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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 and Seeking Alpha. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and... More
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  • Barchart Morning Call 4/1 0 comments
    Apr 1, 2013 11:38 AM | about stocks: YUM, T, JNJ, MMM, AVY, CSCO, AMZN, CALM, DSCI, BMTC, CHK, FRF, FES, ACRE, SCVL, LWAY, ZAZA, AJRD, AAPL, HNR, CALL, LPLA

    BARCHART MORNING CALL

    Monday, April 1st, 2013>>View 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

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    Stocks: YUM, T, JNJ, MMM, AVY, CSCO, AMZN, CALM, DSCI, BMTC, CHK, FRF, FES, ACRE, SCVL, LWAY, ZAZA, AJRD, AAPL, HNR, CALL, LPLA
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