Wednesday, September 17, 2014

BARCHART MORNING CALL /

OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ14 +0.01%) this morning are up +0.04% and European stocks are up +0.63% on signs that China is expanding stimulus to promote economic growth after a government official familiar with the matter said the PBOC is injecting 500 billion yuan ($81 billion) into China's five biggest banks. Another positive for European stocks was the larger-than-expected drop in the UK unemployment rate to a 6-year low of 6.2%. Asian stocks closed mixed: Japan -0.14%, Hong Kong +1.00%, China +0.53%, Taiwan +0.68%, Australia -0.70%, Singapore +0.73%, South Korea +0.98%, India +0.52%. China's Shanghai Stock Index recovered from a 1-1/2 week low and closed higher as bank stocks rallied after an unnamed official said that the PBOC will provide a liquidity infusion and funnel 100 billion yuan into each of China's five biggest banks for a 3-month period. Commodity prices are mixed. Oct crude oil (CLV14 -0.38%) is down -0.08%. Oct gasoline (RBV14 +0.19%) is up +0.30%. Dec gold (GCZ14 +0.06%) is up +0.10%. Dec copper (HGZ14 -0.71%) is down -0.54%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.02%) is up +0.02%. EUR/USD (^EURUSD) is down -0.06%. USD/JPY (^USDJPY) is up +0.19%. Dec T-note prices (ZNZ14 +0.06%) are up +4.5 ticks ahead of the outcome of the 2-day FOMC meeting later today.
UK Aug jobless claims fell -37,200, a larger decrease than expectations of -30,000. The Aug claimant count rate fell -0.1 to 2.9%, right on expectations and the lowest in 6 years.
The UK ILO unemployment rate fell -0.2 to 6.2% in the three months through Jul, a bigger decline than expectations of -0.1 to 6.3% and the lowest in 5-3/4 years.
The Eurozone Aug CPI was revised upward to +0.4% y/y from the originally reported +0.3% y/y. The Aug core CPI was left unrevised at +0.9% y/y.
Eurozone Aug new car registrations rose +2.1% y/y, the twelfth consecutive monthly increase.
Eurozone Jul construction output was unch m/m and up +0.4% y/y, an improvement from Jun which was down -0.4% m/m and -1.1% y/y.
U.S. STOCK PREVIEW
The market is expecting today’s Aug CPI to edge lower to +1.9% y/y from +2.0% y/y in July and for the Aug core CPI to be unchanged from July at +1.9% y/y. The market is expecting today’s Sep NAHB housing market index to rise +1 point to 56, adding to the +2 point increase to 55 seen in Aug. The market is expecting today’s Q2 current account deficit to widen to -$114.0 billion from -$111.2 billion in Q1. The market is unanimously expecting the FOMC after its 2-day meeting that concludes today to announce another $10 billion cut in QE3 to $15 billion. Fed Chair Yellen will hold a press conference today after the FOMC meeting and the FOMC will release updated forecasts. The market is expecting today’s Aug CPI to edge lower to +1.9% y/y from +2.0% y/y in July and for the Aug core CPI to be unchanged from July at +1.9% y/y. There are 3 earnings reports today from the Russell 1000 companies: General Mills (consensus $0.69), Lennar (0.67), and FedEx (1.96).
Equity conferences this week include: Bank of America Merrill Lynch Media, Communications & Entertainment Conference on Tue-Wed, Bank of America Merrill Lynch Power & Gas Leaders Conference on Tue-Wed, Deutsche Bank Access Energy Conference on Tue-Wed, Credit Suisse Basic Materials Conference on Tue-Thu, Bank of America Merrill Lynch Global Healthcare Conference on Wed, Capital Link Global Commodities Energy & Freight Forum on Wed, Wolfe Research Power & Gas Leaders Conference on Wed-Thu, Morningstar Management Behind the Moat Conference on Wed-Thu, UBS Houston Energy Bus-less Tour on Wed-Thu, Credit Suisse Chemical & Ag Science Conference on Thu, Imperial Capital Global Opportunities Conference on Thu, MKM Partners Entertainment, Leisure & Internet Conference on Thu, 5th Annual Summit Internal Audit on Thu-Fri, GTC 7th CNS Partnering & Deal-Making on Thu-Fri, Imperial Capital Global Opportunities Conference on Thu, Tokyo Game Show 2014 on Fri, and Zelman & Associates Housing Summit on Fri.
OVERNIGHT U.S. STOCK MOVERS
Lennar (LEN -0.25%) reported Q3 EPS of 78 cents, higher than consensus of 67 cents.
AB InBev (BUD +0.01%) was upgraded to 'Hold' from 'Sell' at Societe Generale.
Cigna (CI +1.88%) was upgraded to 'Positive' from 'Neutral' at Susquehanna.
Kellogg (K +0.22%) was downgraded to 'Hold' from 'Buy' at Societe Generale.
DaVita (DVA +0.42%) was downgraded to 'Hold' from 'Buy' at KeyBanc.
BHP Billiton (BHP +1.33%) was downgraded to 'Underperform' from 'Neutral' at Exane BNP Paribas.
General Mills (GIS unch) reported Q1 EPS of 61 cents, less than consensus of 69 cents, and then the stock was downgraded to 'Sell' from 'Hold' at Societe Generale.
Under Armour (UA +0.83%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray.
NASA awarded a $6.8 billion contract to Boeing (BA +0.80%) and SpaceX, of which Boeing will receive $4.2 billion, and SpaceX will receive $2.6 billion, for the commercial flight of astronauts to the International Space Station.
L Brands (LB +1.48%) was downgraded to 'Neutral' from 'Overweight' at Piper Jaffray.
Apogee Enterprises (APOG +1.76%) jumped over 5% in after-hours trading after it reported Q2 EPS of 57 cents, well above consensus of 34 cents, and then raised guidance on fiscal 2015 EPS to $1.62-$1.72, higher than consensus of $1.44.
Adobe (ADBE +0.65%) fell 4% in after-hours trading after it reported Q3 adjusted EPS of 28 cents, better than consensus of 26 cents, but Q3 revenue of $1.005 billion was below consensus of $1.02 billion.
MARKET COMMENTS
Dec E-mini S&Ps (ESZ14 +0.01%) this morning are up +0.75 of a point (+0.04%). The S&P 500 index on Tuesday climbed to a 1-week high and closed higher: S&P 500 +0.75%, Dow Jones +0.59%, Nasdaq +0.93%. Bullish factors included (1) reduced interest rate concerns after the WSJ reported that the FOMC will maintain its “considerable time” language in Wednesday’s post-meeting statement, (2) optimism that additional stimulus measures by China will boost its economic growth prospects after the PBOC started a 500 billion yuan ($81 billion) standing lending-facility to China’s five biggest banks, and (3) a rally in energy stocks after crude oil prices climbed by more than $1.00 per barrel to a 1-week high.
Dec 10-year T-notes (ZNZ14 +0.06%) this morning are up +4.5 ticks. Dec 10-year T-note futures prices on Tuesday closed higher. Bullish factors included (1) carry-over support from a rally in German bunds after German Sep ZEW investor confidence slipped to a 23-month low, and (2) benign inflation pressures after U.S. Aug PPI final-demand was unch m/m and up +1.8% y/y, right on expectations. Closes: TYZ4 +2.00, FVZ4 +3.75.
The dollar index (DXY00 +0.02%) this morning is up +0.020 (+0.02%). EUR/USD (^EURUSD) is down -0.008 (-0.06%) and USD/JPY (^USDJPY) is up +0.20 (+0.19%). The dollar index on Tuesday fell to a 1-week low and closed lower. The main bearish factor was the report from the WSJ that said the FOMC will maintain its “considerable time” language in its policy statement Wednesday following the conclusion of the 2-day FOMC meeting. Gains in EUR/USD were limited after the German Sep ZEW investor confidence weakened to its lowest level in 23 months. Closes: Dollar index -0.190 (-0.23%), EUR/USD +0.00199 (+0.17%), USD/JPY -0.058 (-0.05%).
Oct WTI crude oil (CLV14 -0.38%) this morning is down -8 cents (-0.08%) and Oct gasoline (RBV14 +0.19%) is up +0.0078 (+0.30%). Oct crude and gasoline prices on Tuesday closed higher with Oct crude at a 1-week high: CLV4 +1.96 (+2.11%), RBV4 +0.0280 (+1.11%). Bullish factors included (1) comments from OPEC Secretary General El-Badri that OPEC may cut its production target by -500,000 bpd to 29.5 million bpd next year, and (2) expectations for Wednesday’s weekly EIA inventory data to show crude supplies fell -1.5 million bbl.
GLOBAL EVENT CALENDAR09/17/2014
US0700 ETWeekly MBA mortgage applications, previous -7.2% with purchase sub-index -2.6% and refi sub-index -10.7%.
0830 ETAug CPI expected unch m/m and +1.9% y/y, Jul +0.1% m/m and +2.0% y/y. Aug CPI ex food & energy expected +0.2% m/m and +1.9% y/y, Jul +0.1% m/m and +1.9% y/y.
0830 ETQ2 current account balance expected -$114.0 billion, Q1 -$111.2 billion.
1000 ETSep NAHB housing market index expected +1 to 56, Aug +2 to 55.
1030 ETEIA Weekly Petroleum Status Report.
1400 ETFOMC 2-day meeting concludes. Fed expected to leave funds rate target unchanged at zero to 0.25%. Fed expected to cut QE3 by $10 billion to $15 billion per month.
n/aG-20 finance ministers and central bankers meet for a 4-day meeting in Cairns, Australia.
UK0430 ETMinutes of the Sep 3-4 BOE meeting.
0430 ETUK Aug jobless claims change expected -30,000, Jul -33,600. Aug claimant count rate expected -0.1 to 2.9%, Jul 3.0%.
0430 ETUK Jul avg weekly earnings expected +0.5% 3-mo avg, Jun -0.2% 3-mo avg. Jul avg weekly earnings ex-bonus expected +0.7% 3-mo avg y/y, Jun +0.6% 3-mo avg y/y.
0430 ETUK Jul ILO unemployment rate expected -0.1 to 6.3% 3-months through Jul, Jun 6.4% 3-months through Jun.
EUR0200 ETEurozone Aug new car registrations.
0500 ETRevised Eurozone Aug CPI, previous +0.3% y/y. Revised Aug core CPI, previous +0.9% y/y.
0500 ETEurozone Jul construction output, Jun -0.7% m/m and -2.3% y/y.
JPN1950 ETJapan Aug trade balance expected -1.028 trillion yen, Jul -962.1 billion yen. Aug exports expected -2.6% y/y, Jul +3.9% y/y. Aug imports expected -1.2% y/y, Jul +2.3% y/y.
CHI2130 ETChina Aug property prices.
U.S. STOCK CALENDAR09/17/2014
Company NameTickerTimeEvent DescriptionPeriodEstimate
American International Group IncAIG US0:30Investor DayY 2014
General Mills IncGIS USBef-mktQ1 2015 Earnings ReleaseQ1 20150.686
Lennar CorpLEN US6:00Q3 2014 Earnings ReleaseQ3 20140.67
FedEx CorpFDX US7:30Q1 2015 Earnings ReleaseQ1 20151.963
American Realty Capital Properties IncARCP US8:00Investor DayY 2014
FedEx CorpFDX US8:30Q1 2015 Earnings CallQ1 2015
General Mills IncGIS US8:30Q1 2015 Earnings CallQ1 2015
VF CorpVFC US9:00Investor DayY 2014
Dunkin' Brands Group IncDNKN US9:00Investor & Analyst DayY 2014
Lennar CorpLEN US11:00Q3 2014 Earnings CallQ3 2014
MDU Resources Group IncMDU US11:00Analyst DayY 2014
MasterCard IncMA US11:00Investment Community MeetingY 2014
Veeva Systems IncVEEV US13:00Analyst DayY 2014
Stryker CorpSYK US14:30Analyst MeetingY 2014
Prudential Financial IncPRU US19:30Investor Day - TokyoY 2014
Eli Lilly & CoLLY USFDA Adcomm, testosterone replacement therapy, cardiovascular safety
Pinnacle West Capital CorpPNW USInvestor Conference - Day 2Y 2014
Endo International PLCENDP USFDA Adcomm, testosterone replacement therapy, cardiovascular safety
AbbVie IncABBV USFDA Adcomm, testosterone replacement therapy, cardiovascular safety
Posted by Jim Van Meerten at
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