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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 12/20 0 comments
    Dec 20, 2013 9:35 AM | about stocks: MMM, KMX, ZUMZ, BBRY, WBA, BTU, JAZZY, CTAS, NKE, AIR, TIBX, RHT, NAV, TER, MHK, ODFL, JDSU, ANF, ADS, FB, DIS, JNJ, FOXA

    BARCHART MORNING CALL

    Friday, December 20th, 2013View Older Reports

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    OVERNIGHT MARKETS AND NEWS

    March E-mini S&Ps (ESH14 +0.07%) this morning are up +0.11% and European stocks are also up +0.11% after a gauge of German consumer confidence unexpectedly rose to a 6-1/3 year high. Asian stocks closed mixed: Japan +0.07%, Hong Kong -0.33%, China -2.33%, Taiwan +0.01%, Australia +1.21%, Singapore +0.79%, South Korea +0.41%, India +1.79%. China's Shanghai Stock index fell to a 1-month low on signs of a cash crunch in China after the 7-day repurchase rate surged 100 bp to a 6-month high of 7.60%, even after the PBOC said it conducted short-term liquidity operations and added funds to the financial system. Commodity prices are mixed. Feb crude oil (CLG14 -0.17%) is down -0.30%. Feb gasoline (RBG14 +0.29%) is up +0.01%. Feb gold (GCG14 +0.19%) is up +0.11%. March copper (HGH14 +0.53%) is up +0.62%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.09%) is up +0.04% at a 2-week high. EUR/USD (^EURUSD) is down -0.07% at a 2-week low after S&P downgraded the credit rating of the European Union. USD/JPY (^USDJPY) is up +0.21% at a fresh 5-year high after the BOJ said they will maintain stimulus until annual inflation is stable at 2%. March T-note prices (ZNH14 -0.25%) are down -8.5 ticks.

    Standard & Poor's cut its long-term rating on the EU to AA+ from AAA, with a stable outlook, S&P said "The downgrade reflects our view of the overall weaker creditworthiness of the EU's 28 member states."

    German Jan GfK consumer confidence unexpectedly rose +0.2 to 7.6, better than expectations of no change at 7.4 and the highest in 6-1/3 years.

    German Nov PPI fell -0.1% m/m and -0.8% y/y, right on expectations, as producer prices weakened further from a -0.7% y/y decline in Oct.

    At the conclusion of its 2-day policy meeting, the BOJ as expected, pledged to maintain its stimulus program and expand the monetary base by an annual 60 trillion to 70 trillion yen ($670 billion) until inflation reaches the BOJ's 2% inflation target.

    UK Dec GfK consumer confidence unexpectedly fell -1 point to a 4-month low of -13, weaker than expectations of +1 to -11.

    UK Nov public sector net borrowing was 14.8 billion pounds, more than expectations of 13.4 billion pounds and the most in 2-1/2 years.

    UK Q3 GDP was revised upward to +0.8% q/q and +1.9% y/y from the originally reported +0.8% m/m and +1.5% y/y. Q3 total business investment was revised upward to +2.0% q/q and -5.3% y/y from the +1.4% q/q and -6.3% y/y originally reported.

    U.S. STOCK PREVIEW

    The market is not expecting any revisions from the last BEA estimates for Q3 GDP of +3.6% or for Q3 personal consumption of +1.4%. Senate Majority Leader Reid on Thursday set a schedule to allow the Senate to adjourn for the year on Saturday. The Senate, according to reporting by The Hill, will vote to end debate on Janet Yellen's confirmation at 11 AM on Friday. The Senate is then scheduled to vote on Ms. Yellen's actual confirmation on Saturday at 6 PM. The markets will be pleased if the Senate can finalize Ms. Yellen's confirmation before leaving for the holidays.

    There are 3 of the Russell 1000 companies that report earnings today: Navistar (consensus -$1.56), Walgreen (0.72), CarMax (0.48). There are no equity conferences during the remainder of the week.

    OVERNIGHT U.S. STOCK MOVERS

    3M Company (MMM +0.45%) was upgraded to 'Neutral' from 'Underweight' at JPMorgan.

    CarMax (KMX +1.01%) reported Q3 EPS of 47 cents, below consensus of 48 cents.

    Zumiez (ZUMZ -0.68%) was upgraded to 'Buy' from 'Neutral' at BofA/Merrill.

    BlackBerry (BBRY +3.14%) slid 7% in pre-market trading after it reported a Q3 adjusted EPS loss of -67 cents, a bigger loss than consensus of -45 cents.

    Walgreen (WAG -0.70%) reported Q1 EPS of 79 cents, stronger than consensus of 72 cents.

    Standard & Poor's Ratings Services raised its long-term local currency rating on Mexico to 'A' from 'A-' and its long-term foreign currency rating to 'BBB+' from 'BBB.'

    Peabody Energy (BTU +2.74%) said it sees fiscal 2013 adjusted EBITDA $60 million-$80 million lower than its prior view.

    Jazz Pharmaceuticals (JAZZ +0.86%) will acquire Gentium (GENT -2.28%) for $57 per share.

    Cintas (CTAS +0.34%) reported Q2 EPS of 70 cents, stronger than consensus of 68 cents.

    Nike (NKE -0.37%) reported Q2 EPS of 59 cents, better than consensus of 58 cents.

    AAR Corp. (AIR -0.56%) lowered guidance on fiscal 2014 EPS view to $1.95-$2.00 from $2.00-$2.05, below consensus of $2.05.

    TIBCO (TIBX unch) slumped over 13% in after-hours trading after it reported Q4 adjusted EPS of 42 cents, better than consensus of 39 cents, but then cut guidance on Q1 EPS to 17 cents-18 cents, below consensus of 21 cents.

    Red Hat (RHT +0.18%) surged over 10% in after-hours trading after it reported Q3 adjusted EPS of 42 cents, higher than consensus of 35 cents, and then raised guidance on fiscal 2013 EPS $1.46-$1.48, well ahead of consensus of $1.38.

    MARKET COMMENTS

    Mar E-mini S&Ps (ESH14 +0.07%) this morning are up +2.00 points (+0.11%). The S&P 500 on Thursday gave back some of Wednesday's sharp rally and closed lower. Negative factors included (1) the Dec Philadelphia Fed manufacturing report of +0.5 to 7.0, weaker than expectations of +3.5 to 10.0, and (2) the U.S. Nov existing home sales report of -4.3% to 4.90 million, weaker than expectations of -2.0% to 5.02 million and the lowest level in 11 months. Closes: S&P 500 -0.06%, Dow Jones +0.07%, Nasdaq 100 -0.31%.

    Mar 10-year T-notes (ZNH14 -0.25%) this morning are down -8.5 ticks. Mar 10-year T-note prices on Thursday tumbled to a 3-1/4 month low on negative carry-over from the Fed's action on Wednesday to reduce its bond buying by $10 billion a month. Expectations that the Fed will continue to taper QE3 at a $10 billion clip at each FOMC meeting in 2014 further weighed on T-note prices. T-notes shrugged off the unexpected jump in weekly U.S jobless claims to an 8-1/2 month high due to typical seasonal adjustment problems over the holidays. Closes: TYH4 -20.50, FVH4 -15.00.

    The dollar index (DXY00 +0.09%) this morning is up +0.035 (+0.04%) at a fresh 2-week high. EUR/USD (^EURUSD) is down -0.0010 (-0.07%) at a 2-week low and USD/JPY (^USDJPY) is up +0.22 (+0.21%) at a new 5-year high. The dollar index on Thursday rallied to a 2-week high on carry-over support from the Fed's QE3 tapering on Wednesday. Other supportive factors included (1) the slide in stocks that boosted safe-haven demand for the dollar, and (2) the larger-than-expected increase in U.S. Nov leading indicators, which signals the U.S. economy can sustain the economic recovery. Closes: Dollar index +0.525 (+0.66%), EUR/USD -0.00232 (-0.17%), USD/JPY -0.040 (-0.04%).

    Feb WTI crude oil (CLG14 -0.17%) this morning is down -30 cents (-0.30%) and Feb gasoline (RBG14 +0.29%) is up +0.0003 (+0.01%). Feb crude oil and gasoline prices on Thursday rose to 1-week highs and closed higher. Bullish factors included (1) the Fed's confidence in the U.S. economy as it raised its U.S. 2013 and 2014 GDP estimates on Wed, and (2) stronger demand after EIA data on Wed showed that total U.S. petroleum demand rose +13% in the week ended Dec 13 to 20.996 million barrels a day, a 5-1/2 year high. Closes: CLG4 +0.98 (+1.00%), RBG4 +0.0392 (+1.45%).

    GLOBAL EVENT CALENDAR12/20/2013

    US0830 ETQ3 GDP expected unrevised at +3.6% (q/q annualized). Q3 personal consumption expected unrevised at +1.4%. Q3 GDP price index expected unrevised at +2.0%. Q3 core PCE expected unrevised at +1.5%.
     1100 ETKansas City Fed Dec manufacturing index expected -1 to 6, Nov 7.
     1500 ETNov USDA Cattle on Feed.
    GER0200 ETGerman Nov PPI expected -0.1% m/m and -0.8% y/y, Oct -0.2% m/m and -0.7% y/y.
     0200 ETGerman Jan GfK consumer confidence expected unch at 7.4, Dec 7.4.
    UK0430 ETUK Nov public sector net borrowing expected +13.4 billion pounds, Oct +6.4 billion pounds.
     0430 ETRevised UK Q3 GDP, previous +0.8% q/q and+1.5% y/y.
     0430 ETUK Q3 current account balance expected -14.0 billion pounds, Q2 -13.0 billion pounds.
    EUR1000 ETEurozone Dec consumer confidence expected +0.4 to -15.0, Nov -15.4.
    JPNn/aBOJ announces interest rate decision.

    U.S. STOCK CALENDAR12/20/2013

    Company NameTickerTimeEvent DescriptionPeriodEstimate
    Navistar International CorpNAV USBef-mktQ4 2013 Earnings ReleaseQ4 2013-1.561
    Walgreen CoWAG US7:30Q1 2014 Earnings ReleaseQ1 20140.717
    CarMax IncKMX US7:35Q3 2014 Earnings ReleaseQ3 20140.482
    Walgreen CoWAG US8:30Q1 2014 Earnings CallQ1 2014 
    Teradyne IncTER USAft-mktFacebook Inc. Replaces Teradyne Inc. in S&P 500  
    Teradyne IncTER USAft-mktTeradyne Inc. Replaces Scholastic Corp. in S&P MidCap 400  
    Mohawk Industries IncMHK USAft-mktMohawk Industries Inc. Replaces JDS Uniphase Corp. in S&P 500  
    Mohawk Industries IncMHK USAft-mktJDS Uniphase Corp. Replaces Mohawk Industries Inc. in S&P MidCap 400  
    Old Dominion Freight Line IncODFL USAft-mktOld Dominion Freight Line Replaces Arch Coal in S&P MidCap 400  
    Old Dominion Freight Line IncODFL USAft-mktArch Coal Replaces Old Dominion Freight Line in S&P SmallCap 600  
    JDS Uniphase CorpJDSU USAft-mktMohawk Industries Inc. Replaces JDS Uniphase Corp. in S&P 500  
    JDS Uniphase CorpJDSU USAft-mktJDS Uniphase Corp. Replaces Mohawk Industries Inc. in S&P MidCap 400  
    Abercrombie & Fitch CoANF USAft-mktAlliance Data Systems Replaces Abercrombie & Fitch in S&P 500  
    Abercrombie & Fitch CoANF USAft-mktAbercrombie & Fitch Replaces Alliance Data in S&P MidCap 400  
    Alliance Data Systems CorpADS USAft-mktAlliance Data Systems Replaces Abercrombie & Fitch in S&P 500  
    Alliance Data Systems CorpADS USAft-mktAbercrombie & Fitch Replaces Alliance Data in S&P MidCap 400  
    Facebook IncFB USAft-mktFacebook Inc. Replaces Teradyne Inc. in S&P 500  
    Walt Disney Co/TheDIS US U.S. Box Office Release of Movie Saving Mr. Banks""  
    Johnson & JohnsonJNJ US EMA Meeting, Sirturo  
    Twenty-First Century Fox IncFOXA US U.S. Box Office Release of Movie Walking With Dinosaurs""

    Stocks: MMM, KMX, ZUMZ, BBRY, WBA, BTU, JAZZY, CTAS, NKE, AIR, TIBX, RHT, NAV, TER, MHK, ODFL, JDSU, ANF, ADS, FB, DIS, JNJ, FOXA
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