Barchart.com U.S. Morning Call for Friday, November 6, 2009
Overnight Developments
- The European DJ Stoxx 50 this morning is up +0.10% and Dec S&Ps are up +1.30 points. Treasuries and commodities are higher and the dollar weaker on speculation this morning's US employment report will add to evidence the labor-market slump is bottoming. Continued better-than-expected earnings results has helped European stocks to firm today after Hannover Re rose 3.7% after Germany's second-biggest reinsurer posted Q3 net income of 159.4 million euros ($237 million), beating analysts' estimates of 148 million euros, and they also raised their full-year profit target. British Airways climbed 6.3% even after reporting a first-half net loss of 217 million pounds ($360 million), as they said premium air traffic slipped 1.4% last month versus a 7.9% decline in Sep and that volume and yields, a measure of revenue per passenger, are now stable. Also benefiting Eurpean stock prices was the +0.9% increase in Sep German factory orders, the seventh consecutive monthly gain, as a 3.7% increase in export orders helped the recovery in Europe's largest economy to gather pace. Keeping gains in check was the 3.8% tumble in Lafarge after the world's biggest cement maker reported that Q3 net income fell to 404 million euros from 637 million euros a year earlier and it predicted a 6% to 8% drop in cement sales this year versus a July estimate of a 4% to 8% sales decline.
- The Asian markets today closed higher with Japan up +0.74%, Hong Kong +1.63%, China +0.54%, Taiwan +0.61%, Australia +1.91%, Singapore +1.10%, South Korea +1.48%, India +0.59%. Asian stock markets were boosted today after Australia's central bank, the RBA, predicted that the Australian economy will expand at more than three times the pace forecast in Aug, and signaled "a further gradual lessening of monetary stimulus is likely required over time." The RBA now forecasts GDP will rise 1.75% this year and 3.25% in 2010, higher than its Aug estimates of 0.5% and 2.25%. Australian bank stocks rallied, led by Macquarie Group, Australia's largest investment bank, and Westpac Banking, the country's second-largest bank, both closing more than 2.5% higher, while DBS Group Holdings, Southeast Asia's biggest lender, closed 2.9% higher after it reported better-than-expected Q3 net income.
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Overnight U.S. Stock News
- December S&Ps this morning are trading up +1.30 points. The US stock market yesterday moved higher right from the opening finished with sharp gains (Dow Jones +2.08%, S&P 500 +1.92%, Nasdaq Composite +2.42%). Bullish factors included (1) the larger-than-expected decline in weekly initial US unemployment claims, which fell to their lowest level in 10 months (-20,000 to 512,000 versus expectations of -8,000 to 522,000), (2) a favorable environment for company profits after Q3 nonfarm productivity rose more-than-expected to a 6-year high of +9.5% (versus expectations of +6.5%) with Q3 unit labor costs declining more than expected by -5.2% (versus expectations of -4.2%) with labor costs in the past 12 months down by the most since records began in 1948, (3) a gain in bank stocks after Rochdale Securities bank analyst Dick Bove predicted that the biggest US banks that led the eight-month rally in US stocks will double by the end of next year, (4) strength in technology stocks after Cisco posted better-than-expected Q1 profits with Cisco CEO John Chambers saying he now sees a global economic recovery "with the US leading the way," (5) a rally in chipmakers after the Semiconductor Industry Association predicted that global sales will grow 10.2% next year and 8.4% in 2011 and revised its estimate for this year's sales drop to -11.6 from its June prediction of -21%, and (6) a move higher in retailer stocks after the Oct ICSC chain store sales rose by +2.1% y/y, the best monthly gain since July 2008.
- Bearish factors included (1) the statement from Moody's Investors Service that the global speculative-grade default rate rose to 12.4% in Oct, the highest ratio of defaults since the Great Depression, and (2) trepidation ahead of Friday's Oct payrolls report which is expected to show US job losses continuing for the 22nd consecutive month and the unemployment rate rising to a 26-year high.
- Starbucks (SBUX) rose 4.4% in pre-market trading after it reported Q4 adjusted earnings of 24 cents a share, higher than analysts' estimates of 21 cents.
- Nvidia (NVDA) jumped 6.4% in European trading after it reported Q3 profit excluding some items of 19 cents a share, beating analysts' estimates of 10 cents
Today's U.S. Market Focus
- December 10-year T-notes this morning are tradingup +3 ticks . Dec T-note prices yesterday chopped on either side of unchanged early before grinding higher into the close and settling up +8 ticks at 118-025. Bullish factors included (1) the greater-than-expected increase in Q3 nonfarm productivity which rose at its fastest pace in 6 years (+9.5% versus expectations of +6.5%), (2) slack wage pressures after the larger-than-expected fall in Q3 unit labor costs (-5.2% versus expectations of -4.2%) which also capped their biggest 12-month drop since records began in 1948, and (3) the prediction from Bank of Tokyo-Mitsubishi UFJ that the Fed's recent post-FOMC statement in which they reiterated their commitment to keeping rates lows for an "extended period" means the Fed may be on hold beyond Q2 of 2010. Bearish factors for T-note prices yesterday included (1) the larger-than-expected fall in weekly initial unemployment claims to their lowest level in 10 months (-20,000 to 512,000 versus expectations of -8,000 to 522,000), and (2) reduced safe-haven demand for Treasuries after the sharp rally in the stock market.
- The dollar index this morning is slightly weaker with the dollar/yen -0.11 yen and the euro/dollar +0.07 cents. The dollar yesterday fell to a 1-1/2 week low early in the session before recovering its losses and closing higher on the day. Bullish factors included (1) euro-negative economic data after Sep Euro-Zone retail sales unexpectedly declined, and (2) dollar short-covering ahead of Friday's all-important Oct US payrolls report which may boost the dollar if more jobs are lost than expected. Bearish factors included (1) strength in the British pound after the BOE expanded its quantitative easing program by only 25 billion pounds, less than market expectations for 50 billion, and (2) the prediction from BNP Paribas SA that the dollar will slide further as nations that hold the world's biggest currency reserves seek "safer" assets including gold.
- December crude oil prices this morning are trading down -2 cents a barrel and Dec gasoline is trading -0.22 cent a gallon. Dec crude yesterday traded with small losses throughout most of the session and closed down -$0.78 a barrel. Dec gasoline yesterday closed down -2.50 cents a gallon. Bearish factors yesterday included (1) the rebound in the dollar index which closed higher after recovering from a 1-1/2 week low, (2) the prediction from Schork Group that the price of crude oil has gotten ahead of the economic recovery and is formimg another "speculative bubble," and (3) speculation that Friday's US payrolls report will show that the US unemployment rate rose to a 26-year high last month, which may depress demand for energy products. Bullish factors yesterday included (1) the larger-than-expected decrease in weekly initial unemployment claims which fell to a 10-month low, indicating possible improvement in the US labor market which may increase fuel demand, and (2) the prediction from Emerging Global Advisors LLC that crude oil may top $100 a barrel in the next six months as a "herd mentality" fuels an investment boom in commodities
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Today's U.S. Earnings Reports
Earnings reports (confirmed releases, sorted by mkt cap) BRK-Berkshire Hathaway (BEST earnings consensus $1,270.00), BX-Blackstone Group (0.14), EIX-Edison International (1.04), AIG-American International Group (2.39), SEP-Spectra Energy (0.43), MIR-Mirant (1.14), FIG-Fortress Investment Group LLC (0.09), TCLP-TC Pipelines LP (0.50), NNN-National Retail Properties (0.27), LPNT-LifePoint Hospitals (0.56), FNM-Fannie Mae (-4.09), GBL-Gamco Investors (0.48), BEXP-Brigham Exploration (0.01), PRX-Par Pharmaceutical Companies(0.49), AER-Aercap Holdings (0.40), ROSE-Rosetta Resources (0.10)
Global Financial Calendar
| Friday 11/6/2009 |
|---|
| |
| United States |
|---|
| 0830 ET | Oct nonfarm payrolls expected –175,000, Sep –263,000. Oct unemployment rate expected +0.1 to 9.9%, Sep +0.1 to 9.8%. Oct manufacturing payrolls expected -42,000, Sep -51,000. Oct avg hourly earnings expected +0.1% m/m and +2.2% y/y, Sep +0.1% m/m and +2.5% y/y. Oct avg weekly hours expected +0.1 to 33.1, Sep 0.1 to 33.0. |
| 0945 ET | Chicago Fed President Charles Evans delivers opening remarks to his bank’s 5th Annual Community Bankers Symposium. |
| 1000 ET | Sep wholesale inventories expected –1.0%, Aug –1.3%. |
| 1130 ET | Fed Governor Elizabeth Duke is the keynote speaker at the Chicago Fed’s bankers conference. |
| 1500 ET | Sep consumer credit expected -$10.0 billion, Aug -$12.0 billion. |
| Japan |
|---|
| 0000 ET | Sep Japan leading index CI expected +3.0 to 86.2, Aug +0.7 to 83.2. Sep coincident index CI expected +1.3 to 92.5, Aug +1.4 to 91.2. |
| France |
|---|
| 0245 ET | Sep French trade balance, Aug –3.4 billion euros. |
| United Kingdom |
|---|
| 0430 ET | Oct UK PPI input prices expected +1.5% m/m and –1.3% y/y, Sep –0.5% m/m and –6.5% y/y. |
| 0430 ET | Oct UK PPI output prices expected +0.3% m/m and +1.9% y/y, Sep +0.5% m/m and +0.4% y/y. |
| 0430 ET | Oct UK PPI output core expected +0.2% m/m and +2.0% y/y, Sep +0.5% m/m and +1.4% y/y. |
| Germany |
|---|
| 0600 ET | Sep German factory orders expected +1.0% m/m and –13.6% y/y, Aug +1.4% m/m and –20.4% y/y. |
| Canada |
|---|
| 0700 ET | Oct Canadian net change in employment expected +10,000, Sep +30,600. Oct unemployment rate expected +0.1 to 9.9%, Sep +0.1 to 9.8%. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures |
|---|
| S&P (Globex) (Z9) | 1064.50 | 1.30 | 0.12% | 07:16:10 |
| DJIA (CBOT) (Z9) | 9965 | 11 | 0.11% | 07:15:09 |
| | | | |
| European Stocks |
|---|
| Europe DJ Stoxx 50 | 2436.72 | 2.42 | 0.10% | 07:11:00 |
| London UK FTSE Index | 5136.93 | 11.29 | 0.22% | 07:11:00 |
| German Dax Index | 5483.24 | 2.32 | 0.04% | 07:11:14 |
| French CAC 40 Index | 3708.76 | 0.03 | 0.00% | 07:11:00 |
| | | | |
| Asian-Pacific Stocks |
|---|
| Japan Nikkei Index | 9789 | 72 | 0.74% | 02:00:16 |
| Hong Kong Hang Seng | 21830 | 351 | 1.63% | 03:01:15 |
| China CSI 300 Index | 3483 | 19 | 0.54% | 02:01:16 |
| Taiwan TAIEX Index | 7463 | 46 | 0.61% | 00:46:01 |
| Australian S&P 200 | 4594 | 86 | 1.91% | 00:47:03 |
| Singapore Str. Times | 2658.21 | 28.86 | 1.10% | 04:10:01 |
| South Korea KOSPI 200 | 206.53 | 3.01 | 1.48% | 04:03:23 |
| Bombay Sensex 30 | 16158 | 94.38 | 0.59% | 05:29:54 |
| Karachi KSE-100 | 8936 | -176 | -1.93% | 06:47:41 |
| | | | |
| US Interest Rates |
|---|
| 10yr T-notes (CBT)(Z9) | 118.055 | 0.030 | 0.08% | 07:16:12 |
| Cash 10yr T-note Price | 100.295 | 0.030 | 0.09% | 07:25:30 |
| Cash 10yr T-note Yield | 3.512 | -0.011 | -0.32% | 07:25 |
| 5yr T-note (CBT)(Z9) | 116.160 | 0.025 | 0.06% | 07:16:10 |
| Cash 5yr T-note Price | 100.060 | 0.000 | 0.00% | 07:26:00 |
| Cash 5yr T-note Yield | 2.335 | 0.000 | 0.00% | 07:25 |
| 30-yr T-bond (CBT)(Z9) | 118.14 | 0.07 | 0.19% | 07:15:38 |
| Cash 30yr T-bond Price | 101.275 | 0.060 | 0.18% | 07:26:00 |
| Cash 30yr T-bond Yield | 4.387 | -0.011 | -0.26% | 07:25 |
| Eurodollars (CME)(Z9) | 99.705 | 0.005 | 0.01% | 07:15:36 |
| Eurodollars (CME)(H0) | 99.555 | 0.000 | 0.00% | 07:15:36 |
| | | | |
| Asian & European Rates |
|---|
| 10-yr JGBs (TSE) (Z9) | 137.56 | -0.04 | -0.03% | 01:00:00 |
| EuroyenTibor(SGX)(Z9) | 99.505 | 0.000 | 0.00% | 11/6/2009 |
| Bunds (Eurex) (Z9) | 120.96 | -0.05 | -0.04% | 07:11:09 |
| Euribor (Eurex) (Z9) | 99.27 | 0.01 | 0.01% | 06:27:42 |
| UK Gilts (Liffe) (Z9) | 116.46 | -0.09 | -0.08% | 07:10:53 |
| Short Stlg (Liffe) (Z9) | 99.36 | 0.01 | 0.01% | 07:09:55 |
| | | | |
| Forex |
|---|
| U.S. Dollar Index | 75.73 | -0.02 | -0.02% | 07:16:11 |
| US Dollar-Japanese Yen | 90.60 | -0.11 | -0.12% | 07:26:14 |
| EuroFX-US Dollar | 1.4878 | 0.0007 | 0.07% | 07:26:14 |
| US Dollar-Swiss Franc | 1.0157 | -0.0004 | -0.04% | 07:26:14 |
| British Pound-US$ | 1.6582 | -0.0002 | -0.02% | 07:26:14 |
| US$-Canadian Dlr | 1.0706 | 0.0055 | 0.55% | 07:26:14 |
| Yen (Globex) (Z9) | 1.1039 | 0.0021 | 0.21% | 07:15:53 |
| Euro FX (Globex) (Z9) | 1.4874 | 0.0007 | 0.05% | 07:16:10 |
| SwissFranc (Globex)(Z9) | 0.9845 | 0.0006 | 0.06% | 07:16:12 |
| British Pound(Glbx)(Z9) | 1.6592 | 0.001 | 0.06% | 07:16:09 |
| Canadian$ (Globex)(Z9) | 0.9347 | -0.0045 | -0.48% | 07:16:13 |
| | | | |
| Commodities |
|---|
| Gold (Comex) (Z9) | 1093.6 | 3.6 | 0.33% | 07:15:44 |
| Silver (Comex) (Z9) | 17.520 | 0.125 | 0.72% | 07:15:41 |
| Copper (Comex) (Z9) | 298.9 | 2.1 | 0.71% | 07:16:09 |
| Crude Oil (Nymex) (Z9) | 79.60 | -0.02 | -0.03% | 07:16:12 |
| Gasoline (Nymex) (Z9) | 198.55 | -0.22 | -0.11% | 07:08:41 |
| Heating Oil(Nymex) (Z9) | 205.34 | -0.42 | -0.20% | 07:16:05 |
| NaturalGas(Nymex)(Z9) | 4.723 | -0.059 | -1.23% | 07:15:54 |
| Corn (CBOT) (Z9) | 378.50 | 2.00 | 0.53% | 07:13:57 |
| Soybeans (CBOT) (F0) | 977.50 | 5.50 | 0.57% | 07:15:35 |
| Wheat (CBOT) (Z9) | 515.25 | 3.00 | 0.59% | 07:15:49 |