Daily Market Brief 4-13-12

Fri, 13 Apr 2012 07:00:00 -0500

Overnight Developments

• Global stock and commodity prices are trading mostly lower with June E-mini S&Ps down -3.00 points and the Euro Stoxx 50 down -0.47%.  The main bearish factor for stocks and commodities this morning was weaker-than-expected Q1 China economic growth.  U.S. stock futures pared overnight losses after JPMorgan reported Q1 EPS of $1.31, stronger than expectations of $1.17.  The euro weakened against the dollar while the yield on Spain’s 10-year bond climbed 10 bp to 5.90%, near the 6% level that prompted Greece, Ireland and Portugal to seek bailouts, after average net borrowings by Spanish banks climbed to 227.8 billion euros in March, up +49% from Feb.  This fuels concern that the so-called Long Term Refinancing Operations (LTRO) aren’t working and the ECB may need to restart its government bond purchase program as the European sovereign-debt crisis intensifies.  European bank stocks are lower on concern the effect of the LTRO program is waning and that banks are left holding assets that investors are wary of.  On the positive side, IMF Managing Director Lagarde said she will scale down her request for $600 billion of additional resources as threats to the global economy diminish.  Also, stocks were supported and Treasuries rose after Fed Governor Raskin said late yesterday that she sees signs the U.S. economic recovery may be strengthening while still having a “long way to go.”
• Asian stocks today closed mostly higher with Japan up +1.19%, China +0.39%, Australia +1.00%, South Korea +1.10%, India -1.37%.  Asian stocks finished higher after a North Korean rocket launch failed minutes after takeoff and as Chinese bank lending surged.  Chinese stocks gained despite the weaker-than-expected Q1 China GDP of +8.1% y/y, slower than expectations of +8.4% y/y and the weakest pace of growth in nearly 3 years.  Mar China new loans rose 1.010 trillion yuan ($160.1 billion), stronger than expectations of 797.5 billion yuan and their biggest increase in a year.  China’s foreign-exchange reserves, the world’s largest, rose to a record $3.31 trillion as of Mar 31, while Mar China industrial production climbed +11.9% y/y, stronger than expectations of +11.5% y/y.  South Korea’s Kospi Stock Index closed over 1% higher after a North Korean rocket failed after liftoff and crashed into the ocean.

Overnight U.S. Stock News

• June E-mini S&Ps this morning are trading down -3.00 points on the weaker-than-expected Q1 GDP.  Stock futures pared their losses however, after JPMorgan posted stronger-than-expected Q1 earnings of $1.31 per share versus market expectations of $1.17.The U.S. stock market on Wednesday rallied fairly sharply with the E-mini S&P and Dow posting new 1-week highs:  Dow Jones +1.41%, S&P 500 +1.38%, Nasdaq Composite +1.30%.  Bullish factors included dovish comments from the Fed’s Dudley and Yellen as well as the Bank of Japan chief.  New York Fed President Dudley on Thursday said that while the U.S. recovery may be getting more established, “it is too soon to conclude that we are out of the woods, as underlined by the March labor-market release.”  Fed Vice Chairman Janet Yellen on Wednesday evening said that the outlook warrants the current “highly accommodative policy.”  Bank of Japan Governor Shirakawa said on Thursday that the BOJ will pursue “powerful easing” to overcome deflation and put the economy on a sustainable growth path.  The U.S. stock market was also supported by yesterday’s further decline in 10-year bond yields for Italy (-13 bp to 5.39%) and Spain (-5 bp to 5.80%).  The main bearish factor yesterday was the 13,000 rise in U.S. initial unemployment claims to which showed a weaker labor market than expectations for a 2,000 decline.  In a positive sign, however, continuing claims fell sharply by 98,000 to a new 3-3/4 year low.

Today’s Market Focus

• June 10-year T-notes this morning are trading up +8 ticks on dovish comments from Fed Governor Raskin and the weaker-than-expected Q1 China GDP.  T-note prices on Thursday closed mildly lower:  TYM2 -6.0, FVM2 -1.  The main bearish factor was a continued decline in safe-haven demand with the sharp rally in stocks and the continued decline in Spanish and Italian bond yields.  Yesterday’s March PPI report of +2.8% y/y was weaker than market expectations of +3.1%, but the core PPI of +2.9% was slightly higher than expectations of +2.8%.  In any case, both were down from February, which was positive for the inflation outlook and for T-note prices.
• The dollar index this morning is trading higher with USD/JPY up +0.11 yen and EUR/USD down -0.26 cents.  The dollar index on Thursday fell fairly sharply:  Dollar Index -0.510, USD/JPY +0.02, EUR/USD +0.0078.  Bearish factors centered on reduced safe-haven demand with the rally in stocks and the continued decline in Spanish and Italian bond yields.  In addition, the dovish comments by the Fed’s Dudley and Yellen was negative for the dollar’s interest rate differentials.
• May crude oil prices this morning are trading down -22 cents a barrel and May gasoline is up +0.08 of a cent per gallon.  Crude oil prices on Thursday rallied sharply for the second straight session:  CLM12 +0.92, RBM2 +0.0541.  Bullish factors centered on the rally in stocks and the dovish comments by Dudley/Yellen.  In addition, there was some short-covering ahead of the Friday-Saturday talks with Iran in the event that the talks go poorly and speculation then heats up about military action.  Iran can be expected to drag out the talks as long as possible to avoid military action by Israel and/or the U.S.  However, if the talks break down quickly, then the markets will become worried about near-term military action against Iran that would roil the Persian Gulf.  The crude oil markets yesterday largely ignored OPEC monthly report saying that the oil markets are well supplied and that oil prices are only higher because of geopolitical concerns and a perception of oil tightness.

Today’s U.S. Earnings Reports

Earnings reports (sorted by mkt cap): WFC-Wells Fargo (consensus $0.73), JPM-JPMorgan Chase (1.17).

Global Financial Calendar

Friday 4/13/12
United States
0830 ET	Mar CPI expected +0.3% m/m and +2.7% y/y, Feb +0.4% m/m and +2.9% y/y.  Mar CPI ex food & energy expected +0.2% m/m and +2.2% y/y, Feb +0.1% m/m and +2.2% y/y.
0955 ET	Preliminary Apr U.S. University of Michigan consumer confidence expected unchanged at 76.2, Mar +0.9 to 76.2.
n/a	S&P 500 earnings:  JPM-JP Morgan ($1.15), WFC-Wells Fargo ($0.72).
Germany
0200 ET	Revised Mar German CPI (EU harmonized) expected no change at +0.4% m/m and +2.3% y/y.
Euro-Zone
0255 ET	ECB Executive Board member Joerg Asmussen speaks on “The Challenge of De-Leveraging and Overhangs of Debt I: Inflation and Austerity” at a conference in Berlin.
United Kingdom
0430 ET	Mar U.K. PPI input prices expected +1.4% m/m and +4.8% y/y, Feb +2.1% m/m and +7.3% y/y.
0430 ET	Mar U.K. PPI output prices expected +0.5% m/m and +3.5% y/y, Feb +0.6% m/m and +4.1% y/y.
0430 ET	Mar U.K. PPI output core prices expected +0.2% m/m and +2.6% y/y, Feb +0.5% m/m and +3.0% y/y.

Daily Market Report 4-12-12

Thu, 12 Apr 2012 07:00:00 -0500

Overnight Developments

• Global stock and commodity prices are trading generally higher today.  June E-mini S&Ps are up 6.00 points (+0.44%), although the Euro Stoxx 50 is mildly lower by -0.19%.  Bullish factors include supportive comments by Fed and BOJ officials.  Federal Reserve Vice Chairman Janet Yellen Wednesday evening said that the outlook warrants the current “highly accommodative policy.”  She said that housing and the European debt crisis are among the “significant headwinds” that are holding back the U.S. economy.  Meanwhile, Bank of Japan Governor Shirakawa said that the BOJ will pursue “powerful easing” to overcome deflation and put the economy on a sustainable growth path.  There was some positive news in Europe today.  Eurozone Feb industrial production unexpectedly rose by +0.5% m/m, which was stronger than market expectations of -0.2%.  European industrial production was down -1.8% y/y.  Italy today sold 4.88 billion euros of bonds, which was close to its maximum target of 5 billion euros and was considered a success.  Royal Dutch Shell is down 3.8% today after the company found a “light Sheen” of oil between its Mars and Ursa production areas in the Gulf of Mexico and deployed an oil spill vessel.
• Asian stocks today closed higher almost across the board:  Japan +0.70%, Hong Kong +0.93%, China +2.00%, Taiwan +0.08%, Australia +0.81%, Singapore +1.08%, and India +0.77%.  The South Korean stock market today closed -0.54% lower as the market waits for North Korea to launch its long-range rocket and possibly conduct a nuclear test as well.

Overnight U.S. Stock News

• June E-mini S&Ps this morning are trading +6.00 points on support from the Yellen comments and the positive Eurozone industrial production data.  The U.S. stock market on Wednesday showed a moderate recovery rally:  Dow Jones +0.70%, S&P 500 +0.74%, Nasdaq Composite +0.84%.  Bullish factors included (1) some relief on the European debt crisis as ECB Executive Board member Benoit Coeure said the ECB could revive its bond purchase program, which caused the 10-year bond yield to drop by 11 bp to 5.85% for Spain and by 16 bp to 5.52% for Italy, (2) news late Tuesday that Alcoa produced a profit of 9 cents versus the consensus for a 5-cent loss, (3) some positive economic news out of Japan (Feb machinery orders +4.8% versus the consensus of -0.8%) and China (March passenger-car sales rose +4.5%, which was stronger than the market consensus of +3.9%.), and (4) the Fed’s Beige Book report that said that the U.S. economy grew at a “modest to moderate” pace in March.  Bearish factors include (1) continued worries about whether U.S. economic growth is slowing based on last Friday’s March payroll report of +120,000, (2) nervousness about North Korea’s launch of a long-range rocket which could occur as early as today, and (3) nervousness about China’s Q1 GDP report (released Thursday evening at 10 PM ET), which is expected to ease to +8.4% from +8.9% in Q4.

Today’s Market Focus

• June 10-year T-notes this morning are trading -1.5 ticks due to the higher trade in E-mini S&Ps.  T-note prices on Wednesday closed mildly lower:  TYM2 -8.5, FVM2 -3.25.  T-notes fell back on Wednesday on reduced safe-haven demand with the upward rebound in stocks and with the decline in Spanish and Italian bond yields due to the ECB’s implicit threat to start buying Spanish bonds again.
• The dollar index this morning is trading down -0.229 points.  USD/JPY is up -0.10 yen and EUR/USD is up 0.0028.  The dollar is trading lower this morning on the higher trade in E-mini S&Ps and the successful Italian bond auction.  The dollar index on Wednesday closed slightly lower:  Dollar Index -0.096, USD/JPY +0.186, EUR/USD -0.00227.  The dollar fell back on reduced safe-haven demand with the rebound in stocks and the ability of the ECB to cap the recent surge in Spanish and Italian bond yields with the comments from ECB Executive Board member Benoit Coeure.
• May crude oil prices this morning are trading +0.48 cents a barrel and May gasoline is +0.03 cents per gallon.  Energy prices continue to rally on short-covering and the improvement in stock prices.  OPEC in its monthly report said today that, “The oil market is well-supplied.  High prices cannot be justified by the current market fundamentals.  Instead it is more them impact of geopolitical factors and a perceived shortage of oil, rather than the evidence of any actual or impending shortfall, that is keeping prices high.”  OPEC forecasts increasing production from non-OPEC members such as Russia and Canada.  Crude oil prices on Wednesday rebounded moderately higher after the recent losses:  CLK12 +1.68, RBK2 +0.0459.  Bullish factors on Wednesday included (1) the upward rebound in stocks, (2) the Fed’s Beige Book report saying that U.S. economic growth in March was “modest to moderate,” and (3) doubts whether any progress will be made in the talks with Iran on Saturday about its nuclear program.  Yesterday’s weekly DOE report was bearish for crude oil but bullish for products.  Crude oil inventories rose by another 2.8 million bbls, bringing the combined 3-week surge to 19 million bbl or 7.4%.  Crude oil inventories are now 5.6% above their 5-year seasonal average, the highest since last September.  Meanwhile, gasoline inventories fell by 4.3 million bbl for the fifth consecutive weekly decline.  Gasoline inventories are now only 1.8% above their 5-year seasonal average.  Distillate inventories fell by 4.0 million bbl and are now 0.5% below their 5-year seasonal average.

Today’s U.S. Earnings Reports

Earnings reports (sorted by mkt cap): GOOG-Google (consensus $9.63), FAST-Fastenal (0.34), JBHT-JB Hunt (0.52), CBSH-Commerce Bankshares (0.67), RAD-Rite Aid (-0.14).

Global Financial Calendar

Thursday 4/12/12
United States
0715 ET	New York Fed President William Dudley speaks on regional and national economic conditions before the Center for Economic Development in Syracuse, NY.
0830 ET	Weekly initial unemployment claims expected -2,000 to 355,000, previous -6,000 to 357,000.  Weekly continuing claims expected -3,000 to 3.335 million, previous -16,000 to 3.338 million.
0830 ET	Feb trade balance expected -$51.8 billion, Jan -$52.6 billion.
0830 ET	Mar PPI expected +0.3% m/m and +3.1% y/y, Feb +0.4% m/m and +3.3% y/y.  Mar PPI ex food & energy expected +0.2% m/m and +2.8% y/y, Feb +0.2% m/m and +3.0% y/y.
0830 ET	USDA weekly export sales.
1030 ET	DOE natural gas storage
1100 ET	Treasury announces amount of 5-year TIPS (previous $12 billion) to be auctioned on Apr 19.
1300 ET	Treasury auctions $13 billion 30-year T-bonds.
1230 ET	Philadelphia Fed President Charles Plosser speaks on the economic outlook to the National Economists Club.
1300 ET	Minneapolis Fed President Narayana Kocherlakota speaks to the White Bear Lake Area Chamber of Commerce.
1530 ET	Fed Governor Sarah Bloom Raskin speaks on “The State of he Economy” at the San Francisco Fed business and community leaders  luncheon in Los Angeles.
1630 ET	Weekly money supply report and Fed balance sheet.
n/a	S&P 500 earnings:  GOOG-Google ($9.64), FAST-Fastenal ($0.34).
France
0130 ET	Mar French CPI (EU harmonized) expected +0.7% m/m and +2.3% y/y, Feb +0.5% m/m and +2.5% y/y.
Euro-Zone
0400 ET	ECB publishes its monthly report for April.
0500 ET	Feb Euro-Zone industrial production expected -0.3% m/m and -1.8% y/y, Jan +0.2% m/m and -1.5% y/y.
0700 ET	ECB Executive Board member Joerg Asmussen speaks in Dublin at the Institute of International and European Affairs.
0900 ET	ECB Executive Board member Peter Praet speaks at the Minsky Conference in New York.
Canada
0830 ET	Feb Canada new housing price index expected +0.2% m/m, Jan +0.1% m/m and +2.4% y/y.
CHI
2200 ET	Mar China industrial production expected +11.5% y/y, Feb +21.3% y/y.
2200 ET	Q1 China GDP expected +1.9% q/q and +8.4% y/y, Q4 +2.0% q/q and +8.9% y/y.
2200 ET	Mar China retail sales expected +15.0% y/y, Feb +18.1% y/y.

Daily Market Brief 4-11-12

Wed, 11 Apr 2012 07:00:00 -0500

Overnight Developments

• European stock and commodity prices this morning are generally trading higher on a rebound after several days of sharp losses.  June E-mini S&Ps are trading up 10.40 points and the Euro Stoxx 50 is up 0.62%.  Bullish factors include Alcoa’s surprise profit reported after yesterday’s close, positive economic reports from China and Japan, and an ECB hint that it might start buying Spanish debt.   Alcoa is up 6% in European trading on its report of a 9-cent profit versus the consensus for a 5-cent loss.On the negative side, Tsunami alerts were issued today after a large 8.6-magnitude earthquake hit 268 miles off the coast of Indonesia’s Aceh province.  Tremors were felt as far away as Singapore and India.  Indonesia’s Jakarta Composite index fell by about 0.5% on the close and Thailand’s SET Index fell 1%.  There were no initial reports of any major damage.
• The euro rallied about one-quarter cent this morning when ECB Executive Board member Benoit Coeure said that the ECB has the capacity to start buying Spanish bonds through its bond purchase program.  The ECB has not purchased any bonds through that program for the past month.  The 10-year Spanish bond yield fell by 14 bp this morning to 5.84% and the Italian yield is down by 19 bp at 5.49%.  Germany today received bids for 4.11 billion euros of 10-year bonds at the auction, which was less than its target of 5 billion euros.  The bonds were sold at a record low yield of 1.77%.  Italy was able to sell 8 billion euros of 1-year bills today, which was its target.  The Italian bill auction produced an average yield of 2.84%, which was far higher than 1.405% at the previous 1-year bill auction that was held just a month ago.
• Asian stocks today closed mostly lower on carry-over weakness from Tuesday’s sharp sell-off in U.S. stocks:  Japan -0.83%, Hong Kong -1.06%, China +0.01%, Taiwan +0.21%, Australia -1.07%, Singapore -1.21%, India -0.26%.  China’s March passenger-car sales rose +4.5%, which was stronger than the market consensus of +3.9%.  The rebound was a positive sign after weak auto sales in January and February caused concern about weaker Chinese consumer spending.  Japan’s Feb machinery orders rose +4.8%, which was stronger than the market consensus of -0.8%.

Overnight U.S. Stock News

• June S&Ps this morning are trading 10.40 points higher on Alcoa’s profit, the decline in Spanish and Italian bond yields, and positive economic reports from China and Japan.  The U.S. stock market on Tuesday sold-off sharply:  Dow Jones -1.65%, S&P 500 -1.71%, Nasdaq Composite -1.83%.  Bearish factors included (1) technical long liquidation pressure after this year’s Q1 rally, (2) continued downward pressure from last Friday’s weak U.S. March payroll report of +120,000, (3) Tuesday’s continued climb in Spanish and Italian bond yields, and (4) reports that North Korea is near completion on getting its long-range rocket ready to launch as early as Thursday.

Today’s Market Focus

• June 10-year T-notes this morning are trading -8 ticks on reduced safe-haven demand with the upward rebound in S&Ps and this morning’s decline in Spanish and Italian bond yields.  T-note prices on Tuesday closed moderately higher:  TYM2 +14, FVM2 +7.5, EDU2 +0.5.  T-note prices extended the rally that began last Friday after the weaker-than-expected March payroll report of +120,000.  T-note prices received a continued boost on Tuesday from safe-haven demand with the continued sell-off in stocks and with concern continuing to rise about Spain and the European debt crisis.
• The dollar index this morning is trading -0.32 points, USD/JPY is +0.20 yen and EUR/USD is -0.0060.  The dollar is seeing some reduced safe-haven demand with the upward rebound in stocks and lower Spanish/Italian bond yields.  The dollar index on Tuesday closed slightly higher:  Dollar Index +0.138, USD/JPY -0.754, EUR/USD -0.00293.  The dollar index saw a little strength yesterday from safe-haven demand with the sharp sell-off in stocks.  However, the dollar sold off sharply against the yen due to post a new 1-month low.  Bearish factors for USD/JPY included techical selling and yen strength after the Bank of Japan at its policy meeting that ended on Tuesday left policy unchanged and did not boost its asset purchase program.
• May crude oil prices this morning are trading +0.56 cents a barrel and May gasoline is -0.14 cents per gallon.  Crude oil prices this morning are seeing some carry-over strength from higher U.S. and European stocks, but the market is cautious going into today’s weekly DOE inventory report.  Crude oil prices on TUesday sold-off fairly with May crude oil edging to a new 2-month low and May gasoline edging to a new 5-week low: CLK12 -$1.17, RBK2 -0.0469.  Bearish factors for crude oil on Tuesday included (1) the downshift in the economic outlook after last Friday’s weak U.S. payroll report, (2) weakness in stocks, which helped cause general weakness in commodity prices, (3) the slightly higher close in the dollar index, and (4) expectations for a bearish DOE report today with an expected 2 million barrel increase in crude oil inventories to a new 22-year high.

Today’s U.S. Earnings Reports

Earnings reports (sorted by mkt cap): ADTN-Adtran (consensus $0.27), Titan Machinery ($0.53).

Global Financial Calendar

Wednesday 4/11/12
United States
0700 ET	Weekly MBA mortgage applications, previous +4.8% with purchase mortgage sub-index +7.2% and refinancing sub-index +4.0%.
0730 ET	Atlanta Fed President Dennis Lockhart will discuss the economy with reporters attending the Atlanta Fed’s financial market conference in Stone Mountain, GA.
0830 ET	Mar import price index expected +0.9% m/m and +3.5% y/y, Feb +0.4% m/m and +5.5% y/y.
0930 ET	Kansas City Fed President Esther George speaks at the Minsky Conference entitled “Debt, Deficits and Financial Instability.”
1030 ET	Boston Fed President Eric Rosengren speaks on a panel at the Atlanta Fed conference on “Money Market Funds: Past Devils?  Reformed into Future Angels?”
1030 ET	DOE Weekly Petroleum Status Report
1300 ET	Treasury auctions $21 billion 10-year T-notes.
1400 ET	Fed’s Beige Book.
1400 ET	Mar monthly budget statement expected -$203.0 billion, Feb -$231.683 billion.
1700 ET	St. Louis Fed President James Bullard delivers opening remarks at the Homer Jones Memorial Lecture at the St. Louis Fed.
1730 ET	Fed Vice Chairman Janet Yellen speaks to the Money Marketeers of NYU on “The Economic Outlook and Monetary Policy.”
Canada
0815 ET	Mar Canada housing starts expected +202,000, Feb +201,100.
Japan
1950 ET	Mar Japan domestic CGPI expected +0.4% m/m and +0.4% y/y, Feb +0.2% m/m and +0.6% y/y.

Daily Market Report 4-10-12

Tue, 10 Apr 2012 07:00:00 -0500

Overnight Developments

• Global stocks this morning are trading mixed.  June E-mini S&Ps are trading slightly lower by -2.00 points.  However, the Euro Stoxx 50 is down 0.89% as the European markets reopen after holidays on Friday and Monday and get their first chance to react to last Friday’s weak U.S. March payroll report of +120,000.  Stocks are lower as Spanish 10-year bond yields today rose by another 10 bp to 5.86% as the market worries about Spain’s fiscal and economic situation.  The 10-year Italian yield today rose by 6 bp to 5.50%.  Spanish Prime Minister Rajoy met with his health and education ministers on Monday to discuss another 10 billion euros of spending cuts.  Spain needs to pass its budget for this year that brings the deficit down to 5.3% of GDP from  about 8% last year and then Spain needs to meet its promise to cut its budget deficit to 3% for next year.   In some good news for Europe, Germany’s trade report today showed that imports rose by 3.9% and that exports rose by 1.6%, which were both stronger than expectations of +1.3% and -1.2%, respectively.  Germany’s trade surplus was 14.7 billion euros, wider than expectations of 12.0 billion.  The French March business sentiment index from the Bank of France was unchanged at 95, which was 1 point weaker than market expectations of 96.  French Feb industrial production was reported at +0.3% m/m, which was in line with market expectations, although the year-on-year figure of -1.9% was weaker than market expectations of -1.2%.
• Asian stocks today closed mixed:  Japan -0.09%, Hong Kong -1.15% (after Monday’s holiday), China +0.99%, Taiwan +0.52%, Australia -0.64%, Singapore +0.75%, South Korea -0.19%, India +0.13%.  Asian stock markets that were open on Monday and already reacted to last Friday’s weak U.S. payroll report generally closed higher today, except for South Korea’s stock market, which closed lower by -0.19% as the market worries about North Korea’s move to launch a rocket later this week and possibly test a nuclear weapon as well.  The Bank of Japan at its meeting today left its policy unchanged, which was in line with market expectations.  China’s March trade report showed that imports rose +5.3%, which was a smaller increase than expectations of +9% and suggested weak domestic demand.

Overnight U.S. Stock News

• June S&Ps this morning are trading ….The U.S. stock market on Monday sold off fairly sharply due to last Friday’s weaker-than-expected March payroll report of +120,000 (versus expectations of +205,00):  Dow Jones -1.00%, S&P 500 -1.14%, Nasdaq Composite -1.08%.  The European stock markets were closed on Monday for Easter Monday, which lightened U.S. trading volume.  Other bearish factors on Monday included (1) carry-over concerns about last week’s flare-up in the European debt crisis, (2) South Korea’s assertion that North Korea may soon test a nuclear weapon in addition to its intended launch of a rocket between this Thursday and next Monday, and (3) China’s report that its March CPI rose +3.6% y/y, which was up from +3.2% in Feb and was stronger than expectations of +3.4% and reduced the flexibility of China’s central bank to ease monetary policy to combat the slower economy.  A bullish factor was Iran’s final agreement to talks starting Saturday, which helped bring down crude oil prices.

Today’s Market Focus

• June 10-year T-notes this morning are trading -2 ticks on some long liquidation pressure after the sharp 2-session rally.  T-note prices on Monday extended last Friday’s rally on the payroll report and closed higher:  TYM2 +3, FVM2 -0.25, EDU2 +0.005.  T-note prices on Monday were also boosted by safe-haven demand with weaker global stocks and news that North Korea may soon test a nuclear weapon in addition to launching a long-range rocket.
• The dollar index this morning is trading _0.119 points.  USD/JPY is up 0.51 yen and EUR/USD is unchanged.  The Swiss franc is little changed this morning after it strengthened on Monday through the Swiss central bank’s cap, which was only the second time the cap has been breached since it was imposed on September 6, 2011.  The Swiss National Bank said today that it engaged in some “isolation” intervention to enforce the cap.  The dollar index on Monday closed mildly lower in continued reaction to last Friday’s weak U.S. payroll report: Dollar Index -0.153, USD/JPY -0.03, EUR/USD +0.0022.  The payroll report undercut U.S. interest differentials and encouraged market speculation that QE3 may be back on the table.  The European markets were closed on Monday for Easter Monday, which substantially undercut trading volume in the FX market.
• May crude oil prices this morning are trading down 0.41 cents a barrel and May gasoline is down 0.98 cents per gallon.  Crude oil prices are lower today at the market looks forward to Wednesday’s weekly DOE report, which is expected to add another 2 million barrels to the surge to crude oil inventories seen in the past two weeks and reach a 22-year high.  Crude oil prices on Monday fell moderately due to last Friday’s weak U.S. March payroll report: CLK12 -$0.85, RBK2 -$0.0438.  Crude oil prices were also pressured yesterday by Iran’s final agreement to nuclear talks starting Saturday in Istanbul.  Iran had been waffling on the location and timing of the talks, which made it appear that Iran is not serious about any compromise and is simply stalling for time.  Israel’s defense minister called on Iran to stop enriching uranium up to 20%, give up any uranium material already enriched to 20%, and close the Fordo underground enrichment facility near Qom.  While talks are ongoing with Iran, Israel has little choice but to stand aside and wait for the outcome before it can reasonably launch a military attack.

Today’s U.S. Earnings Reports

Earnings reports (sorted by mkt cap): none.

Global Financial Calendar

Tuesday 4/10/12
United States
0745 ET	ICSC (Int’l Council of Shopping Centers) weekly retailer sales.
0830 ET	Monthly USDA crop production and WASDE reports.  2011-12 U.S. ending stocks expected 717 million bushels for corn (last USDA estimate was 801 million), 246 million bushels for soybeans (last 275 million), 796 million bushels for wheat (last 865 million).
0855 ET	Redbook weekly retailer sales.
1000 ET	Apr IBD/TIPP economic optimism, Mar -1.9 to 47.5.
1000 ET	Feb wholesale inventories expected +0.5%, Jan +0.4%.
1130 ET	Weekly 4-week T-bill auction.
1230 ET	Dallas Fed President Richard Fisher speaks at the University of Oklahoma on the economy and the Dallas Fed’s views on too-big-to-fail banks.
1245 ET	Atlanta Fed President Dennis Lockhart delivers opening remarks at the Atlanta Fed conference on “Financial Reform: The Devil’s in the Details.”
1300 ET	Treasury auctions $32 billion 3-year T-notes.
1430 ET	Minneapolis Fed President Kocherlakota speaks at an event in Nicollet, MN.
1630 ET	API weekly U.S. oil statistics.
n/a	S&P 500 Earnings:  AA-Alcoa (consensus -$0.05), SVU-Supervalu ($0.35).
Germany
0200 ET	Feb German trade balance expected +12.0 billion euros, Jan +13.1 billion euros.  Feb exports expected -1.2%, Jan +2.4%.  Feb imports expected +1.3%, Jan +2.4%.
Japan
0200 ET	Mar Japan machine tool orders, Feb -8.6% y/y.
1950 ET	Feb Japan machine orders expected -0.8% m/m and +3.0% y/y, Jan +3.4% m/m and +5.7% y/y.
n/a	BOJ announces interest rate decision (expected no change to the 0.00% to 0.10% benchmark rate).
France
0230 ET	Mar Bank of France business sentiment expected +1 to 96. Feb -1 to 95.
0245 ET	Feb France industrial production expected +0.3% m/m and -1.4% y/y, Jan +0.3% m/m and -1.5% y/y.
0245 ET	Feb France manufacturing production expected unchanged m/m and -1.7% y/y, Jan +0.2% m/m and -1.2% y/y.
Euro-Zone
0430 ET	Apr Euro-Zone Sentix investor confidence expected -0.9 to -9.1, Mar +3.3 to -8.2.
1130 ET	ECB Council member Ewald Nowotny speaks on a panel at the Agenda Austria 2020 conference in Vienna.
United Kingdom
0430 ET	Feb U.K. DCLG house prices, Jan +0.2% y/y.
CHI
n/a	Mar China trade balance expected -$3.15 billion, Feb -$31.48 billion.  Mar exports expected +7.0% y/y, Feb +18.4% y/y.  Mar imports expected +9.0% y/y, Feb +39.6% y/y.

Daily Market Report 4-5-12

Thu, 5 Apr 2012 07:00:00 -0500

Overnight Developments

• Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.55% at a 2-1/2 month low and Jun S&Ps down -5.50 points at a 1-1/2 week low.  Treasuries rose and the dollar index climbed to a 2-1/2 week high as stocks added to this week’s losses on concern European authorities will struggle to keep the region’s debt crisis from spreading.  The euro slipped to a 2-1/2 week low against the dollar and 5-year German bund yields fell to a record low 0.719% after the yield spread between Spanish and German 10-year maturities reached 400 bp for the first time since Dec 12, while the extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds widened to 126 bp, the most in 2-months.  The yields on French bonds rose despite decent demand for its auction of 8.44 billion euros of debt, close to the maximum target.  France sold 4.32 billion euros of 10-year debt at a yield of 2.98%, higher than a similar auction last month of 2.91%, although the bid-to-cover ratio was 2.65, higher than last month’s 2.47, a sign of strong demand.  Another negative for stocks and the euro was Feb German industrial production which fell -1.3% m/m and -1.0% y/y, weaker than expectations of -0.5% m/m and +0.3% y/y.  As expected, the BOE held its benchmark interest rate at 0.50% and kept the asset purchase target at 325 billion pounds
• Asian stocks today closed mixed with Japan down -0.53%, China +2.36%, Australia -0.32%, South Korea +0.61%, India closed for holiday.  Most Asian stock markets were under pressure on concern Europe won’t be able to contain its debt crisis.  Japan’s Nikkei 225 Stock Index tumbled to a 4-week low after companies that do business in Europe slid while exporters as a whole weakened as the yen rose against the dollar.  Japanese stocks pared a loss and closed well above their lows after a rejection of a BOJ nominee came as a victory for lawmakers pressing for more monetary easing.  China’s Shanghai Stock Index closed higher after the government said it will more than double the amount foreigners can invest in Chinese assets, but gains were limited as the country’s big banks fell after Prime Minister Wen Jiabao pledged to break the “monopoly” enjoyed by the largest lenders who are able to make easy profits because it’s hard to borrow money elsewhere.  South Korea’s Kospi Index finished higher after Q1 South Korea foreign direct investment rose +17% y/y, the most in 3 quarters.

Overnight U.S. Stock News

• June S&Ps this morning are trading down -5.50 points.  The U.S. stock market Wednesday settled sharply lower on an increase in European sovereign-debt concerns after weak demand was seen at a Spanish debt auction and after the Mar ISM non-manufacturing index fell more than expected: Dow Jones -0.95%, S&P 500 -1.02%, Nasdaq Composite -1.46%.  The Dow and the Nasdaq fell to 1-week lows.  Bearish factors Wednesday included (1) carry-over weakness from a fall in European stocks on concern the region’s debt crisis may spread to Spain after credit-default swaps to insure its government debt jumped to a 4-month high as demand dropped at a Spanish bond auction and after Spanish Prime Minister Rajoy said Spain’s situation is one of “extreme difficulty,” (2) the larger-than-expected decline in the Mar ISM non-manufacturing index (-1.3 to 56.0 versus expectations of -0.5 to 56.8), and (3) weakness in energy producers after crude oil plunged to a 1-1/2 month low after weekly DOE crude supplies rose by the most since Aug 2008.
• Bullish factors Wednesday included (1) the larger-than-expected increase in the Mar ADP employment change along with the upward revision to Feb (Mar +209,000, stronger than expectations of 206,000, and Feb revised up to +230,000 from the originally reported +216,000) and (2) comments from Richmond Fed President Lacker who said “downside risks have diminished now relative to where they were 4 to 5 months ago,” and the U.S. economy should expand from 2% to 3% this year.

Today’s Market Focus

• June 10-year T-notes this morning are up +16.5 ticks.  T-note prices Wednesday rebounded from a 1-week low and settled higher early on increased safe-haven demand over concern the European debt crisis may worsen along with the weaker-than-expected Mar ISM non-manufacturing index: TYM2 +14.5, FVM2 +9.2, EDU2 -1.5.  Bullish factors Wednesday included (1) increased safe-haven demand for Treasuries on concern the European debt crisis may spread to Spain after credit-default swaps to insure its government debt jumped to a 4-month high as demand dropped at a Spanish bond auction and after Spanish Prime Minister Rajoy said Spain’s situation is one of “extreme difficulty,” (2) the larger-than-expected decline in the Mar ISM non-manufacturing index (-1.3 to 56.0 versus expectations of -0.5 to 56.8), and (3) the action by the Fed to purchase $1.866 billion of Treasuries as part of it Operation Twist program to replace $400 billion of short-term debt in its holdings with longer maturities in an attempt to keep borrowing costs down.  Bearish factors included (1) the larger-than-expected increase in the Mar ADP employment change along with the upward revision to Feb (Mar +209,000, stronger than expectations of 206,000, and Feb revised up to +230,000 from the originally reported +216,000) and (2) comments from Richmond Fed President Lacker who said U.S. economic growth will probably accelerate to about 3% next year, which will warrant an increase in interest rates.
• The dollar index this morning is stronger and at a 2-1/2 week high with the dollar/yen -0.53 yen and the euro/dollar -0.72 cents.  The dollar index Wednesday rallied to a 1-1/2 week high and settled higher as the euro fell when ECB President Draghi said the economic outlook remained subject to “downside risks” and after Spanish bond yields surged on weak demand for its government debt: Dollar Index +0.295, USD/JPY -0.356, EUR/USD -0.00910.  Bullish factors included (1) the fall in the euro to a 2-1/2 week low against the dollar after ECB President Draghi said the economic outlook remained subject to “downside risks as the remaining tensions in euro area sovereign debt markets are expected to dampen economic momentum,” (2) increased safe-haven demand for the dollar on concern over contagion of the European debt crisis to Spain after credit-default swaps to insure its government debt jumped to a 4-month high of 457 bp after it sold 2.59 billion euros of bonds at auction, less than the maximum target of 3.5 billion euros, and after Prime Minister Rajoy said Spain’s situation is one of “extreme difficulty,” and (3) the weaker than expected Feb German factory orders, which is euro negative.  Bearish factors included (1) the larger-than-expected decrease in the Mar ISM non-manufacturing index, which is dollar negative and (2) the unexpected upward revision to the Mar Euro-Zone PMI composite index, which is euro positive.
• May crude oil prices this morning are up +35 cents a barrel and May gasoline is -0.60 of a cent per gallon.  Crude oil and gasoline prices Wednesday sold-off and settled sharply lower as the dollar rallied and after weekly DOE crude supplies surged to a 9-1/2 month high and U.S. crude output rose to a 12-year high: CLK12 -$2.54, RBK -6.18.  May crude dropped to a 1-1/2 month low.  Bearish factors included (1) the rally in the dollar index to a 1-1/2 week high, which reduces investment demand in commodities, (2) the much larger-than-expected increase in weekly DOE crude inventories which rose by the most since Aug 2008 to their highest level in 9-1/2 months (+9.01 million bbl to 362.4 million bbl versus expectations of +2.2 million bbl), (3) the +3.9% increase in U.S. crude production for the week ended Mar 30 to 6.049 million barrels day, the highest in 12 years, (4) the unexpected increase in weekly DOE distillate stockpiles (+19,000 bbl versus expectations of -450,000), and (5) the larger-than-expected decline in the Mar ISM non-manufacturing index, which indicates reduced fuel demand.  Bullish factors included (1) the larger-than-expected increase in the Mar ADP employment change, which signals economic strength that is beneficial for fuel demand and (2) the unexpected upward revision to the Mar Euro-Zone PMI composite index, which indicates increased energy consumption.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): KMX-CarMax (BEST earnings consensus $0.40), STZ-Constellation Brands (0.38), RPM-RPM International (0.01), PIR-Pier 1 Imports (0.48), SCHN-Schnitzer Steel Industries (0.32), WDFC-WD-40 Co. (0.54), AZZ-AZZ Inc. (0.82).

Global Financial Calendar

Thursday 4/5/12
United States
0730 ET	Mar Challenger job cuts, Feb +2.0% y/y.
0830 ET	Weekly initial unemployment claims expected -4,000 to 355,000, previous -5,000 to 359,000.  Weekly continuing claims expected +10,000 to 3.350 million, previous -41,000 to 3.340 million..
0910 ET	St. Louis Fed President James Bullard speaks on the U.S. economy and monetary policy at an event in St. Louis.
1030 ET	Mar ICSC chain store sales, Feb +4.1% y/y.
1100 ET	Treasury announces amounts of 3-year T-notes (previous $32 billion), 10-year T-notes (previous $21 billion) and 30-year T-bonds (previous $13 billion) to be auctioned Apr 10-12.
1630 ET	Weekly money supply report and Fed balance sheet.
United Kingdom
0430 ET	Feb U.K. industrial production expected +0.4% m/m and -2.1% y/y, Jan -0.4% m/m and -3.8% y/y.
0430 ET	Feb U.K. manufacturing production expected +0.1% m/m and +0.1% y/y, Jan +0.1% m/m and +0.3% y/y.
0700 ET	BOE announces interest rate decision and asset purchase target (expected no change to the 0.50% benchmark rate and no change to the 325 billion asset purchase target).
Germany
0600 ET	Feb German industrial production expected -0.5% m/m and +0.3% y/y, Jan +1.6% m/m and +1.8% y/y.
Canada
0830 ET	Mar Canada net change in employment expected +10,000, Feb -2,800.  Mar unemployment rate expected unchanged at 7.4%, Feb -0.2 to 7.4%.
1000 ET	Mar Ivey purchasing managers index expected +0.5 to 67.0, Feb +2.4 to 66.5.

Daily Market Report 4-3-12

Tue, 3 Apr 2012 07:00:00

Overnight Developments

• Global stocks this morning are weaker with the Euro Stoxx 50 down -0.39% and Jun S&Ps down -1.90 points.  The dollar index fell to a 1-month low, Treasuries rose and commodities are mixed ahead of a report on Feb U.S. factory orders and the FOMC minutes from the Mar 13 policy meeting.  The euro rose against the dollar after Volker Kauder, a parliamentary leader of Chancellor Merkel’s Christian Democratic Party who met Monday with Spanish Prime Minister Rajoy said, “There is no necessity at the moment for there to be any talk of Spain having to apply for aid from a rescue fund.”  European stocks fell back on profit taking after Feb Euro-Zone PPI rose +0.6% m/m and +3.6% y/y, stronger than expectations of +0.5% m/m and +3.5% y/y.  Limiting declines in stocks was the unexpected +2.4 increase in Mar U.K. PMI construction to 56.7, stronger than expectations of -0.9 to 53.4 and its fastest level of expansion in 21 months.
• Asian stocks today closed mixed with Japan down -0.59%, China closed for holiday, Australia +0.18%, South Korea +1.29%, India +0.68%.  Japanese stocks finished weaker as exporters declined when the yen strengthened to a 3-week high against the dollar, while other Asian stock markets closed higher after the Mar China non-manufacturing PMI rose +0.7 to 58.0, its fastest pace of expansion in 21 months.  Australia’s central bank kept the overnight cash-rate target at 4.25% but signaled it may resume cutting interest rates as soon as next month if weaker-than-expected growth slows inflation after RBA Governor Stevens said, “The board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.”

Overnight U.S. Stock News

• June S&Ps this morning are trading down -1.90 points.  The U.S. stock market Monday settled higher after an unexpected increase in Chinese manufacturing activity reduced global growth concerns and after Mar ISM manufacturing rose more than expected: Dow Jones +0.40%, S&P 500 +0.75%, Nasdaq Composite +0.91%.  The S&P 500 posted a fresh 3-3/4 year high and the Dow rose to a 4-year high.  Bullish factors Monday included (1) reduced global growth concerns after the Mar China manufacturing PMI unexpectedly rose +2.1 to 53.1, stronger than expectations of -0.2 to 50.8 and its strongest pace of growth in a year, (2) the stronger-than-expected Mar ISM manufacturing index (+1.0 to 53.4 versus expectations of +0.7 to 53.1), (3) strength in raw material and energy producers on speculation increased global economic growth will boost demand for commodities, and (4) comments from Cleveland Fed President Pianalto who said “I am seeing more evidence that our economic expansion is becoming self-sustaining” with growth in the U.S. economy at 2.5% this year and 3.0% next year.
• Bearish factors Monday included (1) concern the European debt crisis may worsen after Germany’s Bundesbank said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral and as Moody’s Investors Service said “this announcement marks a step towards divergent collateral rules and raises questions about policy cohesiveness among Euro-Zone central banks and is credit negative for Euro-Zone sovereigns and banking systems overall,” (2) concern that European economic growth may remain subdued after the Feb Euro-Zone unemployment rose to a 14-3/4 year high of 10.8%, and (3) the unexpected decline in Feb U.S. construction spending by the most in 7-months along with the downward revision to Jan (Feb -1.1% versus expectations of +0.7% and Jan revised down to -0.8% from the originally reported -0.1%).
• Netflix (NFLX) fell 2.4% in pre-market trading after Barclays Capital downgraded the stock to “Equalweight” from “Overweight.”

Today’s Market Focus

• June 10-year T-notes this morning are up +4 ticks.  T-note prices Monday settled higher on increased safe-haven demand when European sovereign-debt concerns increased after Germany’s Bundesbank said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral along with the action by the Fed to buy long-term Treasuries: TYM2 +7.0, FVM2 +3.7, EDU2 unchanged.  Bullish factors included (1) increased safe-haven demand for Treasuries on concern the European debt crisis may worsen after Germany’s Bundesbank said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral and as Moody’s Investors Service said “this announcement marks a step towards divergent collateral rules and raises questions about policy cohesiveness among Euro-Zone central banks and is credit negative for Euro-Zone sovereigns and banking systems overall,” (2) the action by the Fed to purchase $4.549 billion of long-term Treasuries as part of it Operation Twist program to replace $400 billion of short-term debt in its holdings with longer maturities in an attempt to keep borrowing costs down, and (3) the unexpected decline in Feb construction spending by the most in 7-months along with the downward revision to Jan (Feb -1.1% versus expectations of +0.7% and Jan revised down to -0.8% from the originally reported -0.1%).  Bearish factors Monday included (1) decreased safe-haven demand for Treasuries on reduced global economic concerns after the Mar China PMI manufacturing unexpectedly expanded at its fastest pace in a year (+2.1 to 53.1), and (2) the stronger-than-expected Mar ISM manufacturing index (+1.0 to 53.4 versus expectations of +0.7 to 53.1).
• The dollar index this morning is weaker and at a 1-month low with the dollar/yen -0.04 yen and the euro/dollar +0.08 cents.  The dollar index Monday settled weaker as a rally in stocks reduced the safe-haven demand for the dollar along with strength in Asian currencies after stronger-than-expected Chinese manufacturing data brightened the outlook for Asian exporters: Dollar Index -0.184, USD/JPY -0.754, EUR/USD -0.00204.  Bearish factors included (1) reduced safe-haven demand for the dollar as stocks rallied, (2) strength in the yen after the unexpected increase in the Mar China PMI manufacturing to its best level in a year, which boosted the prospects for Japanese exporters and reduces global economic concerns, and (3) the unexpected upward revision to the Mar German PMI manufacturing index, which is euro supportive.  Bullish factors included (1) increased safe-haven demand for the dollar after Germany’s Bundesbank said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral and as Moody’s Investors Service said “this announcement marks a step towards divergent collateral rules and raises questions about policy cohesiveness among Euro-Zone central banks and is credit negative for Euro-Zone sovereigns and banking systems overall,” (2) euro negative comments from ECB Council member Mersch who said he sees a “long road ahead” for the Euro-Zone economy as the Euro-Zone has much work to do in addressing the causes of the debt crisis and governments must step up fiscal coordination in the face of “weak growth,” and (3) concern that European economic growth may remain subdued after the Feb Euro-Zone unemployment rose to a 14-3/4 year high of 10.8%.
• May crude oil prices this morning are down -66 cents a barrel and May gasoline is -1.07 cents per gallon.  Crude oil and gasoline prices Monday rebounded from early losses on renewed European debt concerns and settled sharply higher after March U.S. and Chinese manufacturing activity strengthened more than expected: CLK12 +$2.21, RBK +7.41.  May crude posted a 1-1/2 month low and May gasoline slipped to a 2-week low but both contracts erased their losses and closed higher.  Bullish factors included (1) the weaker dollar, (2) the unexpected increase in Mar China PMI manufacturing activity to its fastest pace in a year, which signals increased energy consumption in the world’s second-largest crude oil consumer, and (3) the larger-than-expected increase in the Mar ISM manufacturing index along with the unexpected upward revision to the Mar German PMI manufacturing index, which reduces concern over a global economic slowdown and is supportive for fuel consumption.  Bearish factors included (1) the increase in Feb Euro-Zone unemployment to a 14-3/4 year high of 10.8%, which may keep European economic growth and energy demand subdued, and (2) renewed European sovereign-debt concerns after Germany’s Bundesbank said it won’t accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral, which may worsen the region’s debt crisis.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): CMVT-Comverse Technology (BEST earnings consensus $0.17), ISCA-International Speedway (0.39), TISI-Team Inc. (0.19), CONN-Conn’s (0.29), MIND-Mitcham Industries (0.52).

Global Financial Calendar

Tuesday 4/3/12
United States
0745 ET	ICSC (Int’l Council of Shopping Centers) weekly retailer sales.
0855 ET	Redbook weekly retailer sales.
1000 ET	Feb factory orders expected +1.5%, Jan -1.0%.
1130 ET	Weekly 4-week and monthly 1-year T-bill auctions.
1400 ET	Minutes of the Mar 13 FOMC meeting.
1605 ET	San Francisco President John Williams presents an economic briefing at a University of San Diego symposium simulating an FOMC meeting.
1700 ET	Mar total vehicle sales expected 14.60 million, Feb 15.03 million.  Mar domestic vehicle sales expected 11.30 million, Feb 11.70 million.
United Kingdom
0430 ET	Mar U.K. PMI construction expected -0.9 to 53.4, Feb +2.9 to 54.3.
1901 ET	Mar U.K. BRC shop price index expected +1.5% y/y, Feb +1.2% y/y.
Euro-Zone
0500 ET	Feb Euro-Zone PPI expected +0.5% m/m and +3.5% y/y, Jan +0.7% m/m and +3.7% y/y.

Daily Market Report 3-29-12

Thu, 29 Mar 2012 07:00:00

Overnight Developments

• Global stocks this morning are lower with the Euro Stoxx 50 down -0.83% and Jun S&Ps down -5.00 points.  The dollar and Treasuries rose while stocks and commodities declined after the head of sovereign ratings at Standard & Poor’s said Greece will probably have to restructure its debt again and this may involve bailout partners such as European governments.  The IMF mission chief to Greece added that while the country has made an “aggressive” fiscal adjustment, it will take at least a decade to fully complete the country’s restructuring.  Another negative for European stocks and the euro was the unexpected -0.1 point decline in Mar Euro-Zone economic confidence to 94.4, weaker than expectations of +0.1 to 94.5.  On the positive side, Mar German unemployment fell -18,000, more than expectations of -10,000, while the Mar unemployment rate unexpectedly fell -0.1 to 6.7%, better than expectations of unchanged at 6.8% and the lowest since data for a reunified Germany began in 1991.  Crude oil prices declined after French Premier Fillon told France Inter Radio that the prospects of an accord between the U.S. and Europe on tapping strategic oil reserves are “good.”
• Asian stocks today closed lower with Japan down -0.67%, China -1.28%, Australia -0.13%, South Korea -0.93%, India -0.37%. Asian stocks closed lower on concerns China’s economic slowdown is weighing on company earnings and after U.S. durable goods orders rose less than expected.  The yen rose against the dollar, which weakened Japanese exporters, on speculation Japanese companies will repatriate overseas earnings before the end of the fiscal year on Mar 31.  A bullish factor for Japanese stocks was the +2.0% m/m and +3.5% y/y increase in Feb Japan retail sales, stronger than expectations of unchanged m/m and +1.4% y/y, with the +3.5% y/y increase the biggest gain in 1-1/2 years.  China’s Shanghai Stock Index slipped to a 2-1/4 month low on concern the slowing economy is undercutting company earnings.  Data from Bloomberg show 505 companies in the Shanghai Composite have released annual earnings with an average profit growth of 17%, compared with 38% growth in the previous year.

Overnight U.S. Stock News

• June S&Ps this morning are trading down -5.00 points.  The U.S. stock market Wednesday retreated after durable goods orders rose less than forecast and after a slide in crude oil drove energy producers lower: Dow Jones -0.54%, S&P 500 -0.49%, Nasdaq Composite -0.49%.  The Nasdaq rallied up to an 11-year high early, but gave up its advance and closed lower.  Bearish factors Wednesday included (1) the smaller-than-expected increase in Feb U.S. durable goods orders (+2.2% and +1.6% ex transportation, weaker than expectations of +3.0% and +1.7% ex transportation), (2) weakness in energy producers after a surge in weekly DOE crude inventories sent oil prices tumbling, and (3) global growth concerns after Q4 U.K. and French GDP were revised lower.
• Bullish factors Wednesday included (1) reduced European sovereign debt concerns after  Italy auctioned 8.5 billion euros of T-bills at 1.119%, the lowest yield in 1-1/2 years and after Italian Prime Minister Monti said that the Euro-Zone’s debt woes are “almost over,” and (2) a rally in oil-tanker companies after Dahlman Rose & Co. said the industry’s asset prices may gain as much as 20% within a year as sanctions targeting Iran’s crude exports alters trading patterns and reduces a glut in global oil tanker fleets.
• Mosaic (MOS) fell 2.2% in European trading after the company reported Q3 EPS of 64 cents a share, weaker than analysts’ estimates of 69 cents, citing lower potash volumes and higher phosphate raw-material costs.

Today’s Market Focus

• June 10-year T-notes this morning are up +5 ticks.  T-note prices Wednesday moved higher into early afternoon after the Fed bought long-term Treasuries as part of its Operation Twist program and Feb durable goods orders rose less than expected but prices faded into the close and settled little changed on lackluster demand for the Treasury’s $35 billion 5-year T-note auction: TYM2 -0.5, FVM2 -1.0, EDU2 -0.5.  Bullish factors Wednesday included (1) the smaller-than-expected increase in Feb U.S. durable goods orders (+2.2% and +1.6% ex transportation, weaker than expectations of +3.0% and +1.7% ex transportation), and (2) the Fed’s purchase of $4.81 billion of Treasuries as part of its Operation Twist program to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an attempt to keep borrowing costs low.  Bearish factors included (1) reduced safe-haven demand for Treasuries as European sovereign-debt concerns eased after Italy auctioned 8.5 billion euros of T-bills at 1.119%, the lowest yield in 1-1/2 years, (2) slack demand for the Treasury’s $35 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.85, weaker than the 12-auction average of 2.89, and (3) supply pressures ahead of the Treasury’s $29 billion auction of 7-year T-notes on Thu.
• The dollar index this morning is higher with the dollar/yen -0.66 yen and the euro/dollar -0.42 cents.  The dollar index Wednesday strengthened after the euro and British pound declined when Q4 U.K. and French GDP were revised lower along with increased safe-haven demand for the greenback after stocks moved lower: Dollar Index +0.079, USD/JPY -0.279, EUR/USD +0.00020.  Bullish factors included (1) weakness in the British pound and the euro after Q4 U.K. and French GDP were revised lower, and (2) increased safe-haven demand for the dollar after stocks declined.  Bearish factors included (1) euro positive comments from Italian Prime Minister Monti who said that the Euro-Zone’s debt woes are “almost over” after a slow initial response by policy makers, (2) Italy’s auction of 8.5 billion euros of T-bills at 1.119%, the lowest yield in 1-1/2 years, which reduces the safe-haven demand for the dollar as European debt concerns ease, and (3) a draft statement for Euro-Zone finance ministers that said European governments are preparing for a 1-year increase in the ceiling on rescue funds to 940 billion euros to combat the European debt crisis, which is euro supportive.
• May crude oil prices this morning are down -64 cents a barrel and May gasoline is +0.10 of a cent per gallon.  Crude oil and gasoline prices Wednesday tumbled as the dollar rose and after weekly DOE crude oil inventories climbed by the most since July 2010: CLK12 -$1.92, RBK -2.43.  Bearish factors included (1) the stronger dollar, which diminishes investment demand in commodities, (2) the surge in weekly DOE crude stockpiles by the most in 20-months to a 7-month high (+7.10 million bbl to 353.4 million bbl versus expectations of +2.7 million bbl), (3) a possible release of SPR supplies in an attempt to curb rising oil prices after French Budget Minister Pecresse said “France is accompanying the U.S. and U.K. in an IEA consultation that could allow the release of strategic oil reserves in order to break the rising price spiral,” and (4) the downward revisions to Q4 U.K. and French GDP, which indicates reduced energy consumption.  Bullish factors included (1) the larger-than-expected decline in weekly DOE gasoline supplies (-3.54 million bbl versus expectations of -1.55 million bbl) and (2) increased crude consumption in Japan, the world’s third-largest oil consumer, after data showed Japan’s utilities use of crude oil for generating power rose +118% in 2011 to 8.8 million kiloliters, or a 4-year high of 400,000 barrels a day, as it runs out of capacity to use liquefied natural gas as a stopgap for idled nuclear-power plants.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): BBY-Best Buy (BEST earnings consensus $2.15), TIBX-TIBCO Software (0.19), FCE-Forest City Enterprises (0.32), SHAW-Shaw Group (0.45), JOSB-JOS A Bank Clothiers (1.58), WOR-Worthington Industries (0.35), NAT-Nordic American Tankers Ltd. (-0.33), CASC-Cascade (1.09), MOV-Movado Group (0.10), XRTX-Xyratex Ltd. (0.26), MAPP-MAP Pharmaceuticals (-0.31).

Global Financial Calendar

Thursday 3/29/12
United States
0830 ET	Weekly initial unemployment claims expected +2,000 to 350,000, previous -5,000 to 348,000.  Weekly continuing claims expected -2,000 to 3.350 million, previous -9,000 to 3.352 million.
0830 ET	Revised Q4 U.S. GDP expected no change at +3.0% annualized, previous +3.0% annualized.  Q4 personal consumption, previous +2.1%.  Q4 GDP price index, previous +0.9%.  Q4 core PCE, previous +1.3% q/q.
1030 ET	Richmond Fed President Jeffrey Lacker delivers introductory remarks at the Richmond Fed’s 2012 credit markets symposium on “Reviving the Credit Markets.”
1215 ET	Atlanta Fed President Dennis Lockhart speaks on “The European economic crisis and how it affects you” at a panel discussion at Emory University in Atlanta.
1245 ET	Fed Chairman Ben Bernanke delivers a lecture (4 of 4) at George Washington University School of Business on “The Federal Reserve and its Role in Today’s Economy.”
1300 ET	Treasury auctions $29 billion 7-year T-notes.
1300 ET	Philadelphia Fed President Charles Plosser speaks on the economic outlook to business leaders at the Rotary Club of Wilmington, DE.
1630 ET	Weekly money supply report and Fed balance sheet.
1845 ET	Richmond Fed President Jeffrey Lacker speaks to bankers and students from the University of North Carolina School of Law’s Center for Banking and Finance.
Germany
0355 ET	Mar German unemployment change expected -10,000, Feb unchanged.  Mar unemployment rate expected unchanged at 6.8%, Feb unchanged at 6.8%.
United Kingdom
0430 ET	Feb U.K. net consumer credit expected +0.2 billion pounds, Jan +0.1 billion pounds.
0430 ET	Feb U.K. mortgage approvals expected +57,200, Jan +58,700.
0430 ET	Feb U.K. M4 money supply, Jan +1.6% m/m and -1.8% y/y.
0430 ET	Jan U.K. index of services expected +0.2% m/m and +0.3% 3-mo/3-mo, Dec +0.2% m/m and unchanged 3-mo/3-mo.
1901 ET	Mar U.K. GfK consumer confidence survey expected unchanged at -29, Feb unchanged at -29.
Euro-Zone
0500 ET	Mar Euro-Zone economic confidence expected +0.1 to 94.5, Feb +1.0 to 94.4.  Mar business climate indicator expected +0.02 to -0.16, Feb +0.03 to -0.18.
0500 ET	Revised Mar Euro-Zone consumer confidence expected no change at -19.0.
Canada
0830 ET	Feb Canada industrial product prices expected +0.5% m/m, Jan +0.3% m/m.
0830 ET	Feb Canada raw materials price index expected +0.4% m/m, Jan +0.1% m/m.
Japan
1915 ET	Mar Japan Markit/JMMA manufacturing PMI, Feb -0.2 to 50.5.
1930 ET	Feb Japan jobless rate expected unchanged at 4.6%, Jan +0.1 to 4.6%.  Feb job-to-applicant ratio expected 0.74, Jan0.73.
1930 ET	Feb Japan overall household spending expected -0.5% y/y, Jan -2.3% y/y.
1930 ET	Mar Tokyo CPI expected -0.1% y/y, Feb -0.2% y/y,  Mar Tokyo CPI ex-fresh food expected -0.3% y/y, Feb  0.3% y/y.  Mar Tokyo CPI ex food & energy expected -1.0% y/y, Feb -1.1% y/y.
1930 ET	Feb Japan national CPI expected unchanged y/y, Jan +0.1% y/y,  Feb national CPI ex-fresh food expected -0.1% y/y, Jan -0.1% y/y.  Feb national CPI ex food & energy expected -0.9% y/y, Jan -0.9% y/y.
1950 ET	Feb Japan industrial production expected +1.3% m/m and +3.7% y/y, Jan +1.9% m/m and -1.3% y/y.

Daily Market Report 3-28-12

Wed, 28 Mar 2012 07:00:00

Overnight Developments

• Global stocks this morning are mixed with the Euro Stoxx 50 down -0.21% and Jun S&Ps up +2.80 points.  The dollar and Treasuries are little changed, while commodities and European stocks weakened after the French and British economies grew less than expected last quarter.  Q4 French GDP was revised down to +1.3% annualized from +1.4% y/y and Q4 U.K. GDP was revised down to -0.3% q/q and +0.5% y/y, weaker than the previously reported -0.2% q/q and +0.7% y/y.  European and U.S. stocks were also pressured after a transcript of an interview with ABC News anchor Diane Sawyer revealed that Fed Chairman Bernanke said the U.S. recovery isn’t assured and “it’s far too early to declare victory.”  The euro rose against the dollar after Italian Prime Minister Monti said during a visit to Tokyo that the Euro-Zone’s debt woes are “almost over” after a slow initial response by policy makers.  Natural gas prices posted another fresh 10-year nearest-futures low in overnight trade and metals prices weakened after Goldman Sachs Group cut its 3-month outlook on commodities to neutral from overweight.
• Asian stocks today closed mostly lower with Japan down -0.71%, China -2.84%, Australia +0.98%, South Korea -0.40%, India -0.79%.  Asian stocks fell after Chinese companies reported slumping profits and Societe Generale said consensus earnings expectations for some Chinese companies are “far too optimistic.”  China’s Shanghai Stock Index tumbled to a 1-1/2 month low led by a 21% plunge in Gome Electrical Appliances Holdings Ltd. after China’s second-largest electronics retailer said net income last year dropped to 1.84 billion yuan, weaker than analysts’ estimates of 2.42 billion yuan.  Chinese metal producers also fell as Jiangxi Copper, China’s biggest copper producer by market value, fell 2.4% after it reported an 18% fall in profit and Angang Steel dropped 2.2% after reporting a wider-than-expected loss.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +2.80 points.  The U.S. stock market Tuesday fell back from an early rally and settled lower as profit-taking set in after the S&P 500 and the Nasdaq posted new yearly highs: Dow Jones -0.33%, S&P 500 -0.28%, Nasdaq Composite -0.07%.  The S&P 500 posted a 3-3/4 year high, the Dow climbed to a 1-week high and the Nasdaq rallied up to an 11-year high, but they all gave up their gains and closed lower.  Bearish factors Tuesday included (1) the larger-than-expected decline in the Mar Richmond Fed manufacturing index to its weakest level in 4 months (-13 to 7 versus expectations of -2 to 18), (2) concern over contagion of the European sovereign-debt crisis to Portugal after Fitch Ratings said Portuguese banks remain on “shaky ground,” and (3) late afternoon comments from Fed Chairman Bernanke that prompted profit-taking and long liquidation when he said its “too early to declare victory” on the U.S. recovery  as unemployment remains too high.
• Bullish factors Tuesday included (1) strength in homebuilders after a smaller-than-expected decline in Jan S&P/CaseShiller composite-20 home prices (unchanged m/m versus expectations of -0.3% m/m), (2) the stronger than expected Mar U.S. consumer confidence (-1.4 to 70.2 versus expectations of -0.7 to 70.1), and (3) comments from the first managing director of the IMF who said “We expect modest growth in the U.S., mild recession in Europe and a continuation of a comfortable level of growth in Asia with a soft landing in China.”

Today’s Market Focus

• June 10-year T-notes this morning are down -2.5 ticks.  T-note prices Tuesday rallied up to a 1-1/2 week high and settled higher after the Fed bought long-term Treasuries as part of its Operation Twist program, the Mar Richmond Fed manufacturing index weakened more than expected and strong demand was seen for the Treasury’s $35 billion auction of 2-year T-notes: TYM2 +17.0, FVM2 +9.5, EDU2 +2.0.  Bullish factors Tuesday included (1) the Fed’s purchase of $1.969 billion of Treasuries as part of its Operation Twist program to replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in an attempt to keep borrowing costs low, (2) the larger-than-expected decline in the Mar Richmond Fed manufacturing index to its weakest level in 4 months (-13 to 7 versus expectations of -2 to 18), (3) strong demand for the Treasury’s $35 billion auction of 2-yer T-notes that had a bid-to-cover ratio of 3.69, higher than the 12-auction average of 3.46, and (4) dovish comments from Boston Fed President Rosengren who said “if real GDP does not grow more rapidly and unemployment remains at its current unacceptably high level, monetary policy may need to be more accommodative.”  Bearish factors included (1) the stronger-than-expected Jan S&P/CaseShiller composite-20 home prices (unchanged m/m versus expectations of -0.3% m/m), (2) the stronger than expected Mar U.S. consumer confidence (-1.4 to 70.2 versus expectations of -0.7 to 70.1), and (3) supply pressures ahead of the Treasury’s $35 billion auction of 5-year T-notes on Wed.
• The dollar index this morning is lower with the dollar/yen -0.19 yen and the euro/dollar +0.43 cents.  The dollar index Tuesday declined early to a 3-week low but erased its losses and settled higher after stronger than expected U.S. economic data reduced speculation the Fed will increase stimulus measures: Dollar Index +0.174, USD/JPY +0.327, EUR/USD -0.00426.  Bullish factors included (1) the stronger-than-expected Mar U.S. consumer confidence and the smaller-than-expected decline in Jan S&P 500/CaseShiller home prices, which signals economic strength that reduces the chances of further Fed stimulus measures, and (2) weakness in the euro which fell back from a 3-1/2 week high against the dollar and closed lower on weak demand for European sovereign debt after Italy sold 3.82 billion euros of bonds, below the maximum target of 4 billion euros, and Spain sold 2.58 billion euros of debt, below its maximum target of 3 billion euros.  Bearish factors included (1) the unexpected increase in the Mar French consumer confidence indicator which matched its highest level in 15 months (+5 to 87) and is euro positive, (2) comments from ECB Council member Makuch that reduced expectations of additional ECB stimulus measures when he said he sees no reason for further 3-year loans for now because “the central bank considers as sufficient what it has done so far,” and (3) strength in the British pound against the dollar after the pound climbed to a 4-1/4 month high against the dollar after Mar U.K. CBI reported sales rose more than expected.
• May crude oil prices this morning are down -98 cents a barrel and May gasoline is -4.28 cents per gallon.  Crude oil and gasoline prices Tuesday settled mixed after dollar strength and comments from DOE officials about a possible release of Strategic Petroleum Reserves offset the bullish aspects of stronger than expected U.S. economic data on Mar U.S. consumer confidence and Jan S&P/CaseShiller home prices: CLK12 +$0.30, RBK -1.23.  Bearish factors included (1) the rebound in the dollar as the dollar index recovered from a 3-week low and settled higher, which diminishes investment demand in commodities, (2) comments from the acting assistant secretary for fossil energy at the DOE who said that a release of oil from the Strategic Petroleum Reserve is “being considered,” and (3) the larger-than expected decline in the Mar Richmond Fed manufacturing index, which indicates reduced energy consumption.  Bullish factors included (1) the stronger-than-expected Mar U.S. consumer confidence, which is positive for fuel demand and (2) the smaller than expected decline in the Jan S&P/CaseShiller composite-20 home prices, which signals economic strength and may lead to increased energy demand.  Expectations for Wednesday’s weekly DOE inventory report are for crude oil supplies to increase +2.7 million bbl, gasoline stockpiles to fall -1.55 million bbl, distillate inventories to drop -500,000 bbl and the refinery utilization rate to increase +0.3 to 82.5% of capacity.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): MOS-Mosaic (BEST earnings consensus $0.69), PAYX-Paychex (0.37), RHT-Red Hat (0.27), FDO-Family Dollar Stores (1.13), HII-Huntington Ingalls Industries (0.94), CMC-Commercial Metals (0.09), FUL-HB Fuller (0.37), PRGS-Progress Software (0.25), UNF-Unifirst (0.88), VRNT-Verint Systems (0.68), TXI-Texas Industries (-0.82), LNN-Lindsay (0.82), TEA-Teavana Holdings (0.31), NGL-NGL Energy Partners LP (0.68), RECN-Resources Connection (0.08).

Global Financial Calendar

Wednesday 3/28/12
United States
0700 ET	Weekly MBA mortgage applications, previous -7.4% with purchase mortgage sub-index -1.0% and refinancing sub-index -9.3%.
0830 ET	Feb durable goods orders expected +3.0% and +1.7% ex transportation, Jan -3.7% and -3.0% ex transportation.
1300 ET	Treasury auctions $35 billion 5-year T-notes.
France
0130 ET	Revised Q4 French GDP expected no change at +0.2% q/q and +1.4% y/y.
Euro-Zone
0400 ET	Feb Euro-Zone M3 money supply (seasonally adjusted) expected +2.2% 3-mo avg and +2.4% y/y, Jan +2.0% 3-mo avg and +2.5% y/y.
United Kingdom
0430 ET	Revised Q4 U.K. GDP expected no change at -0.2% q/q and +0.7% y/y.
0430 ET	Revised Q4 U.K. total business investment expected -5.6% q/q and -1.9% y/y, previous -5.6% q/q and -2.0% y/y.
Germany
0800 ET	Mar German CPI (EU harmonized) expected +0.4% m/m and +2.3% y/y, Feb +0.9% m/m and +2.5% y/y
Canada
0900 ET	Jan Canada Teranet/National Bank home price index, Dec -0.2% m/m and +6.8% y/y.
Japan
1950 ET	Feb Japan retail trade expected unchanged m/m and +1.4% y/y, Jan +3.1% m/m and +1.8% y/y.

Daily Market Report 3-27-12

Tue, 27 Mar 2012 07:00:00 -0500

Overnight Developments

• Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.20% and Jun S&Ps up +0.20 of a point.  The dollar index slipped to a 3-week low and most commodities gained with Apr gold at a 1-week high before U.S. reports on house prices and consumer confidence later this morning.  European stocks received a boost after the Mar French consumer confidence indicator unexpectedly rose +5 to 87, stronger than expectations of unchanged at 82 as it matched its 15-month high from July 2011.  Stocks also were boosted from comments made late yesterday by ECB President Draghi who said governments should continue to take “decisive measures” after the ECB’s liquidity measures helped restore investor confidence.  Bunds rallied and the euro fell back from a 3-1/2 week high against the dollar on slack demand for European sovereign debt after Italy sold 3.82 billion euros of bonds, below the maximum target of 4 billion euros, while Spain sold 2.58 billion euros of debt, below the maximum target of 3 billion euros.  The British pound rose to a 4-1/4 month high against the dollar after Mar U.K. CBI reported sales rose to 0, stronger than expectations of -5.
• Asian stocks today closed mostly higher with Japan up +2.36%, China -0.32%, Australia +0.90%, SOuth Korea +1.23%, India +1.20%. Asian stocks rose after Fed Chairman Bernanke said accommodative monetary policy is still needed and Mar German business confidence unexpectedly gained, which improves the earnings outlook for Asian exporters.  Japan’s Nikkei 225 Stock Index posted a 1-year high and recovered all of its losses from last year’s earthquake crisis as $241 billion of reconstruction spending and BOJ efforts to devalue the yen provided a bullish backdrop for Japanese equities.  Chinese stocks closed lower after Jan-Feb China industrial company profits fell -5.2% y/y, the first decline since 2009 as slowing exports and government measures to cool housing dampened earnings.  South Korean stocks finished higher after Mar South Korea consumer confidence rose +1 to 101, a 4-month high.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +0.20 of a point.  The U.S. stock market Monday rallied right from the opening and settled sharply higher after Fed Chairman Bernanke said accommodative policies are still needed along with optimism the European debt crisis may be contained after German Chancellor Merkel hinted Germany may end its opposition to expanding the size of the European bailout fund: Dow Jones +1.23%, S&P 500 +1.39%, Nasdaq Composite +1.78%.  The S&P 500 posted a fresh 3-3/4 year high and the Nasdaq rallied up to an 11-year high.  Bullish factors Monday included (1) comments from Fed Chairman Bernanke which indicate the Fed will maintain its overly easy monetary policies when he said reducing the U.S. jobless rate further will probably require a quicker expansion of business production and consumer demand, which “can be supported by continued accommodative policies,” (2) optimism the EU will increase the size of its bailout, which may help contain the European sovereign-debt crisis, after German Chancellor Merkel suggested Germany may drop its opposition to an expansion of the debt-crisis bailout fund when she said Germany may back plans to let the temorary and permanent rescue funds run in parallel, and (3) carry-over support from strength in the Mar IFO German business climate which unexpectedly rose to an 8-month high and bolsters confidence in the global economic outlook.
• Bearish factors Monday included (1) weakness in homebuilders after the unexpected decline in Feb U.S. pending home sales (-0.5% m/m, weaker than expectations of +1.0% m/m) and (2) comments from Italian Prime Minister Monti who warned that Spain could reignite the European debt crisis as it struggles to control its finances.

Today’s Market Focus

• June 10-year T-notes this morning are up +1.5 ticks.  T-note prices Monday recovered from early losses and settled little changed after dovish comments from Fed Chairman Bernanke offset reduced safe-haven demand for Treasuries as stocks rallied: TYM2 +0.5, FVM2 +2.0, EDU2 +2.0.  Bullish factors Monday included (1) comments from Fed Chairman Bernanke who said reducing the U.S. jobless rate further will probably require a quicker expansion of business production and consumer demand, which “can be supported by continued accommodative policies,” and (2) the unexpected decline in Feb U.S. pending home sales (-0.5% m/m, weaker than expectations of +1.0% m/m).  Bearish factors included (1) the rally in equities which curbed the safe-haven demand for Treasuries, (2) comments from Philadelphia Fed President Plosser who said he sees “no need at the moment” for additional Fed stimulus, and (3) supply pressures ahead of the Treasury’s $35 billion auction of 2-year T-notes on Tue.
• The dollar index this morning is weaker and at a 3-week low with the dollar/yen +0.07 yen and the euro/dollar -0.06 cents.  The dollar index Monday erased an early rally and fell to a 3-week low and settled lower after Fed Chairman Bernanke said accommodative monetary policy was still needed to reduce U.S. unemployment along with strength in the euro which posted a 3-week high against the dollar after Germany said it may back plans to increase Euro-Zone rescue funds: Dollar Index -0.363, USD/JPY +0.483, EUR/USD +0.00881.  Bearish factors included (1) dollar negative comments from Fed Chairman Bernanke who said reducing the U.S. jobless rate further will probably require a quicker expansion of business production and consumer demand, which “can be supported by continued accommodative policies,” (2) comments from German Chancellor Merkel which boosted the euro when she suggested Germany may drop its opposition to an expansion of the debt-crisis firewall when she said Germany may back plans to let the temporary and permanent rescue funds run in parallel, and (3) the unexpected increase in the Mar German IFO business climate to an 8-month high, which is euro supportive.  Bullish factors included (1) comments from Philadelphia Fed President Plosser who said he sees “no need at the moment” for additional Fed stimulus and (2) euro negative comments from Italian Prime Minister Monti who warned that Spain could reignite the European debt crisis as it struggles to control its finances.
• May crude oil prices this morning are up +19 cents a barrel and May gasoline is -1.28  cents per gallon.  Crude oil and gasoline prices Monday gyrated on either side of unchanged and finally settled higher after comments from Fed Chairman Bernanke weakened the dollar and offset concern over contagion to the European debt crisis: CLK12 +$0.16, RBK +2.98.  Bullish factors included (1) the slide in the dollar index to a 3-week low, which boosts investment demand in commodities, (2) comments from Fed Chairman Bernanke that boosted commodities when he said that continued accommodative monetary policy was needed to lower unemployment, and (3) the unexpected increase in the Mar IFO German business climate to an 8-month high, which is positive for economic growth and energy demand.  Bearish factors included (1) the warning from Italian Prime Minister Monti who said that Spain could reignite the European debt crisis, which may lead to weakness in the European economy and energy demand and (2) the unexpected decline in Feb pending U.S. home sales, which signals ongoing weakness in the U.S. housing sector that may crimp economic growth and fuel demand.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): WAG-Walgreen (BEST earnings consensus $0.77), MKC-McCormick (0.53), PVH-PVH Corp. (1.09), LEN-Lennar (0.05), RBN-Robbins & Myers (0.74), SNX-SYNNEX (0.92), NEOG-Neogen (0.23), OXM-Oxford Industries (0.55), CHRS-Charming Shoppes (-0.02).

Global Financial Calendar

Tuesday 3/27/12
United States
0745 ET	ICSC (Int’l Council of Shopping Centers) weekly retailer sales.
0855 ET	Redbook weekly retailer sales.
0900 ET	Jan S&P/CaseShiller composite-20 home price index expected -0.3% m/m and -3.8% y/y, Dec -0.5% m/m and  4.0% y/y.
1000 ET	Mar U.S. consumer confidence (Conference Board) expected -0.7 to 70.1, Feb +9.3 to 70.8.
1000 ET	Mar Richmond Fed manufacturing index expected -2 to 18, Feb +8 to 20.
1000 ET	New York Fed President William Dudley speaks at a Domestic Monetary Policy and Technology Subcommittee hearing entitled “Federal Reserve Aid to the Euro-Zone: Its Impact on the U.S. and the Dollar.”
1130 ET	Weekly 4-week T-bill auction.
1235 ET	Boston Fed President Eric Rosengren speaks in London at the National Institute for Economic and Social Research.
1245 ET	Fed Chairman Ben Bernanke delivers a lecture (3 of 4) at George Washington University School of Business on “The Federal Reserve and its Role in Today’s Economy.”
1300 ET	Treasury auctions $35 billion 2-year T-notes.
1320 ET	Dallas Fed President Richard Fisher speaks at a Dallas Fed community forum on Federal Reserve operations and an economic update.
2100 ET	St. Louis Fed President James Bullard speaks at Tsinghua University in Beijing on “Monetary Policy in a Global Setting: China and the United States.”
Germany
0200 ET	Feb German import price index expected +1.0% m/m and +3.5% y/y, Jan +1.3% m/m and +3.7% y/y.
0300 ET	Apr German GfK consumer confidence survey expected +0.1 to 6.1, Mar +0.1 to 6.0.
France
0245 ET	Mar French consumer confidence indicator expected unchanged at 82, Feb +1 to 82.
Euro-Zone
0430 ET	OECD Secretary-General Angel Gurria and EU Commissioner for Economic and Monetary Affairs Ollie Rehn speak at the presentation of the OECD Economic Survey of the Euro-Zone.
United Kingdom
0600 ET	Mar U.K. CBI reported sales expected -5, Feb -2.

Daily Market Report 3-26-12

Overnight Developments

• Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.34% and Jun S&Ps up +4.80 points.  The dollar strengthened and Treasuries retreated after Philadelphia Fed President Plosser, speaking at an event in Paris, said he sees “no need at the moment” for additional Fed stimulus.  European stocks climbed after the Mar German IFO business climate unexpectedly rose +0.1 to 109.8, stronger than expectations of -0.1 to 109.5 and the highest in 8-months.  The euro fell back though, after European Commission economic spokesman Amadeu Altafaj said that a return to economic growth in Europe has been “delayed slightly” to the second half of the year.  The euro also weakened after Italian Prime Minister Monti warned that Spain could reignite the European debt crisis as it struggles to control its finances.  Euro-Zone finance ministers will meet on Friday in Denmark to seek agreement to raise a 500 billion-euro ceiling on bailout funding to thwart contagion of the debt crisis by strengthening the region’s financial firewall.
• Asian stocks today closed mixed with Japan up +0.07%, China +0.10%, Australia -0.18%, South Korea -0.20%, India -1.78%.  Japanese stocks finished higher as exporters rallied when the yen fell against the dollar, while chip-related companies gained after Goldman Sachs boosted its April-June estimate for DRAM large-lot prices, saying the demand-supply balance on DRAMs is improving after Elpida Memory went bankrupt.  Chinese stocks retreated from their best levels and finished little changed as financial stocks fell amid speculation banks had understated the risks associated with about 20% of their outstanding loans to local governments.

Overnight U.S. Stock News

• June S&Ps this morning are trading up +4.80 points after German business confidence unexpectedly rises.  The U.S. stock market Friday gyrated on both sides of unchanged and finally settled higher as a rally in commodity and energy producers overshadowed weakness in homebuilders after Feb U.S. new home sales unexpectedly declined: Dow Jones +0.27%, S&P 500 +0.31%, Nasdaq Composite +0.15%.  The S&P 500 and the Dow posted 1-week lows but recovered their losses and finished higher.  Bullish factors Friday included (1) strength in raw-material and energy producers after most commodities rallied and (2) a rally in financial stocks after Morgan Stanley was raised to sector perform from under perform at Royal Bank of Canada and Discover Financial Services was raised to conviction buy at Goldman Sachs.
• Bearish factors Friday included (1) weakness in homebuilders after the unexpected decline in Feb U.S. new home sales for a second month (-1.6% to 313,000 versus expectations of +1.2% to 325,000) and (2) comments from Fed Chairman Bernanke who said that increased household spending is needed to sustain the expansion and that “consumer spending is not recovered and it’s still quite weak relative to where it was before the crisis.”
• Lions Gate Entertainment (LGF) surged 11% in European trading after gross receipts for the opening weekend of “The Hunger Games” movie were $155 million, higher than analysts’ estimates of $125 to $135 million.

Today’s Market Focus

• June 10-year T-notes this morning are down -12.5 ticks.  T-note prices Friday posted a 1-week high and settled higher for a third day after Feb U.S. new home sales unexpectedly declined and after Fed Chairman Bernanke said the U.S. economy is operating below its level prior to the financial crisis: TYM2 +10.0, FVM2 +4.5, EDU2 +1.5.  Bullish factors included (1) the unexpected decline in Feb U.S. new home sales for a second month (-1.6% to 313,000 versus expectations of +1.2% to 325,000) and (2) comments from Fed Chairman Bernanke who said that increased household spending is needed to sustain the expansion and that “consumer spending is not recovered and it’s still quite weak relative to where it was before the crisis.”  Bearish factors Friday included (1) comments from St. Louis Fed President Bullard who warned that the U.S. and world economies risk elevated inflation that persists for years should they mistime their exits from “ultra-easy” monetary policies and (2) the rebound in stocks which reduced the safe-haven demand for Treasuries after the S&P 500 recovered from a 1-1/2 week low and closed higher.
• The dollar index this morning is higher with the dollar/yen +0.63 yen and the euro/dollar -0.17 cents.  The dollar index Friday fell to a 2-week low and settled lower after U.S. Feb new home sales unexpectedly declined for a second month along with strength in commodity currencies as the prices of raw materials rose: Dollar Index -0.391, USD/JPY -0.197, EUR/USD +0.00681.  Bearish factors included (1) the unexpected fall in Feb U.S. new home sales for a second month, which suggests economic weakness and id dollar negative and (2) a rally in raw-materials and energy prices, which boosted demand for the commodity currencies of Australia, Canada and Norway.  Bullish factors included (1) early weakness in the yen after BOJ Governor Shirakawa said the central bank and the government share the same view on the economy, which bolsters speculation the BOJ may increase yen-negative stimulus measures to spur the Japanese economy and (2) comments from St. Louis Fed President Bullard who said  U.S. monetary policy may be at a “turning point” and the Fed’s first interest rate increase could come as soon as late 2013, earlier than Fed Chairman Bernanke’s view that economic slack and subdued inflation will probably warrant record low interest rates at least through late 2014.
• May crude oil prices this morning are down -24 cents a barrel and May gasoline is +0.51 of a cent per gallon.  Crude oil and gasoline prices Friday shot higher and settled with sharp gains as the dollar slumped and after Reuters reported that Iranian oil exports will plunge this month because of tighter sanctions: CLK12 +$1.52, RBK +4.33.  May gasoline posted a contract high and nearest-futures Apr gasoline posted an 11-month high.  Bullish factors included (1) the fall in the dollar index to a 2-week low, which boosts investment demand in commodities, and (2) the report from Reuters that said Iranian oil exports will drop by 300,000 barrels a day this month because of tighter sanctions, which may mean tighter global supplies as other crude producers must make up for the lost Iranian output.  Bearish factors included (1) the unexpected decline in Feb U.S. new home sales, which signals continued weakness in the U.S. housing market that may keep fuel demand constrained and (2) weakness in stocks, which reduces confidence in the economic outlook and energy demand.

Today’s U.S. Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap): APOL-Apollo Group (BEST earnings consensus $0.37), KIOR-KiOR Inc. (-0.15), CALM-Cal-Maine Foods (1.02).

Global Financial Calendar

Monday 3/26/12
United States
0700 ET	Philadelphia Fed President Charles Plosser speaks on monetary policy on a panel with former ECB Council member Axel Weber along with BOF Governor and current ECB Council member Christian Noyer at the Global Independence Center conference in Paris.
0800 ET	Fed Chairman Ben Bernanke speaks on “A View from the Federal Reserve” to the 2012 NABE policy conference in Arlington, VA.
0830 ET	Feb Chicago Fed national activity index, Jan -0.31 to 0.22.
1000 ET	Feb pending home sales expected +1.0% m/m, Jan +2.0% m/m and +10.3% y/y.
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
Euro-Zone
0300 ET	EU Economic and Monetary Affairs Commissioner Olli Rehn speaks in Helsinki on the outlook for the European economy.
1200 ET	ECB President Mario Draghi speaks at an event hosted by the German BDB Banking Association in Berlin.
Germany
0500 ET	Mar German IFO business climate expected -0.1 to 109.5, Feb +1.3 to 109.6.  Mar IFO current assessment expected -0.5 to 117.0, Feb +1.2 to 117.5.  Mar IFO expectations expected +0.3 to 102.6, Feb +1.4 to 102.3.
France
1200 ET	Feb French jobseekers expected +15,000, Jan +13,400.  Feb total jobseekers expected 2.878,400, Jan 2,861,700.
Japan
1050 ET	Feb Japan corporate serve price index expected -0.4% y/y, Jan -0.2% y/y