Barchart Morning Call
Barchart.com - Tue Jan 31, 7:00AM CST
- Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.80% and Mar S&Ps up +5.40 points. The dollar index fell to a 1-1/2 month low while Treasuries and commodities weakened after EU leaders completed a fiscal-discipline treaty that speeds sanctions on high-deficit countries and requires members to enact laws to limit budget shortfalls. Policy makers also decided to bring the region's permanent bailout fund, the European Stability Mechanism, into operation on July 1, a year before schedule. The euro rose against the dollar after Greek Prime Minister Papademos said he's "strongly committed" to reaching a debt-swap pact with bondholders. Yields on Portuguese bonds fell after Prime Minister Coelho said his country's debt has been judged "perfectly sustainable" by the EU and IMF and that there is no risk of writedown on the bonds. Another positive for stocks was the -34,000 drop in Jan German unemployment, bigger than expectations of a -10,000 decline, while the Jan German unemployment rate unexpectedly dipped -0.1 to 6.7%, the lowest since data for a reunified Germany began in 1991. On the negative side, the Dec Euro-Zone unemployment rate remained unchanged at a 13-3/4 year high of 10.4%, while Dec German retail sales unexpectedly fell -1.4% m/m and -0.9% y/y, weaker than expectations of an increase of +0.8% m/m and +0.9% y/y with the -1.4% m/m drop the biggest monthly decline in 2-1/2 years.
- Asian stocks today closed mostly higher with Japan up +0.11%, China +0.14%, Australia -0.24%, South Korea +0.66%, India +1.96%. The yen fell back from a 3-month high against the dollar and lifted Japanese export stocks after Japanese Finance Minister Azumi told reporters that "we are ready to act decisively against excessive and speculative currency moves if needed." Japanese stocks finished higher as optimism rose that European leaders will find a resolution to the region's debt crisis and after Dec Japan industrial production jumped +4.0% m/m, bigger than expectations of +3.0% m/m and the biggest monthly increase in 7 months. Chinese stocks closed higher and received a boost from a Securities Times article that said China may announce methods for local pensions to invest in the stock market as soon as the first quarter with as much as 30% of pension assets, or about 580 billion yuan ($91.6 billion) allowed for stock investments.
- March S&Ps this morning are trading up +5.40 points. The US stock market on Monday fell back and settled lower on concern the European sovereign-debt crisis may worsen along with concern U.S. economic growth may weaken after consumer spending stalled in Dec: Dow Jones -0.05%, S&P 500 -0.25%, Nasdaq Composite -0.16%. The S&P 500 and the Dow posted 1-1/2 week lows. Bearish factors on Monday included (1) carry-over weakness from a slide in European stocks on concern the region's debt crisis may worsen after Portugal's 10-year bond yield rose to a euro-era record of 17.39% and as Greece debt-swap talks remain unresolved, (2) the unexpected stagnation in Dec U.S. personal spending (unchanged m/m versus expectations of +0.1%), and (3) weakness in energy and raw material producers as a strong dollar fueled a decline in most commodities.
- Bullish factors included (1) the larger-than-expected increase in Dec personal income which posted its biggest gain in 9 months (+0.5% versus expectations of +0.4%), (2) the fall in the 10-year T-note yield to a 1-1/4 month low of 1.811%, and (3) decent Q4 earnings results thus far as 66% of the 170 companies in the S&P 500 that reported earnings results since Jan 9 have beaten analysts' estimates.
- Hologic (NASDAQ:HOLX) climbed 7.1% in pre-market trading after the company raised its 2012 profit forecast to as much as $1.38 a share, higher than analysts' estimates of $1.36.
- March 10-year T-notes this morning are down -6.5 ticks. T-note prices on Monday posted a fresh contract high for a second day and settled higher on increased safe-haven demand from the European debt crisis along with concern U.S. economic growth may slow after Dec personal spending unexpectedly stagnated: TYH2 +10.0, FVH2 +2.5, EDM2 unchanged. The 10-year T-note yield fell to a 1-1/4 month low of 1.811%. Bullish factors included (1) the unexpected stagnation in Dec U.S. personal spending (unchanged m/m versus expectations of +0.1%), and (2) increased safe-haven demand for Treasuries on concern the European debt crisis may worsen after Portugal's 10-year bond yield rose to a euro-era record of 17.39% and as Greece debt-swap talks remain unresolved. Bearish factors included (1) the larger-than-expected increase in Dec personal income which posted its biggest gain in 9 months (+0.5% versus expectations of +0.4%) and (2) hawkish comments from Philadelphia Fed President Plosser who said the Fed may have to raise interest rates this year and that last week's post-FOMC statement to keep rates near zero through late 2014 "isn't a firm commitment."
- The dollar index this morning is weaker and at a fresh 1-1/2 month low with the dollar/yen +0.04 yen and the euro/dollar +0.46 cents. The dollar index on Monday rallied and settled higher as the euro weakened on concern the European sovereign debt crisis may worsen after Portuguese government bond yields soared to a euro-era record and Greece debt-swap talks remain unresolved: Dollar Index +0.265, USDJPY -0.333, EURUSD -0.00752. Bullish factors included (1) increased safe-haven demand for the dollar after Portugal's 10-year bond yield rose to a euro-era record of 17.39% on concern investors will have to take losses on their Portuguese bond holdings in the wake of a Greek debt deal, (2) the unresolved Greek debt-swap talks and the report from Der Spiegel that a second Greek bailout now requires 145 billion euros, 15 billion euros more than was agreed to in Oct, and (3) weak demand for Italian government debt after Italy sold 7.5 billion euros of debt due between 2016 and 2022, less than its maximum target of 8 billion euros. Bearish factors Monday included (1) the weaker-than-expected Dec U.S. personal spending, which bolsters concern that economic growth may slow and is dollar negative and (2) concern the foreign exchange market is too one-sided against the euro, which may fuel short covering after CFTC data showed large traders increased their short positions in the euro to a record for the fifth consecutive week as euro short positions climbed to a record 171,347 as of Jan 24.
- Mar crude oil prices this morning are up +$1.40 a barrel and Mar gasoline is +1.86 cents per gallon. Crude oil and gasoline prices on Monday fell back and settled lower as the dollar strengthened, stocks fell and concerns grew that Greek debt-swap talks will falter and lead to default, which may weaken the European economy: CLH12 -$0.78, RBH12 -5.07. Bearish factors included (1) strength in the dollar, which discourages investment demand in commodities, (2) the slump in the S&P 500 to a 1-week low, which reduces confidence in the economic outlook and energy demand, (3) concern that Greek bailout negotiations will falter and lead to a Greek default, which may slow European economic growth and fuel demand, (4) the weaker-than-expected Dec U.S. personal spending, which bolsters concern that economic growth and fuel demand will slow, and (5) comments from OPEC Secretary General Abdalla El-Badri who said global oil markets are "very well supplied." Bullish factors included (1) comments from the United Steelworkers Union that strikes at U.S. oil refineries may be imminent as negotiations near a Feb 1 deadline, which would reduce U.S. gasoline supplies and (2) the report from the Fars news agency that said Iran's parliament drafted legislation calling for the government to halt oil exports to Europe until the EU cancels its planned ban on Iranian crude.
Earnings reports (confirmed releases, sorted by mkt cap): XOM-Exxon Mobil (BEST earnings consensus $1.98), PFE-Pfizer (0.47), AMZN-Amazon.com (0.47), UPS-United Parcel Service (1.26), BIDU-Baidu (0.89), LLY-Eli Lilly (0.81), DHR-Danaher (0.78), BIIB-Biogen Idec (1.49), ITW-Illinois Tool Works (0.88), ACE-ACE Ltd. (1.78), AFL-Aflac (1.51), TYC-Tyco International Ltd. (0.79), ADM-Archer-Daniels-Midland (0.76), BRCM-Broadcom (0.65), VLO-Valero Energy (-0.11), MAT-Mattel (1.00).
Global Financial Calendar
|0745 ET||ICSC (Int?l Council of Shopping Centers) weekly retailer sales.|
|0830 ET||Q4 employment cost index expected +0.4%, Q3 +0.3%.|
|0855 ET||Redbook weekly retailer sales.|
|0900 ET||Nov S&P/CaseShiller composite-20 home price index expected -0.4% m/m and -3.3% y/y, Oct -0.6% m/m and 3.4% y/y.|
|0945 ET||Jan Chicago purchasing managers index expected +0.5 to 63.0, Dec -0.1 to 62.5.|
|1000 ET||Jan U.S. consumer confidence (Conference Board) expected +3.5 to 68.0, Dec +9.3 to 64.5.|
|1130 ET||Weekly 4-week T-bill auction.|
|0000 ET||Dec Japan construction orders, Nov +21.0% y/y.|
|0000 ET||Dec Japan housing starts expected -1.5% y/y, Nov -0.3% y/y.|
|2030 ET||Dec Japan labor cash earnings expected -0.4% y/y, Nov -0.2% y/y.|
|0200 ET||Dec German retail sales expected +0.8% m/m and +0.9% y/y, Nov -1.0% m/m and +0.8% y/y.|
|0355 ET||Jan German unemployment change expected -10,000, Dec -22,000. Jan unemployment rate expected unchanged at 6.8%, Dec -0.1 to 6.8%.|
|0245 ET||Dec French producer prices expected -0.1% m/m and +4.7% y/y, Nov +0.4% m/m and +5.6% y/y.|
|0245 ET||Dec French consumer spending expected +0.2% m/m and -2.1% y/y, Nov -0.1% m/m and -2.1% y/y.|
|0430 ET||Dec U.K. net consumer credit expected +0.4 billion pounds, Nov +0.4 billion pounds.|
|0430 ET||Dec U.K. mortgage approvals expected +54,000, Nov +52,900.|
|0430 ET||Dec U.K. M4 money supply, Nov -0.6% m/m and -2.6% y/y.|
|0500 ET||Dec Euro-Zone unemployment rate expected +0.1 to 10.4%, Nov unchanged at 10.3%.|
|0830 ET||Dec Canada industrial product prices, Nov +0.2% m/m. Dec raw materials price index, Nov +3.8% m/m.|
|0830 ET||Nov Canada GDP expected +0.2% m/m, Oct unchanged m/m and +2.7% y/y.|
|2000 ET||Jan China PMI manufacturing expected -0.7 to 49.6, Dec +1.3 to 50.3.|
Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.