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Jim Van Meerten
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Jim Van Meerten is an advisor to Marketocracy Capital Management and writes on financial subjects here and on Barchart Portfolio Blogs. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and attended... More
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  • Barchart Morning Call 3/21 0 comments
    Mar 21, 2013 3:37 PM | about stocks: IHS, LULU, ORCL, JCP, RTN, GES, JBL, CAG, PANW, ROST, COO, SIAL, CMCSA, VIAB, NKE, MU, TIBX, AAPL, UPS, AMZN

    BARCHART MORNING CALL

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    OVERNIGHT MARKETS AND NEWS
    June E-mini S&Ps (ESM13 unch) are trading slightly lower by -0.08% on a -0.90% drop in the Euro Stoxx 50 index on unexpected declines in the German and Eurozone PMI manufacturing and services indexes. European stocks are also lower after the ECB said it would cut off lending to the Cyprus central bank and banking system if no bailout is in place by Monday. However, on the positive side, the Chinese March HSBC flash manufacturing PMI rose by +1.3 points to 51.7 and was stronger than market expectations. Asian stocks today closed mixed. The Nikkei index rallied by +1.3%, the Hang Seng closed -0.14%, and China's CSI 300 index rose +0.18%. Commodity prices this morning are little changed on average. May crude oil (CLK13 -0.31%) is down -0.43%, May gasoline (RBK13 -0.36%) is down -0.36%, April gold (GCJ13 +0.02%) is down -0.01%, May copper (HGK13 +0.42%) is up +0.19%, and agriculture prices are mixed. The dollar index (DXY00 -0.06%) is slightly higher by +0.05% and EUR/USD (^EURUSD) is down -0.08%. USD/JPY (^USDJPY) is down -0.70%. June 10-year T-note (ZNM13 -0.10%) prices are down -3.5 ticks.
    The European Central Bank stepped up the pressure on politicians to reach a Cyprus bailout agreement by saying that it will cut off current funding to the Cyprus central bank through its Emergency Liquidity Assistance (ELA) program if there is no bailout agreement by Monday. The cut-off of ECB funding to the Cyprus central bank, which is in turn keeping Cyprus banks afloat, would mean the immediate collapse of most Cyprus banks. However, the market is still expecting Eurozone and Cyprus officials to come up with an agreement to allow Cyprus banks to reopen by early next week. The Cyprus central bank announced yesterday that Cyprus banks and stock market will be closed through Friday and then Monday is a holiday when they will be closed in any case. That indicates a target date of next Tuesday for reopening banks and the stock market.
    Spain today successfully sold 4.51 billion euros of 2-year and 5-year bonds, more than the maximum target of 4 billion euros. The average yield was 2.275% on the 2-year and 3.557% on the 5-year. Spain has covered about one-third of its mid- and long-term funding needs for the year.
    The German March manufacturing PMI fell by -1.4 points to 48.9 from 50.3 in Feb, which was substantially weaker than market expectations for a +0.2 point increase to 50.3. The German March services PMI fell by -3.1 points to 51.6, which was substantially weaker than market expectations of +0.3 to 55.0.
    The Eurozone March manufacturing PMI fell by -1.3 points to 46.6 from 47.9 in Feb, which was weaker than market expectations of +0.3 to 48.2. The Eurozone March services PMI fell by -1.4 points to 46.5 from 47.9 in Feb, which was weaker than market expectations for a +0.3 point increase to 48.2.
    UK Feb retail sales (with auto fuel) rose sharply by +2.1% m/m, which was stronger than market expectations of +0.4% m/m and an improvement from the revised -0.7% m/m decline seen in Jan (prelim -0.6% m/m).
    China's March HSBC flash manufacturing PMI rose by +1.3 points to 51.7 from 50.4 in Feb, which was stronger than market expectations for a +0.4 point increase to 50.8.
    Japan's Feb adjusted merchandise trade balance of -1.087 trillion yen was narrower than market expectations of -1.103 trillion yen and was wider than the revised -737 billion yen deficit in Jan. Japanese Feb exports fell -2.9% y/y, which was weaker than market expectations for a decline of-1.7% y/y. Feb imports rose +11.9% y/y, less than market expectations of +15.0%.

    U.S. STOCK PREVIEW
    The Cyprus situation calmed down a bit yesterday with a sharp rally in European stocks and a decline in Spanish and Italian bond yields as the market seems to be relatively confident that a compromise will be reached. Today's U.S. weekly initial unemployment claims report is expected to show an increase of +8,000 to 340,000, reversing most of last week's decline of -10,000 to 332,000. Today's Feb existing home sales report is expected to show a +1.6% increase to 5.0 million, adding to the +0.4% increase to 4.92 million seen in January. Today's Jan FHFA house price index is expected to show another solid increase of +0.7% m/m, adding to the +0.6% m/m increase seen in December. Today's March Philadelphia Fed manufacturing index is expected to show a +9.5 increase to -3.0, more than reversing the -6.7 point drop to -12.5 seen in January.
    There are earnings reports today from IHS (consensus $0.85), ConAgra Foods (0.56), Ross Stores (1.07), Nike (0.67), Micron Technology (-0.20), and Tibco Software (0.18).
    Conferences during the remainder of this week include 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 unch) this morning are slightly lower by -1.25 points (-0.08%) on the -0.90% sell-off in European stocks, the weak Eurozone and German PMI reports, and the threat to cut off funding for the Cyprus banking system by Monday if there is no bailout agreement. The S&P 500 index on Wednesday closed moderately higher as the market was encouraged that the FOMC left QE3 intact and that Cyprus is working on a new plan to qualify for a bailout. Closes: S&P 500 +0.67%, Dow Jones +0.39%, Nasdaq 100 +0.67%.

    OVERNIGHT U.S. STOCK MOVERS

    • IHS Inc (IHS -0.04%) reported Q1 adjusted EPS of 86 cents, 1 cent above the consensus of 85 cents.
    • Lululemon (LULU -0.31%) reported Q4 EPS of 75 cents, slightly above the consensus of 74 cents.
    • Oracle (ORCL +0.20%) fell sharply by 7% in after-hours trading after reporting Q3 EPS of 65 cents versus the consensus of 66 cents and saying that it is "not pleased with Q3 revenue growth" due to poor sales execution.
    • J.C. Penney (JCP -0.68%) rallied 1.4% in after-hours trading after announcing that bondholders rescinded their notice of default.
    • Raytheon (RTN -0.18%) increased its annual dividend payout by 10% to $2.20 from $2.00 per share.
    • Guess (GES +0.75%) fell 5% in after-hours trading after the company issued disappointing Q1 EPS guidance of 5-10 cents versus the consensus of 29 cents. Q4 adjusted EPS of 95 cents was stronger than the consensus of 87 cents.
    • Jabil Circuit (JBL +1.56%) fell 4% in after-hours trading after the company reported Q2 core EPS of 53 cents versus the consensus of 54 cents, and issued disappointing Q3 core EPS guidance of 50-58 cents versus the consensus of 61 cents.

    MARKET COMMENTS
    June 10-year T-notes (ZNM13 -0.10%) this morning are down -3.5 ticks. June 10-year T-note prices on Wednesday closed lower on reduced safe-haven demand with the rally in stocks and somewhat reduced concern about Cyrpus. Closes: TYM3 -5.5, FVM3 -1.25.
    The dollar index (DXY00 -0.06%) this morning is slightly higher by +0.04 points (+0.05%) while EUR/USD (^EURUSD) is down -0.0010 (-0.08%). USD/JPY (^USDJPY) is down -0.67 yen (-0.70%). The dollar index on Wednesday closed mildly lower on reduced safe-haven demand with the +0.67% rally in the S&P 500 index and the +1.38% rally in the Euro Stoxx 50 index on reduced concerns about Cyprus. Closes: Dollar index-0.21 (-0.25%), EUR/USD +0.0051 (+0.40%), USD/JPY +0.85 (+0.89%).
    May WTI crude oil (CLK13 -0.31%) is down -0.40 (-0.43%) and April gasoline (RBK13 -0.36%) is down -0.0112 (-0.36). Crude oil and gasoline prices on Wednesday rallied sharply on (1) the recovery in global stock prices, (2) the -1.314 mln bbl drop in crude oil inventories vs expectations for a +2.0 mln bbl increase, and (3) the small -0.1% decline in U.S. oil production to 7.150 mln bpd from the previous week's 20-1/2 year high of 7.159 mln bpd. Closes: CLJ3 +0.80 (+0.87%), RBJ3 +0.0712 (+2.34%).

    GLOBAL EVENT CALENDAR03/21/2013

    US0830 ETWeekly initial unemployment claims expected +8,000 to 340,000, previous -10,000 to 332,000. Weekly continuing claims expected +26,000 to 3.050 mln, previous -89,000 to 3.024 mln.
     0830 ETUSDA weekly Export Sales.
     0900 ETJan FHFA house price index expected +0.7% m/m, Dec +0.6% m/m.
     0900 ETTreasury announces details of 2, 5 and 7-year T-notes March 26-28.
     1000 ETMar Philadelphia Fed manufacturing index expected +9.5 to -3.0, Feb -6.7 to -12.5.
     1000 ETFeb existing home sales expected +1.6% to 5.0 mln, Jan +0.4% to 4.92 mln.
     1000 ETFeb leading indicators expected +0.4% m/m, Jan +0.2% m/m.
     1300 ETTreasury sells $13 billion in 10-year TIPS.
    JPN0030 ETJapan Jan all-industry activity index expected -1.3% m/m, Dec +1.8% m/m.
     0100 ETJapan Feb supermarket sales, Jan -4.7% y/y.
     0300 ETJapan Feb convenience store sales, Jan -0.9% y/y.
    GER0430 ETGerman March PMI manufacturing, expected 50.5 Feb 50.3. March PMI services expected 55.0, Jan 54.7.
    EUR0500 ETEurozone March PMI manufacturing expected 48.2, Feb 47.9. March PMI services expected 48.2, Feb 47.9.
    UK0530 ETUK Feb retail sales ex-auto fuel expected +0.6% m/m and +1.2% y/y, Jan -0.5% m/m and +0.2% y/y. Feb retail sales with auto fuel expected +0.4% m/m and +0.5% y/y, Jan -0.6% m/m and -0.6% y/y.
     0530 ETUK Feb public finances (PSNCR) expected -12.0 bln pounds, Jan -35.6 bln pounds. Feb PSNB ex-interventions expected 8.0 bln pounds, Jan -11.4 bln pounds. Feb public sector net borrowing expected 8.2 bln pounds, Jan was -9.9 bln pounds.
     0700 ETUK March CBI trends total orders expected -15, Feb -14. March CBI trends selling prices expected 17, Feb 20.

    U.S. STOCK CALENDAR03/21/2013

    Company NameSymbolTimeEvent DescriptionPeriodEPS Est (US$)
    IHS IncIHS USBef-mktQ1 2013 Earnings ReleaseQ1 20130.853
    ConAgra Foods IncCAG US7:30Q3 2013 Earnings ReleaseQ3 20130.563
    IHS IncIHS US8:00Q1 2013 Earnings CallQ1 2013 
    Palo Alto Networks IncPANW US8:00Analyst DayY 2013 
    Ross Stores IncROST US8:30Q4 2013 Earnings ReleaseQ4 20131.07
    Cooper Cos Inc/TheCOO US9:00Annual General MeetingY 2013 
    Sigma-Aldrich CorpSIAL US9:30Business Update Call  
    Ross Stores IncROST US11:00Q4 2013 Earnings CallQ4 2013 
    Comcast CorpCMCSA US11:15Economic Club of Washington, D.C. Presents CEO Brian L. Roberts  
    Viacom IncVIAB US14:00Annual General MeetingY 2013 
    NIKE IncNKE US16:15Q3 2013 Earnings ReleaseQ3 20130.672
    Micron Technology IncMU US16:30Q2 2013 Earnings CallQ2 2013 
    TIBCO Software IncTIBX US16:30Q1 2013 Earnings CallQ1 2013 
    NIKE IncNKE US17:00Q3 2013 Earnings CallQ3 2013 
    Micron Technology IncMU USAft-mktQ2 2013 Earnings ReleaseQ2 2013-0.197
    TIBCO Software IncTIBX USAft-mktQ1 2013 Earnings ReleaseQ1 20130.181
    Apple IncAAPL US Apple Inc. v. Amazon.com Inc. - Settlement Negotiations  
    United Parcel Service IncUPS US Roadshow - Day 4Y 2013 
    Amazon.com IncAMZN US Apple Inc. v. Amazon.com Inc. - Settlement Negotiations 

    Stocks: IHS, LULU, ORCL, JCP, RTN, GES, JBL, CAG, PANW, ROST, COO, SIAL, CMCSA, VIAB, NKE, MU, TIBX, AAPL, UPS, AMZN
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