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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 6/3 0 comments
    Jun 4, 2014 10:39 AM | about stocks: BCS, AVGO, NRG, COH, CS, DB, UA, NOC, ABM, ASNA, MFRM, LDOS, FAST, BF.B, PRU, CMP, CIE, AAL, SCG, RDVWF, SAIC, TRMB, NYCB, AWAY, P, PVH, GEF, BAC, WBA, ANIMF, B, RWT, SCTY, CST

    BARCHART MORNING CALL

    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.

    The WSJ reports that NRG Energy (NRG +1.21%) is close to buying Alta Wind Energy Center (EIX +0.97%) , the largest wind farm in North America, for $800 million.

    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.

    MARKET COMMENTS

    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
    Stocks: BCS, AVGO, NRG, COH, CS, DB, UA, NOC, ABM, ASNA, MFRM, LDOS, FAST, BF.B, PRU, CMP, CIE, AAL, SCG, RDVWF, SAIC, TRMB, NYCB, AWAY, P, PVH, GEF, BAC, WBA, ANIMF, B, RWT, SCTY, CST
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