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Barchart Morning Call - 3/26

|Includes:Apollo Education Group, Inc. (APOL), CALM, KIOR

Barchart Morning Call - 53 mins ago

Overnight Developments

  • Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.34% and Jun S&Ps up +4.80 points. The dollar strengthened and Treasuries retreated after Philadelphia Fed President Plosser, speaking at an event in Paris, said he sees "no need at the moment" for additional Fed stimulus. European stocks climbed after the Mar German IFO business climate unexpectedly rose +0.1 to 109.8, stronger than expectations of -0.1 to 109.5 and the highest in 8-months. The euro fell back though, after European Commission economic spokesman Amadeu Altafaj said that a return to economic growth in Europe has been "delayed slightly" to the second half of the year. The euro also weakened after Italian Prime Minister Monti warned that Spain could reignite the European debt crisis as it struggles to control its finances. Euro-Zone finance ministers will meet on Friday in Denmark to seek agreement to raise a 500 billion-euro ceiling on bailout funding to thwart contagion of the debt crisis by strengthening the region?s financial firewall.
  • Asian stocks today closed mixed with Japan up +0.07%, China +0.10%, Australia -0.18%, South Korea -0.20%, India -1.78%. Japanese stocks finished higher as exporters rallied when the yen fell against the dollar, while chip-related companies gained after Goldman Sachs boosted its April-June estimate for DRAM large-lot prices, saying the demand-supply balance on DRAMs is improving after Elpida Memory went bankrupt. Chinese stocks retreated from their best levels and finished little changed as financial stocks fell amid speculation banks had understated the risks associated with about 20% of their outstanding loans to local governments.
Overnight U.S. Stock News
  • June S&Ps this morning are trading up +4.80 points after German business confidence unexpectedly rises. The U.S. stock market Friday gyrated on both sides of unchanged and finally settled higher as a rally in commodity and energy producers overshadowed weakness in homebuilders after Feb U.S. new home sales unexpectedly declined: Dow Jones +0.27%, S&P 500 +0.31%, Nasdaq Composite +0.15%. The S&P 500 and the Dow posted 1-week lows but recovered their losses and finished higher. Bullish factors Friday included (1) strength in raw-material and energy producers after most commodities rallied and (2) a rally in financial stocks after Morgan Stanley was raised to sector perform from under perform at Royal Bank of Canada and Discover Financial Services was raised to conviction buy at Goldman Sachs.
  • Bearish factors Friday included (1) weakness in homebuilders after the unexpected decline in Feb U.S. new home sales for a second month (-1.6% to 313,000 versus expectations of +1.2% to 325,000) and (2) comments from Fed Chairman Bernanke who said that increased household spending is needed to sustain the expansion and that "consumer spending is not recovered and it's still quite weak relative to where it was before the crisis."
  • Lions Gate Entertainment (NYSE:LGF) surged 11% in European trading after gross receipts for the opening weekend of "The Hunger Games" movie were $155 million, higher than analysts' estimates of $125 to $135 million.
Today's Market Focus
  • June 10-year T-notes this morning are down -12.5 ticks. T-note prices Friday posted a 1-week high and settled higher for a third day after Feb U.S. new home sales unexpectedly declined and after Fed Chairman Bernanke said the U.S. economy is operating below its level prior to the financial crisis: TYM2 +10.0, FVM2 +4.5, EDU2 +1.5. Bullish factors included (1) the unexpected decline in Feb U.S. new home sales for a second month (-1.6% to 313,000 versus expectations of +1.2% to 325,000) and (2) comments from Fed Chairman Bernanke who said that increased household spending is needed to sustain the expansion and that "consumer spending is not recovered and it's still quite weak relative to where it was before the crisis." Bearish factors Friday included (1) comments from St. Louis Fed President Bullard who warned that the U.S. and world economies risk elevated inflation that persists for years should they mistime their exits from "ultra-easy" monetary policies and (2) the rebound in stocks which reduced the safe-haven demand for Treasuries after the S&P 500 recovered from a 1-1/2 week low and closed higher.
  • The dollar index this morning is higher with the dollar/yen +0.63 yen and the euro/dollar -0.17 cents. The dollar index Friday fell to a 2-week low and settled lower after U.S. Feb new home sales unexpectedly declined for a second month along with strength in commodity currencies as the prices of raw materials rose: Dollar Index -0.391, USD/JPY -0.197, EUR/USD +0.00681. Bearish factors included (1) the unexpected fall in Feb U.S. new home sales for a second month, which suggests economic weakness and id dollar negative and (2) a rally in raw-materials and energy prices, which boosted demand for the commodity currencies of Australia, Canada and Norway. Bullish factors included (1) early weakness in the yen after BOJ Governor Shirakawa said the central bank and the government share the same view on the economy, which bolsters speculation the BOJ may increase yen-negative stimulus measures to spur the Japanese economy and (2) comments from St. Louis Fed President Bullard who said U.S. monetary policy may be at a "turning point" and the Fed's first interest rate increase could come as soon as late 2013, earlier than Fed Chairman Bernanke's view that economic slack and subdued inflation will probably warrant record low interest rates at least through late 2014.
  • May crude oil prices this morning are down -24 cents a barrel and May gasoline is +0.51 of a cent per gallon. Crude oil and gasoline prices Friday shot higher and settled with sharp gains as the dollar slumped and after Reuters reported that Iranian oil exports will plunge this month because of tighter sanctions: CLK12 +$1.52, RBK +4.33. May gasoline posted a contract high and nearest-futures Apr gasoline posted an 11-month high. Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, and (2) the report from Reuters that said Iranian oil exports will drop by 300,000 barrels a day this month because of tighter sanctions, which may mean tighter global supplies as other crude producers must make up for the lost Iranian output. Bearish factors included (1) the unexpected decline in Feb U.S. new home sales, which signals continued weakness in the U.S. housing market that may keep fuel demand constrained and (2) weakness in stocks, which reduces confidence in the economic outlook and energy demand.
Today's U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): APOL-Apollo Group (BEST earnings consensus $0.37), KIOR-KiOR Inc. (-0.15), CALM-Cal-Maine Foods (1.02).

Global Financial Calendar

Monday 3/26/12
United States
0700 ET Philadelphia Fed President Charles Plosser speaks on monetary policy on a panel with former ECB Council member Axel Weber along with BOF Governor and current ECB Council member Christian Noyer at the Global Independence Center conference in Paris.
0800 ET Fed Chairman Ben Bernanke speaks on ?A View from the Federal Reserve? to the 2012 NABE policy conference in Arlington, VA.
0830 ET Feb Chicago Fed national activity index, Jan -0.31 to 0.22.
1000 ET Feb pending home sales expected +1.0% m/m, Jan +2.0% m/m and +10.3% y/y.
1130 ET Weekly 3-mo and 6-mo T-bill auctions.
0300 ET EU Economic and Monetary Affairs Commissioner Olli Rehn speaks in Helsinki on the outlook for the European economy.
1200 ET ECB President Mario Draghi speaks at an event hosted by the German BDB Banking Association in Berlin.
0500 ET Mar German IFO business climate expected -0.1 to 109.5, Feb +1.3 to 109.6. Mar IFO current assessment expected -0.5 to 117.0, Feb +1.2 to 117.5. Mar IFO expectations expected +0.3 to 102.6, Feb +1.4 to 102.3.
1200 ET Feb French jobseekers expected +15,000, Jan +13,400. Feb total jobseekers expected 2.878,400, Jan 2,861,700.
1050 ET Feb Japan corporate serve price index expected -0.4% y/y, Jan -0.2% y/y
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