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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 10/25 0 comments
    Oct 25, 2013 4:03 PM | about stocks: WY, SPG, NWL, AON, SHW, MCO, NOV, VTR, DTE, ETN, PG, LM, COL, UPS, C, EMN, MTW, WDC, NCR, CB, WYNN, PFG, MSFT, ABBV, AVY, ESRX, GILD, FOXA, HRS

    BARCHART MORNING CALL

    Friday, October 25th, 2013View Older Reports

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    OVERNIGHT MARKETS AND NEWS

    December E-mini S&Ps (ESZ13 +0.03%) this morning are trading slightly lower by -0.10% while the Euro Stoxx 50 index is down -0.23%. Asian stocks today closed lower nearly across the board: Japan -2.75%, Hong Kong -0.60%, China CSI 300 -1.33%, Taiwan -0.80%, Australia +0.25%, Singapore -0.39%, South Korea -0.69%, India -0.20%, Turkey +0.13%. Bearish factors include (1) continued concern about the recent surge in China's 1-month interbank rate on the central bank's refusal to inject liquidity through money market operations, and (2) disappointing sales news today from companies such as Renault and Canon.

    Commodity prices are mixed. Dec crude oil (CLZ13 +0.24%) is up +0.37 (+0.38%), but Dec gasoline (RBZ13 -0.68%) is down -0.12 (-0.11%). Dec gold (GCZ13 -0.88%) is down -8.8 (-0.65). Agricultural prices are mixed. The dollar index (DXY00 +0.06%) is slightly higher by +0.03 (+0.04%). EUR/USD (^EURUSD) is down -0.0003 (-0.02%) and USD/JPY (^USDJPY) is down -0.05 (-0.05%). December T-note prices (ZNZ13 +0.05%) are up 2.5 ticks.

    The New Zealand dollar fell by -0.4% today against the Australian dollar after the country's central bank chief expressed concern that a stronger currency may hurt trade, which suggested that the bank will not raise interest rates.

    Germany's Oct IFO business climate index rose by +0.3 points to 108.0 from 107.7 in Sep, which was stronger than market expectations for a -0.3 point drop to 107.4. However, the Oct IFO expectations index fell by -0.6 points to 103.6 from 104.2, which was weaker than market expectations for a +0.3 point increase to 104.5.

    The Eurozone Sep M3 money supply report of +2.1% y/y was down from +2.3% y/y in Aug and was weaker than market expectations of +2.4% y/y. The report indicated weaker money demand in Sep.

    The UK Q3 GDP report of +0.8% q/q and +1.5% y/y was up from Q2's +0.7% q/q and +1.3% and was in line with market expectations. UK GDP showed the fastest growth in more than 3 years, which was a boost for the overall global economic outlook.

    Japan's Sep national CPI rose +1.1% from +0.9% in Aug and was stronger than market expectations of +0.9%. The report provided some hope that Japan is winning its long battle against deflation. However, Japan's Sep CPI excluding food and energy was unchanged y/y, up from -0.1% in Aug.

    U.S. STOCK PREVIEW

    Today's final-Oct U.S. consumer confidence index from the University of Michigan is expected to show a -0.2 point decline to 75.0 from the early-October level of 75.2. Today's Sep durable goods orders report is expected to show some strength at +2.3% and +0.5% ex-transportation. There are 16 of the S&P 500 companies that report earnings today with notable reports including Procter & Gamble, AbbVie, Moody's Eaton, Rockwell Collins, and UPS. There are no equity conferences scheduled for today.

    Dec E-mini S&Ps (ESZ13 +0.03%) this morning are trading slightly lower by -1.75 points (-0.10%) due to lower overseas stocks with Europe down -0.23% and Asian stocks closing mostly lower. The S&P 500 index on Thursday closed higher. Supportive factors included (1) strength in Chinese manufacturing activity after the China Oct HSBC/Markit flash manufacturing PMI rose +0.7 to 50.9, a faster pace of expansion than expectations of +0.2 to 50.4, and (2) healthy Q3 earnings results thus far with 76% of the 212 reporting companies in the S&P 500 beating earnings estimates. Stocks shrugged off the weekly initial jobless claims that fell -12,000 to 350,000, less than expectations of -18,000 to 340,000. Closes: S&P 500 +0.33%, Dow Jones +0.62%, Nasdaq 100 +0.49%.

    OVERNIGHT U.S. STOCK MOVERS

    Earnings reports that have been released this morning have been mixed. Companies that beat earnings include Weyerhaeuser (WY -0.53%) (0.35 vs 0.21), Simon Property Group (SPG +1.07%) (2.21 vs 2.16), Newell Rubbermaid (NWL -0.48%) (0.52 vs 0.49), Aon (AON -0.36%) (1.13 vs 1.04), Sherwin Williams (SHW +1.32%) (2.68 vs 2.64), Moody's (MCO +1.74%) (0.83 vs 0.81), National Oilwell Varco (NOV +0.41%) (1.34 vs 1.32), Ventas (VTR +0.03%) (1.04 vs 1.02).

    Companies that underperformed earnings include DTE Energy (DTE -0.97%) (1.11 vs 1.22), ({=Eaton ETN=}) (1.12 vs 1.124), Procter & Gamble (PG -0.37%) (1.05 vs 1.053), ({=Legg Mason LM=}) (0.54 vs 0.62), and Rockwell Collins (COL +0.29%) (1.28 vs 1.31).

    USP (UPS +0.57%) this morning reported Q adjusted EPS of $1.16, which was slightly better than the consensus of $1.15. However, Q3 revenue of $13. 52 billion was slightly below the consensus of $13.60 billion. The company reiterated its full-year guidance of $4.65-4.85, which would be up 3-7% y/y.

    Barrons, in its Weekday Trader column, said that Citigroup (C -0.08%) trades at a discount to other financial stocks and if it would trade in line with its peers, then the stock could rise 32%.

    Eastman Chemical (EMN -0.51%) reported Q3 EPS ex-items of $1.68, better than consensus of $1.64, but then lowered guidance on fiscal 2013 EPS view to $6.30-$6.40 from $6.40-$6.50, weaker than consensus of $6.48.

    Manitowoc (MTW +1.08%) reported Q3 EPS of 39 cents, higher than consensus of 32 cents.

    Western Digital (WDC +0.61%) reported Q1 EPS of $2.12, stronger than consensus of $2.05.

    NCR Corp. (NCR +0.60%) reported Q3 EPS of 76 cents, better than consensus of 68 cents.

    Chubb (CB -0.27%) reported Q3 EPS of $2.06, stronger than consensus of $1.88, and then raised guidance on fiscal 2013 EPS view to $7.90-$8.00 from $7.30-$7.50, well ahead of consensus of $7.65.

    Wynn Resorts (WYNN +3.84%) reported Q3 EPS of $1.84, much better than consensus of $1.65.

    Principal Financial Group (PFG +1.10%) reported Q3 operating EPS of 90 cents, better than consensus of 87 cents.

    Microsoft (MSFT -0.12%) jumped 6% in after-hours trading after it reported Q1 EPS of 62 cents, well ahead of consensus of 54 cents.

    MARKET COMMENTS

    Dec 10-year T-notes (ZNZ13 +0.05%) this morning are up 2.5 ticks on lower global stocks today. Dec 10-year T-note prices on Thursday closed lower on reduced safe-haven demand as stocks rallied on stronger-than-expected Chinese manufacturing activity. Losses in T-notes were muted on expectations the Fed will not taper QE3 after U.S. weekly jobless claims fell less than expected. Closes: TYZ3 -8, FVZ3 -4.

    The dollar index (DXY00 +0.06%) this morning is trading slightly higher by +0.03 points (+0.04%). EUR/USD (^EURUSD) is down -0.0003 (-0.02%) while USD/JPY (^USDJPY) is down -0.05 (-0.05%). The dollar index on Thursday slid to a new 8-3/4 month low on speculation that the smaller-than-expected increase in weekly U.S. unemployment claims will prompt the Fed to maintain QE3. EUR/USD surged to a 23-month high after the German Oct PMI manufacturing index rose +0.4 to 51.5, better than expectations of +0.3 to 51.4. Closes: Dollar index -0.079 (-0.10%), EUR/USD +0.0025 (+0.18%), USD/JPY -0.094 (-0.10%).

    Dec WTI crude oil (CLZ13 +0.24%) this morning is up +0.37 (+0.38%) while Dec gasoline (RBZ13 -0.68%) is down -0.12 (-0.11%). Dec crude oil and gasoline prices on Thursday posted 3-3/4 month lows but recovered and closed higher. Dec crude rebounded as equities rallied and after the dollar index fell to an 8-3/4 month low. Dec gasoline closed higher on concern over tighter supplies in the Midwest after a fire forced a closure of Citgo Petroleum's 170,500 barrel-a-day refinery in Lemont, IL. Closes: CLZ3 +0.25 (+0.26%), RBZ3 +0.0293 (+1.15%).

    GLOBAL EVENT CALENDAR10/25/2013

    US0830 ETSep durable goods orders expected +2.2% and +0.5% ex transportation, Aug +0.1% and -0.1% ex transportation. Sep capital goods orders non-defense ex-aircraft expected +0.7% m/m, Aug +1.5%.
     0955 ETFinal-Oct University of Michigan U.S. consumer confidence expected -0.2 to 75.0, early-Oct -2.3 to 75.2.
     1000 ETAug wholesale inventories expected +0.3% m/m, July +0.1%. Aug wholesale sales expected +0.3% m/m, July +0.1% m/m.
    GER0400 ETGerman Oct IFO business climate expected +0.3 to 108.0, Sep 107.7. Oct IFO current assessment expected unch at 111.4, Sep 111.4. Oct IFO expectations expected +0.3 to 104.5, Sep 104.2.
    EUR0400 ETEurozone Sep M3 money supply expected +2.4% y/y and +2.3% 3-mo avg, Aug +2.3% y/y and +2.3% 3-mo avg.
    UK0430 ETUK Q3 GDP expected +0.8% q/q and +1.5% y/y, Q2 +0.7% q/q and +1.3% y/y.
     0430 ETUK Aug index of services expected +0.4% m/m and +0.5% 3-mo/3-mo, July +0.2% m/m and +0.5% 3-mo/3-mo.

    U.S. STOCK CALENDAR10/25/2013

    Company NameTickerTimeEvent DescriptionPeriodEstimate
    Newell Rubbermaid IncNWL USBef-mktQ3 2013 Earnings ReleaseQ3 20130.491
    Aon PLCAON USBef-mktQ3 2013 Earnings ReleaseQ3 20131.026
    Procter & Gamble Co/ThePG USBef-mktQ1 2014 Earnings ReleaseQ1 20141.053
    AbbVie IncABBV USBef-mktQ3 2013 Earnings ReleaseQ3 20130.776
    Sherwin-Williams Co/TheSHW USBef-mktQ3 2013 Earnings ReleaseQ3 20132.637
    DTE Energy CoDTE USBef-mktQ3 2013 Earnings ReleaseQ3 20131.216
    Moody's CorpMCO USBef-mktQ3 2013 Earnings ReleaseQ3 20130.813
    Eaton Corp PLCETN USBef-mktQ3 2013 Earnings ReleaseQ3 2013 
    Ventas IncVTR USBef-mktQ3 2013 Earnings ReleaseQ3 20131.019
    Weyerhaeuser CoWY USBef-mktQ3 2013 Earnings ReleaseQ3 20130.212
    National Oilwell Varco IncNOV USBef-mktQ3 2013 Earnings ReleaseQ3 20131.315
    Legg Mason IncLM US7:00Q2 2014 Earnings ReleaseQ2 20140.615
    Rockwell Collins IncCOL US7:30Q4 2013 Earnings ReleaseQ4 20131.313
    United Parcel Service IncUPS US7:45Q3 2013 Earnings ReleaseQ3 20131.151
    Legg Mason IncLM US8:00Q2 2014 Earnings CallQ2 2014 
    Eastman Chemical CoEMN US8:00Q3 2013 Earnings CallQ3 2013 
    Aon PLCAON US8:30Q3 2013 Earnings CallQ3 2013 
    Avery Dennison CorpAVY US8:30Q3 2013 Earnings ReleaseQ3 20130.638
    Procter & Gamble Co/ThePG US8:30Q1 2014 Earnings CallQ1 2014 
    Express Scripts Holding CoESRX US8:30Q3 2013 Earnings CallQ3 2013 
    United Parcel Service IncUPS US8:30Q3 2013 Earnings CallQ3 2013 
    Gilead Sciences IncGILD US FDA Adcomm, sofosbuvir, Hepatitis C  
    Twenty-First Century Fox IncFOXA US U.S. Box Office Release of Movie The Counselor""  
    Harris CorpHRS US Annual General Meeting  
    Simon Property Group IncSPG US Q3 2013 Earnings ReleaseQ3 20132.162

    Stocks: WY, SPG, NWL, AON, SHW, MCO, NOV, VTR, DTE, ETN, PG, LM, COL, UPS, C, EMN, MTW, WDC, NCR, CB, WYNN, PFG, MSFT, ABBV, AVY, ESRX, GILD, FOXA, HRS
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