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BARCHART MORNING CALL 4/22

|Includes:AEP, AGN, AGN, AMGN, ATI, BCR, BK, BKD, CE, CMA, CMCSA, CRMQF, CSQPF, DFS, FB, FTI, GPC, HOG, HXL, IGT, IPG, ISRG, JNPR, KORS, LLY, Lockheed Martin (LMT), MCD, NBL, NFLX, OMC, PKI, PLD, PNR, RCII, RF, SPG, SYK, TRV, UTX, VFC, WERN, XRX

BARCHART MORNING CALL

Tuesday, April 22nd, 2014

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OVERNIGHT MARKETS AND NEWS

June E-mini S&Ps (ESM14 +0.01%) this morning are up +0.01% and European stocks are up +0.95% after drug maker stocks rallied as more than $28 billion in M&A deals has bolstered speculation of more takeovers. GlaxoSmithKline Plc and AstraZeneca Plc jumped more than 5% after Novartis AG agreed to buy Glaxo's cancer-drug business for as much as $16 billion, and after reports surfaced about a potential AstraZeneca acquisition by Pfizer. The Ukraine deal nears collapse after pro-Russian forces who seized buildings in at least 10 eastern Ukrainian cities said they are not bound by the deal reached last Thursday by Ukraine. Asian stocks closed mixed: Japan -0.85%, Hong Kong -0.13%, China +0.44%, Taiwan +0.26%, Australia +0.46%, Singapore +0.67%, South Korea +0.25%, India -0.03%. Commodity prices are mixed. Jun crude oil (CLM14 -0.37%) is down -0.36%. Jun gasoline (RBM14 -0.43%) is down -0.46%. Jun gold (GCM14 +0.23%) is up +0.26%. May copper (HGK14 -0.36%) is down -0.35%. Agriculture and livestock prices are mixed. The dollar index (DXY00 -0.12%) is down -0.14%. EUR/USD (^EURUSD) recovered from a 1-1/2 week low and is up +0.19% on expectations for Eurozone Apr consumer confidence, scheduled to be released later today, will remain unchanged. USD/JPY (^USDJPY) is down -0.04%. June T-note prices (ZNM14 +0.03%) are up +2 ticks.

The chairman of China Huarong Asset Management, China's largest manager of bad debt, said that China's bad-loan ratio rose "significantly" in Q1 as the business environment this year has been "grim and complicated" as lenders face pressures on asset quality, liquidity and lending margins. This increases the risks for China's entire banking industry.

ECB Executive Board member Coeure said that "all things being equal, a stronger euro justifies accommodative monetary policy, and that the ECB could cut the benchmark rate and/or deposit rate if necessary to counter the strength from the currency."

Eurozone Feb construction output rose +0.1% m/m and +6.7% y/y, weaker than Jan which was revised to +1.6% m/m and +8.0% y/y from the originally reported +1.5% m/m and +8.8% y/y.

The Japan Feb leading index CI was revised upward to 108.9 from the originally reported 108.5. The Feb coincident index was revised down to 113.0 from the originally reported 113.4.

U.S. STOCK PREVIEW

Today's March existing home sales report is expected to show a -1.1% decline to 4.55 million, adding to the -0.4% decline to 4.60 million seen in February. Today's Feb FHFA house price index is expected to show an increase of +0.5% m/m, matching the +0.5% m/m increase seen in January. Today's Apr Richmond Fed manufacturing index is expected to show a +9 point increase to 2 following the -1 point decline to -7 seen in March. The Treasury today will sell $32 billion in 2-year T-notes.

There are 30 of the S&P 500 companies that report earnings today. Notable reports include AT&T (consensus $0.70), Yum Brands (0.84), Amgen (1.94), Discover (1.25), Comcast (0.64), Lockheed Martin (2.54), and McDonalds (1.24). The only equity conference this week is the Barclays Chicago Energy CFO Corporate Day on Tuesday.

OVERNIGHT U.S. STOCK MOVERS

Lockheed Martin (LMT +0.77%) reported Q1 EPS of $2.87, higher than consensus of $2.54.

Comcast (CMCSA +1.59%) reported Q1 EPS of 68 cents, better than consensus of 64 cents.

Harley-Davidson (HOG +1.35%) reported Q1 EPS of $1.21, stronger than consensus of $1.08.

Travelers (TRV -0.32%) reported Q1 EPS of $2.95, well ahead of consensus of $2.16.

Celanese (CE +0.96%) reported Q1 EPS of $1.33, well above consensus of $1.21.

Allergan (AGN +6.03%) surged 19% in European trading after Pershing Square reported a 9.7% stake in the company and then said that Valeant (VRX +3.24%) intends to propose a merger with Allergan.

Lone Pine Capital reported a 5.5% passive stake in Michael Kors (KORS +0.83%) .

Rent-A-Center (RCII -1.38%) reported Q1 adjusted EPS of 57 cents, better than consensus of 55 cents, and then raised guidance on fiscal 2014 EPS to $2.30-$2.50, higher than consensus of $2.29.

Werner (WERN -0.08%) reported Q1 EPS of 20 cents, below consensus of 21 cents.

Visium Asset reported a 5.1% passive stake in Brookdale Senior Living (BKD +0.41%) .

Polaris Venture Partners V reported a 17.3% stake in Cerulean (CERU +6.72%) .

The U.S. Food and Drug Administration approved Eli Lilly's (LLY +0.71%) Cyramza drug to treat patients with advanced stomach cancer or gastroesophageal junction adenocarcinoma.

Hexcel (HXL unch) reported Q1 EPS of 50 cents, better than consensus of 49 cents.

Waste Connections (WCN -0.02%) reported Q1 adjusted EPS of 44 cents, higher than consensus of 41 cents.

Facebook (FB +3.90%) climbed over 2% in after-hours trading after it was upgraded to 'Outperform' from 'Neutral' at Credit Suisse.

Netflix (NFLX +0.80%) rose 7% in after-hours trading after it reported Q1 EPS of 86 cents, higher than consensus of 83 cents, and said it expects Q2 EPS of $1.12, better than consensus of $1.00.

MARKET COMMENTS

June E-mini S&Ps (ESM14 +0.01%) this morning are up +0.25 of a point (+0.01%). The S&P 500 index on Monday rose to a 1-week high and closed higher. Bullish factors included (1) the +0.8% increase in U.S. Mar leading indicators, stronger than expectations of +0.7% and the largest increase in 4 months, and (2) optimism that U.S. Q1 company earnings results will continue to surprise on the upside as 70% of the 86 S&P 500 companies that have reported earnings results thus far have beaten expectations. Closes: S&P 500 +0.38%, Dow Jones +0.25%, Nasdaq +0.72%.

Jun 10-year T-notes (ZNM14 +0.03%) this morning are up +2 ticks. Jun 10-year T-note futures prices on Monday rebounded from a 2-week low and closed little changed. Bullish factors included (1) concerns over the global economy after Japan Mar exports rose at the slowest pace in a year, and (2) increased safe-haven demand for Treasuries on concern the crisis in Ukraine may escalate after three people were killed in a clash between pro-Russian militants and Ukraine forces in the Ukraine city of Slovyansk. T-note prices fell back from their best levels after strength in stocks undercut safe-haven demand for Treasuries. Closes: TYM4 -20.00, FVM4 -11.00.

The dollar index (DXY00 -0.12%) this morning is down -0.109 (-0.14%). EUR/USD (^EURUSD) is up +0.0026 (+0.19%). USD/JPY (^USDJPY) is down -0.04 (-0.04%). The dollar index on Monday rallied up to a 1-1/2 week high and closed higher. Supportive factors for the dollar included (1) the stronger-than-expected U.S. Mar leading indicators, which boosts the outlook for the Fed to continue to taper QE3, and (2) weakness in the yen after USD/JPY climbed to a 1-1/2 week high when Japan Mar exports rose +1.8% y/y, weaker than expectations of +6.5% y/y and the slowest pace of increase in a year, which bolsters speculation the BOJ may increase its stimulus measures. Closes: Dollar index +0.109 (+0.14%), EUR/USD -0.00206 (-0.15%), USD/JPY +0.211 (+0.21%).

Jun WTI crude oil (CLM14 -0.37%) this morning is down -37 cents (-0.36%) and Jun gasoline (RBM14 -0.43%) is down -0.0141 (-0.46%). Jun crude and gasoline prices on Monday closed higher with Jun gasoline at a 7-1/2 month high. Bullish factors included (1) the larger-than-expected +0.8% increase in U.S. Mar leading indicators, which signals strength in the U.S. economy and energy demand, (2) the ongoing Ukraine crisis and concern any further escalation of hostilities could lead to a disruption of energy supplies throughout Europe. Closes: CLM4 +0.28 (+0.27%). RBM4 +0.0221 (+0.73%).

GLOBAL EVENT CALENDAR04/22/2014

US 0900 ET Feb FHFA house price index expected +0.5% m/m, Jan +0.5% m/m.
  1000 ET Apr Richmond Fed manufacturing index expected +9 to 2, Mar -1 to -7.
  1000 ET Mar existing home sales expected -1.1% to 4.55 million, Feb -0.4% to 4.60 million.
  1145 ET Former Fed Chairman Ben Bernanke speaks at the Economic Club of Canada on 8 Years of Crisis Management at the Federal Reserve and the Way Forward.
  1300 ET Treasury auctions $32 billion 2-year T-notes.
  1500 ET USDA Mar Cold Storage.
JPN 0100 ET Revised Japan Fed leading index CI, previous 108.5. Revised Feb coincident index CI, previous 113.4.
EUR 0500 ET Eurozone Feb construction output, Jan +1.5% m/m and +8.8% y/y.
  1000 ET Eurozone Apr consumer confidence expected unch at -9.3, Mar -9.3.
CHI 2145 ET China HSBC Apr manufacturing PMI expected +0.3 to 48.3, Mar -0.5 to 48.0.
Click to enlarge

U.S. STOCK CALENDAR04/22/2014

Company Name Ticker Time Event Description Period Estimate
Pentair Ltd PNR US Bef-mkt Q1 2014 Earnings Release Q1 2014 0.728
Omnicom Group Inc OMC US Bef-mkt Q1 2014 Earnings Release Q1 2014 0.789
Lockheed Martin Corp LMT US Bef-mkt Q1 2014 Earnings Release Q1 2014 2.535
Allegheny Technologies Inc ATI US Bef-mkt Q1 2014 Earnings Release Q1 2014 -0.07
Regions Financial Corp RF US Bef-mkt Q1 2014 Earnings Release Q1 2014 0.195
Prologis Inc PLD US Bef-mkt Q1 2014 Earnings Release Q1 2014 0.42
Genuine Parts Co GPC US Bef-mkt Q1 2014 Earnings Release Q1 2014 1.019
Harley-Davidson Inc HOG US Bef-mkt Q1 2014 Earnings Release Q1 2014 1.082
Simon Property Group Inc SPG US Bef-mkt Q1 2014 Earnings Release Q1 2014 2.243
Interpublic Group of Cos Inc/The IPG US Bef-mkt Q1 2014 Earnings Release Q1 2014 -0.081
McDonald's Corp MCD US Bef-mkt Q1 2014 Earnings Release Q1 2014 1.238
Bank of New York Mellon Corp/The BK US 6:30 Q1 2014 Earnings Release Q1 2014 0.535
United Technologies Corp UTX US 6:59 Q1 2014 Earnings Release Q1 2014 1.273
Xerox Corp XRX US 7:15 Q1 2014 Earnings Release Q1 2014 0.238
Bank of New York Mellon Corp/The BK US 8:00 Q1 2014 Earnings Call Q1 2014  
Coca-Cola Enterprises Inc CCE US 8:00 Annual General Meeting Y 2014  
Illinois Tool Works Inc ITW US 8:00 Q1 2014 Earnings Release Q1 2014 0.978
Omnicom Group Inc OMC US 8:30 Q1 2014 Earnings Call Q1 2014  
Allegheny Technologies Inc ATI US 8:30 Q1 2014 Earnings Call Q1 2014  
Comcast Corp CMCSA US 8:30 Q1 2014 Earnings Call Q1 2014  
Interpublic Group of Cos Inc/The IPG US 8:30 Q1 2014 Earnings Call Q1 2014  
Pentair Ltd PNR US 9:00 Q1 2014 Earnings Call Q1 2014  
Travelers Cos Inc/The TRV US 9:00 Q1 2014 Earnings Call Q1 2014  
United Technologies Corp UTX US 9:00 Q1 2014 Earnings Call Q1 2014  
Harley-Davidson Inc HOG US 9:00 Q1 2014 Earnings Call Q1 2014  
SunTrust Banks Inc STI US 9:30 Annual General Meeting    
Citigroup Inc C US 10:00 Annual General Meeting Y 2014  
Xerox Corp XRX US 10:00 Q1 2014 Earnings Call Q1 2014  
Illinois Tool Works Inc ITW US 10:00 Q1 2014 Earnings Call Q1 2014  
CR Bard Inc BCR US Aft-mkt Q1 2014 Earnings Release Q1 2014 1.862
Yum! Brands Inc YUM US Aft-mkt Q1 2014 Earnings Release Q1 2014 0.837
AT&T Inc T US Aft-mkt Q1 2014 Earnings Release Q1 2014 0.698
Torchmark Corp TMK US Aft-mkt Q1 2014 Earnings Release Q1 2014 1.507
Nabors Industries Ltd NBR US Aft-mkt Q1 2014 Earnings Release Q1 2014 0.152
FMC Technologies Inc FTI US Aft-mkt Q1 2014 Earnings Release Q1 2014 0.5
Intuitive Surgical Inc ISRG US Aft-mkt Q1 2014 Earnings Release Q1 2014 2.7
Amgen Inc AMGN US Aft-mkt Q1 2014 Earnings Release Q1 2014 1.94
Juniper Networks Inc JNPR US Aft-mkt Q1 2014 Earnings Release Q1 2014 0.29
International Game Technology IGT US Aft-mkt Q2 2014 Earnings Release Q2 2014 0.189
Discover Financial Services DFS US Aft-mkt Q1 2014 Earnings Release Q1 2014 1.254
Noble Energy Inc NBL US   Annual General Meeting Y 2014  
American Electric Power Co Inc AEP US   Annual General Meeting    
Travelers Cos Inc/The TRV US   Q1 2014 Earnings Release Q1 2014 2.155
Comerica Inc CMA US   Annual General Meeting Y 2014  
PerkinElmer Inc PKI US   Annual General Meeting    
Actavis plc ACT US   FDA Adcomm, Moxduo (morphine/oxycodone fixed-ratio combo), acute pain    
VF Corp VFC US   Annual General Meeting    
Comcast Corp CMCSA US   Q1 2014 Earnings Release Q1 2014 0.644
Stryker Corp SYK US   Annual General Meeting
Click to enlarge
Stocks: LMT, CMCSA, HOG, TRV, CE, AGN, KORS, RCII, WERN, BKD, CRMQF, LLY, CSQPF, HXL, FB, NFLX, PNR, OMC, ATI, RF, PLD, GPC, SPG, IPG, MCD, BK, UTX, XRX, BCR, FTI, ISRG, AMGN, JNPR, IGT, DFS, NBL, AEP, CMA, PKI, AGN, VFC, SYK