States
0945 ET	Oct Chicago purchasing managers index expected -1.4 to 59.0, Sep +4.1 to 60.4.
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
Japan
0100 ET	Sep Japan construction orders, Aug +9.3% y/y.
0100 ET	Sep Japan housing starts expected +8.6% y/y to 906,000, Aug +14.0% y/y to 934,000.
2130 ET	Sep Japan labor cash earnings expected -0.4% y/y, Aug -0.4% y/y.
Germany
0300 ET	Sep German retail sales expected +1.0% m/m and +1.6% y/y, Aug -2.7% m/m and +2.2% y/y.
France
0345 ET	Sep French producer prices expected +0.1% m/m and +6.1% y/y, Aug unchanged m/m and +6.3% y/y.
United Kingdom
0530 ET	Sep U.K. net consumer credit expected +0.4 billion pounds, Aug +0.5 billion pounds.
0530 ET	Sep U.K. mortgage approvals expected +50,600, Aug +52,400.
0530 ET	Sep U.K. M4 money supply, Aug -0.2% m/m and -0.5% y/y.
Euro-Zone
0600 ET	Oct Euro-Zone CPI estimate expected +2.9% y/y, Sep +3.0% y/y.
0600 ET	Sep Euro-Zone unemployment rate expected unchanged at 10.0%, Aug unchanged at 10.0%,
Canada
0830 ET	Sep Canada industrial product prices expected +0.1% m/m, Aug +0.5% m/m.
0830 ET	Sep Canada raw materials price index expected -1.9% m/m, Aug -3.2% m/m.
CHI
2100 ET	Oct China PMI manufacturing expected +0.6 to 51.8, Sep +0.3 to 51.2.

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BAC : Ken Lewis and Bank of America

I've really tried to pay attention to this whole Ken Lewis - Bank of America saga. I'm really more confused then ever. I'm not sure what to believe and need your help. Please give me your opinions.

1. Ken Lewis is one of the smartest CEOs ever. He has weathered the storm and bought both Country Wide and Merrill Lynch for a song and got the Feds to pay for it all. He should be Time Magazine's Man of the Year.

2. Ken Lewis has knowingly lied about everything and has committed securities fraud. Not only is he as bad as Madoff and Stanford but his Ponzi scheme is a lot bigger. Indict and arrest him for fraud.

3. Ken Lewis and his Board of Directors have misled the stock holders, the Fed, the SEC, and the press. Because of their lies and deliberate misinformation stockholders have lost billions. Sue them all for every cent they have.

4. Ken Lewis is the stupidest CEO ever. Because he was clueless he made and packaged bad loans that destroyed the American economy, bought Country Wide and Merrill Lynch without even the least due diligence. He isn't smart enough to be a teller in one of his bank locations. Fire him without a severance package.

5. Ken Lewis? Who cares?

Please give me your opinions.