Barchart Morning Call 3/11

Barchart Morning Call 

Monday, March 11th, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

June E-mini S&Ps (ESM13 -0.18%) this morning are down -0.15% on a -0.67% sell-off in the Euro Stoxx 50 index and generally bearish economic news since last Friday. Negative factors this morning include the late-Friday Italian debt downgrade and weaker-than-expected Chinese industrial production, retail sales, and new yuan loans reports, and Japan's weaker-than-expected Japan Feb machine orders report. The main supportive factor is today's +1.4% m/m increase in German Jan exports. Asian stocks closed mixed today. China's CSI 300 index fell -0.56% on the weak Chinese economic data, while Hong Kong was unchanged and Japan closed +0.53%. Commodity prices this morning are down -0.13%. April crude oil (CLJ13 -0.21%) is down -0.28%, April gasoline (RBJ13 +1.08%) is up +1.55%, April gold (GCJ13 +0.15%) is up +0.01%, May copper (HGK13 -0.54%) is down -0.77%, grain prices are up about +0.4% on average, and softs are trading lower. The dollar index (DXY00 +0.11%) is slightly higher by +0.06%. EUR/USD (^EURUSD) is down -0.07% and USD/JPY (^USDJPY) is up +0.08%. June 10-year T-notes (ZNM13 +0.10%) are up +3.5 ticks.
Fitch late Friday downgraded Italy's debt rating by one notch to BBB+ from A- with a negative outlook, leaving the rating three notches above junk and one notch above Spain. The downgrade was caused by Italy's political stalemate and the inability of the country to respond to the recession and the Eurozone debt crisis. Italian credit default swap price today rose by 6.5 bp to 264 bp.
China's Feb industrial production eased to +9.9% y/y from +10.0% y/y in Jan and was weaker than market expectations of +10.6% y/y. Chinese retail sales were also weaker than expected. Chinese Feb retail sales eased to +12.3% year-to-date y/y from +14.3% in Jan and were weaker than market expectations of +15.0%.
China's Feb new yuan loans fell to 620 billion yuan from 1.070 trillion yuan in Jan and were weaker than market expectations of 700 billion yuan. China's M2 money supply report of +15.2% y/y was down from Jan's +15.9% but was stronger than market expectations of +14.9% y/y.
Japan's Feb machine orders report of -13.1% m/m was much weaker than market expectations of -1.7% m/m and was down from +2.8% in Jan. On a year-on-year basis, Feb machine orders fell to -9.7% y/y from -3.4% in Jan.
Japan's Feb machine tool orders improved to -21.5% y/y from -26.4% y/y in Jan.
Japan's Feb M2 money supply report of +2.9% y/y was up from +2.7% y/y in Jan and was 0.2 points higher than market expectations of +2.7% y/y.
Germany's Jan trade surplus of 13.7 billion euros was up from a revised 12.1 billion euros in Dec but was slightly below expectations of 13.9 billion euros. Germany's Jan exports were up +1.4% m/m, which was stronger than market expectations of +0.5% m/m and Dec's report of a revised +0.2% m/m. Germany's Jan current account surplus fell to 11.3 billion euros from a revised 20.2 billion euros and was above the market consensus of 10.5 billion euros.
French Jan industrial production fell by -1.2% m/m, which was much weaker than market expectations of -0.2% m/m. France may be back in a recession with the market consensus for French Q1 GDP of -0.1% q/q that would follow the -0.2% q/q decline in Q4.

U.S. STOCK PREVIEW

Market attention this week will focus on the ongoing U.S. fiscal battles with the Senate due to take up the House version of the continuing resolution that must be approved in 2-1/2 weeks to keep the government open past March 27. The Senate is expected to make relatively minor changes and a government shut-down on March 27 appears unlikely. Also on the fiscal front, House Budget Committee Chairman Paul Ryan is due to release his 2014 budget on Tuesday.
This is a light earnings week with only 9 of the Russell 1000 companies due to report. Today brings reports from Dick’s Sporting Goods (consensus $1.07), Urban Outfitters (0.57), and Molycorp (-0.30).
Conferences this week include the BIO-Europe Spring Partnering Conference on Monday, Edison Electric Institute - International Utility Conference on Mon-Tue, Credit Suisse Global Services Conference on Mon-Wed, Bank of America Merrill Lynch Consumer & Retail Conference on Tue-Wed, World Biofuels Markets 2013 on Tue-Wed, China Healthcare Investment Conference on Tue-Wed, FIA International Derivatives Conference on Tue-Thu, Piper Jaffray Technology Media and Telecommunications Conference on Tue-Wed, Barclays Capital Healthcare Conference on Tue-Thu, UBS Global Consumer Conference on Wed-Thu, and Susquehanna Chemical Conference on Thu.

June E-mini S&Ps (ESM13 -0.18%) are down -2.25 points (-0.15%) this morning on today's -0.67% sell-off in European stocks, the late-Friday Fitch downgrade of Italy, and generally negative Chinese, Japanese and European economic data released since Saturday. The S&P 500 index on Friday closed higher with the Dow at a record high and the S&P 500 at a 5-1/3 year high. Bullish factors included (1) the stronger-than-expected U.S. Feb payroll report and (2) the continued decline in Spanish and Italian bond yields. Closes: S&P 500 +0.45%, Dow Jones +0.47%, Nasdaq +0.17%.

OVERNIGHT U.S. STOCK MOVERS

• Dick's Sporting Goods (DKS +0.48%) reported Q4 EPS of $1.03, below the consensus of $1.06.
• Canadian Solar (CSIQ +0.54%) reported Q4 adjusted EPS at -$1.01, worse than the consensus of -92 cents.
• Kraft Foods (KRFT +1.37%) will join the NASDAQ-100 index effective March 18, replacing STARZ (STRZA +2.05%).
• The Icahn proposal could kill the Dell (DELL -0.42%) buyout, boost Dell's value, according to Barron's.
• Live Nation (LYV +1.53%) may have more upside, according to Barron's.
• Genworth Financial (GNW +1.97%) is undervalued, according to Barron's.
• Railroads are profiting from hauling overflow oil production, according to Barron's.
• Itron (ITRI +0.51%) announced a new $50 million share repurchase plan.

MARKET COMMENTS

June 10-year T-notes (ZNM13 +0.10%) are up 3.5 ticks this morning on increased safe-haven demand with the sell-off in U.S. and European stock indexes. June 10-year T-note prices on Friday fell sharply on the stronger-than-expected U.S. payroll report combined with reduced safe-haven demand with the rally in the S&P 500 index to a new 5-1/3 year high and the continued decline in Italian and Spanish bond yields. Closes: TYM3 -16, FVM3 -6.5.
The dollar index (DXY00 +0.11%) is slightly higher by +0.05 points (+0.06%) on some increased safe-haven demand. EUR/USD (^EURUSD) is slightly lower by -0.0009 (-0.07%) on the Italian downgrade. USD/JPY (^USDJPY) is up +0.08 (+0.08%). The dollar index on Friday rallied to a new 6-month high on the stronger-than-expected U.S. payroll report, which put the U.S. economy is a stronger light that should attract foreign investment and boost the dollar’s interest rate differentials. Closes: Dollar index +0.62 (+0.75%), EUR/USD -0.0102 (-0.78%), USD/JPY +1.18 (+1.24%).
April WTI crude oil (CLJ13 -0.21%) is mildly lower by -0.26 (-0.28%), while April gasoline (RBJ13 +1.08%) is up +0.0497 (+1.55%). Crude oil and gasoline prices on Friday rallied on hopes for improved fuel demand with last Friday’s stronger-than-expected U.S. payroll report. Brent crude oil, however, closed lower as capacity came back on line from the damaged North Sea pipeline. Closes: CLJ3 +0.39 (+0.43%), RBJ3 +0.0802 (+2.57%).

GLOBAL EVENT CALENDAR03/11/2013

US	1100 ET	USDA weekly grain export inspections.
JPN	0200 ET	Japan Feb machine tool orders, Jan -26.4% y/y.
	1950 ET	Japan Feb domestic CGPI expected +0.3% m/m and -0.1% y/y, Jan +0.4% m/m and -0.2% y/y.
	1950 ET	Japan Jan tertiary industry index expected -0.2% m/m, Dec +1.4% m/m.
	1950 ET	Japan Q1 BSI large all industry, Q4 -5.5. Q1 BSI large manufacturing, Q4 -10.3.
GER	0300 ET	German Jan trade balance expected 13.9 bln euros, Dec +12.0 bln euros. Jan exports expected +0.5% m/m, Dec +0.3% m/m. Jan imports expected +0.7% m/m, Dec -1.5% m/m.
	0300 ET	German Jan current account expected 10.5 bln euros, Dec 17.3 bln euros.
UK	2001 ET	U.K. Feb RICS house price balance expected -1%, Jan -4%.
CHI	2001 ET	China Q2 Manpower survey, Q1 +14%.

U.S. STOCK CALENDAR03/11/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
Dick's Sporting Goods Inc	DKS US	7:30	Q4 2013 Earnings Release	Q4 2013	1.065
Akamai Technologies Inc	AKAM US	8:00	Investor Summit	Y 2013
Dick's Sporting Goods Inc	DKS US	10:00	Q4 2013 Earnings Call	Q4 2013
Edwards Lifesciences Corp	EW US	11:00	ACC, PARTNER 1 Cohort A 3 Yr Data
Urban Outfitters Inc	URBN US	16:00	Q4 2013 Earnings Release	Q4 2013	0.573
Urban Outfitters Inc	URBN US	17:00	Q4 2013 Earnings Call	Q4 2013
Yum! Brands Inc	YUM US	Aft-mkt	February 2013 Sales and Revenue Release	2013
Molycorp Inc	MCP US		Q4 2012 Earnings Release	Q4 2012	-0.3