Barchart Morning Call
Overnight Developments - Global stocks this morning are higher with the Euro Stoxx 50 up +0.09% and Mar S&Ps up +3.70 points. Treasuries are weaker and the dollar index slid to a 2-week low as global economic optimism propels stock prices higher. The euro climbed to a 2-1/2 month high against the dollar on the prospects that G-20 officials meeting this weekend in Mexico City may discuss committing further resources to Europe's debt crisis. French consumer confidence unexpectedly rose for a second month in Feb, which added to today's bullish factors for stocks, after the Feb French consumer confidence indicator rose +1 to 82, better than expectations of unchanged at 81 and its best level in 4 months. Comments from St. Louis Fed President Bullard also gave stocks a lift and weakened Treasuries when he said he sees "possible 3% growth" in 2012 and that a drop in the unemployment rate to 7.8% is possible by year-end. Liquidity concerns continue to ease in Europe as the Euribor-OIS spread, a measure of European banks' reluctance to lend to one another, fell to 66 bp between the euro interbank offered rate and overnight indexed swaps, a 5-3/4 month low.
- Asian stocks today closed mostly higher with Japan up +0.54%, China +1.60%, Australia +0.48%, South Korea +0.61%, India -0.86%. Asian stocks rose on optimism Europe will contain its debt crisis; increased speculation China will ease monetary policy and signs that the U.S. economy is improving. Japan's Nikkei 2225 Stock Average climbed to a 6-1/2 month high led by strength in exporters, as the yen weakened to a 7-1/2 month low against the dollar and boosted exporters' earnings prospects. South Korean stocks closed higher after Feb South Korean consumer confidence rose +2 to 100, a 3-month high, while China's Shanghai Stock Index posted a 3-1/4 month high on speculation local governments are relaxing restrictions on the property market and an improving economy will spur Chinese exports.
Overnight U.S. Stock News - March S&Ps this morning are trading up +3.70 points. The US stock market Thursday erased early losses and settled higher after weekly U.S. jobless claims unexpectedly held at a 3-3/4 year low and FHFA Dec U.S. home prices rose more than expected: Dow Jones +0.36%, S&P 500 +0.43%, Nasdaq Composite +0.81%. Bullish factors Thursday included (1) weekly initial U.S. unemployment claims that unexpectedly held steady at a 3-3/4 year low of 351,000, better than expectations of a +7,000 increase to 355,000, (2) a rally in home builders after the larger-than-expected increase in the Dec FHFA house price purchase only index (+0.7% m/m versus expectations of +0.1% m/m), and (3) optimism that Europe may be able to withstand the negative effects of the region's debt crisis after the Fed German IFO business climate rose to a 7-month high and ECB President Draghi said "positive" signs have increased within the last 2 weeks in the Euro-Zone.
- Bearish factors included (1) carry-over weakness from a slide in European stocks after the European Commission cut its 2012 Euro-Zone GDP forecast to contraction of -0.3% from a Nov forecast of +0.5% growth and (2) comments from Dallas Fed President Fisher who said additional asset-purchases from the Fed are unnecessary and are "wishful thinking" by Wall Street.
- American International Group (AIG) jumped 8.1% in European trading after the company said it posted net income in Q4 of $19.8 billion and that it will generate emough profit to use tax assets, tied to prior losses, that can limit future payments to the government.
Today's Market Focus - March 10-year T-notes this morning are down -1 tick. T-note prices Thursday weakened early after weekly jobless claims unexpectedly held steady but then erased their losses and settled higher after strong demand was seen for the Treasury's $29 billion 7-year T-note auction: TYH2 +5.0, FVH2 -0.5, EDM2 -1.5. Bullish factors Thursday included (1) economic growth concerns after the European Commission cut its 2012 Euro-Zone GDP forecast to contraction of -0.3% from a Nov forecast of +0.5% growth and (2) strong demand for the Treasury's $29 billion auction of 7-year T-notes that had a bid-to-cover ratio of 3.11, higher than the 12-auction average of 2.81. Bearish factors included (1) weekly initial U.S. unemployment claims that unexpectedly held steady at a 3-3/4 year low of 351,000, better than expectations of a +7,000 increase to 355,000, (2) the larger-than-expected increase in the Dec FHFA house price purchase only index (+0.7% m/m versus expectations of +0.1% m/m), (3) comments from Dallas Fed President Fisher who said additional asset purchases by the Fed are unnecessary and calls for such a move are ?wishful thinking? by Wall Street, and (4) carry-over weakness from a slide in German bunds after the Fed German IFO business climate index rose to a 7-month high.
- The dollar index this morning is weaker and posted a 2-week low with the dollar/yen +0.56 yen and the euro/dollar +0.52 cents. The dollar index Thursday slipped to a 1-1/2 week low and settled lower after the Feb German IFO business confidence climbed to a 7-month high: Dollar Index -0.392, USDJPY -0.294, EURUSD +0.01229. Bearish factors included (1) strength in the euro which rose to a 2-1/4 month high against the dollar on optimism the European economy may withstand the region's debt crisis after the Feb German IFO business climate climbed to its best level in 7 months and (2) euro positive comments from ECB President Draghi who said "positive" signs have increased within the last 2 weeks in the Euro-Zone. Bullish factors included (1) the action by the EU to cut its 2012 Euro-Zone GDP forecast to contraction of -0.3% from a Nov forecast of +0.5% growth and (2) dollar positive comments from Dallas Fed President Fisher who said additional asset-purchases from the Fed are unnecessary and are "wishful thinking" by Wall Street.
- Apr crude oil prices this morning are up +52 cents a barrel and Apr gasoline is +0.15 of a cent per gallon. Crude oil and gasoline prices Thursday settled higher as an increase in German business confidence and a weaker dollar offset a larger-than-expected increase in weekly DOE crude supplies along with comments from Saudi Arabia's deputy oil minister: CLJ12 +$1.55, RBJ +2.59. Apr crude posted a 9-1/2 month high and Apr gasoline rose to a 6-1/2 month high. Bullish factors included (1) the weaker dollar, (2) improvement in the U.S. labor market that may boost fuel demand after weekly initial U.S. unemployment claims unexpectedly held at a 3-3/4 year low, and (3) the unexpected decline in weekly DOE gasoline supplies (-649,000 bbl versus expectations of +250,000). Bearish factors included (1) the larger-than-expected increase in weekly DOE crude stockpiles (+1.63 million bbl to a 5-month high of 340.7 million bbl versus expectations of a +1.5 million bbl increase), (2) comments from Saudi Arabia?s deputy oil minister who said oil markets are currently ?well supplied,? and (3) the action by the European Commission to cut its 2012 Euro-Zone GDP forecast to contraction of -0.3% from a Nov forecast of +0.5% growth.
Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): NEM-Newmont Mining (BEST earnings consensus $1.27), JCP-J.C. Penney (0.67), AWK-American Water Works (0.33), SUG-Southern Union (0.55), PNW-Pinnacle West Capital (0.04), IPG-Interpublic Group of Cos. (0.39), POM-Pepco Holdings (0.19), ANR-Alpha Natural Resources (0.26), WCRX-Warner Chilcott PLC (0.90), ENDP-Endo Pharmaceuticals Holdings (1.32), USM-United States Cellular (0.24), FSLR-First Solar (1.57), TDS-Telephone & Data Systems (0.25), CIM-Chimera Investment (0.11), Y-Alleghany (3.62).
Global Financial Calendar
| Friday 2/24/12 |
| United States |
| 0955 ET | Final Feb U.S. University of Michigan consumer confidence expected +0.5 to 73.0, previous -2.5 to 72.5. |
| 1000 ET | Jan new home sales expected +2.6% to 315,000, Dec -2.2% to 307,000. |
| 1135 ET | St. Louis Fed President James Bullard, New York Fed President William Dudley, Philadelphia Fed President Charles Plosser and San Francisco Fed President John Williams speak on a panel titled ?Housing, Monetary Policy and the Recovery? at the 2012 U.S. Monetary Policy Forum Initiative on Global Markets in New York. |
| Germany |
| 0200 ET | Revised Q4 German GDP, previous -0.2% q/q and +2.0% y/y. |
| France |
| 0245 ET | Feb French consumer confidence indicator expected unchanged at 81, Jan +1 to 81. |
| 1200 ET | Jan French jobseekers net change expected +32,500, Dec +29,700. Jan total jobseekers, Dec 2,874,500 |
| United Kingdom |
| 0430 ET | Revised Q4 U.K. GDP, previous -0.2% q/q and +0.8% y/y. |
| 0430 ET | Q4 U.K. total business investment expected -0.7% q/q and +2.2% y/y, Q3 +0.3% q/q and +4.3% y/y. |
| Euro-Zone |
| 0400 ET | ECB Council member Ewald Nowotny speak at an event in Vienna. |
| n/a | G-20 finance ministers and central bankers meet for a 2-day summit in Mexico City. |
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