11:11 PM
M.vishnu
- European stocks are lower with the European DJ Stoxx 50 down -0.64% and Dec S&Ps down -7.10 points. The dollar index climbed to a 5-week high on increased safe-haven demand as global equity markets tumbled, while Treasuries rose and most commodities weakened. Concerns that China is poised to increase interest rates again after its Oct consumer prices accelerated to their fastest pace in 25 months is pressuring global equities. European Q3 GDP figures were all revised lower with growth in the Euro-Zone cut to a +0.4% q/q increase from the previously reported +0.5% q/q, while Germany was cut to +0.7% q/q from +0.8% q/q and growth in France was revised lower to +0.4% q/q from +0.5% q/q. Keeping the pressure on European equities was the unexpected decline in Sep Euro-Zone industrial production, which fell -0.9% m/m, weaker than the expected +0.3% m/m gain and the biggest decline in 18 months. In an attempt to stem the rout in the bond markets of Europe's periphe ral nations (i.e., Ireland, Spain & Portugal), European finance ministers that are meeting other global leaders at the G-20 summit in South Korea, said a crisis-resolution mechanism they're discussing that may force bondholders to share the cost of a bailout wouldn't apply to outstanding debt. The euro rebounded from a 1-1/4 month low against the dollar and Irish bonds rallied for the first time in 14 days after the statement was released.
- The Asian markets today closed lower with Japan down -1.39%, Hong Kong -1.93%, China -6.21%, Taiwan -1.43%, Australia -0.76%, Singapore -1.26%, South Korea +0.34%, India -2.10%. Concern that growth in China may slow as it takes additional steps to damp inflation undercut most Asian stock markets with China's Shanghai Stock Index falling the most in over a year. Japanese exporters declined as the yen rallied and Japanese bank stocks tumbled after a WSJ article contradicted a Nov 10 report from the FT that the Group of 20 leaders may consider different capital rules for lenders with mostly domestic operations and those for global banks. Sep India industrial production rose +4.4% y/y, smaller-than-expected and the slowest pace of growth in 16 months, which may prompt the RBI from further raising interest rates as consumer demand slows from the previous six rate hikes the RBI has already made this year.
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- Dec S&Ps this morning are down -7.10 points on China rate hike fears. The stock market yesterday opened lower and remained in negative territory throughout the day on increased European sovereign-debt concerns and on weakness in technology stocks after Cisco's earnings disappointed: Dow -0.65%, S&P 500 -0.42%, Nasdaq Composite -0.90%. Bearish factors included (1) carry-over weakness from a fall in European stocks on heightened sovereign-debt risks after Portuguese and Spanish government bonds fell on mounting concern that the nations on Europe's periphery will be forced to restructure their debt, (2) the slump in technology companies after Cisco plunged when it projected sales and profit that fell short of market expectations, and (3) weakness in financial stocks after Ireland's central bank Governor and ECB Council member Honohan said Irish and international banks' loan losses in the country may total at least 85 billion euros ($117 billion).
- Bullish factors included (1) the action by Moody's Investors Service to raise China's debt rating one level to Aa3 from A1 with a positive outlook, which bolsters confidence in China's ability to help sustain global economic growth, (2) the ECB's monthly report in which the central bank raised its 2010 Euro-Zone GDP forecast to 1.6% from an estimate made 3 months ago of 1.1% and raised its 2011 Euro-Zone GDP forecast to 1.5% from 1.4%, which bodes well for the sustainability of the economic recovery, and (3) a report from the Huffington Post in which President Obama's adviser, David Axelrod, said President Obama will agree to Republican demands that Bush-era tax policies be extended.
- Alcoa (AA) slipped 2.1% and Barrick Gold (ABX) lost 1.8% in pre-market trading as a rally in the dollar index to a 5-week high and speculation of further Chinese interest rate hikes prompted a sell-off in metals.
- December 10-year T-notes this morning are trading up +5.5 ticks as global equity markets slump. T-note prices yesterday traded weaker throughout the day in subdued action as the cash Treasury market was closed for Veterans Day: TYZ10 -15.5, FVZ10 -13.2, EDH11 -4.5. Bearish factors included (1) reduced safe-haven demand for Treasuries after the ECB raised its 2010 and 2011 Euro-Zone GDP forecasts in its monthly report, and (2) the action by Moody's Investors Service to raise China's debt rating, which boosts confidence in the global economic outlook and reduced the safe-haven demand for Treasuries. Bullish factors included (1) post-refunding short covering after the Treasury finished its $71 billion Nov quarterly refunding on Wed, and (2) comments from French Finance Minister Lagarde who said "investors must share the cost of sovereign debt restructurings," which raised concern some Euro-Zone nations may need to restructure their debt in order to avoid de faulting.
- The dollar index this morning is trading higher and at a 5-week high with the dollar/yen -0.36 yen and the euro/dollar +0.46 cents. The dollar index yesterday rallied to a 2-week high and finished near its high on increased safe-haven demand as the euro weakened due to heightened sovereign-debt risk concerns: Dollar Index +0.191, USDJPY +0.580, EURUSD +0.00101. Bullish factors for the dollar included (1) the slump in the euro to a 5-week low against the dollar after Ireland's central bank Governor and ECB Council member Honohan said Irish and international banks' loan losses in his country may total at least 85 billion euros ($117 billion), and (2) comments from French Finance Minister Lagarde who said "investors must share the cost of sovereign debt restructurings," which boosted the safe-haven demand for the dollar on concern some Euro-Zone nations may need to restructure their debt in order to avoid defaulting. Bearish factors for the dollar included (1) the ECB's monthly report in which the central bank raised its 2010 Euro-Zone GDP forecast to 1.6% from a 1.1% estimate made 3 months ago and raised its 2011 GDP forecast to 1.5% from 1.4%, and (2) comments from ECB Executive Board member Gonzalez-Paramo who said he doesn't rule out higher interest rates in the "medium term" if signs of inflationary pressures appear.
- December crude oil prices this morning are trading sharply lower by -$1.76 a barrel and December gasoline is -3.12 cents per gallon. Most commodity prices tumbled in overnight trade on concern that further Chinese rate hikes will slow economic growth and demand for commodities. Crude oil and gasoline prices yesterday rallied early but shed their gains after the stock market weakened and the dollar strengthened and they finally finished unchanged to slightly lower: CLZ10 +$0.00, RBZ10 -0.005. Dec crude rallied to a 25-month high and Dec gasoline posted a 6-month high. Bullish factors included (1) the action by Moody's Investors Service to raise China's debt rating, which spurred a rally in most commodities on optimism that the global economic recovery and strong energy demand will continue, (2) the action by OPEC to raise its 2011 global oil demand forecast by 1.2 million bpd to 86.95 million bpd, up +120,000 bpd from last month's forecast, and (3) the +12% y/y incre ase in Oct China crude processing as Chinese refiners processed a record 37 million metric tons, or 8.8 million barrels a day of crude in Oct, a sign of strong demand. Bearish factors included (1) the rally in the dollar index to a 2-week high, (2) the retreat in stock prices, which dampens confidence in the economic outlook and fuel demand, and (3) the drop in compliance by OPEC members on their production quotas in Oct to 51% from 55% in Sep as rising oil prices prompted cartel members to cheat on their quotas and overproduce.
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Today's U.S. Earnings Reports
Earnings reports (confirmed releases, sorted by mkt cap) A-Agilent Technologies (BEST earnings consensus $0.59), JCP-J.C. Penney (0.17), CIE-Cobalt International Energy (-0.07), DHI-DR Horton (-0.05), WEN-Wendy's/Arby's Group (0.04), STRI-STR Holdings (0.35), VIVO-Meridian Bioscience (0.18), BH-Biglari Holdings (4.41).
Global Financial Calendar
| Friday 11/12/10 | |
| United States | |
| 0835 ET | Fed Governor Daniel Tarullo speaks on "Next Steps in Financial Reform" at the George Washington Law School. |
| 0955 ET | Preliminary Nov U.S. University of Michigan consumer confidence expected +1.3 to 69.0, Oct -0.5 to 67.7. |
| 0830 ET | USDA weekly export sales. |
| 1635 ET | Fed Governor Sarah Bloom Raskin speaks on "Mortgage Servicing Issues" at a conference in Boston. |
| France | |
| 0130 ET | Q3 France GDP expected +0.5% q/q and +1.9% y/y, Q2 +0.7% q/q and +1.7% y/y. |
| Germany | |
| 0200 ET | Q3 German GDP expected +0.8% q/q and +3.7% y/y, Q2 +2.2% q/q and +3.7% y/y. |
| Euro-Zone | |
| 0500 ET | Q3 Euro-Zone GDP expected +0.5% q/q and +1.9% y/y, Q2 +1.0% q/q and +1.9% y/y. |
| 0500 ET | Sep Euro-Zone industrial production expected +0.3% m/m and +7.1% y/y, Aug +1.2% m/m and +8.2% y/y. |
Morning Quote Board
| Morning Quotes (ET) | Last | Chg | %chg | Updated |
| US Stock Futures | ||||
| S&P (Globex) (Z0) | 1204.00 | -7.10 | -0.59% | 07:11:39 |
| DJIA (CBOT) (Z0) | 11191 | -51 | -0.45% | 07:11:21 |
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| European Stocks | ||||
| Europe DJ Stoxx 50 | 2579.94 | -16.58 | -0.64% | 07:07:45 |
| London UK FTSE Index | 5808.37 | -6.86 | -0.12% | 07:07:49 |
| German Dax Index | 6717.00 | -6.41 | -0.10% | 07:07:50 |
| French CAC 40 Index | 3833.55 | -33.80 | -0.87% | 07:07:45 |
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| Asian-Pacific Stocks | ||||
| Japan Nikkei Index | 9725 | -137 | -1.39% | 01:28:01 |
| Hong Kong Hang Seng | 24223 | -478 | -1.93% | 03:01:15 |
| China CSI 300 Index | 3292 | -218 | -6.21% | 02:01:30 |
| Taiwan TAIEX Index | 8316 | -121 | -1.43% | 00:46:01 |
| Australian S&P 200 | 4692.7 | -35.9 | -0.76% | 00:40:39 |
| Singapore Str. Times | 3252 | -41.39 | -1.26% | 04:10:01 |
| South Korea KOSPI 200 | 248.35 | 0.84 | 0.34% | 04:03:28 |
| Bombay Sensex 30 | 20157 | -432.2 | -2.10% | 05:29:57 |
| Karachi KSE-100 | 10874 | -31 | -0.29% | 06:42:06 |
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| US Interest Rates | ||||
| 10yr T-notes (CBT)(Z0) | 126.210 | 0.055 | 0.14% | 07:12:50 |
| Cash 10yr T-note Price | 99.225 | -0.040 | -0.13% | 07:21:30 |
| Cash 10yr T-note Yield | 2.659 | 0.014 | 0.54% | 07:21 |
| 5yr T-note (CBT)(Z0) | 121.090 | 0.080 | 0.21% | 07:12:47 |
| Cash 5yr T-note Price | 100.025 | -0.040 | -0.12% | 07:21:00 |
| Cash 5yr T-note Yield | 1.234 | 0.026 | 2.16% | 07:20 |
| 30-yr T-bond (CBT)(Z0) | 128.28 | 0.05 | 0.12% | 07:12:35 |
| Cash 30yr T-bond Price | 100.120 | 1.210 | 1.68% | 07:21:30 |
| Cash 30yr T-bond Yield | 4.228 | -0.099 | -2.28% | 07:21 |
| Eurodollars (CME)(Z0) | 99.665 | 0.020 | 0.02% | 07:12:46 |
| Eurodollars (CME)(H1) | 99.555 | 0.040 | 0.04% | 07:12:41 |
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| Asian & European Rates | ||||
| 10-yr JGBs (TSE) (Z0) | 142.59 | 0.17 | 0.12% | 01:00:00 |
| EuroyenTibor(SGX)(Z0) | 99.660 | 0.000 | 0.00% | 11/12/2010 |
| Bunds (Eurex) (Z0) | 129.65 | -0.53 | -0.41% | 07:07:50 |
| Euribor (Eurex) (Z0) | 98.88 | 0.00 | 0.00% | 03:58:26 |
| UK Gilts (Liffe) (Z0) | 122.64 | -0.14 | -0.11% | 07:07:50 |
| Short Stlg (Liffe) Z0) | 99.21 | 0.00 | 0.00% | 07:07:44 |
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| Forex | ||||
| U.S. Dollar Index | 78.06 | -0.15 | -0.20% | 07:12:44 |
| US Dollar-Japanese Yen | 82.12 | -0.36 | -0.44% | 07:22:50 |
| EuroFX-US Dollar | 1.3714 | 0.0046 | 0.46% | 07:22:50 |
| US Dollar-Swiss Franc | 0.9743 | -0.0009 | -0.09% | 07:22:50 |
| British Pound-US$ | 1.6088 | -0.0035 | -0.35% | 07:22:51 |
| US$-Canadian Dlr | 1.0087 | 0.0055 | 0.55% | 07:22:50 |
| Yen (Globex) (Z0) | 1.2171 | 0.0043 | 0.43% | 07:12:32 |
| Euro FX (Globex) (Z0) | 1.3693 | 0.0044 | 0.32% | 07:12:50 |
| SwissFranc (Globex)(Z0) | 1.0257 | 0.002 | 0.20% | 07:12:42 |
| British Pound(Glbx)(Z0) | 1.6058 | -0.0046 | -0.29% | 07:12:34 |
| Canadian$ (Globex)(Z0) | 0.9908 | -0.0018 | -0.18% | 07:12:45 |
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| Commodities | ||||
| Gold (Comex) (Z0) | 1386.4 | -16.9 | -1.20% | 07:12:50 |
| Silver (Comex) (Z0) | 26.875 | -0.530 | -1.93% | 07:12:42 |
| Copper (Comex) (Z0) | 393.6 | -8.7 | -2.15% | 07:12:42 |
| Crude Oil (Nymex) (Z0) | 86.05 | -1.76 | -2.00% | 07:12:50 |
| Gasoline (Nymex) (Z0) | 220.45 | -3.12 | -1.40% | 07:10:56 |
| Heating Oil(Nymex) (Z0) | 239.4 | -3.26 | -1.34% | 07:12:34 |
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