Barchart Morning Call 7/10

BARCHART MORNING CALL

Wednesday, July 10th, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU13 -0.14%) this morning are down -0.17% and European stocks are down -0.62%. Asian stocks closed mixed: Japan -0.39%, Hong Kong +1.07%, China +2.84%, Taiwan +0.51%, Australia +0.40%, Singapore +0.30%, South Korea -0.30%, India -0.75%. U.S. and European stocks were undercut after China's exports and imports unexpectedly contracted in Jun, although China's Shanghai Stock index closed higher on speculation the government will take measures to support economic growth. Italian and Spanish government bonds declined after Standard & Poor's late yesterday cut Italy's credit rating to BBB, two levels above junk, citing weak economic prospects. Commodity prices are mostly higher. Aug crude oil (CLQ13 +1.64%) is up +1.35% at a 14-month high after weekly API inventory data released late yesterday showed crude inventories tumbled -9.0 million bbl. Aug gasoline (RBQ13 +1.60%) is up +1.27% at a 3-month high, Aug gold (GCQ13 +0.76%) is up +0.49%, and Sep copper (HGU13 +0.41%) is up +0.07%. Agricultural and livestock prices are higher. The dollar index (DXY00 -0.34%) is down -0.30%. EUR/USD (^EURUSD) is up +0.33% and USD/JPY (^USDJPY) is down -1.10%. September T-note prices (ZNU13 -0.01%) are down -1.5 ticks.
China's Jun trade balance widened to a +$27.12 billion surplus, the most in 5-months but slightly smaller than expectations of a +$27.80 billion, and wider than a revised +$20.42 billion surplus in May. Jun exports unexpectedly fell -3.1% y/y, weaker than expectations of a +3.7% increase and the biggest decline in 3-1/2 years. Jun imports unexpectedly fell for a second month by -0.7% y/y, mush weaker than expectations of +6.0% y/y.
The Japan Jun domestic CGPI rose +0.1% m/m and +1.2% y/y, close to expectations of unch m/m and +1.2% y/y.
Japan's May tertiary industry index rose +1.2% m/m, stronger than expectations of +0.7% m/m.
Japan Jun consumer confidence fell -1.4 to 44.3, weaker than expectations of -0.1 to 45.6.
Revised German Jun CPI (EU harmonized) was unchanged at +0.1% m/m and +1.9% y/y, right on expectations.

U.S. STOCK PREVIEW

The Treasury today will sell $21 billion in 10-year T-notes, continuing this week's $66 billion package of 3-year, 10-year and 30-year securities. The markets will be watching today's June 18-19 FOMC meeting minutes for any hints of when the Fed may start tapering QE3. Fed Chairman Bernanke will deliver a speech this afternoon at 4:10 PM ET in Boston at the National Bureau of Economic Research on the topic of “The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future.” Four of the Russell 1000 companies report earnings today: Fastenal (consensus $0.41), Family Dollar Stores (1.03), MSC Industrial Direct (0.97), Yum Brands (0.54).

OVERNIGHT U.S. STOCK MOVERS

Wells Fargo (WFC -0.30%) was downgraded to "Hold" from "Buy" at Sandler O'Neil.
Moody’s Investors Service raised its outlook of the U.K. banking system to stable from negative, citing improving profitability and lower impairments.
The WSJ reports that investors pulled $13.5 billion from mutual funds that invest in municipal bonds in June, according to Lipper FMI, a retreat that is making it harder for several cities, states and towns to raise money.
Famiy Dollar Stores (FDO -0.48%) reported Q3 EPS of $1.05, better than expectations of $1.03, and raised guidance on fiscal 2013 EPS to $3.77-$3.82, higher than consensus of $3.77.
Cummins (CMI +1.62%) raised its quarterly dividend 25% to 62.5 cents per share from 50 cents per share.
Fastenal (FAST +2.46%) reported Q2 EPS of 41 cents, right on expectations, but then boosted its dividend by 5 cents to 25 cents per share.
Amazon.com (AMZN +0.32%) was initiated with a "Buy" at Citigroup with a price target of $340.
eBay (EBAY +1.45%) was initiated with a "Buy" at Citigroup eith a price target of $65.
Google (GOOG +0.02%) was initiated with a "Buy" at Citigroup with a price target of $1100.
Helen of Troy (HELE +2.14%) gained over3% in after-hours trading after it reported Q1 EPS of 82 cents, well ahead of consensus of 71 cents, and raised its fiscal 2014 EPS view to $3.50-$3.60, better than consensus of $3.53.

MARKET COMMENTS

Sep E-mini S&Ps (ESU13 -0.14%) this morning are down -2.75 points (-0.17%). The U.S. stock market on Tuesday shook off the IMF’s cut to its global 2013 GDP estimate and moved higher on speculation the economy is strong enough to withstand any Fed QE3 tapering. Another bullish factor for stocks is optimism that stocks will beat their Q2 earnings estimates, which, according to Bloomberg estimates, have been sharply lowered to +1.8% earnings growth from expectations of +8.3% growth 6 months ago. Closes: S&P 500 +0.72%, Dow Jones +0.50%, Nasdaq 100 +0.61%.
Sep 10-year T-notes (ZNU13 -0.01%) this morning are down -1.5 ticks. Sep 10-year T-note prices on Tuesday closed higher after the IMF cut its 2013 global GDP forecast for a fifth consecutive time, which may prompt global central banks to delay cutting their stimulus measures. Closes: TYU3 +5.0, FVU3 +2.0.

The dollar index (DXY00 -0.34%) this morning is down -0.257 (-0.30%). EUR/USD (^EURUSD) is up +0.0042 (+0.33%). USD/JPY (^USDJPY) is down -1.11 (-1.10%). The dollar index on Tuesday rose to a 3-year high and closed higher. EUR/USD slumped to a 3-month low on dovish comments from ECB Executive Board member Asmussen who said ECB policymakers’ forward guidance, which is that interest rates will stay low for an extended period, “goes beyond 12 months.” Closes: Dollar index +0.424 (+0.50%), EUR/USD -0.00894 (-0.69%), USD/JPY +0.185 (+0.18%).
Aug WTI crude oil (CLQ13 +1.64%) this morning is up +$1.40 a barrel (+1.35%) at a fresh 14-month high and Aug gasoline (RBQ13 +1.60%) is up +3.73 cents per gallon (+1.27%) at a 3-month high. Crude oil and gasoline prices on Tuesday shook off the rally in the dollar index to 3-year high and closed higher. Crude was supported by the rally in the stock market and by expectations that Wednesday’s weekly EIA data will show crude inventories fell -3.1 million bbl to a 4-month low. Gasoline gained on concern that Irving Oil’s 298,800-barrel-a-day refinery in New Brunswick, Canada may slow output and reduce gasoline supplies to the U.S. East coast after a train derailment there closed the track. Closes: CLQ3 +0.86 (+0.83%), RBQ3 +0.0458 (+1.59%).

GLOBAL EVENT CALENDAR07/10/2013

US	0700 ET	Weekly MBA mortgage applications, previous -11.7%, purchase sub-index -3.1% and refi sub-index -15.6%.
	1000 ET	May wholesale inventories expected +0.3% m/m, Apr +0.2% m/m.
	1030 ET	EIA Weekly Petroleum Status Report.
	1300 ET	Treasury auctions $21 billion in 10-year T-notes.
	1400 ET	FOMC minutes from Jun 18-19 meeting.
	1610 ET	Fed Chairman Ben Bernanke speaks at a National Bureau of Economic Research Conference in Boston on The First 100 Years of the Federal Reserve: The Policy Record, Lessons Learned, and Prospects for the Future.
JPN	0100 ET	Japan Jun consumer confidence expected -0.1 to 45.6, May 45.7.
	1950 ET	Japan May machine orders expected +1.9% m/m and +3.3% y/y, Apr -8.8% m/m and -1.1% y/y.
	2200 ET	Tokyo Jun average office vacancies, May 8.33%.
GER	0200 ET	German final-Jun CPI (EU harmonized) expected unrevised from prelim +0.1% m/m and +1.9% y/y.

U.S. STOCK CALENDAR07/10/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
Fastenal Co	FAST US	6:50	Q2 2013 Earnings Release	Q2 2013	0.405
Family Dollar Stores Inc	FDO US	7:00	Q3 2013 Earnings Release	Q3 2013	1.026
MSC Industrial Direct Co Inc	MSM US	7:30	Q3 2013 Earnings Release	Q3 2013	0.973
Family Dollar Stores Inc	FDO US	10:00	Q3 2013 Earnings Call	Q3 2013
Fastenal Co	FAST US	10:00	Q2 2013 Earnings Call	Q2 2013
MSC Industrial Direct Co Inc	MSM US	11:00	Q3 2013 Earnings Call	Q3 2013
Smithfield Foods Inc	SFD US	14:30	Hearing Smithfield and Beyond:Examining Foreign Purchases of Amer. Food Cos.""
Chevron Corp	CVX US	17:00	Q2 2013 Sales and Revenue Release - Interim Update	Q2 2013
Yum! Brands Inc	YUM US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	0.54