Barchart Morning Call 5/15

BARCHART MORNING CALL

Wednesday, May 15th, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

June E-mini S&Ps (ESM13 -0.11%) this morning are down -0.05% while European stocks are up +0.39% at a 1-3/4 year high after BOE Governor King predicted that a recovery for the UK economy was "in sight." European stocks shook off weaker-than-expected Q1 GDP reports from Germany and the Eurozone. Asian stocks closed mostly higher: Japan up +2.29%, Hong Kong +0.50%, China +0.55%, Taiwan +0.81%, Australia -0.56%, Singapore +0.26%, South Korea +0.12%, India +2.49%. Commodity prices are weaker as the dollar strengthens. June WTI crude oil (CLM13 -1.31%) is down -0.82%. June gasoline (RBM13 -0.16%) is up +0.09%, June natural gas (NGM13 +0.22%) is up +0.45%, June gold (GCM13 -1.12%)is down -1.10%, and July copper (HGN13 -1.48%) is down -1.09%. Agriculture prices are lower. The dollar index (DXY00 +0.45%) is up +0.45% at a 9-1/2 month high. EUR/USD (^EURUSD) is down -0.48% at a 1-1/4 month low after Eurozone Q1 GDP trailed estimates. USD/JPY (^USDJPY) is up +9.26% at a 4-1/2 year high. June 10-year T-note futures prices (ZNM13 -0.06%) are down -4 ticks.
Eurozone Q1 GDP fell -0/2% q/q and -1.0% y/y, weaker than expectations of -0.1% q/q and -0.9% y/y, as the recession extends to a record six quarters in the Eurozone.
German Q1 GDP rose +0.1% q/q and fell -0.2% y/y, weaker than expectations of +0.3% q/q and +0.2% y/y.
BOE Governor King declared that a UK recovery is now "in sight" after the BOE raised its Q2 GDP estimate to +0.5% from +0.3%, although he said "inflation was likely to remain above the central bank's 2% target for much of the next 2 years, although the risks around the target were broadly balanced in the latter part of the forecast period."
UK Mar ILO unemployment rate unexpectedly dropped -0.1 to 7.8% in the three months through Mar, better than expectations of unchanged at 7.9%.
UK Mar avg weekly earnings rose +0.4% 3-mo/year-over-year, weaker than expectations of +0.7% 3-mo/year-over-year, while Mar avg weekly earnings ex bonus roe +0.8% 3-mo/year-over-year, right on expectations.
UK Apr jobless claims fell -7,300, more than expectations of -3,000, while the Apr claimant count rate unexpectedly dipped to a 2-year low of 4.5%, weaker than expectations of unchanged at 4.6%.
Japan Apr consumer confidence unexpectedly slipped -0.3 to 44.5, weaker than expectations of a +0.7 increase to 45.5.
Japan's Mar tertiary industry index fell -1.3% m/m, weaker than expectations of -0.7% m/m.

U.S. STOCK PREVIEW

Today’s April PPI report is expected to show a -0.6% m/m decline, matching the -0.6% m/m decline seen in March. Today’s April industrial production report is expected to be weak at -0.1% m/m, losing a little ground after the +0.4% increase seen in March and the +1.1% increase seen in February. Looking ahead to the May manufacturing data, today’s May Empire manufacturing index is expected to show a 1 point increase to 4.0, stabilizing after the -6.2 point drop to 3.1 seen in April. Today’s May NAHB housing market index is expected to show a +1 point increase to 43, stabilizing after the -2 point drop to 42 seen in April. There are four of the S&P 500 companies that report earnings today: Deere (consensus $2.72), Macy's (0.53), Computer Sciences Corp (1.00), Cisco Systems (0.49).
Conferences during the remainder of this week include BMO Capital Markets Farm to Market Conference on Tue/Wed, Credit Suisse Industrial & Environmental Services Conference on Tue/Wed, Oppenheimer Industrial Growth Summit on Wed, Citi Global Energy and Utilities Conference on Tue-Thu, JPMorgan Global Technology, Media and Telecom Conference on Tue-Thu, Bank of America Merrill Lynch Health Care Conference on Tue-Thu, Bank of America Merrill Lynch Global Transportation Conference on Wed-Thu, RBC Capital Markets Aerospace & Defense Conference on Wed/Thu, 15th Annual Medicaid and GP Congress on Wed/Thu, Morgan Stanley Refining Conference on Thu, 19th International Cash, Treasury and Risk for Finance Professionals in Asia Co on Wed-Fri, and Google Developers Conference on Wed-Fri.

OVERNIGHT U.S. STOCK MOVERS

Noble Energy (NBL +1.69%) was upgraded to "Buy" from "Hold" at Stifel with a price target of $140.
Morgan Stanley raised its price target on Google (GOOG +1.09%) to $996 from $932 and keeps an "Overweight" rating on the stock.
Discover (DFS +3.03%) reported April net charge-offs of 1.94% vs. 2.13% last month and an April delinquency rate of 1.65% vs. 1.73% in March.
Deere & Co. (DE +1.29%) tumbled 11% in pre-market trading after it reported Q2 EPS of $2.76, better than consensus of $2.72, but said global financial pressures, weather add caution to its outlook.
Northrop Grumman (NOC +1.81%) increased its dividend to 61 cents a share from 55 cents.
Polaris Industries (PII +1.42%) has been awarded a $382.5 million government contract for fire and emergency vehicles.
Safeway (SWY +3.25%) announced that it will increase to its regular quarterly cash dividend from 17.5 cents per share to 20 cents per share.
Pandora (P +6.82%) fell 4% in pre-market trading after the WSJ reported that Google (GOOG +1.09%) will launch a a paid, Spotify-like music streaming service.
Agilent (A +2.16%) lowered guidance on fiscal 2013 to $2.70-$2.85, below consensus of $2.88, and said it will initiate a restructuring program that is expected to cut approximately 450 regular employees, or approximately 2% of its global workforce.
Apollo Investment (AINV +0.91%) fell over 3% in after-hours trading after it filed to sell 18 million shares of common stock.

MARKET COMMENTS

June E-mini S&Ps (ESM13 -0.11%) this morning are down slightly by -0.75 of a point (-0.05%). The S&P 500 index on Tuesday surged to a fresh all-time high on increased global economic optimism. Financial stocks led the rally after well-known hedge-fund manager David Tepper said U.S. banks are “a good sector.” Stocks also found support from a rally in European shares after Eurozone Mar industrial production rose +1.0% m/m, stronger than expectations of +0.5% m/m, and on reduced European sovereign debt concerns after Fitch upgraded Greece’s IDR to B- from CCC. Closes: S&P 500 +1.01%, Dow Jones +0.82%, Nasdaq 100 +0.47%.
June 10-year T-notes (ZNM13 -0.06%) this morning are down -4 ticks. June 10-year T-note futures prices on Tuesday closed lower as the 10-year T-note yield rose to a 1-1/2 month high of 1.961%. Safe-haven demand for Treasuries was reduced when the S&P 500 posted another record high and after Fitch upgraded Greece. Another negative was hawkish commentary from Philadelphia Fed President Plosser who said the Fed should curtail bond purchases as early as its next FOMC meeting. Closes: TYM3 -8.0, FVM3 -3.0.
The dollar index (DXY00 +0.45%) this morning is up +0.379 (+0.45%) at a new 9-1/2 month high. EUR/USD (^EURUSD) is down -0.0062 (-0.48%) at a 1-1/4 month low and USD/JPY (^USDJPY) is up +027 (+0.26%) at a fresh 4-1/2 year high. The dollar index on Tuesday climbed to a 9-1/2 month high and closed higher on increased optimism about the U.S. economic outlook. EUR/USD was undercut after German May ZEW economic sentiment rose less than expected, while USD/JPY posted a fresh 4-1/2 year high of 102.43 yen per dollar as the aggressive easing program by the BOJ continues to pressure the yen. Closes: Dollar index +0.318 (+0.16%), EUR/USD -0.00551 (-0.42%), USD/JPY +0.573 (+0.56%).
June WTI crude oil (CLM13 -1.31%) this morning is down -77 cents a barrel (-0.82%) and June gasoline (RBM13 -0.16%) is up +0.025 of a cent a gallon (+0.09%). June crude oil and gasoline on Tuesday settle mixed. A rally in the S&P 500 to a record high was a supportive factor, along with the IEA’s hike in its 2013 global oil demand forecast by +65,000 barrels a day to 90.6 million barrels a day. Bearish factors included strength in the dollar and expectations for weekly IEA crude inventories to increase by +400,000 bbls Wednesday to an 82-year high. Closes: CLM3 -0.96 (-1.01%), RBM3 +0.0166 (+0.59%).

GLOBAL EVENT CALENDAR05/15/2013

US	0700 ET	Weekly MBA mortgage applications, previous +7.0% with the purchase mortgage sub-index up +2.4% and the refi sub-index up +8.3%.
	0830 ET	May Empire manufacturing index expected +0.95 to 4.00, Apr -6.19 to 3.05.
	0830 ET	Apr PPI expected -0.6% m/m and +0.8% y/y, Mar -0.6% m/m and +1.1% y/y, Apr PPI ex food & energy expected +0.1% m/m and +1.7% y/y, Mar +0.2% m/m and +1.7% y/y.
	0915 ET	Apr industrial production expected -0.1%, Mar +0.4%. Apr capacity utilization expected -0.2 at 78.3%, Mar 78.5%.
	1000 ET	May NAHB housing market index expected +1 to 43, Apr -2 to 42.
	1030 ET	EIA Weekly Petroleum Status Report.
JPN	0100 ET	Japan Apr consumer confidence expected +0.7 to 45.5, Mar 44.8.
	1950 ET	Japan Q1 GDP expected +0.7% q/q and +2.7% annualized, Q4 unch q/q and +0.2% annualized. Q1 GDP deflator expected -0.9% y/y, Q4 -0.7% y/y.
GER	0200 ET	German Q1 GDP expected +0.3% q/q and +0.2% y/y, Q4 -0.6% q/q and +0.4% y/y.
UK	0430 ET	UK Apr jobless claims change expected -3,000, Mar -7,000. Apr claimant rate count expected unch at 4.6%, Mar 4.6%.
	0430 ET	UK Mar avg weekly earnings expected +0.7% 3-mo/year-over-year, Feb +0.8% 3-mo/year-over-year. Mar avg earnings ex-bonus expected +0.8% 3-mo/year-over-year, Feb +1.0% 3-mo/year-over-year.
	0430 ET	UK Mar ILO unemployment rate expected unch at 7.9% 3-mo, Feb 7.9% 3-mo.
	0530 ET	BOE releases inflation report.
EUR	0500 ET	Eurozone Q1 GDP expected -0.1% q/q and -0.9% y/y, Q4 -0.6% q/q and -0.9% y/y (sa).

U.S. STOCK CALENDAR05/15/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
Deere & Co	DE US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	2.72
Macy's Inc	M US	Bef-mkt	Q1 2014 Earnings Release	Q1 2014	0.532
Northrop Grumman Corp	NOC US	8:00	Annual General Meeting	Y 2013
Computer Sciences Corp	CSC US	8:00	Q4 2013 Earnings Release	Q4 2013	0.999
PPL Corp	PPL US	10:00	Annual General Meeting	Y 2013
Deere & Co	DE US	10:00	Q2 2013 Earnings Call	Q2 2013
State Street Corp	STT US	10:00	Annual General Meeting	Y 2013
Macy's Inc	M US	10:30	Q1 2014 Earnings Call	Q1 2014
Xcel Energy Inc	XEL US		Investor Meeting - New York - Day 3	Y 2013
Halliburton Co	HAL US		Annual General Meeting	Y 2013