Barchart Morning Call 4/1

BARCHART MORNING CALL

Monday, April 1st, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

June E-mini S&Ps (ESM13 +0.03%) this morning are little changed. The main supportive factor this morning is positive U.S. economic data last Friday when the markets were closed, which included (1) a +6.8 point increase in the final-March U.S. consumer confidence index from the University of Michigan, and (2) strong Feb personal income (+1.1%) and personal spending (+0.7%) reports. However, those reports were offset by weaker-than-expected Japanese Tankan report and Chinese manufacturing PMI reports released on Sunday. Many markets are closed today including Europe, Hong Kong, Australia, and New Zealand. The Nikkei index today closed down -2.12% while China's CSI 300 index closed slightly lower by -0.08%. May crude oil prices this morning are down -0.50%, May gasoline is down -0.31%, and May copper is down -1.46%. Corn prices are down -5.4% this morning and soybeans and wheat are each down about -1.3% as the selling continues after last Thursday's bearish USDA reports and limit-down closes. The dollar index (DXY00 -0.03%) this morning is slightly lower by -0.05%, EUR/USD (^EURUSD) is slightly lower by -0.02%, and USD/JPY (^USDJPY) is down -0.53%. March 10-year T-note futures (ZNM13 -0.13%) are down -3.5 ticks.
The U.S. markets this morning are reacting to last Friday's stronger-than-expected U.S. economic reports, which were released when the markets were closed but the U.S. government was open. Friday’s Feb personal income report of +1.1% was stronger than market expectations of +0.8%. The Feb personal spending report of +0.7% was slightly stronger than market expectations of +0.6%. The Feb PCE deflator rose to +1.3% y/y from a revised +1.3% in Jan and was weaker than market expectations of+1.4% y/y. The Feb core PCE deflator report of +1.3% y/y was unchanged from Jan and was in line with market expectations.
Friday’s final-March U.S. consumer confidence (Univ of Michigan) rose sharply by +6.8 points to a 4-month high of 78.6 from 71.8 in early-March and was stronger than market expectations for a +0.8 point increase to 72.6. The final-March report was up by +1.0 from Feb and was the third consecutive monthly gain.
The Japanese Tankan report released on Sunday night showed an improvement in Japanese confidence but the improvement was slightly less than market expectations. The Tankan large manufacturers index from the National Bureau of Statistics improved to -8 from -12 in Q4 but was weaker than market expectations of -7. The Tankan large manufacturers outlook index rose to -1 from -10 in Q4 but was weaker than market expectations of 1. The Q1 Tankan non-manufacturing index rose to 6 from 4 in Q4 but was weaker than market expectations of 8. The Tankan non-manufacturing outlook index rose to 9 from 3 in Q4 but was weaker than market expectations of 11. The Tankan Q1 capital expenditure report of -2.0% was much weaker than market expectations of +5.0% and Q4’s +6.8%.
The city of Beijing on Saturday announced that one-person households will not be allowed to buy second homes and that everyone will have to make larger down payments on second homes. Beijing home prices are up sharply by +5.9% y/y. Various levels of government in China have recently taken steps to cool property prices, which is negative for the Chinese construction sector and for commodity prices. Meanwhile, the city of Shanghai instituted a ban on mortgages for people buying a third home.
Chinese March new home prices rose sharply by +1.1% m/m and +3.9% y/y, according to SouFun Holdings, China's largest real estate website owner. The home price increases are expected to cause more cities and regions to introduce restrictions on property markets.
The March China manufacturing PMI reports released on Sunday night indicated an improvement in Chinese manufacturing confidence in March although the reports were slightly weaker than market expectations. The March manufacturing PMI rose by +0.8 points to 50.9 from 50.1 in Feb but was 0.3 points weaker than market expectations of 51.2. The HSBC March manufacturing PMI of 51.6 was 0.1 point below the flash estimate of 51.7, but was in line with market expectations and was up by +1.2 points from 50.4 in Feb.

U.S. STOCK PREVIEW

The U.S. markets this week will focus mainly on Friday’s March unemployment report, which is expected to show a solid increase in payrolls of +200,000 and an unchanged unemployment rate of 7.7%. Other key U.S. economic reports this week include today’s March ISM manufacturing index (expected -0.2 to 54.0), Tuesday’s Feb factory orders report (expected +2.9%), Wednesday’s ADP employment report (expected +200,000), and Friday’s Feb U.S. trade deficit (expected slightly wider at -$44.7 billion versus -$44.4 billion in Jan). This is a busy week for Fed-speak with comments by Fed Chairman Bernanke on Thursday and eight different events for other Fed officials. This is a very light earning week with only three S&P 500 companies scheduled to report earnings (McCormick on Tuesday, and Monsanto and ConAgra Foods on Wednesday).
This is a very light earning week with only three S&P 500 companies scheduled to report earnings (McCormick on Tuesday, and Monsanto and ConAgra Foods on Wednesday). Conferences this week include Utility Corporate Access Day on Tuesday, Wells Fargo Tech Transformation Summit on Tuesday, Boston Biotech Business Development Conference on Tue-Wed, J.P. Morgan Private Builder/Private Equity Conference on Thursday, China Business Conference 2013 in NY on Friday, and Women in the World Summit 2013 on Friday.

June E-mini S&Ps this morning are slightly lower by -1.00 point (-0.06) with offsetting news between last Friday's firm U.S. economic reports as compared with weaker-than-expected Chinese manufacturing PMI and Japanese Tankan reports on Sunday night. The S&P 500 index on Thursday posted a new 5-1/2 year high on the upward revision in U.S. Q4 GDP to +0.4% from +0.1% and general optimism about the U.S. economy and earnings. Closes: S&P 500 +0.41%, Dow Jones +0.36%, Nasdaq 100 +0.31%. U.S. Q4 GDP on Thursday was revised higher to +0.4% from +0.1%, but Q4 personal consumption was revised lower to +1.8% from +2.1%. The March Chicago PMI report on Thursday fell by -4.4 points to 52.4, which was much weaker than the expected report of a small -0.3 point decline to 56.5. U.S. weekly unemployment claims on Thursday rose +16,000 to 357,000, which showed a weaker labor market than market expectations of 340,000. Continuing claims fell by -27,000 to a new 4-3/4 year low of 3.050 mln, which showed a stronger labor market than market expectations for a decline to 3.042 million.

OVERNIGHT U.S. STOCK MOVERS

• Yum's (YUM +0.87%) KFC will open over 40 restaurants in U.K. and Ireland, according to the Guardian newspaper.
• AT&T (T +0.19%) approved a new 300 million share repurchase program but said that it plans to slow the pace of its repurchases.
• The FDA approved Johnson & Johnson's (JNJ +0.32%) Invokana medication to treat Type 2 diabetes.
• 3M (MMM +0.97%) and Avery Dennison (AVY +0.65%) concluded various patent infringement and related lawsuits between the two companies.
• Cisco (CSCO +0.34%) increased its dividend by 3 cents to 17 cents per share.
• Amazon.com (AMZN +0.45%) announced an agreement to acquire Goodreads, a book enthusiastics website.

MARKET COMMENTS

June 10-year T-notes this morning are down 3.5 ticks. June 10-year T-note prices on Thursday closed mildly lower on reduced safe-haven demand with the 5-1/2 year high in the S&P 500 index. Closes: TYM3 -4.5, FVM3 -3.25.
The dollar index this morning is down -0.04 points (-0.05%) while EUR/USD is down -0.0002 (-0.02%). USD/JPY down -0.50 yen (-0.53%). The dollar index on Thursday fell back from Wednesday’s 8-month high and closed mildly lower on reduced safe-haven demand with the rally in the S&P 500 index to a new 5-1/2 year high. Meanwhile, EUR/USD closed mildly higher as Spanish and Italian bond yields on Thursday fell 2-3 bp, although the Italian 10-year bond yield closed sharply higher on the week by +25 bp at 4.76% on the Italian political deadlock. Closes: Dollar index -0.23 (-0.27%), EUR/USD +0.0036 (+0.28%), USD/JPY -0.31 (-0.33%).
May WTI crude oil this morning is down -0.49 (-0.50%) and May gasoline is down -0.0096 (-0.31). Crude oil and gasoline prices on Thursday closed mixed with crude oil seeing some strength and gasoline seeing weakness on the recent pickup in U.S. refinery operations after seasonal maintenance, which will boost demand for crude oil and increase the supply of gasoline. Closes: CLK3 +0.65 (+0.67%), RBK3 -0.0012 (-0.04%).

GLOBAL EVENT CALENDAR04/01/2013

US	1000 ET	March ISM manufacturing index expected -0.2 to 54.0, Feb +1.1 to 54.2. Mar ISM prices-paid sub-index expected -1.5 to 60.0, Feb +5.0 to 61.5.
	1000 ET	Feb construction spending expected +1.0% m/m, Jan -2.1% m/m.
	1100 ET	USDA weekly grain export inspections.
JPN	0100 ET	Japan Mar vehicle sales, Feb -12.2% y/y.
	1950 ET	Japan March monetary base.
	2130 ET	Japan Feb labor cash earnings expected -0.1% y/y, Jan +0.1% y/y.
	n/a	Japan holiday.
UK	1901 ET	UK March Lloyds business barometer, Feb 13.
	n/a	UK holiday.
CH	n/a	China holiday.

U.S. STOCK CALENDAR04/01/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
Cal-Maine Foods Inc	CALM US	Bef-mkt	Q3 2013 Earnings Release	Q3 2013	1.4
Derma Sciences Inc	DSCI US	Bef-mkt	Q4 2012 Earnings Release	Q4 2012	-0.11
Bryn Mawr Bank Corp	BMTC US	8:30	Acquisition of MidCoast Community Bancorp, Inc by Bryn Mawr Bank Corp Call
Chesapeake Energy Corp	CHK US	8:30	Business Update Call
Fortegra Financial Corp	FRF US	8:30	Q4 2012 Earnings Call	Q4 2012
Forbes Energy Services Ltd	FES US	10:00	Q4 2012 Earnings Call	Q4 2012
Derma Sciences Inc	DSCI US	11:00	Q4 2012 Earnings Call	Q4 2012
Ares Commercial Real Estate Corp	ACRE US	11:00	Q4 2012 Earnings Call	Q4 2012
Shoe Carnival Inc	SCVL US	16:30	Q4 2013 Earnings Call	Q4 2013
Lifeway Foods Inc	LWAY US	16:35	Q4 2012 Earnings Call	Q4 2012
Lifeway Foods Inc	LWAY US	Aft-mkt	Q4 2012 Earnings Release	Q4 2012	0.025
ZaZa Energy Corp	ZAZA US	Aft-mkt	Q4 2012 Earnings Release	Q4 2012
Shoe Carnival Inc	SCVL US	Aft-mkt	Q4 2013 Earnings Release	Q4 2013	0.16
GenCorp Inc	GY US		Q1 2013 Earnings Release	Q1 2013
Apple Inc	AAPL US		Apple vs. Samsung - ITC Due to Release Findings
Harvest Natural Resources Inc	HNR US		Q4 2012 Earnings Release	Q4 2012	0.255
magicJack VocalTec Ltd	CALL US		Q4 2012 Earnings Release	Q4 2012	0.51
Forbes Energy Services Ltd	FES US		Q4 2012 Earnings Release	Q4 2012	0.02
LPL Financial Holdings Inc	LPLA US		Roadshow-Minneapolis	Y 2013
Ares Commercial Real Estate Corp	ACRE US		Q4 2012 Earnings Release	Q4 2012	0.197

Barchart Morning Call 4/2

Barchart Morning Call

Barchart.com - Mon Apr 02, 7:00AM CDT

Overnight Developments

• Global stocks this morning are mixed with the Euro Stoxx 50 down % and Jun S&Ps down -0.20 of a point. The dollar is lower, Treasuries are little changed and commodities are mixed as European stocks relinquished early gains and moved lower after Germany's Bundesbank said it won't accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral. Moody's Investors Service said "this announcement marks a step towards divergent collateral rules and raises questions about policy cohesiveness among Euro-Zone central banks and this is credit negative for Euro-Zone sovereigns and banking systems overall, but particularly for those of Greece, Ireland and Portugal." European Stocks had initially rallied after China's Mar PMI manufacturing unexpectedly expanded by its fastest pace in a year, while Mar German PMI manufacturing was unexpectedly revised up to 48.4 from the originally reported 48.1. The British pound rallied to a 4-1/2 month high against the dollar after Mar U.K. PMI manufacturing unexpectedly increased +0.6 to 52.1, stronger than expectations of -0.5 to 50.7 and its fastest pace of growth in 11-months.
• Asian stocks today closed mostly higher with Japan up +0.26%, China closed for holiday, Australia -0.14%, South Korea +0.90%, India +0.42%. Asian stocks finished higher after an increase in Chinese manufacturing activity reduced concern over a slowdown in the Chinese economy. The Mar China manufacturing PMI unexpectedly rose +2.1 to 53.1, stronger than expectations of -0.2 to 50.8 and its strongest pace of growth in a year. The yen gained against the dollar and Japanese stocks finished higher despite stagnation in sentiment among Japan's largest manufacturers. The Q1 Japan Tankan large manufacturers index was -4, weaker than expectations of -1 and unchanged from Q4. South Korea's Kospi Stock Index finished higher after Mar South Korea CPI rose +2.6% y/y, weaker than expectations of +3.2% y/y and the slowest pace in 20 months, and after Moody's Investor's Service raised its outlook on the country's A1 credit rating to positive from stable.

Overnight U.S. Stock News

• June S&Ps this morning are trading little changed, down -0.20 of a point. The U.S. stock market Friday settled mostly higher and was bolstered by the larger-than-expected increases in personal spending and consumer confidence along with the action by European finance ministers to boost their rescue fund: Dow Jones +0.50%, S&P 500 +0.37%, Nasdaq Composite -0.12%. Bullish factors Friday included (1) the larger-than-expected increase in Feb personal spending which rose by the most in 7 months (+0.8% versus expectations of +0.6%), (2) the larger-than-expected increase in the Mar U.S. University of Michigan consumer confidence to its best level in 13-months (+1.9 to 76.2 versus expectations of +0.3 to 74.6), (3) carry-over support from a rally in European stocks on reduced European sovereign-debt concerns after European finance ministers agreed to increase their rescue lending funds.
• Bearish factors Friday included (1) the +0.2% increase in Feb personal income, weaker than expectations of +0.4%, which raises concern about the sustainability of consumer spending, (2) the larger-than-expected decline in the Mar Chicago PMI (-1.8 to 62.2 versus expectations of -1.0 to 63.0), and (3) hawkish comments from Philadelphia Fed President Plosser who said "we should not anticipate additional accommodation" and that the Fed may have to raise interest rates before the end of 2014.

Today's Market Focus

• June 10-year T-notes this morning are up +1 tick. T-note prices Friday gyrated on either side of unchanged into late morning when they climbed to a 2-1/2 week high but then tumbled into the close and settled lower after the Mar U.S. University of Michigan consumer confidence rose to its highest level in 13-months and stocks rallied: TYM2 -13.5, FVM2 -4.0, EDU2 unchanged. Bearish factors included (1) the larger-than-expected increase in Feb personal spending which rose by the most in 7 months (+0.8% versus expectations of +0.6%), (2) the larger-than-expected increase in the Mar U.S. University of Michigan consumer confidence to its best level in 13-months (+1.9 to 76.2 versus expectations of +0.3 to 74.6), (3) reduced safe-haven demand for Treasuries as stocks rallied after European finance ministers agreed to increase their rescue lending funds, and (4) hawkish comments from Philadelphia Fed President Plosser who said "we should not anticipate additional accommodation" and that the Fed may have to raise interest rates before the end of 2014. Bullish factors Friday included (1) the +0.2% increase in Feb personal income, weaker than expectations of +0.4%, which raises concern about the sustainability of consumer spending, (2) the larger-than-expected decline in the Mar Chicago PMI (-1.8 to 62.2 versus expectations of -1.0 to 63.0), and (3) the Fed's purchase of $2.09 billion of long-term Treasuries as part of it Operation Twist program to replace $400 billion of short-term debt in its holdings with longer maturities in an attempt to keep borrowing costs down.
• The dollar index this morning is lower with the dollar/yen -0.23 yen and the euro/dollar +0.01 cents. The dollar index Friday tumbled to a 1-month low and settled lower as stocks rallied and after European finance ministers agreed to increase their rescue lending fund: Dollar Index -0.182, USD/JPY +0.379, EUR/USD +0.00384. Bearish factors included (1) reduced safe-haven demand for the dollar as stocks rallied, (2) the action by European finance ministers to increase their rescue lending fund to 800 billion euros, which may help stem the European debt crisis and us euro supportive, and (3) is a rally in the yen to a 3-week high against the dollar on speculation Japanese companies will repatriate overseas earnings before the end of the fiscal year. Bullish factors included (1) the larger-than-expected increase in Mar U.S. University of Michigan consumer confidence to a 13-month high, which is dollar supportive and (2) dollar positive comments from Richmond Fed President Lacker who said the Fed is "really far" from the need for more stimulus.
• May crude oil prices this morning are down -50 cents a barrel and May gasoline is +0.53 of a cent per gallon. Crude oil and gasoline prices Friday settled mixed as a weaker dollar and better-than-expected U.S. consumer confidence and personal spending boosted crude, but gasoline fell on late-day profit taking and closed lower: CLK12 +$0.24, RBK -3.16. Bullish factors included (1) the slide in the dollar index to a 1-month low, which boosts investment demand for commodities, (2) the larger-than-expected increase in Mar U.S. University of Michigan consumer confidence to a 13-month high, which is positive for fuel demand, and (3) the action by Euro-Zone finance ministers to increase its rescue lending fund to 800 billion euros, which may help stem the European debt crisis and keep economic growth and fuel demand from falling. Bearish factors included (1) the weaker-than-expected Mar Chicago PMI and the unexpected decline in Feb Japan industrial production, which signals reduced energy consumption and (2) Bloomberg data that shows OPEC Mar crude production rose 110,000 barrels a day to 31.22 million barrels a day, the most since Oct 2008.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): PBY-PEP Boys-Manny Moe & Jack (BEST earnings consensus $0.12), DDMG-Digital Domain Media Group (-0.70), LWAY-Lifeway Foods (0.07), FES-Forbes Energy Services Ltd. (0.24).
Global Financial Calendar

Monday 4/2/12
United States
1000 ET	Feb construction spending expected +0.7%, Jan -0.1% m/m.
1000 ET	Mar ISM manufacturing index expected +0.7 to 53.1, Feb -1.7 to 52.4. Mar ISM prices paid sub-index expected +0.8 to 62.3, Feb +6.0 to 61.5.
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
1235 ET	Cleveland Fed President Sandra Pianalto speaks on ?The Fed and the Economy: Striving for Stability? at an event in Marietta, Ohio.
France
0350 ET	Revised Mar French PMI manufacturing expected no change at 47.6.
Germany
0355 ET	Revised Mar German PMI manufacturing expected no change at 48.1.
United Kingdom
0430 ET	Mar U.K. PMI manufacturing expected -0.5 to 50.7, Feb -0.8 to 51.2.
Euro-Zone
0500 ET	Feb Euro-Zone unemployment rate expected +0.1 to 10.8%, Jan +0.1 to 10.7%.
CHI
2100 ET	Mar China non-manufacturing PMI, Feb -4.5 to 48.4.
Japan
2130 ET	Feb Japan labor cash earnings expected +0.1% y/y, Jan unchanged y/y.

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