Barchart Morning Call
Overnight
Developments
Global Financial Calendar
Barchart.com provides Financial Quotes, Charts and Technical Analysis for
Stock and Commodity Traders.
- June E-mini S&Ps are up 9.25 points (+0.72%) this morning on mildly
higher European stocks and a pro-growth statement by Chinese Premier Wen Jiabao.
Commodity prices are mixed this morning with July crude oil up 36 cents, June
gold down $1.3, copper up 3 cents (+0.85%), and agricultural prices mostly
higher. The dollar index this morning is down 0.15 (-0.19%). June 10-year
T-notes are down 10.5 ticks on the stable global stock markets seen so far
today. European stocks are mildly higher this morning with the Euro Stoxx 50 up
+0.23%. Asian stocks closed mostly higher today after Chinese Premier Wen
Jiabao's pro-growth statement: Japan +0.26%, Hong Kong -0.16%, China +0.51%,
Taiwan +0.57%, Australia +0.67%, Singapore +0.40%, South Korea +1.17%, India
+0.19%, Turkey +0.52%. Chinese Premier Wen Jiabao over the weekend said, "We
should continue to implement a proactive fiscal policy and a prudent monetary
policy, while giving more priority to maintaining growth." The comment came
after Wen Jiabao was told by officials in six provinces that "there are
prominent problems seen in areas including insufficient demand and falling
profits in some industries and companies. The economy is facing increasing
downward pressures." Wen Jiaboa's comment spurred expectations that China over
the near-term will announce new growth measures. Morgan Stanley today lowered
its forecast for China's GDP growth for this year to +8.5% from +9.0%. That
followed Goldman Sachs move last week to cut its 2012 Chinese growth forecast to
+8.1% from +8.6%. Spain's deficit was actually 8.9% in 2011, higher than the
previous figure of 8.5%, and only slightly lower than 9.3% in 2010, according to
a government report released last Friday at 10 pm European time after the
European markets closed. The government found additional liabilities at the
state/regional level that had to be added to the central government's deficit.
However, the Spanish government is sticking with the plan for this year's
deficit to fall to 5.3% of GDP. German Finance Minister Wolfgang Schaeuble and
new French Finance Minister Pierre Moscovici will meet today in Berlin to
discuss debt crisis strategy ahead of Wednesday's informal EU summit in Berlin.
G-8 leaders on Saturday in their statement said they support Greece staying in
the Eurozone. They papered over differences on the growth versus austerity
debate by saying that ?the right measures are not he same for each of us.?
Spanish Economy Minister Luis de Guindos reportedly rejected pressure from the
European Union last week to take an IMF credit line to help support Spain's
banks, according to a report in the Madrid-based ABC newspaper based on sources
present at an EU finance ministers meeting. Italian Prime Minister Monti
reportedly delivered a plan at the G-8 meeting for a European system to
guarantee bank accounts in the region, according to an Italian newspaper report.
A European-wide plan to guarantee bank deposits would be a confidence-booster
for the markets, except that bank regulation and support is normally a
nation-level issue in Europe and it can be assumed that Germany will not be
eager to directly guarantee banks in other countries. Greek Radical Left Syriza
leader Tsipras over the weekend said that the view that the June 17 Greek
elections represent a referendum on whether Greece wants to stay in the Eurozone
are "alarmist" and represent a "vulgar propaganda campaign" against Syriza and
an attempt to "terrorize the Greek people" with a false dilemma. Mr. Tsipras
says he favors staying in the Eurozone and expresses confidence that he will be
able to carry out his threat to repudiate the bailout terms while not getting
Greece ushered out of the Eurozone. In polls released over the weekend, one had
New Democracy in the lead for the upcoming June 17 election while two other
polls had Syriza in the lead.
- June E-mini S&Ps this morning are trading are up +9.25 points (+0.72%)
on the higher trade in European stocks and the higher close in most Asian
stocks. Lowe's this morning reported its Q1 EPS at 44 cents, higher than the
consensus of 42 cents, although management cut its full-year EPS guidance by 2
cents to $1.73-1.83 from $1.75-1.85. There are earnings reports today from
CPB-Campbell Soup (consensus $0.52), URBN-Urban Outfitter (0.20), NDSN-Nordson
(0.87%), and TDW-Tidewater (0.61). U.S. stocks on Friday closed lower: S&P
500 -0.74%, Dow Jones -0.59%, Nasdaq 100 -1.22%. The S&P 500 index last
Friday posted a new 4-month low and has now corrected lower by a total of 9.2%
from the 4-year high posted in early April. U.S. stocks continued to follow
European stocks lower. The Euro Stoxx 50 last Friday closed down -0.10%, posted
a new 6-1/2 month low, and corrected lower by a total of 19% from the 9-1/2
month high posted in mid-March. The U.S. stock market last week fell sharply by
4.3% as Greece was forced into new elections and worries grew that Greece may
eventually have to leave the Eurozone, with potentially major European and
global financial market damage. The markets were particularly alarmed last week
by news of a slow run on Greek banks and disputed reports about whether Spain's
4th largest bank, Bankia, was experiencing at least a slow depositor run in the
wake of being partially nationalized by the Spanish government. There are
continued worries that Spain is eventually going to need a Eurozone/IMF bailout
to fix its government and regional finances and fully recapitalize the troubled
Spanish banking sector. The U.S. stock market is also worried about slower
growth in China and mixed U.S. economic reports.
- June 10-year T-notes this morning are down -10.5 ticks on mostly higher
global stocks and on overhang ahead of this week's $99 billion T-note auction
package. T-note prices on Friday closed mixed: TYM2 +1.5, FVM2 -0.5. The 10-year
T-note yield on Friday closed at 1.72%, which was only 5 bp above the record low
of 1.67% posted last September. T-note prices stalled on Friday as the 10-year
T-note yield neared its record low. The European debt crisis is a serious
problem, but the U.S. economy has yet to fall apart and justify even lower
yields. The problems in Europe are making it more likely that the Fed will
extend its Operation Twist program when it expires in June, which would keep the
Fed in the market as a big buyer of longer-term Treasury securities. The
Treasury market this week faces a bit of test as to whether the market can
absorb $99 billion of 2, 5 and 7-year T-notes at such low yields. The dollar
index this morning is trading mildly lower by -0.15 points (-0.19%) on reduced
safe-haven demand with higher global stocks. EUR/USD is down -0.0005 (-0.04%)
and USD/JPY is up 0.28 (+0.35%). The dollar index on Friday closed mildly lower:
Dollar Index -0.09, EUR/USD +0.0082, USD/JPY -0.26. The dollar index on Friday
fell on some pre-weekend long liquidation pressure after the very sharp 4.0%
rally seen in the past 3 weeks. The dollar index last Friday posted a new
4-month high but again stopped just shy of taking out the 1-2/3 year high of
81.784 posted in mid-January. EUR/JPY posted a new 4-month low on Friday but
snapped back up on some pre-weekend short-covering and on Spanish government
denials of a bank run at Bankia. Bankia, Spain's 4th largest bank, was
nationalized 2 weeks ago due to big mortgage and property losses. Even though
the ECB's refinancing rate of 1.00% is well above the Fed's target range for the
federal funds rate of zero to 0.25%, the 3-month Euribor futures curve has
dropped sharply and the euro now has only a minor interest rate differential
against the dollar. The euro's poor interest rate differential, plus the mild
recession in Europe, makes the euro a particularly unattractive currency at
present. The dollar index is trading mainly on Greek and Spanish debt crisis
developments and could have much farther to run if the European situation
continues to deteriorate. July WTI crude oil prices this morning are trading +36
cents +0.39%) and July gasoline is up 1.75 cents (+0.62%). Bullish factors this
morning include higher global stocks, the mildly lower dollar index, and some
short-covering after the sharp recent losses. Crude oil and gasoline prices on
Friday closed mixed: CLN12 -1.14 (-1.23%), RBN2 +0.0028 (+0.10%). Crude oil
prices fell by $4.69 (-4.9%) last week due to (1) worries about weak Chinese,
European and U.S. economic growth and fuel demand, (2) the 15.8% surge in U.S.
crude oil inventories so far this year to a new 21-3/4 year high, and (3) Saudi
Oil Minister al-Naimi's specific call last week for Brent crude oil to fall to
$100. July Brent crude oil last Friday closed at $107.14, which means oil prices
would have to fall by another 7% for Mr. al-Naimi to get his wish. The Seaway
pipeline this past weekend started carrying oil from the hub at Cushing,
Cushing, Oklahoma to the Gulf coast, which should cause a slow draw-down of
record crude oil inventories at Cushing. However, the pipeline will only be
carrying 150,000 bpd this year, which may not be enough to cause any major
near-term drawn-down in Cushing inventories, thus keeping alive the wide spread
between European Brent crude futures and Nymex U.S West Texas Intermediate oil
futures (which is priced at Cushing).
Global Financial Calendar
| Monday 5/21/12 | |
|---|---|
| United States | |
| 0515 ET | Atlanta Fed President Dennis Lockhart speaks on monetary policy in Tokyo. |
| 0830 ET | Chicago Fed April National Activity Index, Mar -0.29. |
| 1100 ET | USDA weekly grain export inspections. |
| 1130 ET | Weekly 3-mo and 6-mo T-bill auctions. |
| 1600 ET | USDA Crop Progress |
| n/a | NATO Summit in Chicago concludes. |
| Japan | |
| 0030 ET | Japan Mar all-industry activity index expected -0.10%, Feb -0.10%. |
| 0100 ET | Japan Mar final leading index, prelim 96.6. Japan Mar final coincident index, prelim 96.5. |
| 0300 ET | Japan Apr convenience store sales, Mar +0.40%. |
| Euro-Zone | |
| 0500 ET | Eurozone Mar construction output, Feb -7.1% m/m and -12.9% y/y. |
| CHI | |
| 2200 ET | China April leading economic index (Conference Board). |
