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Barchart.com U.S. Morning Call for Tuesday, April 21, 2009

Overnight Developments

The European DJ Stoxx 50 this morning is down -0.80% and June S&Ps are down -5.50 points (-0.66%). The Asia-Pacific stock markets today closed mostly lower with Japan (-2.39%), Hong Kong (-2.95%), China (-1.19%), Taiwan (+1.73%), Australia (-2.43%), Singapore (+0.66%), South Korea (-0.20%), India (-0.74%). Tesco Plc, Europe's second-biggest retailer, is up 4.6% after reporting Q1 sales ex-gasoline up 3.4%, more than the 2.7% rise in Q4 sales. The Apr German ZEW economic sentiment survey rose a greater-than-expected +16.5 to 13.0, a 1-3/4 year high and the first positive reading for German investor confidence since July 2007. Mar German producer prices fell a greater-than-expected -0.7% m/m, their sixth straight monthly decline, and fell -0.5% y/y for their steepest y/y drop in 6-1/2 years, indicating deflation risks are increasing in Europe's largest economy. The Reserve Bank of India cut the reverse repurchase rate to a record low 3.25% from 3.50% and forecast tha t economic growth in Asia's third-largest economy will ease to 6% in the year started Apr 1 from 7.1% the previous year, the slowest rate of growth since 2003.

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Overnight U.S. Stock News

June S&Ps this morning are down -5.50 points after Bank of New York Mellon said Q1 earnings dropped a greater-than-expected 51%. The US stock market yesterday sold-off sharply and closed near its low (Dow -3.56%, S&P 500 -4.28%, Nasdaq Composite -3.88%).
Bearish factors for stock prices yesterday included (1) weakness in bank stocks after JPMorgan Chase predicted global banks are likely to realize about $400 billion more in losses on bad assets, requiring further injections of government capital, (2) the sell-off in energy and raw-material producers after crude oil plunged to a 1-month low and copper prices tumbled, (3) the prediction from Standard & Poor's that companies in the S&P 500 Index may need to divert cash from operations or sell assets this year to meet underfunded retirement expenses, and (4) the prediction from Goldman Sachs that state and local finances will constrain the US economic recovery as government officials are forced to cut spending and raise taxes to meet balanced budget requirements.
Bullish factors for stock prices yesterday included (1) the prediction from Obama administration officials that there may be no need to request more financial-rescue funds from Congress as several banks plan to return taxpayer money and others are pushed to tap private markets first, and (2) the 37% surge in Sun Microsystems after Oracle agreed to buy Sun for about $7.4 billion in cash.
Texas Instruments (TXN) is trading 2.3% higher in pre-market trading after late yesterday reporting Q1 net income of $17 million, or 1 cent a share, better than analysts' estimates of a 4 cents a share loss. The company also said earnings this quarter will be as much as 15 cents a share, greater than the 1 cent a share forecast by analysts.
Bank of New York Mellon (BK) tumbled over 9% in pre-market trading after the world's biggest custody bank reported Q1 earnings of 53 cents a share, well below analysts' estimates of 63 cents, and it slashed its dividend to 9 cents a share from 24 cents so it could build capital and repay TARP funds it received from the government.

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Today's U.S. Market Focus

June 10-year T-notes this morning are up +5 ticks. June T-note prices yesterday remained well-supported throughout the day and closed higher by +24 ticks. Bullish factors for T-note prices yesterday included increased flight-to-safety demand for Treasuries after (1) the stock market tumbled, and (2) JPMorgan Chase predicted that global banks are likely to realize about $400 billion more in losses on soured assets, requiring further injections of government capital. A bearish factor for T-note prices yesterday was reduced safe-haven demand for Treasuries after Obama administration officials said that there may be no need to request more financial-rescue funds from Congress as several banks plan to return taxpayer money and as other banks are pushed to tap private markets first.
The dollar index is little changed this morning with the dollar/yen +0.27 yen and the euro/dollar +0.23 cents. The dollar index yesterday rallied for the fifth straight day and closed at a 1-month high. Bullish factors included (1) concerns that a rift among ECB policy makers is deepening after ECB Executive Board member Bini Smaghi said the central bank's 1.25% rate is "very close" to its floor, contradicting two other ECB members who last week said they supported interest rates below 1.00%, (2) the prediction from Wells Fargo that the "ambiguity" of the ECB's monetary policy stance will drive the euro down to $1.20 by year-end, and (3) flight to safety into the dollar as the stock market tumbled. Bearish factors for the dollar included (1) comments from ECB Council member Nowotny that the ECB shouldn't lower its benchmark rate below 1.00% saying "The 1.00% limit is, in my view, one which must not be undershot," and (2) comments from ECB President Trichet that any f urther rate cut by the ECB would be "very measured" (i.e., 25 bp) and that a zero interest-rate policy would not be appropriate for the bank.
May crude oil prices this morning are down -13 cents a barrel and May gasoline is +0.10 cent a gallon. May crude oil prices yesterday sold off sharply and closed down -$4.45 a barrel at a 1-month low. May gasoline closed down -8.08 cents a gallon at a 2-week low. Bearish factors for crude oil prices yesterday included (1) the surge in the dollar index to a 1-month high, and (2) the sell-off in the stock market which raises concerns that the recession will linger and reduce energy demand. Bullish factors include (1) comments from the vice chairman of China's National Development and Reform Commission that China will give priority to boosting its storage capacity of crude, possibly boosting its demand for crude, and (2) comments from the Algerian oil minister that OPEC should cut crude oil production at its May meeting to boost prices, saying "we would be taking a big risk if we don't readjust supply."

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Today's U.S. Earnings Reports

Earnings reports (confirmed releases for companies with market caps above $5.0 bln listed by mkt cap) KO-Coca-Cola (BEST earnings consensus $0.65 per share), MRK-Merck & Co. ($0.78), UTX-United Technologies ($0.78), GILD-Gilead Sciences ($0.61), SGP-Schering-Plough ($0.47), BK-Bank of NY Mellon ($0.63), USB-US Bancorp ($0.22), LMT-Lockheed Martin ($1.65), UNH-UnitedHealth Group ($0.60), DD-Du Pont ($0.53), YHOO-Yahoo! ($0.08), CAT-Caterpillar ($0.05), BLK-Blackrock ($0.81), STT-State Street Corp. ($1.03), NSC-Norfolk Southern ($0.56), NTRS-Northern Trust ($0.97), BRCM-Broadcom ($0.03), WU-Western Union ($0.28), JCI-Johnson Controls (-$0.17)

Global Financial Calendar

Tuesday 4/21/2009

United States
0745 ET	ICSC (Int’l Council of Shopping Centers) weekly retailer sales, previous +0.8% w/w and –0.4% weekly y/y.
0855 ET	Redbook weekly retailer sales, previous +1.9% month-to-date m/m and +0.9% month-to-date y/y.
1000 ET	Kansas City Fed President Thomas Hoenig testifies before the Joint Economic Committee in Washington D.C. on “Too Big to Fail.”
1000 ET	Treasury Secretary Timothy Geithner will testify before the Congressional Oversight Panel.
1300 ET	Weekly 4-week T-bill auction.
1700 ET	ABC U.S. weekly consumer confidence, previous –1 to -51.
Germany
0200 ET	Mar German producer prices expected –0.3% m/m and +0.1% y/y, Feb –0.5% m/m and +0.9% y/y.
0500 ET	Apr German ZEW economic sentiment survey expected +5.5 to 2.0, Mar +2.3 to –3.5. Apr ZEW current situation survey expected –0.6 to –90.0, Mar –3.2 to –89.4.
United Kingdom
0430 ET	Mar UK consumer price index (CPI) expected unchanged m/m and +2.7% y/y, Feb +0.9% m/m and +3.2% y/y. Mar core CPI, Feb +1.6% y/y.
0430 ET	Mar UK retail price index (RPI) expected –0.2% m/m and –0.5% y/y, Feb +0.6% m/m and unchanged y/y. Mar RPI ex mortgage interest payments expected +2.2% y/y, Feb +2.5% y/y.
Euro-Zone
0500 ET	Apr Euro-Zone ZEW economic sentiment survey expected +6.5 to zero, Mar +2.2 to –6.5.
1300 ET	ECB Vice President Lucas Papademos presents the central bank’s annual report to the European Parliament’s Committee on Economic and Monetary Affairs and speaks to the Parliament shortly thereafter.
Canada
0830 ET	Feb Canadian wholesale sales, Jan –4.2% m/m.
0900 ET	Bank of Canada announces interest rate decision

Morning Quote Board

Morning Quotes (ET)	Last	Chg	%chg	Updated
US Stock Futures
S&P (Globex) (M9)	827.40	-5.50	-0.66%	07:10:53
DJIA (CBOT) (M9)	7772	-48	-0.61%	07:11:14

European Stocks
Europe DJ Stoxx 50	1916.27	-15.49	-0.80%	07:06:00
London UK FTSE Index	3962.55	-28.31	-0.71%	07:06:00
German Dax Index	4467.23	-19.07	-0.43%	07:06:14
French CAC 40 Index	2948.62	-20.78	-0.70%	07:06:00

Asian-Pacific Stocks
Japan Nikkei Index	8711	-213	-2.39%	03:00:16
Hong Kong Hang Seng	15286	-465	-2.95%	04:01:15
China CSI 300 Index	2675	-32	-1.19%	03:00:56
Taiwan TAIEX Index	5881	100	1.73%	01:46:01
Australian S&P 200	3677.4	-91.6	-2.43%	02:47:03
Singapore Str. Times	1887.25	12.4	0.66%	05:10:00
South Korea KOSPI 200	171.96	-0.34	-0.20%	05:04:03
Bombay Sensex 30	10898	-81.39	-0.74%	07:12:48
Karachi KSE-100	7834	-68	-0.86%	05:44:49

US Interest Rates
10yr T-notes (CBT)(M9)	123.060	0.050	0.13%	07:11:05
Cash 10yr T-note Price	99.125	0.040	0.13%	07:21:01
Cash 10yr T-note Yield	2.821	-0.015	-0.52%	07:20
5yr T-note (CBT)(M9)	117.310	0.015	0.04%	07:11:00
Cash 5yr T-note Price	99.255	0.005	0.02%	07:20:00
Cash 5yr T-note Yield	1.793	-0.003	-0.18%	07:19
30-yr T-bond (CBT)(M9)	126.31	0.10	0.23%	07:10:56
Cash 30yr T-bond Price	96.305	0.115	0.37%	07:21:01
Cash 30yr T-bond Yield	3.669	-0.020	-0.55%	07:20
Eurodollars (CME)(M9)	98.895	-0.015	-0.02%	07:10:57
Eurodollars (CME)(U9)	98.860	0.000	0.00%	07:10:51

Asian & European Rates
10-yr JGBs (TSE) (M9)	137.04	0.41	0.30%	02:00:00
EuroyenTibor(SGX)(U9)	99.490	0.010	0.01%	06:02:58
Bunds (Eurex) (M9)	123.14	0.25	0.20%	07:06:10
Euribor (Eurex) (U9)	98.63	-0.02	-0.02%	04:30:27
UK Gilts (Liffe) (M9)	122.98	-0.25	-0.20%	07:06:12
Short Stlg (Liffe) (U9)	98.56	-0.03	-0.03%	07:06:12

Forex
US Dollar-Japanese Yen	98.17	0.27	0.28%	07:21:14
EuroFX-US Dollar	1.2944	0.0023	0.23%	07:21:14
US Dollar-Swiss Franc	1.1689	0.0000	0.00%	07:21:14
British Pound-US$	1.4554	0.0015	0.15%	07:21:14
US$-Canadian Dlr	1.2372	-0.0019	-0.19%	07:21:12
Yen (Globex) (M9)	1.0201	-0.0031	-0.31%	07:11:06
Euro FX (Globex) (M9)	1.2933	0.0016	0.12%	07:11:07
SwissFranc (Globex)(M9)	0.8558	-0.0005	-0.06%	07:11:13
British Pound(Glbx)(M9)	1.4533	-0.001	-0.07%	07:11:07
Canadian$ (Globex)(M9)	0.8082	0.0000	0.00%	07:11:13

Commodities
Gold (Comex) (M9)	887.8	0.3	0.03%	06:51:13
Silver (Comex) (K9)	12.120	0.015	0.12%	06:48:18
Copper (Comex) (K9)	202.4	-8.0	-3.80%	06:50:43
Crude Oil (Nymex) (K9)	45.75	-0.13	-0.28%	06:49:24
Gasoline (Nymex) (K9)	141.29	0.10	0.07%	06:49:27
Heating Oil(Nymex)(K9)	133.8	0.64	0.48%	06:50:55
NaturalGas(Nymex)(K9)	3.558	0.018	0.51%	06:44:21
Corn (CBOT) (K9)	371.00	1.50	0.41%	07:10:58
Soybeans (CBOT) (K9)	1020.25	1.75	0.17%	07:08:47
Wheat (CBOT) (K9)	508.50	4.00	0.79%	07:08:26