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Barchart Morning Call 2/21

|Includes:AMYZF, CHK, DELL, EXPD, GPC, HD, HLF, INTU, M, MDLZ, MDT, MHS, RRC, WFT, Wal-Mart Stores, Inc. (WMT)

Barchart Morning Call - 2 hrs 56 mins ago

Overnight Developments

  • Global stocks this morning are mixed with the Euro Stoxx 50 down -0.31% and Mar S&Ps up +2.70 points. The euro fell back from a 1-week high against the dollar and European stocks retreated even after European finance ministers approved 130 billion euros of aid for Greece on concern that Greece's debt crisis will persist even after a second bailout. The dollar index climbed to a 1-week high after IMF and European officials indicated that Greece may remain encumbered by debt even after the bailout and that Greece's debt may still balloon to 160% of GDP in a worst case scenario. Crude oil surged to a 9-1/2 month high in overnight electronic trade after Greece's second bailout was agreed upon along with the report Sunday from Iran's oil-ministry news website Shana that Iran will cut oil supplies to the U.K. and France. U.S. stock futures moved higher after China cut banks' reserve requirements by 50 bp to 20.5% from Feb 24.
  • Asian stocks today closed mixed with Japan down -0.23%, China up +0.86%, Australia +0.82%, South Korea -0.0%, India +0.76%. Japanese stocks retreated from Monday's 6-1/2 month high after the yen recovered from its 6-1/2 month low against the dollar. The yen plunged to a 6-1/2 month low against the dollar Monday after Standard & Poor's affirmed Japan's sovereign-debt rating at AA- while maintaining a negative outlook and warned that "a downgrade is likely if medium-term growth prospects weaken." China's Shanghai Stock Index finished higher and just below Monday's 2-1/2 month high as banks and financial stocks rallied on carry-over support from Monday's gains after the PBOC cut banks reserve requirements by 50 bp Saturday along with strength in exporters after the China Daily reported that Vice Commerce Minister Zhong Shan said China will raise export tax rebates for some goods for the first time since 2009 this year.
Overnight U.S. Stock News
  • March S&Ps this morning are trading up +2.70 points. The US stock market on Friday settled mostly higher on increased economic confidence along with optimism that an agreement on a Greek rescue package can be reached: Dow Jones +0.35%, S&P 500 +0.23%, Nasdaq Composite -0.27%. The S&P 500 posted a 9-1/2 month high and the Dow Jones climbed to its highest level in 3-3/4 years. Bullish factors Friday included (1) the +0.4% increase in Jan leading indicators, which rose for the fourth consecutive month and points to continued economic strength and (2) optimism a resolution to a Greek aid package can finally be reached after a conference call between Italian Prime Minister Monti, German Chancellor Merkel and Greek Prime Minister Papademos ended with all parties saying an "agreement on Greece" can be reached at the Feb 20 Euro-Zone finance ministers meeting.
  • Bearish factors included (1) concern that the action by the ECB to swap its Greek debt holdings for new Greek bonds may be construed by ratings agencies as a default and (2) concern over China's banking system after the China Banking Regulatory Commission reported that Q4 China commercial banks' bad loans rose 20.1 billion yuan ($3.2 billion) to 427.9 billion yuan as non-performing loans accounted for 0.96% of total lending, up from 0.95% in Q3.
  • Home Depot (NYSE:HD) climbed 1% in pre-market trading after the company reported Q4 EPS of 50 cents, well ahead of analysts' estimates of 42 cents.
Today's Market Focus
  • March 10-year T-notes this morning are down -7.5 ticks. T-note prices on Friday dropped to a 1-1/2 week low and settled lower for a second day as a rally in stocks and speculation that EU leaders will reach an agreement to provide funding for Greece discouraged the safe-haven demand for Treasuries: TYH2 -2.0, FVH2 +0.5, EDM2 -0.5. Bearish factors Friday included (1) the larger-than-expected increase in Jan core CPI which rose at its fastest pace in 3-1/3 years (+2.3% y/y versus expectations of +2.2% y/y), (2) the rally in the S&P 500 to a 9-1/2 month high, which reduced the safe-haven demand for Treasuries, and (3) a conference call between Italian Prime Minister Monti, German Chancellor Merkel and Greek Prime Minister Papademos in which they all agreed that an "agreement on Greece" can be reached at the Feb 20 Euro-Zone finance ministers meeting. Bullish factors included (1) the Fed's action to purchase $4.96 billion of long-term Treasuries as part of its Operation Twist program to hold down borrowing costs by exchanging shorter-term debt in its holdings for longer ones and (2) increased safe-haven demand for Treasuries on concern that the ECB's swap of Greek bonds for new ones may be construed by ratings agencies as a default.
  • The dollar index this morning is higher with the dollar/yen +0.03 yen and the euro/dollar -0.37 cents. The dollar index on Friday gyrated on either side of even and finally settled little changed: Dollar Index -0.017, USDJPY +0.620, EURUSD +0.00113. Bearish factors included (1) strength in the euro on optimism a bailout for Greece will soon be finalized, (2) reduced safe-haven demand for the dollar after the S&P 500 rose to a 9-1/2 month high, and (3) strength in the British pound which rose to a 1-week high against the dollar after Jan U.K. retail sales unexpectedly increased for a second month. Bullish factors Friday included (1) weakness in the yen which plunged to a 3-1/2 month low against the dollar and (2) the +0.4% increase in Jan leading indicators, which rose for the fourth consecutive month and point to economic strength that is dollar supportive.
  • Mar crude oil prices this morning are up +$1.38 a barrel at a 9-1/2 monthhigh and Mar gasoline is +2.13 cents per gallon at a 6-1/2 month high. Crude oil and gasoline prices Friday settled mixed as weak U.S. fuel demand undercut gasoline while confidence in the U.S. economy and optimism for a Greek aid package lifted crude: CLH12 +$0.93, RBH -3.13. Mar crude posted a 1-1/2 month high and Mar gasoline rose to a 5-1/2 month high but erased its gains and closed lower. Bullish factors included (1) the rally in the S&P 500 to a 9-1/2 month high, which boosts confidence in the economic outlook and energy demand and (2) optimism that progress has been made for Greece to receive an aid package it needs to avoid default. Bearish factors included (1) API data that showed the total deliveries of petroleum products, a measure of demand, fell -5.7% y/y in Jan to 18 million barrels a day, the lowest for a Jan in 17 years and (2) data that shows Jan U.S. crude production climbed by +3.8% to 5.69 million barrels a day, an 8-year high for the month.
Today's U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): WMT-Wal-Mart Stores (BEST earnings consensus $1.45), HD-Home Depot (0.42), KFT-Kraft Foods (0.57), MDT-Medtronic (0.84), DELL-Dell (0.51), MHS-Medco Health Solutions (1.17), INTU-Intuit (0.45), CHK-Chesapeake Energy (0.59), M-Macy's (1.65), WFT-Weatherford International Ltd (0.33), RRC-Range Resources (0.30), GPC-Genuine Parts (0.83), MYL-Mylan (0.50), EXPD-Expeditors International (0.46), HLF-Herbalife Ltd. (0.72).

Global Financial Calendar

Tuesday 2/21/12
United States
0830 ET Jan Chicago Fed national activity index expected +0.05 to +0.22, Dec +0.63 to +0.17.
1130 ET Weekly 3-mo and 6-mo T-bill auctions.
1300 ET Treasury auctions $35 billion 2-year T-notes.
United Kingdom
0430 ET Jan U.K. public sector net borrowing expected -9.1 billion pounds, Dec +10.8 billion pounds.
0830 ET Dec Canada retail sales expected -0.2% and +0.2% less autos, Nov +0.3% and +0.3% less autos.
0830 ET Dec Canada wholesale sales expected +0.5% m/m, Nov -0.4% m/m.
0300 ET EU finance ministers meet in Brussels.
1000 ET Feb Euro-Zone consumer confidence expected +0.4 to -20.3, Jan +0.6 to -20.7. provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.