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Barchart U.S. Morning Call

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Wed, 8 Sep 2010 07:00:00 -0500

'); document.write('Overnight Developments

European stocks are higher with the European DJ Stoxx 50 up +0.56% and Sep S&Ps are up +3.90 points. European bank stocks are weaker for a second day on concern the sovereign-debt crisis may force them to raise more capital. The yen climbed to a 15-year high against the dollar as investors flock into the Asian currency to avoid risk and gold rallied to a 2-1/4 month high on increased safe-haven demand. Well-known bank analyst Meredith Whitney added further pressure to bank stocks when she predicted that securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow. Jul German industrial production rose a less-than-expected +0.1% m/m and Jul German exports unexpectedly declined -1.5% m/m, their first drop in 3 months, which suggests the recovery is beginning to lose momentum. Helping to push stock prices into positive territory is the 2.1% jump in Ericsson AB after Credit Suisse predicted the world\'s largest maker of wireless phone networks should "enjoy a robust" second half in 2010, along with the 2.2% increase in Sanofi-Aventis SA after Citigroup raised its price estimate for the drugmaker by 15% to 70 euros, saying the next 12 months could be a "turning point" for the company.
The Asian markets today closed mostly lower with Japan down -2.18%, Hong Kong -1.46%, China -0.07%, Taiwan -0.42%, Australia -0.79%, Singapore -0.81%, South Korea -0.65%, India +0.12%. Asian stocks fell for a second day, led by Japanese equities, as the yen\'s advance to a 15-year high against the dollar threatens the earnings of its exporters. Nomura Holdings cut sales and profit forecasts for Japanese companies this year because of the stronger yen, predicting year-on-year sales growth of 353 companies excluding financials in the Nomura 400 stock index of 4.0%, down from its Jun estimate of 4.4%. China\'s Shanghai Stock Index closed lower, led by declines in property stocks, on concern the Chinese government may put further restrictions on the housing market after the 21st Century Business Herald cited an unidentified person close to the Ministry of Housing and Urban-Rural Development as saying new curbs may include ending loans to real estate developers, a compulsory lowering of home prices, and a ban on third-home purchases.

Overnight U.S. Stock News

Sep S&Ps this morning are up +3.90 points. The stock market yesterday traded in negative territory the entire day and closed just above its low (Dow -1.03%, S&P 500 -1.15%, Nasdaq Composite -1.11%). Bearish factors included (1) carry-over weakness from a fall in European equity markets on concern the European debt crisis may worsen after the WSJ reported that European stress tests published in July may have understated some financial institutions\' sovereign debt holdings of potentially risky government debt, along with a separate report from the Association of German banks that Germany\'s top lenders might need about 105 billion euros ($135 billion) in fresh capital, (2) concern that the recovery in Europe\'s largest economy may be losing momentum after Jul German factory orders unexpectedly posted their biggest monthly decline in 17 months (-2.2% m/m versus expectations of +0.6% m/m), (3) the prediction from Bank of America Merrill Lynch that the jobless rate in the US is likely to approach 10% in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, (4) the action by Oppenheimer to cut its year-end forecast for the S&P 500 Index to 1,225 from an earlier forecast of 1,300, saying "the deceleration of important economic indicators recently cannot be ignored," and (5) losses in raw materials and energy producers as demand concerns and a surge in the dollar prompted a sell off in the prices of most commodities.
Bullish factors included (1) the report from Bank of America that said more US stocks are paying dividends that exceed bond yields by the most in 15 years as profits rise at the fastest pace in two decades, which may lead to increased demand for US stocks that pay high dividends, and (2) the prediction from Goldman Sachs that the world economy won\'t slip back into recession as it benefits from growth in emerging economies in Asia.
Hewlett-Packard (HPQ) fell 1.4% in pre-market trading after UBS downgraded the world\'s largest maker of personal computers and printers to "neutral" from "buy."
Staples (SPLS) rose 1.7% in pre-market trading after Goldman Sachs lifted its recommendation on the world\'s largest office-supply retailer to "buy" from "neutral" and added the stock to its "conviction buy" list.

Today\'s Market Focus

December 10-year T-notes this morning are trading down -1.5 ticks. Dec 10-year T-note prices yesterday strengthened the entire session and closed up +26.5 ticks at 124-270. Bullish factors included (1) strong safe-haven demand for Treasuries after European and US stock markets declined on renewed concerns that Europe\'s sovereign-debt crisis will undermine the global economic recovery, (2) comments from former Fed Governor Kohn who said the Fed should take further steps to support the economy such as buying government bonds if the recovery continues to slow, (3) overall strong demand for the Treasury\'s $33 billion 3-year T-note auction which had a bid-to-cover ratio of 3.21, compared with an average of 3.14 for the previous 10 sales, and (4) the prediction from Bank of America Merrill Lynch that the jobless rate in the US is likely to approach 10% in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force. Bearish factors included (1) concern that President Obama\'s proposed $50 billion program to update US infrastructure will lead to increased Treasury issuance to pay for the program, and (2) supply pressures ahead of the Treasury\'s $21 billion auction of 10-year T-notes on Wed.
The dollar index this morning is weaker with the dollar/yen -0.06 yen and the euro/dollar +0.35 cents. The dollar index yesterday rallied throughout the day and closed moderately higher. Bullish factors included (1) weakness in the euro on renewed European sovereign-debt concerns after the WSJ reported that European stress tests published in July may have understated some financial institutions\' sovereign debt holdings of potentially risky government debt, (2) the report from the Association of German banks that said Germany\'s top 10 lenders might need about 105 billion euros ($135 billion) in fresh capital, (3) increased safe-haven demand for the dollar after European and US equity markets tumbled, and (4) the prediction from PIMCO that Greece still faces a "substantial" default risk as insolvency prevents them from repaying their debt when its bailout program expires in 3 years. Bearish factors included (1) the surge in the yen to a 15-year high against the dollar as the fall in global stock markets boosted demand for the yen on risk aversion and after the BOJ refrained from expanding its quantitative easing program following the conclusion of its monetary policy meeting, (2) the action by Morgan Stanley to cut its year-end forecast for the euro against the dollar to $1.36 from a previous forecast of $1.16, citing the increasing likelihood of the Fed further easing monetary policy, and (3) comments from former Fed Governor Kohn who said the Fed should take further steps to support the economy such as buying government bonds if the recovery continues to slow, which would undercut the dollar.
October crude oil prices this morning are trading down -20 cents a barrel and October gasoline is -1.30 cents per gallon. Oct crude oil prices yesterday retreated for a second session as they closed down -$0.51 a barrel. Oct gasoline closed higher by +1.34 cents per gallon. Bearish factors included (1) the stronger dollar, (2) the unexpected decline In Jul German factory orders, which signals weak fuel consumption in Europe\'s largest economy, (3) weakness in gasoline on the prospects for weaker demand going forward as the US Labor Day Holiday marks the end of the summer driving season and US gasoline supplies are already 14% above their 5-year average for the period, and (4) the slide in European and US equity markets, which dampens confidence in the economic outlook and energy demand. Bullish factors included (1) strength in gasoline prices after an explosion at Mexico\'s Cadereyta refinery, which produces 235,000 bpd of gasoline, may lead to increased Mexican demand for US gasoline supplies, and (2) the outlook for US crude supplies to fall in Thursday\'s weekly DOE inventory report (delayed one day because of the Labor Day holiday).

Today\'s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) NAV-Navistar International(BEST earnings consensus $1.44), SFD-Smithfield Foods (0.46), FCE-Forest City Enterprises (0.01), UNFI-United Natural Foods (0.40), CIEN-Ciena (-0.32), MW-Men\'s Warehouse (0.78), TLB-Talbots (0.05), VRNT-Verint Systems (0.35), PBY-PEP Boys-Manny Moe & Jack (0.19), AVAV-Aerovironment (-0.23).

Global Financial Calendar
Wednesday 9/8/10
United States
0700 ET Weekly MBA mortgage applications for the week ended Sep 3, last +2.7% with purchase sub-index +1.8% and refinancing sub-index +2.8%.
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 $21 billion 10-year T-notes.
1400 ET Fed\'s Beige Book.
1500 ET Jul consumer credit expected -$4.5 billion, Jun -$1.3 billion.
Japan
0030 ET Aug Japan bankruptcies, Jul -23.1% y/y.
0100 ET Aug Japan Eco watchers survey current expected 49.9, Jul 49.8. Aug Eco watchers survey outlook expected 46.4, Jul 46.6.
1950 ET Q3 Japan BSI large all industry business condition, Q2 +4.0 q/q. Q3BSI large manufacturing business condition, Q2 +10 q/q.
Germany
0200 ET Jul German trade balance expected +13.0 billion euros, Jun +14.1 billion euros. Jul exports expected unchanged m/m, Jun +3.7% m/m. Jul imports expected +0.1% m/m, Jun +1.6% m/m.
0600 ET Jul German industrial production expected +1.0% m/m and +12.5% y/y, Jun -0.6% m/m and +10.9% y/y.
France
0230 ET Aug Bank of France business sentiment expected unchanged at 101, Jul unchanged at 101.
0245 ET Jul French trade balance expected -4.1 billion euros, Jun -3.8 billion euros.
United Kingdom
0430 ET Jul UK industrial production expected +0.4% m/m and +2.0% y/y, Jun -0.5% m/m and +1.3% y/y.
0430 ET Jul UK manufacturing production expected +0.3% m/m and +4.9% y/y, Jun +0.3% m/m and +4.1% y/y.
Canada
0830 ET Jul Canadian building permits expected -5.3% m/m, Jun +6.5% m/m
0900 ET Bank of Canada announces interest rate decision (expected 25 bp increase in benchmark rate to 1.00%).
1000 ET Aug Ivey purchasing managers index expected +1.0 to 55.0, Jul -4.9 to 54.0.

Wednesday 9/8/10
United States
0700 ET	Weekly MBA mortgage applications for the week ended Sep 3, last +2.7% with purchase sub-index +1.8% and refinancing sub-index +2.8%.
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 $21 billion 10-year T-notes.
1400 ET	Fed\'s Beige Book.
1500 ET	Jul consumer credit expected -$4.5 billion, Jun -$1.3 billion.
Japan
0030 ET	Aug Japan bankruptcies, Jul -23.1% y/y.
0100 ET	Aug Japan Eco watchers survey current expected 49.9, Jul 49.8. Aug Eco watchers survey outlook expected 46.4, Jul 46.6.
1950 ET	Q3 Japan BSI large all industry business condition, Q2 +4.0 q/q. Q3BSI large manufacturing business condition, Q2 +10 q/q.
Germany
0200 ET	Jul German trade balance expected +13.0 billion euros, Jun +14.1 billion euros. Jul exports expected unchanged m/m, Jun +3.7% m/m. Jul imports expected +0.1% m/m, Jun +1.6% m/m.
0600 ET	Jul German industrial production expected +1.0% m/m and +12.5% y/y, Jun -0.6% m/m and +10.9% y/y.
France
0230 ET	Aug Bank of France business sentiment expected unchanged at 101, Jul unchanged at 101.
0245 ET	Jul French trade balance expected -4.1 billion euros, Jun -3.8 billion euros.
United Kingdom
0430 ET	Jul UK industrial production expected +0.4% m/m and +2.0% y/y, Jun -0.5% m/m and +1.3% y/y.
0430 ET	Jul UK manufacturing production expected +0.3% m/m and +4.9% y/y, Jun +0.3% m/m and +4.1% y/y.
Canada
0830 ET	Jul Canadian building permits expected -5.3% m/m, Jun +6.5% m/m
0900 ET	Bank of Canada announces interest rate decision (expected 25 bp increase in benchmark rate to 1.00%).
1000 ET	Aug Ivey purchasing managers index expected +1.0 to 55.0, Jul -4.9 to 54.0.

Morning Quote Board
Morning Quotes (ET) Last Chg %chg Updated
US Stock Futures
S&P (Globex) (U0) 1095.10 3.90 0.36% 07:11:49
DJIA (CBOT) (U0) 10373 35 0.34% 07:10:40
European Stocks
Europe DJ Stoxx 50 2545.62 14.16 0.56% 07:06:45
London UK FTSE Index 5407.70 -0.12 0.00% 07:06:52
German Dax Index 6127.67 9.78 0.16% 07:06:52
French CAC 40 Index 3653.24 9.43 0.26% 07:06:45
Asian-Pacific Stocks
Japan Nikkei Index 9025 -201 -2.18% 02:28:01
Hong Kong Hang Seng 21089 -313 -1.46% 04:01:15
China CSI 300 Index 2981 -2 -0.07% 03:01:23
Taiwan TAIEX Index 7851 -33 -0.42% 01:46:00
Australian S&P 200 4537.2 -36 -0.79% 02:37:36
Singapore Str. Times 3011.42 -24.67 -0.81% 05:10:01
South Korea KOSPI 200 230.94 -1.51 -0.65% 05:03:24
Bombay Sensex 30 18667 21.65 0.12% 06:29:59
Karachi KSE-100 9891 143 1.47% 05:12:22
US Interest Rates
10yr T-notes (CBT)(Z0) 124.250 -0.015 -0.05% 07:11:48
Cash 10yr T-note Price 100.035 -0.050 -0.16% 07:21:30
Cash 10yr T-note Yield 2.612 0.018 0.69% 07:21
5yr T-note (CBT)(Z0) 120.000 -0.020 -0.05% 07:11:47
Cash 5yr T-note Price 99.070 -0.025 -0.08% 07:20:30
Cash 5yr T-note Yield 1.413 0.016 1.17% 07:20
30-yr T-bond (CBT)(Z0) 132.30 0.00 0.00% 07:11:41
Cash 30yr T-bond Price 103.155 -0.120 -0.36% 07:21:30
Cash 30yr T-bond Yield 3.682 0.020 0.55% 07:21
Eurodollars (CME)(Z0) 99.535 -0.015 -0.02% 07:11:39
Eurodollars (CME)(H1) 99.480 -0.020 -0.02% 07:11:39
Asian & European Rates
10-yr JGBs (TSE) (Z0) 141.59 0.24 0.17% 02:00:00
EuroyenTibor(SGX)(Z0) 99.668 -0.013 -0.01% 07:05:48
Bunds (Eurex) (Z0) 131.93 0.23 0.17% 07:06:48
Euribor (Eurex) (Z0) 99.05 -0.02 -0.02% 06:26:33
UK Gilts (Liffe) (Z0) 124.54 -0.01 -0.01% 07:06:50
Short Stlg (Liffe) Z0) 99.15 -0.03 -0.03% 07:06:31
Forex
U.S. Dollar Index 82.70 -0.19 -0.23% 07:11:50
US Dollar-Japanese Yen 83.77 -0.06 -0.07% 07:21:52
EuroFX-US Dollar 1.2717 0.0035 0.35% 07:21:52
US Dollar-Swiss Franc 1.0091 -0.0023 -0.23% 07:21:52
British Pound-US$ 1.5464 0.0106 1.06% 07:21:52
US$-Canadian Dlr 1.0453 -0.0027 -0.27% 07:21:52
Yen (Globex) (Z0) 1.1944 -0.0005 -0.05% 07:11:26
Euro FX (Globex) (Z0) 1.2707 0.001 0.08% 07:11:51
SwissFranc (Globex)(Z0) 0.9921 0.0002 0.02% 07:11:10
British Pound(Glbx)(Z0) 1.5443 0.011 0.72% 07:11:51
Canadian$ (Globex)(Z0) 0.9533 0.0005 0.05% 07:11:09
Commodities
Gold (Comex) (Z0) 1261.3 2.0 0.16% 07:11:46
Silver (Comex) (Z0) 20.030 0.116 0.58% 07:11:44
Copper (Comex) (Z0) 347.4 0.3 0.09% 07:11:28
Crude Oil (Nymex) (V0) 73.89 -0.20 -0.27% 07:11:49
Gasoline (Nymex) (V0) 191.99 -1.30 -0.67% 07:10:05
Heating Oil(Nymex) (V0) 206.7 -0.73 -0.35% 07:11:33
NaturalGas(Nymex)(V0) 3.863 0.011 0.29% 07:10:59
Corn (CBOT) (Z0) 466.75 0.50 0.11% 07:11:30
Soybeans (CBOT) (X0) 1050.50 -1.50 -0.14% 07:10:23
Wheat (CBOT) (Z0) 733.00 -2.25 -0.31% 07:11:46
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US Stock Futures
Morning Quotes (ET)	Last	Chg	%chg	Updated
S&P (Globex) (U0)	1095.10	3.90	0.36%	07:11:49
DJIA (CBOT) (U0)	10373	35	0.34%	07:10:40

European Stocks
Europe DJ Stoxx 50	2545.62	14.16	0.56%	07:06:45
London UK FTSE Index	5407.70	-0.12	0.00%	07:06:52
German Dax Index	6127.67	9.78	0.16%	07:06:52
French CAC 40 Index	3653.24	9.43	0.26%	07:06:45

Asian-Pacific Stocks
Japan Nikkei Index	9025	-201	-2.18%	02:28:01
Hong Kong Hang Seng	21089	-313	-1.46%	04:01:15
China CSI 300 Index	2981	-2	-0.07%	03:01:23
Taiwan TAIEX Index	7851	-33	-0.42%	01:46:00
Australian S&P 200	4537.2	-36	-0.79%	02:37:36
Singapore Str. Times	3011.42	-24.67	-0.81%	05:10:01
South Korea KOSPI 200	230.94	-1.51	-0.65%	05:03:24
Bombay Sensex 30	18667	21.65	0.12%	06:29:59
Karachi KSE-100	9891	143	1.47%	05:12:22

US Interest Rates
10yr T-notes (CBT)(Z0)	124.250	-0.015	-0.05%	07:11:48
Cash 10yr T-note Price	100.035	-0.050	-0.16%	07:21:30
Cash 10yr T-note Yield	2.612	0.018	0.69%	07:21
5yr T-note (CBT)(Z0)	120.000	-0.020	-0.05%	07:11:47
Cash 5yr T-note Price	99.070	-0.025	-0.08%	07:20:30
Cash 5yr T-note Yield	1.413	0.016	1.17%	07:20
30-yr T-bond (CBT)(Z0)	132.30	0.00	0.00%	07:11:41
Cash 30yr T-bond Price	103.155	-0.120	-0.36%	07:21:30
Cash 30yr T-bond Yield	3.682	0.020	0.55%	07:21
Eurodollars (CME)(Z0)	99.535	-0.015	-0.02%	07:11:39
Eurodollars (CME)(H1)	99.480	-0.020	-0.02%	07:11:39

Asian & European Rates
10-yr JGBs (TSE) (Z0)	141.59	0.24	0.17%	02:00:00
EuroyenTibor(SGX)(Z0)	99.668	-0.013	-0.01%	07:05:48
Bunds (Eurex) (Z0)	131.93	0.23	0.17%	07:06:48
Euribor (Eurex) (Z0)	99.05	-0.02	-0.02%	06:26:33
UK Gilts (Liffe) (Z0)	124.54	-0.01	-0.01%	07:06:50
Short Stlg (Liffe) Z0)	99.15	-0.03	-0.03%	07:06:31

Forex
U.S. Dollar Index	82.70	-0.19	-0.23%	07:11:50
US Dollar-Japanese Yen	83.77	-0.06	-0.07%	07:21:52
EuroFX-US Dollar	1.2717	0.0035	0.35%	07:21:52
US Dollar-Swiss Franc	1.0091	-0.0023	-0.23%	07:21:52
British Pound-US$	1.5464	0.0106	1.06%	07:21:52
US$-Canadian Dlr	1.0453	-0.0027	-0.27%	07:21:52
Yen (Globex) (Z0)	1.1944	-0.0005	-0.05%	07:11:26
Euro FX (Globex) (Z0)	1.2707	0.001	0.08%	07:11:51
SwissFranc (Globex)(Z0)	0.9921	0.0002	0.02%	07:11:10
British Pound(Glbx)(Z0)	1.5443	0.011	0.72%	07:11:51
Canadian$ (Globex)(Z0)	0.9533	0.0005	0.05%	07:11:09

Commodities
Gold (Comex) (Z0)	1261.3	2.0	0.16%	07:11:46
Silver (Comex) (Z0)	20.030	0.116	0.58%	07:11:44
Copper (Comex) (Z0)	347.4	0.3	0.09%	07:11:28
Crude Oil (Nymex) (V0)	73.89	-0.20	-0.27%	07:11:49
Gasoline (Nymex) (V0)	191.99	-1.30	-0.67%	07:10:05
Heating Oil(Nymex) (V0)	206.7	-0.73	-0.35%	07:11:33
NaturalGas(Nymex)(V0)	3.863	0.011	0.29%	07:10:59
Corn (CBOT) (Z0)	466.75	0.50	0.11%	07:11:30
Soybeans (CBOT) (X0)	1050.50	-1.50	-0.14%	07:10:23
Wheat (CBOT) (Z0)	733.00	-2.25	-0.31%	07:11:46