Barchart Morning Call 10/5

Barchart Morning Call

BC - Fri Oct 05, 7:00AM CDT

Overnight Developments

• Dec E-mini S&Ps are trading slightly higher ahead of this morning's Sep unemployment report, which is expected to show a +115,000 increase in payrolls and a 0.1 point increase in the unemployment rate to 8.2%. European stocks are up 1.07% on continued optimism over ECB President Draghi's strong support yesterday for the euro and for the ECB' bond-buying program. Asian stocks today closed mostly higher. Commodity prices are moderately lower today by -0.32% with Nov crude oil down -0.98%, Dec gold down -0.26%, Dec copper down -0.08%, and agriculture prices mostly lower. The dollar index is slightly higher after yesterday's losses. EUR/USD is down -0.07% and USD/JPY is unchanged. Dec 10-year T-notes are down 3 ticks.
• India's S&P CNX Nifty index today closed -0.8% lower after recovering from a 16% slide caused by erroneous trades.
• The Bank of Japan today left its asset purchase target unchanged at 55 trillion yen ($700 billion) after its 2-day policy meeting, which was in line with market expectations. The BOJ just boosted its stimulus program last month. The BOJ is facing increased political pressure to further boost its quantitative easing program as Economy Minister Seiji Maehara attended today's BOJ meeting, the first time in 9 years that a minister has attended a BOJ policy meeting. The BOJ today left unchanged its interest rate target of zero to 0.10% and its monthly bond purchase target of 1.8 trillion yen.
• The German Aug factory orders report of -1.3% m/m and -4.8% y/y was weaker than market expectations of -0.5% m/m and -4.3% y/y.
• Japan's Aug leading index of 93.6 was up from 93.0 in July and was 0.1 point stronger than market expectations of 93.5. The Aug coincident index of 93.6 was down -0.2 points from July and was in line with market expectations.
  Market Comments
  • Dec E-mini S&Ps this morning are slightly higher by +1.50 points (+0.10%) as the market gets support from the 1.07% rally in the Euro Stoxx 50 index this morning and from hopes for a decent U.S. payroll report this morning. The S&P 500 index on Thursday closed with fairly sharp gains: S&P 500 +0.72%, Dow Jones +0.60%, Nasdaq 100 +0.35%. Bullish factors included stronger than expected U.S. economic data and ECB President Draghi's comments in strong support of the euro and keeping the Eurozone intact. U.S. initial unemployment claims rose +4,000 to 367,000, which showed a slightly stronger labor market than market expectations for a report of 370,000. U.S. Aug factory orders fell -5.2%, which was a little stronger than market expectations of -5.9%.
  • Dec 10-year T-notes this morning are down 3 ticks. Dec 10-year T-note prices on Thursday closed lower: TYZ2 -10, FVZ2 -3.25. T-note prices closed lower on the stronger-than-expected initial claims report, some nervousness that Friday's payroll report may be stronger than expected after Wednesday's ADP report of +162,000, and reduced safe-haven demand with the rally in the stock market and ECB President Draghi's comments in support of the euro.
  • The dollar index this morning is slightly higher by +0.04 points (+0.05%), seeing some stabilization after yesterday's sharp sell-off. EUR/USD is down -0.0009 (-0.07%) and USD/JPY is unchanged. The dollar index on Thursday closed sharply lower: Dollar index -0.63 (-0.78%), EUR/USD +0.113 (+0.88%), USD/JPY -0.01 (-0.01%). EUR/USD received a sharp boost on Thursday after the ECB at its meeting left rates unchanged against hopes by some market participants for a rate cut to 0.50%. In addition, ECB President Draghi voiced strong support for the euro and said that the ECB is ready to engage in its bond-buying bailout program as soon as Spain makes a formal request and all the conditions are in place. The ECB has agreed to purchase an uncapped amount of 1-3 year bonds in the secondary market of troubled countries under its "Outright Monetary Transactions" program.
  • Nov WTI crude oil prices this morning are down 0.90 (-0.98%) and Nov gasoline is down -0.0140 (-0.48%) on ideas yesterday's rally was overdone. Nov crude oil and gasoline on Thursday closed sharply higher: CLX2 +3.39 (+3.85%), RBV2 +0.1334 (+4.77%). Bullish factors included the sharp sell-off in the dollar index, Turkish-Syrian shelling, and continued worries about tight gasoline inventories on the east and west coasts. Gasoline prices continue to get a boost from refinery outages that have caused tight gasoline inventories in the Northeastern U.S. and particularly in California. Some gas stations in the Los Angeles area are actually running out of gasoline to sell because of refinery problems. Exxon's Torrance refinery is just getting back into operation the loss of power on Oct 1, Phillips 66 is scheduled to perform maintenance on its two California refineries this week, and a pipeline delivering crude oil to refineries in northern California was shut down last month due to high levels of chloride in the oil. Turkey's parliament on Thursday approved a 1-year mandate allowing the Turkish military to launch military operations outside Turkey. That could result in more of the cross-border shelling seen this week. Moreover, Syria's shelling of a Turkish village this week was effectively an attack on NATO as a whole since Turkey is a member of NATO. Fighting in the area could disrupt the Kirkuk-Ceyhan pipeline that Iraq uses to export oil and that runs through southern Turkey near the Syrian border.
  • 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): STZ-Constellation (Consensus:$0.54), RBN-Robbins & Myers (0.96).
    Global Financial Calendar
    

    Friday 10/5/12
    United States
    0830 ET	Sep non-farm payrolls expected +115,000, Aug +96,000. Sep private payrolls expected +128,000, Aug +103,000. Sep manufacturing payrolls expected unch, Aug was -15,000. Sep unemployment rate expected +0.1 to 8.2%, Aug -0.2 to 8.1%.
    0830 ET	Sep average hourly earnings expected +0.2% m/m and +1.8% y/y, Aug unch m/m and +1.7% y/y. Sep average weekly hours expected 34.4 hours, Aug 34.4.
    1000 ET	NY Fed President William Dudley delivers welcoming remarks at distressed real estate conference at the NY Fed.
    1300 ET	Fed Governor Elizabeth Duke speaks on neighborhood stabilization at NY Fed.
    1500 ET	Aug consumer credit expected +$7.25 bln, July -$3.276 bln.
    Japan
    n/a	BOJ policy decision after 2-day meeting.
    0100 ET	Japan Aug coincident index expected 93.6, July 93.8. Aug leading index expected 93.5, July 93.0.
    Germany
    0600 ET	German Aug factory orders expected -0.5% m/m and -4.3% y/y, July -0.5% m/m and -4.5% y/y.
    CHI
    n/a	Chinese markets closed for Golden Week.

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Barchart's Morning Call 6/26

Barchart Morning Call

BC - 37 mins ago

Overnight Developments

• Sep E-mini S&Ps are mildly higher by +0.29% thanks to the slightly higher +0.18% trade in European stocks. Commodity prices are mixed this morning with crude oil up +0.23%, gold down -0.23%, copper -0.14%, and agricultural prices mixed. The dollar index is down -0.13 (-0.16%) and EUR/USD is down -0.08%. Sep 10-year T-note prices are down 8.5 ticks.
• Asian stocks today closed mostly lower due to yesterday's sharp sell-off in U.S. stocks: Japan -0.81%, Hong Kong 0.45%, China -0.07%, Taiwan -0.40%, Australia -0.36%, Singapore -0.34%, South Korea -0.44%, India +0.14%, Turkey +0.50%.
• Spain today successfully sold 3.08 billion euros of bills, although the yield on the 3-month bill jumped to 2.362% from 0.846% at the previous auction. Spain's 10-year yield today rose by 7 bp to 6.67% and Italy's 10-year bond yield today is up 5 bp at 6.05%.
• Italy's cabinet may approve as soon as today a measure that would allow Italy's banks to raise capital by selling bonds to the Italian government when the banks cannot sell bonds in the capital markets. However, selling bonds to the Italian government would raise the government's cash needs and further impair Italy's credit quality.
• Germany's July GfK consumer confidence index rose by 0.1 point to 5.8 from 5.7 in June, which was better than expectations for a 0.1 point decline to 5.6.
• Turkey has stepped up its rules of engagement with Syria and now says that "any military element that approaches the Turkish border from Syria in a way that may pose a risk or danger will be viewed as a threat and treated as a military target." That action comes after Turkey concluded that the Turkish military jet that Syria shot down last Friday was over international waters when it was shot down. Turkey called for a meeting today with its NATO allies to discuss Syria's downing of its plane.
• Japanese Prime Minister Noda's bill that raises Japan's 5% sales tax to 10% by 2015 was approved today by the lower house of Parliament. The bill must still be approved by the opposition-controlled upper house of Parliament, but that appears likely due to the acceptance by the opposition parties. The bill raises the sales tax to 8% in April 2014 and to 10% in October 2015. Japan is under pressure to address its massive budget deficit which will hit 223% of GDP next year, according to the OECD.
• Japan's June small business confidence index fell by 1.0 point to 46.2 from 47.2 in May.
• HSBC today cut its 2012 growth forecast for China to +8.4% from +8.6%.
• China's commerce ministry said today that China's trade growth is improving and that China can achieve 10% growth in exports and imports if the world economy does not worsen further.
• Tropical Storm Debby is nearly stalled 85 miles west of Cedar Key, Florida and is moving at only 3 mph. The storm had halted 44% of oil production in the Gulf of Mexico and 35% of gas production, but companies on Monday started returning workers to platforms.
  Market Comments
  • Sep E-mini S&Ps this morning are up 3.75 points (+0.29%) on the mildly higher trade in European stocks by +0.18% and on some short-covering after yesterday's sharp decline. The US stock market on Monday closed sharply lower: S&P 500 -1.60%, Dow Jones -1.09%, Nasdaq 100 -2.01%. The main bearish factor was pessimism about the Eurozone summit to be held later this week on Thursday and Friday. German Chancellor Merkel has refused to accept any of the provisions that might help solve the Eurozone debt crisis such as banking union, joint euro bonds, or using the ESM to directly lend money to banks or to buy sovereign bonds. Eurozone leaders at the Thur/Fri meeting will likely only accept the 130 billion euro growth pact that the leaders from Germany, France, Italy and Spain agreed upon last Friday that mainly involves a repackaging of existing EU funds and programs. The good news on Monday was that May U.S. new home sales rose sharply by 6.7% to a new 2-year high of 369,000, which was stronger than expectations of 347,000.
  • Sep 10-year T-notes this morning are down 8.5 ticks on the higher trade in U.S. and European stock indexes this morning. Sep 10-year T-note prices on Monday closed sharply higher: TYU2 +18, FVU2 +7.75. Sep T-notes rallied mainly on increased safe-haven demand with the sharp sell-off in stocks and the likelihood that the Eurozone debt crisis will not go away anytime soon with Germany Chancellor Merkel unwilling to step up German support for a solution.
  • The dollar index this morning is trading is down -0.13 points (-0.16%) on the calm trade in U.S. and European stock indexes. EUR/USD is down -0.08% and USD/JPY is down -0.36%. The dollar index on Monday closed mildly higher: Dollar Index +0.214 (+0.26%), EUR/USD -0.0066 (-0.53%), USD/JPY -0.77 (-0.96%). The dollar index rallied on increased safe-haven support as pessimism rose for the Thursday/Friday Eurozone summit. In addition, Cyprus on Monday requested a bailout for its banking system, which was not a surprise but will further drain the Eurozone's limited bailout facilities.
  • Aug WTI crude oil prices this morning are up +0.18 (+0.23%) and Aug gasoline is up +0.0230 (+0.92%) on the lower dollar index and higher trade in stock indexes. Oil and gas companies started returning workers to platforms on Monday after Tropical Storm Debby over the weekend shifted direction and moved toward Florida. Crude oil and gasoline prices on Monday closed mixed: CLQ2 -0.55 (-0.69%), RBQ2 +0.0306 (+1.24%). Crude oil fell on economic pessimism tied to the European debt crisis, while gasoline rose on various refinery outages in the U.S. and Europe. Tropical Storm Debby succeeded in shutting down about one-quarter of the oil output in the Gulf of Mexico but the storm is now expected to hover over the northeastern part of the Gulf of Mexico and eventually make landfall in Florida, staying away from the bulk of the oil rigs in the northwestern part of the Gulf.
  • 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 (sorted by mkt cap): HRB-H&R Block (consensus $2.07), RBN-Robbins & Myers (0.90).
    Global Financial Calendar
    

    Tuesday 6/26/12
    United States
    0745 ET	ICSC (Int'l Council of Shopping Centers) weekly retailer sales.
    0855 ET	Redbook weekly retailer sales.
    0900 ET	S&P-Case-Shiller Apr Composite-20 Home Price index expected +0.3% m/m and -2.65% y/y, Mar +0.09% m/m and -2.57% y/y.
    1000 ET	June U.S. consumer confidence (Conference Board) expected -1.5 to 63.5, May -3.8 to 64.9.
    1000 ET	June Richmond Fed manufacturing index expected +1 to 5, May -10 to 4.
    1130 ET	Weekly 4-week T-bill auction.
    1300 ET	Treasury sells $35 billion in 2-year T-notes.
    1630 ET	API weekly U.S. oil statistics.
    United Kingdom
    0430 ET	UK May public finances (PSNCR) expected 4.0 bln pounds, Apr -23.2 bln pounds. May public sector net borrowing expected 14.0 bln pounds, Apr -18.8 bln pounds.

    Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

3 NYSE stocks -- 12/13

Here are 3 NYSE stocks you might want to add to your watch list.  They were found on the Barchart most new highs list.

Biglari Holdings (BH) -- formerly known as The Steak n Shake Company, is engaged primarily in the ownership, operation, and franchising of restaurants in the United States. Steak n Shake Operations, Inc. (Steak n Shake) is a wholly-owned subsidiary of the Company. Steak n Shake is an American brand serving burgers and milk shakes. It offers its patrons full-service dining with counter and dining room seating, as well as drive-thru and carry-out service. Biglari Holdings is based in San Antonio, Texas.

• 100% Barchart technical buy signal
• 15 new highs in the last month
• Up 21.46% in the last month
• Relative Strength Index 76.74%

Robbins & Myers (RBN) -- is engaged in the design, manufacture, and marketing of fluids management equipment, primarily progressing cavity pumps, chemical reactor and storage vessels, agitators and mixers, and fluoropolymer corrosion-resistant coatings.

• 96% Barchart technical buy signal
• 15 new highs in the last month
• Up 19.22% in the last month
• Relative Strength Index 82.39% and rising

International Coal Group (ICO) -- is a leading producer of coal in Northern and Central Appalachia and the Illinois Basin. The company has eleven active mining complexes, of which ten are located in Northern and Central Appalachia and one in Central Illinois. ICO's mining operations and reserves are strategically located to serve utility, metallurgical and industrial customers throughout the Eastern United States.

• 96% Barchart technical buy signal
• 15 new highs in the last month
• Up 39.22% in the last month
• Relative Strength Index 78.40% and rising

Jim Van Meerten is an advisor to Marketocracy Capital Management who uses his model portfolios not only to manage their mutual funds but also their clients Separately Managed Accounts. You can read his blogs about those model portfolios and investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: Jim Van Meerten through Marketocracy Capital Management has an interest in the stocks mentioned in this blog.