Jim Van Meerten's  Instablog

• Global stocks are mixed with the European Euro Stoxx 50 down -0.47% at a 13-month low although Sep S&Ps are up +7.00 points. The dollar and most commodities weakened, with Sep crude falling to a 5-week low and Sep copper declining to a 3-week low on economic growth concerns, while Aug gold surged to yet another record high of $1.672.30 an ounce. The Swiss central bank unexpectedly cut interest rates and said it will increase the supply of francs to money markets to curb the "massively overvalued" currency. The franc dropped from a record after the SNB lowered its target for the 3-month Libor to "as close to zero as possible" from 0.25% and said it will expand banks' sight deposits to 80 billion Swiss francs ($103 billion) from 30 billion francs and repurchase outstanding SNB bills. The euro strengthened against the dollar even as cost of credit-default swaps to insure the government debts of Spain, Italy and France all climbed to records. The dollar index weakened after Moody's Investors Service warned the US is still at risk of losing its top credit rating. The Euro Stoxx 50 Stock Index recovered from a 13-month low after Jun Euro-Zone retail sales rose +0.9% m/m and fell -0.4% y/y, stronger than expectations of +0.5% m/m and -1.0% y/y. Another positive factor for stocks was the upward revision to the Jul Euro-Zone PMI composite to 51.1 from the originally reported 50.8.
• The Asian stock markets today closed lower with Japan down -2.11%, China -0.05%, Australia -2.27%, South Korea -2.76%, India -0.94%. Most Asian stock markets closed lower after an unexpected drop in US consumer spending raised concern that US economic growth is faltering and will harm Asian exporters. China's Shanghai Stock Index nearly recovered all of its losses and finished just slightly lower after the Jul China non-manufacturing PMI index rose +2.6 to 59.6, its first increase in 3 months, which eases concern that China's policies to rein in consumer and property prices will trigger a deeper economic slowdown.

• September S&Ps this morning are trading up +7.00 points on short-covering after yesterday's plunge. The US stock market yesterday sold-off sharply the entire day and finished on its low due to signs the US economy is in jeopardy after Jun US personal spending declined for the first time in 22 months along with concern that the European debt crisis may worsen: Dow Jones -2.19%, S&P 500 -2.56%, Nasdaq Composite -2.75%. The S&P 500 sank to a 4-1/2 month low, the Dow slumped to a 1-1/2 month low and the Nasdaq slipped to a 1-month low. Bearish factors included (1) carry-over weakness from a plunge in European stocks which sank to an 11-month low on concern the European debt crisis may worsen after credit-default swaps to insure the government debts of France, Italy and Spain all climbed to records, (2) additional signs that the US economy is slowing after Jun US personal spending unexpectedly fell for the first time in 22 months (-0.2% versus expectations of +0.1%), (3) the smaller-than-expected increase in Jun US personal income (+0.1% versus expectations of +0.2%), and (4) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
• Bullish factors included (1) the action by Congress to approve a deal to raise the US debt ceiling, (2) reduced inflation fears after the smaller-than-expected increase in the Jun PCE core deflator (+0.1% m/m and +1.3% y/y versus expectations of +0.2% m/m and +1.4% y/y), and (3) the plunge in the 10-year T-note yield to an 8-3/4 month low of 2.601%.
• CBS Corp. (CBS) rallied 1.6% in pre-market trading after the company reported Q2 earnings of 58 cents a share, well ahead of analysts' estimates of 46 cents a share.

• September 10-year T-notes this morning are trading down -0.5 of a tick. T-note prices yesterday rallied to an 8-1/2 month nearest-futures high and closed higher for the fourth consecutive session on increased safe-haven demand after the stock market tumbled along with concerns the economy is slowing after US personal spending unexpectedly fell in Jun: TYU11 +26, FVU11 +12, EDZ11 -3.5. The 10-year T-note yield dropped to an 8-3/4 month low of 2.601%. Bullish factors included (1) the unexpected decline in Jun US personal spending which fell for the first time in 22 months (-0.2% versus expectations of +0.1%), (2) the smaller-than-expected increase in the Jun PCE core deflator (+0.1% m/m and +1.3% y/y versus expectations of +0.2% m/m and +1.4% y/y), (3) the smaller-than-expected increase in Jun US personal income (+0.1% versus expectations of +0.2%), and (4) increased safe-haven demand for Treasuries after the S&P 500 tumbled to a 4-1/2 month low. Bearish factors included (1) the action by Congress to approve a deal to raise the US debt ceiling, which temporarily reduces the safe-haven demand for Treasuries and (2) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
• The dollar index this morning is lower with the dollar/yen -0.05 yen and the euro/dollar +0.10 cents. The dollar index yesterday posted a 1-1/2 week high and closed higher on increased safe-haven demand as the stock market slumped along with concerns that Europe's debt crisis may worsen: Dollar Index +0.251, USDJPY -0.058, EURUSD -0.00473. Bullish factors included (1) weakness in the euro which fell to a 1-1/2 week low against the dollar on concern the European debt crisis may worsen after credit-default swaps to insure the government debts of France, Italy and Spain all climbed to records and (2) increased safe-haven demand for the dollar after the equity market plunged. Bearish factors included (1) the unexpected decline in Jun US personal spending, which suggests an economic slowdown that may prompt the Fed into additional easing measures which would weaken the dollar's interest rate differentials further and (2) speculation that an agreement by Congress to raise the debt ceiling and cut spending will weigh on US economic growth.
• Sep crude oil prices this morning are down -47 cents a barrel at a 5-week low and Sep gasoline is -3.43 cents per gallon. Sep crude oil and gasoline prices yesterday moved lower as the dollar strengthened along with concerns of an economic slowdown after Jun US personal spending declined for the first time in 22 months: CLU11 -$1.10, RBU11 -1.67. Bearish factors included (1) the rally in the dollar index to a 1-1/2 week high, which reduces investment demand for commodities, (2) the unexpected decline in US Jun personal spending, which suggests an economic slowdown that may dampen energy demand, and (3) the outlook for an increase in weekly crude supplies when the DOE releases its inventory figures on Wed. Expectations for Wednesday's inventory report from the DOE are for crude oil stockpiles to rise +1.5 million bbl, gasoline supplies to gain +250,000 bbl, distillate inventories to increase +1.5 million bbl and the refinery capacity rate to remain unchanged at 88.3%.

Earnings reports (confirmed releases, sorted by mkt cap): CMCSA-Comcast (BEST earnings consensus $0.40), MA-Mastercard (4.23), TWX-Time Warner (0.56), DVN-Devon Energy (1.53), PRU-Prudential Financial (1.55), AGN-Allergan (0.95), CTL-CenturyLink (0.67), RIG-Transocean Ltd. (0.80), WMB-Williams Cos. (0.39), SE-Spectra Energy (0.40), PEG-Public Service Enterprise Group (0.55), MMC-Marsh & McLennan (0.48), ATVI-Activision Blizzard (0.05), CLR-Continental Resources (0.61), PXD-Pioneer Natural Resources (0.81), ETP-Energy Transfer Partners LP (0.30).

Global Financial Calendar

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The "Chart of the Day" is McGraw-Hill Companies (MHP), which showed up on Tuesday's list of stocks that had a new "Buy" signal from the Barchart "TrendSpotter" trading system. McGraw-Hill on Tuesday rallied by 7.29% and posted a new 3-1/2 year high. In recent news on the stock, McGraw-Hill on Tuesday reiterated that is conducting a strategic portfolio review following news that JANA Partners, the investment manager on behalf of the Ontario Teachers' Pension Plan Board, has acquired 5.2% of the stock and is seeking discussions with the company about ways to increase shareholder value. McGraw-Hill on June 28 reported Q2 EPS of 68 cents versus the consensus of 66 cents and said it sees FY11 EPS at the top end of $2.79-2.89 guidance. McGraw-Hill, with a market cap of $12.7 billion, is a large multimedia publishing and information company, employing a broad range of media, including books, magazines, newsletters, software, on-line data services, CD-ROMs, facsimile and television broadcasting.

How we found the Chart of the Day:

We found the "Chart of the Day" by scanning the Barchart "Trading Signals" page. That page provides a summary of changes in the Barchart signals. We then clicked on the TrendSpotter "Buy" category to obtain a list of all the stocks for which the Barchart TrendSpotter trading system has just turned to a buy. We then clicked on the "Today's Opinion" column header in order to sort the list with the strongest stocks on top. Further information is available at Barchart Signals Guide help page and at TrendSpotter help page.

Barchart's Opinion trading systems are mostly a "Buy" and Barchart's daily TrendSpotter trading system is a "Buy." Please note that the Barchart Opinion indicators are updated live during the session every 10 minutes and can therefore change during the day as the market fluctuates. The indicator numbers shown below therefore may not match what you see live on the Barchart.com web site when you read this report.

• TrendSpotter: Buy
• Short-Term Indicators: 80% Buy
• Medium-Term Indicators: 100% Buy
• Long-Term Indicators: 100% Buy
• Overall Average 96% Buy

• Global stocks are trading weaker with the European Euro Stoxx 50 down -0.63% at an 11-month low and Sep S&Ps down -5.70 points. The dollar index rose to a 1-1/2 week high and the 10-year T-note yield fell to an 8-1/2 month low on signs US economic growth is slowing. The Senate later today will vote on a debt-limit compromise that already passed the House yesterday by a 269-161 vote margin, which raises the national debt ceiling enough to fund the government until 2013 and threatens automatic spending cuts to enforce a goal of cutting $2.4 trillion over the next decade. Commodities fell and the euro dropped to a 1-1/2 week low against the dollar after credit-default swaps to insure the government debts of France, Italy and Spain all climbed to records. Jun Euro-Zone producer prices were unchanged m/m, slightly weaker than expectations of +0.1% m/m, which helped German bund prices climb and the 10-year German bund yield to fall to an 8-1/2 month low of 2.394%.
• The Asian stock markets today closed lower with Japan down -1.21%, China -0.72%, Australia -1.43%, South Korea -2.46%, India -1.12%. The weaker than expected Jul ISM manufacturing report that showed US manufacturing activity slowed to a 2-year low dampened the outlook for Asian exporters and help drive Asian stocks lower today. Chinese stocks were also undercut after the Xinhua News Agency website said the PBOC may boost borrowing costs around Aug 10, a day after inflation figures are due to be released. India's Sensitive Stock Index tumbled after RBI Governor Subbarao said further interest rate increases will be necessary to tame inflation, which raised concern that corporate earnings growth will slow. The Australian dollar weakened against the US dollar after the RBA kept its overnight cash rate unchanged at 4.75% as RBA Governor Stevens cited "the acute sense of uncertainty" in financial markets as a key factor for inaction.

• September S&Ps this morning are trading down -5.70 points. The US stock market yesterday rallied early on speculation that US lawmakers will raise the debt ceiling, but shed its gains and finished lower after US manufacturing growth slipped to a 2-year low in July: Dow Jones -0.09%, S&P 500 -0.41%, Nasdaq Composite -0.43%. The S&P 50 and the Dow tumbled to 1-month lows and the Nasdaq fell to a 2-week low. Bearish factors included (1) concern the economy is slowing after the Jul ISM manufacturing index fell more than expected to its slowest pace in 2 years (-4.4 to 50.9 versus expectations of -0.8 to 54.5), (2) weakness in health-care companies after Medicare announced an 11.1% rate cut for next year for nursing-home providers, and (3) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
• Bullish factors included (1) an early rally in stocks on optimism congressional leaders will agree on a deal to raise the US debt ceiling, (2) reduced concerns over a slowdown in the Chinese economy after the Jul China PMI manufacturing index fell less than expected (-0.2 to 50.7 versus expectations of -0.7 to 50.2), (3) the stronger than expected Jun construction spending along with the upward revision to May (Jun +0.2% versus expectations of +0.1% and May revised up to a gain of +0.3% from a previously reported decline of -0.6%), and (4) reduced price pressures after the larger-than-expected decline in the Jul ISM prices paid sub-index to its slowest pace of growth in a year (-9.0 to 59.0 versus expectations of -4.0 to 64.0).
• NYSE Euronext (NYX) slipped 2.2% in European trading after the US exchange company planning to be bought by Deutsche Boerse AG reported that Q2 net income fell -16% to $154 million as revenue from European derivatives and US equity trading declined.

• September 10-year T-notes this morning are trading up +14 ticks and at an 8-1/2 month nearest-futures high as global equity markets slide. T-note prices yesterday rallied sharply and closed higher after US manufacturing growth slowed to a 2-year low in July: TYU11 +14.5, FVU11 +7.5, EDZ11 +1.5. The 10-year T-note yield tumbled to an 8-1/2 month low of 2.716%. Bullish factors included (1) the larger-than-expected decline in the Jul ISM manufacturing index (-4.4 to a 2-year low of 50.9 versus expectations of -0.8 to 54.5), (2) the larger-than-expected decline in the Jul ISM prices paid sub-index to its slowest pace of growth in a year (-9.0 to 59.0 versus expectations of -4.0 to 64.0), and (3) increased safe-haven demand for Treasuries after the stock market plunged. Bearish factors included (1) President Obama's statement that congressional leaders had approved a deal to raise the US debt ceiling, which temporarily reduces the safe-haven demand for Treasuries and (2) concern that credit-rating agencies will still downgrade the credit rating of the US despite a hike in the debt ceiling.
• The dollar index this morning is higher and at a 1-1/2 week high with the dollar/yen +0.22 yen and the euro/dollar -0.55 cents. The dollar index yesterday recovered from early losses and rallied to a 1-week high and settled higher after President Obama said congressional leaders had approved a deal to raise the US debt ceiling: Dollar Index +0.365, USDJPY +0.413, EURUSD -0.01476. Bullish factors included (1) the statement from President Obama that congressional leaders had approved a deal to raise the US debt ceiling, (2) weakness in the British pound which fell to a 1-week low against the dollar after the Jul UK PMI manufacturing index contracted at its slowest level in 2 years, and (3) comments from Japanese Finance Minister Noda who said he's watching currency markets "closely," which prompted the yen to weaken from a 4-1/2 month high against the dollar on fears of currency intervention by Japan to curb the yen's strength. Bearish factors included (1) the larger-than-expected drop in the Jul ISM manufacturing index which slid to its slowest level in 2 years and fueled speculation the Fed may increase its emergency stimulus measures and (2) concern that the US will still face a credit downgrade from ratings agencies even with an increase in the debt ceiling.
• Sep crude oil prices this morning are down -64 cents a barrel and Sep gasoline is -0.96 of a cent per gallon. Sep crude oil and gasoline prices yesterday rallied early after President Obama said congressional leaders approved a deal to raise the US debt ceiling, but gave up their gains and turned lower after US factory growth in July fell to its slowest pace in 2 years: CLU11 -$0.81, RBU11 -0.39. Sep crude fell to a 1-month low and Sep gasoline rallied to a 2-3/4 month high but erased its gains and closed lower. Bearish factors included (1) the rally in the dollar index to a 1-week high, which reduces investment demand for commodities, (2) the larger-than-expected decline in the Jul ISM manufacturing index which slowed to its slowest pace in 2-years and signals reduced energy consumption, and (3) increased OPEC output as OPEC production in July rose by 245,000 barrels a day from Jun to 29.565 million barrels a day, the most since December 2008. Bullish factors included (1) an early rally after President Obama said that congressional leaders had reached a deal to raise the US debt ceiling, which boosts the prospects for economic growth and energy demand and (2) the stronger-than-expected Jul China PMI manufacturing index.

Earnings reports (confirmed releases, sorted by mkt cap): PFE-Pfizer (BEST earnings consensus $0.59), EMR-Emerson Electric (0.90), SCCO-Southern Copper (0.75), BEN-Franklin Resources (2.17), DUK-Duke Energy (0.31), MRO-Marathon Oil (1.16), CTSH-Cognizant Technology Solutions (0.69), AMT-American Tower (0.23), ADM-Archer-Daniels-Midland (0.85), COH-Coach (0.65), FE-FirstEnergy (0.72), CBS-CBS Corp. (0.46), BDX-Becton Dickinson (1.43), GGP-General Growth Properties (0.03), HCP-HCP Inc. (0.53), PH-Parker Hannifin (1.80), NYX-NYSE Euronext (0.60).

Global Financial Calendar

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