Wednesday, June 4th, 2014
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OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM14 -0.17%) this morning are down -0.13% ahead of the May ADP employment change later this morning and European stocks are down -0.25% at a 1-week low after the Eurozone May composite PMI was revised lower, a sign of weaker economic growth. European stocks also fell back on profit taking ahead of Thursday's ECB meeting where the ECB is expected to boost stimulus measures to spur economic growth and combat deflation risks. Asian stocks closed mostly lower: Japan +0.22%, Hong Kong -0.60%, China -1.01%, Taiwan -0.04%, Australia -0.64%, Singapore -0.50%, South Korea closed for holiday, India -0.21%. Japanese stocks bucked the trend and closed higher, led by gains in exporters, after the yen fell to a 1-month low against the dollar, which boosts the earnings prospects of exporters. China's Shanghai Stock Index fell to a 2-week low on concern that government measures to revive China's property market may come up short. Commodity prices are mixed. July crude oil (CLN14 +0.75%) is up +0.61% ahead of the weekly EIA inventory data later today. July gasoline (RBN14 +0.12%) is up +0.09%. Aug gold (GCQ14 +0.10%) is up +0.04%. July copper (HGN14 -1.42%) is down -1.37% at a 3-week low. Agriculture and livestock prices are mostly higher. The dollar index (DXY00 unch) is up +0.04%. EUR/USD (^EURUSD) is down -0.07%. USD/JPY (^USDJPY) is up +0.14% at a 1-month high. Sep T-note prices (ZNU14 -0.04%) are down -0.5 of a tick.
Eurozone Apr PPI fell -0.1% m/m and -1.2% y/y, right on expectations. Eurozone producer prices have now fallen for 9 straight months on a year-over-year basis.
The Eurozone May Markit composite PMI was revised lower to 53.5 from the originally reported 53.9.
Eurozone Q1 GDP was left unrevised at +0.2% q/q and +0.9% y/y.
The German May Markit/BME composite PMI was revised lower to 55.6 from the originally reported 56.1.
The UK May BRC shop price index fell -1.4% y/y, a larger decline than expectations of -1.3% y/y.
U.S. STOCK PREVIEW
Today's May ADP employment report is expected to show a solid increase of +210,000, down slightly from +220,000 in April. Today's April U.S. trade deficit is expected to widen slightly to -$40.8 billion from -$40.4 billion in March. Today's May ISM non-manufacturing index is expected to show a small increase of +0.3 points to 55.5, adding to the +2.1 point increase to 55.2 seen in April. There are 4 of the Russell 1000 companies that report earnings today: Brown-Forman (consensus $0.58), Leidos Holdings (0.54), PVH (1.49), Greif (0.61).
Equity conferences this week include: Jefferies Global Health Care Conference on Mon-Thu, National Association of Real Estate Investment Trusts REITWeek Investor Forum on Tue-Thu, Bank of America Merrill Lynch Global Technology Conference on Tue-Wed, Stephens Spring Conference on Tue-Wed, Bank of America Merrill Lynch Energy and Power Leveraged Finance Conference on Tue-Wed, Goldman Sachs Dotcommerce Conference on Wed, KBW Asset Management Conference on Wed, Sandler O'Neill Global Exchange & Brokerage Conference on Wed,
Deutsche Bank Global Industrials and Basic Materials Conference on Wed-Thu, Credit Suisse Engineering & Construction Conference on Thu, UBS Aerospace & Defense Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Barclays (BCS -0.79%) was downgraded to 'Neutral' from 'Overweight' at HSBC.
Broadcom (BRCM +2.99%) was downgraded to 'Hold' from 'Buy' at Standpoint Research.
Coach (COH -0.20%) was downgraded to 'Neutral' from 'Buy' at Sterne Agee.
Credit Suisse (CS -0.74%) was upgraded to 'Conviction Buy' from 'Neutral' at Goldman Sachs.
Deutsche Bank (DB -0.22%) was upgraded to 'Neutral' from 'Sell' at Goldman Sachs.
Under Armour (UA -0.72%) gained 1.4% in pre-market trading after the stock was upgraded to 'Buy' from 'Hold' at Jeffries.
Northrop Grumman (NOC -0.39%) was awarded a $9.9 billion government contract for B-2 modernization and sustainment.
ABM Industries (ABM -1.79%) reported Q4 adjusted EPS of 33 cents, well below consensus of 40 cents.
Ascena Retail (ASNA -0.79%) reported Q3 adjusted EPS of 27 cents, well ahead of consensus of 19 cents.
Mattress Firm (MFRM -0.74%) reported Q1 adjusted EPS of 31 cents, below consensus of 36 cents.
June E-mini S&Ps (ESM14 -0.17%) this morning are down -2.50 points (-0.13%). The S&P 500 index on Tuesday fell back from Monday's record high on long liquidation pressures and closed slightly lower. Bullish factors included (1) the +0.7% increase in U.S. Apr factory orders, better than expectations of +0.5%, and (2) expectations for the ECB to expand its stimulus measures when it meets Thursday, which may help facilitate global economic growth. Closes: S&P 500 -0.04%, Dow Jones -0.13%, Nasdaq -0.08%.
Sep 10-year T-notes (ZNU14 -0.04%) this morning are down -0.5 of a tick. Sep 10-year T-note futures prices on Tuesday slipped to a 2-1/2 week low and closed lower. Bearish factors included (1) the larger-than-expected increase in U.S. Apr factory orders along with the upward revision to Mar, and (2) carry-over weakness from a drop in European bond markets which fell back on long liquidation ahead of Thursday's ECB meeting. Closes: TYU4 -15.00, FVU4 -6.00.
The dollar index (DXY00 unch) this morning is up +0.030 (+0.04%). EUR/USD (^EURUSD) is down -0.0009 (-0.07%). USD/JPY (^USDJPY) is up +0.14 (+0.14%) at a 1-month high. The dollar index on Tuesday closed lower. EUR/USD gained after the Eurozone Apr unemployment rate unexpectedly fell -0.1 to a 17-month low of 11.7%. Losses in the dollar were limited after the yen weakened as USD/JPY climbed to a 1-month high on speculation that Japan's Government Pension Investment Fund (GPIF), Japan's biggest, will diversify more of its assets into foreign investments from yen-denominated investments. Closes: Dollar Index -0.090 (-0.11%), EUR/USD +0.00309 (+0.23%), USD/JPY +0.128 (+0.13%).
July WTI crude oil (CLN14 +0.75%) this morning is up +63 cents (+0.61%). July gasoline (RBN14 +0.12%) is up +0.0027 (+0.09%). July crude and gasoline prices on Tuesday settled mixed. Crude prices rallied after U.S. Apr factory orders rose more than expected, a sign of strength in energy demand and consumption. July gasoline fell to a 2-week low and closed lower on expectations for U.S. gasoline production to ramp up now that seasonal refinery maintenance has ended. Closes: CLN4 +0.19 (+0.19%) RBN4 -0.0012 (-0.04%).
GLOBAL EVENT CALENDAR06/04/2014
|US||0700 ET||Weekly MBA mortgage applications, previous -1.2% with purchase sub-index -1.1% and the refi sub-index 1.4%.|
|0815 ET||May ADP employment change expected +210,000, Apr +220,000.|
|0830 ET||Apr trade balance expected -$40.8 billion, Mar -$40.4 billion.|
|0830 ET||Revised Q1 non-farm productivity expected -3.0%, previous -1.7%. Revised Q1 unit labor costs expected +5.3%, previous +4.2%.|
|1000 ET||May ISM non-manufacturing index expected +0.3 to 55.5, Apr +2.1 to 55.2.|
|1030 ET||EIA Weekly Petroleum Status Report.|
|1400 ET||Fed Beige Book.|
|EUR||0400 ET||Revised Eurozone May composite PMI, previous 53.9.|
|0500 ET||Eurozone Apr PPI expected -0.1% m/m and -1.2% y/y, Mar -0.2% m/m and -1.6% y/y.|
|0500 ET||Revised Eurozone Q1 GDP, previous +0.2% q/q and +0.9% y/y.|
U.S. STOCK CALENDAR06/04/2014
|Company Name||Ticker||Time||Event Description||Period||Estimate|
|Leidos Holdings Inc||LDOS US||6:00||Q1 2015 Earnings Release||Q1 2015||0.537|
|Fastenal Co||FAST US||7:00||May 2014 Sales and Revenue Release||2014|
|Brown-Forman Corp||BF/B US||8:00||Q4 2014 Earnings Release||Q4 2014||0.582|
|Leidos Holdings Inc||LDOS US||8:00||Q1 2015 Earnings Call||Q1 2015|
|Prudential Financial Inc||PRU US||8:30||Analyst & Investor Meeting||Y 2014|
|Compass Minerals International Inc||CMP US||8:30||Investor Day||Y 2014|
|Cobalt International Energy Inc||CIE US||8:30||Analyst Day||Y 2014|
|American Airlines Group Inc||AAL US||9:00||Annual General Meeting||Y 2014|
|SCANA Corp||SCG US||9:00||Analyst Day||Y 2014|
|Devon Energy Corp||DVN US||9:00||Annual General Meeting||Y 2014|
|Science Applications International Corp||SAIC US||9:00||Annual General Meeting||Y 2014|
|Brown-Forman Corp||BF/B US||10:00||Q4 2014 Earnings Call||Q4 2014|
|Trimble Navigation Ltd||TRMB US||10:00||Analyst Day||Y 2014|
|New York Community Bancorp Inc||NYCB US||10:00||Annual General Meeting||Y 2014|
|HomeAway Inc||AWAY US||10:00||Annual General Meeting||Y 2014|
|Pandora Media Inc||P US||10:30||Annual General Meeting||Y 2014|
|PVH Corp||PVH US||Aft-mkt||Q1 2015 Earnings Release||Q1 2015||1.488|
|Greif Inc||GEF US||Aft-mkt||Q2 2014 Earnings Release||Q2 2014||0.61|
|Bank of America Corp||BAC US||2014 Global Energy and Power Leveraged Finance Conference|
|Walgreen Co||WAG US||May 2014 Sales and Revenue Release||2014|
|AutoNation Inc||AN US||May 2014 Sales and Revenue Release||2014|
|Ingram Micro Inc||IM US||Annual General Meeting|
|BioMarin Pharmaceutical Inc||BMRN US||Annual General Meeting|
|SolarCity Corp||SCTY US||Annual General Meeting|
|CST Brands Inc||CST US||Annual General Meeting|