Friday, July 31, 2015

BARCHART MORING CALL 7/31

OVERNIGHT MARKETS AND NEWS
Sep E-mini S&Ps (ESU15 -0.20%) this morning are trading slightly lower by -2.50 points (-0.12%) on negative carry-over from this morning's slightly lower trade in European stocks with the EuroStoxx 50 index down -0.08%. In addition, the Shanghai Composite index today closed -1.13% and lower commodity prices are hurting commodity producer stocks. The markets remain worried about China and a Fed rate hike later this year. On the more positive side, the MSCI Emerging Markets Index is up +0.3% this morning.
Asian stocks today closed mostly higher: Japan +0.30%, Hong Kong +0.56%, China -1.13%, Taiwan +0.16%, Australia +0.52%, Singapore -1.45%, South Korea +0.28%, India +1.48%, Turkey +0.92%.
The dollar index (DXY00 -0.21%) this morning is down -0.291 (-0.30%) while EUR/USD (^EURUSD) is up +0.0041 (+0.38%) and USD/JPY (^USDJPY) is up +0.13 (+0.10%). Sep 10-year T-note prices (ZNU15 -0.05%) this morning are down -2.5 ticks since global stocks are generally stable this morning.
Commodity prices this morning are down by -0.33% on average. Sep crude oil (CLU15 -1.77%) this morning is down -0.91 (-1.88%) and Sep gasoline (RBU15 +0.06%) is down -0.0027 (-0.15%) as bearish sentiment prevails. Metals prices this morning are trading lower with Aug gold (GCQ15 -0.74%) down -8.5 (-0.78%), Sep silver (SIU15 -1.16%) down -0.161 (-1.10%), and Sep copper (HGU15 -0.63%) down -0.016 (-0.65%). Grains are steady to higher. Softs are mixed.
The Russian central bank today cut its key rate by 50 bp to 11.0%, in line with most market forecasts. Today's rate cut was the fifth this year. The Russian bank was able to slowly cut the rate this year, which was raised sharply late last year to as high as 17% when U.S. and European sanctions over Ukraine caused the ruble to plunge. The market consensus is that the Russian economy this year will fall by -3.5% but then recover to +0.5% in 2016 and +1.3% in 2017.
Greek Prime Minister Tsipras managed to delay a Syriza party congress until September, which should come after his government signs off on a 3-year bailout program some time in August. Members in his Syriza party who are opposed to the bailout had hoped to hold a party congress as early as this weekend, which could have led to a split in the party and could have forced new elections. The outcome is favorable for the markets since it suggests that Ms. Tsipras should be able to push the 3-year bailout through the Greek parliament before new elections are held, likely this autumn.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Key U.S. reports today include: (1) Q2 employment cost index (expected +0.6% after Q1's +0.7%), (2) Jul Milwaukee ISM (expected +3.45 to 50.00, Jun -1.15 to 46.55), (3) Jul Chicago PMI (expected +1.4 to 50.8, Jun +3.2 to 49.4), and (4) final-July U.S. consumer sentiment from the University of Michigan (expected +0.7 to 94.0, prelim-Jul -2.8 to 93.3).
There are 13 of the S&P 500 companies that report earnings today with notable reports including: Exxon Mobil (consensus $1.11), Chevron (1.16), Phillips 66 (1.81), Bershire Hathaway (3038), Aon (1.30), Tyco (0.55), Royal Caribbean (0.72).
U.S. IPO's scheduled to price today include: Ardelyx (ARDX), Accelerize (ACLZ), NovaBay Pharma (NBY).
Equity conferences this week: none.

Sep E-mini S&Ps this morning are trading slightly lower by -2.50 points (-0.12%) on negative carry-over from this morning's slightly lower -0.08% trade in European stocks and today's -1.13% sell-off in Chinese stocks. Thursday's closes: S&P 500 unchanged, Dow Jones -0.03%, Nasdaq +0.33%. The S&P 500 on Thursday closed little changed, finding support from general optimism about Q2 earnings as about three-quarters of reporting SPX companies have surprised to the upside, and from relief that the Chinese stock market appears to be holding and has not fallen below Monday’s lows. However, factors causing downward pressure yesterday included the slightly weaker-than-expected U.S. Q2 GDP report of +2.3% (vs expectations of +2.5%) and a -4% decline in Procter & Gamble and -1.8% decline in Facebook on negative earnings news.
OVERNIGHT U.S. STOCK MOVERS
  • SPX earnings reports this morning have all been positive thus far: Weyerhaeuser (WY +0.53%) (0.26 vs 0.20 consensus), Tyco (TYC +0.38%) (0.59 vs 0.56), Aon (AON +0.06%) (1.31 vs 1.29), Newell Rubbermaid (NWL +1.16%) (0.64 vs 0.62), Legg Mason (LM +1.16%) (0.84 vs 0.83).
  • Amgen (AMGN +0.13%) is up +1% in pre-market trading after reporting favorable earnings of 2.57 (vs 2.43).
  • LinkedIn (LNKD -2.09%) fell 4% as concerns arose about slowing core growth.
  • SPX earnings reports late yesterday afternoon were mostly positive: Electronic Arts (EA +0.17%) (0.15 vs 0.03), Western Union (WU -0.11%) (0.41 vs 0.39), Apartment Investment (AIV -0.53%) (0.56 vs 0.54), Hanesbrands (HBI +1.19%) (0.50 vs 0.499), Flowserve (FLS +0.28%) (0.80 vs 0.79), Eversource Energy (ES +0.99%) (0.66 vs 0.56), KLA-Tencor (KLAC +0.62%) (0.99 vs 0.92), FirstEnergy (FE +1.07%) (0.53 vs 0.47), PerkinElmer (PKI +1.32%) (0.60 vs 0.59), Expedia (EXPE +0.69%) (1.02 vs 0.87), Universal Health Services (UHS -0.61%) (1.85 vs 1.65).
  • Negative SPX earnings reports late yesterday included: Leggett & Platt (LEG +0.86%) (0.53 vs 0.538), Broadcom (BRCM -0.89%) (0.72 vs 0.75), Fluor (FLR +1.01%) (1.00 vs 1.06).
MARKET COMMENTS
Sep 10-year T-note prices this morning are down -2.5 ticks since global stocks are generally stable this morning. Thursday's closes: TYU5 +1, FVU5 -2.50. Sep 10-year T-notes on Thursday closed slightly higher on the sluggish stock market and on the slightly weaker-than-expected Q2 GDP report of +2.3%, which did not create any fresh pressure on the Fed to begin its rate-hike regime. T-notes continued to see some downward pressure from supply overhang as the Treasury sold 7-year T-notes to conclude this week’s $105 billion T-note package.
The dollar index this morning is down -0.291 (-0.30%) while EUR/USD is up +0.0041 (+0.38%) and USD/JPY is up +0.13 (+0.10%). Thursday's closes: Dollar Index +0.58 (+0.60%), EUR/USD -0.0052 (-0.47%), USD/JPY +0.20 (+0.16%). The dollar index on Thursday closed moderately higher on technical buying, continued ideas that the Fed will tighten by year-end, and weakness in EUR/USD as the IMF said it will not join a Greek bailout unless the Eurozone provides debt relief and assurance of long-term debt sustainability.
GLOBAL EVENT CALENDAR07/31/2015
US0830 ETQ2 employment cost index expected +0.6%, Q1 +0.7%.
0900 ETJul Milwaukee ISM expected +3.45 to 50.00, Jun -1.15 to 46.55.
0945 ETJul Chicago PMI expected +1.4 to 50.8, Jun +3.2 to 49.4.
1000 ETFinal-July U.S. consumer sentiment (University of Michigan) expected +0.7 to 94.0, prelim-Jul -2.8 to 93.3.
JPN0100 ETJapan Jun housing starts expected +3.0% y/y annualized to 913,000, May +5.8% y/y annualized to 912,000.
0100 ETJapan Jun construction orders, May -7.4% y/y.
GER0200 ETGerman Jun retail sales expected +0.1% m/m and +4.1% y/y, May +0.2% m/m and -0.4% y/y.
UK0430 ETUK Jul Lloyds business barometer, Jun 55.
EUR0500 ETEurozone Jul CPI estimate expected +0.2% y/y, Jun +0.2% y/y. Jul CPI core expected +0.8% y/y, Jun +0.8% y/y.
0500 ETEurozone Jun unemployment rate expected -0.1 to 11.0%, May 11.1%.
CHI2100 ETChina Jul manufacturing PMI, Jun 50.2. Jul non-manufacturing PMI, Jun 53.8.
U.S. STOCK CALENDAR07/31/2015
CompanyTickerTimeEvent DescriptionPeriodEstimate
Aon PLCAON USBef-mktQ2 2015 Earnings ReleaseQ2 20151.295
Newell Rubbermaid IncNWL USBef-mktQ2 2015 Earnings ReleaseQ2 20150.623
Tyco International PlcTYC USBef-mktQ3 2015 Earnings ReleaseQ3 20150.554
Weyerhaeuser CoWY USBef-mktQ2 2015 Earnings ReleaseQ2 20150.198
Royal Caribbean Cruises LtdRCL USBef-mktQ2 2015 Earnings ReleaseQ2 20150.719
Ameren CorpAEE USBef-mktQ2 2015 Earnings ReleaseQ2 20150.606
Seagate Technology PLCSTX USBef-mktQ4 2015 Earnings ReleaseQ4 20150.634
Legg Mason IncLM US7:00Q1 2016 Earnings ReleaseQ1 20160.83
Public Service Enterprise Group IncPEG US7:30Q2 2015 Earnings ReleaseQ2 20150.543
Exxon Mobil CorpXOM US8:00Q2 2015 Earnings ReleaseQ2 20151.111
Legg Mason IncLM US8:00Q1 2016 Earnings CallQ1 2016
Tyco International PlcTYC US8:00Q3 2015 Earnings CallQ3 2015
Phillips 66PSX US8:00Q2 2015 Earnings ReleaseQ2 20151.814
Aon PLCAON US8:30Q2 2015 Earnings CallQ2 2015
Chevron CorpCVX US8:30Q2 2015 Earnings ReleaseQ2 20151.158
Newell Rubbermaid IncNWL US8:30Q2 2015 Earnings CallQ2 2015
Leggett & Platt IncLEG US9:00Q2 2015 Earnings CallQ2 2015
Eversource EnergyES US9:00Q2 2015 Earnings CallQ2 2015
Universal Health Services IncUHS US9:00Q2 2015 Earnings CallQ2 2015
Reynolds American IncRAI US9:00Investor Meeting - New YorkY 2015
Seagate Technology PLCSTX US9:00Q4 2015 Earnings CallQ4 2015
Exxon Mobil CorpXOM US9:30Q2 2015 Earnings CallQ2 2015
Weyerhaeuser CoWY US10:00Q2 2015 Earnings CallQ2 2015
Royal Caribbean Cruises LtdRCL US10:00Q2 2015 Earnings CallQ2 2015
FirstEnergy CorpFE US10:00Q2 2015 Earnings CallQ2 2015
Ameren CorpAEE US10:00Q2 2015 Earnings CallQ2 2015
Chevron CorpCVX US11:00Q2 2015 Earnings CallQ2 2015
Public Service Enterprise Group IncPEG US11:00Q2 2015 Earnings CallQ2 2015
Flowserve CorpFLS US11:00Q2 2015 Earnings CallQ2 2015
Phillips 66PSX US12:00Q2 2015 Earnings CallQ2 2015
Apartment Investment & Management CoAIV US13:00Q2 2015 Earnings CallQ2 2015
Essex Property Trust IncESS US14:00Q2 2015 Earnings CallQ2 2015
Berkshire Hathaway IncBRK/A USQ2 2015 Earnings ReleaseQ2 20153038.09
Posted by Jim Van Meerten at
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