Barchart Morning Call 6/24

BARCHART MORNING CALL

Monday, June 24th, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU13 -1.10%) this morning are down -0.87% and European stocks are down -1.63%. Asian stocks closed lower: Japan -1.26%, Hong Kong -2.22%, China -6.31%, Taiwan -0.45%, Australia -1.47%, Singapore -1.60%, South Korea -1.31%, India -1.24%. Global stocks tumbled and China's Shanghai Stock index fell more than -6% to a 6-1/2 month low after Goldman Sachs cut its 2013 China GDP forecast to 7.4% from 7.8% on concern the cash crunch in China will hurt its economy. Chinese money-market rates fell further from record highs after the PBOC used targeted injections of funds to ease China's cash crunch. China's overnight repurchase rate fell -196 bp to 6.47%, though that is still more than double this year's average of 3.09%. European stocks ignored the increase in German business confidence after the German Jun IFO business climate rose for a second month. Commodity prices are mostly lower. Aug WTI crude oil (CLQ13 -0.39%) is down -0.20% at a 2-week low. Aug gasoline (RBQ13 -0.51%) is down -0.18%, Aug natural gas (NGQ13 +0.26%) is higher by +0.42%, Aug gold (GCQ13 -0.96%) is down -0.67% and July copper (HGN13 -2.60%) is down -2.76%. Agriculture prices are weaker. The dollar index (DXY00 +0.37%) is up +0.32% at a 2-week high. EUR/USD (^EURUSD) is down -0.14%. USD/JPY (^USDJPY) is up +0.06%. September 10-year T-note futures prices (ZNU13 -0.84%) this morning are down -20 ticks on signs on long capitulations out of Asia as the 10-year T-note yield rose to a 1-3/4 year high of 2.630%.
In a statement dated June 17 and released today, the PBOC said that "At present, the overall liquidity in China's banking system is at a reasonable level, but due to many changing factors in the financial markets and also because of the mid-year point, the requirements for commercial banks in liquidity management have become higher," which suggests the cash squeeze may continue as they PBOC may not go to extraordinary measures to provide extra funds to China's banking system.
The German Jun IFO business climate sentiment rose +0.2 from May to 105.9, right on expectations. The Jun IFO current assessment fell -0.6 to 109.4, a bigger decline than expectations of -0.4 to 109.6, although the Jun IFO expectations climbed +1.1 points to 102.5, a bigger increase than expectations of +0.4 to 102.0.

U.S. STOCK PREVIEW

There are two minor U.S. economic reports today: May Chicago Fed national activity index and the Dallas Fed June manufacturing index (expected to improve to -1.0 from -10.5 in May). There are no earnings reports today from the Russell 1000 companies. Conferences this week include: Insurance Marketing and Communications Association 2013 Annual Conference on Mon, Mobile Commerce World on Mon-Tue, Mobile Pharma BizTech 2013 on Tue-Wed, 11th Product Complaints Congress for the Life Sciences on Tue-Wed, Global Hunter Securities Energy Conference on Tue-Wed, Oppenheimer Consumer Conference on Tue-Wed, Credit Suisse MLP and Energy Logistics Conference on Wed, and The UK Energy Summit 2013 on Thu.

OVERNIGHT U.S. STOCK MOVERS

Walgreens (WAG +0.77%) was downgraded to "Hold" from "Buy" at Cantor.
JPMorgan raised its price target for Google (GOOG -0.43%) shares to $1,025 from $860 citing increased confidence in search pricing and continued momentum for YouTube.
Reuters reported that more U.S. senators are raising concerns about a Chinese company's plan to buy U.S. pork company Smithfield Foods, particularly in light of restrictions that China continues to place on imports of U.S. meats.
The WSJ reported that Disney (DIS +1.21%) and Sony Pictures Entertainment (SNE +1.70%) are testing a business model in South Korea to rent movies through video on demand while they are still playing in theaters.
Politico reports that Republicans in various states around the country are split on the Internet sales tax bill being considered by Congress.
PVH Corp. (PVH +0.57%) was upgraded to "Overweight" from "Neutral" at Piper Jaffray who raised their price target on the stock to $141 from $124.
CBOE Holdings (CBOE +0.07%) was upgraded to "Buy" from "Neutral" at Goldman with a price target of $47.
The U.S. Food and Drug Administration expanded the approved use of Theravance's (THRX +10.20%) antibiotic Vibativ to treat patients with hospital-acquired and ventilator-associated bacterial pneumonia caused by Staphylococcus aureus.
GlobalScape (GSB unch) announced that the U.S. Army has exercised year one of a two-year option contract to continue Globalscape's support for the Standard Army Maintenance System-Enhanced logistics program. The option year is worth $1.45 million and will yield in excess of $360,000 of revenue per quarter.

MARKET COMMENTS

September E-mini S&Ps (ESU13 -1.10%) this morning are down -13.75 points (-0.87%). The S&P 500 index on Friday sold off to a 2-month low but recovered its losses and settled mixed. Bearish factors included (1) the surge in the 10-year T-note yield to a 1-3/4 year high of 2.51% on Fed Chairman Bernanke’s timetable for ending QE3, and (2) concern about the Chinese economy and fears that the liquidity squeeze in China may slow its economy and crimp global economic growth. Closes: S&P 500 +0.27%, Dow Jones +0.28%, Nasdaq 100 -0.43%.
September 10-year T-notes (ZNU13 -0.84%) this morning are down -20 ticks at a fresh contract low and the 10-year T-note yield overnight climbed to a 1-3/4 year high of 2.630%. Sep 10-year T-note futures prices on Friday slid to a fresh contract low. The 10-year T-note yield climbed to a 1-3/4 year high of 2.51% on heavy liquidation of Treasuries as investors flee the Treasury market on the Fed’s timetable for ending QE3, which has kept bond prices propped up and yields at abnormally low levels. Closes: TYU3 -26.50, FVU3 -16.000.

The dollar index (DXY00 +0.37%) this morning is up +0.264 (+0.32%) at a 2-week high. EUR/USD (^EURUSD) is down -0.0019 (-0.14%) and USD/JPY (^USDJPY) is up +0.06 (+0.06%). The dollar index on Friday rose to a 2-week high and closed higher. The dollar strengthened on (1) expectations the Fed is getting closer to reducing its dollar-negative QE3 program, and (2) the surge in the 10-year T-note yield to a 1-3/4 year high of 2.51%, which fuels dollar demand as foreign investors purchase dollars to buy Treasuries. Closes: Dollar index +0.403 (+0.49%), EUR/USD -0.00959 (-0.73%), USD/JPY +0.596 (+0.61%).
Aug WTI crude oil (CLQ13 -0.39%) this morning is down -19 cents (-0.20%) at a 2-week low and Aug gasoline (RBQ13 -0.51%) is down -0.0049 (-0.18%). Aug crude oil and gasoline prices on Friday slipped to 2-week lows and closed lower. Bearish factors include (1) the rally in the dollar index to a 2-week high on expectations for the Fed tapering of QE3 by year-end, (2) the slide in global equity markets, which may dampen economic optimism and energy demand, and (3) concern the liquidity squeeze in China may curb its economic growth and fuel demand. Closes: CLQ3 -1.45 (-1.52%), RBQ3 -0.0308 (-1.11%).

GLOBAL EVENT CALENDAR06/24/2013

US	0830 ET	May Chicago Fed national activity index, Apr -0.53.
	1030 ET	Dallas Fed June manufacturing activity index expected -1.0, May -10.5.
	1100 ET	USDA weekly grain export inspections.
	1230 ET	Dallas Fed President Richard Fisher speaks on U.S. monetary policy and the economy at an event in London.
	1600 ET	USDA Crop Progress.
GER	0400 ET	German Jun IFO business climate expected +0.2 to 105.9, May 105.7. Jun IFO current assessment expected -0.4 to 109.6, May 110.0. Jun IFO expectations expected +0.4 to 102.0, May 101.6.
JPN	1950 ET	Japan May corporate service price index expected unch y/y, Apr -0.4% y/y.

U.S. STOCK CALENDAR06/24/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
NRG Energy Inc	NRG US	9:00	Business Update Call
CarMax Inc	KMX US	13:00	Annual General Meeting	Y 2013
Freeport-McMoRan Copper & Gold Inc	FCX US	13:30	Analyst Meeting
Multiple Companies	MSFT US	15:30	Business Update Call
Multiple Companies	MSFT US	15:30	Business Update Call
Eli Lilly & Co	LLY US	20:00	Analyst Meeting
Apple Inc	AAPL US	21:40	Apple vs. Samsung Ruling Due in Tokyo on Infringement Case
Teradata Corp	TDC US		Roadshow - Dsseldorf	Y 2013
Clearwire Corp	CLWR US		Special Meeting - M&A Vote