Tuesday, September 24th, 2013
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OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ13 -0.06%) this morning are down -0.01% as they fluctuate on both sides of unchanged, while European stocks are up +0.37% after German investor confidence rose for a fifth month to a 17-month high. Asian stocks closed mostly lower: Japan -0.07%, Hong Kong -0.82%, China -1.15%, Taiwan +0.08%, Australia -0.35%, Singapore -0.08%, South Korea -0.07%, India +0.10%. Technology stocks may get a lift today on increased M&A activity after Applied Materials, the largest supplier of chipmaking equipment, agreed to pay $9.39 billion in stock for rival Tokyo Electron Ltd. Commodity prices are mixed. Nov crude oil (CLX13 -0.14%) is down -0.36% at a 1-1/2 month low on reduced Middle East tensions as the UN Security Council is set to negotiate a Syria resolution. Nov gasoline (RBX13 -0.02%) is down -0.28% at a 2-1/2 month low. Dec gold (GCZ13 -0.94%) is down -0.77% and Dec copper (HGZ13 -0.89%) is down -0.92%. Agricultural and livestock prices are higher. The dollar index (DXY00 +0.09%) is up +0.16%. EUR/USD (^EURUSD) is down -0.07% and USD/JPY (^USDJPY) is down -0.03%. December T-note prices (ZNZ13 +0.14%) are up +6.5 ticks.
The German Sep IFO business climate rose +0.1 from a revised 107.6 in Aug to 107.7, weaker than expectations of +0.5 to 108.0, but still the highest level in 17 months. The Sep IFO current assessment unexpectedly fell -0.6 to 111.4, weaker than expectations of +0.5 to 112.5.
ECB Governing Council member Nowotny said that "no additional liquidity is needed at the moment" in the Eurozone, but that it "is a discussion we are having in the ECB or that we will have." He added that LTROs are "a question of the future perspective and that it is definitely important to show the range of our instruments and that we are flexible."
In an early morning interview on CNBC, New York Fed President Dudley suggested the Fed may still yet taper its bond buying this year when he said "If the economy were behaving in a way aligned with the Fed's June forecast, then it's certainly likely that the Fed would begin to taper later this year. I certainly wouldn't want to rule it out, but it depends on the data."
U.S. STOCK PREVIEW
Today's July S&P/CaseShiller composite-20 home price index and the FHFA home price index are both expected to show sharp increases of +0.8% m/m as the 1-point surge in mortgage rates has yet to dampen home prices. Today's Sep U.S. consumer confidence index from the Conference Board is expected to show a -1.5 point decline to 80.0, more than reversing the +0.5 point increase to 81.5 seen in August. Today's Sep Richmond Fed manufacturing index is expected to show a -2 point decline to 12, giving back a little ground after the +25 point surge to 14 seen in August. There are five of the Russell 1000 companies that report earnings today: Carnival (consensus $1.29), CarMax (0.57), Lennar (0.45), Ascena Retail Group (0.21), and Copart (0.40).
Conferences this week include the following: 12th Annual Biological Production Forum 2013 on Mon-Wed, Bank of America Merrill Lynch Banking & Insurance CEO Conference on Tue, Bank of America Merrill Lynch Power & Gas Leaders Conference on Tue, Credit Lyonnais Securities Asia Ltd Investors Forum on Tue, Denver Gold Forum on Tue, Deutsche Bank dbAccess Energy Conference on Tue, Wolfe Research Power and Gas Leaders Conference on Tue, Goldman Sachs Communacopia Conference on Tue-Thu, Global AgInvesting Asia 2013 on Wed, PSA The Pharmaceutical Strategy Conference on Wed, UBS Chemicals Conference on Wed, Keefe Bruyette & Woods Insurance Conference on Wed-Thu, and Capital Link International Shipping & Marine Services Forum on Thu.
OVERNIGHT U.S. STOCK MOVERS
CarMax KMAX reported Q2 EPS of 62 cents, better than consensus of 57 cents.
DirecTV DTV and DISH DISH were both downgraded to "Neutral" from "Buy" at Moffett Research.
The NY Times reports that JPMorgan Chase JPM is preparing to be sued by U.S. prosecutors who suspect that the bank sold "shoddy" mortgage securities to investors prior to the financial crisis.
Hologic HOLX was upgraded to "Strong Buy" from "Buy" at ISI Group.
Hanesbrands HBI was downgraded to "Neutral" from "Buy" at DA Davidson.
Apple AAPL was upgraded to "Positive" from "Neutral" at Susquehanna with a price target of $625.
Lennar LEN reported Qe EPS of 54 cents, better than consensus of 45 cents.
CIT Group CIT was upgraded to "Buy" from "Hold" at Jefferies who also raised their price target on the stock to $65 from $52.
Westar Energy (WR +1.77%) filed to sell 8 million shares of common stock.
KKR Fund Holdings reported a 28.4% stake in RigNet (RNET +0.61%) .
Red Hat (RHT -0.54%) tumbled 8% in pre-market trading after it reported Q2 adjusted EPS of 35 cents, above consensus of 33 cents, but also reported Q2 billings, a predictor of future revenue, rose only +8% y/y, weaker than consensus of a +17% y/y increase.
Deutsche Bank kept its "Buy" rating on Apple (AAPL +4.97%) and raised its price target on the stock to $575 from $480.
Dec E-mini S&Ps (ESZ13 -0.06%) this morning are little changed, down -0.25 (-0.01%). The S&P 500 index on Monday closed lower. Bearish factors included (1) weakness in bank stocks after an analyst at Atlantic Equities LLP predicted that fixed-income trading revenue at the biggest U.S. banks will fall 20% in Q3 y/y, and (2) the ongoing political wrangling in Washington over the upcoming deadlines for an Oct 1 continuing resolution to fund the government and a mid-Oct debt ceiling hike. Closes: S&P 500 -0.47%, Dow Jones -0.32%, Nasdaq 100 -0.17%.
Dec 10-year T-notes (ZNZ13 +0.14%) this morning are up +6.5 ticks. Dec 10-year T-note prices on Monday closed higher. Bullish factors for T-note prices included (1) increased safe-haven demand for T-notes as stocks retreated, and (2) dovish comments from New York Fed President Dudley and from Atlanta Fed President Lockhart who both suggested the Fed needs to keep its extraordinary accommodative policy intact. Closes: TYZ3 +5.50, FVZ3 +2.25.
The dollar index (DXY00 +0.09%) this morning is up +0.132 (+0.16%). EUR/USD (^EURUSD) is down -0.0010 (-0.07%) and USD/JPY (^USDJPY) is down -0.03 (-0.03%). The dollar index on Monday closed higher. EUR/USD retreated on comments from ECB President Draghi who said he's ready to deploy another long-term refinancing operation (LTRO) if needed to help keep money market rates low. Closes: Dollar index +0.018 (+0.02%), EUR/USD -0.00302 (-0.22%), USD/JPY -0.488 (-0.49%).
Nov WTI crude oil (CLX13 -0.14%) this morning is down -37 cents (-0.36%) at a 1-1/2 month low and Nov gasoline (RBX13 -0.02%) is down -0.0073 (-0.28%) at a 2-1/2 month low. Nov crude oil and gasoline prices on Monday closed lower. Nov crude posted a 1-month low, Nov gasoline tumbled to a 2-1/2 month low and nearest-futures Oct gasoline slumped to a 9-month low on bearish factors that included (1) the slide in stocks, (2) continued hopes that the current diplomatic efforts on Syria's chemical weapons will keep the U.S. from launching a military strike on Syria, and (3) speculation that U.S. gasoline inventories, which are already 10% higher than the same time last year, will increase even more now that the summer driving season is over. Closes: CLX3 -1.16 (-1.11%), RBX3 -0.0553 (-2.07%).
GLOBAL EVENT CALENDAR09/24/2013
|US||0900 ET||July S&P/CaseShiller composite-20 home price index expected +0.80% m/m and +12.40% y/y, June +0.89% m/m and +12.07% y/y.|
|0900 ET||July FHFA house price index purchase only expected +0.8% m/m, Jun +0.7% m/m.|
|1000 ET||Sep Richmond Fed manufacturing index expected -2 to 12, Aug +25 to 14.|
|1000 ET||Sep consumer confidence (Conference Board) expected -1.5 to 80.0, Aug +0.5 to 81.5.|
|1300 ET||Treasury auctions $33 billion 2-year T-notes.|
|1630 ET||API weekly U.S. oil statistics.|
|GER||0400 ET||German Sep IFO business climate expected +0.5 to 108.0, Aug 107.5. Sep IFO current assessment expected +0.5 to 112.5, Aug 112.0. Sep IFO expectations expected +0.7 to 104.0, Aug 103.3.|
|EUR||0400 ET||ECB Governing Council member Ewald Nowotny speaks on The Future of Monetary Policy at the Joint Vienna Institute.|
|JPN||1950 ET||Japan Aug corporate service price index expected +0.5% y/y, July +0.4% y/y.|
U.S. STOCK CALENDAR09/24/2013
|Company Name||Ticker||Time||Event Description||Period||Estimate|
|Carnival Corp||CCL US||Bef-mkt||Q3 2013 Earnings Release||Q3 2013||1.293|
|CarMax Inc||KMX US||Bef-mkt||Q2 2014 Earnings Release||Q2 2014||0.567|
|Lennar Corp||LEN US||6:00||Q3 2013 Earnings Release||Q3 2013||0.452|
|Varian Medical Systems Inc||VAR US||7:15||Investor Meeting||Y 2013|
|Moody's Corp||MCO US||8:00||Investor Day||Y 2013|
|Patterson Cos Inc||PDCO US||8:30||Investor Day||Y 2013|
|Bank of America Corp||BAC US||9:00||Bank of America Trial Begins Over Countrywide Mortgages|
|Smithfield Foods Inc||SFD US||9:00||Extraordinary Shareholders Meeting - M&A Vote||Y 2013|
|CarMax Inc||KMX US||9:00||Q2 2014 Earnings Call||Q2 2014|
|Carnival Corp||CCL US||10:00||Q3 2013 Earnings Call||Q3 2013|
|Lennar Corp||LEN US||10:30||Q3 2013 Earnings Call||Q3 2013|
|Copart Inc||CPRT US||Aft-mkt||Q4 2013 Earnings Release||Q4 2013||0.397|
|Target Corp||TGT US||Target Canada President Tony Fisher speaks to Montreal Board of Trade|
|United Parcel Service Inc||UPS US||Roadshow - Day 2||Y 2013|
|WhiteWave Foods Co||WWAV US||Special Meeting|