BARCHART MORNING CALL 7/6

BARCHART MORNING CALL

Monday, July 6th, 2015View Older Reports

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OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU15 -0.63%) are down -0.62% at a 3-month low and European stocks are down -1.73% at a 4-3/4 month low after Greek voters voted 'No' to austerity measures. The ECB will meet today to discuss its next move and German Chancellor Merkel will meet with French President Hollande today before Eurozone leaders meet on Tuesday. Stocks recovered from their worst levels after Greek Finance Minister Vaoufakis resigned, which boosted speculation a last-minute deal with Greece's creditors was possible. Another positive for European stocks was the upward revision to the Eurozone Jun Markit composite PMI which was revised higher to its best level since the data series began in 2012. Asian stocks closed mostly lower: Japan -2.08%, Hong Kong -3.18%, China +2.41%, Taiwan -1.09%, Australia -1.14%, Singapore -0.29%, South Korea -2.50%, India +0.41%. China's Shanghai Composite closed higher after the government over the weekend suspended initial public offerings and the PBOC said it would provide liquidity for margin trading.
Commodity prices are mostly lower. Aug crude oil (CLQ15 -2.32%) is down -4.67% at a 2-1/2 month low, Aug gasoline (RBQ15 -1.57%) is down -3.31%. Metals prices are mixed. Aug gold (GCQ15 -0.30%) is up +0.07%. Sep copper (HGU15 -3.04%) is down -3.93% at a 5-month low. Agricultural prices are weaker as a stronger dollar and drier weather pressured grain prices.
The dollar index (DXY00 +0.38%) is up +0.35% at a 1-month high. EUR/USD (^EURUSD) is down -0.71% at a 1-week low. USD/JPY (^USDJPY) is up +0.09%.

Sep T-note prices (ZNU15 +0.26%) are up ticks at a 5-week high as global government bonds rally after the Sunday's Greek 'No' vote to austerity increases the chances that Greece will be forced to exit the Eurozone.
In an attempt to stop the recent plunge in Chinese stocks, China's State Council suspended initial public offerings and the China Securities Regulatory Commission (CSRC) said 21 brokerages pledged not to reduce any proprietary investments in the equity market as long as the Shanghai Composite Index stays below 4,500. The PBOC also said it will offer China Securities Finance Corp., which manages China's short selling and margin trading, liquidity support, according to a statement on the CSRC website on Sunday.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) final-Jun Markit U.S. services PMI (expected +0.1 to 54.9 after prelim-Jun -1.4 to 54.8), (2) Jun ISM non-manufacturing index (expected +0.7 to 56.4 after May's -2.1 to 55.7), and (3) Jun Labor Market Conditions Index (expected 2.0 vs May's 1.3).
None of the Russell 1000 companies report earnings today.
U.S. IPO's scheduled to price today include: NephroGenex (NRX).
Equity conferences this week: none.

OVERNIGHT U.S. STOCK MOVERS

Celanese (CE +2.39%) was downgraded to 'Neutral' from 'Buy' at UBS.
Intuitive Surgical (ISRG +0.09%) was downgraded to 'Underweight' from 'Equal Weight' at Morgan Stanley.
Guess (GES -0.88%) was upgraded to 'Neutral' from 'Underweight' at Piper Jaffray.
Aegerion (AEGR -1.27%) was downgraded to 'Sell' from 'Neutral' at Guggenheim.
VMware (VMW +0.40%) was downgraded to 'Market Perform' from 'Outperform' at FBR Capital.
Bank of America (BAC -1.10%) and Citigroup (C -0.56%) both fell over 1% in pre-market trading as financial stocks fell across the globe following the results of the Greek referendum.
Humana (HUM -2.92%) jumped over 8% in pre-market trading after Aetna agreed to buy the health insurer for about $35 billion,
The Financial Times reported that Royal Bank of Scotland (RBS +0.89%) could potentially face a judgment of nearly $13 billion in a case related to the subprime mortgage crisis.
Pershing Square reported a 13.2% stake in Howard Hughes (HHC -0.81%) .
Man Group reported a 5.31% stake in Perfect World (PWRD -0.25%) .
Point72 Asset Management reported a 5.1% passive stake in SPX Corp. (SPW -0.65%) .
Frigate Ventures reported a 6.8% passive stake in Novogen (NVGN unch) .

MARKET COMMENTS

September E-mini S&Ps (ESU15 -0.63%) this morning are down -12.75 points (-0.62%0 at a 3-month low. Thursday's closes: S&P 500 -0.03%, Dow Jones -0.16%, Nasdaq +0.09%. The S&P 500 on Thursday settled slightly lower on (1) the slightly weaker-than-expected +223,000 increase in U.S. Jun payrolls and the downward revision in May payrolls to +254,000 from +280,000, and (2) the -1.0% drop in U.S. May factory orders, weaker than expectations of -0.5%. On the supportive side for stocks, the U.S. Jun unemployment rate fell -0.2 to a 7-year low of 5.3%, a bigger decline than expectations of -0.1 to 5.4%.
Sep 10-year T-notes (ZNU15 +0.26%) this morning are up +24.5 ticks at a 5-week high. Thursday's closes: TYU5 +13.00, FVU5 +10.00. Sep T-notes on Thursday closed higher on the weaker-than-expected +223,000 increase in U.S. Jun payrolls and Jun average hourly earnings, which may push back the timing of a Fed interest rate increase.
The dollar index (DXY00 +0.38%) this morning is up +0.341 (+0.35%) at a 1-month high. EUR/USD (^EURUSD) is down -0.0079 (-0.71%) at a 1-week low. USD/JPY (^USDJPY) is up +0.11 (+0.09%). Thursday's closes: Dollar Index -0.197 (-0.20%), EUR/USD +0.00312 (+0.28%), USD/JPY -0.116 (-0.09%). The dollar index on Thursday settled lower on (1) the weaker-than-expected U.S. Jun payroll and average hourly earnings reports, which may push back a Fed interest rate increase, and (2) strength in EUR/USD on short covering ahead of the July 5 Greek referendum.
Aug WTI crude oil (CLQ15 -2.32%) this morning is down sharply by -$2.66 (-4.67%) at a 2-1/2 month low. Aug gasoline (RBQ15 -1.57%) is down -0.0673 (-3.31%). Thursday's closes: CLQ5 -0.03 (-0.05%), RBQ5 +0.0275 (+1.37%). Aug crude oil and gasoline on Thursday settled mixed. Crude oil received support from a weaker dollar and the close-to-expected increase in U.S. Jun payroll report, which signals moderate economic growth that is beneficial for energy demand. Crude oil prices were undercut by the afternoon report from Baker Hughes that U.S. active oil rigs rose by +12 rigs to 640 rigs, the first increase in nearly 7 months.

GLOBAL EVENT CALENDAR07/06/2015

US	0945 ET	Final-Jun Markit U.S. services PMI expected +0.1 to 54.9, prelim-Jun -1.4 to 54.8. Final-Jun Markit U.S. Composite PMI, prelim-Jun -1.4 to 54.6.
	1000 ET	Jun ISM non-manufacturing index expected +0.7 to 56.4, May -2.1 to 55.7.
	1000 ET	Jun Labor Market Conditions Index expected 2.0, May 1.3.
	1100 ET	USDA weekly grain export inspections.
	1600 ET	USDA weekly crop progress.
JPN	0100 ET	Japan May leading index CI expected -0.1 to 106.3, Apr 106.4. May coincident index expected -1.7 to 109.3, Apr 111.0.
GER	0200 ET	German May factory orders expected unch m/m and +4.4% y/y, Apr +1.4% m/m and +0.4% y/y.
	0330 ET	German Jun Markit construction PMI, May 50.8.
UK	0400 ET	UK Jun new car registrations, May +2.4% y/y.
EUR	0430 ET	Eurozone Jul Sentix investor confidence expected -1.6 to 15.5, Jun 17.1.

U.S. STOCK CALENDAR07/06/2015

Company	Ticker	Time	Event Description	Period	Estimate
Aetna	AET US	8:30	Acquisition of Humana Inc by Aetna Inc Call
Humana	HUM US	8:30	Acquisition of Humana Inc by Aetna Inc Call
A Schulman Inc	SHLM US	Aft-mkt	Q3 2015 Earnings Release	Q3 2015	0.77

Barchart Morning Call 11/9

Barchart Morning Call

BC - 42 mins ago

Overnight Developments

• Dec E-mini S&Ps this morning are down -0.27% as concerns about the U.S. fiscal cliff have caused a global sell-off in stocks. European stocks this morning are down -0.69% and Asian stocks closed lower across the board. Japanese stocks closed down -0.90%, Hong Kong closed down -0.85%, and China closed down -0.20%. Global stocks at least received a little support from slightly stronger-than-expected Chinese economic data. Commodity prices are down by -0.12% this morning with Dec crude oil down -0.45%, Dec gasoline +0.07%, Dec gold +0.26%, Dec copper -1.33% , and agriculture prices trading mostly lower. The USDA in today's WASDE report is expected to make relatively minor changes in its crop estimates. The dollar index is up +0.20% this morning on increased safe-haven demand, while EUR/USD is down -0.21%. Dec 10-year T-notes are up 8 ticks.
• President Obama today at 1:05 PM is due to make a statement at the White House about the economy and the fiscal outlook. The comments are not likely to be detailed, but the markets will be listening carefully to gauge the extent that President Obama may be willing to compromise on the fiscal cliff and possibly a grand bargain.
• China's economic data released last night was slightly stronger than expected. The Oct industrial production report of +9.6% y/y was stronger than market expectations of +9.4% and was up from +9.2% in Sep. The Oct retail sales report of +14.5% y/y was slightly stronger than market expectations of +14.4% and was up from +14.2% y/y in Sep. The Oct fixed asset investment (excluding rural) report of +20.7% y/y of +20.7% was stronger than market expectations of +20.6% and was up from +20.5% in Sep. Meanwhile, the Oct CPI rate of +1.7% y/y was weaker than market expectations of +1.9% y/y and Sep's report of +1.9% y/y, which gives the Chinese central bank a little more flexibility on monetary policy to either cut the reserve ratio or interest rates.
• China's Oct passenger-vehicle wholesale deliveries rose +6.4% to 1.3 million units, which was slightly stronger than market expectations of +1.28 million units and suggested that consumer demand for vehicles is holding up.
• Japan's Oct consumer confidence report of 39.7 was slightly stronger than market expectations of 39.5, although it was down from Sep's 40.1.
• The UK Sep visible trade deficit of -8.368 billion pounds was narrower than market expectations of -8.9 bln pounds, which was supportive for the British pound. The Sep non-EU trade deficit of -3.972 billion pounds was narrower than market expectations of -4.6 billion pounds.
• The Greek parliament on Sunday is expected to approve the 2013, which should satisfy most of the requirements necessary for Greece to receive its 31 billion euro bailout payment. However, Eurozone officials said yesterday that Eurozone approval is not likely to come until later in November when the final troika report is available.
• French Sep industrial production fell -2.7% m/m, which was a much larger drop than market expectations of -1.0%. Meanwhile, the French central bank said that France may be slipping into a recession.
  Market Comments
  • Dec E-mini S&Ps this morning are down -3.75 points (-0.27%) on continued fiscal cliff concerns and on overhang from the sell-off in European and Asian stocks overnight. U.S. stocks on Thursday closed sharply lower again on bearish factors including (1) concern about the fiscal cliff as the CBO released a report providing even more detail about the highly negative effects if the U.S. goes over the fiscal cliff, (2) concern about the apparent delay in a Greek deal until late November, (3) technical weakness with the new 3-month low in the S&P 500 index, and (4) a sharp 3.6% sell-off in Apple on Thursday. Closes: S&P 500 -1.22%, Dow Jones -0.94%, Nasdaq -1.545%. Weekly initial unemployment claims fell by -8,000 to 355,000 and continuing claims plunged by -136,000 to 3.127 mln on Hurricane Sandy distortions.
  • Dec 10-year T-notes this morning are up 8 ticks on safe-haven demand and worries about the economy. Dec 10-year T-note prices on Thursday continued to rally and posted a new 3-month high on (1) safe-haven demand with the sell-off in stocks, and (2) expectations for weaker economic growth in coming months if the fiscal cliff is not resolved: TYZ2 +9, FVZ2 +2.75. In addition, demand was strong for Thursday's 30-year bond auction with a bid cover ratio of 2.77 that was higher than the 12-auction average of 2.65. In addition, foreign buying was strong with indirect bidders buying 45.4% of the auction, well above the 12-auction average of 33.6%.
  • The dollar index this morning is up +0.17 points (+0.20%) on increased safe-haven demand with the sell-off in global stocks on fiscal cliff concerns. EUR/USD is down -0.0027 (-0.21%) and USD/JPY is down -0.24 (-0.30%). The dollar index closed little changed as safe-haven demand for the dollar was offset by worries about a possible U.S. recession from the fiscal cliff: Dollar index +0.03 (+0.04%), EUR/USD -0.0024 (-0.19%), USD/JPY -0.53 (-0.66%). The dollar index received a little support on the report that the Sep U.S. trade deficit narrowed to -$41.5 bln from a revised -$43.8 bln in August. The ECB at its policy meeting on Thursday left its refinancing rate unchanged at 0.75%, which was fully in line with market expectations. The Bank of England at its policy meeting left the base rate unchanged at 0.50%. The BOE also left its asset purchase plan at 375 billion pounds, which was disappointing to some stock market participants who had been hoping for an extension of the BOE's quantitative easing program, although it was bullish for GBP/USD.
  • Dec WTI crude oil prices this morning are down -0.38 (-0.45%) on the higher dollar and worries about the economy. Dec gasoline is up +0.0017 (+0.07%). Dec crude oil and gasoline prices on Thursday closed moderately higher on some short-covering after Wednesday's extraordinary plunges of more than 4%. However, sentiment remains bearish for crude oil on worries about fuel demand if the economy goes off the fiscal cliff and on talk that the Obama administration may launch an aggressive last-ditch negotiating effort with Iran: CLZ2 +0.65 (+0.77%), RBZ2 +0.0184 (+0.71%).
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): COV-Covidien (Consensus:$1.00), AEE-Ameren (1.41), APO-Apollo Global (0.75), JCP-JC Penney (-0.07), LNT-Alliant Energy (1.30), MDVN-Medivation (-0.10), WCRX-Warner Chilcot (0.78), HHC-Howard Hughe (0.19), LPI-Laredo Petroleum (0.13), FWLT-Foster Wheeler (0.45), LORL-Loral Space (na), SPH-Suburban Propane (-0.79), MMS-Maximus (0.69), GEN-Genon Energy (0.03), BPT-PB Prud Bay (na), OPK-Opko Health (-0.03).
    Global Financial Calendar
    

    Friday 11/9/12
    United States
    0830 ET	Oct import price index expected unch m/m and -0.5% y/y, Sep +1.1% m/m and -0.6% y/y.
    0830 ET	USDA WASDE report.
    0955 ET	Preliminary Nov U.S. University of Michigan consumer confidence expected +0.3 to 82.9, Oct +4.3 to 82.6.
    1000 ET	Sep wholesale inventories expected +0.4%, Aug +0.5%.
    Japan
    0000 ET	Japan Oct consumer confidence expected 39.5, Sep 40.1.
    CHI
    0030 ET	China Oct industrial production, Sep +9.2% y/y. Oct retail sales expected +14.3% y/y, Sep +14.2% y/y. Oct fixed asset investment ex-rural, +20.5% year-to-date y/y.
    United Kingdom
    0430 ET	UK Sep visible trade balance expected -8.9 bln pounds, Aug -9.844 bln pounds. Sep non-EU trade balance expected -4.60 bln pounds, Aug -4.972 bln pounds. Sep total trade balance expected -3.2 bln pounds, Aug -4.169 bln pounds.
    Germany
    0200 ET	German final-Oct CPI expected unch from prelim of unch m/m and +2.0% y/y. Final-Oct CPI EU-harmonized expected unch from prelim of unch m/m and +2.1% y/y.

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