Tuesday, August 2, 2016

MORNING CALL 8/2

MORNING CALL
OVERNIGHT MARKETS AND NEWS
Sep E-mini S&Ps (ESU16 -0.23%) are down -0.15% and European stocks are down -1.45% at a 2-week low as weakness in European bank stocks leads the overall market lower. Commerzbank AG, Germany's second-largest lender, is down 8% after it scrapped its profit target for this year and forecast a drop in earnings, while Italy's UniCredit dropped over 5% after Il Messaggero reported that the bank may consider a capital increase of as much as 8 billion euros ($8.96 billion). Another negative for European stocks is concern that rising prices may keep the ECB from boosting stimulus measures after Eurozone Jun PPI rose a more-than-expected +0.7% m/m, the largest monthly increase in 3-3/4 years. Asian stocks settled mostly lower: Japan -1.47%, Hong Kong closed for holiday, China +0.61%, Taiwan -0.13%, Australia -0.84%, Singapore -1.24%, South Korea -0.74%, India -0.08%. Japanese stocks closed lower after USD/JPY dropped to a 3-week low when the Japanese government announced 4.6 trillion yen ($45 billion) in extra spending for the current fiscal year, much less than the 28 trillion-yen amount Japanese Prime Minister Abe had signaled in a speech last week. Australia's 10-year bond yield fell to a record low 1.823% after the Reserve Bank of Australia (RBA) cut its benchmark rate by 25 bp to a record low 1.5% today.
The dollar index (DXY00 -0.29%) is down -0.30% at a week low. EUR/USD (^EURUSD) is up +0.26% at a 1-1/4 month high. USD/JPY (^USDJPY) is down-0.63% at a 3-week low.
Sep T-note prices (ZNU16 -0.34%) are down -14 ticks.
The RBA cut its benchmark rate by 25 bp to a record low 1.5% and RBA Governor Stevens said that "recent data confirm that inflation remains quite low and given very subdued growth in labor costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time."
The Eurozone Jun PPI of +0.7% m/m and -3.1% y/y was stronger than expectations of +0.4% m/m and -3.4% y/y with the +0.7% m/m gain the largest monthly increase in 3-3/4 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Dallas Fed President Robert Kaplan speaks on economic conditions and implications for monetary policy at an Official Monetary and Financial Institutions Forum City Lecture in Beijing, China, (2) Jun personal spending (expected +0.3%, May +0.4%) and Jun personal income (expected +0.3%, May +0.2%), (3) Jun PCE deflator (expected +0.2% m/m and +0.9% y/y, May +0.2% m/m and +0.9% y/y) and Jun core PCE deflator (expected +0.1% m/m and +1.6% y/y, May +0.2% m/m and +1.6% y/y), (4) Jul New York ISM (May 45.4), (5) Jul total vehicle sales (expected 17.30 million, Jun 16.61 million).
There are 40 of the S&P 500 companies that report earnings today with notable reports including: Procter & Gamble (consensus $0.75), Emerson Electric (0.84), Royal Caribbean Cruises (1.02), Martin Marietta Materials (2.02), Seagate Technology (0.60), Aetna (2.12), Harris Corp (1.05), Pfizer (0.62), CVS Health (1.30), ADM (0.45), Cummins (2.16), Devon Energy (-0.20), Electronic Arts (-0.02), Verisk Analytics (0.76).
U.S. IPO's scheduled to price today: none.
Equity conferences this week include: Wells Fargo Services Conference on Wed-Thu.
OVERNIGHT U.S. STOCK MOVERS
Buffalo Wild Wings (BWLD +1.21%) was downgraded to 'Hold' from 'Buy' at Maxim Group.
Frontier Communications (FTR -2.31%) slid over 3% in pre-market trading after it reported Q2 adjusted Ebitda of $1.03 billion, less than consensus of $1.05 billion.
Charter Communications (CHTR +0.48%) was rated a new 'Buy' at Bank of America/Merrill Lynch with a price target of $300.
Williams Cos. (WMB -6.01%) rallied over 4% in after-hours trading after the company cut its dividend to 20 cents a share from 64 cents and said it will reinvest $1.7 billion into Williams Partners through 2017 with the cash saved from the lower dividends.
Texas Roadhouse (TXRH +1.02%) dropped over 5% in after-hours trading after it reported Q2 franchise comps of +2.6%, below consensus of +3.7%.
FormFactor (FORM +0.53%) was upgraded to 'Buy' from 'Hold' at Stifel with a 12-month target price of $13.
Tenet Healthcare (THC -5.55%) lost over 2% in after-hours trading after it reported Q2 adjusted EPS of 38 cents, weaker than consensus of 51 cents.
Chegg (CHGG +2.78%) climbed nearly 4% in after-hours trading after it reported Q2 adjusted EPS of 5 cents, better than consensus of 3 cents.
Trex Co. (TREX +0.82%) gained nearly 3% in after-hours trading after it reported Q2 EPS of 79 cents, higher than consensus of 71 cents.
Atwood Oceanics (ATW -3.65%) rose 3% in after-hours trading after it reported Q3 revenue of $227.8 million, above consensus of $225.2 million.
T2 Biosystems (TTOO +24.38%) slumped 9% in after-hours trading after it reported an Q2 EPS loss of -58 cents, wider than consensus of -56 cents
Amkor Technology (AMKR +2.54%) jumped 11% in after-hours trading after it reported an unexpected Q2 EPS profit of 2 cents, better than consensus for an -8 cent loss, and said it sees Q3 sales of $1.01 billion-$1.09 billion, higher than consensus of $936 million.
Cognex (CGNX +0.33%) surged 15% in after-hours trading after it reported Q2 EPS continuing operations of 50 cents, higher than consensus of 44 cents, and then said it sees Q3 revenue of $142 million-$147 million, above consensus of $127.6 million.
MARKET COMMENTS
Sep E-mini S&Ps (ESU16 -0.23%) this morning are down -3.25 points (-0.15%). Monday's closes: S&P 500 -0.13%, Dow Jones -0.15%, Nasdaq +0.55%. The S&P 500 on Monday retreated from a new all-time high and closed lower on the -0.6 point decline in the U.S. Jul ISM manufacturing index to 52.6 (weaker than expectations of -0.2 to 53.0) and on the sell-off in energy producers caused by the -3.7% drop in crude oil prices to a new 3-1/2 month low.
Sep 10-year T-notes (ZNU16 -0.34%) this morning are down -14 ticks. Monday's closes: TYU6 -8.00, FVU6 -2.50. Sep T-notes on Monday closed lower on hawkish comments from New York Fed President Dudley who said investors "appear to be too complacent" on interest rates" and "it is premature” to rule out Fed rate hikes this year.
The dollar index (DXY00 -0.29%) is down -0.285 (-0.30%) at a 4-week low. EUR/USD (^EURUSD) is up +0.0029 (+0.26%) at a 1-1/4 month high. USD/JPY (^USDJPY) is down -0.64 (-0.63%) at a 3-week low. Monday's closes: Dollar index +0.183 (+0.195%), EUR/USD -0.0011 (-0.10%), USD/JPY +0.33 (+0.32%). The dollar index on Monday closed higher on hawkish comments from New York Fed President Dudley who said "it is premature to rule out further monetary policy tightening this year." USD/JPY saw strength ahead of expectations that Japanese Prime Minister Abe on Tuesday will unveil the details of his 28 trillion-yen ($273 billion) fiscal stimulus package.
Sep WTI crude oil (CLU16 +1.45%) this morning is up +50 cents (+1.25%) and Sep gasoline (RBU16 +1.69%) is up +0.0227 (+1.74%). Monday's closes: CLU6 -1.54 (-3.70%), RBU6 -0.0158 (-1.20%). Sep crude oil and gasoline on Monday closed lower with Sep crude at a 3-1/2 month low on the stronger dollar and on global energy demand concerns after the U.S. Jul ISM manufacturing PMI and the China Jul manufacturing PMI were both weaker-than-expected. There was also negative carryover from last Friday's Baker Hughes report that U.S. active oil rigs increased for a fifth straight week.

GLOBAL EVENT CALENDAR08/02/2016
Tuesday, Aug 2
US0615 ETDallas Fed President Robert Kaplan speaks on economic conditions and implications for monetary policy at an Official Monetary and Financial Institutions Forum City Lecture in Beijing, China.
0830 ETJun personal spending expected +0.3%, May +0.4%. Jun personal income expected +0.3%, May +0.2%.
0830 ETJun PCE deflator expected +0.2% m/m and +0.9% y/y, May +0.2% m/m and +0.9% y/y. Jun core PCE deflator expected +0.1% m/m and +1.6% y/y, May +0.2% m/m and +1.6% y/y.
0945 ETJul New York ISM, May 45.4.
n/aJul total vehicle sales expected 17.30 million, Jun 16.61 million. Jul domestic vehicle sales expected 13.06 million, Jun 12.76 million.
Wednesday, Aug 3
US0700 ETWeekly MBA mortgage applications.
0815 ETJul ADP employment change expected +170,000, Jun +172,000.
0830 ETTreasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $20 billion) and 30-year T-bonds (previous $12 billion) to be auctioned Aug 9-11 in the Aug quarterly refunding.
0945 ETRevised Jul Markit services PMI expected +0.1 to 51.0; prelim-Jul -0.5 to 50.9. Revised Jul Markit composite PMI, prelim-Jul +0.3 to 51.5.
1000 ETJul ISM non-manufacturing PMI expected -0.6 to 55.9, Jun +0.6 to 56.5.
1030 ETEIA Weekly Petroleum Status Report.
GER0355 ETRevised German Jul Markit services PMI, prelim-Jul +0.9 to 54.6.
EUR0400 ETRevised Eurozone Jul Markit composite PMI, prelim-Jul -0.2 to 52.9.
0500 ETEurozone Jun retail sales expected unch m/m and +1.8% y/y, May +0.4% m/m and +1.6% y/y.
U.S. STOCK CALENDAR08/02/2016

CompanyTickerTimeEvent DescriptionPeriodEstimate
Emerson Electric CoEMR USBef-mktQ3 2016 Earnings ReleaseQ3 20160.843
NiSource IncNI USBef-mktQ2 2016 Earnings ReleaseQ2 20160.072
Pinnacle West Capital CorpPNW USBef-mktQ2 2016 Earnings ReleaseQ2 20161.135
Expeditors International of Washington IncEXPD USBef-mktQ2 2016 Earnings ReleaseQ2 20160.589
Welltower IncHCN USBef-mktQ2 2016 Earnings ReleaseQ2 20161.14
Royal Caribbean Cruises LtdRCL USBef-mktQ2 2016 Earnings ReleaseQ2 20161.021
Martin Marietta Materials IncMLM USBef-mktQ2 2016 Earnings ReleaseQ2 20162.017
Seagate Technology PLCSTX USBef-mktQ4 2016 Earnings ReleaseQ4 20160.604
Teradata CorpTDC USBef-mktQ2 2016 Earnings ReleaseQ2 20160.596
Mallinckrodt PLCMNK USBef-mktQ3 2016 Earnings ReleaseQ3 20162.011
Aetna IncAET US6:00Q2 2016 Earnings ReleaseQ2 20162.118
Eaton Corp PLCETN US6:30Q2 2016 Earnings ReleaseQ2 20161.069
Entergy CorpETR US6:30Q2 2016 Earnings ReleaseQ2 20161.049
Harris CorpHRS US6:30Q4 2016 Earnings ReleaseQ4 20161.438
Pfizer IncPFE US6:45Q2 2016 Earnings ReleaseQ2 20160.624
Molson Coors Brewing CoTAP US6:45Q2 2016 Earnings ReleaseQ2 20161.094
AmerisourceBergen CorpABC US6:45Q3 2016 Earnings ReleaseQ3 20161.268
CVS Health CorpCVS US6:50Q2 2016 Earnings ReleaseQ2 20161.303
Xylem Inc/NYXYL US6:55Q2 2016 Earnings ReleaseQ2 20160.474
Archer-Daniels-Midland CoADM US7:00Q2 2016 Earnings ReleaseQ2 20160.448
Pitney Bowes IncPBI US7:00Q2 2016 Earnings ReleaseQ2 20160.39
Procter & Gamble Co/ThePG US7:00Q4 2016 Earnings ReleaseQ4 20160.745
Cardinal Health IncCAH US7:00Q4 2016 Earnings ReleaseQ4 20161.13
Mosaic Co/TheMOS US7:00Q2 2016 Earnings ReleaseQ2 20160.117
Discovery Communications IncDISCA US7:00Q2 2016 Earnings ReleaseQ2 20160.567
Cummins IncCMI US7:30Q2 2016 Earnings ReleaseQ2 20162.164
Pitney Bowes IncPBI US8:00Q2 2016 Earnings CallQ2 2016
Cardinal Health IncCAH US8:00Q4 2016 Earnings CallQ4 2016
Dun & Bradstreet Corp/TheDNB US8:00Q2 2016 Earnings CallQ2 2016
Ecolab IncECL US8:30Q2 2016 Earnings ReleaseQ2 20161.078
Harris CorpHRS US8:30Q4 2016 Earnings CallQ4 2016
CVS Health CorpCVS US8:30Q2 2016 Earnings CallQ2 2016
Procter & Gamble Co/ThePG US8:30Q4 2016 Earnings CallQ4 2016
Aetna IncAET US8:30Q2 2016 Earnings CallQ2 2016
Teradata CorpTDC US8:30Q2 2016 Earnings CallQ2 2016
Discovery Communications IncDISCA US8:30Q2 2016 Earnings CallQ2 2016
Mallinckrodt PLCMNK US8:30Q3 2016 Earnings CallQ3 2016
Archer-Daniels-Midland CoADM US9:00Q2 2016 Earnings CallQ2 2016
NiSource IncNI US9:00Q2 2016 Earnings CallQ2 2016
General Growth Properties IncGGP US9:00Q2 2016 Earnings CallQ2 2016
Seagate Technology PLCSTX US9:00Q4 2016 Earnings CallQ4 2016
Mosaic Co/TheMOS US9:00Q2 2016 Earnings CallQ2 2016
Xylem Inc/NYXYL US9:00Q2 2016 Earnings CallQ2 2016
Ford Motor CoF US9:15July 2016 Sales and Revenue Release
Williams Cos Inc/TheWMB US9:30Q2 2016 Earnings CallQ2 2016
Cummins IncCMI US10:00Q2 2016 Earnings CallQ2 2016
Eaton Corp PLCETN US10:00Q2 2016 Earnings CallQ2 2016
Equifax IncEFX US10:00Business Update Call
Ford Motor CoF US10:00July 2016 Sales and Revenue Call
Pfizer IncPFE US10:00Q2 2016 Earnings CallQ2 2016
Vornado Realty TrustVNO US10:00Q2 2016 Earnings CallQ2 2016
Alliant Energy CorpLNT US10:00Q2 2016 Earnings CallQ2 2016
Welltower IncHCN US10:00Q2 2016 Earnings CallQ2 2016
Royal Caribbean Cruises LtdRCL US10:00Q2 2016 Earnings CallQ2 2016
Entergy CorpETR US11:00Q2 2016 Earnings CallQ2 2016
Molson Coors Brewing CoTAP US11:00Q2 2016 Earnings CallQ2 2016
AmerisourceBergen CorpABC US11:00Q3 2016 Earnings CallQ3 2016
American International Group IncAIG USAft-mktQ2 2016 Earnings ReleaseQ2 20160.922
FMC CorpFMC USAft-mktQ2 2016 Earnings ReleaseQ2 20160.68
ONEOK IncOKE USAft-mktQ2 2016 Earnings ReleaseQ2 20160.437
Cerner CorpCERN USAft-mktQ2 2016 Earnings ReleaseQ2 20160.571
Electronic Arts IncEA USAft-mktQ1 2017 Earnings ReleaseQ1 2017-0.023
Fiserv IncFISV USAft-mktQ2 2016 Earnings ReleaseQ2 20161.074
Newfield Exploration CoNFX USAft-mktQ2 2016 Earnings ReleaseQ2 20160.157
Hanesbrands IncHBI USAft-mktQ2 2016 Earnings ReleaseQ2 20160.524
Concho Resources IncCXO USAft-mktQ2 2016 Earnings ReleaseQ2 20160.053
Verisk Analytics IncVRSK USAft-mktQ2 2016 Earnings ReleaseQ2 20160.762
Fortive CorpFTV USAft-mktQ2 2016 Earnings ReleaseQ2 20160.613
Alaska Air Group IncALK USJuly 2016 Sales and Revenue Release - Traffic Results2016
Delta Air Lines IncDAL USJuly 2016 Sales and Revenue Release - Traffic Results2016
General Motors CoGM USJuly 2016 Sales and Revenue Release2016
Posted by Jim Van Meerten at
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