U.S. Preview
- The European DJ Stoxx 50 this morning is trading mildly higher by +0.34% on lower oil prices this morning (-79 cents) and on M&A support. TNT NV (Amsterdam: TNT) rallied 7% today after the UK Times newspaper said a bid from UPS could come this weekend. Benfield Group (London: BFD) rallied 30% today on a $1.6 billion takeover offer by Aon Corp. Asia-Pacific stocks today closed mixed: Japan -0.68%, China -1.60%, Taiwan -0.10%, Australia +1.15%, Singapore +0.36%, South Korea -0.93%, Bombay +1.11%.
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Overnight U.S. Stock News
- September S&Ps this morning are trading +1.90 on lower oil prices this morning. The US stock market yesterday settled mixed (Dow +0.11%, S&P 500 +0.25%, Nasdaq Composite -0.36%).
- Bullish factors for stock prices yesterday included (1) the larger-than-expected drop in weekly unemployment claims, (2) the rally in energy shares as crude oil rallied +$5.62 a barrel yesterday for the third straight day of gains, and (3) the rally in coal producers as Peabody Energy, the largest US coal producer, rallied 5.9% and Massey Energy surged 6.8% after UBS raised their recommendation on the largest producer of coal in the Appalachian region to "buy" from "neutral," saying Massey's 29% price drop since June was overdone.
- Bearish factors for stock prices yesterday included (1) speculation that writedowns at financial firms will increase after Citigroup predicted Goldman Sachs, Morgan Stanley and Lehman Brothers will write down a combined $6.4 billion in Q3, (2) comments from former Fed Governor Meyer that the US economy is close to a recession with growth probably not exceeding 1% for the rest of this year, (3) the larger-than-expected decrease in July leading indicators for the biggest monthly drop in a year (July -0.7%), (4) the rise in the cost of protecting bank debt from default to a 5-week high after the Financial Times reported that Lehman Brothers failed to sell a 50% stake to Asian lenders who walked away from the deal after balking at Lehman's asking price, and (5) Goldman Sachs' prediction that the US, Japan, UK and the Euro-Zone are "either in recession or face significant recession risks in the months ahead."
- UAL (UAUA), the owner of United Airlines, is up +3.3% this morning on lower oil prices.
- GAP Inc (GPS) rallied 3.4% in after-hours trading yesterday after reporting better-than-expected Q2 earnings of 32 cents.
- Foot Locker (FL) is up +8.3% are the company provided 2008 earnings guidance of 85 cents a share, well above the analyst consensus of 71 cents.
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Today's U.S. Market Focus
- September 10-year T-notes this morning are trading -2.5 ticks on slightly higher S&Ps and European stocks. September T-note prices yesterday moved lower and closed -11 ticks. Bearish factors for T-note prices yesterday included (1) a larger-than-expected decline in weekly unemployment claims (-13,000 to 432,000 versus expectations of -10,000 to 440,000), and (2) long liquidation pressures after the month-long 4+ point rally in T-note prices. Bullish factors for T-note prices yesterday include (1) comments from former Fed Governor Meyer that "things have gotten worse and worse" in credit markets and the US economy is "teetering on the edge of recession," and (2) the larger-than-expected decline in July leading indicators for the biggest monthly drop in a year (-0.7% versus expectations of -0.2%).
- The dollar is trading moderately higher this morning with the dollar/yen up +0.85 yen and the euro/dollar down -0.42 cents. The dollar is seeing some short-covering after yesterday's sharp decline. The dollar index yesterday sold-off sharply and closed at a 1-week low. Bearish factors for the dollar yesterday included (1) concerns that writedowns at financial institutions will increase after Citigroup said Goldman Sachs, Morgan Stanley and Lehman Brothers will write down a combined $6.4 billion during Q3, (2) the largest monthly drop in US leading indicators (July -0.7% m/m) since Aug 2007, and (3) the drop in the dollar/yen to a 2-week low as the carry-trade continues to be unwound due to risk aversion on concern of continued credit-market losses. A bullish factors for the dollar yesterday was the larger-than-expected drop in US weekly unemployment claims.
- October crude oil prices this morning are trading -79 cents a barrel and October gasoline is trading -2.48 cents a gallon. Bearish factors this morning include the higher dollar, yesterday's reopening of BP's Baku-Tbilisi-Ceyhan pipeline, and the estimate by PetroLogistics that OPEC supply in August rose by 400,000 barrels per day (1.2%). October crude oil prices yesterday rallied sharply and closed +$5.62 a barrel and October gasoline closed +5.74 cents a gallon. October crude oil and gasoline both posted 2-1/2 week highs yesterday. Bullish factors for crude oil prices yesterday included (1) US-Russia tensions as the US-Poland signed a missile treaty and as Russia drags its feet on leaving Georgia, and (2) the drop in the dollar to a 1-week low. Bearish factors for crude oil prices yesterday included (1) comments from former Fed Governor Meyer that the US economy is close to a recession, increasing concern of reduced energy demand, and (2) the action by BP to shor tly repoen its 1.0 million bbl a day Baku-Tbilisi-Ceyhan pipeline from Azerbaijan to Turkey's Mediterranean coast after it was shut down on Aug 5 due to a fire.
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Today's U.S. Earnings Reports
Earnings reports (confirmed releases for companies with market caps above $10.0 bln listed by mkt cap): HNZ-HJ Heinz (BEST earnings consensus $0.66 per share), MLNM-Millenium Pharmaceuticals (0.05), FL-Foot Locker (0.01), CGI-Commerce Group (0.66), ANN-AnnTaylor Stores (0.48), SKIL-Skillsoft Plc (0.09)
| Friday 8/22/2008 | |
|---|---|
| United States | |
| 1000 ET | Fed Chairman Ben Bernanke speaks on financial stability at the Fed’s annual symposium in Jackson Hole, Wyoming. |
| United Kingdom | |
| 0430 ET | Revised Q2 UK GDP expected +0.1% q/q versus previous +0.2% q/q and +1.5% y/y versus previous +1.6% y/y. |
| Euro-Zone | |
| 0500 ET | Jun Euro-Zone industrial new orders expected –1.1% m/m and –6.3% y/y, May –3.5% m/m and –4.4% y/y. |
Morning Quote Board
Morning Quotes (ET) Last Chg %chg Updated US Stock Futures S&P (Globex) (U8) 1277.40 1.90 0.15% 07:05:11 DJIA (CBOT) (U8) 11422 14 0.12% 07:04:20 European Stocks Europe DJ Stoxx 50 2828.53 9.66 0.34% 07:01:00 London UK FTSE Index 5421.30 51.10 0.95% 07:01:01 German Dax Index 6272.95 35.99 0.58% 07:01:05 French CAC 40 Index 4328.47 23.86 0.55% 07:01:00 Asian-Pacific Stocks Japan Nikkei Index 12666 -86 -0.68% 03:00:15 Hong Kong Hang Seng 20392 0 0.00% 8/21/2008 China CSI 300 Index 2405 -39 -1.60% 03:01:05 Taiwan TAIEX Index 6912 -7 -0.10% 01:46:00 Australian S&P 200 4931.4 56.2 1.15% 02:47:04 Singapore Str. Times 2723.3 9.83 0.36% 05:10:07 South Korea KOSPI 200 192.04 -1.81 -0.93% 02:02:09 Bombay Sensex 30 14401 157.76 1.11% 06:28:11 Karachi KSE-100 9994 -243 -2.37% 03:30:56 US Interest Rates 10yr T-notes (CBT)(U8) 116.075 -0.025 -0.07% 07:06:00 Cash 10yr T-note Price 101.090 -0.040 -0.12% 07:16:01 Cash 10yr T-note Yield 3.844 0.015 0.39% 07:15 5yr T-note (CBT)(U8) 112.090 -0.020 -0.06% 07:05:59 Cash 5yr T-note Price 101.100 -0.040 -0.12% 07:16:01 Cash 5yr T-note Yield 3.086 0.027 0.88% 07:15 30-yr T-bond (CBT)(U8) 117.22 -0.02 -0.05% 07:04:56 Cash 30yr T-bond Price 100.155 -0.040 -0.12% 07:16:01 Cash 30yr T-bond Yield 4.470 0.008 0.17% 07:15 Eurodollars (CME)(U8) 97.170 -0.002 0.00% 07:02:51 Eurodollars (CME)(Z8) 97.020 0.005 0.01% 07:03:02 Asian & European Rates 10-yr JGBs (TSE) (U8) 137.69 -0.34 -0.25% 02:00:00 EuroyenTibor(SGX)(U8) 99.165 0.000 0.00% 05:40:39 Bunds (Eurex) (U8) 114.08 -0.07 -0.06% 07:01:07 Euribor (Eurex) (U8) 95.03 0.00 0.00% 06:09:21 UK Gilts (Liffe) (U8) 109.35 0.09 0.08% 07:00:19 Short Stlg (Liffe) (U8) 94.23 0.00 0.00% 06:34:14 Forex US Dollar/Japanese Yen 109.28 0.85 0.78% 07:16:03 EuroFX / US Dollar 1.4857 -0.0042 -0.42% 07:16:03 SwissFranc/US Dollar 1.0911 0.0053 0.53% 07:16:01 British Pound (per USD) 1.8609 -0.0174 -1.74% 07:16:06 Canadian Dlr (perUSD) 1.0448 0.0018 0.18% 07:16:04 Yen (Globex) (U8) 0.9165 -0.0053 -0.53% 07:06:07 Euro FX (Globex) (U8) 1.4843 -0.0014 -0.09% 07:06:08 SwissFranc (Globex)(U8) 0.917 -0.0023 -0.25% 07:06:08 British Pound(Glbx)(U8) 1.8574 -0.0147 -0.79% 07:06:07 Canadian$ (Globex)(U8) 0.957 0.0009 0.09% 07:05:49 Commodities Gold (Comex) (Z8) 834.5 -4.5 -0.54% 06:45:58 Copper (Comex) (U8) 350.3 -4.3 -1.21% 06:44:58 Crude Oil (Nymex) (V8) 120.39 -0.79 -0.65% 06:45:58 Gasoline (Nymex) (V8) 292.9 -2.48 -0.84% 06:40:25 Heating Oil(Nymex)(V8) 330.63 -2.11 -0.63% 06:39:54 NaturalGas(Nymex)(V8) 8.32 -0.039 -0.47% 06:46:06
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