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Barchart.com U.S. Morning Call for Wednesday, April 29, 2009

Overnight Developments

The European DJ Stoxx 50 this morning is up +0.68% and June S&Ps are up +7.00 points (+0.82%). The Asia-Pacific stock markets today closed mostly higher with Hong Kong (+2.76%), China (+3.45%), Taiwan (+0.31%), Australia (-0.35%), Singapore (+2.28%), South Korea (+2.89%), India (+3.65%). Japanese markets were closed today for the Showa Day Holiday. Global stock prices are rebounding from losses posted the first two days of this week from concerns over the swine flu outbreak. US bank stocks received a boost today after Fox-Pitt Cochran Caronia Waller raised their recommendation on bank stocks to "marketweight" from "underweight," saying non-performing assets will peak at the end of this year. Siemens AG, Europe's largest engineering company is up over 5% after reporting Q1 profit of 1.84 billion euros ($2.42 billion), well ahead of analysts' estimates of 1.65 billion euros, while Sanofi-Aventis SA, France's biggest drugmaker, rose nearly 3% after reporting Q1 adjust ed net income of 2.18 billion euros, higher than the 1.98 billion-euro median estimate. Consumer and business confidence in the Euro-Zone rose for the first time in the last 11 months in Apr and all of the European Apr Bloomberg retail PMI indexes improved to their best levels since last May as government stimulus packages and central bank rate cuts begin to take hold. In Asia, China Petroleum & Chemical, Asia's biggest refiner, gained nearly 4% after saying first-half profit may climb more than 50% and South Korea's Samsung SDI, the world's second-biggest plasma-display maker, surged over 8% after Hana Daetoo Securities raised its recommendation to "buy" saying the company's profits will improve "rapidly" starting in the second quarter. Li & Fung Ltd., the biggest supplier of toys and clothes to Wal-Mart Stores jumped over 7% after US consumer confidence in Apr gained more-than-expected

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Overnight U.S. Stock News

June S&Ps this morning are up +7.00 points as bank stocks rally after being upgraded by Fox-Pitt Kelton Cochran Caronia Waller. The US stock market yesterday recovered early losses and pushed into positive territory in the early afternoon, but then faded into the close to settle mildly lower (Dow -0.10%, S&P 500 -0.27%, Nasdaq Composite -0.33%).
Bearish factors for stock prices yesterday included (1) weakness in bank stocks after the WSJ reported that the early results of the government's stress tests show that some banks may need additional capital, (2) carryover weakness from overseas equity markets that fell on concerns the swine flu outbreak will hinder a recovery from the global recession, and (3) the tumble in energy and raw-material producers as crude oil and industrial metal prices fell on concerns demand for commodities will remain weak.
Bullish factors for stock prices yesterday included (1) a rally in retailers and consumer discretionary stocks after US Apr consumer confidence had its biggest monthly increase since 2005 as it jumped to a 5-month high, (2) a sign that the drop in US home prices may be stabilizing after the Feb S&P/CaseShiller home price index fell less-than-expected, (3) the stronger-than-expected Apr Richmond Fed manufacturing index which climbed to an 11-month high, and (4) speculation that Chrysler may stave off bankruptcy after the automaker reportedly reached a deal with creditors in a deal brokered by the Treasury Department that has bond holder representatives agreeing to forego $6.9 billion in debt in return for $2 billion in cash.
Dreamworks Animation (DWA) surged 14% in European trading after reporting Q1 profit of 68 cents a share, beating analysts' estimaes of 43 cents after home-video sales of its "Madagascar: Escape 2 Africa" surged. Goldman Sachs then raised Dreamworks to "buy" from "neutral," saying "the bulk of estimate cuts and negative catalysts are now behind us."
Citigroup (c) is up nearly 7% and Bank of America (BAC) is trading nearly 4% higher after Fox-Pitt Cochran Caronia Waller upgraded the banking industry to "marketweight" from "underweight," saying non-performing assets will peak at the end of this year

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Today's U.S. Market Focus

June 10-year T-notes this morning are down -1.5 ticks. June T-note prices yesterday traded higher into mid-morning before they fell apart the remainder of the day and closed down -20 ticks. Bearish factors for T-note prices yesterday included (1) talk that the Treasury increase the 30-year bond auctions to a monthly cycle, (2) the slightly better-than-expected Feb S&P/CaseShiller home price index (-18.6% y/y versus expectatons of -18.7% y/y), (3) the larger-than-expected increase in US Apr consumer confidence which had its biggest monthly gain since 2005 (+12.3 to a 5-month high of 39.2 versus expectations of +4.0 to 30.0), (4) the better-than expected Apr Richmond Fed manufacturing index (+11 to an 11-month high of -9 versus expectations of +3 to -17), and (5) the Treasury's record $35 billion 5-year T-note auction that was sold at a higher yield than forecast, signaling slack demand. Bullish factors included (1) safe-haven demand for Treasuries after the WSJ report ed that the US government's stress tests on its largest lenders will show some of them need additional capital along with concerns that the swine flu outbreak may turn into a pandemic which could damage the global economy, and (2) the prediction from PIMCO that the Fed is likely to increase purchases of Treasuries if yields on 10-year T-notes climb beyond a range of 3.00% to 3.10%.
The dollar index is weaker this morning with the dollar/yen +0.45 yen and the euro/dollar +1.12 cents. The dollar index yesterday gave up an early rally and closed lower. Bearish factors for the dollar yesterday included (1) a reduced demand for the safety of the dollar after the stock market recovered from early losses when US Apr consumer confidence rose more-than-expected to a 5-month high, and (2) the continued improvement in the interbank lending market as the 3-month dollar Libor rate fell to a 5-3/4 year low of 1.04%. Bullish factors for the dollar included (1) some US banking system concerns after the WSJ reported that the US government's stress tests on the nation's biggest lenders will show some banks need additional capital, (2) comments from ECB Council member Nout Wellink that policy makers shouldn't shy away from "bold steps" when dealing with the financial crisis and that the ECB should discuss cutting its benchmark rate below 1.00%, and (3) the predic tion from Brown Brothers Harriman & Co. that the euro may drop 10% toward $1.17 as confidence in European plicy makers wanes after their "slow" response to the global recession compared with US counterparts.
June crude oil prices this morning are up +72 cents a barrel and June gasoline is +1.96 cents a gallon. June crude oil prices yesterday added to Monday's losses and closed down -$0.22 a barrel. June gasoline closed down -0.88 cents a gallon. Bearish factors for crude oil prices yesterday included (1) concerns that the swine-flu outbreak will lessen demand for fuels as worldwide travel is curtailed and also causes a possible delay a recovery from the global recession, (2) the prediction from Goldman Sachs that the market for diesel and other distillates is "extremely over supplied" and must rebalance before crude oil prices can rally, and (3) the prediction from Commerzbank that oil prices are likely to fluctuate around $50 a barrel with short-term risks to the downside amid swine flu concerns. Bullish factors for crude oil prices yesterday included (1) the larger-than-expected increase in US Apr consumer confidence, stoking optimism that US fuel demand will increase as the mood of the consumer improves, and,(2) the weaker dollar. Expectations for today's weekly DOE inventories are for crude oil inventories to rise +1.5 million bbl, gasoline stockpiles to rise +200,000 bbl, distillates to rise +1.0 million bbl, and the refinery capacity rate to rise +0.1 to 83.5%

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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) WYE-Wyeth (BEST earnings consensus $0.88 per share), V-Visa ($0.65), TWX-Time Warner ($0.39), SO-Southern ($0.41), PX-Praxair ($0.92), MHS-Medco Health Solutions ($0.62), GD-General Dynamics ($1.46), HES-Hess (-$0.23), ESRX-Express Script ($0.82), AFL-Aflac ($1.16), WMI-Waste Management ($0.41), AMT-American Tower ($0.15), FSLR-First Solar ($1.54), RAI-Reynolds American ($0.96), AET-Aetna ($0.93), BHI-Baker Hughes ($0.76), SBUX-Starbucks ($0.15), TEL-Tyco Electronics ($0.05), MCO-Moody's ($0.34), CCI-Crown Castle International (-$0.05), Q-Quest Communications International ($0.08)

Global Financial Calendar

Wednesday 4/29/2009

United States
0700 ET	Weekly MBA mortgage applications, previous +5.3% with purchase sub-index -4.2% and refi sub-index +7.7%.
0830 ET	Q1 GDP expected –4.7%, Q4 –6.3%. Q1 personal consumption expected +0.9%, Q4 –4.3%. Q1 GDP price index expected +1.8%, Q4 +0.5%, Q1 core PCE expected +1.0% q/q, Q4 +0.9% q/q.
0900 ET	Treasury announces amounts of 3-year T-notes (previous $35 billion), 10-year T-notes (previous $18 billion) and 30-year T-bonds (previous $11 billion) to be auctioned during the May quarterly refunding May 5-7.
1300 ET	Treasury auctions $26 billion 7-year T-notes.
1415 ET	FOMC announces interest rate decision (expected no change to 0-0.25% funds rate).
Euro-Zone
0400 ET	Mar Euro-Zone M3 money supply expected +5.9% 3-mo avg and +5.7% y/y, Feb +6.5% 3-mo avg and +5.9% y/y.
0400 ET	Apr Euro-Zone Bloomberg retail PMI, Mar +1.8 to 44.1.
0500 ET	Apr Euro-Zone business climate indicator expected +0.05 to -3.53, Mar -0.07 to -3.58. Apr consumer confidence expected +1 to -33, Mar -1 to -34. Apr economic confidence expected +1.0 to 65.6, Mar -0.8 to 64.6.
1130 ET	ECB Executive Board member Juergen Stark speaks on “Crisis Management: Market versus State” in Siegen, Germany.
France
0400 ET	Apr French Bloomberg retail PMI, Mar +3.1 to 45.7.
Germany
0400 ET	Apr German Bloomberg retail PMI, Mar –1.0 to 44.4.
United Kingdom
1901 ET	Apr UK GfK consumer confidence survey expected +2 to –28, Mar +5 to –30.
Japan
1915 ET	Apr Japan Nomura/JMMA manufacturing PMI, Mar +2.2 to 33.8.
1950 ET	Mar Japan industrial production expected +0.8% m/m and –34.7% y/y, Feb –9.4% m/m and –38.4% y/y.
n/a	Bank of Japan announces interest rate decision (expected no change to 0.10% benchmark rate).

Morning Quote Board

Morning Quotes (ET)	Last	Chg	%chg	Updated
US Stock Futures
S&P (Globex) (M9)	858.80	7.00	0.82%	07:14:38
DJIA (CBOT) (M9)	8032	65	0.82%	07:10:47

European Stocks
Europe DJ Stoxx 50	1979.89	13.31	0.68%	07:10:15
London UK FTSE Index	4149.16	52.76	1.29%	07:10:15
German Dax Index	4644.67	37.25	0.81%	07:10:18
French CAC 40 Index	3085.11	34.09	1.12%	07:10:15

Asian-Pacific Stocks
Japan Nikkei Index	8494	0	0.00%	4/28/2009
Hong Kong Hang Seng	14957	402	2.76%	04:01:30
China CSI 300 Index	2605	87	3.45%	03:01:04
Taiwan TAIEX Index	5614	17	0.31%	01:46:01
Australian S&P 200	3695.3	-13.1	-0.35%	02:47:03
Singapore Str. Times	1849.57	41.16	2.28%	05:10:00
South Korea KOSPI 200	172.08	4.84	2.89%	05:04:03
Bombay Sensex 30	11403	401.5	3.65%	06:28:15
Karachi KSE-100	7271	-159	-2.14%	05:44:13

US Interest Rates
10yr T-notes (CBT)(M9)	121.200	-0.015	-0.04%	07:15:18
Cash 10yr T-note Price	97.270	0.005	0.02%	07:23:30
Cash 10yr T-note Yield	3.005	-0.002	-0.06%	07:23
5yr T-note (CBT)(M9)	117.145	0.010	0.02%	07:15:16
Cash 5yr T-note Price	99.205	0.025	0.08%	07:15:31
Cash 5yr T-note Yield	1.951	0.010	0.53%	07:15
30-yr T-bond (CBT)(M9)	123.20	-0.06	-0.15%	07:14:50
Cash 30yr T-bond Price	91.315	-0.035	-0.12%	07:24:01
Cash 30yr T-bond Yield	3.960	0.007	0.17%	07:23
Eurodollars (CME)(M9)	99.010	0.015	0.02%	07:15:16
Eurodollars (CME)(U9)	98.960	0.020	0.02%	07:14:58

Asian & European Rates
10-yr JGBs (TSE) (M9)	137.30	0.00	0.00%	4/28/2009
EuroyenTibor(SGX)(U9)	99.505	-0.015	-0.02%	07:05:00
Bunds (Eurex) (M9)	122.63	-0.33	-0.27%	07:10:17
Euribor (Eurex) (U9)	98.72	0.01	0.01%	04:44:14
UK Gilts (Liffe) (M9)	121.12	0.02	0.02%	07:10:18
Short Stlg (Liffe) (U9)	98.61	0.00	0.00%	07:09:21

Forex
US Dollar-Japanese Yen	96.90	0.45	0.47%	07:25:18
EuroFX-US Dollar	1.3261	0.0112	1.12%	07:25:19
US Dollar-Swiss Franc	1.1364	-0.0064	-0.64%	07:25:19
British Pound-US$	1.4785	0.0151	1.51%	07:25:19
US$-Canadian Dlr	1.2052	-0.0144	-1.44%	07:25:19
Yen (Globex) (M9)	1.0327	-0.0051	-0.51%	07:15:14
Euro FX (Globex) (M9)	1.3242	0.0096	0.73%	07:15:14
SwissFranc (Globex)(M9)	0.8796	0.0046	0.53%	07:14:49
British Pound(Glbx)(M9)	1.4767	0.0147	1.01%	07:15:14
Canadian$ (Globex)(M9)	0.8289	0.0083	1.01%	07:14:57

Commodities
Gold (Comex) (M9)	896.6	3.0	0.34%	06:55:18
Silver (Comex) (K9)	12.495	0.095	0.77%	06:54:31
Copper (Comex) (K9)	197.1	5.5	2.84%	06:52:59
Crude Oil (Nymex) (M9)	50.64	0.72	1.44%	06:55:18
Gasoline (Nymex) (M9)	141.91	1.96	1.40%	06:15:55
Heating Oil(Nymex)(M9)	135.2	1.9	1.43%	06:45:55
NaturalGas(Nymex)(M9)	3.45	0.01	0.29%	06:55:18
Corn (CBOT) (K9)	375.50	0.50	0.13%	07:02:23
Soybeans (CBOT) (K9)	1004.25	14.75	1.49%	07:14:54
Wheat (CBOT) (K9)	516.75	6.25	1.22%	06:44:00