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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 +0.38%) this morning are up +0.40% and European stocks are up +1.15% after better-than-expected manufacturing data in China and Europe signal strength in the global economy. Asian stocks closed mostly lower: Japan -0.44%, Hong Kong +0.36%, China -0.20%, Taiwan -0.23%, Australia -0.48%, Singapore -0.63%, South Korea -0.87%, India +2.27%. Commodity prices are mostly higher. Oct crude oil (CLV13 +0.33%) is up +0.48% and Oct gasoline (RBV13 +0.16%) is up +0.21%. Dec gold (GCZ13 -0.18%) is down -0.26%, and Sep copper (HGU13 +1.62%) is up +1.77%. Agricultural and livestock prices are lower as field samples taken from the ongoing Pro Farmers of America Midwest Crop Tour signal better-than-expected U.S. corn and soybean yields. The dollar index (DXY00 +0.54%) is up +0.56%. EUR/USD (^EURUSD) is down -0.30% and USD/JPY (^USDJPY) is up +1.00%. Most emerging market currencies plunged after the July 30-31 FOMC meeting minutes signaled the Fed will begin cutting stimulus next month, which boosted the dollar and exacerbates capital outflows out of emerging market countries. India's rupee fell to a record low 65.56 against the dollar, Thailand's baht and the Malaysian ringgit dropped to 3-year lows, while the Indonesian rupiah sank to a 4-year low against the dollar. September T-note prices (ZNU13 -0.45%) are down -15.5 ticks as the 10-year T-note yield climbed overnight to a fresh 2-year high of 2.93%.The China HSBC Aug flash manufacturing PMI rose +2.4 points from July to 50.1, stronger than expectations of +0.5 to 48.2 and the first reading since April above the 50.0 level that divides contraction from expansion.
The German Aug PMI manufacturing index rose +1.3 points from July to 52.0, stronger than expectations of +0.4 to 51.1 and the fastest pace of expansion in 2 years.
The Eurozone PMI composite index climbed +1.2 points from July to 51.7, better than expectations of +0.4 to 50.9 and its fastest pace of expansion in over 2 years.
The revised Japan July machine tool orders were revised slightly lower to -12.2% y/y from the originally reported -12.1% y/y.
U.S. STOCK PREVIEW
Today’s weekly initial unemployment claims report is expected to show an increase of +10,000 to 330,000, reversing part of last week’s decline of -15,000 to 320,000. Meanwhile, continuing claims are expected to fall by -4,000 to 2.965 million, adding to last week’s decline of -54,000 to 2.969 million. Today’s June FHFA house price index is expected to show a +0.6% m/m increase, adding to the +0.7% increase seen in May. Today’s July leading indicators report is expected to show a solid gain of +0.5% after June’s report of unchanged. The Treasury today will sell $16 billion in 5-year inflation-protected TIPS securities. The 3-day Kansas City Fed monetary conference in Jackson Hole, Wyoming begins today. There are 15 of the S&P 500 companies that report earnings today: Hormel (consensus $0.45), Patterson (0.48), Dollar Tree (0.57), Sears Holdings (-1.07), Abercrombie & Fitch (0.29), Toro ($0.59), Gap (0.64), Ross Stores (0.93), MICROS Systems (0.62), Autodesk (0.42), Nordson (1.05), Solera Holdings (0.66), Pandora (0.02), Marvell Technology Group (0.19), GameStop (0.04). Equity conferences during the remainder of this week include the Raymond James Bank Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Microsoft (MSFT -0.03%) was upgraded to "Buy" from "Neutral" at Nomura.Dollar Tree (DLTR -0.31%) reported Q2 EPS of 56 cents, lower than consensus of 57 cents.
Target (TGT -3.61%) was downgraded to "Underperform" from "Market Perform" at William Blair.
Marathon Oil (MRO -1.35%) was upgraded to "Outperform" from "Market Perform" at Raymond James.
Sears Holdings (SHLD +4.04%) reported a Q2 adjusted EPS loss of -$1.46, a wider loss than consensus of -$1.10
Abercrombie & Fitch (ANF -3.51%) reported Q2 EPS of 16 cents, well below consensus of 29 cents.
Patterson (PDCO -0.53%) reported Q1 EPS of 45 cents, weaker than consensus of 48 cents.
Hormel Foods (HRL -1.57%) reported Q3 EPS of 42 cents, lower than consensus of 45 cents.
Yahoo! (YHOO -0.22%) is up over 1% in pre-market trading after data from ComScore showed that Yahoo attracted 196 million Web visitors in July, 4.3 million more than Google (GOOG +0.45%) and the first time in 2-years that Yahoo's Web traffic has surpassed Google.
Kratos Defense (KTOS +3.39%) announced that it was awarded a Blanket Purchase Agreement with an estimated value of $6 billion to provide Continuous Monitoring as a Service to the Department of Homeland Security as part of the Continuous Diagnostics and Mitigation Program.
Hewlett-Packard (HPQ -1.78%) fell over 7% in after-hours trading after it reported Q3 EPS of 86 cents, right on consensus, but gave guidance on fiscal 2013 EPS of $3.53-$3.57, below consensus of $3.57 and said demand in China is soft 'across the board.'
Synopsys (SNPS -1.22%) reported Q3 EPS of 55 cents, better than consensus of 54 cents, and gave guidance on fiscal 2013 EPS of $2.42 - $2.44, better than consensus of $2.42.
Bloomberg reported that Wells Fargo (WFC -0.54%) will cut 2,300 mortgage lending jobs.
Hain Celestial (HAIN -1.30%) reported Q4 adjusted EPS of 65 cents, stronger than consensus of 62 cents.
LTD Brands (LTD -1.34%) reported Q2 EPS of 61 cents, better than consensus of 60 cents.
MARKET COMMENTS
Sep E-mini S&Ps (ESU13 +0.38%) this morning are up +6.50 points (+0.40%) as they recover from a 1-1/2 month low overnight on stronger-than-expected manufacturing data from China and Europe. The S&P 500 index on Wednesday fell to a 1-1/2 month low and closed lower on concern the Fed will cut stimulus measures next month after the July 30-31 FOMC minutes stated that Fed officials were "broadly comfortable" with Fed Chairman Bernanke's timeline for moderating "the pace of its securities purchases later this year." Stocks failed to garner much support from the +6.5% increase in July existing home sales, better-than-expectations of +1.0% and their best level in 3-1/2 years. Closes: S&P 500 -0.58%, Dow Jones -0.70%, Nasdaq 100 -0.35%.Sep 10-year T-notes (ZNU13 -0.45%) this morning are down -15.5 ticks as the 10-year T-note yield rose to a new 2-year high overnight at 2.93%. Sep 10-year T-note prices on Wednesday fell to a 1-1/2 month low and closed lower after the July 30-31 FOMC meeting minutes showed that Fed members expressed support for Fed Chairman Bernanke's timeline to cut bond buying later this year. Another negative for T-note prices was the larger-than-expected increase in U.S. July existing home sales that rose to their fastest pace in 3-1/2 years. Closes: TYU3 -14.50, FVU3 -9.75.
The dollar index (DXY00 +0.54%) this morning is up +0.453 (+0.56%). EUR/USD (^EURUSD) is down -0.0040 (-0.30%) and USD/JPY (^USDJPY) is up +0.98 (+1.00%). The dollar index on Wednesday closed higher. Bullish factors included (1) the larger-than-expected +6.5% increase in U.S. July existing home sales to the fastest pace in 3-1/2 years and (2) the July 30-31 FOMC minutes in which Fed members expressed support for a cut in the dollar-negative QE3 program. Closes: Dollar index +0.307 (+0.38%), EUR/USD -0.00618 (-0.46%), USD/JPY +0.419 (+0.43%).
Oct WTI crude oil (CLV13 +0.33%) this morning is up +50 cents (+0.48%) and Oct gasoline (RBV13 +0.16%) is up +0.0060 (+0.21%). Oct crude oil and gasoline prices on Wednesday settled mixed. Crude prices fell to a 1-week low on a stronger dollar and on concern the Fed will cut stimulus next month, which may reduce economic growth and demand for crude. Supportive factors included (1) the -4.029 plunge in weekly EIA gasoline inventories to a 3-month low of 218.4 million bbl, a bigger decline than expectations of -1.5 million bbl draw, and (2) the -1.09 million bbl decline in crude oil stockpiles at Cushing, OK, the delivery point for WTI futures, to a 17-month low of 37.425 million bbl. Closes: CLV3 -1.26 (-1.20%), RBV3 unchanged.
GLOBAL EVENT CALENDAR08/22/2013
| US | 0830 ET | Weekly initial unemployment claims expected +10,000 to 330,000, previous -15,000 to 320,000. Weekly continuing claims expected -4,000 to 2.965 million, previous -54,000 to 2.969 million. |
| 0830 ET | USDA weekly Export Sales. | |
| 0900 ET | Jun FHFA purchase only house price index expected +0.6% m/m, May +0.7% m/m. Q2 house price purchase index expected +2.45% q/q, Q21 +1.95% q/q. | |
| 1000 ET | July leading indicators expected +0.5%, Jun unch. | |
| 1100 ET | Treasury announces amounts of 2-year T-notes (previous $35 billion, 5-year T-notes (previous $35 billion) and 7-year T-notes (previous $29 billion) to be auctioned Aug 27-29. | |
| 1300 ET | Treasury auctions $16 billion 5-year TIPS. | |
| 1400 ET | Dallas Fed President Richard Fisher speaks at the U.S. Manufacturing Summit in Orlando, FL. | |
| 1500 ET | USDA July Cold Storage. | |
| n/a | Annual Kansas City Fed Jackson Hole Summit begins (Thu-Sat). | |
| JPN | 0200 ET | Revised Japan July machine tool orders, previous -12.1% y/y. |
| GER | 0330 ET | German Aug PMI manufacturing expected +0.4 to 51.1, July 50.7. Aug PMI services expected +0.4 to 51.7, July 51.3. |
| EUR | 0400 ET | Eurozone Aug PMI composite expected +0.4 to 50.9, July 50.5. |
U.S. STOCK CALENDAR08/22/2013
| Company Name | Company Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| Hormel Foods Corp | HRL US | Bef-mkt | Q3 2013 Earnings Release | Q3 2013 | 0.45 |
| Patterson Cos Inc | PDCO US | Bef-mkt | Q1 2014 Earnings Release | Q1 2014 | 0.481 |
| Dollar Tree Inc | DLTR US | Bef-mkt | Q2 2014 Earnings Release | Q2 2014 | 0.572 |
| Sears Holdings Corp | SHLD US | Bef-mkt | Q2 2014 Earnings Release | Q2 2014 | -1.067 |
| Abercrombie & Fitch Co | ANF US | 7:00 | Q2 2014 Earnings Release | Q2 2014 | 0.291 |
| Abercrombie & Fitch Co | ANF US | 8:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Toro Co/The | TTC US | 8:30 | Q3 2013 Earnings Release | Q3 2013 | 0.59 |
| Hormel Foods Corp | HRL US | 9:00 | Q3 2013 Earnings Call | Q3 2013 | |
| L Brands Inc | LTD US | 9:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Dollar Tree Inc | DLTR US | 9:00 | Q2 2014 Earnings Call | C2 2014 | |
| Dollar Tree Inc | DLTR US | 9:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Patterson Cos Inc | PDCO US | 10:00 | Q1 2014 Earnings Call | Q1 2014 | |
| Toro Co/The | TTC US | 11:00 | Q3 2013 Earnings Call | Q3 2013 | |
| GameStop Corp | GME US | 11:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Medtronic Inc | MDT US | 11:30 | Annual General Meeting | Y 2013 | |
| Gap Inc/The | GPS US | 16:00 | Q2 2014 Earnings Release | Q2 2014 | 0.638 |
| Ross Stores Inc | ROST US | 16:00 | Q2 2014 Earnings Release | Q2 2014 | 0.931 |
| MICROS Systems Inc | MCRS US | 16:15 | Q4 2013 Earnings Release | Q4 2013 | 0.624 |
| Ross Stores Inc | ROST US | 16:15 | Q2 2014 Earnings Call | Q2 2014 | |
| MICROS Systems Inc | MCRS US | 16:45 | Q4 2013 Earnings Call | Q4 2013 | |
| Marvell Technology Group Ltd | MRVL US | 16:45 | Q2 2014 Earnings Call | Q2 2014 | |
| Gap Inc/The | GPS US | 17:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Autodesk Inc | ADSK US | 17:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Solera Holdings Inc | SLH US | 17:00 | Q4 2013 Earnings Call | Q4 2013 | |
| Pandora Media Inc | P US | 17:00 | Q2 2014 Earnings Call | Q2 2014 | |
| Autodesk Inc | ADSK US | Aft-mkt | Q2 2014 Earnings Release | Q2 2014 | 0.42 |
| Nordson Corp | NDSN US | Aft-mkt | Q3 2013 Earnings Release | Q3 2013 | 1.045 |
| Solera Holdings Inc | SLH US | Aft-mkt | Q4 2013 Earnings Release | Q4 2013 | 0.659 |
| Pandora Media Inc | P US | Aft-mkt | Q2 2014 Earnings Release | Q2 2014 | 0.02 |
| Marvell Technology Group Ltd | MRVL US | Q2 2014 Earnings Release | Q2 2014 | 0.192 | |
| GameStop Corp | GME US | Q2 2014 Earnings Release | Q2 2014 | 0.043 |
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