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Jim Van Meerten
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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. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and attended... More
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  • BARCHART MORNING CALL 7/1 0 comments
    Jul 1, 2014 9:13 AM | about stocks: NFLX, GS, MS, HBI, URBN, SYMC, MLM, BA, NOC, BNPQY, EXPE, PCLN, TE, AYI, F, HRL, PAYX, MRVL

    BARCHART MORNING CALL

    Tuesday, July 1st, 2014

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    OVERNIGHT MARKETS AND NEWS

    September E-mini S&Ps (ESU14 +0.22%) this morning are up +0.20% and European stocks are up +0.63%% after Chinese manufacturing activity expanded last month at the fastest pace in 6 months, which may help sustain global economic growth. The Russian Micex Stock Index and the ruble fell after Ukraine refused to extend the cease-fire as Ukrainian President Poroshenko vowed to retake the country's eastern most regions taken over by pro-Russian rebels. Gains in European stocks were tempered after a gauge of Eurozone manufacturing activity was revised down to the slowest pace in 7 months. Asian stocks closed mixed: Japan +1.08%, Hong Kong closed for holiday, China -0.03%, Taiwan +0.52%, Australia -0.37%, Singapore -0.40%, South Korea -0.31%, India +0.40%. Commodity prices are mixed. Aug crude oil (CLQ14 +0.30%) is up +0.34%. Aug gasoline (RBQ14 +0.13%) is up +0.05%. Aug gold (GCQ14 +0.36%) is up +0.33% at a 3-1/4 month high on increased safe-haven demand after the truce in Ukraine ended and fighting between government forces and separatists intensified. Sep copper (HGU14 -0.25%) is down -0.14%. Agriculture and livestock prices are mixed with grain prices lower on negative carry-over from Monday's bearish USDA planting intentions report. The dollar index (DXY00 +0.06%) is up +0.07%. EUR/USD (^EURUSD) is down -0.01%. USD/JPY (^USDJPY) is up +0.22%. GBP/USD jumped +0.20% to a 5-1/2 year high after UK manufacturing growth unexpectedly accelerated last month to the fastest pace in 7 months. Sep T-note prices (ZNU14 -0.21%) are down -8 ticks.

    The China Jun manufacturing PMI rose +0.2 to 51.0, right on expectations and the fastest pace of expansion in 6 months.

    The Japan Q2 Tankan large manufacturing business conditions fell to 12 from 17 in Q1, weaker than expectations of a decline to 15. The Q2 Tankan large non-manufacturing business conditions fell to 19 from 24 in Q1, right on expectations.

    German Jun unemployment unexpectedly rose for a second month as it climbed +9,000, worse than expectations of a -10,000 decline. The Jun unemployment rate remained unchanged at 6.7%, right on expectations.

    The German Jun Markit/BME manufacturing PMI was revised down to 52.0 from the originally reported 52.4, the slowest pace of expansion in 8 months.

    The Eurozone Jun Markit manufacturing PMI was revised down to 51.8 from the originally reported 51.9, the slowest pace of expansion in 7 months.

    The Eurozone May unemployment rate was unchanged from Apr that was revised lower to a 1-1/2 year low of 11.6% from 11.7%.

    The UK Jun Markit PMI manufacturing unexpectedly rose +0.5 to 57.5, better than expectations of -0.2 to 56.8 and the fastest pace of expansion in 7 months.

    U.S. STOCK PREVIEW

    Today's June ISM manufacturing index is expected to show a +0.4 point increase to 55.8, adding to May's +0.5 point increase to 55.4. Today's June total vehicle sales report is expected to fall back to 16.3 million units after posting a 7-1/3 year high of 16.70 million in May. There are two of the Russell 1000 companies report earnings today: Acuity Brands (consensus $1.12), Paychex (0.40). There are no equity conferences this week.

    OVERNIGHT U.S. STOCK MOVERS

    Goldman Sachs upgraded Netflix (NFLX -0.33%) to 'Buy' from 'Neutral' and raised their price target on the stock to $590 from $380.

    BofA/Merrill lowered Goldman Sach's (GS +0.40%) Q2 EPS estimate to $3.00 from $3.44, vs. consensus of $3.16 and Morgan Stanley's (MS +2.47%) Q2 EPS estimate to 54 cents from 63 cents, vs. consensus of 58 cents to reflect lower trading revenues and mixed capital markets activity.

    FBR Capital reiterated its 'Outperform' rating on Hanesbrands (HBI +0.19%) and raised their price target on the stock to $111 following the company's acquisition of DBApparel.

    Urban Outfitters (URBN +0.36%) was downgraded to 'Neutral' from 'Outperform' at Wedbush.

    Symantec (SYMC +0.57%) was downgraded to 'Market Perform' from 'Outperform' at BMO Capital.

    Martin Marietta (MLM -0.14%) will replace U.S. Steel (X +0.08%) in the S&P 500 as of the close of trading today.

    Boeing (BA -1.02%) was awarded a $1.94 billion fixed-price-incentive-fee government contract for the full rate production of 11 Lot 38 F/A-18E aircraft for the U.S. Navy and 33 EA-18G aircraft for the U.S. Navy and the government of Australia.

    Northrop Grumman (NOC -0.86%) was awarded a $3.64 billion government contract modification for the procurement of 25 full rate production E-2D Advanced Hawkeye aircraft.

    Bloomberg reports that BNP Paribas (BNPQY +0.40%) agreed to plead guilty to processing transactions involving Sudan, Iran and Cuba and will pay $8.8 billion in fines.

    Expedia (EXPE -0.24%) was initiated with an 'Outperform' at Oppenheimer with a price target of $90.

    Goldman Sachs (GS +0.40%) was downgraded to 'Market Perform' from 'Outperform' at Bernstein.

    Priceline (PCLN -0.20%) was initiated with an 'Outperform' at Oppenheimer with a price target of $1450.

    TECO Energy (TE +0.76%) filed to sell 15.5 million shares of common stock.

    MARKET COMMENTS

    Sep E-mini S&Ps (ESU14 +0.22%) this morning are up +4.00 points (+0.20%). The S&P 500 index on Monday closed little changed. A bullish factor for the S&P 500 was a rally in homebuilding stocks after U.S. May pending home sales rose +6.1% m/m, much stronger than market expectations of +1.5% m/m and the largest monthly increase in 4 years. Bearish factors included (1) the -2.9 point decline in the Jun Chicago PMI to 62.6, a larger decline than expectations of -2.5 to 63.0, and (2) the prediction from UBS that with the end of the quarter on Monday, fund managers may sell up to $20 billion in stocks as fund manages sell equities and buy bonds to rebalance their portfolios. Closes: S&P 500 -0.04%, Dow Jones -0.15%, Nasdaq +0.13%.

    Sep 10-year T-notes (ZNU14 -0.21%) this morning are down -8 ticks. Sep 10-year T-note futures prices on Monday closed little changed. A bullish factor for T-notes was the larger-than-expected decline in the Jun Chicago PMI. Limiting strength was the larger-than-expected +6.1% m/m increase in May pending home sales, the biggest jump in 4 years. Closes: TYU4 +2.50, FVU4 +2.25.

    The dollar index (DXY00 +0.06%) this morning is up +0.055 (+0.07%). EUR/USD (^EURUSD) is down -0.0001 (-0.01%). USD/JPY (^USDJPY) is up +0.22 (+0.22%). The dollar index on Monday fell to a 1-1/2 month low and closed lower. Bearish factors included (1) strength in EUR/USD which climbed to a 5-week high after Eurozone Jun core CPI rose more than expected, which reduces the chances of further ECB monetary stimulus, and (2) strength in the yen as USD/JPY fell to a 5-week low amid speculation the BOJ will refrain from boosting monetary stimulus after Friday's Japanese inflation data rose and Japan's unemployment rate unexpectedly fell to the lowest in over 16 yrs. Closes: Dollar index -0.264 (-0.33%), EUR/USD +0.0045 (+0.33%). USD/JPY -0.054 (-0.05%).

    Aug WTI crude oil (CLQ14 +0.30%) this morning is up +36 cents (+0.34%). Aug gasoline (RBQ14 +0.13%) is up +0.0015 (+0.05%). Aug crude and gasoline prices on Monday closed lower with Aug crude at a 2-week low and Aug gasoline at a 1-1/2 week low. Bearish factors included (1) increased OPEC output as Bloomberg data showed that OPEC Jun crude production rose +278,000 bpd to 30.223 million bpd, a 4-month high, and (2) reduced concern that sectarian violence in Iraq will spread to the southern part of the country where three-quarters of the country's oil production is located. Closes: CLQ4 -0.37 (-0.35%) RBQ4 -0.0309 (-1.01%).

    GLOBAL EVENT CALENDAR07/01/2014

    US0945 ETRevised Jun Markit manufacturing PMI expected unch at 57.5, prelim-Jun +1.1 to 57.5.
     1000 ETJun ISM manufacturing index expected +0.5 to 55.9, May +0.5 to 55.4. Jun ISM employment, May -1.9 to 52.8. Jun ISM new orders, May +1.8 to 56.9. Jun ISM prices paid expected unch at 60.0, May +3.5 to 60.0.
     1000 ETMay construction spending expected +0.5% m/m, Apr +0.2% m/m.
     n/aJun total vehicle sales expected 16.38 million, May 16.70 million. Jun domestic vehicle sales expected 13.00 million, May 13.11 million.
    JPN0100 ETJapan Jun vehicle sales, May -5.6% y/y.
    GER0355 ETGerman Jun unemployment change expected -10,000, May +24,000. Jun unemployment rate expected unch at 6.7%.
     0355 ETRevised German Jun Markit/BME manufacturing PMI, previous 52.4.
    EUR0400 ETRevised Eurozone Jun Markit manufacturing PMI, previous 51.9.
     0500 ETEurozone May unemployment rate expected unch at 11.7%.
    UK0430 ETUK Jun Markit PMI manufacturing expected -0.5 to 56.5, May 57.0.

    U.S. STOCK CALENDAR07/01/2014

    Company NameTickerTimeEvent DescriptionPeriodEstimate
    Acuity Brands IncAYI USBef-mktQ3 2014 Earnings ReleaseQ3 20141.124
    Ford Motor CoF US9:30June 2014 Sales and Revenue Release2014 
    Hormel Foods CorpHRL US9:30Acquisition of CytoSport Holdings, Inc by Hormel Foods Corporation Call  
    Ford Motor CoF US10:00June 2014 Sales and Revenue Call2014 
    Acuity Brands IncAYI US10:00Q3 2014 Earnings CallQ3 2014 
    Paychex IncPAYX USAft-mktQ4 2014 Earnings ReleaseQ4 20140.395
    Marvell Technology Group LtdMRVL US19:00Annual General MeetingY 2014

    Stocks: NFLX, GS, MS, HBI, URBN, SYMC, MLM, BA, NOC, BNPQY, EXPE, PCLN, TE, AYI, F, HRL, PAYX, MRVL
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