Monday, July 15th, 2013
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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 +0.15%) this morning are up +0.10% at a 1-3/4 month high and European stocks are up +0.25%. Asian stocks closed higher: Japan closed for holiday, Hong Kong +0.12%, China +1.40%, Taiwan +0.42%, Australia +0.15%, Singapore +0.02%, South Korea +0.29%, India +0.38%. Global stocks are higher after China Q2 GDP rose at a 7.5% y/y pace, right on market expectations, although JPMorgan cut their 2013 China GDP estimate to 7.4% from 7.6%. Commodity prices are mostly lower. Aug crude oil (CLQ13 -0.60%) is down -0.65% after China's Jun industrial production rose at its slowest pace in 4 years. Aug gasoline (RBQ13 -1.47%) is down -0.91%, Aug gold (GCQ13 +0.36%) is up +0.35%, and Sep copper (HGU13 -0.59%) is down -0.63%. Agricultural prices are lower. The dollar index (DXY00 +0.40%) is up +0.35% on expectations that U.S. Jun retail sales, to be released later this morning, will be strong enough to add to the case for the Fed to reduce stimulus. EUR/USD (^EURUSD) is down -0.30% and USD/JPY (^USDJPY) is up +0.93%. September T-note prices (ZNU13 +0.01%) are little changed, up +0.5 of a tick.China Q2 GDP rose 7.5% y/y, right on expectations, although it did slow from a 7.7% y/y pace in Q1.
China Jun industrial production climbed +8.9% y/y, weaker than expectations of +9.1% y/y and matched its slowest pace of growth in 4-years.
China Jun retail sales rose +13.3% y/y, the fastest pace in 4-months and stronger than expectations of +12.9% y/y.
UK July Rightmove house prices slowed to a +0.3% m/m increase from +1.2% in Jun, but rose +4.8% y/y, a 3-year high, from a 2.7% y/y increase in Jun.
U.S. STOCK PREVIEW
Today’s June retail sales report is expected to show a strong increase of +0.8% overall and +0.5% ex-autos. That would add to May’s respectable report of +0.6% and +0.3% ex-autos. Today’s July Empire manufacturing index is expected to show a small decline of -2.84 to 5.00, giving back a small part of the +9.27 point increase to 7.84 seen in June. There are four of the Russell 1000 companies that report earnings today: Citigroup (consensus $1.18), JB Hunt Transport (0.74), Cintas (0.70), Brown & Brown (0.35). There are no equity conferences this week.
OVERNIGHT U.S. STOCK MOVERS
According to the Korea Economic Daily, Samsung (SSNLF +0.88%) , which previously supplied the mobile application processors for Apple's (AAPL -0.18%) iPhones but lost the business to TSMC (TSM -0.54%) , will again be Apple's supplier for the chips from 2015.Qualcomm (QCOM +1.17%) was downgraded to "Neutral" from "Buy" at Lazard Capital.
Harley-Davidson (HOG +1.56%) was downgraded to "Neutral" from "Outperform" at Wedbush.
Tiffany (TIF -0.09%) was upgraded to "Buy" from "Hold" at Stifel.
Gap (GPS +0.76%) was downgraded to "Neutral" from "Overweight" at Piper Jaffray.
Teekay Tankers (TNK +0.68%) was downgraded to "Underweight" from "Neutral" at JPMorgan.
Newmont Mining (NEM -2.45%) was downgraded to "Market Perform" from "Outperform" at BMO Capital.
CIBC downgraded Mosaic (MOS -1.32%) to "Sector Performer" from "Sector Outperformer" based on a reduction in its long-term potash price target to $400 a tonne from $450 a tonne.
Genesco (GCO -1.68%) was downgraded to "Neutral" from "Buy" at Sterne Agee.
UPS (UPS -5.83%) downgraded to "Outperform" from "Strong Buy" at Raymond James and was also downgraded to "Hold" from "Buy" at BB&T.
BNY Mellon (BK +0.97%) was upgraded to "Buy" from "Neutral" at Citigroup who also raised their price target on the stock to $34 from $28.
Leap Wireless (LEAP +2.57%) surged over 80% in after-hours trading after AT&T (T -0.17%) said it would purchase the company for $15 per share.
MARKET COMMENTS
Sep E-mini S&Ps (ESU13 +0.15%) this morning are up +1.75 points (+0.10%) at a 1-3/4 month high. The U.S. stock market on Friday settled slightly high as better-than-expected bank earnings offset an unexpected decline in July University of Michigan consumer confidence, (-0.2 to 83.9 versus expectations of +0.6 to 84.7) and comments from Philadelphia Fed President Plosser who said he wants to start tapering stimulus in September. Closes: S&P 500 +0.31%, Dow Jones +0.02%, Nasdaq 100 +0.64%.Sep 10-year T-notes (ZNU13 +0.01%) this morning are little changed, up +0.5 of a tick. Sep 10-year T-note prices on Friday climbed to a 1-week high after the July U.S. consumer confidence index from the University of Michigan unexpectedly fell, but shed their gains and closed lower on hawkish comments from Philadelphia Fed President Plosser who said “I’d like for us to start in September” to taper asset purchases. Closes: TYU3 -7.00, FVU3 -6.25.
The dollar index (DXY00 +0.40%) this morning is up +0.289 (+0.35%). EUR/USD (^EURUSD) is down -0.0039 (-0.30%). USD/JPY (^USDJPY) is up +0.92 (+0.93%). The dollar index on Friday closed higher on expectations the Fed will taper its stimulus measures faster than the ECB. EUR/USD weakened after Fitch Ratings cut France’s credit ratings and after dovish comments from ECB Executive Board member Constancio who said that the Eurozone’s slow economic recovery “implies that monetary policy has to stay accommodative for a longer period of time.” Closes: Dollar index +0.242 (+0.29%), EUR/USD -0.0288 (-0.22%), USD/JPY +0.259 (+0.26%).
Aug WTI crude oil (CLQ13 -0.60%) this morning is down -69 cents a barrel (-0.65%) and Aug gasoline (RBQ13 -1.47%) is down -2.84 cents per gallon (-0.91%). Crude oil and gasoline prices on Friday closed higher as Aug gasoline climbed to a 3-1/4 month high. Bullish factors included (1) optimism that global central banks will keep stimulus measures in place after ECB Executive Board member Constancio said monetary policy needs to stay accommodative due to a substandard recovery, and (2) strength in gasoline on supply concerns after unplanned outages at Valero’s Port Arthur, Texas refinery and Irving Oil’s St. John, New Brunswick refinery have shuttered a combined 608,000 barrels a day of gasoline production. Closes: CLQ3 +1.04 (+0.99%), RBQ3 +0.0961 (+3.18%).
GLOBAL EVENT CALENDAR07/15/2013
| US | 0830 ET | Jul Empire manufacturing index expected -2.84 to 5.00, Jun +9.27 to 7.84. |
| 0830 ET | Jun retail sales expected +0.8% and +0.5% less autos, May +0.6% and +0.3% less autos. | |
| 1000 ET | May business inventories expected unchanged, Apr +0.3% | |
| 1100 ET | USDA weekly grain export inspections. | |
| 1600 ET | USDA Crop Progress. | |
| JPN | n/a | Japanese markets closed for Marine Day. |
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