Jim Van Meerten's  Instablog

Barchart Morning Call

BC - 21 mins ago

Overnight Developments

• Dec E-mini S&Ps this morning are slightly lower by -0.04%. European stocks are up +0.55% and the big Asian stock markets closed higher with Japan up +0.21%, Hong Kong up +0.83%, and China up +1.91% on increases in China's manufacturing PMI reports. Commodity prices are up +0.46% this morning with Dec crude oil up +0.24%, Dec gasoline +0.24%, Dec gold +0.32%, Dec copper +1.02%, and agricultural prices trading mostly higher. The dollar index is slightly higher by +0.09% while EUR/USD is down -0.08%. Dec 10-year T-note prices are down 6 ticks.
• China's two manufacturing PMI reports both rose and suggested that the Chinese manufacturing sector may be bottoming out. The Oct PMI from the China Federation of Logistics and Purchasing and the National Bureau of Statistics rose +0.4 points to 50.2 from 49.8 in Sep, which was in line with market expectations. The manufacturing PMI rose back above the expansion-contraction level of 50.0 for the first time since July when the index fell below 50.0 in August and September. Meanwhile, the Chinese Oct manufacturing PMI from HSBC rose 1.6 points to 49.5 from 47.9 and was 0.4 points stronger than the flash report and market expectations of 49.1. The HSBC index has been below 50.0 for 12 consecutive months.
• The Oct UK Oct PMI manufacturing index fell by -0.6 points to 47.5 from Sep's revised 48.1 (prelim 48.4) and was 0.5 points weaker than market expectations for a report of 48.0.
• The U.S. Labor Department will release the U.S. Oct unemployment report as originally scheduled on Friday, according to a statement yesterday by the Labor Department. There had been some doubts about an on-time release considering that the federal government was closed on Monday and Tuesday.
• The Northeastern U.S. continues to see major power outages with about 6 million electricity customers still having no power, although that is down from 8.5 million in the immediate aftermath of the storm.
• U.S. Treasury Secretary Geithner and ECB President Draghi will attend the G-20 meeting in Mexico City to be held this coming Sunday-Monday (Nov 4-5), thus reducing its importance. Finance ministers from France and Brazil also will not attend. The market is not expecting anything of consequence to come out of the meeting in any case. Market Comments
  • Dec E-mini S&Ps this morning are down -0.50 points (-0.04%) as the market braces for a heavy slate of U.S. economic reports today and continues to total up the damage from Hurricane Sandy. However, the market is seeing support from a +0.55% rally in the Euro Stoxx 50 index and from rallies in Asian stocks on the rise in China's two manufacturing PMI reports. U.S. stocks on Wednesday erased an early rally and closed mostly lower on concern about the economic damage from Hurricane Sandy and after the Oct Chicago purchasing managers index rose less than expected and remained in contraction mode (+0.2 to 49.9) for a second month: S&P 500 +0.02%, Dow Jones -0.08%, Nasdaq -0.67%. Supportive factors included the smaller-than-expected increase in the Q3 employment cost index (+0.4%), strength in automakers and a rally in home-improvement stocks amid speculation that they will benefit by spending to rebuild from Hurricane Sandy.
  • Dec 10-year T-notes this morning are down 6 ticks on the strength in global stocks. Dec 10-year T-note prices Wednesday closed higher on speculation Hurricane Sandy will cut U.S. economic growth along with month-end buying by dealers who bought longer-term Treasuries to match adjustments in duration of bond indexes used as performance benchmarks: TYZ2 +11.5, FVZ2 +8.0. Other bullish factors included the smaller than expected increase in the Oct Chicago purchasing managers index (+0.2 to 49.9) and dovish comments from Minneapolis Fed President Kocherlakota who said that the subdued outlook for inflation suggests current monetary policy is currently "too tight," which suggests he favors additional Fed stimulus measures.
  • The dollar index this morning is trading slightly higher by +0.07 (+0.09%). EUR/USD is down -0.0010 (-0.08%) and USD/JPY is up +0.25 (+0.31%). The dollar index Wednesday erased early losses and closed little changed on concern Greece will have problems making the spending cuts it needs to make in order to receive further aid: Dollar index -0.012 (-0.02%), EUR/USD -0.0002 (-0.02%), USD/JPY +0.024 (+0.03%). EUR/USD shed gains and closed little changed after comments from German Finance Minister Schaeuble increased European sovereign debt concerns when he said that the timely payment of Greece's next tranche of aid was "ambitious."
  • Dec WTI crude oil prices this morning are up +0.21 (+0.24%) and Dec gasoline is up +0.0064 (+0.24%). Dec crude oil and gasoline prices on Wednesday closed higher as refiners in the Northeast began to resume operations after being closed for Hurricane Sandy, which increases their demand for crude: CLZ2 +0.56 (+0.65%), RBZ2 +0.0145 (+0.55%). The weekly DOE inventory report, which will be released today, is expected to show crude stockpiles rose +1.75 million barrels, gasoline supplies slipped -500,000 barrels, distillate stocks dropped -1.4 million barrels and the refinery utilization rate climbed +0.1 to 87.3%. Today's DOE report is for the week ended Oct 26 and will not show any direct effects from Hurricane Sandy, which made landfall on Monday, Oct 29.
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    Earnings reports (ranked by market cap): XOM-Exxon (Consensus:$1.96), PFE-Pfizer (0.53), AIG-AIG (0.87), EPD-Enterprise Products (0.61), LVS-Las Vegas Sands (0.60), SBUX-Starbucks (0.45), APA-Apache (2.24), EXC-Exelon (0.72), PCLN-Priceline (11.80), ADP-ADP (0.62), NEM-Newmont Mining (0.89), EL-Estee Lauder (0.77), FE-FirstEnergy (1.06), SE-Spectra Energy (0.31), K-Kellogg (0.81), MPC-Marathon Petroleum (3.23), PEG-Public Service Enterprises (0.72), NLY-Annaly Capital (0.47), EIX-Edision (1.00), VNO-Vornado Realty Trust (0.61), SIRI-Sirius XM Radio (0.02), CI-Cigna (1.36), HCA-HCA Holdings (0.79), ESV-Ensco (1.30), CHK-Chesapeake Energy (0.10), SWN-Southwestern Energy (0.33), TDC-Teradata (0.67), WPI-Watson Pharmaceutical (1.28), LNKD-LinkedIn (0.11), IVZ-Invesco (0.44), VRTX-Vertex Pharm (0.34), RSG-Republic Services (0.49).

    Global Financial Calendar

    Global Calendar - Thursday 11/1/12
    Today's News (ET release time)
    United States
    0730 ET	Oct Challenger job cuts, Sep -70.80% y/y.
    0815 ET	Oct ADP employment change expected +135,000, Sep +162,000.
    0830 ET	Weekly initial unemployment claims expected +1,000 to 370,000, previous -23,000 to 369,000. Weekly continuing claims expected -4,000 to 3.250 million, previous -2,000 to 3.254 mln.
    0830 ET	Q3 non-farm productivity expected +1.8% y/y, Q2 +2.2%. Q3 unit labor costs expected +0.8%, Q2 +1.5%.
    0830 ET	USDA weekly U.S. Export Sales.
    1000 ET	Oct ISM manufacturing index expected -0.5 to 51.0, Sep +1.9 to 51.5. Oct ISM prices paid index expected -1.5 to 56.5, Sep +4.0 to 58.0.
    1000 ET	Oct consumer confidence (Conference Board) expected +2.7 to 73.0, Sep 70.3 (postponed from Tuesday).
    1000 ET	Sep construction spending expected +0.7%, Aug -0.6% m/m.
    1230 ET	Atlanta Fed President Dennis Lockhart speaks to Chattanooga Downtown Rotary in Chattanooga, TN.
    1630 ET	Weekly money supply report and Fed balance sheet.
    1700 ET	Oct total vehicle sales expected 14.9 mln, Sep 14.88 mln. Oct domestic vehicle sales expected 11.48 mln, Sep 11.49 mln.
    1700 ET	Boston Fed President Eric Rosengren speaks on U.S. economic outlook at Babson College.
    Japan
    0100 ET	Japan Oct vehicle sales, Sep -8.1% y/y.
    United Kingdom
    0300 ET	UK Oct nationwide house prices expected +0.1% m/m and -1.2% y/y, Sep -0.4% m/m and -1.4% y/y.
    0530 ET	UK Oct manufacturing PMI expected -0.4 to 48.0, Sep 48.4.

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