Barchart Morning Call 11/6

Barchart Morning Call

BC - Tue Nov 06, 7:00AM CST

Overnight Developments

• Dec E-mini S&Ps this morning are mildly higher by +0.32% going into today's election with support from today's +0.70% rally in European stocks. European stocks have been able to shake off today's generally weak European economic data. The big Asian stock markets closed lower today with Japan down -0.36%, Hong Kong down -0.28%, and China down -0.42%. Commodity prices are trading higher almost across the board today and are up by an average +0.52%. Dec crude oil is up +0.69%, Dec gasoline is up +1.03%, Dec gold is up +0.57%, Dec copper is up +0.45%, and agriculture prices are all trading higher. The dollar index is slightly lower by -0.08 points (-0.09%) and EUR/USD is up +0.0006 (+0.05%). Dec 10-year T-note prices are down -4 ticks.
• The markets are waiting to assess the outcome of today's U.S. election, which will at least significantly reduce the uncertainty level for the markets. The first big news will be available when polls close in key eastern states at 8 PM ET. The markets are hoping for a decisive election outcome by late tonight or the early morning hours. The markets hoping that the decision isn't delayed by recounts or court challenges that would cause substantial uncertainty and could even delay the results by a matter of days.
• Greek workers began a 48-hour general strike today to protest austerity measures. Meanwhile, doubts continue about whether the Greek parliament will be able to approve the 13.5 billion euro austerity package that is required for Greece to receive its next tranche of bailout aid. European Union Economic and Monetary Affairs Commissioner Olli Rehn said yesterday that the target for a Greek deal is an EU finance ministers meeting this coming Monday (Nov 12), although target that could easily slip since Eurozone officials still haven't decided how to plug the 30 billion euro hole in Greece's long-term deficit reduction plan. Greek Prime Minister Samaras submitted the austerity bill to parliament late Monday. The Greek parliament is expected to vote on the plan on Wednesday and then vote on the budget on Sunday (Nov 11).
• The Australian central bank today left its overnight cash rate target unchanged at 3.25% versus some market hopes for a rate cut. The bank cited a more stable global economy as the reason for leaving its rate unchanged. AUD/USD is up +0.64% today on the lack of a rate cut.
• Germany's final-Oct services PMI was revised lower by -0.9 points to 48.4 from the early-Oct level of 49.3, leaving the index down by 1.3 points from the Sep level of 49.7. The final-Oct Eurozone services PMI was revised slightly lower by -0.2 points to 46.0 from the early-Oct level of 46.2, leaving the index down by -0.1 point from Sep's level of 46.1.
• German Sep factory orders fell by -3.3% m/m and -4.7% y/y, which was weaker than market expectations of -0.4% m/m and -1.5% y/y.
• UK Sep industrial production fell -1.7% m/m and -2.6% y/y, which was weaker than market expectations of -0.6% m/m and -1.6% y/y. The UK Sep manufacturing production report of +0.1% m/m and -1.0% y/y was weaker than market expectations of +0.4% m/m and -0.8% y/y.
• The Eurozone Sep PPI report of +0.2% m/m and +2.7% y/y was in line with market expectations.
  Market Comments
  • Dec E-mini S&Ps this morning are up +4.50 points (+0.32%) on the +0.70% rally in the Euro Stoxx 50 index this morning. Otherwise, stock investors are simply holding their ground ahead of today's election results. The S&P 500 index on Monday closed mildly higher: S&P 500 +0.22%, Dow Jones +0.15%, Nasdaq +0.63%. The U.S. stock market on Monday was boosted by some short-covering after last Friday's sharp sell-off. The Nasdaq received a boost from a 1.4% rally in Apple after news it sold 3 million of its iPad mini on its debut weekend. U.S. stocks were undercut by the news that the U.S. Oct ISM non-manufacturing index fell by -0.9 points to 54.2, which was mildly weaker than market expectations for a -0.6 point drop to 54.5.
  • Dec 10-year T-notes this morning are down 4 ticks on today's higher trade in the U.S. and European stock indexes.. Dec 10-year T-note prices on Monday closed moderately higher: TYZ2 +11.5, FVZ2 +4.75. Bullish factors included some safe-haven demand ahead of the election and with increased concerns about Greece. The T-note market shook off supply overhang concerns ahead of the $72 billion refunding operation that begins Tuesday with the Treasury's sale of $35 billion in 3-year T-notes.
  • The dollar index this morning is slightly lower by -0.08 points (-0.09%) on reduced safe-haven demand with the mildly higher trade in E-mini S&Ps. EUR/USD is up +0.0006 (+0.05%) and USD/JPY is down -0.12 (-0.15%). The dollar index on Monday closed mildly higher: Dollar index +0.11 (+0.13%), EUR/USD -0.0039 (-0.30%), USD/JPY -0.14 (-0.17%). Bullish factors included (1) some safe-haven demand ahead of Tuesday's U.S. election, (2) weakness in EUR/USD on worries about whether the Greek parliament will be able to approve the 13.5 billion euro austerity package that is necessary for Greece to obtain its next 31.5 billion euro tranche of aid and stay in the Eurozone, and (3) some technical strength in the dollar index with the rally to a new 2-mont high and technical weakness in EUR/USD with the new 2-month low.
  • Dec WTI crude oil prices this morning are up +0.59 (+0.69%) and Dec gasoline is up +0.0271 (+1.03%). Dec crude oil and gasoline prices on Monday closed higher: CLZ2 +0.79 (+0.93%), RBZ2 +0.0466 (+1.81%). Bullish factors include (1) pent-up demand for fuel in Northeastern U.S. with refineries slowly getting back to normal, and (2) news of a temporary shut-down of Valero's Port Arthur, Texas refinery after a fire. Israeli Prime Minister Netanyahu said yesterday that if he wins another term as Prime Minister at Israel's election in January, Iran's nuclear program will no longer exist by the end of his term. The market consensus for Wednesday's DOE report is for a +1.5 million barrel rise in crude oil inventories, a -1.5 million barrel drop in gasoline inventories, a -1.25 million barrel drop in distillate inventories, and a -1.5 point drop in the refinery utilization rate to 86.2% of capacity.
  • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit http://www.barchart.com/register/crbfms_usmc.php
    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): CVS-CVS Caremark (Consensus:$0.84), NWSA-News Corp (0.37), EMR-Emerson (1.05), DTV-DirectTV (0.92), DISCA-Discovery Communications (0.63), MRO-Marathon Oil (0.65), MMC-Marsh & McLennan (0.38), SRE-Sempra Energy (1.00), DISH-Dish Network (0.56), HCN-Health Care REIT (0.26), LMCA-Liberty Media (0.94), RAX-Rackspace Hosting (0.19), CPN-Calpine (0.41), EXPD-Expeditors (0.43), CHTR-Charter Communications (-0.33), OAK-Oaktree Capital (0.74), NYX-NYSE Euronext (0.41), SCG-Scana (0.89), DNR-Denbury Resource (0.33), DOX-Amdocs (0.70), FOSL-Fossil (1.16).
    Global Financial Calendar
    

    Global Calendar - Tuesday 11/6/12
    United States
    n/a	U.S. Election Day.
    0745 ET	ICSC (Int'l Council of Shopping Centers) weekly retailer sales.
    0855 ET	Redbook weekly retailer sales.
    1130 ET	Weekly 4-week T-bill auction.
    1300 ET	Treasury auctions $32 billion in 3-year T-notes.
    1630 ET	API weekly U.S. oil statistics.
    Japan
    0000 ET	Japan Sep coincident index expected 91.2, Aug 93.5. Sep leading index expected 91.8, Aug 93.2.
    Germany
    0355 ET	German final-Oct services PMI expected unch from prelim of 49.3.
    0600 ET	German Sep factory orders expected -0.5% m/m and -1.5% y/y, Aug -1.3% m/m and -4.8% y/y.
    Euro-Zone
    0400 ET	Eurozone final-Oct services PMI expected unch from prelim 46.2. Final-Oct composite PMI expected unch from prelim 45.8.
    0500 ET	Eurozone Sep PPI expected +0.2% m/m and +2.6% y/y, Aug +0.9% m/m and +2.7% y/y.
    United Kingdom
    0430 ET	UK Sep industrial production expected -0.6% m/m and -1.6% y/y, Aug -0.5% m/m and -1.2% y/y. Sep manufacturing production expected +0.4% m/m and -0.8% y/y, Aug -1.1% m/m and -1.2% y/y.
    1000 ET	UK Oct NIESR GDP estimate, previous +0.8%.
    1901 ET	UK Oct BRC shop price index, Sep +1.0% y/y.

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Barchart Morning Call 7/27

Barchart Morning Call

BC - 23 mins ago

Overnight Developments

• Sep E-mini S&Ps this morning are slightly higher by +0.24% on continued optimism that the ECB appears ready to restart its bond buying program, although the Bundesbank today restated its opposition to the program. European stocks are trading mildly higher by +0.21%. Commodity prices are trading up +0.58% on average with crude oil up +0.34%, gold up +0.39%, copper up +1.06%, and agricultural prices trading mostly higher. The dollar index is trading slightly lower while EUR/USD is up +0.17%. Sep 10-year T-notes are down 7.5 ticks.
• Asian stocks today closed higher on support from Thursday's sharp rally in the U.S. stock market: Japan +1.46%, Hong Kong +2.02%, china +0.07%, Taiwan +2.21%, Australia +1.50%, Singapore -0.20%, South Korea +2.93%, India +1.20%, Turkey +0.06%.
• France's Le Monde today reported that that ECB is preparing to restart its Securities Market Program and start buying bonds again of troubled countries such as Spain and Italy. That will be followed by bond purchases in the secondary market by the Eurozone's bailout facilities. However, the Bundesbank's spokesman today said that restarting the ECB's bond buying program is not the best way to resolve the crisis. Bundesbank officials in the past have opposed the ECB's bond purchase program because it blurs the line between monetary and fiscal policy, takes the pressure off countries to make the necessary fiscal consolidation to regain the trust of bond investors, and puts impaired securities on the ECB's balance sheet.
• German Chancellor Merkel and French President Hollande plan to speak today at 1PM Paris time by telephone to discuss how to help Spain as quickly as possible and to implement last month's summit agreements.
• Spain's Q2 unemployment rate rose by 0.2 points to a new record high of 24.6%, underlining the severe state of the Spanish economy.
• Chinese industrial company earnings in Jan-June fell 2.2% y/y, underlining the profit pressure that companies are under due to slower Chinese GDP growth.
• Japan's July CPI fell -0.2% y/y, down from +0.2% y/y in June and weaker than market expectations of unchanged. The report highlighted that Japan remains subject to deflationary pressure despite years of near-zero interest rates and large quantitative easing programs. Separately, Japan's June retail trade fell -1.2% m/m, which was much weaker than market expectations for a gain of +0.2% m/m and a reversal from the +0.7% m/m gain seen in May.
  Market Comments
  • Sep E-mini S&Ps this morning are up +3.25 points (+0.24%) on continued optimism that the ECB appears ready to start buying Spanish and Italian bonds in the secondary market. Facebook is down 10% in European trading this morning after reporting slower sales growth and narrower profit margins late yesterday afternoon. Starbucks is down 10% in European trading after fiscal Q4 earnings guidance was weaker than expected. The U.S. stock market on Thursday closed sharply higher: S&P 500 +1.65%, Dow Jones +1.67%, Nasdaq 100 +1.40%. Bullish factors centered on ECB President Draghi's strong statement that the ECB will do whatever it needs to do to support the euro and his implicit promise to push peripheral bond yields lower. Spanish and Italian bond yields plunged on Mr. Draghi's comments, making funding costs a little more reasonable for Spain and Italy. U.S. stock market participants are also hopeful that the Fed may announce a QE3 program at either next week's FOMC meeting or the next meeting in September.
  • Sep 10-year T-notes this morning are down 7.5 ticks on reduced safe-haven demand. Sep 10-year T-note prices on Thursday closed moderately lower: -6.5, FVU2 -2.25. T-note prices fell on reduced safe-haven demand with the sharp rally in stocks and the sharp decline in Spanish and Italian bond yields.
  • The dollar index this morning is slightly lower by -0.082 points (-0.10%) while EUR/USD is up +0.0021 (+0.17%) on the ECB's apparent intention to restart its bond buying program. USD/JPY is down -0.09 (-0.12%). The dollar index on Thursday closed sharply lower: Dollar index -0.716 (-0.86%), EUR/USD +0.0125 (+1.03%), USD/JPY +0.05 (+0.06%). The dollar index fell and EUR/USD rallied on Mr. Draghi's strong promise of support for the Eurozone and his implication that something big might be in the works. The ECB meets next Thursday and could be ready to announce new support measures for the Eurozone.
  • Sep WTI crude oil prices this morning are mildly higher by +0.30 (+0.34%) and Sep gasoline is up +0.0164 +0.60%) on some optimism about Europe with the ECB stepping in to try to reduce Spanish and Italian bond yields. Crude oil and gasoline prices on Thursday closed moderately higher: CLU2 +0.42 (+0.47%), RBU2 +0.0208 (+0.77%). Bullish factors centered on the sharp sell-off in the dollar index and the improved economic sentiment that came with ECB President Draghi's strong statement of support for the Eurozone.
  • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit http://www.barchart.com/register/crbfms_usmc.php
    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): Chevron (Consensus $3.22), MRK-Merck (1.01), LYB-Lyndellbasell (1.40), Newmont Mining (0.93), AON-Aon Plc (1.02), WY-Weyerhaeuser (0.10), DTE-DTE Energy (0.70), KKR-KKR & Co (0.16), CPN-Calpine (0.01), DHI-DR Horton (0.20), NWL-Newell Rubbermaid (0.45), HP-Helmerich & Payne (1.15), CVH-Coventry Health (0.64), NVE-NV Energy (0.18), BOKF-BOK Financial (1.13), NS-Nustar Energy (0.30).
    Global Financial Calendar
    

    Friday 7/27/12
    United States
    0830 ET	Q2 GDP expected +1.4% annualized, Q1 +1.9% q/q annualized. Q2 personal consumption expected +1.3%, Q1 +2.5%. Q2 GDP price index expected +1.6%, Q1 +2.0%. Q2 PCE expected +1.8% q/q, Q1 +2.3% q/q.
    0955 ET	Final-July U.S. consumer confidence index (University of Michigan) unchanged from early-July at 72.0, early-July -1.2 to 72.0.
    Germany
    0800 ET	Jul German CPI (EU harmonized) expected +0.4% m/m and +1.9% y/y, Jun -0.2% m/m and +2.0% y/y. German state July CPIs.

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