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BARCHART MORNING CALL 6/11

|Includes:ALLE, AVNR, CAT, DKS, DWA, FEYE, HRB, KN, LNT, MDT, MRVL, N, PGR, RAI, REGI, RH, RadioShack Corporation (RSH), RYN, SBSA, SEAS, SYK, TAP, TGI, TK, UAL, ULTA, UNFI, UPS, ZNGA

BARCHART MORNING CALL

Wednesday, June 11th, 2014View Older Reports

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OVERNIGHT MARKETS AND NEWS

June E-mini S&Ps (ESM14 -0.47%) this morning are down -0.40% and European stocks are down -0.64% after the World Bank cut its global 2014 GDP forecast to 2.8% from a Jan estimate of 3.2%. Also undercutting European stocks was a 4% drop in Airbus after Emirates airlines canceled a deal for $16 billion of A350 planes, the biggest-ever order cancelation. In addition, Lufthansa tumbled 14% after it lowered its earnings forecasts for this year and next. Asian stocks closed mostly lower: Japan +0.50%, Hong Kong -0.25%, China -0.02%, Taiwan +0.08%, Australia -0.29%, Singapore -0.11%, South Korea -0.01%, India -0.43%. Commodity prices are mixed. July crude oil (CLN14 +0.16%) is up +0.15% after Saudi Oil Minister Ali al-Naimi, speaking before OPEC's meeting in Vienna today, said that crude supply, demand and prices are good. July gasoline (RBN14 +0.67%) is up +0.43%. Aug gold (GCQ14 +0.25%) is up +0.18% at a 2-week high. July copper (HGN14 -0.41%) is down -0.44%. Agriculture and livestock prices are mixed ahead of the Jun WASDE crop production report later today. The dollar index (DXY00 -0.16%) is down -0.04%. EUR/USD (^EURUSD) is down -0.10%. USD/JPY (^USDJPY) is down -0.30% at a 1-week low. Sep T-note prices (ZNU14 +0.06%) are down -1.5 ticks.

The World Bank cut its 2014 global growth forecast to 2.8% from a Jan estimate of 3.2%. It also lowered its U.S. 2014 GDP forecast to 2.1% from a Jan estimate of 2.8% and cut its China 2014 GDP estimate to 7.6% from 7.7% estimated in Jan.

UK May jobless claims fell -37,400, more than expectations of -25,000, and Apr was revised to show a -28,400 decrease, more than the originally reported -25,100. The May claimant count rate fell -0.1 to 3.2%, right on expectations and the lowest in 5-1/2 years.

The UK Apr unemployment rate fell -0.2 to 6.6% for the 3-months ended Apr, a bigger decline than expectations of -0.1 to 6.7% and the lowest in 4-1/3 years.

The UK Apr average weekly earnings 3-month avg was +0.7% y/y, less than expectations of +1.2% y/y and the smallest increase in 13 months. UK Apr average weekly earnings ex-bonus 3-month avg rose +0.9% y/y, less than expectations of +1.2% y/y and the smallest increase in 6 months.

The Japan Q2 BSI large all industry business conditions tumbled to -14.6 from 12.7 in Q1. The Q2 BSI large manufacturing business conditions fell to -13.9 from 12.5 in Q1. Both fell to 3-year lows.

Japan May domestic CGPI rose +0.3% m/m and +4.4% y/y, more than expectations of +0.1% m/m and +4.1% y/y, with the +4.4% y/y gain the largest annual increase in 5-1/2 years.

U.S. STOCK PREVIEW

The Treasury today will sell $21 billion of 10-year T-notes. There is one of the Russell 1000 companies that report earnings today: H&R Block (consensus $3.23). Equity conferences during the remainder of this week include: Morgan Stanley Financials Conference on Tue-Wed, Piper Jaffray Consumer Conference on Tue-Wed, Goldman Sachs Global Healthcare Conference on Tue-Thu, William Blair Growth Stock Conference on Tue-Thu, Credit Suisse Future of Payments & Commerce Conference on Wed, Goldman Sachs North American Energy Summit on Wed, Mexico Capital Projects & Infrastructure Summit on Wed, 2nd Annual Mexico Capital Projects & Infrastructure Summit on Wed-Thu, Morgan Stanley Leveraged Finance Conference on Wed-Thu, Drexel Hamilton Aerospace and Defense Conference on Thu, and Robert W. Baird & Co. Inc. Utility & Infrastructure Symposium on Thu.

OVERNIGHT U.S. STOCK MOVERS

B. Riley kept its 'Sell' rating on Radio Shack (RSH -10.39%) and cut its price target on the stock to $0, saying a turnaround at RadioShack is unlikely given its balance sheet and limited cost cutting opportunities.

Stryker (SYK -0.47%) was upgraded to 'Buy' from 'Hold' at Argus.

Marvell (MRVL -0.07%) was upgraded to 'Buy' from 'Neutral' at Nomura.

Reynolds American (RAI -0.29%) was upgraded to 'Buy' from 'Neutral' at BofA/Merrill with a price target of $65.

Molson Coors (TAP +5.36%) was upgraded to 'Buy' from 'Underperform' at BofA/Merrill with a price target of $80.

Tiger Global Investments reported an 8% passive stake in Restoration Hardware (RH -0.94%) .

Covidien (COV -0.21%) announced U.S. FDA approval of its Apollo Onyx delivery micro catheter; the first detachable tip micro catheter available in the U.S.

Third Avenue reported a 16.36% passive stake in Spanish Broadcasting (SBSA +1.71%) .

Baker Bros. Advisors reported a 10.8% passive stake in Avanir (AVNR +2.43%) .

Sooner Holdings reported a 8.3% passive stake in Renewable Energy (REGI -0.38%) .

Ulta Salon (ULTA -0.12%) rose over 5% in after-hours trading after it reported Q1 EPS of 77 cents, better than consensus of 74 cents.

United Natural Foods (UNFI -0.85%) reported Q3 EPS of 73 cents, right on consensus.

MARKET COMMENTS

June E-mini S&Ps (ESM14 -0.47%) this morning are down -7.75 points (-0.40%). The S&P 500 index on Tuesday settled mixed as profit-taking set in after the S&P 500 rose +7.8% in the past 2 months up to Monday's all-time high. Losses in stocks were contained on optimism that Chinese economic growth can be sustained after the PBOC announced a -0.5 point cut in reserve requirements for some banks in a policy move aimed at supporting smaller companies and agriculture. Closes: S&P 500 -0.02%, Dow Jones +0.02%, Nasdaq +0.13%.

Sep 10-year T-notes (ZNU14 +0.06%) this morning are down -1.5 ticks. Sep 10-year T-note futures prices on Tuesday dropped to a 4-week low and closed lower. Bearish factors for T-notes included (1) supply pressures as the Treasury auctions $62 billion of T-notes this week, and (2) reduced safe-haven demand after stocks erased early losses and settled little changed. Closes: TYU4 -5.50, FVU4 -3.75.

The dollar index (DXY00 -0.16%) this morning is down -0.030 (-0.04%). EUR/USD (^EURUSD) is down -0.0014 (-0.10%). USD/JPY (^USDJPY) is down -0.31 (-0.30%). The dollar index on Tuesday closed higher. Supportive factors included (1) early weakness in stocks which boosted the safe-haven demand for the dollar, and (2) speculation that divergent monetary policies among global central banks will boost the dollar's interest rate differentials versus the euro and yen as the Fed continues to taper QE3 while the BOJ and ECB expand their monetary stimulus measures. Closes: Dollar Index +0.167 (+0.21%), EUR/USD -0.00462 (-0.34%), USD/JPY -0.176 (-0.17%).

July WTI crude oil (CLN14 +0.16%) this morning is up +16 cents (+0.15%). July gasoline (RBN14 +0.67%) is up +0.0127 (+0.43%). July crude and gasoline prices on Tuesday closed lower. July crude posted a 3-1/4 month high on expectations that Wednesday's weekly EIA inventory data will show crude stockpiles fell -1.5 million bbl. Prices fell back, however, and closed lower on bearish factors that included (1) a stronger dollar, and (2) reduced geopolitical concerns on the prospects for a cease-fire to be implemented in eastern Ukraine as peace talks continue between Russia and Ukraine. Closes: CLN4 -0.06 (-0.06%) RBN4 -0.0103 (-0.35%).

GLOBAL EVENT CALENDAR06/11/2014

US 0700 ET Weekly MBA mortgage applications, previous -3.1% with purchase sub-index -3.6% and refi sub-index -2.9%.
  1030 ET EIA Weekly Petroleum Status Report.
  1200 ET Jun WASDE crop production report.
  1300 ET Treasury auctions $21 billion 10-year T-notes.
  1400 ET May monthly budget statement expected -$142.500 billion, Apr +$106.853 billion.
UK 0430 ET UK May jobless claims change expected -25,000, Apr -25,100. May claimant count rate expected -0.1 to 3.2%.
  0430 ET UK Apr avg weekly earnings expected +1.2% 3-mo avg y/y, Mar +1.7% 3-mo avg y/y. Apr weekly earnings ex-bonus expected +1.2% 3-mo avg y/y, Mar +1.3% 3-mo avg y/y.
  0430 ET UK Apr ILO unemployment rate expected -0.1 to 6.7% 3-months through Apr.
  1901 ET UK May RICS house price balance expected 52%, Apr 54%.
JPN 1950 ET Japan Apr machine orders expected -10.8% m/m and +13.3% y/y, Mar +19.1% m/m and +16.1% y/y.

U.S. STOCK CALENDAR06/11/2014

Company Name Ticker Time Event Description Period Estimate
H&R Block Inc HRB US Bef-mkt Q4 2014 Earnings Release Q4 2014 3.233
Rayonier Inc RYN US 7:00 Business Update Call    
H&R Block Inc HRB US 8:30 Q4 2014 Earnings Call Q4 2014  
Caterpillar Inc CAT US 9:00 Annual General Meeting Y 2014  
Triumph Group Inc TGI US 9:00 Investor Day Y 2014  
Allegion PLC ALLE US 9:30 Annual General Meeting    
Teekay Corp TK US 11:00 Annual General Meeting Y 2013  
SeaWorld Entertainment Inc SEAS US 11:00 Annual General Meeting    
Knowles Corp KN US 11:00 Management Conference Call    
NetSuite Inc N US 11:30 Annual General Meeting Y 2014  
FireEye Inc FEYE US 13:00 Annual General Meeting    
Dick's Sporting Goods Inc DKS US 13:30 Annual General Meeting Y 2014  
Target Corp TGT US 14:30 Annual General Meeting Y 2014  
Progressive Corp/The PGR US   May 2014 Sales and Revenue Release 2014  
Alliant Energy Corp LNT US   Roadshow-Day 2 Y 2014  
United Parcel Service Inc UPS US   Roadshow - Geneva Y 2014  
DreamWorks Animation SKG Inc DWA US   Annual General Meeting    
United Continental Holdings Inc UAL US   Annual General Meeting    
Zynga Inc ZNGA US   Annual General Meeting  
Stocks: RSH, SYK, MRVL, RAI, TAP, RH, MDT, SBSA, AVNR, REGI, ULTA, UNFI, HRB, RYN, CAT, TGI, ALLE, TK, SEAS, KN, N, FEYE, DKS, PGR, LNT, UPS, DWA, UAL, ZNGA