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Barchart.com U.S. Morning Call for Thursday, April 23, 2009

Overnight Developments

The European DJ Stoxx 50 this morning is down (-0.01%) and June S&Ps are up +8.50 points (+1.02%). The Asia-Pacific stock markets today closed mostly higher with Japan (+1.37%), Hong Kong (+2.26%), China (+0.67%), Taiwan (-0.18%), Australia (+2.04%), Singapore (+0.90%), South Korea (+1.00%), India (+2.93%). Europe's manufacturing and service industries contracted at the slowest pace in six months in Apr, suggesting the worst of the recession may be over after the Apr Euro-Zone PMI composite rose a greater-than-expected +2.2 to 40.5. French manufacturers' confidence rose for the first time in 13 months in Apr as the Apr French business confidence indicator climbed +3 to 71, recovering from the Mar reading of 68, which was the lowest level since the index began in 1962. Feb Euro-Zone industrial new orders fell -0.6% m/m, their seventh straight monthly decline, while the -34.5% y/y decline in Feb industrial orders is the largest annual decline since records began in De c 1994. Credit Suisse rallied over 7% after the biggest Swiss bank by market value reported Q1 profit of 2 billion francs ($1.7 billion), nearly twice the 1 billion-franc estmate expected by analysts. Japanese automakers received a boost today after Goldman Sachs upgraded Toyota and Honda to "buy" from "neutral," saying the automakers and Nissan will likely boost their US market share by 7% through 2010. After the close of Asian trading, Mizuho Financial Group, Japan's third-biggest bank by market value, said it will revise its earnings estimate for the year just ended after reporting a 529.5 billion yen ($5,4 billion) loss for the quarter ending Mar 31, wider than the expected 350.5 billion yen shortfall as bad-loan costs surged almost seven times to 560 billion yen for the year ended Mar 31

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Overnight U.S. Stock News

June S&Ps this morning are up +8.50 points on stronger-than-expected earnings from Apple. The US stock market yesterday rallied mid-morning but shed its gains late in the day and finished mixed (Dow -1.04%, S&P 500 -0.77%, Nasdaq Composite +0.14%).
Bearish factors for stock prices yesterday included (1) a late-day plunge in financials after the CEO of Wells Fargo said "credit may not have turned yet," along with the prediction from Friedman Billings Ramsey that should the US unemployment rate rise to 12% from its current 8.5%, then most banks will need to raise more capital, (2) the sell-off in the S&P 500 Real Estate Index after RealFacts reported that apartment rents and occupancy rates dropped for the third straight quarter in the US West and South as the recession forced some renters to combine households, and (3) the IMF's cut in its 2009 world growth estimate to a contraction of -1.3% compared with their Jan estimate of +0.5% growth and the cut in its world growth forecast for next year to an expansion of +1.9% instead of a previous prediction of 3% growth, saying the global recessiom will be deeper and the recovery slower than previously thought.
Bullish factors for stock prices yesterday included (1) the unexpected rise in the US Feb Federal Housing Finance Agency house price index which has now risen in back-to-back months for the first time in nearly 2 years, suggesting a e bottom in US home prices could be getting closer, (2) the 12% surge in shares of Ford Motor after Goldman Sachs added the company to its "conviction buy" list, saying the automaker doesn't need government assistance and will benefit from likely bankruptcy filings at General Motors and Chrysler, and (3) the 2% gain in AT&T after the biggest US phone company reported Q1 EPS of 53 cents, higher than analysts' estimates of 48 cents.
Apple (AAPL) rallied 3.5% in after-hours trading yesterday after reporting Q2 profit of $1.33 a share, well ahead of analysts' estimates of $1.08 a share. Apple said strong sales of the iPhone and new versions of the iPod helped the company overcome a slump in consumer spending.

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Today's U.S. Market Focus

June 10-year T-notes this morning are down -1 tick. June T-note prices yesterday added to Tuesday's losses and closed down -15.5 ticks at a 2-week low. Bearish factors for T-note prices yesterday included (1) the unexpected increase in home prices in the US Feb Federal Housing Finance Agency house price index (+0.7% versus expectations of -0.7%), and (2) an increase in supply pressures after the prediction from UBS that the US government will have to sell $2.4 trillion in new bills, notes and bonds in 2009 as a drop in tax receipts along with the rise in spending causes the budget deficit to soar to a record. Bullish factors included (1) the action by the IMF to cut their world growth estimate to a contraction of -1.3% this year, compared with a Jan forecast of +0.5% growth, saying "financial stabilization will take longer than previously envisaged," and (2) an increase in the safe-haven demand for Treasuries after the stock market tumbled late yesterday,
The dollar index is lower this morning with the dollar/yen +0.30 yen and the euro/dollar +0.61 cents. The dollar index finished weaker for the second straight day. Bearish factors included (1) the rally in the yen to a 3-week high against the dollar after Japan's exports in March dropped less than in Feb, signaling the worst of the recession may be over, and (2) strength in the euro after hawkish comments from ECB Council member Weber that he sees 1.00% as a "reasonable lower boundary" for the central bank's benchmark rate and that buying government bonds to help revive the Euro-Zone economy is not a "desirable option," suggesting he is not in favor of rate cuts below 1.00% or any form of quantitative easing. Bullish factors for the dollar included (1) the drop in the British pound to a 2-week low against the dollar after the Chancellor of the Exchequer announced income tax increases in the UK budget which may drive investment out of England and cause the pound to we aken further, and (2) a possible increase in the demand for the safety of the dollar after the IMF predicted that the global recession will be deeper and the recovery slower than previously thought.
June crude oil prices this morning are up +49 cents a barrel and June gasoline is -0.03 cent a gallon. June crude oil prices yesterday gyrated on either side of unchanged until rallying late when they closed up +$0.30 a barrel. June gasoline closed down -2.06 cents a gallon. Bullish factors for crude oil prices included (1) the weaker dollar, (2) the prediction from Standard Chartered Plc that OPEC may announces additional supply cuts when it meets next month should oil prices remain below $60 a barrel, and (3) comments from Iran's oil minister that Iran will press for oil prices near $80 a barrel at next month's OPEC meeting. Bearish factors for crude oil prices yesterday included (1) the larger-than-expected rise in weekly crude oil inventories (+3.86 million bbl versus expectations of +2.5 million bbl) which now shows total US crude inventories at 370.6 million bbl, their highest level in 18-1/2 years, (2) the unexpected gains in weekly inventories of gasoline an d distillates (gasoline +802,000 bbl versus expectations of -600,000 bbl and distillates +2.68 million bbl versus expectations of -1.0 million bbl), (3) slack US energy demand after US fuel demand in the four weeks ended Apr 17 was 18.5 million bpd, -6.5% from a year earlier, and (4) the -18.4% drop in Mar oil imports from Japan, the world's third-biggest oil consumer, as Japanese crude imports have now fallen for five consecutive months, a sign of weak demand

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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) MSFT-Microsoft (BEST earnings consensus $0.39 per share), PM-Philip Morris ($0.70), COP-ConocoPhillips ($0.44), UPS-United Parcel Service ($0.56), AMGN-Amgen ($1.14), OXY-Occidental Petroleum ($0.39), AMZN-Amazon.com ($0.45), EXC-Exelon ($1.13), EMC-EMC Corp. ($0.16), UNP-Union Pacific ($0.66), AXP-American Express ($0.13), BNI-Burlington Northern Santa Fe ($0.97), PNC-PNC Financial Services ($0.42), DHR-Danaher ($0.73), RTN-Raytheon ($1.01), CME-CME Group ($3.21), CB-Chubb ($1.37), TMO-Thermo Fisher ($0.70), NOV-National Oilwell Varco ($1.07), NUE-Nucor (-$0.58), DO-Diamond Offshore Drilling ($2.22)

Global Financial Calendar

Thursday 4/23/2009

United States
0830 ET	Weekly unemployment claims expected +29,000 to 639,000, previous –53,000 to 610,000. Weekly continuing claims expected +98,000 to 6.120 million, previous +172,000 to 6.022 million.
1000 ET	Mar existing home sales expected –1.5% to 4.65 million, Feb +5.1% to 4.72 million.
1100 ET	Treasury announces amounts of 2-year T-notes (previous $40 billion), 5-year T-notes (previous $34 billion) and 7-year T-notes (previous $24 billion) to be auctioned Apr 27-30.
1145 ET	Minneapolis Fed President Gary Stern speaks on new policies for financial stability on a panel discussion in Washington D.C.
1300 ET	Treasury auctions $8 billion 5-year TIPS.
France
0245 ET	Apr French business confidence indicator expected at 69, Mar unchanged at 68.
0300 ET	Apr French PMI manufacturing expected +0.5 to 37.0, Mar +1.7 to 36.5. Apr PMI services expected +0.1 to 43.7, Mar +3.4 to 43.6.
Germany
0330 ET	Apr German PMI manufacturing expected +0.6 to 33.0, Mar +0.3 to 32.4. Apr PMI services expected +0.1 to 42.4, Mar +1.0 to 42.3.
Euro-Zone
0400 ET	Apr Euro-Zone PMI manufacturing expected +0.8 to 34.7 Mar +0.4 to 33.9. Apr PMI services expected +0.4 to 41.3, Mar +1.7 to 40.9. April PMI composite expected +0.6 to 38.9, Mar 38.3.
0400 ET	Apr Euro-Zone PMI composite, Mar +2.1 to 38.3.
0500 ET	Feb Euro-Zone industrial new orders expected –2.2% m/m and –34.8% y/y, Jan –3.4% m/m and –34.1% y/y.
Canada
0830 ET	Feb Canadian retail sales, Jan +1.9% m/m and +1.3% y/y.
1030 ET	Bank of Canada monetary policy report.
Japan
1950 ET	Mar Japan corporate service prices, Feb –2.6% y/y.
1950 ET	Feb Japan all industry activity index, Jan –1.7% m/m.

Morning Quote Board

Morning Quotes (ET)	Last	Chg	%chg	Updated
US Stock Futures
S&P (Globex) (M9)	845.40	8.50	1.02%	07:08:42
DJIA (CBOT) (M9)	7877	61	0.78%	07:08:51

European Stocks
Europe DJ Stoxx 50	1947.00	-0.13	-0.01%	07:04:15
London UK FTSE Index	4052.58	21.92	0.54%	07:04:15
German Dax Index	4579.31	-15.11	-0.33%	07:04:21
French CAC 40 Index	3035.71	10.47	0.35%	07:04:15

Asian-Pacific Stocks
Japan Nikkei Index	8847	120	1.37%	03:00:15
Hong Kong Hang Seng	15214	336	2.26%	04:01:30
China CSI 300 Index	2594	17	0.67%	03:01:04
Taiwan TAIEX Index	5875	-11	-0.18%	01:46:01
Australian S&P 200	3743	74.8	2.04%	02:47:03
Singapore Str. Times	1859.98	16.57	0.90%	05:10:00
South Korea KOSPI 200	176.14	1.74	1.00%	05:04:03
Bombay Sensex 30	11135	317.45	2.93%	06:28:11
Karachi KSE-100	7336	-238	-3.15%	05:49:08

US Interest Rates
10yr T-notes (CBT)(M9)	121.285	-0.010	-0.03%	07:09:17
Cash 10yr T-note Price	98.090	-0.035	-0.11%	07:18:31
Cash 10yr T-note Yield	2.953	0.013	0.45%	07:18
5yr T-note (CBT)(M9)	117.135	-0.005	-0.01%	07:09:20
Cash 5yr T-note Price	99.085	-0.020	-0.06%	07:18:31
Cash 5yr T-note Yield	1.907	0.013	0.71%	07:18
30-yr T-bond (CBT)(M9)	124.28	0.07	0.18%	07:08:57
Cash 30yr T-bond Price	94.160	-0.035	-0.12%	07:18:31
Cash 30yr T-bond Yield	3.810	0.006	0.17%	07:18
Eurodollars (CME)(M9)	98.940	0.030	0.03%	07:09:11
Eurodollars (CME)(U9)	98.875	0.035	0.04%	07:09:11

Asian & European Rates
10-yr JGBs (TSE) (M9)	137.26	0.05	0.04%	02:00:00
EuroyenTibor(SGX)(U9)	99.525	0.035	0.04%	21:54:50
Bunds (Eurex) (M9)	122.24	-0.10	-0.08%	07:04:21
Euribor (Eurex) (U9)	98.61	0.01	0.01%	02:43:58
UK Gilts (Liffe) (M9)	120.46	-0.61	-0.50%	07:04:21
Short Stlg (Liffe) (U9)	98.59	0.05	0.05%	07:00:44

Forex
US Dollar-Japanese Yen	98.31	0.30	0.30%	07:19:22
EuroFX-US Dollar	1.3066	0.0061	0.61%	07:19:22
US Dollar-Swiss Franc	1.1585	-0.0051	-0.51%	07:19:22
British Pound-US$	1.4539	0.0046	0.46%	07:19:21
US$-Canadian Dlr	1.2350	-0.0047	-0.47%	07:19:21
Yen (Globex) (M9)	1.0175	-0.0022	-0.22%	07:09:09
Euro FX (Globex) (M9)	1.3045	0.0032	0.25%	07:09:07
SwissFranc (Globex)(M9)	0.8633	0.0038	0.44%	07:08:43
British Pound(Glbx)(M9)	1.4532	0.0029	0.20%	07:09:06
Canadian$ (Globex)(M9)	0.8092	-0.0002	-0.02%	07:09:20

Commodities
Gold (Comex) (M9)	894.2	1.7	0.19%	06:49:21
Silver (Comex) (K9)	12.380	0.075	0.61%	06:49:08
Copper (Comex) (K9)	208.8	2.9	1.38%	06:49:17
Crude Oil (Nymex) (M9)	49.34	0.49	1.00%	06:49:16
Gasoline (Nymex) (M9)	139.85	-0.03	-0.02%	06:43:22
Heating Oil(Nymex)(M9)	135	0.36	0.27%	06:44:47
NaturalGas(Nymex)(M9)	3.631	-0.014	-0.38%	06:44:57
Corn (CBOT) (K9)	373.50	0.00	0.00%	06:59:58
Soybeans (CBOT) (K9)	1057.25	11.25	1.08%	07:08:21
Wheat (CBOT) (K9)	516.25	-0.50	-0.10%	06:59:58