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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 +1.15%) this morning are up +0.97% at a 1-1/2 month high and European stocks are up +0.90%. Asian stocks closed higher: Japan +0.39%, Hong Kong +2.55%, China +4.61%, Taiwan +2.10%, Australia +1.31%, Singapore +1.91%, South Korea +3.24%, India +1.98%. Global stock and bond markets surged after Fed Chairman Bernanke, in a speech delivered after the U.S. markets had closed Wednesday, said that low inflation and high unemployment mean the Fed needs to continue with its stimulus measures. Commodity prices are mostly higher. Aug crude oil (CLQ13 -0.54%) is down -0.64% as it fell back from a 15-month high. Aug gasoline (RBQ13 -0.85%) is down -0.95%, Aug gold (GCQ13 +2.69%) is up +2.83% at a 2-week high, and Sep copper (HGU13 +3.09%) is up +3.02% at a 3-week high. Agricultural and livestock prices are mostly higher ahead of the USDA's monthly WASDE report later this morning. The dollar index (DXY00 -1.26%) plunged -1.30% and is at a 2-week low after Fed Chairman Bernanke said that it's too early to taper QE3. EUR/USD (^EURUSD) is up +0.65% at a 2-1/2 week high and USD/JPY (^USDJPY) is down -0.43%. September T-note prices (ZNU13 +0.85%) are up sharply by 1-02/32 points after Fed Chairman Bernanke said he backed continued bond buying.In its monthly bulletin for July, the ECB said that its statement last week that it is committed to keep rates low for an extended period of time uses a "flexible horizon" and will depend on the Eurozone's economic performance.
German Jun wholesale prices fell -0.4% m/m, the fourth consecutive monthly decline, and rose +0.7% y/y.
In a statement following its 2-day policy meeting, the BOJ raised its outlook on the Japanese economy for the seventh straight month when it said Japan's economy "is starting to recover moderately." That was the first time the BOJ has used the word "recovery" in its assessment of the Japanese economy since Jan 2011.
Japan May machine orders surged +10.5% m/m and +16.5% y/y, the biggest annual increase in 1-3/4 years. The report was stronger than expectations of +1.9% m/m and +3.3% y/y.
U.S. STOCK PREVIEW
The Treasury today will sell $13 billion in 10-year T-bonds, concluding this week's $66 billion package of 3-year, 10-year and 30-year securities. Today’s weekly initial unemployment claims report is expected to show a small decline of -3,000 to 340,000, adding to last week’s decline of -5,000 to 343,000. Meanwhile, today’s continuing claims report is expected to show an increase of +22,000 to 2.955 million, reversing about one-half of last week’s decline of -54,000 to 2.933 million. There are two of the Russell 1000 companies that report earnings today: Progressive Corp (consensus $0.41), and Commerce Bancshares (0.71).
OVERNIGHT U.S. STOCK MOVERS
Viacom (VIAB +1.55%) was upgraded to "Market Perform" from "Underperform" at Bernstein.Family Dollar (FDO +7.11%) was downgraded to "Equal Weight" from "Overweight" at Barclays.
The NY Post reported that Verizon Wireless, a joint venture between Verizon (VZ -0.82%) and Vodafone (VOD -0.10%) , could end up owing Apple (AAPL -0.38%) as much as $14 billion in purchase commitments if the mobile carrier fails to sell an agreed number of iPhones.
Wynn Resorts (WYNN +0.54%) was downgraded to "Underweight" from "Equal Weight" at Morgan Stanley.
Hess Corp. (HES +0.23%) was upgraded to "Overweight" from "Neutral" at JPMorgan.
New York Times (NYT -1.11%) was downgraded to "Equal Weight" from "Overweight" at Barclays.
Analog Devices (ADI +1.02%) was upgraded to "Buy" from "Hold" at Jefferies.
KB Home (KBH -2.81%) was upgraded to "Buy" from "Fair Value" at CRT Capital.
Diamond Offshore (DO -0.04%) was upgraded to "Market Perform" from "Underperform" at BMO Capital.
Transocean (RIG -0.35%) was downgraded to "Market Perform" from "Outperform" at BMO Capital.
Worldwide PC shipments dropped to 76 million units in Q2, a 10.9% decrease from the same period last year, according to preliminary results by Gartner. This marks the fifth consecutive quarter of declining shipments, which is the longest duration of decline in the PC market’s history.
Fed Chairman Bernanke who was speaking at an event late Wednesday in Cambridge, MA. said "inflation, jobs indicate accomodative policy needed" and that "a rate increase won't be automatic when jobless rate hits the Fed's target."
Yum! Brands (YUM -0.88%) reported Q2 EPS ex-items of 56 cents, better than consensus of 54 cents, although it said its June same-store-sales for its China division were down approx 10%.
PriceSmart (PSMT -1.80%) fell nearly 4% in after-hours trading after it reported Q3 EPS of 61 cents, weaker than consensus of 64 cents.
Walgreens (WAG +3.01%) increased its quarterly dividend from 27.5 cents to 31.5 cents per share.
MARKET COMMENTS
Sep E-mini S&Ps (ESU13 +1.15%) this morning are up sharply by +16.00 points (+0.97%) after Fed Chairman Bernanke said he backs sustained stimulus. The U.S. stock market on Wednesday opened lower on concerns about the Chinese economy after China Jun exports unexpectedly fell -3.1% y/y, the biggest decline in 3-1/2 years. However, prices moved higher after the Jun 18-19 FOMC meeting minutes showed many members wanted to see further progress in the labor market before they start to taper QE3. Closes: S&P 500 +0.02%, Dow Jones -0.06%, Nasdaq 100 +0.55%.Sep 10-year T-notes (ZNU13 +0.85%) this morning are up sharply by +1-02/32 points after Fed Chairman Bernanke said he favors continued bond buying. Sep 10-year T-note prices on Wednesday closed lower on (1) reduced safe-haven demand as stocks rallied, and (2) weak demand for the Treasury’s $21 billion 10-year T-note auction that had a bid-to-cover ratio of 2.57, weaker than the 12-auction average of 2.87. Closes: TYU3 -7.0, FVU3 -3.50.
The dollar index (DXY00 -1.26%) this morning is down -1.089 (-1.30%) to a 2-week low on signs the Fed favors maintaining its dollar-negative asset purchases. EUR/USD (^EURUSD) is up +0.0084 (+0.65%) at a 2-1/2 week high. USD/JPY (^USDJPY) is down -0.43 (-0.43%). The dollar index on Wednesday closed lower after the Jun 18-19 FOMC meeting minutes indicated Fed members wanted more evidence of economic strength before tapering QE3. EUR/USD rebounded after the ECB issued a statement saying that Tuesday’s comments from ECB Executive Board member Asmussen that interest rates will stay low for an extended period “beyond 12 months” was not intended to give guidance on rates for an exact period. Closes: Dollar index -0.539 (-0.64%), EUR/USD +0.01949 (+1.53%), USD/JPY -1.773 (-1.75%).
Aug WTI crude oil (CLQ13 -0.54%) this morning is down -68 cents a barrel (-0.64%) and Aug gasoline (RBQ13 -0.85%) is down -2.86 cents per gallon (-0.95%). Crude oil and gasoline prices on Wednesday rallied sharply with crude at a 14-month high and gasoline at a 3-month high. Bullish factors include (1) the -9.87 million bbl plunge in weekly EIA crude inventories, more than three times expectations of a -3.2 million bbl draw), (2) the -2.69 million bbl decline in inventories at Cushing, the delivery point of WTI futures, and (3) the fall in weekly EIA gasoline inventories (-2.634 million bbl vs. expectations of +1.0 million bbl). Crude oil prices ignored the +1.8% increase in U.S. crude production to a new 21-year high of 7.4 million bpd in the week ended July 5. Closes: CLQ3 +2.99 (+2.89%), RBQ3 +0.0889 (+3.04%).
GLOBAL EVENT CALENDAR07/11/2013
| US | 0830 ET | Weekly initial unemployment claims expected -3,000 to 340,000, previous -5,000 to 343,000. Weekly continuing claims expected +22,000 to 2.955 mln, previous -54,000 to 2.933 mln. |
| 0830 ET | Jun import price index expected unch m/m and +0.4% y/y, May -0.6% m/m and -1.9% y/y. | |
| 0830 ET | USDA weekly Export Sales. | |
| 1100 ET | Treasury announces amount of 10-year TIPS to be auctioned July 18 (previous $13 billion). | |
| 1200 ET | July WASDE crop production report. | |
| 1300 ET | Treasury auctions $13 billion in 30-year T-bonds. | |
| 1400 ET | Jun monthly budget statement expected +$100.0 billion, May -$138.732 billion.. | |
| GER | 0200 ET | German Jun wholesale price index, May -0.4% m/m and -0.1% y/y. |
| EUR | 0400 ET | ECB publishes monthly economic report. |
| JPN | n/a | BOJ announces monetary policy decision after 2-day meeting. |
U.S. STOCK CALENDAR07/11/2013
| Company Name | Symbol | Time | Event Description | Period | EPS Est (US$) |
|---|---|---|---|---|---|
| L Brands Inc | LTD US | 7:30 | June 2013 Sales and Revenue Call | 2013 | |
| Yum! Brands Inc | YUM US | 9:15 | Q2 2013 Earnings Call | Q2 2013 | |
| Macy's Inc | M US | June 2013 Sales and Revenue Release | 2013 | ||
| Gap Inc/The | GPS US | June 2013 Sales and Revenue Release | 2013 | ||
| L Brands Inc | LTD US | June 2013 Sales and Revenue Release | 2013 | ||
| Progressive Corp/The | PGR US | Q2 2013 Earnings Release | Q2 2013 | 0.408 | |
| Progressive Corp/The | PGR US | Q2 2013 Earnings Release - June Sales | Q2 2013 | 0.408 | |
| Costco Wholesale Corp | COST US | June 2013 Sales and Revenue Release | 2013 | ||
| Costco Wholesale Corp | COST US | June 2013 Sales and Revenue Call | 2013 | ||
| Commerce Bancshares Inc/MO | CBSH US | Q2 2013 Earnings Release | Q2 2013 | 0.714 | |
| Ross Stores Inc | ROST US | June 2013 Sales and Revenue Release | 2013 | ||
| WP Carey Inc | WPC US | Annual General Meeting |
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