Tuesday, April 22, 2014

BARCHART MORNING CALL 4/22

OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM14 +0.01%) this morning are up +0.01% and European stocks are up +0.95% after drug maker stocks rallied as more than $28 billion in M&A deals has bolstered speculation of more takeovers. GlaxoSmithKline Plc and AstraZeneca Plc jumped more than 5% after Novartis AG agreed to buy Glaxo's cancer-drug business for as much as $16 billion, and after reports surfaced about a potential AstraZeneca acquisition by Pfizer. The Ukraine deal nears collapse after pro-Russian forces who seized buildings in at least 10 eastern Ukrainian cities said they are not bound by the deal reached last Thursday by Ukraine. Asian stocks closed mixed: Japan -0.85%, Hong Kong -0.13%, China +0.44%, Taiwan +0.26%, Australia +0.46%, Singapore +0.67%, South Korea +0.25%, India -0.03%. Commodity prices are mixed. Jun crude oil (CLM14 -0.37%) is down -0.36%. Jun gasoline (RBM14 -0.43%) is down -0.46%. Jun gold (GCM14 +0.23%) is up +0.26%. May copper (HGK14 -0.36%) is down -0.35%. Agriculture and livestock prices are mixed. The dollar index (DXY00 -0.12%) is down -0.14%. EUR/USD (^EURUSD) recovered from a 1-1/2 week low and is up +0.19% on expectations for Eurozone Apr consumer confidence, scheduled to be released later today, will remain unchanged. USD/JPY (^USDJPY) is down -0.04%. June T-note prices (ZNM14 +0.03%) are up +2 ticks.
The chairman of China Huarong Asset Management, China's largest manager of bad debt, said that China's bad-loan ratio rose "significantly" in Q1 as the business environment this year has been "grim and complicated" as lenders face pressures on asset quality, liquidity and lending margins. This increases the risks for China's entire banking industry.
ECB Executive Board member Coeure said that "all things being equal, a stronger euro justifies accommodative monetary policy, and that the ECB could cut the benchmark rate and/or deposit rate if necessary to counter the strength from the currency."
Eurozone Feb construction output rose +0.1% m/m and +6.7% y/y, weaker than Jan which was revised to +1.6% m/m and +8.0% y/y from the originally reported +1.5% m/m and +8.8% y/y.
The Japan Feb leading index CI was revised upward to 108.9 from the originally reported 108.5. The Feb coincident index was revised down to 113.0 from the originally reported 113.4.
U.S. STOCK PREVIEW
Today’s March existing home sales report is expected to show a -1.1% decline to 4.55 million, adding to the -0.4% decline to 4.60 million seen in February. Today’s Feb FHFA house price index is expected to show an increase of +0.5% m/m, matching the +0.5% m/m increase seen in January. Today’s Apr Richmond Fed manufacturing index is expected to show a +9 point increase to 2 following the -1 point decline to -7 seen in March. The Treasury today will sell $32 billion in 2-year T-notes.
There are 30 of the S&P 500 companies that report earnings today. Notable reports include AT&T (consensus $0.70), Yum Brands (0.84), Amgen (1.94), Discover (1.25), Comcast (0.64), Lockheed Martin (2.54), and McDonalds (1.24). The only equity conference this week is the Barclays Chicago Energy CFO Corporate Day on Tuesday.


OVERNIGHT U.S. STOCK MOVERS
Lockheed Martin (LMT +0.77%) reported Q1 EPS of $2.87, higher than consensus of $2.54.
Comcast (CMCSA +1.59%) reported Q1 EPS of 68 cents, better than consensus of 64 cents.
Harley-Davidson (HOG +1.35%) reported Q1 EPS of $1.21, stronger than consensus of $1.08.
Travelers (TRV -0.32%) reported Q1 EPS of $2.95, well ahead of consensus of $2.16.
Celanese (CE +0.96%) reported Q1 EPS of $1.33, well above consensus of $1.21.
Allergan (AGN +6.03%) surged 19% in European trading after Pershing Square reported a 9.7% stake in the company and then said that Valeant (VRX +3.24%) intends to propose a merger with Allergan.
Lone Pine Capital reported a 5.5% passive stake in Michael Kors (KORS +0.83%) .
Rent-A-Center (RCII -1.38%) reported Q1 adjusted EPS of 57 cents, better than consensus of 55 cents, and then raised guidance on fiscal 2014 EPS to $2.30-$2.50, higher than consensus of $2.29.
Werner (WERN -0.08%) reported Q1 EPS of 20 cents, below consensus of 21 cents.
Visium Asset reported a 5.1% passive stake in Brookdale Senior Living (BKD +0.41%) .
Polaris Venture Partners V reported a 17.3% stake in Cerulean (CERU +6.72%) .
The U.S. Food and Drug Administration approved Eli Lilly's (LLY +0.71%) Cyramza drug to treat patients with advanced stomach cancer or gastroesophageal junction adenocarcinoma.
Hexcel (HXL unch) reported Q1 EPS of 50 cents, better than consensus of 49 cents.
Waste Connections (WCN -0.02%) reported Q1 adjusted EPS of 44 cents, higher than consensus of 41 cents.
Facebook (FB +3.90%) climbed over 2% in after-hours trading after it was upgraded to 'Outperform' from 'Neutral' at Credit Suisse.
Netflix (NFLX +0.80%) rose 7% in after-hours trading after it reported Q1 EPS of 86 cents, higher than consensus of 83 cents, and said it expects Q2 EPS of $1.12, better than consensus of $1.00.
MARKET COMMENTS
June E-mini S&Ps (ESM14 +0.01%) this morning are up +0.25 of a point (+0.01%). The S&P 500 index on Monday rose to a 1-week high and closed higher. Bullish factors included (1) the +0.8% increase in U.S. Mar leading indicators, stronger than expectations of +0.7% and the largest increase in 4 months, and (2) optimism that U.S. Q1 company earnings results will continue to surprise on the upside as 70% of the 86 S&P 500 companies that have reported earnings results thus far have beaten expectations. Closes: S&P 500 +0.38%, Dow Jones +0.25%, Nasdaq +0.72%.
Jun 10-year T-notes (ZNM14 +0.03%) this morning are up +2 ticks. Jun 10-year T-note futures prices on Monday rebounded from a 2-week low and closed little changed. Bullish factors included (1) concerns over the global economy after Japan Mar exports rose at the slowest pace in a year, and (2) increased safe-haven demand for Treasuries on concern the crisis in Ukraine may escalate after three people were killed in a clash between pro-Russian militants and Ukraine forces in the Ukraine city of Slovyansk. T-note prices fell back from their best levels after strength in stocks undercut safe-haven demand for Treasuries. Closes: TYM4 -20.00, FVM4 -11.00.
The dollar index (DXY00 -0.12%) this morning is down -0.109 (-0.14%). EUR/USD (^EURUSD) is up +0.0026 (+0.19%). USD/JPY (^USDJPY) is down -0.04 (-0.04%). The dollar index on Monday rallied up to a 1-1/2 week high and closed higher. Supportive factors for the dollar included (1) the stronger-than-expected U.S. Mar leading indicators, which boosts the outlook for the Fed to continue to taper QE3, and (2) weakness in the yen after USD/JPY climbed to a 1-1/2 week high when Japan Mar exports rose +1.8% y/y, weaker than expectations of +6.5% y/y and the slowest pace of increase in a year, which bolsters speculation the BOJ may increase its stimulus measures. Closes: Dollar index +0.109 (+0.14%), EUR/USD -0.00206 (-0.15%), USD/JPY +0.211 (+0.21%).
Jun WTI crude oil (CLM14 -0.37%) this morning is down -37 cents (-0.36%) and Jun gasoline (RBM14 -0.43%) is down -0.0141 (-0.46%). Jun crude and gasoline prices on Monday closed higher with Jun gasoline at a 7-1/2 month high. Bullish factors included (1) the larger-than-expected +0.8% increase in U.S. Mar leading indicators, which signals strength in the U.S. economy and energy demand, (2) the ongoing Ukraine crisis and concern any further escalation of hostilities could lead to a disruption of energy supplies throughout Europe. Closes: CLM4 +0.28 (+0.27%). RBM4 +0.0221 (+0.73%).
GLOBAL EVENT CALENDAR04/22/2014
US0900 ETFeb FHFA house price index expected +0.5% m/m, Jan +0.5% m/m.
1000 ETApr Richmond Fed manufacturing index expected +9 to 2, Mar -1 to -7.
1000 ETMar existing home sales expected -1.1% to 4.55 million, Feb -0.4% to 4.60 million.
1145 ETFormer Fed Chairman Ben Bernanke speaks at the Economic Club of Canada on 8 Years of Crisis Management at the Federal Reserve and the Way Forward.
1300 ETTreasury auctions $32 billion 2-year T-notes.
1500 ETUSDA Mar Cold Storage.
JPN0100 ETRevised Japan Fed leading index CI, previous 108.5. Revised Feb coincident index CI, previous 113.4.
EUR0500 ETEurozone Feb construction output, Jan +1.5% m/m and +8.8% y/y.
1000 ETEurozone Apr consumer confidence expected unch at -9.3, Mar -9.3.
CHI2145 ETChina HSBC Apr manufacturing PMI expected +0.3 to 48.3, Mar -0.5 to 48.0.
U.S. STOCK CALENDAR04/22/2014
Company NameTickerTimeEvent DescriptionPeriodEstimate
Pentair LtdPNR USBef-mktQ1 2014 Earnings ReleaseQ1 20140.728
Omnicom Group IncOMC USBef-mktQ1 2014 Earnings ReleaseQ1 20140.789
Lockheed Martin CorpLMT USBef-mktQ1 2014 Earnings ReleaseQ1 20142.535
Allegheny Technologies IncATI USBef-mktQ1 2014 Earnings ReleaseQ1 2014-0.07
Regions Financial CorpRF USBef-mktQ1 2014 Earnings ReleaseQ1 20140.195
Prologis IncPLD USBef-mktQ1 2014 Earnings ReleaseQ1 20140.42
Genuine Parts CoGPC USBef-mktQ1 2014 Earnings ReleaseQ1 20141.019
Harley-Davidson IncHOG USBef-mktQ1 2014 Earnings ReleaseQ1 20141.082
Simon Property Group IncSPG USBef-mktQ1 2014 Earnings ReleaseQ1 20142.243
Interpublic Group of Cos Inc/TheIPG USBef-mktQ1 2014 Earnings ReleaseQ1 2014-0.081
McDonald's CorpMCD USBef-mktQ1 2014 Earnings ReleaseQ1 20141.238
Bank of New York Mellon Corp/TheBK US6:30Q1 2014 Earnings ReleaseQ1 20140.535
United Technologies CorpUTX US6:59Q1 2014 Earnings ReleaseQ1 20141.273
Xerox CorpXRX US7:15Q1 2014 Earnings ReleaseQ1 20140.238
Bank of New York Mellon Corp/TheBK US8:00Q1 2014 Earnings CallQ1 2014
Coca-Cola Enterprises IncCCE US8:00Annual General MeetingY 2014
Illinois Tool Works IncITW US8:00Q1 2014 Earnings ReleaseQ1 20140.978
Omnicom Group IncOMC US8:30Q1 2014 Earnings CallQ1 2014
Allegheny Technologies IncATI US8:30Q1 2014 Earnings CallQ1 2014
Comcast CorpCMCSA US8:30Q1 2014 Earnings CallQ1 2014
Interpublic Group of Cos Inc/TheIPG US8:30Q1 2014 Earnings CallQ1 2014
Pentair LtdPNR US9:00Q1 2014 Earnings CallQ1 2014
Travelers Cos Inc/TheTRV US9:00Q1 2014 Earnings CallQ1 2014
United Technologies CorpUTX US9:00Q1 2014 Earnings CallQ1 2014
Harley-Davidson IncHOG US9:00Q1 2014 Earnings CallQ1 2014
SunTrust Banks IncSTI US9:30Annual General Meeting
Citigroup IncC US10:00Annual General MeetingY 2014
Xerox CorpXRX US10:00Q1 2014 Earnings CallQ1 2014
Illinois Tool Works IncITW US10:00Q1 2014 Earnings CallQ1 2014
CR Bard IncBCR USAft-mktQ1 2014 Earnings ReleaseQ1 20141.862
Yum! Brands IncYUM USAft-mktQ1 2014 Earnings ReleaseQ1 20140.837
AT&T IncT USAft-mktQ1 2014 Earnings ReleaseQ1 20140.698
Torchmark CorpTMK USAft-mktQ1 2014 Earnings ReleaseQ1 20141.507
Nabors Industries LtdNBR USAft-mktQ1 2014 Earnings ReleaseQ1 20140.152
FMC Technologies IncFTI USAft-mktQ1 2014 Earnings ReleaseQ1 20140.5
Intuitive Surgical IncISRG USAft-mktQ1 2014 Earnings ReleaseQ1 20142.7
Amgen IncAMGN USAft-mktQ1 2014 Earnings ReleaseQ1 20141.94
Juniper Networks IncJNPR USAft-mktQ1 2014 Earnings ReleaseQ1 20140.29
International Game TechnologyIGT USAft-mktQ2 2014 Earnings ReleaseQ2 20140.189
Discover Financial ServicesDFS USAft-mktQ1 2014 Earnings ReleaseQ1 20141.254
Noble Energy IncNBL USAnnual General MeetingY 2014
American Electric Power Co IncAEP USAnnual General Meeting
Travelers Cos Inc/TheTRV USQ1 2014 Earnings ReleaseQ1 20142.155
Comerica IncCMA USAnnual General MeetingY 2014
PerkinElmer IncPKI USAnnual General Meeting
Actavis plcACT USFDA Adcomm, Moxduo (morphine/oxycodone fixed-ratio combo), acute pain
VF CorpVFC USAnnual General Meeting
Comcast CorpCMCSA USQ1 2014 Earnings ReleaseQ1 20140.644
Stryker CorpSYK USAnnual General Meeting
Posted by Jim Van Meerten at
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