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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 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 4/11 0 comments
    Apr 11, 2013 1:16 PM | about stocks: MSFT, RAD, GWR, YUM, IDCC, APOG, IART, BBBY, MDLZ, FTNT, XRX, MEIP, RT, CBSH, LB, TJX, PL, HIG, GPS, STR, COST, JBHT, ROST

    BARCHART MORNING CALL - Thursday, April 11th, 2013>>View Older Reports

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    OVERNIGHT MARKETS AND NEWS
    June E-mini S&Ps (ESM13 unch) this morning are little changed as the market looks ahead to this morning's unemployment claims report and next week's pickup in Q1 earnings reports. The Euro Stoxx 50 index this morning is slightly higher by +0.08%. Asian stocks today closed mostly higher except for the -0.30% decline in the Chinese CSI 300 index. The Nikkei index today closed +1.96% and the Hang Seng closed +0.30%. Commodity prices this morning are mildly higher by +0.16%. May crude oil (CLK13 -0.11%) is down -0.10%, May gasoline (RBK13+0.29%) is up +0.20%, May natural gas (NGK13 +0.86%) is up +0.51%, June gold GCM13 +0.09%) is down -0.03%, May copper (HGK13-0.42%) is down -0.12%, and agriculture prices are trading mostly higher. The dollar index (DXY00 -0.55%) this morning is down -0.48% on reduced safe-haven demand. EUR/USD (^EURUSD) is up +0.48% on a positive Italian 3-year bond auction today. USD/JPY (^USDJPY) is down-0.26%. June 10-year T-note prices (ZNM13 -0.02%) are down -0.5 tick ahead of today's 30-year bond auction.
    In the first sign of a possible break in North Korea's feverish rhetoric, the official North Korean Central News Agency last night said that the suspension of business activity at the joint North-South business zone at Gaeseong is "temporary." Despite that comment, South Korean officials still believe there is a good chance that North Korea in coming days will launch an intermediate-range missile and/or conduct another nuclear test.
    The South Korean central bank at its meeting today left its policy rate unchanged at 2.75%. The South Korean Kospi stock index today closed +0.7% and the won strengthened by +0.6%.
    Italy today sold 4 trillion euros of a 3-year bond at 2.29%, down by 19 bp from the 2.48% on the same bond maturity sold on March 13. The bid cover ratio rose to 1.40 from 1.28 in March.
    Greece's Jan unemployment rate rose to a record 27.2% from a revised 25.7% in Dec. The European Commission is forecasting that Greek GDP this year will fall -4.4%, adding to last year's plunge of -6.4%.
    China's March local-currency lending was 1.06 trillion yuan ($171 billion), which was higher than market expectations of 900 billion yuan and was supportive for the Chinese economic outlook. Feb lending was 620 billion yuan. Separately, China's M2 money supply growth of +15.7% y/y was stronger than market expectations of +14.6%.
    China's foreign exchange reserves rose to a record $3.44 trillion at the end of Q1, up from $3.31 trillion at the end of Q4.
    Japan Feb machine orders rose +7.5% m/m, which was stronger than market expectations of +6.9% m/m and regained some ground after the-13.1% m/m decline seen in Jan. On a year-on-year basis, Feb machine orders fell to -11.3% y/y from -9.7% in Jan.

    U.S. STOCK PREVIEW
    Today's weekly initial unemployment claims report is expected to show a decline of -25,000 to 360,000, reversing most of last week's sharp increase of +28,000 to 4-month high of 385,000. Meanwhile today's continuing claims report is expected to show a small +7,000 increase to 3.070 mln, reversing most of last week's decline of -8,000 to 3.063 mln. The Treasury today will sell $13 billion in 30-year T-bonds, concluding this week's $66 billion coupon package. Earnings reports today include Commerce Bancshares (consensus $0.68) and JB Hunt Transport ($0.64). Conferences through the remainder of this week include the Bio-IT World Conference & Expo 2013 on Wed-Thu.

    June E-mini S&Ps (ESM13 unch) this morning are slightly higher by +0.75 points (+0.05%) on a possible break in North Korea's feverish rhetoric and on a decline in yields at today's Italian 3-year bond auction. The S&P 500 index on Wednesday closed sharply higher and posted an all-time high on economic optimism and speculation that U.S. companies can beat already reduced Q1 corporate earnings estimates. Technology stocks soared after the CEO of Taiwan Semiconductor, the world's biggest chip maker, predicted that the global chip industry will grow 4% this year. Stocks shrugged off weaker-than-expected March China export growth of +10% y/y, versus expectations of +11.7% y/y, and the slightly hawkish Mar 19-20 FOMC meeting minutes. Closes: S&P 500 +1.22%, Dow Jones +0.88%, Nasdaq 100 +1.94%.

    OVERNIGHT U.S. STOCK MOVERS

    • Microsoft (MSFT +2.26%) was downgraded to Sell from Neutral at Goldman Sachs and cut its target to $27 from $30 due to weakening PC trends.
    • Rite Aid (RAD +0.56%) reported Q4 EPS of 13 cents, better than the consensus for a 2-cent loss.
    • Genesee & Wyoming (GWR +0.39%) reports Q1 traffic up 102.7% y/y. March traffic was up +100.0% y/y.
    • Yum! Brands (YUM -0.04%) slid 3% in after-hours trading after the compoany said its China Division same-store sales were down 13% in March.
    • According to the International Data Corporation (Pending:IDC) worldwide quarterly PC tracker, worldwide PC shipments totaled 76.3 million units in Q1, down 13.9% compared to the same quarter in 2012 and worse than the forecast decline of 7.7%. The extent of the year-on-year contraction marked the worst quarter since IDC began tracking the PC market quarterly in 1994. The results also marked the fourth consecutive quarter of year-on-year shipment declines.
    • Apogee Enterprises (APOG +0.10%) slumped over 7% in after-hours trading after the company reported Q4 EPS of 15 cents, below consensus of 17 cents.
    • Integra LifeSciences (IART +1.27%) announced that it initiated a voluntary recall of certain products. After the announcement, the company lowered its guidance on Q1 EPS to 30 cents to 40 cents, well below consensus of 69 cents.
    • Bed Bath & Beyond (BBBY +1.55%) reported Q4 EPS of $1.68, right on consensus $1.68, but lowered its guidance on Q1 EPS to 88 cents to 94 cents, below consensus of 95 cents.
    • Fortinet (FTNI) reported preliminary Q1 EPS of 10 cents, weaker than consensus of 12 cents.
    • Mondelez (MDLZ +0.33%) was initiated with an "Outperform" at Wells Fargo with a valuation range of $35-$37 a share.
    • Xerox (XRX +2.05%) was initiated with an "Overweight" at Piper Jaffray with a target of $12 a share.
    • MEI Pharma (MEIP +2.24%) announced the presentation of new data showing the ability of its drug ME-344 to decrease tumor burden and delay recurrence of ovarian cancer.
    • Ruby Tuesday (RT +5.29%) reported Q3 adjusted EPS of 10 cents, right on expectations, but raised its guidance for fiscal year 2013 to EPS of 28 cents to 32 cents, above the consensus of 25 cents.

    MARKET COMMENTS
    June 10-year T-notes (ZNM13 -0.02%) this morning are down 0.5 tick. June 10-year T-note futures prices on Wednesday closed lower after the Mar 19-20 FOMC meeting minutes indicated support for a slowdown of the Fed's QE program. Treasuries were also pressured on reduced safe-haven demand after the S&P 500 and Dow rallied to fresh all-time highs. Closes: TYM3 -21.5, FVM3 -5.5.
    The dollar index (DXY00 -0.55%) this morning is moderately lower by -0.48% on reduced safe-haven demand and technical selling with the new 1-month low. EUR/USD (^EURUSD) is up +0.0063 (+0.48%) on the positive Italian 3-year bond auction and on technical buying with the new 1-month high this morning. USD/JPY is down -0.26 yen (-0.26%). The dollar index on Wednesday recovered from a 2-week low and closed higher after the Mar 19-20 FOMC minutes indicated several Fed members were in favor of reducing dollar negative asset purchases. USD/JPY (^USDJPY) posted a nearly 4-year high as the yen slumped when BOJ Governor Kuroda said the BOJ will take "all necessary measures" to boost inflation. Closes: Dollar index +0.223 (+0.27%), EUR/USD -0.00123 (-0.09%), USD/JPY +0.746 (+0.75%).
    May WTI crude oil (CLK13 -0.11%) this morning is down -0.09 (-0.10%) and May gasoline is up +0.0058 (+0.20%). May crude oil and gasoline prices (RBK13 +0.29%) on Wednesday closed mixed. Bearish factors included (1) the increase in U.S. crude production by 30,000 bbl to 7.18 million bbl in the week ended Apr 5, its highest in 22 years, (2) OPEC's action to cut its 2013 world oil consumption estimate to +800,000 bpd from +840,000 bpd last month, and (3) the unexpected +1.699 million bbl increase in weekly EIA gasoline inventories when a draw of -1.5 million bbl was expected. Supportive factors included (1) economic optimism after the S&P 500 and the Dow rallied to fresh record highs and (2) the +250,000 bbl increase in weekly EIA crude inventories, less than expectations of a +1.5 million bbl build. Closes: CLK3 +0.44 (+0.47%), RBK3-0.0773 (-2.63%).

    GLOBAL EVENT CALENDAR04/11/2013

    US 0600 ET Philadelphia Fed President Charles Plosser speaks on monetary policy in Hong Kong at the Market News International Economic Seminar.
      0830 ET Weekly initial unemployment claims expected -25,000 to 360,000, previous +28,000 to 385,000. Weekly continuing claims expected +7,000 to 3.070 mln, previous -8,000 to 3.063 mln.
      0830 ET March import price index expected -0.5% m/m and -1.9% y/y, Feb +1.1% m/m and -0.3% y/y.
      0830 ET USDA weekly Export Sales.
      0830 ET St. Louis Fed President James Bullard gives welcoming remarks in Washington at 2013 Federal Reserve System Community Development Research Conference Resilience & Rebuilding for Low-Income Communities: Research to Inform Policy.
      0900 ET Treasury announces 5-year TIPS auction for April 18.
      1300 ET Treasury sells $13 billion of 30-year T-bonds.
    EUR 0400 ET ECB publishes monthly report.
    GER 0200 ET German March final-March CPI expected unrevised from preliminary of +0.5% m/m and +1.4% y/y. German final-March CPI expected unrevised from preliminary +0.4% m/m and +1.8% y/y.
    JPN 1950 ET Japan Feb tertiary industry index expected +0.7% m/m, Jan -1.1% m/m.

    U.S. STOCK CALENDAR04/11/2013

    Company Name Symbol Time Event Description Period EPS Est (US$)
    Commerce Bancshares Inc/MO CBSH US Bef-mkt Q1 2013 Earnings Release Q1 2013 0.678
    L Brands Inc LTD US 7:30 March 2013 Sales and Revenue Call 2013  
    TJX Cos Inc TJX US 8:15 March 2013 Sales and Revenue Release 2013  
    Protective Life Corp PL US 9:00 Business Update Call    
    Hartford Financial Services Group Inc HIG US 9:00 Investor Day Y 2013  
    Gap Inc/The GPS US   March 2013 Sales and Revenue Release 2013  
    L Brands Inc LTD US   March 2013 Sales and Revenue Release 2013  
    Questar Corp STR US   Roadshow - Day 3 Y 2013  
    TJX Cos Inc TJX US   March 2013 Sales and Revenue Call 2013  
    Costco Wholesale Corp COST US   March 2013 Sales and Revenue Release 2013  
    JB Hunt Transport Services Inc JBHT US   Q1 2013 Earnings Release Q1 2013 0.643
    Ross Stores Inc ROST US   March 2013 Sales and Revenue Release 2013
    Stocks: MSFT, RAD, GWR, YUM, IDCC, APOG, IART, BBBY, MDLZ, FTNT, XRX, MEIP, RT, CBSH, LB, TJX, PL, HIG, GPS, STR, COST, JBHT, ROST
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