Barchart Morning Call
Overnight Developments
Global Financial Calendar
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- Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.33% and Mar S&Ps up +1.40 points. The dollar and Treasuries are slightly weaker, while credit default swaps to insure European government debt fell on optimism Greece will get a bailout. According to people familiar with the talks, European governments are considering cutting interest rates on emergency loans to Greece and using contributions from the ECB's sale of its Greek debt holdings to plug a financing gap in the second Greek bailout. Another positive for European stocks and the euro is reduced funding concerns for European banks after the Euribor-OIS spread, a measure of banks' reluctance to lend that is the difference between the euro interbank offered rate and overnight indexed swaps, fell to 69 bp, a 5-1/2 month low. The British pound climbed to a 1-week high against the dollar after Jan U.K. retail ex auto fuel unexpectedly rose +1.2% m/m and +1.9% y/y, stronger than expectations of a -0.3% m/m and -0.1% y/y decline.
- Asian stocks today closed higher with Japan up +1.58%, China +0.04%, Australia +0.34%, South Korea +1.50%, India +0.75%. The Japanese yen extended its recent slide as it fell to a fresh 3-1/2 month low against the dollar and fueled a rally in stocks with the Nikkei 225 Stock Index climbing to its best level in 6-1/2 months. Strength in U.S. economic data also boosted stocks that export to the U.S., led by a 2.4% gain for Honda Motor. Chinese stocks closed little changed as weakness in bank stocks limited gains. The China Banking Regulatory Commission reported that Q4 China commercial banks' bad loans rose 20.1 billion yuan ($3.2 billion) to 427.9 billion yuan as of Dec 31 as non-performing loans accounted for 0.96% of total lending, up from 0.95% in Q3. Chinese housing developers and builders also weakened after Qin Hong, head of the policy research center under the Ministry of Housing and Urban-Rural Development said China will "unwaveringly" maintain property curbs in both the long and short term.
- March S&Ps this morning are trading up +1.40 points. The US stock market on Thursday settled higher on better-than-estimated U.S. economic data along with increased optimism over Greek bailout efforts: Dow Jones +0.96%, S&P 500 +1.10%, Nasdaq Composite +1.51%. Bullish factors Thursday included (1) the unexpected decline in weekly initial U.S. unemployment claims to a nearly 4-year low (-13,000 to 348,000 versus expectations of +7,000 to 365,000), (2) the larger-than-expected increase in Jan U.S. housing starts (+1.5% to 699,000 versus expectations of +2.7% to 675,000), (3) the greater-than-expected increase in the Feb Philadelphia Fed manufacturing index (+2.9 to 10.2 versus expectations of +1.7 to 9.0), (4) the action by Congress to agree on a plan to extend a payroll tax cut and expanded unemployment benefits through the rest of the year, and (5) the report from the German newspaper Die Welt that the ECB is exchanging Greek bonds for new securities and using the profits to plug a financing gap in the second bailout for Greece, which eases concern that Greece will get its aid package on time to avoid default.
- Bearish factors included (1) the warning from Moody's Investors Service that ratings for global banks may be cut as lenders worldwide face risks of rising funding costs due to the European debt crisis and (2) global economic concerns after China's commerce industry said the outlook for foreign investment in China and trade this year is "grim" along with the ECB's monthly report that said forecasters lowered their 2012 Euro-Zone GDP forecast to a contraction of -0.1% from a Nov projection of +0.8% growth, while they cut their 2013 GDP forecast to 1.1% from a Nov estimate of 1.6%.
- Applied Materials (AMAT) climbed 5.5% in European trading after the largest maker of chipmaking equipment forecast Q2 profit of 20 cents to 28 cents a share, better than analysts' estimates of 16 cents on average.
- Dell (DELL) fell 1% in European trading after the stock was cut to "neutral" from "outperform" at Robert W Baird. & Co.
- March 10-year T-notes this morning are down -3 ticks. T-note prices on Thursday settled lower after stronger-than-expected U.S. economic data and reduced European debt concerns limited the safe-haven demand for Treasuries: TYH2 -19.0, FVH2 -11.5, EDM2 -2.0. Bearish factors Thursday included (1) the unexpected decline in weekly initial U.S. unemployment claims to a nearly 4-year low (-13,000 to 348,000 versus expectations of +7,000 to 365,000), (2) the larger-than-expected increase in Jan core PPI (+0.4% m/m and +3.0% y/y versus expectations of +0.2% m/m and +2.7% y/y), (3) the larger-than-expected increase in Jan U.S. housing starts (+1.5% to 699,000 versus expectations of +2.7% to 675,000), (4) the greater-than-expected increase in the Feb Philadelphia Fed manufacturing index (+2.9 to 10.2 versus expectations of +1.7 to 9.0), and (5) reduced safe-haven demand for Treasuries after the German newspaper Die Welt reported that the ECB is exchanging Greek bonds for new securities, which eases concern that Greece will get its second bailout. Bullish factors included (1) increased safe-haven demand for Treasuries after Moody's warned that ratings for global banks may be cut as lenders worldwide face risks of rising funding costs due to the European debt crisis and (2) global economic concerns after China's commerce industry said the outlook for foreign investment in China and trade this year is "grim" and after the ECB's monthly report said forecasters lowered their 2012 and 2013 Euro-Zone GDP forecasts.
- The dollar index this morning is weaker with the dollar/yen +0.24 yen and the euro/dollar +0.32 cents. The dollar index on Thursday retreated from a 3-week high and finished lower after a German newspaper reported the ECB is swapping its 50 billion euros of Greek bond holdings for new Greek bonds: Dollar Index -0.322, USDJPY +0.498, EURUSD +0.00642. Bearish factors included (1) a rebound in the euro which recovered from a 3-week low against the dollar and closed higher after Germany's Die Welt reported that the ECB is swapping its 50 billion euros of Greek bond holdings at their nominal value for a profit and will distribute the profits to national governments and on into the debt crisis bailout program and (2) reduced safe-haven demand for the dollar as the stock market rallied. Bullish factors Thursday included (1) increased safe-haven demand for the dollar after Moody's Investors Service warned that ratings for global banks may be cut as lenders worldwide face risks of rising funding costs due to the European debt crisis, (2) weakness in the yen which fell to a 3-1/2 month low against the dollar as a rally in stocks reduced its safe-haven demand, and (3) the stronger-than-expected U.S. economic data on weekly jobless claims, Jan housing starts and the Feb Philadelphia ed manufacturing index, which signals economic strength and is dollar supportive.
- Mar crude oil prices this morning are up +45 cents a barrel and Mar gasoline is -0.59 of a cent per gallon. Crude oil and gasoline prices Thursday traded on either side of unchanged and finished higher as a rally in the dollar was offset by stronger-than-expected U.S. economic data that suggests energy demand may strengthen: CLH12 +$0.51, RBH +4.04. Bullish factors included (1) the unexpected decline in weekly initial U.S. unemployment claims to near a 4-year low along with the stronger-than-expected Jan housing starts and Feb Philadelphia Fed manufacturing index, which indicate economic strength that is supportive for energy demand and (2) strength in gasoline on concern that more refinery outages will threaten the supply of gasoline for the summer driving season after Exxon Mobile took its Beaumont, Texas refinery offline for repairs and Marathon Petroleum shut its Garyville, Louisiana plant after a power failure. Bearish factors included (1) the rally in the dollar index to a 3-week high, which discourages investment demand in commodities, (2) the statement from China's commerce industry that said the outlook for foreign investment in China and trade this year is "grim," which is negative for fuel demand, and (3) the monthly report from the ECB that said forecasters lowered their 2012 and 2013 Euro-Zone GDP forecasts, which signals reduced energy consumption in Europe.
Global Financial Calendar
| Friday 2/17/12 | |
|---|---|
| United States | |
| 0830 ET | Jan CPI expected +0.3% m/m and +2.8% y/y, Dec unchanged m/m and +3.0% y/y. Jan CPI ex food & energy expected +0.2% m/m and +2.2% y/y, Dec +0.1% m/m and +2.2% y/y. |
| 1000 ET | Jan leading indicators expected +0.5%, Dec +0.4%. |
| Germany | |
| 0200 ET | Jan German producer prices expected +0.3% m/m and +3.2% y/y, Dec -0.4% m/m and +4.0% y/y. |
| United Kingdom | |
| 0430 ET | Jan U.K. retail sales ex auto fuel expected -0.3% m/m and -0.1% y/y, Dec +0.6% m/m and +1.7% y/y. |
| 0430 ET | Jan U.K. retail sales with auto fuel expected -0.3% m/m and +0.5% y/y, Dec +0.6% m/m and +2.6% y/y. |
| Euro-Zone | |
| 0500 ET | Dec Euro-Zone construction output, Nov +0.8% m/m and +0.2% y/y. |
| Canada | |
| 0700 ET | Jan Canada CPI expected +0.3% m/m and +2.3% y/y, Dec -0.6% m/m and +2.3% y/y. |
| 0700 ET | Jan Bank of Canada core CPI expected unchanged m/m and +1.9% y/y, Dec -0.5% m/m and +1.9% y/y. |
| 0830 ET | Jan Canada leading indicators expected +0.6% m/m, Dec +0.8% m/m. |
