Pre-market, futures are up. Hooray! Gainers this morning include VFC, FSLR, PEG, HIG and MU. Losers include RF, GILD, BMS, SRE and PNW. Light Crude is down -0.67%.
U.S. Stock News
*September S&Ps this morning are trading up +3.80 points. The US stock market last Friday tumbled as industrial stocks fell on concern the economy is slowing and bank stocks weakened on the Fed’s plan to expand a capital-planning program to the 35 largest US banks: Dow Jones -1.42%, S&P 500 -1.40%, Nasdaq Composite -1.53%. The S&P 500, the Dow and the Nasdaq all fell to 2-3/4 month lows. Bearish factors for stocks included (1) inflation concerns after the unexpected increase in May import prices (+0.2% m/m and +12.5% y/y, the biggest annual gain in 2-1/2 years, and stronger than expectations of -0.7% m/m and +1.2% y/y), (2) weakness in industrial and consumer stocks on concern the economy is slowing, (3) a slump in bank stocks on concern that over-regulation may hurt bank profits after the Fed said it will expand a capital-planning program to the 35 largest US banks, and (4) comments from New York Fed President Dudley who said “the recent disappointing data suggest that downside risks to the outlook” have increased.
*Bullish factors included (1) the larger than expected increase in May China imports (+28.4% y/y versus expectations of +22.5% y/y), which bolsters optimism that Chinese demand may support global growth, and (2) the action by the Bundesbank to raise its forecasts for German growth for this year and next, which signals strength in the German economy that may help sustain the global economic recovery.
*Transatlantic Holdings (TRH) surged 10% in European trading after agreeing to merge with Allied World Assurance in a deal worth $3.2 billion.
*September 10-year T-notes this morning are down -1.5 ticks. T-note prices last Friday closed higher on dovish comments from New York Fed President Dudley along with increased safe-haven demand as the stock market declined: TYU11 +8, FVU11 +4, EDZ11 +0.5. Bullish factors included (1) comments from New York Fed President Dudley who said “the recent disappointing data suggest that downside risks to the outlook” have increased, and (2) increased safe-haven demand for Treasuries after the S&P 500 fell to a 2-3/4 month low. A bearish factor was the unexpected increase in May import prices (+0.2% m/m and +12.5% y/y, the biggest annual gain in 2-1/2 years, and stronger than expectations of -0.7% m/m and +1.2% y/y).
The dollar index this morning is weaker with the dollar/yen +0.03 yen and the euro/dollar +0.42 cents. The dollar index last Friday rallied to a 1-week high on increased safe-haven demand for the greenback as the stock market tumbled along with weakness in the euro on rising European debt concerns: Dollar Index +0.603, USDJPY -0.046, EURUSD -0.01634. Bullish factors included (1) the slide in the euro to a 1-week low against the dollar on concern the European sovereign-debt crisis will worsen after credit-default swaps to insure Greek and Portuguese government debt climbed to records, and (2) increased safe-haven demand for the dollar after the S&P 500 fell to a 2-3/4 month low. Bearish factors included (1) the action by the Bundesbank to raise its growth estimates for Germany this year and next, which is euro supportive, and (2) weakened dollar interest rate differentials as the 3-month dollar Libor rate fell to a record low of 0.24850%.
*July crude oil prices this morning are trading down -$1.23 a barrel and July gasoline -0.77 of a cent per gallon. Crude oil and gasoline prices last Friday tumbled as the dollar strengthened along with a report that Saudi Arabia will raise oil production: CLN11 -$2.64, RBN11 -2.21. Bearish factors included (1) the rally in the dollar index to a 1-week high, which discourages investment demand in commodities, (2) the report from the el-Hayat newspaper that Saudi Arabia will raise oil production to 10 million barrels a day next month, and (3) the sell-off in the stock market, which decreases confidence in the economic outlook and energy demand. Bullish factors included (1) the action by the Bundesbank to raise its growth estimates for Germany this year and next, which signals greater fuel consumption, and (2) the widening of the spread between Brent crude and WTI to a record $18.88 a barrel, which may boost gasoline and distillate products that are vulnerable to changes in Brent because refineries on the US East Coast process oil grades that are sold relative to the European benchmark.
Earnings reports (confirmed releases, sorted by mkt cap) CASY-Casey’s General Stores (BEST earnings consensus $0.50), NX-Quanex Building Products (0.11), IDT-IDT Corp. (0.49), AMSC-American Superconductor (-0.24).
0930 ET Richmond Fed President Jeffrey Lacker speaks on Â“Manufacturing in the New Southern EconomyÂ” at the Southern Growth Conference in Roanoke, VA.
1130 ET Weekly 3-mo and 6-mo T-bill auctions.
1900 ET Dallas Fed President Richard Fisher speaks to the Certified Financial Analysts Society of Dallas on Federal Reserve functions and an economic update.