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Barchart Morning Call 10/11

|Includes:Fastenal Company (FAST), JBHT, NSR, OZRK, SWY

Barchart Morning Call

BC - 2 hrs 10 mins ago

Overnight Developments

  • Dec E-mini S&Ps are up +0.40% on the +0.61% rally in European stocks and on some optimism after Italy today successfully sold 3-year bonds. The markets have been able to shake off S&P's downgrade of Spain late yesterday. Asian stocks today closed mostly lower with Japan down -0.58% and China down -0.93%. Commodity prices are mildly higher by +0.13% with Nov crude oil +0.94%, Dec gold +0.44%, Dec copper +0.74%, and agriculture prices trading mostly lower. The dollar index is down -0.09%. EUR/USD is up +0.29% and USD/JPY is up +0.24%. Dec 10-year T-notes are down -0.5 tick.
  • S&P late yesterday cut Spain's debt rating by two notches to BBB- from BBB+ where the rating is now only one notch above junk. S&P left Spain's rating on negative watch.
  • Italy today sold 3.75 billion euros of 3-year bonds at 2.86% with a bid cover ratio of 1.67, up from 1.49 last month.
  • South Korea's central bank cut its policy rate by 25 bp to 2.75% from 3.00%, which was in line with market expectations. The central bank cut its 2012 South Korean GDP forecast to +2.4% from +3.0%. South Korea's rate cut followed the 25 bp rate cut in Brazil on Wednesday to address weak global economic growth.
  • The Greek unemployment rate in July climbed to a new record high of 25.1% from a revised 24.8% in June.
  • Japan Aug machine orders fell -3.3% m/m and -6.1% y/y, which was weaker than market expectations of -2.3% m/m and -4.7% y/y.
  • Germany's Sep CPI was left unrevised at unch m/m and +2.0% y/y. Market Comments
    • Dec E-mini S&Ps this morning are trading +5.75 (+0.40%) on the +0.61% rally in the Euro Stoxx 50 index this morning and on optimism that Italy today successfully sold 3-year bonds. The S&P 500 index on Wednesday closed moderately lower: S&P 500 -0.62%, Dow Jones -0.95%, Nasdaq 100 -0.49%. Bearish factors included (1) Alcoa's poor earnings report and the cut in its forecast for global 2012 aluminum demand to +6% from +7%, (2) the unexpected 0.3% drop in Chinese vehicle shipments that was caused in large part by the Chinese boycott of Japanese vehicles due to the dispute over the islands in the East China Sea, and (3) the boycott by China's finance minister and central bank chief of the IMF meetings being held in Tokyo due to the China-Japan island dispute, which was another factor showing the dispute is spilling over into the economic damage. On the brighter side, the Fed's Beige Book report said that the economy was growing "modestly" as housing and autos improve.
    • Dec 10-year T-notes this morning are down -0.5 tick ahead of today's 30-year bond auction. Dec 10-year T-note prices on Wednesday closed higher: TYZ2 +5.5, FVZ2 +0.25. Bullish factors included the continued sell-off in stocks and strong demand for the 10-year T-note auction which saw a strong bid cover ratio of 3.26.
    • The dollar index this morning is slightly lower by -0.07 (-0.09%) and EUR/USD is up +0.0037 (+0.29%) on the successful Italian bond sale. USD/JPY is up +0.19 points (+0.24%). The dollar index on Wednesday closed little changed: Dollar index -0.03 (-0.04%) EUR/USD -0.0010 (-0.08%) , USD/JPY -0.08 (-0.10%). The dollar index on Wednesday posted a new 1-month high but then faded on some long liquidation pressure and was unable to get much sustained support from the continued sell-off in global stocks and worries about Chinese growth.
    • Nov WTI crude oil prices this morning are up +0.86 (+0.94%) while Nov gasoline is down -0.0037 (-0.13%). Nov crude oil on Wednesday closed lower while gasoline closed little changed: CLX2 -1.14 (-1.23%), RBV2 +0.0006 (+0.02%). Gasoline prices fell on (1) the API report showing a 1.65 million barrel increase in U.S. oil inventories, (2) this week's sharp sell-off in stocks which is negative for economic sentiment, and (3) concerns about Chinese growth with the poor Chinese vehicle shipment report and Alcoa's cut in its forecast for global aluminum demand. Oil prices saw some support after news that Turkey forced a Syrian civilian aircraft flying over its territory to land and be searched for military equipment being shipped from Russia to Syria. The market consensus for today's weekly DOE report (delayed a day due to Monday's government holiday) is for a 1.5 million barrel increase in crude oil inventories, a 250,000 barrel increase in gasoline inventories, a 1 million barrel decline in distillate inventories, and an unchanged refinery utilization rate of 88.2% of capacity. In last week's DOE report, U.S. oil production rose 11,000 to a 15-3/4 year high of 6.52 million bpd. Yesterday's API report showed a 1.65 million barrel increase in crude oil inventories, a 2.47 million barrel increase in gasoline inventories, and a sharp 6.2 million drop in distillate inventories.
    • For the complete subscription version of this daily report (plus a 13-page big-picture weekly report), along with the earliest possible delivery in the morning, please visit Today's U.S. Earnings Reports

      Earnings reports (ranked by market cap): FAST-Fastenal (Consensus:$0.37), JBHT-JB Hunt Transportation (0.66), SWY-Safeway (0.43), NSR-Neustar (0.72), OZRK-Bank Ozarks (0.55).

      Global Financial Calendar

      Thursday 10/11/12
      United States
      n/a G7 finance ministers meet in Tokyo.
      0330 ET Fed Vice Chair Janet Yellen speaks in Tokyo on economy panel.
      0830 ET Weekly initial unemployment claims expected +3,000 to 370,000, previous +4,000 to 367,000. Weekly continuing claims expected -6,000 to 3.275 mln, previous unch at 3.281 mln.
      0830 ET Sep import price index expected +0.7% m/m and -1.3% y/y, Aug +0.7% m/m and -2.2% y/y.
      0830 ET Aug U.S. trade deficit expected -$44.0 bln, July -$42.0 bln.
      0830 ET USDA monthly WASDE report.
      0830 ET USDA weekly Net Export Sales.
      1030 ET DOE Weekly Petroleum Status Report.
      1115 ET Fed Governor Sarah Raskin in France at 2012 Women's Forum Global Meeting participates in panel discussion titled "Why has growth become so inequitable and what to do about it?"
      1230 ET Philadelphia Fed President Charles Plosser speaks in PA on the U.S. economic outlook.
      1300 ET Treasury auction of $13 billion of 30-year T-bonds.
      1630 ET Weekly money supply report and Fed balance sheet.
      1100 ET Treasury announces 30-year TIPS auction for Oct 18.
      1800 ET St. Louis Fed President James Bullard meets with reporters at St. Louis Fed conference to discuss the economy.
      2100 ET Vice presidential candidate debate at Centre College in Danville, Kentucky.
      0100 ET Japan Sep consumer confidence, Aug 40.5.
      1950 ET Japan Sep M2 expected +2.4% y/y, Aug +2.4% y/y. Sep M3 expected +2.0% y/y, Aug +2.1% y/y.
      1950 ET Japan Aug tertiary industry index expected +0.4% m/m, July -0.8% m/m.
      1950 ET Japan Sep domestic CGPI expected +0.2% m/m and -1.4% y/y, Aug +0.3% m/m and -1.8% y/y.
      0200 ET German final-Sep CPI expected unrevised from preliminary unch m/m and +2.0% y/y. Final-Sep CPI EU-harmonized expected unrevised from prelim unch m/m and +2.0% y/y.
      0400 ET ECB publishes Oct monthly report.
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