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Barchart Moring Call 10/25


Barchart Morning Call

BC - 1 hr 50 mins ago

Overnight Developments

  • Dec E-mini S&Ps are down -0.80% at a 1-1/2 month low and European stocks are down -0.58% as weaker-than-expected earnings results undercuts stock prices. Ericsson AB, the world's largest maker of mobile-phone networks, posted a 43% decline in Q3 profit, while Amazon, the biggest online retailer, posted its first quarterly net loss since 2003. Asian stocks also closed lower despite Japan increasing stimulus measures with Japan down -1.35%, China -1.89%, Australia -0.85%, South Korea -1.80% and India -0.71%. Commodities declined as well with Dec gold down -0.54%, Dec crude off by -0.52% and Dec copper down -0.58% to a 1-1/2 month low. EUR/USD slumped to a 2-week low after Spanish unemployment rose to a record in Q3. The dollar index climbed +0.24% to a 2-week high, while Dec 10-year T-notes are up +15 ticks as the slide in global equities fuels increased safe-haven demand for Treasuries.
  • Q3 Spain unemployment rose +0.42 from Q2 to 25.02%, the second highest in the EU after Greece and the highest since Spain began keeping records in 1976, the year after dictator Franco's death led Spain to democracy.
  • The German Nov GfK consumer confidence survey unexpectedly rose +0.2 from Oct to 6.3, stronger than expectations of unchanged and its highest level in 5 years.
  • The German Sep import price index fell -0.7% m/m and rose +1.8% y/y, weaker than expectations of +0.3% m/m and +2.9% y/y.
  • Q3 South Korea GDP rose +1.6% y/y, weaker than expectations of 1.7% y/y and the slowest pace since 2009.
  • The Japanese government announced 750 billion yen ($9.4) billion of fiscal stimulus in an attempt to boost economic growth. Japan's Economy Minister Maehara said the government will tap discretionary budget funds to fund some of the stimulus but hasn't decided on how to fund further planned stimulus measures as lawmakers in Japan's Diet are blocking financing legislation. Japan's main opposition party has vowed to block a bill allowing the government to borrow 38.3 trillion yen ($477 billion) for this year's deficit as they press Prime Minister Noda to call early elections. Market Comments
    • Dec E-mini S&Ps this morning are down -11.25 points (-0.80%) to a fresh 1-1/2 month low. The S&P 500 index on Thursday closed mildly higher: S&P 500 +0.30%, Dow Jones +0.20%, Nasdaq 100 +0.08%. Bullish factors included some short-covering after recent losses, a 1.0% q/q increase in UK GDP, and reports that the BOJ next week will boost its asset-purchase program. Yesterday's Sep durable goods orders report of +9.9% was stronger than expectations of +7.5%, but the capital goods component was weaker than expected. Sep non-defensive capital goods orders ex-aircraft were unchanged versus expectations of +0.8%, and Aug was revised lower to +0.2% from +1.1%. The Sep pending home sales report of +0.3% was weaker than market expectations of +2.5%. The weekly initial unemployment claims report was in line with market expectations.
    • Dec 10-year T-notes this morning are up +15 ticks on increased safe-haven demand with the slide in global equities. Dec 10-year T-note prices on Thursday closed lower: TYZ2 -15, FVZ2 -8.75. Bearish factors included the mildly higher close in stocks, technical selling with the new 2-month low, and the poor reception seen for the 7-year T-note auction, which saw a bid cover ratio of 2.56 that was the lowest in more than three years. Fitch said that it is leaving America's AAA credit rating unchanged with a negative outlook and that it would not change anything until at least late 2013 as it waits to gauge Washington's budget moves next year.
    • The dollar index this morning is up by +0.24% to a 2-week high with EUR/USD down -0.30% to a 2-week low and USD/JPY down -0.61%. USD/JPY had posted a 4-month high overnight on expectations of further BOJ stimulus measures at next week's policy meeting, although USD/JPY fell back after a drop in stock prices boosted safe-haven demand for the yen. The dollar index on Thursday closed slightly higher: Dollar index +0.17 (+0.21%), EUR/USD -0.0040(-0.31%), USD/JPY +0.49 (+0.61%). The dollar index closed slightly higher as T-note yields rose and supported the dollar's interest rate differentials. However, bearish factors for the dollar included the slightly higher close in stocks, the weaker-than-expected U.S. pending home sales report, and reports that troika officials have reached a draft agreement with Greece. However, the hard part now is for Greek Prime Minister Samaras to see if he can push the new austerity measures through the Greek parliament without fracturing his coalition.
    • Dec WTI crude oil prices this morning are down -45 cents a barrel and Dec gasoline is down -0.97 cents a gallon. Dec crude oil on Thursday closed higher: CLZ2 +0.32 (+0.37%), RBZ2 +0.0410 (+1.58%). Crude oil and gasoline prices saw some short-covering. Gasoline received a boost from forecasts that Hurricane Sandy could be the worst storm to hit the Northeastern U.S. in a century, which could disrupt refinery operations and disrupt oil and gasoline shipments into NY Harbor where Nymex gasoline futures are priced.
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      Earnings reports (ranked by market cap): MRK-Merck (Consensus:$0.93), CMCSA-Comcast (0.46), LVS-Las Vegas Sands (0.60), LYB-Lyondellbassel (1.44), VTR-Ventas (0.28), AON-Aon (0.90), WY-Weyerhaeuser (0.18), MCO-Moody's (0.62), DLR-Digital Realty (0.16), COL-Rockwell Collins (1.11), CVH-Coventry Health (0.72), NWL-Newell Rubbermaid (0.44), IPG-Interpublic (0.17), ARE-Aleandria Realty (0.31), LEA-Lear (1.20), BOKF-BOK Finl (1.22), LM-Legg Mason (0.52), AHGP-Alliance Holding (0.90), GT-Goodyear Tire (0.59), OSK-Oshkosh (0.47), UFS-Domitar (1.59), OHI-Omega Healthcare (0.27).

      Global Financial Calendar

      Friday 10/26/12
      United States
      0830 ET U.S. Q3 GDP expected +1.9% q/q annualized, Q2 +1.3%. Q3 personal consumption expected +2.1%, Q2 +1.5%. Q3 GDP price index expected +2.1%, Q2 +1.6%. Q3 core PCE expected +1.3% q/q, Q2 +1.7% q/q.
      0955 ET Final-Oct U.S. consumer confidence (University of Michigan) expected -0.1 to 83.0, early-Oct +4.8 to 83.1.
      0200 ET German Nov GfK consumer confidence survey expected unch at 5.9, Oct 5.9.
      0200 ET German Sep import price index expected +0.3% m/m and +2.9% y/y, Aug +1.3% m/m and +3.2% y/y.
      2130 ET China Sep industrial profits, -3.1% ytd y/y. provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.