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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 7/10 0 comments
    Jul 10, 2014 9:51 AM | about stocks: FDO, UNH, HOT, MDRX, AA, SEE, PVTB, MBFI, LL, RJET, PBPB, VSH, PGR, LB, AMFW, JNJ, SSYS, CVX, GPS, COST, BKD


    Thursday, July 10th, 2014View Older Reports

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    September E-mini S&Ps (ESU14 -0.84%) this morning are down -0.95% at a 1-week low and European stocks are down -1.85% at a 1-1/2 month low as European sovereign debt concerns resurfaced after Portuguese bonds tumbled as concern deepened over missed debt payments by a company linked to Banco Espirito Santo, Portugal's second-largest bank. European bank stocks plunged with Banco Espirito Santo down 11% and Espirito Santo Financial Group SA, which owns 25% of the lender, down 9% before trading was halted. The company suspended trading in its stocks and bonds, saying it is "currently assessing the financial impact of its exposure" to Espirito Santo International, which has missed payments on short-term obligations. While Portugal's central bank said Banco Espirito Santo SA is protected after its parent missed debt payments, Moody's Investors Service downgraded a company in the group citing a lack of transparency and links to other companies. Another negative for stocks was the slower-than-expected increase in China Jun exports, which fueled concern that global economic momentum may be slowing. Asian stocks closed mixed: Japan -0.56%, Hong Kong +0.27%, China -0.27%, Taiwan +0.79%, Australia +0.22%, Singapore -0.18%, South Korea +0.12%, India -0.28%. Commodity prices are mixed. Aug crude oil (CLQ14 -0.42%) is down -0.53% and Aug gasoline (RBQ14 +0.06%) is down -0.09%, both at 1-month lows. Aug gold (GCQ14 +1.43%) is up +1.46% at a 3-1/2 month high as a slide in global stocks boosts the safe-haven demand for gold. Sep copper (HGU14 -0.28%) is down -0.28% at a 1-week low on Chinese demand concerns after China Jun exports rose less than expected. Agriculture and livestock prices are mixed with Aug live hog prices down -0.96% at a 2-week low on fund liquidation. The dollar index (DXY00 +0.16%) is up +0.14%. EUR/USD (^EURUSD) is down -0.18%. USD/JPY (^USDJPY) is down -0.33% at a 1-week low as the slide in stocks boosts the safe-haven demand for the yen. Sep T-note prices (ZNU14 +0.33%) are up +12 ticks at a 5-week high and the yield on the 10-year German bund dropped to a 14-month low of 1.171% on increased safe-haven demand amid signs of financial stress in Portugal.

    The China Jun trade balance unexpectedly shrank to a +$31.56 billion surplus, narrower than expectations of a +$36.95 billion surplus. Jun exports rose +7.2% y/y, less than expectations of +10.4% y/y, and Jun imports climbed +5.5% y/y, less than expectations of +6.0% y/y.

    St. Louis Fed President Bullard said that a rapid drop in unemployment will fuel inflation saying "I think we are going to overshoot here on inflation" as he predicts inflation of 2.4% at the end of next year, "well above" the Fed's 2% target. Bullard, who calls himself the "North Pole of inflation hawks," estimates full employment at about 6% and after U.S. Jun unemployment dropped to 6.1% he said the Fed will need to raise interest rates sooner than estimated.

    Japan Jun consumer confidence rose +1.8 to 41.1, better than expectations of +0.7 to 40.0 and the best level in 6 months.

    The Japan Jun PPI rose +0.2% m/m and +4.6% y/y, higher than expectations of +0.1% m/m and +4.5% y/y with the +4.6% y/y gain the fastest annual increase in 5-3/4 years.

    The Japan May tertiary industry index rose +0.9% m/m, less than expectations of +1.7% m/m.

    Japan May machine orders unexpectedly plunged -19.5% m/m, the biggest monthly decline since the data series began in 1987. On an annual basis, May machine orders fell -14.3% y/y, weaker than expectations of +10.1% y/y and the largest y/y drop in 4-1/2 years.


    Today's weekly initial unemployment claims report is expected to be unchanged at 315,000 following last week's small increase of +2,000 to 315,000. Meanwhile, continuing claims are expected to show a -14,000 decline to 2.565 million, more than reversing last week's increase of +11,000 to 2.579 million. The Treasury today will sell $13 billion of 30-year T-bonds, concluding this week's $61 billion coupon package. There are two S&P 500 companies that report earnings today: Progressive Corp (consensus $0.49), and Family Dollar Stores (0.89). There are no equity conferences during the remainder of the week.


    Family Dollar Stores (FDO -0.22%) reported Q3 EPS of 85 cents, below consensus of 89 cents.

    UnitedHealth (UNH +0.99%) was downgraded to 'Hold' from 'Buy' at Jefferies.

    Starwood (HOT +1.90%) was upgraded to 'Buy' from 'Hold' at MLV & Co.

    Allscripts (MDRX -0.39%) was upgraded to 'Strong Buy' from 'Buy' at ISI Group.

    Alcoa (AA +5.66%) was upgraded to 'Overweight' from 'Equal Weight' at Morgan Stanley.

    Billionare activist investor Carl Icahn reported a 9.98% stake in Seventy Seven Energy (SSE -2.30%) .

    PrivateBancorp (PVTB -0.82%) and MB Financial (MBFI -0.49%) were both upgraded to 'Buy' from 'Neutral' at Sterne Agee.

    Lumber Liquidators (LL -8.06%) slumped 16% in after-hours trading after it cut guidance on fiscal 2014 EPS view to $2.65-$3.00 from $3.25-$3.60, well below consensus of $3.34.

    Republic Airways (RJET -1.87%) raised guidance on Q2 EPS view to 35 cents-40 cents from 30 cents-35 cents, above consensus of 34 cents.

    Potbelly (PBPB -2.92%) sank 18% in after-hours trading after it lowered guidance on Q2 adjusted EPS to approximately 6 cents, only half of consensus of 12 cents, and then lowered guidance on fiscal 2014 adjusted EPS to 18 cents-21 cents, well below consensus of 34 cents.

    Ruta Zandman reported a 7.6% stake in Vishay (VSH +0.26%) .


    Sep E-mini S&Ps (ESU14 -0.84%) this morning are down -18.75 points (-0.95%) at a 1-week low. The S&P 500 index on Thursday closed higher. Supportive factors included (1) optimism about Q2 earnings as Alcoa rose over 3% after it kicked off Q2 earnings season by reporting better-than-expected Q2 profit and sales, and (2) the Jun 17-18 FOMC meeting minutes that stated that "monetary policy needed to continue to promote the favorable financial conditions required to support the economic expansion." Closes: S&P 500 +0.46%, Dow Jones +0.47%, Nasdaq +0.75%.

    Sep 10-year T-notes (ZNU14 +0.33%) this morning are up +12 ticks at a 5-week high. Sep 10-year T-note futures prices on Wednesday erased early losses and closed higher after the Jun 17-18 FOMC meetings signaled the Fed was in no hurry to raise interest rates. T-notes had traded lower early on bearish factors that included (1) supply pressures as the Treasury auctions $61 billion in T-notes and T-bonds this week and (2) reduced safe-haven demand for T-notes after stocks rallied. Closes: TYU4 +7.50, FVU4 +3.50.

    The dollar index (DXY00 +0.16%) this morning is up +0.115 (+0.14%). EUR/USD (^EURUSD) is down -0.0024 (-0.18%). USD/JPY (^USDJPY) is down -0.34 (-0.33%). The dollar index on Wednesday closed lower. Negative factors included (1) strength in the Chinese yuan which rose to a 3-month high against the dollar ahead of 2 days of U.S.-Chinese trade talks in Beijing, and (2) the Jun 17-18 FOMC meeting minutes that failed to provide an indication of when the Fed would start to raise interest rates. Closes: Dollar index -0.186 (-0.23%), EUR/USD +0.0029 (+0.22%). USD/JPY +0.071 (+0.07%).

    Aug WTI crude oil (CLQ14 -0.42%) this morning is down -54 cents (-0.53%) and Aug gasoline (RBQ14 +0.06%) is down -0.0025 (-0.09%), both at 1-month lows. Aug crude and gasoline prices on Wednesday sold off to 1-month lows and closed lower. Bearish factors included (1) the +447,000 bbl increase in crude supplies at Cushing, OK, the delivery point of WTI futures, (2) the unexpected +579,000 bbl increase in weekly EIA gasoline stockpiles vs. expectations of a -500,000 bbl draw, and (3) the +0.9% increase in U.S. crude production in the week ended Jul 4 to 8.514 million bpd, a new 27-1/2 yr high. Closes: CLQ4 -1.11 (-1.07%) RBQ4 -0.0352 (-1.18%).


    US 0830 ET Weekly initial unemployment claims expected unchanged at 315,000, previous +2,000 to 315,000. Weekly continuing claims expected -14,000 to 2.565 million, previous +11,000 to 2.579 million.
      0830 ET USDA weekly Export Sales.
      1000 ET May wholesale inventories expected +0.6% m/m, Apr +1.1% m/m. May wholesale sales expected +0.9%, Apr +1.3% m/m.
      1300 ET Treasury auctions $13 billion 30-year T-bonds.
      1315 ET Kansas City Fed President Esther George speaks on the economy and monetary policy to business and community leaders in Shawnee, OK.
      1630 ET Fed Vice Chairman Stanley Fisher speaks on financial reform at an event hosted by the NBER.
    JPN 0100 ET Japan Jun consumer confidence index expected +0.7 to 40.0, May 39.3.
    EUR 0400 ET ECB publishes monthly report for July.
    UK 0700 ET BOE announces interest rate decision and asset purchase target, expected no change to the 0.50% benchmark rate or to the 375 billion pound asset purchase target.

    U.S. STOCK CALENDAR07/10/2014

    Company Name Ticker Time Event Description Period Estimate
    Family Dollar Stores Inc FDO US Bef-mkt Q3 2014 Earnings Release Q3 2014 0.889
    Progressive Corp/The PGR US Bef-mkt Q2 2014 Earnings Release Q2 2014 0.485
    L Brands Inc LB US 7:30 June 2014 Sales and Revenue Call 2014  
    Foster Wheeler AG FWLT US 8:00 Extraordinary General Meeting    
    Johnson & Johnson JNJ US 8:00 FDA Adcomm, Safety of Laparoscopic Power Morcellator Devices    
    Family Dollar Stores Inc FDO US 10:00 Q3 2014 Earnings Call Q3 2014  
    Stratasys Ltd SSYS US 10:00 Annual General Meeting Y 2014  
    Chevron Corp CVX US 17:00 Q2 2014 Sales and Revenue Release Q2 2014  
    Gap Inc/The GPS US   June 2014 Sales and Revenue Release 2014  
    L Brands Inc LB US   June 2014 Sales and Revenue Release 2014  
    Costco Wholesale Corp COST US   June 2014 Sales and Revenue Release 2014  
    Brookdale Senior Living Inc BKD US   Special Meeting - M&A Vote
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