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BARCHART MORNING CALL 12/20

|Includes:ADS, AIR, ANF, BBRY, BTUUQ, CTAS, DIS, FB, FOXA, JNJ, KMX, MHK, 3M Company (MMM), NAV, NKE, ODFL, RHT, TER, TIBX, VIAV, WBA, ZUMZ

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

US 0830 ET Q3 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 ET Kansas City Fed Dec manufacturing index expected -1 to 6, Nov 7.
  1500 ET Nov USDA Cattle on Feed.
GER 0200 ET German Nov PPI expected -0.1% m/m and -0.8% y/y, Oct -0.2% m/m and -0.7% y/y.
  0200 ET German Jan GfK consumer confidence expected unch at 7.4, Dec 7.4.
UK 0430 ET UK Nov public sector net borrowing expected +13.4 billion pounds, Oct +6.4 billion pounds.
  0430 ET Revised UK Q3 GDP, previous +0.8% q/q and+1.5% y/y.
  0430 ET UK Q3 current account balance expected -14.0 billion pounds, Q2 -13.0 billion pounds.
EUR 1000 ET Eurozone Dec consumer confidence expected +0.4 to -15.0, Nov -15.4.
JPN n/a BOJ announces interest rate decision.

U.S. STOCK CALENDAR12/20/2013

Company Name Ticker Time Event Description Period Estimate
Navistar International Corp NAV US Bef-mkt Q4 2013 Earnings Release Q4 2013 -1.561
Walgreen Co WAG US 7:30 Q1 2014 Earnings Release Q1 2014 0.717
CarMax Inc KMX US 7:35 Q3 2014 Earnings Release Q3 2014 0.482
Walgreen Co WAG US 8:30 Q1 2014 Earnings Call Q1 2014  
Teradyne Inc TER US Aft-mkt Facebook Inc. Replaces Teradyne Inc. in S&P 500    
Teradyne Inc TER US Aft-mkt Teradyne Inc. Replaces Scholastic Corp. in S&P MidCap 400    
Mohawk Industries Inc MHK US Aft-mkt Mohawk Industries Inc. Replaces JDS Uniphase Corp. in S&P 500    
Mohawk Industries Inc MHK US Aft-mkt JDS Uniphase Corp. Replaces Mohawk Industries Inc. in S&P MidCap 400    
Old Dominion Freight Line Inc ODFL US Aft-mkt Old Dominion Freight Line Replaces Arch Coal in S&P MidCap 400    
Old Dominion Freight Line Inc ODFL US Aft-mkt Arch Coal Replaces Old Dominion Freight Line in S&P SmallCap 600    
JDS Uniphase Corp JDSU US Aft-mkt Mohawk Industries Inc. Replaces JDS Uniphase Corp. in S&P 500    
JDS Uniphase Corp JDSU US Aft-mkt JDS Uniphase Corp. Replaces Mohawk Industries Inc. in S&P MidCap 400    
Abercrombie & Fitch Co ANF US Aft-mkt Alliance Data Systems Replaces Abercrombie & Fitch in S&P 500    
Abercrombie & Fitch Co ANF US Aft-mkt Abercrombie & Fitch Replaces Alliance Data in S&P MidCap 400    
Alliance Data Systems Corp ADS US Aft-mkt Alliance Data Systems Replaces Abercrombie & Fitch in S&P 500    
Alliance Data Systems Corp ADS US Aft-mkt Abercrombie & Fitch Replaces Alliance Data in S&P MidCap 400    
Facebook Inc FB US Aft-mkt Facebook Inc. Replaces Teradyne Inc. in S&P 500    
Walt Disney Co/The DIS US   U.S. Box Office Release of Movie Saving Mr. Banks""    
Johnson & Johnson JNJ US   EMA Meeting, Sirturo    
Twenty-First Century Fox Inc FOXA US   U.S. Box Office Release of Movie Walking With Dinosaurs""