Wednesday, September 29, 2010

Morning Note...

Apologies, PC issues this morning.  Have not had time to craft anything of intelligence, but here’s the early morning cut-and-paste from JPM:

Morning Levels:
·         SP500 futures flattish as of 6:45amET @ 1141  
·         Europe levels: DJ Euro Stoxx dwn 0.3%, FTSE dwn 0.2%, CAC dwn 0.2%, DAX dwn 0.2%, Spain dwn 1%.
·         Europe – Europe being led lower by financials (DB, SocGen, BNP, BBVA are all off few %).  Some materials stocks also sluggish (CRH, Arcelor).  On the upside, AXA, Daimler, Alstom, FT, Schneider, and Phillips, and Anheuser.  In London, Rolls-Royce is up ~4% and leading the FTSE; Wolseley, BP, Burberry, Carnival all act well; on the downside, Vedanta, HSBC, Astrazeneca, and RBS are all off. 
·         Asia: Japan +0.67%; China -0.03%; Hong Kong +1.22%; India -0.66%; Australia -0.53%
·         European sov CDS – Greece -19bp, Ireland, Spain, Portugal, and Italy are all few BP tighter. 
·         Treasuries – pretty flattish this morning; last auction of the week today @ 1pmET. 
·         FX – DXY off 0.3% (has been falling for last 4 sessions); DXY continues to hit multi-month lows; GBP up small (up 0.16%) after Tues’ 1% ramp; EUR up small today; yen continues to climb (off 0.3%)
·         Gold up $1.5 to $1,310.5, off lows
·         Copper up 0.35%, off highs
·         Crude +30c to $76.50, off lows

Today’s Top Stories
·         In Japan, the Nikkei rose thanks to a better than expected Tankan survey and further talk of stimulus measures (the BOJ meets next week). 
·         China's HSBC/Markit Manufacturing PMI comes in ahead of expectations (the official gov't PMI will hit Thurs night); tomorrow is the last day of trading for the Shanghai market before the country’s Golden Week holidays. 
·         Ireland/Anglo Irish – Irish gov’t capital injection to be less than feared says FT - The central bank’s additional capital injection is expected to be about €5bn (£4.3bn). That would bring the bail-out costs for Anglo Irish to €30bn, shy of the €35bn forecast by credit rating agency Standard & Poor’s (FT)  
·         ECB 3-month auction demand less than expected (being viewed as a positive) - The ECB said it will lend banks 104 billion euros ($141 billion) for three months as some 225 billion euros of long-term loans mature tomorrow.  Bloomberg 
·         Spain - investors anticipating ratings cut from Moody's; Five out of eight money managers surveyed predicted in a Bloomberg survey a one- step reduction to Aa1, with the rest forecasting a two-level cut to Aa2. The decision may come this week – Bloomberg
·         Fed’s Lockhart says more Fed easing not a done deal; after the Tues WSJ article, latest sign of Fed officials trying to temper expectations; "There is growing sentiment that further accommodation through large asset purchases is coming….For me, at this moment it's not a foregone conclusion that we need to go there."   Reuters 
·         China ending ban on rare-earth exports to JapanThe Nikkei reported that China has ended its ban on rare-exports to Japan and that exports have resumed. Nikkei
·         FX wars – discussed in the WSJ – nothing really new in the article, but discusses how at least 6 countries are trying to lower the value of their currencies to maintain export competitiveness; the House on Thurs is expected to pass legislation that could make it easier to retaliate against manipulators like China and while the measure prob. doesn’t have great chances in the Senate, it could be used to pressure Beijing into action ahead of the G20 summit in Nov.  WSJ 
·         AIG – the company’s board on Wed will discuss a plan to convert Washington’s $49B preferred stock stake into common shares (FT/WSJ)
·         HPQ - Bottom Line takeaways on the HPQ meeting – overall people pretty happy w/the financial targets for ’11 and the overall tone from mgmt re the business units; however, there was no news on the CEO front, which is the key issue in the mind’s of investors. 

Catalysts to Watch
·         A lot of stuff coming up on Thurs/Fri – we will get news on the Anglo Irish wind down Thurs (which could help relieve worries around the Irish debt situation) and also the big ECB roll-over refi.  Also reports (DJ) that Moody’s will be meeting w/Spanish officials on Thurs as it makes a determination on whether to downgrade the country’s rating (that news could come Thurs or Fri).  Thurs night/Fri morning we get the key PMI manufacturing #s from China and the US.  Also – Fri is the first day of Q4.  The three big events being watched in the coming months: 1) Q3 earnings (first CQ3 earnings start next week - YUM 10/5, MAR 10/6, AA 10/7); 2) mid-terms (Nov 2); 3) FOMC (Nov 2-3). 
·         US IPOs – 4 deals looking to price today (Wed); largest IPO of ’10 to price today; busiest overall day in 8 weeks.  Bloomberg 
·         Obama will meet with families in Des Moines, Iowa, and Richmond, Virginia, Wednesday as he continues a multi-state tour to talk about economic issues (CNN)
·         Treasury auctions ($29B 7s on Wed)
·         a for-profit education hearing before the Senate HELP committee (Thurs Sept 30)
·         the House could vote on legislation that would give Congress the ability to retaliate against China for alleged currency manipulations. 
·         Bernanke is going to be testifying before the Senate on Thurs Sept 30 (10amET), although the focus of his commentary will be on fin reg reform (not monetary policy). 
·         In Europe, the first ever pan-European strike is planned for Sept 29.  Unions throughout Europe are pushing hard to get millions out on the streets of several cities. 
·         China’s “Golden Week” holidays run Oct 1-7. 
·         Eurozone banks face major refinancing this week - On Thursday, some €75bn in one-year loans and €18bn in six-month loans will return to the ECB. In addition, €132bn in three-month liquidity will mature on the same day; analysts would view as a victory if less than EU175B is rolled over (FT)  
Corporate Events Calendar
·         Tues Sept 28: earnings before the open (MAN Group trading update, WAG); earnings after the close (MLNK, ZZ); analyst meetings (HPQ, DT/FTE, CGNX, KNOT, TLS); shareholder meetings (BKS). 
·         Wed Sept 29: earnings before the open (ATU, FDO, AM, Misys trading update, FirstGroup trading update, London Stock Exchange trading update); earnings after the close (WOR, SNX, XRTX); analyst meeting (FDX, KMT)
·         Thurs Sept 30: earnings before the open (MKC); earnings after the close (ACN, CBK, SMOD, DMAN, RECN, LWSN); analyst meetings (DHX, MMC, WU, VCI, LRCY)
·         Fri Oct 1: sales (auto companies will report their Sept sales). 
Economics Calendar – daily view
·         Wednesday, Sept 29th: no major US releases today
·         Thursday, Sept 30th: US (Core Personal Consumption Expenditure, GDP, Initial Jobless Claims, Personal Consumption); Eurozone (n/a) Other (Canada - GDP).
·         Friday, Oct. 1st: US (Personal Consumption Expenditure Core, Personal Income, Personal Spending, U. of Michigan Confidence, Construction Spending, ISM Manufacturing); Eurozone (Switzerland-Retail Sales, PMI; Germany – PMI; UK – PMI, Eurozone Unemployment Rate) Other (China-PMI Manufacturing).