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BARCHART MORNING CALL 12/19

|Includes:ACN, AKS, CAG, CCE, CTAS, DE, Darden Restaurants, Inc. (DRI), ELY, JPM, LPS, MLHR, NKE, ORCL, PAYX, PIR, RAD, RHT, TGT, TIBX, Z

BARCHART MORNING CALL

Thursday, December 19th, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH14 -0.01%) this morning are down -0.10% and European stocks are up +1.41%. Asian stocks closed mixed: Japan +1.74%, Hong Kong -1.10%, China -1.05%, Taiwan +0.70%, Australia +2.08%, Singapore +0.28%, South Korea +0.08%, India -0.73%. U.S. stocks fell back slightly after Wednesday's sharp rally while European stocks played catch-up to yesterday's late-afternoon surge in U.S. stocks after the Fed's decision to taper QE3 boosted confidence in the U.S. economic recovery. China's Shanghai Stock Index slid to a 1-month low after the 7-day repurchase rate, a gauge of funding availability in the banking system, jumped +140 bp to a 5-3/4 month high of 6.60%, which fueled concern that higher funding costs will hurt economic growth. Japan's Nikkei Stock Index climbed to a 6-3/4 month high as exporter stocks rallied after the yen tumbled to a 5-year low against the dollar. Commodity prices are mixed. Jan crude oil (CLF14 +0.03%) is down -0.04%. Jan gasoline (RBF14 +0.25%) is down -0.18%. Feb gold (GCG14 -2.51%) is down -2.27% at a 5-3/4 month low after the Fed's decision to cut its monthly bond purchases reduces demand for gold as an inflation hedge. March copper (HGH14 -0.65%) is down -0.69%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.55%) is up +0.48% at a 2-week high. EUR/USD (^EURUSD) is up +0.01% and USD/JPY (^USDJPY) is down -0.17%. March T-note prices (ZNH14 -0.38%) are down -10.5 ticks.

UK Nov retail sales ex autos rose +0.4% m/m, better than expectations of +0.3% m/m, and on an annual basis rose +2.3% y/y, less than expectations of +2.4% y/y. Nov retail sales including autos rose +0.3% m/m, right on expectations, and on an annual basis rose +2.0% y/y, less than expectations of +2.2% y/y.

Japan Nov nationwide department store sales rose +2.4% y/y as they recovered from the -0.6% y/y decline in Oct.

The Japan Oct leading index CI was revised down to 109.8 from the originally reported 109.9, and the Oct coincident index was revised up to a 5-1/4 year high of 110.4 from the originally reported 109.6.

The Japan Oct all-industry activity index fell -0.2% m/m, less than expectations of -0.3% m/m, and Sep was revised higher to +0.5% m/m from the originally reported +0.4% m/m.

U.S. STOCK PREVIEW

Today's weekly initial unemployment claims report is expected to show a decline of -33,000 to 335,000, reversing about one-half of last week's surge of +68,000 to 368,000. Meanwhile, today's continuing claims report is expected to show a decline of -21,000 to 2.770 million, reversing about one-half of last week's increase of +40,000 to 2,791 million. Today's Nov existing home sales report is expected to show a decline of -2.0% to 5.02 million, adding to the -3.2% decline seen in October to 5.12 million. Today's Dec Philadelphia Fed manufacturing index is expected to show a +3.5 point increase to 10.0, partially recovering after the -13.3 point decline to 6.5 seen in November. Today's Nov leading indicators report is expected to show a strong increase of +0.7%, adding to the +0.2% increase seen in October. The Treasury today will $29 billion of 7-year T-notes and $16 billion of 5-year TIPS, concluding this week's $112 billion coupon package.

There are 8 of the Russell 1000 companies that report earnings today: Darden Restaurants (consensus $0.20), Accenture (1.09), ConAgra Foods (0.55), NIKE (0.58), Cintas (0.68), Red Hat (0.35), TIBCO (0.39), Carnival (0.00). There are no equity conferences during the remainder of the week.

OVERNIGHT U.S. STOCK MOVERS

Darden (DRI +1.13%) reported Q2 EPS of 15 cents, well below consensus of 20 cents, and said it sees fiscal 2014 EPS down 15%-20% compared to 2013.

Rite Aid (RAD +1.41%) said it sees fiscal 2014 EPS of 17 cents-23 cents, below consensus of 24 cents.

Callaway Golf (ELY +0.63%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James.

Pier 1 Imports (PIR -0.10%) reported Q3 EPS of 26 cents, weaker than consensus of 28 cents, and then lowered guidance on fiscal 2014 EPS view to $1.21-$1.27 from $1.29.

Accenture PLC (ACN +2.19%) reported Q1 EPS of $1.12, above consensus of $1.09, and then raised guidance on fiscal 2014 EPS to $4.44-$4.56 from $4.42-$4.54, above consensus of $4.47.

Dow Jones reports that Target (TGT +3.08%) was hit by theft of customers' credit card data over Black Friday weekend, and the data breach was extensive.

Trulia (TRLA -0.39%) rose 4% in after-hours trading after SAC Capital reported a 5.2% passive stake in the company.

AK Steel (AKS +2.43%) rose over 6% in after-hours trading when it raised guidance on Q4 EPs to a gain of 2 cents-6 cents, better than consensus of a -3 cent loss.

Cascade Investment raises its stake in Deere (DE +1.26%) to 8.1% from 7.0%.

JPMorgan Chase (JPM +2.73%) was downgraded to 'Neutral' from 'Buy' at SunTrust.

Oracle (ORCL +2.88%) gained over 1% in after-hours trading after reported Q2 adjusted EPS of 69 cents, stronger than consensus of 67 cents.

Herman Miller (MLHR +0.72%) reported Q2 adjusted EPS of 42 cents, above consensus of 40 cents.

Paychex (PAYX +0.98%) reported Q2 EPS of 43 cents, better than consensus of 42 cents.

MARKET COMMENTS

Mar E-mini S&Ps (ESH14 -0.01%) this morning are down -1.75 points (-0.10%). The S&P 500 rallied sharply after the Fed said it will taper QE3 by $10 billion a month starting next month, which signals the Fed is confident the U.S. economy is strong enough to handle a reduction in stimulus. Other supportive factors included (1) the +22.7% surge in U.S. Nov housing starts from Aug, which was much stronger than expectations of 955,000 and the most in 5-3/4 years, and (2) the Fed's hike in its U.S. 2013 and 2014 GDP estimates and cut in its unemployment estimates. Closes: S&P 500 +1.66%, Dow Jones +1.84%, Nasdaq 100 +1.16%.

Mar 10-year T-notes (ZNH14 -0.38%) this morning are down -10.5 ticks. Mar T-notes on Wednesday fell to a 1-1/2 week low and closed lower. Bearish factors included (1) the Fed's $10 billion QE3 tapering, (2) the larger-than-expected increase in U.S. Nov housing starts to a 5-3/4 year high, and (3) weak demand for the $35 billion auction of 5-year T-notes that had a bid-to-cover ratio of 2.42, below the 12-auction average of 2.67. T-note prices saw some support from the Fed's cut in its 2013 U.S. PCE inflation estimate. Closes: TYH4 -8.00, FVH4 -2.00.

The dollar index (DXY00 +0.55%) this morning is up +0.388 (+0.48%). EUR/USD (^EURUSD) is up +0.0001 (+0.01%) and USD/JPY (^USDJPY) is down -0.18 (-0.17%). The dollar index on Wednesday initially rose after the Fed tapered QE3 by $10 billion a month and raised its 2013 and 2014 U.S. GDP estimates, but shed its gains and closed little changed after the Fed Chairman Bernanke said that inflation is "more than a bit of a concern" and that the FOMC will take action if inflation doesn't speed up, which suggests the Fed will be slow to cut QE3 further. USD/JPY surged to a fresh 5-year high on expectations the BOJ will continue to expand QE while the Fed cuts stimulus. Closes: Dollar index +0.044 (+0.05%), EUR/USD -0.00839 (-0.61%), USD/JPY +1.619 (+1.58%).

Jan WTI crude oil (CLF14 +0.03%) this morning is down -4 cents (-0.04%) and Jan gasoline (RBF14 +0.25%) is down -0.0049 (-0.18%). Jan crude oil and gasoline prices on Wednesday closed higher. Crude prices found support on weekly EIA data showing (1) U.S. crude stockpiles declined for a third week as they fell -2.941 million bbl to a 2-month low of 372.3 million bbl, and (2) a -600,000 bbl decline in crude oil supplies at Cushing, OK, the delivery point for WTI futures. Jan gasoline climbed to a 1-week high on signs of stronger demand after weekly EIA data showed U.S. gasoline demand for the week ended Dec 13 rose +8% w/w to 9.016 million bpd. Closes: CLF4 +0.58 (+0.60%), RBF4 +0.0501 (+1.89%).

GLOBAL EVENT CALENDAR12/19/2013

US 0830 ET Weekly initial unemployment claims expected -33,000 to 335,000, previous +68,000 to 368,000. Weekly continuing claims expected -21,000 to 2.770 million, previous +40,000 to 2,791 million.
  0830 ET USDA weekly Export Sales.
  1000 ET Dec Philadelphia Fed manufacturing index expected +3.5 to 10.0, Nov -13.3 to 6.5.
  1000 ET Nov existing home sales expected -2.0% to 5.02 million, Oct -3.2% to 5.12 million.
  1000 ET Nov leading indicators expected +0.7%, Oct +0.2%.
  1130 ET Treasury auctions $29 billion 7-year T-notes.
  1300 ET Treasury auctions $16 billion 5-year TIPS.
JPN 0000 ET Revised Japan Oct leading index CI, previous 109.9. Revised Oct coincident index, previous 109.6.
  0030 ET Japan Nov nationwide department store sales, Oct -0.6% y/y.
UK 0430 ET UK Nov retail sales ex autos expected +0.3% m/m and +2.4% y/y, Oct -0.6% m/m and +2.3% y/y.
  0430 ET UK Nov retail sales including autos expected +0.3% m/m and +2.2% y/y, Oct -0.7% m/m and +1.8% y/y.
  1905 ET UK Dec GfK consumer confidence expected +1 to -11, Nov -12.

U.S. STOCK CALENDAR12/19/2013

Company Name Ticker Time Event Description Period Estimate
Darden Restaurants Inc DRI US Bef-mkt Q2 2014 Earnings Release Q2 2014 0.197
Accenture PLC ACN US Bef-mkt Q1 2014 Earnings Release Q1 2014 1.092
ConAgra Foods Inc CAG US 7:30 Q2 2014 Earnings Release Q2 2014 0.552
Accenture PLC ACN US 8:00 Q1 2014 Earnings Call Q1 2014  
Darden Restaurants Inc DRI US 8:30 Q2 2014 Earnings Call Q2 2014  
ConAgra Foods Inc CAG US 9:30 Q2 2014 Earnings Call Q2 2014  
Coca-Cola Enterprises Inc CCE US 10:00 FY 2014 Guidance Call Y 2014  
Lender Processing Services Inc LPS US 10:00 Extraordinary Shareholders Meeting - M&A Vote Y 2013  
Carnival Corp CCL US 10:30 Q4 2013 Earnings Call Q4 2013  
Paychex Inc PAYX US 10:30 Q2 2014 Earnings Call Q2 2014  
NIKE Inc NKE US 16:15 Q2 2014 Earnings Release Q2 2014 0.58
TIBCO Software Inc TIBX US 16:30 Q4 2013 Earnings Call Q4 2013  
NIKE Inc NKE US 17:00 Q2 2014 Earnings Call Q2 2014  
Cintas Corp CTAS US 17:00 Q2 2014 Earnings Call Q2 2014  
Red Hat Inc RHT US 17:00 Q3 2014 Earnings Call Q3 2014  
Cintas Corp CTAS US Aft-mkt Q2 2014 Earnings Release Q2 2014 0.684
Red Hat Inc RHT US Aft-mkt Q3 2014 Earnings Release Q3 2014 0.349
TIBCO Software Inc TIBX US Aft-mkt Q4 2013 Earnings Release Q4 2013 0.394
Carnival Corp CCL US   Q4 2013 Earnings Release Q4 2013 0
Stocks: DRI, RAD, ELY, PIR, ACN, TGT, Z, AKS, DE, JPM, ORCL, MLHR, PAYX, CAG, CCE, LPS, NKE, TIBX, CTAS, RHT