Thursday, June 4, 2015

BARCHART MORNING CALL 6/3

BARCHART MORNING CALL

OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM15 -0.47%) this morning are down -0.63% and European stocks are down -1.70% at a 4-week low as a selloff in global government bonds pressures stock prices. The 10-year German bund yield soared to an 8-1/4 month high of 0.996% as the plunge in German bund prices accelerated for a second day after ECB President Draghi on Wednesday said markets should get used to greater volatility after the ECB forecast higher Eurozone inflation rates. Another negative for stocks is the impasse in Greek debt talks that have yet to be resolved. Greece has four payments due to the IMF this month that total more than 1.5 billion euros with the first payment due on Friday. Asian stocks closed mostly lower: Japan +0.07%, Hong Kong -0.38%, China +0.76%, Taiwan -2.18%, Australia -1.42%, Singapore -0.14%, South Korea +0.54%, India -0.09%.
Commodity prices are mixed. Jul crude oil (CLN15 +0.08%) is up +0.30% and Jul gasoline (RBN15 +0.06%) is up +0.15%. Metals prices are lower. Aug gold (GCQ15 -0.25%) is down -0.14% on continued fund selling as long gold positions in ETFs fell to a 6-year low. Jul copper (HGN15 -0.83%) is down -0.88% at a 5-week low on technical selling after Jul copper fell below its 100-day moving average. Agricultural prices are mixed.
The dollar index (DXY00 -0.64%) is down -0.71% at a 2-week low. EUR/USD (^EURUSD) is up +0.71% at a 2-week high as the surge in European government bond yields boosts the euro's interest rate differentials against the dollar. USD/JPY (^USDJPY) is down -0.16%.

Sep T-note prices (ZNU15 -0.06%) are down -7 ticks at a 5-1/4 month low on the heels of the rout in German bund prices.
As expected, the BOE maintained its benchmark rate at 0.50% and kept its asset purchase plan at 375 billion pounds following today's BOE policy meeting.
The latest round of Greek debt talks failed to yield a breakthrough, and according to a Greek official, EU officials are pressing for an agreement with Greece's creditors by Jun 14. Greek Prime Minister Tsipras said that demands by EU officials and the IMF for cuts in the income of pensioners and increases in value-added taxes on power are unacceptable. Greece has to meet four payments this month to the IMF that total more than 1.5 billion euros, with the first payment due on Friday.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) May Challenger job cuts (April was +52.8% y/y), (2) weekly initial unemployment claims (expected -4,000 to 278,000 after last week's +7,000 to 282,000) and continuing claims (expected -15,000 to 2.207 million after last week's +11,000 to 2.222 million), (3) Q1 non-farm productivity (expected revised to -3.0% from -1.9%) and Q1 unit labor costs (expected revised to +6.1% from +5.0%), and (4) a speech by Fed Governor Daniel Tarullo at a financial conference in New York.
There are 7 of the Russell 1000 companies that report earnings today: JM Smucker (consensus $0.99), Joy Global (0.56), Navistar (-0.17), Michaels Cos (0.33), Cooper (1.75), Thor Industries (1.21), Verifone (0.43).
U.S. IPO's scheduled to price today include: Evolent Health (EVH), ECPM Holdings (GI), DavidsTea (DTEA), Qunar Cayman Islands (QUNR), Markit (MRKT), Oxford Lane Capital Corp (OXLC).
Equity conferences during the remainder of this week include: Deutsche Bank Global Industrials and Basic Materials Conference on Wed-Thu, FBN Securities: Field Trip - 8th Semi-Annual Silicon Valley Tour on Wed-Thu, Credit Suisse Engineering & Construction Conference on Thu, Morgan Stanley Leveraged Finance Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Nordstrom (JWN +0.98%) was downgraded to 'Neutral' from 'Outperform' at Credit Suisse.
Energizer (ENR -0.99%) was downgraded to 'Equal Weight' from 'Overweight' at Morgan Stanley.
Twitter (TWTR +1.65%) was downgraded to 'Hold' from 'Buy' at Evercore ISI.
Ciena (CIEN +0.99%) reported Q2 adjusted EPS of 35 cents, above consensus of 24 cents.
Diebold (DBD +2.95%) was upgraded to 'Neutral' from 'Underweight' at JPMorgan Chase.
Ericsson (ERIC unch) and AT&T (T +1.95%) were both upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase.
JM Smucker (SJM -0.30%) reported Q4 EPS of $1.87, well above consensus of 99 cents.
Joy Global (JOY -0.82%) reported Q2 EPS of 59 cents, better than consensus of 56 cents.
Verizon Communications (VZ -0.12%) fell over 1% in pre-market trading after JPMorgan Chase downgraded the stock to 'Neutral' from 'Overweight.'
T-Mobile (TMUS -0.80%) jumped nearly 6% and Dish Network (DISH -1.24%) climbed almost 8% in pre-market trading after the WSJ reported that T-Mobile in in merger talks with Dish Network.
Arthur J. Gallagher (AJG -0.23%) was initiated with an 'Overweight' at Piper Jaffray with a price target of $58.
Boeing (BA +0.39%) was awarded a $466.5 million government contract for missile guidance repair on the Minuteman III intercontinental ballistic missile.
Brown & Brown (BRO +0.89%) was initiated with an 'Overweight' at Piper Jaffray with a price target of $37.
Marsh & McLennan (MMC +0.64%) was initiated with an 'Overweight' at Piper Jaffray with a price target of $67.
Hirzel Capital reported a 7.3% stake in Hawaiian Holdings (HA -1.37%) .
MARKET COMMENTS
June E-mini S&Ps (ESM15 -0.47%) this morning are down -13.25 points (-0.63%). Wednesday's closes: S&P 500 +0.21%, Dow Jones +0.36%, Nasdaq +0.24%. The S&P 500 on Wednesday closed higher on strength in the U.S. labor market after the May ADP employment change rose +201,000, close to expectations of +200,000, and on optimism that a Greek deal may be close. Stocks were undercut by the -2.1 point decline in the May ISM non-manufacturing PMI to a 13-month low of 55.7 (weaker than expectations of -0.8 to 57.0) and by the OECD's cut in its 2015 global growth forecast to 3.1% from Oct's 3.7%.
Sep 10-year T-notes (ZNU15 -0.06%) this morning are down -7 ticks at a 5-1/4 month low. Wednesday's closes: TYU5 -26.50, FVU5 -11.75. Sep 10-year T-notes on Wednesday fell sharply and posted a new 5-month low on (1) carry-over weakness from a plunge in German bund prices to a 7-month low on reduced deflation concerns after the ECB raised its 2015 Eurozone inflation forecast, and (2) reduced safe-haven demand for Treasuries after stocks rallied.
The dollar index (DXY00 -0.64%) this morning is down -0.678 (-0.71%) at a 2-week low. EUR/USD (^EURUSD) is up +0.0080 (+0.71%) at a 2-week high. USD/JPY (^USDJPY) is down -0.20 (-0.16%). Wednesday's closes: Dollar Index -0.370 (-0.39%), EUR/USD +0.01242 (+1.11%), USD/JPY +0.131 (+0.11%). The dollar index on Wednesday fell to a 1-1/2 week low and closed lower on the larger-than-expected -2.1 point drop in the May ISM non-manufacturing PMI to a 13-month low of 55.7 and on strength in EUR/USD after the ECB raised its 2015 Eurozone inflation forecast to +0.3% from 0% in Mar.
July WTI crude oil (CLN15 +0.08%) this morning is up +18 cents (+0.30%). July gasoline (RBN15 +0.06%) is up +0.0030 (+0.15%). Wednesday's closes: CLN5 -1.62 (-2.64%), RBN5 -0.0196 (-0.95%). Jul crude oil and gasoline on Wednesday closed lower on the +0.2% increase in U.S. crude production in the week ended May 29 to a 43-year high of 9.586 million bpd and on expectations for OPEC to maintain its production levels when the cartel meets on Friday.
GLOBAL EVENT CALENDAR06/04/2015
US0730 ETMay Challenger job cuts, Apr +52.8% y/y.
0830 ETWeekly initial unemployment claims expected -4,000 to 278,000, previous +7,000 to 282,000. Weekly continuing claims expected -15,000 to 2.207 million, previous +11,000 to 2.222 million.
0830 ETRevised Q1 non-farm productivity expected -3.0%, prelim -1.9%. Revised Q1 unit labor costs expected +6.1%, prelim +5.0%.
0830 ETUSDA weekly Export Sales.
1100 ETTreasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $24 billion) and 30-year T-bonds (previous $16 billion) to be auctioned Jun 9-11.
1200 ETFed Governor Daniel Tarullo speaks at a financial conference in New York.
GER0330 ETGerman May Markit construction PMI, Apr 51.0.
UK0700 ETBOE announces interest rate decision and asset purchase target, expected no change to the 0.50% benchmark rate or to the 375 billion pound asset purchase target.
U.S. STOCK CALENDAR06/04/2015
CompanyTickerTimeEvent DescriptionPeriodEstimate
Navistar International CorpNAV USBef-mktQ2 2015 Earnings ReleaseQ2 2015-0.171
JM Smucker Co/TheSJM USBef-mktQ4 2015 Earnings ReleaseQ4 20150.992
Michaels Cos Inc/TheMIK USBef-mktQ1 2016 Earnings ReleaseQ1 20160.326
Joy Global IncJOY US6:00Q2 2015 Earnings ReleaseQ2 20150.557
L Brands IncLB US7:30May 2015 Sales and Revenue Call2015
JM Smucker Co/TheSJM US8:30Q4 2015 Earnings CallQ4 2015
Navistar International CorpNAV US9:00Q2 2015 Earnings CallQ2 2015
Michaels Cos Inc/TheMIK US9:00Q1 2016 Earnings CallQ1 2016
Ingersoll-Rand PLCIR US9:30Annual General MeetingY 2015
SandRidge Energy IncSD US10:00Annual General Meeting
Cinemark Holdings IncCNK US10:00Annual General Meeting
Joy Global IncJOY US11:00Q2 2015 Earnings CallQ2 2015
Patterson-UTI Energy IncPTEN US11:00Annual General MeetingY 2015
SL Green Realty CorpSLG US11:00Annual General MeetingY 2015
Pandora Media IncP US11:00Annual General MeetingY 2015
Las Vegas Sands CorpLVS US15:00Annual General MeetingY 2015
Cooper Cos Inc/TheCOO US16:00Q2 2015 Earnings ReleaseQ2 20151.753
Landstar System IncLSTR US16:00Q2 2015 Guidance CallQ2 2015
Thor Industries IncTHO US16:15Q3 2015 Earnings ReleaseQ3 20151.214
VeriFone Systems IncPAY US16:30Q2 2015 Earnings CallQ2 2015
Cooper Cos Inc/TheCOO US17:00Q2 2015 Earnings CallQ2 2015
Salesforce.com incCRM US17:00Annual General Meeting
VeriFone Systems IncPAY USAft-mktQ2 2015 Earnings ReleaseQ2 20150.425
General Electric CoGE US19:45Bell International Leaders Presents Former CEO, Jack Welch
Gap Inc/TheGPS USMay 2015 Sales and Revenue Release2015
L Brands IncLB USMay 2015 Sales and Revenue Release2015
Questar CorpSTR USRoadshow - Europe - Day 4Y 2015
Vertex Pharmaceuticals IncVRTX USAnnual General Meeting
Jarden CorpJAH USAnnual General Meeting
Priceline Group Inc/ThePCLN USAnnual General Meeting
Concho Resources IncCXO USAnnual General Meeting
CST Brands IncCST USAnnual General Meeting

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