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Barchart.com U.S. Morning Call for Friday, April 24, 2009

Overnight Developments

The European DJ Stoxx 50 this morning is up +1.26% and June S&Ps are up +6.40 points (+0.75%). The Asia-Pacific stock markets today closed mixed with Japan down (-1.57%), Hong Kong (+0.29%), China (-0.80%), Taiwan (+0.09%), Australia (-0.82%), Singapore (-0.38%), South Korea (-1.14%), India (+1.74%). European stocks received a boost today from the Apr German IFO business climate index which rose a more-than-expected +1.6 to 83.7, rebounding from a 26-year low in Mar. Also supporting stock gains in Europe was the rebound in Mar French consumer spending which climbed at a +1.1% m/m pace, higher than the +0.2% m/m gain expected. Limiting gains in stocks today was the plunge in Britain's Q1 GDP which fell -1.9% q/q, the biggest quarterly contraction since Q3 1979, and the first time GDP has shrank by more than 1.0% in consecutive quarters (Q4 -1.6% q/q) since modern records began after WWII. The pound tumbled after the report along with concern the UK will lose its AAA credit rating after Moody's Investors Service said the UK government is "taking risks" with public finances as Britain's balance sheet is "deteriorating rapidly" due to a combination of weakening revenues and bank bailouts. Asian stocks were undercut today by the 5.2% drop in KDDI Corp., Japan's second-biggest mobile-phone operator, after it forecast its slowest profit growth in four years along with the 5.6% fall in Samsung Electronics, the world's largest maker of memory chips, after the company said its too soon to predict a rebound in consumer demand

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Overnight U.S. Stock News

June S&Ps this morning are up +6.40 points on better-than-expected earnings from American Express and Ford. The US stock market yesterday gyrated on both sides of unchanged into late morning before rallying into the close and finishing on its high (Dow +0.89%, S&P 500 +0.99%, Nasdaq Composite +0.37%).
Bullish factors for stock prices yesterday included (1) strength in hotel-related stocks after Marriott International surged 12% as the biggest US hotel chain posted a Q1 profit of 24 cents a share, better than the 13 cents expected by analysts, (2) the 4.5% rally in the S&P 500 Financials Index as the market awaits any additional information on the "stress tests" given to the nations 19 biggest banks, (3) the 3.2% gain in Apple after it reported Q2 profit of $1.33 a share, well ahead of analysts' estimates of $1.08 a share, saying strong sales of the iPhone and new versions of the iPod helped the company overcome a slump in consumer spending, and (4) the 12% rise in EBay after the most-visited US e-commerce site reported Q1 earnings of 39 cents a share, better than the 34 cents expected by analysts.
Bearish factors for stock prices yesterday included (1) the jump in weekly US continuing unemployment claims to a record high for the twelfth consecutive week, indicating a continued deterioration of the US labor market, (2) weakness in homebuilders after US Mar existing home sales fell more-than-expected, (3) The prediction from Deutsche Bank AG that the market for existing homes in the US will take longer to rebound than the one for new homes becasue "shadow inventory," or homes headed for foreclosure, is increasing and hurting prices, (4) the sell-off in drug stocks after IMS Health predicted drugmakers will bring in $70 billion less this year than last year and that prescription drug sales in the US will decline as much as 2%, or $6 billion, the first drop in the 47 years IMS has been keeping records, and (5) the prediction from KBW that US banks may need another $1 trillion to cushion loan losses as unemployment rises and borrowers fall behind on payments.
American Express (AXP) jumped over 8% in after-hours trading late yesterday after the biggest US credit-card company by purchases reported Q1 profit of 32 cents a share, well ahead of analysts' estimates of 13 cents.
Microsoft (MSFT) rallied neary 4% in after-hours trading late yesterday after the world's biggest software maker reported Q3 profit of 39 cents a share, matching analysts' expectations, and saying it plans to eliminate 5,000 jobs by the middle of 2010 with the goal of saving $1.5 billion annually in operating expenses. Early today Morgan Stanley raised their recommendation on Microsoft to "overweight" from "equal weight," citing an "accelerating growth story."
Ford Motor (F) jumped 15% in pre-market trading after reporting a Q1 loss of 75 cents a share, much less than the $1.24 loss expected by analysts

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Today's U.S. Market Focus

June 10-year T-notes this morning are down -2 ticks. June T-note prices yesterday reversed early losses and closed up +5 ticks. Bullish factors included (1) the rise in weekly US continuing unemployment claims to their highest level since records began in 1967 (+93,000 to 6.137 million) as continuing claims have now risen to a record for the twelfth consecutive week, (2) the weaker-than-expected Mar existing home sales (-3.0% to 4.57 million versus expectations of -1.5% to 4.65 million, (3) the Fed's purchase of $7 billion in Treasuries as a part of its quantitative easing campaign, and (4) the prediction from KBW that US banks may need another $1 trillion in capital to cushion losses as unemployment rises and borrowers fall behind on payments, which may increase the safety demand for Tresauries. Bearish factors for T-note prices yesterday included (1) supply pressures after the Treasury announced it will sell a total of $101 billion in 2-year, 5-year and 7-year T-no tes next week, and (2) reduced demand for the safety of Treasuries after the stock market rallied.
The dollar index is trading at a 1-week low this morning with the dollar/yen -0.94 yen and the euro/dollar +1.10 cents. The dollar index finished lower for the third consecutive session. Bearish factors included (1) strength in the euro after all of the Apr European PMI manufacturing and service indexes rose more-than-expected, (2) the weaker-than-expected US Mar existing home sales, (3) the rise in the Apr French business confidence indicator for the first time in the last 13 months, and (4) a decrease in the demand for dollars after the 3-month dollar Libor rate fell to a 3-1/4 month low of 1.09%. Bullish factors for the dollar included (1) the fall in Feb Euro-Zone industrial new orders for the seventh straight month with the -34.5% y/y decline the biggest annual decline since records began in 1994, and (2) comments from several German economic institutes that are calling for the ECB to slash their refinancing rate to at least 0.50% as they predict German exports will tumble by 22.6% this year and unemployment in Germany will soar to 10.8% in 2010.
June crude oil prices this morning are up +39 cents a barrel and June gasoline is +0.30 cent a gallon. June crude oil prices yesterday traded in positive territory most of the day and closed up +$0.77 a barrel. June gasoline closed up +0.27 cent a gallon. Bullish factors for crude oil prices yesterday included (1) the rally in the stock market, (2) the larger-than-expected increases in the Apr European PMI manufacturing and service indexes, signaling stronger energy demand in Europe, and (3) weakness in the dollar. Bearish factors for crude oil prices yesterday included (1) carryover weakness from natural gas prices which slumped to a 6-1/2 year low after the EIA reported that natural gas inventories held in underground storage in the lower 48 states rose to 1.74 trillion cubic feet for the week ended Apr 17, 23% above the 5-year average, and (2) concerns that US energy demand will remain stunted after the latest US weekly continuing unemployment claims rose to a re cord for the twelfth consecutive week and US Mar existing home sales fell more-than-expected

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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) SLB-Schlumberger (BEST earnings consensus $0.74 per share), MMM-3M ($0.86), HON-Honeywell International ($0.55), PCU-Southern Copper ($0.10), F-Ford Motor (-$1.24), AEP-American Electric Power ($0.83), ITT-ITT Corp. ($0.58)

Global Financial Calendar

Friday 4/24/2009

United States
0830 ET	Mar durable goods orders expected –1.5% and –1.3% ex transportation, Feb +3.4% and +3.9% ex transportation.
0930 ET	ECB Council member Erkki Liikanen speaks at the European Institute’s finance seminar in Washington D.C. on the implications of the financial crisis.
1000 ET	Mar new home sales expected unchanged at 337,000, Feb +4.7% to 337,000.
n/a	Treasury Secretary Timothy Geithner will host a Group of 7 Finance Ministers and Central Bank Governors meeting followed by a Group of 20 nations ministerial meeting.
France
0245 ET	Mar French consumer spending expected +0.2% m/m and –0.5% y/y, Feb –2.0% m/m and –2.0% y/y.
Germany
0400 ET	Apr German IFO business climate expected +0.2 to 82.3, Mar –0.5 to 82.1. Apr IFO current assessment expected –0.6 to 82.1, Mar -1.6 to 82.7. Apr IFO expectations expected +1.0 to 82.6, Mar +0.7 to 81.6.
United Kingdom
0430 ET	Q1 UK GDP expected –1.5% q/q and –3.8% y/y, Q4 –1.6% q/q and –2.0% y/y.
0430 ET	Mar UK retail sales expected –0.3% m/m and 1.1% y/y, Feb –1.9% m/m and +0.4% y/y.

Morning Quote Board

Morning Quotes (ET)	Last	Chg	%chg	Updated
US Stock Futures
S&P (Globex) (M9)	855.10	6.40	0.75%	07:11:39
DJIA (CBOT) (M9)	7961	46	0.58%	07:10:58

European Stocks
Europe DJ Stoxx 50	1958.47	24.45	1.26%	07:06:45
London UK FTSE Index	4104.89	86.66	2.16%	07:06:45
German Dax Index	4635.21	97.00	2.14%	07:06:57
French CAC 40 Index	3069.87	61.25	2.04%	07:06:45

Asian-Pacific Stocks
Japan Nikkei Index	8708	-139	-1.57%	03:00:14
Hong Kong Hang Seng	15259	44	0.29%	04:01:30
China CSI 300 Index	2573	-21	-0.80%	03:01:12
Taiwan TAIEX Index	5881	6	0.09%	01:46:01
Australian S&P 200	3712.3	-30.7	-0.82%	02:47:03
Singapore Str. Times	1852.85	-7.13	-0.38%	05:10:00
South Korea KOSPI 200	174.13	-2.01	-1.14%	05:04:05
Bombay Sensex 30	11329	194.06	1.74%	06:28:13
Karachi KSE-100	7621	285	3.89%	06:45:26

US Interest Rates
10yr T-notes (CBT)(M9)	121.305	-0.040	-0.10%	07:11:56
Cash 10yr T-note Price	98.130	-0.050	-0.16%	07:21:31
Cash 10yr T-note Yield	2.938	0.019	0.64%	07:21
5yr T-note (CBT)(M9)	117.160	-0.015	-0.03%	07:11:49
Cash 5yr T-note Price	99.100	-0.030	-0.09%	07:19:31
Cash 5yr T-note Yield	1.897	0.020	1.08%	07:19
30-yr T-bond (CBT)(M9)	125.03	-0.04	-0.10%	07:11:52
Cash 30yr T-bond Price	94.170	-0.090	-0.30%	07:21:31
Cash 30yr T-bond Yield	3.808	0.016	0.43%	07:21
Eurodollars (CME)(M9)	98.965	0.020	0.02%	07:11:28
Eurodollars (CME)(U9)	98.895	0.010	0.01%	07:09:27

Asian & European Rates
10-yr JGBs (TSE) (M9)	137.15	-0.11	-0.08%	02:00:00
EuroyenTibor(SGX)(U9)	99.485	-0.005	-0.01%	07:05:00
Bunds (Eurex) (M9)	122.55	0.38	0.31%	07:06:56
Euribor (Eurex) (U9)	98.66	0.04	0.04%	05:15:46
UK Gilts (Liffe) (M9)	120.62	0.17	0.14%	07:06:07
Short Stlg (Liffe) (U9)	98.60	0.02	0.02%	07:06:47

Forex
US Dollar-Japanese Yen	97.02	-0.94	-0.96%	07:21:57
EuroFX-US Dollar	1.3254	0.0110	1.10%	07:21:57
US Dollar-Swiss Franc	1.1406	-0.0099	-0.99%	07:21:57
British Pound-US$	1.4612	-0.0110	-1.10%	07:21:57
US$-Canadian Dlr	1.2167	-0.0062	-0.62%	07:21:57
Yen (Globex) (M9)	1.0319	0.0093	0.93%	07:11:55
Euro FX (Globex) (M9)	1.3256	0.0147	1.12%	07:11:56
SwissFranc (Globex)(M9)	0.878	0.01	1.15%	07:11:54
British Pound(Glbx)(M9)	1.4619	-0.0075	-0.51%	07:11:55
Canadian$ (Globex)(M9)	0.8228	0.0063	0.77%	07:11:54

Commodities
Gold (Comex) (M9)	912.5	5.9	0.65%	06:51:39
Silver (Comex) (K9)	12.790	0.035	0.27%	06:51:54
Copper (Comex) (K9)	198.6	-0.7	-0.33%	06:51:30
Crude Oil (Nymex) (M9)	50.01	0.39	0.79%	06:51:55
Gasoline (Nymex) (M9)	140.45	0.30	0.21%	06:51:11
Heating Oil(Nymex)(M9)	133.75	0.22	0.16%	06:42:02
NaturalGas(Nymex)(M9)	3.5	-0.016	-0.46%	06:51:29
Corn (CBOT) (K9)	379.50	-1.50	-0.39%	07:08:53
Soybeans (CBOT) (K9)	1036.00	-1.75	-0.17%	07:04:48
Wheat (CBOT) (K9)	529.25	0.00	0.00%	06:55:12