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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 12/1 0 comments
    Dec 1, 2011 8:55 AM | about stocks: KR, AVGO, LULU, HRB, PVH, ULTA, BIG, ASNA, UTIW, BKS, ZUMZ, SCMR
    Barchart Morning Call
    Barchart.com - 51 mins ago
    Overnight Developments
    • Global stocks this morning are mixed with the Euro Stoxx 50 up +0.08% and Dec S&Ps down -2.40 points. European and U.S. stocks weakened after manufacturing in China contracted for the first time in 2-3/4 years, while the euro strengthened against the dollar after the yields on Spanish and French government bonds fell when both countries had successful government debt auctions. Spain sold 3.75 billion euros of 5-year bonds, the maximum planned, while France sold 1.57 billion euros of 10-year bonds at an average yield of 3.18%, down from 3.22% at the last auction on Nov 3. Stocks prices were undercut and gains in the euro were limited after ECB President Draghi said the ECB's program of buying government bonds "can only be limited" as he urged European governments to move toward a fiscal union to solve the region's debt crisis. In its Financial Stability report today, the BOE said that "sovereign and banking risks emanating from the euro area have intensified and remain the most significant and immediate threat to U.K. financial stability." BOE Governor King urged banks to enhance efforts to bolster their defenses against the European debt turmoil, which he said now looks like a "systemic crisis."
    • Asian stocks today closed higher with Japan up +1.93%, China +2.46%, Australia +2.64%, South Korea +4.28%, India +2.23%. Asian stocks closed sharply higher as they reacted to the equity bullish actions by 6 central banks to make dollar funding available to European banks along with the action by the PBOC to cut banks' reserve requirements for the first time since 2008. China's Shanghai Stock Index closed well off of its best level after the Nov China PMI manufacturing index fell -1.4 to 49.0, weaker than expectations of -0.6 to 49.8 and the first time it has contracted in 2-3/4 years. China's Vice Finance Minister Guangyao said at a forum in Beijing today that the global economy faces a "grimmer and more challenging" situation than in 2008 because of constraints on fiscal stimulus and monetary policy. Australian stocks also finished off of their best levels after bank stocks tumbled when Standard & Poor's downgraded the credit ratings of Australia's 4 largest banks to AA- from AA.
    Overnight U.S. Stock News
    • December S&Ps this morning are trading down -2.40 points. The US stock market yesterday rallied sharply after global central banks made additional funds available to lenders to ease liquidity concerns and after stronger-than-expected U.S. economic data eased recession fears: Dow Jones +4.24%, S&P 500 +4.33%, Nasdaq Composite +4.17%. The S&P 500, the Dow and the Nasdaq all posted 2-week highs. Bullish factors included (1) the action by the Fed and 5 other central banks to cut the dollar overnight index swap rate to 50 bp from 100 bp and extend their authorization through Feb 1, 2013, which eases liquidity and funding concerns for European banks, (2) the action by China to lower banks' reserve requirements for the first time in 3 years, which may spur bank lending and economic growth, (3) the larger-than-expected increase in the Nov ADP employment change which posted its biggest increase in jobs in 11 months (+206,000 versus expectations of +130,000), (4) the larger-than-expected increase in the Nov Chicago purchasing managers index which expanded at its best level in 7 months (+4.2 to 62.6 versus expectations of +0.1 to 58.5), and (5) a rally in homebuilders after the larger-than-expected gain in Oct U.S. pending home sales which posted their biggest increase in 11 months (+10.4% m/m versus expectations of +2.0% m/m).
    • Bearish factors included (1) overnight weakness in global bank stocks after Standard & Poor's cut the credit ratings for some of the world's largest lenders, (2) concern the European sovereign-debt crisis may worsen when Spanish and Italian government bonds fell and the yield on Portugal's 10-year bond rose to a euro-era record of 14.06% after Euro-Zone finance ministers said more work was needed to enhance the role of the IMF in fighting Europe's debt crisis, and (3) the Fed's Beige Book that stated economic growth expanded at a "moderate" pace as "hiring was generally subdued" and residential real estate "generally remained sluggish."
    • Hewlett-Packard (HPQ) fell 1% in European trading after S&P cut the company's corporate credit and senior unsecured ratings to BBB+ from A, citing increased debt from Hewlett-Packard's acquisition of Autonomy.
    Today's Market Focus
    • March 10-year T-notes this morning are down -2 ticks. T-note prices yesterday fell to a 2-week low and settled lower on reduced safe-haven demand as the stock market rallied sharply on strong U.S. economic data and after the Fed and 5 other central banks cut the cost of emergency dollar funding for European banks: TYH12 -12.5, FVH12 -3, EDM12 +16.5. Bearish factors included (1) decreased safe-haven demand for Treasuries after the S&P 500 rallied to a 2-week high when the Fed and 5 other central banks cut the dollar overnight index swap rate to 50 bp from 100 bp and extended their authorization through Feb 1, 2013, which eases liquidity and funding concerns for European banks, (2) the action by China to lower banks' reserve requirements for the first time in 3 years, which may spur bank lending and economic growth, (3) the larger-than-expected increase in the Nov ADP employment change which posted its biggest increase in jobs in 11 months (+206,000 versus expectations of +130,000), (4) the larger-than-expected increase in the Nov Chicago purchasing managers index which expanded at its best level in 7 months (+4.2 to 62.6 versus expectations of +0.1 to 58.5), and (5) the larger-than-expected gain in Oct U.S. pending home sales which posted their biggest increase in 11 months (+10.4% m/m versus expectations of +2.0% m/m). Bullish factors included (1) the action by Standard & Poor's to cut the credit ratings for some of the world's largest lenders, including Bank of America, Goldman Sachs and Citigroup, which boosted the safe-haven demand for Treasuries, (2) the unexpected downward revision to Q3 unit labor costs which fell by the most in 6 quarters (-2.5% versus expectations of -2.1%), and (3) the Fed's Beige Book that stated economic growth expanded at a "moderate" pace as "hiring was generally subdued" and residential real estate "generally remained sluggish."
    • The dollar index this morning is slightly lower with the dollar/yen +0.06 yen and the euro/dollar +0.41 cents. The dollar index yesterday slumped to a 1-1/2 week low and settled lower after the Fed and 5 other central banks cut dollar funding costs to ease strains on European banks: Dollar Index -0.623, USDJPY -0.307, EURUSD +0.01311. Bearish factors for the dollar included, (1) the action by the Fed and 5 other central banks to cut the dollar overnight index swap rate to 50 bp from 100 bp and extend their authorization through Feb 1, 2013, which should ease liquidity and funding concerns for European banks, (2) the action by China to lower banks' reserve requirements for the first time in 3 years, which boosted stocks and reduced the safe-haven demand for the dollar as the cut in banks' reserve ratios may spur bank lending and economic growth, and (3) the action by Standard & Poor's to cut the credit ratings for some of the world's largest lenders, including Bank of America, Goldman Sachs and Citigroup. Bullish factors included (1) the unexpected +0.1 point increase in the Oct Euro-Zone unemployment rate to a 13-year high of 10.3%, which is euro negative and (2) stronger-than-expected U.S. economic data on Nov ADP employment, Nov Chicago purchasing mangers, and Oct U.S. pending home sales that reduces recession concerns and is dollar supportive.
    • Jan crude oil prices this morning are unchanged and Jan gasoline is +0.77 of a cent per gallon. Crude oil and gasoline prices yesterday moved higher for a fourth day and posted 2-week highs due to stronger-than-expected U.S. economic data and as the dollar weakened when the Fed and 5 other central banks acted together to boost liquidity and ease funding strains from Europe's debt crisis: CLF12 +$0.57, RBF12 +1.86. Bullish factors included (1) the fall in the dollar index to a 1-1/2 week low, which encourages investment demand in commodities, (2) the action by the Fed and 5 other central banks acted to boost liquidity and ease funding strains from Europe's debt crisis, which may boost economic growth and fuel demand, (3) the action by the PBOC to lower banks' reserve requirements for the first time in 3 years, which may spur bank lending and economic growth in China, the world's second-largest crude oil consumer, and (4) stronger-than-expected U.S. economic data that reduces recession concerns after Nov ADP employment rose by the most in 11 months, the Nov Chicago purchasing managers index climbed to a 7-month high Oct U.S. pending home sale increased by the most in 11 months. Bearish factors included (1) the larger-than-expected increase in weekly DOE crude inventories (+3.93 million bbl versus expectations of +50,000 bbl), (2) the unexpected increase in weekly DOE distillate supplies (+5.53 million bbl versus expectations of a -1.25 million bbl drawdown, and (3) the statement from Libya's state-run National Oil Corp. that Libyan oil output has risen to 840,000 bpd.
    Today's U.S. Earnings Reports

    Earnings reports (confirmed releases, sorted by mkt cap): KR-Kroger (BEST earnings consensus $0.32), AVGO-Avago Technologies Ltd. (0.71), LULU-Lululemon Athletica (0.25), HRB-H&R Block (-0.35), PVH-PVH Corp. (1.81), ULTA-Ulta Salon Cosmetics & Fragrances (0.38), BIG-Big Lots (0.10), ASNA-Ascena Retail Group (0.64), UTIW-UTi Worldwide (0.28), BKS-Barnes & Noble (0.03), ZUMZ-Zumiez (0.42), SCMR-Sycamore Networks (-0.13).

    Global Financial Calendar

    Thursday 12/1/11
    United States
    0830 ET Weekly initial unemployment claims expected -3,000 to 390,000, previous +2,000 to 393,000. Weekly continuing claims expected -41,000 to 3.650 million, previous +68,000 to 3.691 million.
    0900 ET Atlanta Fed President Dennis Lockhart delivers opening remarks at an Atlanta Fed conference titled ?Exploring the Impediments to a Real Estate Recovery.?
    0905 ET St. Louis Fed President James Bullard speaks at the Bloomberg Hedge Funds Summit in New York.
    1000 ET Oct construction spending expected +0.3% m/m, Sep +0.2% m/m.
    1000 ET Nov ISM manufacturing index expected +0.9 to 51.7, Oct -0.8 to 50.8. Nov ISM pries paid expected +4.0 to 45.0, Oct -15.0 to 41.0.
    1130 ET Nov ICSC chain store sales expected +3.5% to +4.0% y/y, Oct +3.7% y/y.
    1700 ET Nov total vehicle sales expected 13.40 million, Oct 13.20 million. Nov domestic vehicle sales expected 10.40 million, Oct 10.29 million.
    1630 ET Weekly money supply report and Fed balance sheet.
    Japan
    0000 ET Nov Japan vehicle sales, Oct +28.3% y/y.
    1850 ET Q3 Japan capital spending excluding software expected -3.0%, Q2 -8.2%. Q3 capital spending expected -3.6%, Q2 -7.8%.
    France
    0130 ET Q3 French unemployment change, Q2 -12,000. Q3 mainland unemployment rate expected 9.3%, Q2 9.1%.
    0315 ET Revised Nov French PMI manufacturing expected no change at 47.6%.
    Euro-Zone
    0300 ET ECB President Mario Draghi presents the ECB?s 2010 Annual Report at the European Parliament Plenary in Brussels.
    Germany
    0355 ET Revised Nov German PMI manufacturing expected no change at 47.9.
    United Kingdom
    0430 ET Nov U.K. PMI manufacturing expected -0.4 to 47.0, Oct -3.4 to 47.4.

     

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    Stocks: KR, AVGO, LULU, HRB, PVH, ULTA, BIG, ASNA, UTIW, BKS, ZUMZ, SCMR
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