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/BARCHART MORNING CALL

|Includes:AN, BMY, BZH, CBOE, EVAR, GBX, GHC, GM, HOG, HRL, Oracle Corporation (ORCL), P, PAYX, RCAP, SHLM, STZ, TLRD

BARCHART MORNING CALL

Wednesday, July 2nd, 2014

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OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14 +0.09%) this morning are up +0.03% and European stocks are up +0.02% amid growing confidence in the global economic recovery. Asian stocks closed higher with Japan's Nikkei Stock Index at a 5-1/4 month high and China's Shanghai Stock Index at a 2-week high on carry-over support from Tuesday's rally in the S&P 500 to an all-time high: Japan +0.29%, Hong Kong +1.55%, China +0.29%, Taiwan +0.46%, Australia +1.48%, Singapore +0.66%, South Korea +0.89%, India +1.27%. Commodity prices are mixed. Aug crude oil (CLQ14 -0.23%) is down -0.32%. Aug gasoline (RBQ14 -0.29%) is down -0.41% at a 2-week low on speculation that Tropical Storm Arthur will curb gasoline demand on the U.S. East coast over the Fourth of July holiday. Aug gold (GCQ14 +0.09%) is up +0.12%. Sep copper (HGU14 +0.03%) is up +0.03%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.05%) is up +0.04%. EUR/USD (^EURUSD) is down -0.11%. USD/JPY (^USDJPY) is down -0.07%. GBP/USD is up +0.07% at a 5-1/2 year high on speculation the BOE may soon start raising interest rates after UK house prices rose more than expected last month and after UK construction growth accelerated in Jun. Sep T-note prices (ZNU14 +0.03%) are up +1 tick.

The Eurozone May PPI unexpectedly fell -0.1% m/m, weaker than expectations of unch m/m and the fifth consecutive month of declines. On an annual basis, May PPI fell -1.0% y/y, right on expectations and the tenth straight month prices have fallen year-over-year.

The UK Jun Markit/CIPS construction PMI unexpectedly rose +2.6 to 62.6, higher than expectations of -0.2 to 59.8 and the fastest pace of expansion in 5 months.

UK Jun nationwide house prices rose +1.0% m/m and +11.8% y/y, higher than expectations of +0.5% m/m and +11.2% y/y with the +11.8% y/y gain the largest annual increase in 9-1/3 years.

U.S. STOCK PREVIEW

Today's June ADP employment report is expected to show a solid rise of +205,000, strengthening from May's report of +179,000. Today's May factory orders report is expected to show a decline of -0.3% following the April increase of +0.7%. There is one Russell 1000 company that reports earnings today: Constellation Brands (consensus $0.93). There are no equity conferences this week.

OVERNIGHT U.S. STOCK MOVERS

Oracle (ORCL +0.59%) was upgraded to 'Overweight' from 'Neutral' at Atlantic Equities.

Credit Suisse downgraded Hormel Foods (HRL -0.32%) to 'Neutral' from 'Outperform' citing valuation.

Men's Wearhouse (MW +0.99%) was upgraded to 'Buy' from 'Hold' at Stifel.

Beazer Homes (BZH +1.10%) was downgraded to 'Neutral' from 'Buy' at Sterne Agee.

Greenbrier (GBX +0.19%) reported Q3 EPS of $1.03, well above consensus of 74 cents, and then raised guidance on fiscal 2014 EPS ex-items to $2.98-$3.08, above consensus of $2.61.

Barclays downgraded the U.S. Major Pharmaceuticals sector to 'Neutral' from 'Positive' citing valuations.

Bristol-Myers (BMY -0.80%) was downgraded to 'Equal Weight' from 'Overweight' at Barclays.

Harley-Davidson (HOG +0.69%) fell 1% in pre-market trading after Ramond James lowered its recommendation on the stock to 'Market Perform' from 'Strong Buy.'

Bank of America (BAC +1.50%) rose 1% in pre-market trading after Deutsche Bank upgraded its recommendation on the stock to 'Buy' from 'Hold.'

Luxor Capital reported a 9.9% stake in RCS Capital (RCAP +4.57%) .

Pandora (P +0.34%) slipped over 1% in after-hours traqding after Google acquireed music streaming service Songza.

CBOE Holdings (CBOE -0.47%) reported June trading volume totaled 100.18 million contracts with average daily volume of 4.77 million contracts, up +3% m/m but down -11% y/y.

Aisling Capital reported a 5.5% passive stake in Lombard Medical (EVAR -0.97%) .

Berkshire Hathaway lowered its stake in Graham Holdings (GHC +0.58%) to 1.72% from 27.7%.

A. Schulman (SHLM +2.14%) reported Q3 adjusted EPS of 74 cents, better than consensus of 66 cents, and then raised guidance on fiscal 2014 adjusted EPS view to $2.31-$2.36, higher than consensus of $2.27.

Paychex (PAYX +1.37%) reported Q4 EPS of 40 cents, right on consensus, although Q4 revenue of $617.2 million was slightly below consensus of $617.35 million.

MARKET COMMENTS

Sep E-mini S&Ps (ESU14 +0.09%) this morning are up +0.50 of a point (+0.03%). The S&P 500 index on Tuesday climbed to new record high and closed higher. Bullish factors included (1) optimism the global economic recovery will continue after the China Jun manufacturing PMI rose +0.2 to 51.0, the fastest pace of expansion in 6 months, and (2) the +2.0 point increase in the new orders sub-index of the Jun ISM manufacturing index to a 6-month high of 58.9, a sign that future manufacturing activity will continue to expand. Closes: S&P 500 +0.67%, Dow Jones +0.77%, Nasdaq +1.17%.

Sep 10-year T-notes (ZNU14 +0.03%) this morning are up +1 tick. Sep 10-year T-note futures prices on Tuesday closed lower. Bearish factors included (1) reduced safe-haven demand for T-notes after the S&P 500 rallied to a new record high, and (2) the increase in the China Jun manufacturing PMI to a 6-month high, which supported confidence in the global economic outlook and may allow the Fed to start raising interest rates sooner than expected. Closes: TYU4 -9.50, FVU4 -5.00.

The dollar index (DXY00 +0.05%) this morning is up +0.035 (+0.04%). EUR/USD (^EURUSD) is down -0.0015 (-0.11%). USD/JPY (^USDJPY) is down -0.07 (-0.07%). The dollar index on Tuesday recovered from a 1-1/2 month low and closed higher. Bullish factors included (1) weakness in EUR/USD which fell back from a 5-week high after the Eurozone Jun Markit manufacturing PMI was revised down to a 7-month low, and (2) weakness in the yen after the Japan Q2 Tankan business conditions fell more than expected, which fueled speculation the BOJ will ease monetary policy further. Closes: Dollar index +0.040 (+0.05%), EUR/USD -0.00129 (-0.09%). USD/JPY +0.199 (+0.20%).

Aug WTI crude oil (CLQ14 -0.23%) this morning is down -34 cents (-0.32%). Aug gasoline (RBQ14 -0.29%) is down -0.0123 (-0.41%) at a new 2-week low. Aug crude and gasoline prices on Tuesday closed lower with Aug gasoline at a 2-week low. Bearish factors included (1) a stronger dollar, 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. Losses were limited on expectations that Wednesday's weekly EIA inventory data will show crude supplies fell -2.4 million bbl. Closes: CLQ4 -0.03 (-0.03%) RBQ4 -0.0080 (-0.26%).

GLOBAL EVENT CALENDAR07/02/2014

US 0700 ET Weekly MBA mortgage applications, previous -1.0% with purchase sub-index -1.2% and refi sub-index -0.9%.
  0730 ET Jun Challenger job cuts, May +45.5% y/y.
  0815 ET Jun ADP employment change expected +205,000, May +179,000.
  0945 ET Jun ISM New York, May 55.3.
  1000 ET May factory orders expected -0.3%, Apr +0.7%.
  1100 ET Fed Chair Janet Yellen delivers a lecture at the IMF in Washington D.C.
  1030 ET EIA Weekly Petroleum Status Report.
UK 0200 ET UK Jun nationwide house prices expected +0.5% m/m and +11.2% y/y, May +0.7% m/m and +11.1% y/y.
  0430 ET UK Jun Markit/CIPS construction PMI expected -0.2 to 59.8, May 60.0.
EUR 0500 ET Eurozone May PPI expected unch m/m and -1.0% y/y, Apr -0.1% m/m and -1.2% y/y.
CHI 2100 ET China Jun non-manufacturing PMI, May +0.7 to 55.5.
Click to enlarge

U.S. STOCK CALENDAR07/02/2014

Company Name Ticker Time Event Description Period Estimate
Constellation Brands Inc STZ US Bef-mkt Q1 2015 Earnings Release Q1 2015 0.927
General Motors Co GM US 9:45 General Motors Switch-Defect Bankruptcy Court Hearing    
Paychex Inc PAYX US 10:30 Q4 2014 Earnings Call Q4 2014  
Constellation Brands Inc STZ US 10:30 Q1 2015 Earnings Call Q1 2015  
AutoNation Inc AN US   June 2014 Sales and Revenue Release 2014
Click to enlarge
Stocks: ORCL, HRL, TLRD, BZH, GBX, BMY, HOG, RCAP, P, CBOE, EVAR, GHC, SHLM, PAYX, STZ, GM, AN