Market Happenings for Monday, June 20, 2011

Pre-market, futures are up down. DJIA is set to loose Dow 12,000 at the open. Gainers this morning include CF, S, BTU, WFM and MON. Losers include NBR, NFLX, JDSU, JBL and STI. Light Crude is down -1.03% at 92.05.

U.S. Stock News

*September S&Ps this morning are trading. The US stock market last Friday traded mostly higher as European sovereign-debt concerns eased and after May US leading indicators rose more than expected, although technology stocks fell after Research in Motion forecast weaker-than-expected profit: Dow Jones +0.36%, S&P 500 +0.30%, Nasdaq Composite -0.28%. Bullish factors for stocks included (1) carry-over support from a surge in European stocks on reduced concern over Greece’s debt crisis after German Chancellor Merkel said she would compromise on German demands that bondholders shoulder a “substantial” share of the Greek rescue, saying she’ll work with the ECB to resolve the crisis, (2) the stronger-than-expected May US leading indicators (+0.8% versus expectations of +0.3%), and (3) strength in airline stocks after crude oil sank to its lowest level in 3-3/4 months, which may cut airlines’ costs and improve their profitability.

*Bearish factors included (1) the larger-than-expected decline in the Jun US University of Michigan consumer confidence (-2.5 to 71.8 versus expectations of -0.3 to 74.0), (2) the action by the IMF to cut its 2011 US growth forecast for the second time in 2 months, to 2.5% from an Apr projection of 2.8%, (3) weakness in technology stocks, which dragged the Nasdaq lower, after Research in Motion plunged when it forecast weaker-than-expected revenue and profit growth, and (4) the statement from former Fed Chairman Greenspan that a Greek default is “almost certain” and could help drive the US into recession.

The Markets

*September 10-year T-notes this morning are up +10 ticks as global stock markets slide. T-note prices last Friday fell on reduced safe-haven demand after German Chancellor Merkel signaled a willingness to compromise with the ECB to prevent a Greek default along with the stronger-than-expected US leading indicators: TYU11 -7.5, FVU11 -3.2, EDZ11 +2.5. Bearish factors included (1) comments from German Chancellor Merkel who said she would compromise on German demands that bondholders shoulder a “substantial” share of the Greek rescue, saying she’ll work with the ECB to resolve the crisis, which lifted the stock market and reduced the safe-haven demand for Treasuries, and (2) the stronger-than-expected May US leading indicators (+0.8% versus expectations of +0.3%). Bullish factors included (1) the larger-than-expected decline in the Jun US University of Michigan consumer confidence (-2.5 to 71.8 versus expectations of -0.3 to 74.0), and (2) the action by the IMF to cut its 2011 US growth forecast for the second time in 2 months, to 2.5% from an Apr projection of 2.8%.

*The dollar index this morning is stronger with the dollar/yen +0.24 yen and the euro/dollar -0.82 cents. The dollar index last Friday weakened after German Chancellor Merkel agreed to a Greek debt compromise: Dollar Index -0.764, USDJPY -0.604, EURUSD +0.01026. Bearish factors included (1) euro strength after German Chancellor Merkel signaled she would compromise on German demands that bondholders shoulder a “substantial” share of the Greek rescue, saying she’ll work with the ECB to resolve the crisis, and (2) the weaker-than-expected Jun US University of Michigan consumer confidence. Bullish factors included (1) the stronger-than-expected May US leading indicators, and (2) the warning from former Fed Chairman Greenspan that a Greek default is “almost certain,” and could help drive the US into recession, which may boost the safe-haven demand for the dollar.

*July crude oil prices this morning are trading down -$1.24 a barrel at a 4-month low and July gasoline is -4.09 cents per gallon. Crude oil and gasoline prices last Friday settled lower on concern the European debt crisis may limit economic growth and energy demand along with the weaker-than-expected US consumer confidence an the action by the IMF to cut its US growth forecast for this year: CLN11 -$1.94, RBN11 -0.34. Jul crude slumped to a 3-3/4 month low and Jul gasoline fell to a 3-week low. Bearish factors included (1) doubts that a German willingness to compromise on the Greek debt crisis will settle markets and spur economic growth, (2) the action by the IMF to cut its 2011 US growth forecast to 2.5%, down from an April forecast of 2.8%, (3) data from the API that showed US crude oil inventories increased for the fifth consecutive month in May to 367.6 million bbl, a record for May in data going back to 1980, and (4) the larger-than-expected decline in the Jun University of Michigan consumer confidence. Bullish factors included (1) the weaker dollar and (2) the larger-than-expected increase in May US leading indicators.

Earnings Reports

Earnings reports (confirmed releases, sorted by mkt cap) RENN-Renren (BEST earnings consensus -$0.01).

Financial Calendar

1100 ET USDA weekly grain export inspections.

1130 ET Weekly 3-mo and 6-mo T-bill auctions.

1700 ET USDA weekly crop progress report for week ended Jun 19.

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