Friday, February 27, 2015

BARCHART MORNING CALL 2/27

OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 -0.15%) this morning are down -0.12% and European stocks are down -0.04% on expectations for U.S. Q4 GDP to be revised lower later today. Stock losses were limited after German lawmakers approved an extension of Greece's loan program. Asian stocks closed mixed: Japan +0.06%, Hong Kong -0.32%, China +0.18%, Taiwan closed for holiday, Australia +0.34%, Singapore -0.68%, South Korea -0.58%, India +1.65%. Japan's Nikkei Stock Index rose to a 14-3/4 year high after Jan industrial production rose more than expected by the most in 3-1/2 years. China's Shanghai Stock Index climbed to a 4-week high ahead of the annual National People's Congress meeting next week. China's yuan fell to 6.2699 per dollar, a 2-1/3 year low, after the PBOC cut its reference rate by the most in a month. Commodity prices are mixed. Apr crude oil (CLJ15 +1.43%) is up +1.74% and Apr gasoline (RBJ15 +1.12%) is up +0.95% at a 2-1/2 month high. Apr gold (GCJ15 -0.10%) is down -0.20%. Mar copper (HGH15 -0.94%) is down -0.87% after weekly Shanghai copper inventories surged +50,475 MT to 205,146 MT, an 11-month high. Agriculture prices are higher. The dollar index (DXY00 -0.26%) is down -0.27%. EUR/USD (^EURUSD) is up +0.22%. USD/JPY (^USDJPY) is down -0.07%. Mar T-note prices (ZNH15 -0.11%) are down -6 ticks.
The Japan Jan jobless rate unexpectedly rose +0.2 to 3.6% when expectations were for no change at 3.4%. The Jan job-to-applicant ratio was unchanged at 1.14, weaker than expectations of 1.15.
Japan Jan overall household spending fell -5.1% y/y, weaker than expectations of -4.1% y/y and the tenth consecutive month that spending has declined.
Japan Jan national CPI rose 2.4% y/y, right on expectations. Jan national CPI ex-fresh food rose +2.2% y/y, less than expectations of +2.3% y/y and the slowest pace of increase in 10 months. Jan national CPI ex food & energy rose +2.1% y/y, right on expectations.
Japan Jan industrial production rose +4.0% m/m, stronger than expectations of +2.7% m/m and the largest increase in 3-1/2 years. Year-over-year, Jan industrial production fell -2.6% y/y, less than expectations of -3.1% y/y.
Japan Jan retail sales fell -1.3% m/m and -2.0% y/y, weaker than expectations of -0.4% m/m and -1.2% y/y.
The German Jan import price index fell -0.8% m/m and -4.4% y/y, less than expectations of -1.1% m/m and -4.6% y/y.
U.S. STOCK PREVIEW
Today’s Q4 GDP report is expected to be revised substantially lower to +2.0% (q/q annualized) from +2.6% in the preliminary report due to weaker trade and inventory figures. Today’s final-Feb U.S. consumer confidence index from the University of Michigan is expected to be revised higher by +0.4 points to 94.0 from the early-Feb level of 93.6. Today’s Feb Chicago PMI is expected to show a decline of -1.4 to 58.0, more than offsetting the +0.6 point increase to 59.4 seen in January. The market is expecting today’s Jan pending home sales report to show a +2.0% m/m increase, recovering some ground after December’s -3.7% decline.
There are 3 of the S&P 500 companies that report earnings today: NRG Energy (consensus $0.54), Pepco (0.20), Leucadia National Corp. Equity conferences during the remainder of this week include: Gabelli & Company Inaugural Waste & Environmental Services Symposium on Fri.
OVERNIGHT U.S. STOCK MOVERS
CBOE Holdings (CBOE -1.63%) was downgraded to 'Neutral' from 'Buy' at BofA/Merrill Lynch.
FedEx (FDX -0.59%) was upgraded to 'Outperform' from 'Neutral' at Credit Suisse.
Universal Health (UHS +3.02%) reported Q4 EPS of $1.71, better than consensus of $1.50.
Southwestern Energy (SWN -5.79%) reported Q4 adjusted EPS of 52 cents, higher than consensus of 50 cents.
MasTec (MTZ -0.96%) reported Q4 adjusted EPS of 40 cents, above consensus of 38 cents.
Bio-Rad (BIO +0.91%) reported Q4 EPS of $1.34, higher than consensus of $1.18.
Tutor Perini (TPC -0.73%) reported Q4 EPS of 56 cents, weaker than consensus of 71 cents, and then lowered guidance on fiscal 2015 EPS to $2.20-$2.50, well below consensus of $2.89.
Mentor Graphics (MENT -2.73%) reported Q4 EPS of $1.09, better than consensus of $1.07.
Ingram Micro (IM -0.04%) reported Q4 EPS of 98 cents, less than consensus of 99 cents.
Herbalife (HLF +3.45%) reported Q4 adjusted EPS of $1.41, better than consensus of $1.22, but then lowered guidance on fiscal 2015 adjusted EPS to $4.10-$4.50, well below consensus of $5.08.
J.C. Penney (JCP +1.45%) dropped over 11% in after-hours trading after it reported Q4 adjusted EPS of 0 cents, well below consensus of 11 cents.
Monster Beverage (MNST +0.77%) gained over 4% in after-hours trading after it reported Q4 EPS of 72 cents, well above consensus of 59 cents.
Autodesk (ADSK -1.61%) reported Q4 EPS of 25 cents, above consensus of 24 cents, but then lowerd guidance on fical 2016 EPS to $1.05-$1.20, below consensus of $1.32.
Ross Stores (ROST +0.60%) jumped nearly 5% in after-hours trading after it reported Q4 EPS of $1.20, higher than consensus of $1.11, and then announced a new $1.4 billion stock repurchase program.
The Gap (GPS +0.20%) rose nearly 3% in pre-market trading after it reported Q4 EPS of 75 cents, better than consensus of 74 cents, and then announced a $1 billion share repurchase program.
MARKET COMMENTS
Mar E-mini S&Ps (ESH15 -0.15%) this morning are down -2.50 points (-0.12%). The S&P 500 index on Thursday closed lower: S&P 500 -0.15%, Dow Jones -0.06%, Nasdaq +0.49%. Negative factors included (1) the +31,000 increase in U.S weekly initial unemployment claims, more than expectations of +7,000, (2) the +0.3% increase in Jan durable goods orders ex-transportation, weaker than expectations of +0.5%, and (3) weakness in energy producers as crude oil fell.
Mar 10-year T-notes (ZNH15 -0.11%) this morning are down -6 ticks. Mar 10-year T-note futures prices on Thursday fell back from a 2-week high and closed lower. Closes: TYH5 -14.00, FVH5 -9.25. Bearish factors included (1) the larger-than-expected +0.2% m/m increase in Jan core CPI, which may put the Fed closer to raising interest rates, and (2) supply pressures as the Treasury auctioned $29 billion of 7-year T-notes.
The dollar index (DXY00 -0.26%) this morning is down -0.261 (-0.27%). EUR/USD (^EURUSD) is up +0.0025 (+0.22%). USD/JPY (^USDJPY) is down -0.08 (-0.07%). The dollar index on Thursday rallied to a 1-month high and closed higher: Dollar index +1.079 (+1.15%), EUR/USD -0.01638 (-1.44%), USD/JPY +0.555 (+0.47%). Bullish factors included (1) the +0.2% m/m increase in U.S. Jan core CPI, stronger than expectations of +0.1%, which reduces deflation concerns and puts the Fed closer to raising interest rates, and (2) weakness in EUR/USD which fell to a 1-month low as the ECB will soon begin its QE program and start buying sovereign debt next month.
Apr WTI crude oil (CLJ15 +1.43%) this morning is up +84 cents (+1.74%) and Apr gasoline (RBJ15 +1.12%) is up +0.0181 (+0.95%) at a 2-1/2 month high. Apr crude and Apr gasoline prices on Thursday closed lower: CLJ5 -2.82 (-5.53%), RBJ5 -0.0022 (-0.11%). Bearish factors included (1) the rally in the dollar index to a 1-month high and (2) negative carry-over from Wednesday’s EIA data that showed an +8.4 million bbl increase in weekly EIA crude inventories to a record 434.1 million bbl (EIA data since 1982) and a +2.4 million bbl increase in crude supplies at Cushing, OK, the delivery point of WTI futures, to a 1-1/2 year high of 48.68 million bbl.
GLOBAL EVENT CALENDAR02/27/2015
US0830 ETRevised Q4 GDP expected +2.0% (q/q annualized) vs. preliminary +2.6%. Q4 personal consumptions expected unrevised at +4.3%. Q4 GDP price index expected unrevised at unch. Q4 core PCE deflator expected unrevised at +1.1% q/q.
0900 ETFeb Milwaukee ISM expected +2.40 to 54.00, Jan -6.01 to 51.60.
0945 ETFeb Chicago PMI expected -1.4 to 58.0, Jan +0.6 to 59.4.
1000 ETJan pending home sales expected +2.0% m/m and +8.7% y/y, Dec -3.7% m/m and +8.5% y/y.
1000 ETFinal-Feb U.S. consumer confidence index (University of Michigan) expected +0.4 to 94.0, early-Feb -4.5 to 93.6.
1015 ETNew York Fed President William Dudley and Cleveland Fed President Loretta Nester are discussants of a report on the new neutral for the federal funds rate and condition of the economy at the University of Chicagos Booth School of Business 2015 U.S. Monetary Policy Forum.
1330 ETFed Vice Chairman Stanley Fischer, ECB Vice President Vitor Constancio and BOJ Deputy Governor Hiroshi Nakaso participate in a panel discussion on Conducting Monetary Policy with a Large Balance Sheet at the University of Chicagos Booth School of Business 2015 U.S. Monetary Policy Forum.
JPN0000 ETJapan Jan housing starts expected -11.6% y/y to 880,000 annualized, Dec -14.7% y/y to 883,000 annualized.
0000 ETJapan Jan construction orders, Dec +7.5% y/y.
GER0200 ETGerman Jan import price index expected -1.1% m/m and -4.6% y/y, Dec -1.7% m/m and -3.7% y/y.
0800 ETGerman Feb CPI (EU harmonized) expected +0.6% m/m and -0.5% y/y, Jan -1.3% m/m and -0.5% y/y.
UK0430 ETRevised UK Q4 GDP, previous +0.5% q/q and +2.7% y/y.
0430 ETUK Q4 total business investment, Q3 -1.4% q/q and +5.2% y/y.
0430 ETUK Dec index of services, Nov +0.1% m/m and +0.8% 3-mon/3-mon.
0430 ETUK Feb Lloyds business barometer, Jan 52.
U.S. STOCK CALENDAR02/27/2015
CompanyTickerTimeEvent DescriptionPeriodEstimate
NRG Energy IncNRG USBef-mktQ4 2014 Earnings ReleaseQ4 20140.541
Principal Financial Group IncPFG US8:00RoadshowY 2015
Eaton Corp PLCETN US8:30Analyst ConferenceY 2015
Universal Health Services IncUHS US9:00Q4 2014 Earnings CallQ4 2014
NRG Energy IncNRG US9:00Q4 2014 Earnings CallQ4 2014
Whole Foods Market IncWFM US9:00Investor ConferenceY 2015
Southwestern Energy CoSWN US10:00Q4 2014 Earnings CallQ4 2014
Pepco Holdings IncPOM USQ4 2014 Earnings ReleaseQ4 20140.2
Leucadia National CorpLUK USQ4 2014 Earnings ReleaseQ4 2014
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