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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 3/10 0 comments
    Mar 10, 2014 12:08 PM | about stocks: FGP, DHI, KBH, ADM, ALU, ATHN, SPLS, BA, PACR, CONN, BBBY, HAYN, WAC, UNTD, IGT, MCD, NAV, HPT, SLXP, SNH, HTA

    BARCHART MORNING CALL

    Monday, March 10th, 2014

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    OVERNIGHT MARKETS AND NEWS

    March E-mini S&Ps (ESH14 -0.12%) this morning are down -0.09% as weak Chinese trade data questions the strength of the global economy, while European stocks are up +0.63% on increased M&A activity and after European investor confidence rose. China Feb exports unexpectedly fell -18.1% y/y, the biggest decline in 4-1/2 years, which fueled concern about the strength of the Chinese economy. The Eurozone Mar Sentix investor confidence climbed to a 2-3/4 year high and Rolls-Royce Holdings Plc gained over 3% and helped lift European stocks after Daimler AG said it will sell a 50% stake in an engine joint venture to Rolls-Royce. Asian stocks closed mostly lower: Japan -1.01%, Hong Kong -1.75%, China -3.25%, Taiwan -0.56%, Australia -0.93%, Singapore -0.31%, South Korea -1.12%, India +0.07%. China's Shanghai Stock Index dropped to a 1-1/2 month low on an unexpected decline in China Feb exports and Japanese stocks closed lower after Japan Q4 GDP was revised lower. Commodity prices are mostly lower. Apr crude oil (CLJ14 -1.32%) is down -1.23%. Apr gasoline (RBJ14 -0.88%) is down -0.84%. Apr gold (GCJ14 -0.10%) is down -0.11%. May copper (HGK14 -2.08%) is down -1.80% at a 7-1/4 month low as weaker-than-expected China trade data fuels concern about Chinese copper demand. Agriculture prices are weaker. The dollar index (DXY00 +0.08%) is up +0.05%. EUR/USD (^EURUSD) is down -0.04%. USD/JPY (^USDJPY) is up +0.04%. June T-note prices (ZNM14 -0.06%) are unchanged.

    The China Feb trade balance unexpectedly posted a -$22.99 billion deficit, the biggest deficit in 2-year as expectations were for a +$14.50 billion surplus. Feb exports tumbled -18.1% y/y, weaker than expectations of +7.5% and the biggest decline in 4-1/2 years. Feb imports rose +10.1% y/y, better than expectations of +7.6% y/y and the most in 7-months.

    The China Feb CPI rose +2.0% y/y, less than expectations of +2.1% y/y and matched the smallest increase in 16-months. Feb PPI fell -2.0% y/y, a bigger decrease than expectations of -1.9% y/y and the biggest decline in 7-months.

    China Feb new loans rose +664.5 billion yuan, less than expectations of +730.0 billion yuan.

    The Eurozone Mar Sentix investor confidence rose +0.6 to 13.9, slightly less than expectations of +0.7 to 14.0, but still the highest in 2-3/4 years.

    Japan Q4 GDP was revised lower to +0.7% q/q annualized from the previously reported +0.9% q/q annualized. The Q4 deflator was revised up to -0.3% y/y from the originally reported -0.4% y/y.

    U.S. STOCK PREVIEW

    This week's U.S. economic schedule is light and is weighted towards the end of the week with Feb retail sales, Feb PPI, and the early-March U.S. consumer confidence report. There is only one of the Russell 1000 companies that report earnings today: Urban Outfitters (consensus $0.54).

    Equity conferences this week include: BIO-Europe Spring Conference on Mon, Offshore Production Technology Summit 2014 on Mon, Credit Suisse Global Services Conference on Mon-Tue, Deutsche Bank Media, Internet & Telecom Conference on Mon-Wed, CeBIT 2014 on Mon-Wed, 27th International Copper Conference on Tue, ROTH Capital Partners Conference on Tue, Susquehanna Chemicals Conference on Tue, International Strategy Investment Group Industrial Conference on Tue, Bank of America Merrill Lynch Consumer & Retail Conference on Tue-Wed, Piper Jaffray Technology, Media & Telecommunications Conference on Tue-Wed, J.P. Morgan Aviation, Transportation & Industrials Conference on Mon-Wed,
    Barclays Global Healthcare Conference on Tue-Thu, Goldman Sachs Agribusiness Conference on Wed, Mitsubishi Oil & Gas Conference on Wed, Barclays Select Series US & EMEA Utilities Sector Update Conference on Wed, Citi Asset Management, Broker Dealer & Exchanges Conference on Wed, Citi Asset Management Conference on Wed, J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum on Wed-Thu,
    UBS Global Consumer Conference on Wed-Thu, RBC Capital Market Consumer and Retail Conference on Wed-Thu, and Barclays Select Insurance Forum on Thu.

    OVERNIGHT U.S. STOCK MOVERS

    Ferrellgas Partners (FGP +1.30%) reported Q2 adjusted EPS of 76 cents, below consensus of 85 cents.

    D.R. Horton (DHI -1.63%) was downgraded to 'Neutral' from 'Buy' at Citigroup.

    Wells Fargo downgraded the Financials sector to 'Market Weight' from 'Overweight' citing weakening earnings momentum.

    KB Home (KBH -2.05%) was downgraded to 'Underperform' from 'Buy' at BofA/Merrill.

    Archer Daniels Midland (ADM +0.95%) was upgraded to 'Outperform' from 'Market Perform' at BMO Capital.

    Alcatel-Lucent (ALU -2.14%) was upgraded to 'Outperform' from 'Market Perform' at BMO Capital.

    athenahealth (ATHN -3.06%) was downgraded to 'Underperform' from 'Perform' at Oppenheimer.

    Staples (SPLS +1.15%) was downgraded to 'Hold' from 'Buy' at BB&T.

    The WSJ reported that Boeing (BA -0.25%) said a problem caused by a change in wing-maker Mitsubishi Heavy Industries' manufacturing process had caused hairline cracks in the wings on some of its yet-to-be-delivered 787 Dreamliner jets, requiring 42 aircraft to be inspected and delaying deliveries to airlines.

    Glazer Capital reported a 7.6% passive stake in Pacer (PACR unch) .

    Moody's Investors Service raised its outlook on the Netherlands' 'Aaa' government bond ratings to stable from negative.

    Luxor Capital Group reported a 5.6% passive stake in Conn's (CONN -1.02%) .

    Bed Bath & Beyond (BBBY +1.32%) lowered guidance on Q4 EPS to $1.57-$1.61 from $1.60-$1.67, weaker than consensus of $1.65.

    Haynes International (HAYN -0.02%) announced a price increase of 3%-5% on all product forms effective immediately

    SAC Capital reported a 5.0% passive stake in Walter Investment (WAC -4.35%) .

    JP Morgan reported a 10.6% passive stake in United Online (UNTD -1.42%) .

    MARKET COMMENTS

    Mar E-mini S&Ps (ESH14 -0.12%) this morning are down -1.75 points (-0.09%). The S&P 500 on Friday jumped to a fresh record high early after U.S. Feb non-farm payrolls rose +175,000, more than expectations of +149,000. Stock prices fell back, however, and closed little changed on increased geopolitical tensions in Ukraine after the U.S. sent six F-15 fighter jets to Lithuania and 12 F-16s to Poland. Another negative for stocks was the first corporate bond default in China as China's Shanghai Chaori Solar Energy Science & Technology Company failed to pay full interest due on its bonds, which fueled Chinese economic concerns. Closes: S&P 500 +0.05%, Dow Jones +0.19%, Nasdaq 100 -0.47%.

    Jun 10-year T-notes (ZNM14 -0.06%) this morning are unch. Jun 10-year T-note futures prices on Friday tumbled to a 5-week low after U.S. Feb non-farm payrolls rose more than expected. T-note prices were also undercut by comments from New York Fed President Dudley who said he sees a "reasonably favorable" outlook for the U.S. economy. Closes: TYM4 -15.00, FVM4 -11.75.

    The dollar index (DXY00 +0.08%) this morning is up +0.036 (+0.05%). EUR/USD (^EURUSD) is down -0.0005 (-0.04%). USD/JPY (^USDJPY) is up +0.04 (+0.04%). The dollar index on Friday recovered from a 4-1/4 month low and closed higher as the stronger-than-expected increase in U.S. Feb non-farm payrolls boosted speculation the Fed will continue to taper QE3. EUR/USD surged to a 2-1/3 year high on short covering spurred on by reduced expectations for the ECB to expand monetary stimulus measures. USD/JPY posted a 1-1/2 month high on speculation the Fed will continue to taper stimulus while the BOJ expands its stimulus, which undercut the yen: Dollar index +0.056 (+0.07%), EUR/USD +0.00153 (+0.11%), USD/JPY +0.217 (+0.21%).

    Apr WTI crude oil (CLJ14 -1.32%) this morning is down -1.26 (-1.23%) and Apr gasoline (RBJ14 -0.88%) is down -0.0250 (-0.84%). Apr crude and gasoline prices on Friday closed higher. Bullish factors included (1) the larger-than-expected increase in U.S. Feb payrolls, and (2) upbeat comments from New York Fed President Dudley who said he sees a "reasonably favorable" outlook for the U.S. economy. Closes: CLJ4 +1.02 (+1.00%), RBJ4 +0.0283 (+0.96%).

    GLOBAL EVENT CALENDAR03/10/2014

    US0615 ETPhiladelphia Fed President Charles Plosser and BOF Governor Christian Noyer speak on a panel at a conference in Paris titled Monetary Policy and Banks and the Rise of Global Protectionism.
     1100 ETUSDA weekly grain export inspections.
     1200 ETMar WASDE crop production report.
    JPN0030 ETJapan Feb bankruptcies, Jan -7.49% y/y.
     0100 ETJapan Feb eco watchers survey current expected -0.6 to 54.1, Jan 54.7. Feb eco watchers survey outlook expected +1.5 to 50.5, Jan 49.0.
     2300 ETBank of Japan announces results of 2-day policy meeting.
    EUR0530 ETEurozone Mar Sentix investor confidence expected +0.7 to 14.0, Feb 13.3.
    UK0530 ETUK Feb Lloyds employment confidence, Jan -2.
     2001 ETUK Feb BRC sales like-for-like expected +1.8% y/y, Jan +3.9% y/y.

    U.S. STOCK CALENDAR03/10/2014

    Company NameTickerTimeEvent DescriptionPeriodEstimate
    International Game TechnologyIGT USAnnual General Meeting   
    McDonald's CorpMCD USFebruary 2014 Sales and Revenue Release 2014 
    Navistar International CorpNAV USAnnual General Meeting   
    Hospitality Properties TrustHPT USAnnual General Meeting Y 2014 
    Salix Pharmaceuticals LtdSLXP USFDA Adcomm, Relistor subcu, opioid-induced constipation in chronic pain patient   
    Senior Housing Properties TrustSNH USAnnual General Meeting Y 2014 
    Healthcare Trust of America IncHTA USSpecial Meeting

    Stocks: FGP, DHI, KBH, ADM, ALU, ATHN, SPLS, BA, PACR, CONN, BBBY, HAYN, WAC, UNTD, IGT, MCD, NAV, HPT, SLXP, SNH, HTA
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