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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 11/20 0 comments
    Nov 20, 2013 12:44 PM | about stocks: ED, BA, PCLN, BBY, SJM, LOW, JCP, DE, JNJ, YHOO, HLS, HLF, LZB, ADT, SPLS, LB, CPB, CLX, EFX

    BARCHART MORNING CALL

    Wednesday, November 20th, 2013View Older Reports

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    OVERNIGHT MARKETS AND NEWS

    December E-mini S&Ps (ESZ13 -0.03%) this morning are down -0.08% and European stocks are down -0.30% ahead of U.S. Oct retail sales and the minutes of the Oct 29-30 FOMC meeting. Asian stocks closed mostly lower: Japan -0.33%, Hong Kong +0.18%, China +0.53%, Taiwan -0.67%, Australia -0.85%, Singapore -0.25%, South Korea -0.82%, India -1.22%. Commodity prices are mixed. Dec crude oil (CLZ13 +0.16%) is up +0.11%. Dec gasoline (RBZ13 -0.50%) is down -0.53%. Dec gold (GCZ13 -0.68%) is down -0.82% and Dec copper (HGZ13 +0.11%) is unch. Agricultural and livestock prices are mostly lower. The dollar index (DXY00 -0.08%) is down -0.09% after Fed Chairman Bernanke said Tuesday evening that the Fed funds rate will remain near zero for a "considerable time" after the Fed's stimulus program ends. EUR/USD (^EURUSD) is down -0.07% and USD/JPY (^USDJPY) is down -0.25%. December T-note prices (ZNZ13 -0.01%) are up +1 tick.

    Speaking to economists late Tuesday evening, Fed Chairman Bernanke said a "preponderance of data" will be needed to begin removing accommodation, and that "the target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after" the jobless rate breaches the Fed's 6.5% threshold.

    Minutes of the Nov 6-7 BOE policy meeting showed officials voted unanimously to keep policy unchanged and said record-low interest rates may be needed even after unemployment falls to the BOE's threshold as "there were uncertainties over the durability of the recovery."

    The Japan Oct trade balance was a -1.090 trillion yen deficit, wider than expectations of a -854.2 billion yen deficit and the most in 9 months. Oct exports rose +18.6% y/y, more than expectations of +16.2% y/y, and Oct imports climbed +26.1% y/y, better than expectations of +19, 0% y/y. Both Oct exports and imports rose at their fastest pace in 3-1/4 years.

    The Japan Sep all-industry activity index climbed +0.4% m/m, right on expectations.

    German Oct PPI fell -0.2% m/m and -0.7% y/y, weaker than expectations of unch m/m and -0.6% y/y.

    U.S. STOCK PREVIEW

    Today's Oct retail sales report is expected to be weak at +0.1% m/m both overall and ex-autos following the Sep report of -0.1% and +0.4% ex-autos. Today's Oct CPI report is expected to ease to +1.0% y/y from +1.2% y/y in Sep. Meanwhile, the Oct core CPI is expected to be unchanged from Sep at +1.7% y/y. Today's Oct existing home sales report is expected to show a decline of -2.7% to 5.15 million, adding to the -1.9% decline to 5.29 million seen in September. Today's release of the minutes from the Oct 29-30 FOMC meeting should shed some additional light on how worried the Fed was about the economy in the immediate aftermath of the Oct 1-16 U.S. government shut-down. There are 7 of the S&P 500 companies that report earnings today: JM Smucker (consensus $1.59), Deere (1.90), ADT (0.46), Staples (0.42), Lowe's (0.48), JC Penney (-1.74), and L Brands (0.28).

    Conferences during the remainder of this week include the following: Morgan Stanley Global Consumer & Retail Conference on Tue-Wed, Citi Global Financial Conference on Tue-Wed, Lazard Capital Markets Healthcare Conference on Tue-Wed, Mitsubishi UFJ Securities Oil & Gas Corporate Access Day on Tue-Wed, UBS Global Technology Conference on Tue-Thu, Los Angeles Auto Show-Press Days on Tue-Thu, UBS Global Outlook Conference on Wed, Bloomberg Business Summit on Wed, Canaccord Genuity TMT Day on Wed, Goldman Sachs Metals & Mining Steel Conference on Wed-Thu, Morgan Stanley Technology Media & Telecoms Conference on Wed-Thu, Bank of America Merrill Lynch Global Energy Conference on Thu, Jefferies Global Health Care Conference on Thu, and 11th Annual MIT Sloan CFO Summit on Thu.

    OVERNIGHT U.S. STOCK MOVERS

    Consolidated Edison (ED -0.65%) was downgraded to 'Hold' from 'Buy' at Argus.

    Boeing (BA -1.00%) was downgraded to 'Perform' from 'Outperform' at Oppenheimer.

    Priceline.com (PCLN -0.84%) was upgraded to 'Conviction Buy' from 'Buy' at Goldman.

    Best Buy (BBY -10.97%) was upgraded to 'Buy' from 'Neutral' at Citigroup.

    JM Smucker (SJM -0.29%) reported Q2 EPS of $1.52, below consensus of $1.59.

    Lowe's (LOW -0.88%) reported Q3 EPS of 47 cents, weaker than consensus of 48 cents.

    JC Penney (JCP unch) reported a Q3 EPS loss of -$1.81, a wider loss than consensus of -$1.74.

    Deere & Co. (DE -1.02%) reported Q4 EPS of $2.11, well ahead of consensus of $1.90.

    Johnson & Johnson's (JNJ +0.59%) DePuy Orthopaedics announced a $2.5 bllion U.S. settlement to compensate 8,000 hip system patients who had surgery to replace their their ASR hip, known as revision surgery, as of August 31.

    Yahoo (YHOO -0.97%) climbed over 3% in after-hours trading after it said it will raise its share buyback program by $5 billion.

    HealthSouth (HLS -1.39%) lowered guidance on fiscal 2013 EPS view to $2.43-$2.46 from $3.06-$3.09, but it is still above consensus of $1.89.

    Herbalife (HLF -1.83%) rose over 3% in after-hours trading after William P. Stiritz reported a 6.38% stake in the company.

    La-Z-Boy (LZB +0.25%) jumped over 6% in after-hours trading after it reported Q2 EPS of 31 cents, higher than consensus of 26 cents.

    MARKET COMMENTS

    Dec E-mini S&Ps (ESZ13 -0.03%) this morning are down -1.50 points (-0.08%). The S&P 500 index on Tuesday closed lower. Bearish factors included (1) the OECD's cut in its global GDP forecast for 2013 to 2.7% from May's 3.1% and for 2014 to 3.6% from 4.0%, and (2) concerns about Chinese economic growth after China Oct foreign direct investment rose only +1.2% y/y, weaker than expectations of +6.1% y/y. Supportive factors included the larger-than-expected increase in the German Nov ZEW survey of expectations of economic growth to a 4-year high. Closes: S&P 500 -0.20%, Dow Jones -0.06%, Nasdaq 100 -0.32%.

    Dec 10-year T-notes (ZNZ13 -0.01%) this morning are up +1 tick. Dec 10-year T-note prices on Tuesday fell back from a 1-week high and closed lower. A decline in German bund prices undercut T-notes after the German Nov ZEW survey of expectations of economic growth rose to a 4-year high. T-notes found support from the OECD's cut its global GDP forecasts for 2013 and 2014. Closes: TYZ3 -10.00, FVZ3 -5.75.

    The dollar index (DXY00 -0.08%) this morning is down -0.071 (-0.09%). EUR/USD (^EURUSD) is down -0.0010 (-0.07%) and USD/JPY (^USDJPY) is down -0.25 (-0.25%). The dollar index on Tuesday posted a 1-1/2 week low on overall bearish sentiment emanating from expectations that the Fed will not taper QE3 until next year. EUR/USD rose to a 2-week high after the German Nov ZEW survey of expectations of economic growth rose for a fourth month and climbed a larger-than-expected +1.8 points to a 4-year high of 54.6. Closes: Dollar index -0.121 (-0.15%), EUR/USD +0.00325 (+0.24%), USD/JPY +0.139 (+0.14%).

    Dec WTI crude oil (CLZ13 +0.16%) this morning is up +10 cents (+0.11%) and Dec gasoline (RBZ13 -0.50%) is down -0.0139 (-0.53%). Dec crude oil and gasoline prices on Tuesday settled mixed. Dec crude oil recovered from a 5-1/2 month low after the dollar index fell to a 1-1/2 week low. Bearish factors included (1) the OECD's cut in its global GDP estimates for 2013 and 2014, which signals reduced energy demand, and (2) expectations that Wednesday's EIA weekly inventories will show crude supplies rose for a ninth week. Closes: CLZ3 +0.31 (+0.33%), RBZ3 -0.0173 (-0.65%).

    GLOBAL EVENT CALENDAR11/20/2013

    US 0700 ET Weekly MBA mortgage applications, previous -1.8% with purchase sub-index -0.5% and refi sub-index -2.3%.
      0830 ET Oct CPI expected unch m/m and +1.0% y/y, Sep +0.2% m/m and +1.2% y/y. Oct CPI ex food & energy expected +0.1% m/m and +1.7% y/y, Sep +0.1% m/m and +1.7% y/y.
      0830 ET Oct retail sales expected +0.1% and +0.1% ex autos, Sep -0.1% and +0.4% ex autos.
      1000 ET Oct existing home sales expected -2.7% to 5.15 million, Sep -1.9% to 5.29 million.
      1000 ET Sep business inventories expected +0.3%, Aug +0.3%.
      1000 ET New York Fed President William Dudley speaks on the regional and national economy at a briefing in New York to discuss the role of for-profit institutions in higher education.
      1030 ET EIA Weekly Petroleum Status Report.
      1210 ET St. Louis Fed President James Bullard speaks on the economy and monetary policy at the Bloomberg Business Summit in Chicago.
      1400 ET Minutes of the Oct 29-30 FOMC meeting.
    GER 0200 ET German Oct PPI expected unch m/m and -0.6% y/y, Sep +0.3% m/m and -0.5% y/y.
    UK 0430 ET Minutes of the Nov 6-7 BOE policy meeting.
    CHI 2045 ET China Nov HSBC/Markit flash manufacturing PMI expected -0.1 to 50.8, Oct +0.7 to 50.9.

    U.S. STOCK CALENDAR11/20/2013

    Company Name Ticker Time Event Description Period Estimate
    JM Smucker Co/The SJM US Bef-mkt Q2 2014 Earnings Release Q2 2014 1.594
    Deere & Co DE US Bef-mkt Q4 2013 Earnings Release Q4 2013 1.903
    ADT Corp/The ADT US Bef-mkt Q4 2013 Earnings Release Q4 2013 0.46
    Staples Inc SPLS US 6:00 Q3 2014 Earnings Release Q3 2014 0.419
    Lowe's Cos Inc LOW US 6:00 Q3 2014 Earnings Release Q3 2014 0.475
    JC Penney Co Inc JCP US 7:30 Q3 2014 Earnings Release Q3 2014 -1.743
    Staples Inc SPLS US 8:00 Q3 2014 Earnings Call Q3 2014  
    L Brands Inc LTD US Aft-mkt Q3 2014 Earnings Release Q3 2014 0.277
    Campbell Soup Co CPB US   Annual General Meeting    
    Clorox Co/The CLX US   Annual General Meeting    
    Equifax Inc EFX US   Investor Meeting - Edinburgh Y 2013
    Stocks: ED, BA, PCLN, BBY, SJM, LOW, JCP, DE, JNJ, YHOO, HLS, HLF, LZB, ADT, SPLS, LB, CPB, CLX, EFX
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