Jim Van Meerten's  Instablog

Barchart Morning Call

BC - 2 hrs 35 mins ago

OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH13 +0.30%) are up +0.20% today on a small rebound after yesterday's sharp 1.83% sell-off. The Euro Stoxx 50 index today is sharply lower by -2.63% on Monday's muddled Italian election results, which raised the spectre of the return of the Eurozone debt crisis. Asian stocks today closed sharply lower across the board on the European election results and the sharp sell-off in U.S. and European stocks. Chinese stocks fell 1.43% also on concerns about new property restrictions to try to curb home price rises. Commodity prices today are down -0.41%. April crude (CLJ13 -0.74%) oil is down -0.72%, April gasoline (RBJ13 -1.47%) is down -1.46%, April gold (GCJ13 +0.43%) is up +0.27%, March copper (HGH13 -0.52%) is down -0.44%, and agriculture prices are trading mostly lower. The dollar index (DXY00 +0.06%) is mildly higher by +0.12% while EUR/USD (^EURUSD) is up +0.14% and USD/JPY (^USDJPY) is up +0.20%. March 10-year T-note (ZNH13 +0.09%) prices are up 6 ticks.
Italian political leaders today began the process of trying to form a government, which could take up to a month and may result in the need for a second election for more conclusive results. Italian voters gave a total of 55% of the vote to anti-recession parties led by ex-comic Grillo and former PM Berlusconi. Democratic Party leader Bersani and incumbent PM Monti together do not have enough votes to form a government. Mr. Grillo has rejected participation in a coalition with any of the other parties and would like to force a new vote since he expects that his party would pick up even more votes. Mr. Berlusconi ruled out a coalition with Mr. Monti's party but a coalition between Bersani and Berlusconi is an outside possibility, at least for a short-lived government. The 10-year Italian bond yield today soared by 28 bp to a 3-month high of 4.77% as the Italian markets today had their first chance to react to the late-Monday election results. Italian credit default swaps today soared by 43 bp to a 2-month high of 293 bp. The Italian stock market fell by -4.6%and Italy's largest banks saw their stock plunge by at least -8%.
Italy's election results had a negative contagion effect for the rest of Europe. The Spanish 10-year bond yield today rose by 14 bp to 5.31% and Portugal's 10-year bond yield rose by 7 bp to 391 bp. The German 10-year bund yield fell by 7 bp to 1.48% on safe-haven demand. The Euro Stoxx banks Index today is down more than 5%, the largest decline in 4 months, as the markets fear the return of the Eurozone debt crisis and renewed banking system problems.
Japan's Feb small business confidence index rose by 1.7 points to 46.0 from 44.3 in Jan.
There is no news as yet out of today's meeting between the largest global nations (P5 plus 1) and Iran over its nuclear program. Iran is being offered a better deal than in the past although there is little to suggest that Iran will do more than its usual procedure of stalling for more time while it speeds up its nuclear enrichment activities.

U.S. STOCK PREVIEW
The U.S. stock market today will continue to react to the Italian election results, which have caused heavy stock market losses throughout Europe today. Today's U.S. economic calendar is very busy. Fed Chairman Bernanke presents his semi-annual testimony on monetary policy to the Senate Banking Committee. The markets will be listening carefully to see if he reinforces news in last Wednesday's Jan 29-30 FOMC minutes that some members seem to favor cutting the size of QE3. The Treasury today will sell $35 billion in 5-year T-notes. Today's Jan new home sales report is expected to show a +3.0% increase to reverse part of the sharp decline of -7.3% seen in December ahead of the year-end fiscal cliff. The Dec U.S. home price indexes from Case-Shiller and FHFA are both expected to show an increase of +0.6% m/m, matching the +0.6% increases seen in both indexes in November. Today's U.S. consumer confidence index from the Conference Board is expected to show a modest +0.9 point increase after three months of declines in Nov-Jan totaling -14.5 points. Today's Richmond Fed index is expected to show an 8 point gain to -3.0, but that would still leave the index in negative territory for the third consecutive month.
There are 15 of the S&P 500 companies that report earnings today. Notable reports include Tenet Healthcare (consensus $0.67), Home Depot (0.64), Macy's (1.99), Sempra Energy (0.96), Edison International (1.05), First Solar (1.77), and Priceline.com (6.53).

March E-mini S&Ps (ESH13 +0.30%) this morning are up +0.20% on some short-covering after yesterday's sharp -1.83% sell-off. The S&P 500 index on Monday fell sharply on (1) fears that the Eurozone debt crisis is back with a 55% Italian vote for anti-austerity parties, (2) the weaker-than-expected Chinese Feb HSBC flash manufacturing index (-1.9 to 50.4), and (3) worries about the impending sequester spending cuts on Friday. The early optimism did not last over reports that Japanese Prime Minister Abe has chosen Haruhiko Kuroda as the new BOJ chief, who is expected to quickly ratchet up the BOJ's QE program. Closes: S&P 500 -1.83%, Dow Jones -1.55%, Nasdaq -1.33%.

OVERNIGHT U.S. STOCK MOVERS

• Home Depot (HD -2.53%) reported Q4 EPS of 67 cents ex-items, which was better than the consensus of 64 cents. The home-improvement retailer benefited in Q4 from home repairs after Hurricane Sandy. Home Depot also said it planned to repurchase $17 billion in stock by the end of fiscal 2015.
• United Natural Foods (UNFI -3.02%) reported Q2 EPS of 46 cents, below the consensus of 50 cents.
• Tenet Healthcare (THC -4.27%) reported Q4 EPS from continuing operations at 52 cents, below the consensus of 68 cents.
• Trina Solar (TSL -4.28%) reported Q4 EPS loss of $1.23, larger than the expected 82 cent loss.
• AutoZone (AZO -1.73%) reported Q2 EPS of $4.78, slightly above the consensus of $4.76.
• ONEOK (OKE -2.55%) reported Q4 EPS of 53 cents, well above the consensus of 45 cents.
• Autodesk (ADSK -3.40%) reported Q4 EPS of 53 cents, above the consensus of 49 cents.

MARKET COMMENTS
March 10-year T-notes (ZNH13 +0.09%) this morning are up 6 ticks on further safe-haven buying on the Italian election results and little hope for averting Friday's U.S. sequester. March 10-year T-note prices on Monday rallied very sharply on short-covering and increased safe-haven demand with the anti-austerity Italian election results and with all indications that Friday's sequester will go into effect. Closes: TYH3 +19, FVH3 +7.75.
The dollar index (DXY00 +0.06%) this morning is up +0.10 points (+0.12%) on some increased safe-haven demand as the European stock markets fall sharply and peripheral bond yields rise. EUR/USD (^EURUSD) is up +0.0018 (+0.14%) and USD/JPY (^USDJPY) is up +0.18 (+0.20%). The dollar index on Monday posted a new 6-month high and closed mildly higher on increased safe-haven demand. EUR/USD saw weakness on the anti-austerity vote in Italy, which may mean the return of the Eurozone debt crisis if the new Italian government backslides on fiscal progress and once again loses investor confidence. USD/JPY rallied sharply and the yen fell sharply on widespread reports that PM Abe will choose Haruhiko Kuroda as the new BOJ chief, which would quickly lead to more aggressive BOJ action. Closes: Dollar index +0.19 (+0.23%), EUR/USD -0.0131 (-0.99%), USD/JPY-1.60 (-1.71%).
April WTI crude oil (CLJ13 -0.74%) this morning is down -0.67 (-0.72%) as the market is expecting a 2.5 million barrel increase in Wednesday's weekly DOE inventory report. April gasoline (RBJ13 -1.47%) this morning is down -0.0475 (-1.46%) on economic concerns. Crude oil and gasoline prices closed slightly lower as global confidence declined with the muddled Italian election and the weaker-than-expected Chinese PMI index. Closes: CLJ3 -0.02 (-0.02%), RBJ3 -0.0022 (-0.07%).

GLOBAL EVENT CALENDAR02/26/2013

U.S. STOCK CALENDAR02/26/2013