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Barchart Morning Call 3/20


Barchart Morning Call - Wednesday, March 20th, 2013

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June E-mini S&Ps (ESM13 +0.26%) are up +0.32% this morning on a +0.51% rally in the Euro Stoxx 50 index and a sharp 3.37% rally in China's CSI 300 index. The Japanese markets were closed today for a public holiday. The markets are hoping for a compromise on a Cyprus bailout. Commodity prices this morning are moderately higher by +0.42%. April crude oil (CLJ13 +0.75%) is up +0.71%, April gasoline (RBJ13 +0.37%) is up +0.25%, April gold (GCJ13 -0.22%) is down -0.06%, May copper (HGK13 +0.95%) is up +1.01%, grains and softs are higher, and livestock is lower. The dollar index (DXY00 -0.18%) is down -0.23%. EUR/USD (^EURUSD) is up +0.25% and USD/JPY (^USDJPY) is up +0.27%. June 10-year T-notes (ZNM13 -0.10%) are down -4.5 ticks.

The U.S. MBA mortgage applications index for the week ended March 15 fell by -7.1% with the purchase sub-index down -3.9% and the refinancing sub-index down -8.0%. The 30-year mortgage rate last week rose by 11 bp to a 6-1/2 month high of 3.63%.

Luxembourg's finance minister Luc Frieden called for a Eurozone finance ministers meeting to produce a new bailout package for Cyprus. Banks and the stock market in Cyprus were closed again today after the Cypriot parliament yesterday defeated the one-time tax levy on bank deposits demanded by Eurozone officials as part of a 10 billion euro bailout. There is now likely to be a big run on Cypriot banks when banks reopen if there is no bailout deal and the deposit tax levy is not resolved one way or another. German Chancellor Merkel today said that the Cyprus banking sector must contribute in some way to the bailout. The Spanish 10-year bond yield today fell by 4 bp to 5.00% as worries eased about Cyprus.

North Korea is suspected in a cyber attack today on computer networks at some of South Korea's largest banks and broadcasters, ramping up tensions on the Korean peninsula. North Korea's rhetoric in recent days has reached a fever pitch after the new round of UN sanctions for its third nuclear test. In addition, the U.S. and South Korea are engaged in military exercises that involved flying an American B-52 bomber from Guam over South Korea as a show of force. South Korean stocks today fell 1.06%.

Germany today sold 4 billion euros of 10-year bunds at an average yield of 1.36%, down by 30 bp from 1.66% at the last auction on Feb 20. The bid cover ratio was strong at 1.62 versus 1.25 at the Feb 20 auction. Today's strong German 10-year bund auction was driven by safe-haven demand with the latest iteration of the Eurozone debt crisis caused by the botched Cyprus bailout.

The minutes from the March 6-7 BOE meeting showed that the majority of members on the Monetary Policy Committee voted against restarting the BOE's quantitative easing program, defying BOE Governor King's push to restart QE. The majority said that UK inflation is currently too high to restart QE.

The German Feb producer price report of -0.1% m/m and +1.2% y/y was weaker than market expectations of +0.2% m/m and +1.5% y/y and was down from the Jan report of +0.8% m/m and +1.7% y/y.

The Jan Eurozone current account (sa) was reported at 14.8 billion euros, which was down from the revised 16.0 billion euro figure in Dec (preliminary 13.9 billion euros).

The UK Feb claimant count rate of 4.7% was in line with market expectations and unchanged from Jan. UK jobless claims fell by -1,500, which showed a slightly weaker labor market than market expectations for a decline of -5,000. Jobless claims fell by a revised -10,000 in Jan (preliminary -12,500). The UK Jan ILO unemployment rate (3mo) was unchanged from Dec at 7.8%.


Today's main focus will be on (1) the Eurozone debt crisis as the markets wait to see if Eurozone officials and Cyprus can reach a compromise on a bailout plan after the Cyprus parliament yesterday soundly rejected the Eurozone's demand for a tax on bank deposits, and (2) outcome of today's FOMC meeting. The market consensus is that the FOMC will leave its QE3 program unchanged and that Fed Chairman Bernanke in his post-meeting press conference will strongly defend QE3. There are earnings reports today from General Mills (consensus $0.57), Lennar (0.15), FedEx (1.38), Jabil Circuit (0.54), Oracle (0.66), and Guess (0.87).

Conferences during the remainder of this week include Consumer Analyst Group of Europe (CAGE) Conference on Mon-Wed, Howard Weil Energy Conference on Mon-Wed, ISI Group Retail Summit on Tue, Barclays Emerging Payments Forum on Tue-Wed, Bank of America Merrill Lynch Global Industrials & EU Autos Conference on Tue-Thu, Gabelli Asset Management Specialty Chemicals & Agriculture Conference on Wed, International Strategy & Investment Group (ISI) Retail Summit on Wed, BB&T Commercial & Industrial Conference on Wed-Thu, J.P. Morgan Insurance Conference on Thu, National Coffee Association Annual Conference on Thu, Nomura Global Chemical Industry Leaders Conference on Thu, and The Future of Utilities - 18th Annual Conference on Tue-Thu.

June E-mini S&Ps (ESM13 +0.26%) this morning are up +5.00 points (+0.32%) on strength in the European and Asian stock markets and on reduced concern about Cyprus. The S&P 500 index on Tuesday closed mildly lower as the Cyprus parliament voted down the bank deposit tax. However, stocks received some encouragement from the stronger than expected Feb U.S. housing starts and building permits report. Closes: S&P 500 -0.24%, Dow Jones +0.03%, Nasdaq 100 -0.18%.


  • FedEx (FDX -0.77%) is down 3.2% in pre-market trading this morning after reporting Q3 EPS of $1.23 ex-business realignment costs, below the consensus $1.38. FedEx said its realignment costs mainly involve its voluntary buyout program for managers.
  • General Electric (GE +0.30%) may consider spinning off GE Capital, according to a report by Dow Jones.
  • BlackBerry (BBRY +0.07%) was upgraded by two notches to Overweight from Underweight at Morgan Stanley due to expanding margins and selling prices.
  • American Realty Capital Properties (ARCP unch) offered to buy Cole Property Trust III for at least $5.7 billion.
  • China-based solar-company Suntech (STP -7.81%) today declared a bankruptcy reorganization, according to China's official Xinhua News Agency. There was no official announcement from the company. A bankruptcy action has been expected after Suntech last Friday defaulted on repayment of more than $500 billion of convertible bonds.
  • Adobe (ADBE -0.75%) rallied 5% in after-hours trading after reporting Q1 adjusted EPS of 35 cents, above the consensus of 31 cents.
  • Williams-Sonoma (WSM -0.75%) rallied 6% in after-hours trading after announcing better-than-expected earnings, a dividend hike, and a $750 million share repurchase program. The company reported Q4 EPS of $1.34, above the consensus of $1.29.
  • Erickson Air-Crane (EAC +2.69%) rallied 15% in after-hours trading after news that it was acquiring Evergreen Helicopters for $250 million.
  • Fuel Tech (FTEK +1.13%) fell 9% in after-hours trading after reporting Q4 EPS with items of zero, below the consensus of 5 cents.
  • Cintas (CTAS +0.99%) fell 3% in after-hours trading on weaker-than-expected earnings.
  • Maxwell Technologies (MXWL +0.40%) fell 5% after announcing a delay in its quarterly report due to material weaknesses in its internal controls.
  • Gevo (GEVO +6.74%) rallied 7% in after-hours trading after a ruling that it did not infringe on patents held by Butamax Advanced Biofuels.


June 10-year T-notes (ZNM13 -0.10%) this morning are down by -4.5 ticks on reduced safe-haven demand. June 10-year T-note prices on Tuesday closed with solid gains once again due to a continued increase in safe-haven demand with Cyprus teetering on the edge of chaos and with the mildly lower close in the S&P 500 index. Closes: TYM3 +11.5, FVM3 +4.5.

The dollar index (DXY00 -0.18%) is down -0.19 points (-0.23%) and EUR/USD (^EURUSD) is up +0.0032 (+0.25%) on reduced concern about Cyprus. USD/JPY (^USDJPY) is up +0.26 (+0.27%). The dollar index on Tuesday closed moderately higher and EUR/USD closed lower on the chaotic Cyprus bailout situation, which has the chance of devolving into a full sovereign default and Cypriot banking meltdown. EUR/USD received some underlying support from the +0.3 point increase in the German Zew economic sentiment index to a new 3-year high, although that was offset by a sharp -9 point drop in the Eurozone Zew economic sentiment index. Mr. Kuroda on Tuesday officially took over as the new governor of the BOJ. Closes: Dollar index +0.30 (+0.36%), EUR/USD -0.0075 (-0.58%), USD/JPY -0.05 (-0.05%).

April WTI crude oil (CLJ13 +0.75%) this morning is up +0.65 (+0.71%) and April gasoline (RBJ13 +0.37%) is up +0.0076 (+0.25%). Crude oil and gasoline prices on Tuesday closed sharply lower on (1) concern about Eurozone growth with the Cyprus bank deposit tax debacle, (2) a recovery in North Sea oil production, and (3) a +278,000 bbl increase in gasoline inventories in yesterday's API report versus expectations of -2 million bbls. Closes: CLJ3 -1.58 (-1.69%), RBJ3 -0.0838 (-2.68%).


US 0700 ET Weekly MBA mortgage applications, previous -4.7% with purchase sub-index -2.5% and refi sub-index -5.2%.
  1030 ET DOE Weekly Petroleum Status Report.
  1400 ET FOMC interest rate decision.
  1400 ET Fed releases its Summary of Economic Projections.
  1430 ET Fed Chairman Ben Bernanke holds press conference in Washington D.C.
GER 0300 ET German Feb producer prices expected +0.2% m/m and +1.5% y/y, Jan +0.8% m/m and +1.7% y/y.
EUR 0500 ET Eurozone Jan current account nsa, Dec 27.0 bln euros. Jan current account, Dec 13.9 bln euros.
  1100 ET Eurozone March consumer confidence, Feb -23.6.
UK 0530 ET UK Bank of England minutes.
  0530 ET UK Feb claimant count rate expected 4.7%, Jan 4.7%. Feb jobless claims change expected -5,000, Jan -12,500.
  0530 ET UK Jan ILO unemployment rate (3mo) expected unch at 7.8%, Dec 7.8%. Jan employment change (3mo/3mo) expected +140,000, Dec +154,000.
  0530 ET UK Jan average weekly earnings expected +1.5% 3mo y/y, Dec +1.4% 3mo y/y. Jan weekly earnings ex-bonus expected +1.5% 3mo y/y, Dec +1.3% 3mo y/y.
  n/a UK Chancellor Osborne presents 2013 budget to Parliament.
JPN n/a Japanese markets closed for Verbal Equinox Day public holiday.
  1950 ET Japan Feb merchandise trade balance expected -856 bln yen, Jan -1.631 bln yen. Feb adjusted merchandise trade balance expected -1.099 trillion yen, Jan -679 bln yen. Feb exports expected -1.2% y/y, Jan +6.4% y/y. Feb imports expected +14.9% y/y, Jan +7.3% y/y.
CHI 2145 ET China March HSBC flash manufacturing PMI expected +0.5 to 50.9, Feb -1.9 to 50.4.
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Company Name Symbol Time Event Description Period EPS Est (US$)
General Mills Inc GIS US Bef-mkt Q3 2013 Earnings Release Q3 2013 0.568
Lennar Corp LEN US 6:00 Q1 2013 Earnings Release Q1 2013 0.154
Covidien PLC COV US 7:00 Annual General Meeting Y 2012  
FedEx Corp FDX US 7:30 Q3 2013 Earnings Release Q3 2013 1.379
Abbott Laboratories ABT US 8:00 FDA Adcomm, MitraClip, Transcatheter Mitral Valve    
FedEx Corp FDX US 8:30 Q3 2013 Earnings Call Q3 2013  
General Mills Inc GIS US 8:30 Q3 2013 Earnings Call Q3 2013  
Terex Corp TEX US 9:00 Analyst Meeting Y 2013  
Flowserve Corp FLS US 9:00 Analyst Day Y 2013  
Lennar Corp LEN US 11:00 Q1 2013 Earnings Call Q1 2013  
Agilent Technologies Inc A US 11:00 Annual General Meeting Y 2013  
Flowers Foods Inc FLO US 12:15 Analyst Day Y 2013  
Starbucks Corp SBUX US 13:00 Annual General Meeting Y 2013  
Jabil Circuit Inc JBL US 16:30 Q2 2013 Earnings Release Q2 2013 0.537
Jabil Circuit Inc JBL US 16:30 Q2 2013 Earnings Call Q2 2013  
Guess? Inc GES US 16:30 Q4 2013 Earnings Call Q4 2013  
Hewlett-Packard Co HPQ US 17:00 Annual General Meeting Y 2013  
Oracle Corp ORCL US 17:00 Q3 2013 Earnings Call Q3 2013 Inc CRM US 17:00 Extraordinary Shareholders Meeting Y 2013  
Oracle Corp ORCL US Aft-mkt Q3 2013 Earnings Release Q3 2013 0.662
Guess? Inc GES US Aft-mkt Q4 2013 Earnings Release Q4 2013 0.871
Citigroup Inc C US   Extraordinary Shareholders Meeting    
Raymond James Financial Inc RJF US   February 2013 Sales and Revenue Release - Operating Data Results 2013  
United Parcel Service Inc UPS US   Roadshow - Day 3 Y 2013  
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