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BARCHART MORNING CALL 8/19

|Includes:AAPL, ARO, CEO, CTSH, DKS, GES, Home Depot, Inc. (HD), IR, MDT, RAX, TJX, TK, URBN

BARCHART MORNING CALL

Tuesday, August 19th, 2014View Older Reports

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OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14 +0.15%) this morning are up +0.09% at a 2-1/2 week high and European stocks are up +0.44% at a 2-week high on reduced tensions in Ukraine along with stronger-than-expected stock earnings results. Home Depot rose 3.5% in pre-market trading after reporting Q2 earnings of $1.52 a share, better than consensus of $1.44, while A.P. Moeller-Maersk A/S jumped nearly 5% after the owner of the world's largest container-shipping line raised its full-year profit forecast. Asian stocks closed higher: Japan +0.83%, Hong Kong +0.67%, China +0.01%, Taiwan +1.12%, Australia +0.66%, Singapore +0.11%, South Korea +0.99%, India +0.11%. China's Shanghai Stock Index posted an 8-1/4 month high amid speculation the government will boost stimulus to meet its growth forecasts, while the Chinese yuan strengthened to a 5-month high of 6.1366 per dollar after the PBOC cut the daily reference rate by -0.04% to 6.1548 per dollar. Commodity prices are mixed. Sep crude oil (CLU14 +0.44%) is up +0.34%. Sep gasoline (RBU14 +0.89%) is up +0.76%. Dec gold (GCZ14 +0.27%) is up +0.17%. Sep copper (HGU14 +0.14%) is up +0.16%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.14%) is up +0.14% at a 1-1/2 week high as GBP/USD tumbled to a 4-1/4 month low after UK inflation slowed more than expected. EUR/USD (^EURUSD) is down -0.13%. USD/JPY (^USDJPY) is up +0.09%. Sep T-note prices (ZNU14 +0.09%) are up +3 ticks.

UK Jul CPI fell -0.3% m/m and rise +1.6% y/y, a slower pace of increase than expectations of -0.2% m/m and +1.8% y/y. Jul core CPI rose +1.8% y/y, less than expectations of +1.9% y/y.

UK Jul RPI fell -0.1% m/m and rose +2.5% y/y, slightly less than expectations of -0.1% m/m and +2.6% y/y. Jul RPI ex-mortgage interest payments rose +2.6% y/y, right on expectations.

The Japan Jun leading index CI was revised higher to 105.9 from the originally reported 105.5. The Jun coincident index was revised higher to 109.7 from the previously reported 109.4, still the lowest in 9 months.

Japan Jul nationwide department store sales fell -2.5% y/y, the fourth consecutive monthly decline.

U.S. STOCK PREVIEW
The market is expecting today's CPI report to show that the CPI inflation indexes remain under wraps near the Fed's 2.0% inflation target. The market is also expecting today's July housing starts report to show an increase of +8.4% to 968,000, reversing most of the -9.3% decline to 893,000 seen in June. There are three S&P 500 companies that reports earnings today: Home Depot (consensus $1.44). Medtronic (0.923) and TJX Companies (0.73). Equity conferences this week include: Enercom, Inc Oil & Gas Conference on Mon-Thu, and 8th Annual Forum on Transparency & Aggregate Spending on Tue-Wed.

OVERNIGHT U.S. STOCK MOVERS

Home Depot (HD -0.12%) climbed 3.5% in pre-market trading after it reported Q2 earnings of $1.52 a share, better than consensus of $1.44.

Medtronic (MDT +0.35%) reported Q1 EPS of 93 cents, better than consensus of 92 cents.

Dick's Sporting Goods (DKS +1.26%) reported Q2 non-GAAP EPS of 67 cents, higher than consensus of 65 cents.

Ingersoll-Rand (IR +2.69%) was downgraded to 'Neutral' from 'Outperform' at RW Baird.

Morgan Stanley recommends adding to Apple (AAPL +1.20%) positions as it keeps its 'Overweight' rating on the stock with a $110 price target.

Guess (GES +2.62%) was downgraded to 'Neutral' from 'Overweight' at Piper Jaffray.

Teekay (TK +2.43%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James.

Rackspace (RAX +1.95%) climbed nearly 4% in pre-market trading after Blue Harbour reported a 6.4% stake in the company.

Aeropostale (ARO +2.21%) jumped over 4% in after-hours trading after it raised guidance on Q2 adjusted EPS to a loss of -45 cents- 42 cents, a smaller loss than consensus of 58 cents.

Lone Pine Capital reported a 5.3% passive stake in Cognizant (CTSH +1.14%) .

CNOOC (CEO +5.28%) was downgraded to 'Hold' from 'Buy' at Jefferies.

Urban Outfitters (URBN +2.41%) reported Q2 EPS of 49 cents, right on consensus, although Q2 revenue of $811 million was better than consensus of $806.99 million. RW Baird then upgraded the stock to 'Outperform' from 'Neutral.'

MARKET COMMENTS

Sep E-mini S&Ps (ESU14 +0.15%) this morning are up +1.75 points (+0.09%) at a fresh 2-1/2 week high. The S&P 500 index on Monday rallied to a 2-week high and closed higher: S&P 500 +0.85%, Dow Jones +1.06%, Nasdaq +0.83%. Bullish factors included (1) carry-over support from a rally in European stocks on reduced geopolitical tensions as Ukraine and Russia met for peace talks, (2) the unexpected +2 point increase in the Aug NAHB housing market index to 55, stronger than expectations of unchanged at 53 and the highest in 7 months, and (3) increased M&A activity after Dollar General offered to buy Family Dollar Stores for $9.7 billion.

Sep 10-year T-notes (ZNU14 +0.09%) this morning are up +3 ticks. Sep 10-year T-note futures prices on Monday closed lower. Negative factors included (1) reduced safe-haven demand for T-notes as stocks rallied after tensions eased in Ukraine when Russian and Ukraine leaders met to discuss a truce, and (2) the unexpected increase in the Aug NAHB housing market index to a 7-month high. Closes: TYU4 -9.00, FVU4 -3.50.

The dollar index (DXY00 +0.14%) this morning is up +0.117 (+0.14%) at a 1-1/2 week high. EUR/USD (^EURUSD) is down -0.0017 (-0.13%) and USD/JPY (^USDJPY) is up +0.09 (+0.09%). The dollar index on Monday closed higher. Bullish factors included (1) the unexpected increase in the Aug NAHB housing market index to a 7-month high, which signals economic strength, and (2) weakness in the yen against the dollar as the rally in the S&P 500 to a 2-week high undercut safe-haven demand for yen. Closes: Dollar index +0.146 (+0.18%), EUR/USD +0.00349 (+0.26%), USD/JPY +0.221 (+0.22%).

Sep WTI crude oil (CLU14 +0.44%) this morning is up +33 cents (+0.34%) and Sep gasoline (RBU14 +0.89%) is up +0.0202 (+0.76%). Sep crude and gasoline prices on Monday closed lower with Sep gasoline at a 6-1/2 month low: CLU4 -0.94 (-0.97%), RBU4 -0.0190 (-0.70%). Bearish factors included (1) a stronger dollar, (2) an increase in Libyan oil output to 540,000 bpd from 415,000 bpd last week, according to Libya's state-run National Oil Corp, and (3) reduced concern that Islamic Sate fighters will take over Iraq's oil facilities after U.S. airstrikes helped Kurdish forces retake land that was taken over by the fighters in northern Iraq.

GLOBAL EVENT CALENDAR08/19/2014

US 0830 ET Jul CPI expected +0.1% m/m and +2.0% y/y, Jun +0.3% m/m and +2.1% y/y. Jul CPI ex food & energy expected +0.2% m/m and +1.9% y/y, Jun +0.1% m/m and +1.9% y/y.
  0830 ET Jul housing starts expected +8.4% to 968,000, Jun -9.3% to 893,000. Jul building permits expected +2.8% to 1.0 million, Jun -3.2% to 973,000.
JPN 0100 ET Revised Japan Jun leading index CI, previous 105.5. Revised Jun coincident index, previous 109.4.
  0130 ET Japan Jul nationwide department store sales, Jun -4.6% y/y.
  0200 ET Revised Japan Jul machine tool orders, previous +37.7% y/y.
  1950 ET Japan Jul trade balance expected -713.9 billion yen, Jun -823.2 billion yen. Jul exports expected +3.8% y/y, Jun -1.9% y/y. Jul imports expected -1.5% y/y, Jun +8.4% y/y.
UK 0430 ET UK Jul CPI expected -0.2% m/m and +1.8% y/y, Jun +0.2% m/m and +1.9% y/y. Jul core CPI expected +1.9% y/y, Jun +2.0% y/y.
  0430 ET UK Jul RPI expected -0.1% m/m and +2.6% y/y, Jun +0.2% m/m and +2.6% y/y. Jul RPI ex-mortgage interest payments expected +2.6% y/y, Jun +2.7% y/y.
  0430 ET UK Jul PPI input prices expected -0.8% m/m and -0.2% y/y, Jun -0.8% m/m and -4.4% y/y.
  0430 ET UK Jul PPI output prices expected +0.1% m/m and unch y/y, Jun -0.2% m/m and +0.2% y/y. Jul PPI output core prices expected +0.9% y/y, Jun unch m/m and +1.0% y/y.
  0430 ET UK Jun ONS house prices expected +10.7% y/y, May +10.5% y/y.
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U.S. STOCK CALENDAR08/19/2014

Company Name Ticker Time Event Description Period Estimate
Home Depot Inc/The HD US Bef-mkt Q2 2015 Earnings Release Q2 2015 1.444
Medtronic Inc MDT US 7:15 Q1 2015 Earnings Release Q1 2015 0.923
Medtronic Inc MDT US 8:00 Q1 2015 Earnings Call Q1 2015  
Home Depot Inc/The HD US 9:00 Q2 2015 Earnings Call Q2 2015  
TJX Cos Inc/The TJX US 9:30 Q2 2015 Earnings Release Q2 2015 0.73
TJX Cos Inc/The TJX US 11:00 Q2 2015 Earnings Call Q2 2015  
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Stocks: HD, MDT, DKS, IR, AAPL, GES, TK, RAX, ARO, CTSH, CEO, URBN, TJX