BARCHART MORNING CALL
Wednesday, June 26th, 2013
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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 +0.54%) this morning are up +0.41% and European stocks are up +2.00%. Asian stocks closed mostly higher: Japan -1.04%, Hong Kong +2.43%, China +0.13%, Taiwan +1.59%, Australia +1.63%, Singapore +0.47%, South Korea -0.10%, India -0.41%. U.S. and European stocks rallied after German consumer confidence rose and after Chinese money-market rates fell for a fourth day. China's overnight repurchase rate dropped -40 bp to 5.6% when the PBOC eased liquidity concerns after it released a statement that said it will provide support to those banks with temporary funding needs if they are lending to help the economy and that for banks with liquidity-management problems, it will "take corresponding measures according to circumstances." Commodity prices are mostly lower. Aug WTI crude oil (CLQ13 -0.24%) is down -0.43%. Aug gasoline (RBQ13 -0.25%) is down -0.30%, Aug natural gas (NGQ13 +1.01%) is up +0.74%, Aug gold (GCQ13 -3.63%) is down -3.63% at a fresh 2-3/4 year low and July copper (HGN13 -1.16%) is down -1.01%. Agriculture prices are mixed. The dollar index (DXY00 +0.37%) is up +0.34%. EUR/USD (^EURUSD) is down -0.41% at a 3-week low after ECB President Draghi said monetary policy "will stay accommodative for the foreseeable future." USD/JPY (^USDJPY) is down -0.11%. September 10-year T-note futures prices (ZNU13 +0.15%) this morning are up +4.5 ticks.ECB President Draghi said the ECB's monetary policy "will stay accommodative for the foreseeable future." He bolstered expectations for additional stimulus measures when he said "We have an open mind about all other possible instruments that we may consider proper to adopt and that an exit from accommodative policies remains distant."
The German July GfK consumer confidence survey unexpectedly rose +0.3 to 6.8, stronger than expectations of unch at 6.5 and its highest level in 5-3/4 years.
The Reserve Bank of India intervened in the currency market today and sold dollars in an attempt to slow the slide in the rupee which plunged to a record low of 60.3775 per dollar.
U.S. STOCK PREVIEW
The market is not expecting any revisions for today's Q1 GDP report of +2.4% or the Q1 personal consumption report of +3.4%. The Treasury today will sell $35 billion in 5-year T-notes, continuing this week’s $99 billion package of 2-year, 5-year and 7-year T-notes. There are five of the Russell 1000 companies that report earnings today: General Mills (consensus $0.54), Monsanto (1.59), Paychex (0.38), Bed, Bath & Beyond (0.93), and Tech Data Corp (1.03).Conferences during the remainder of this week include: 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
Reuters reported that China's securities regulator granted licences to HSBC Holdings (HBC +2.68%) and Citigroup (C +3.43%) , which will allow the banks to distribute mutual funds and expand their services in China.Southwest (LUV +0.30%) was downgraded at Morgan Stanley to "Underweight" from "Equal Weight."
Barrick Gold (ABX -2.78%) was downgraded to "Neutral" from "Outperform" at Credit Suisse who also cut their price target for the stock to $20 from $36.
Health Net (HNT -0.23%) was upgraded to "Outperform" from "Neutral" at Credit Suisse who also raised their price target for the stock to $38 from $32.
General Mills (GIS +0.02%) reported Q4 EPS of 53 cents, a bit below consensus of 54 cents, although it reported Q4 revenue of $4.41 billion, higher than consensus of $4.32 billion.
Enbridge Gas Distribution (ENB +2.88%) announced that it has received approval from the Ontario Energy Board for new rates effective July 1.
Standard & Poor's Rating Services raised its corporate rating on U.S. Silica (SLCA +1.07%) to BB- from B+ with a stable outlook.
Smith & Wesson (SWHC +3.74%) reported Q4 EPS of 44 cents, right on consensus, but reported Q4 revenue of $179 million, better than consensus of $170.72 million.
Apollo Group (APOL +1.36%) reported Q3 EPS of $1.05, stronger than consensus of 85 cents.
Williams’ (WMB +0.79%) board has voted to approve the company’s Bluegrass Pipeline project that will connect supply from the Marcellus and Utica shale-gas areas in the U.S. Northeast to growing petrochemical and export markets in the U.S. Gulf Coast.
MARKET COMMENTS
September E-mini S&Ps (ESU13 +0.54%) this morning areup +6.50 points (+0.41%). The S&P 500 index on Tuesday closed higher on stronger-than-expected U.S. economic data that included (1) May durable goods orders that rose +3.6% and +0.7% ex transportation, stronger than expectations of +3.0% and unch ex transportation, (2) May new home sales that rose +2.1% to a 4-3/4 year high of 476,000, (3) the Apr S&P CaseShiller composite-20 home price index that rose +12.05% y/y, better than expectations of +10.60% y/y and the biggest y/y increase in 7 years, and (4) Jun consumer confidence (Conference Board) that unexpectedly rose +6.9 to a 5-1/3 year high of 81.4, better than expectations of -1.1 to 75.1. Another positive for stocks was the rebound in Chinese stocks from their worst levels after Chinese money-market rates fell. Closes: S&P 500 +0.95%, Dow Jones +0.69%, Nasdaq 100 +0.64%.September 10-year T-notes (ZNU13 +0.15%) this morning are up +4.5 ticks. Sep 10-year T-note futures prices on Tuesday closed lower as stronger-than-expected U.S. economic data on durable goods orders, home prices, consumer confidence and new home sales all bolstered the case for the Fed to taper its bond purchases. Another negative was supply pressures as the Treasury auctions $99 billion of T-notes this week. Closes: TYU3 -8.00, FVU3 -3.25.
The dollar index (DXY00 +0.37%) this morning is up +0.280 (+0.34%). EUR/USD (^EURUSD) is down -0.0054 (-0.41%0 at a 3-week low and USD/JPY (^USDJPY) is down -0.11 (-0.11%). The dollar index on Tuesday closed higher after stronger-than-expected U.S. economic data on durable goods orders, home prices, consumer confidence and new home sales, boosted speculation the Fed will cut its dollar-negative asset purchases. EUR/USD fell back after comments from ECB President Draghi who said the Eurozone economy's condition still requires a loose monetary policy. Closes: Dollar index +0.156 (+0.19%), EUR/USD -0.00375 (-0.29%), USD/JPY +0.078 (+0.08%).
Aug WTI crude oil (CLQ13 -0.24%) this morning is down -41 cents a barrel (-0.43%) and Aug gasoline (RBQ13 -0.25%) is down -0.0082 (-0.30%). Aug crude oil and gasoline prices on Tuesday closed mixed. Crude oil rallied on stronger-than-expected U.S. economic data on durable goods orders, new home sales and consumer confidence. Gasoline retreated and crude prices fell back from their best levels after Enbridge, the largest transporter of Canadian crude to the U.S., said it had restarted pipelines that were closed Monday because of flooding. Closes: CLQ3 +0.14 (+0.15%), RBQ3 -0.0023 (-0.08%).
GLOBAL EVENT CALENDAR06/26/2013
| US | 0700 ET | Weekly MBA mortgage applications, previous -3.3% with purchase sub-index -3.0% and refi sub-index -3.4%. |
| 0830 ET | Q1 GDP expected unrevised at +2.4% (q/q annualized), Q1 personal consumption expected unrevised at +3.4%. Q1 GDP price index expected unrevised at +1.1%. Q1 core PCE expected unrevised at +1.3% q/q. | |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1300 ET | Treasury auctions $35 billion 5-year T-notes. | |
| GER | 0200 ET | German July GfK consumer confidence survey expected unch at 6.5, June 6.5. |
| UK | 0600 ET | UK Jun CBI reported sales expected -3, May -11. |
| CHI | 2130 ET | China May industrial profits year-to-date, Apr +11.4% y/y. |
U.S. STOCK CALENDAR06/26/2013
| Company Name | Symbol | Time | Event Description | Period | EPS Est (US$) |
|---|---|---|---|---|---|
| QIAGEN NV | QGEN US | 4:30 | Annual General Meeting | Y 2013 | |
| General Mills Inc | GIS US | Bef-mkt | Q4 2013 Earnings Release | Q4 2013 | 0.539 |
| Cisco Systems Inc | CSCO US | 8:00 | Investor Day - Day 2 | Y 2013 | |
| Monsanto Co | MON US | 8:00 | Q3 2013 Earnings Release | Q3 2013 | 1.593 |
| General Mills Inc | GIS US | 8:30 | Q4 2013 Earnings Call | Q4 2013 | |
| McKesson Corp | MCK US | 9:00 | Investor Day | Y 2013 | |
| Monsanto Co | MON US | 9:30 | Q3 2013 Earnings Call | Q3 2013 | |
| Pfizer Inc | PFE US | 10:00 | Pfizer's Quigley Unit Bankruptcy Plan Approval Announced | ||
| AvalonBay Communities Inc | AVB US | 10:00 | Investor Day | Y 2013 | |
| Hormel Foods Corp | HRL US | 10:30 | Investor Day | Y 2013 | |
| SEACOR Holdings Inc | CKH US | 11:15 | Annual General Meeting | ||
| Paychex Inc | PAYX US | 16:01 | Q4 2013 Earnings Release | Q4 2013 | 0.375 |
| Bed Bath & Beyond Inc | BBBY US | 16:15 | Q1 2014 Earnings Release | Q1 2014 | 0.934 |
| Bed Bath & Beyond Inc | BBBY US | 17:00 | Q1 2014 Earnings Call | Q1 2014 | |
| Marvell Technology Group Ltd | MRVL US | 19:00 | Annual General Meeting | Y 2013 | |
| Wal-Mart Stores Inc | WMT US | Investor Meeting - Day 2 - Tokyo | Y 2013 | ||
| Tech Data Corp | TECD US | Q1 2014 Earnings Release | Q1 2014 | 1.034 | |
| IAC/InterActiveCorp | IACI US | Annual General Meeting | |||
| United Therapeutics Corp | UTHR US | Annual General Meeting | |||
| Teradata Corp | TDC US | Roadshow - Paris | Y 2013 |
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