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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 5/17 0 comments
    May 17, 2012 8:56 AM | about stocks: WMT, PCP, CRM, INTU, ROST, AMAT, GPS, DLTR, ADSK
    Barchart Morning Call Thu, 17 May 2012 07:00:00 -0500

    Overnight Developments

      E-mini S&Ps are slightly higher by 1.00 point today, shaking off the 0.79% sell-off in European stocks and gaining some confidence from last night's stronger-than-expected Japanese Q1 GDP report of +4.1% (q/q annualized). T-notes are down 2.5 ticks on the stable trade in E-mini S&Ps. The dollar index as usual is trading higher and is up 0.17 points (+0.21%). Commodity markets are mixed. Gold is up $10.00 while copper and WTI crude oil are showing small gains. European stocks today are trading lower again with the Euro Stoxx 50 down -0.79%. The markets are concerned about yesterday's decision by the ECB to halt direct lending to some troubled Greek banks until they get recapitalized. The ECB temporarily transferred the lending responsibility to the Greek central bank. Eurozone and Greek officials are working on the Greek bank recapitalization with 50 billion euros of funding provided by the recent bailout agreement, but the recapitalization process is moving slowly. The ECB's action to step away from direct lending to some Greek banks is move to protect its balance sheet and is also a warning shot to Greek politicians that the ECB alone is propping up the Greek banking system at the moment. Markets are closed today for Ascension Day in Switzerland, Norway, Sweden, Denmark, Finland, Austria, and Luxembourg. Spain today successfully sold 2.5 billion euros of 3-year bonds but had to sell the bonds at 4.876%, up sharply from 4.037% at the last auction just 2 weeks ago. In Spain, Bankia SA plunged by 19% today on a report by El Mundo that depositors have withdrawn 1 billion euros from the bank since May 9 when the Spanish government took over the troubled bank. Bankia is the lender with the largest asset base in Spain. Spain today reported its Q1 GDP at -0.3% q/q and -0.4% y/y, which was right in line with market expectations. In Greece, head of Greece's Council of State Panagiotis Pikrammenos was named head of a caretaker government yesterday. The government today is expected to announce June 16 as the date for the new election. The new election is not likely to result in a major shift in parliamentary seats among the political parties with anti-bailout Syriza winning a few extra seats and the traditional New Democracy and Pasok parties losing a few seats. In a sign that Syriza leader Tsipras is not about to let up on his strident rhetoric, he demanded that the caretaker government freeze the implementation of wage and pension cuts and other austerity measures until after the election. Greece will run out of cash by early July if it does not qualify for another bailout tranche from the Eurozone. Asian stocks today closed mixed: Japan +0.86%, Hong Kong -0.31%, China +1.53%, Taiwan +1.69%, Australia -0.19%, Singapore -0.30%, South Korea +0.23%, India +0.25%, Turkey +0.23%. Japan's Q1 GDP rose +4.1% (q/q annualized), which was stronger than market expectations of +3.5%. The Q1 deflator of -1.2% y/y was stronger than expectations of -1.5% y/y but showed that Japan is still in a deflationary situation. While the 4.1% GDP increase was welcome, part of the GDP increase was due to the earthquake reconstruction effort, which will not last. Japan is also worried about lower exports to Europe with the Greek situation likely dampening European economic growth in Q2. Japan this summer is also expected to experience rolling blackouts and reduced electricity usage since all its nuclear power plants are now offline, which may reduce business output. A Japanese survey of economists found a consensus that Japan GDP will ease to +2.2% in Q2 and Q3 and to +1.7% in Q4. Singapore today reported Q1 GDP at +10% (q/q annualized), which was a positive development for Asia.

    Overnight U.S. Stock News

      June E-mini S&Ps this morning are trading up +1.00 point on some support from the Japan Q1 GDP report of +4.1%, although the European situation continues to undercut confidence. There are earnings reports today from Wal-Mart (consensus $1.04), PCP-Precision Castparts (2.27), CRM-Salesforce.com (0.34), and INTU-Intuit (2.48). US stocks on Wednesday closed lower once again: Dow Jones -0.50%, Nasdaq 100 -0.74%. The Greek situation is becoming even more dangerous with a slow bank run on Greek banks. The Euro Stoxx 50 on Wednesday closed slightly lower by -0.15%. U.S. stocks were also hurt after two ECB officials said the ECB has no immediate plans for more stimulus. U.S. stocks received some underlying support from stronger-than-expected April housing starts data (+2.6% to 717,000 versus expectations of 685,000) and April industrial production data (+1.1% versus expectations of +0.6%). Q1 mortgage delinquencies fell to 7.40% from 7.58% in Q4, although Q1 mortgage foreclosures rose slightly to 4.39% from Q4’s 4.38%

    Today's Market Focus

      June 10-year T-notes this morning are trading slightly lower by 2.5 ticks due to the slightly higher trade in E-mini S&Ps. T-note prices on Wednesday closed narrowly mixed: TYM2 +1.5, FVM2 -1.25. T-note prices on Wednesday received continued underlying support from the Greek situation, but were undercut by the stronger-than-expected U.S. housing starts and industrial production reports. The 10-year T-note yield on Wednesday closed unchanged at 1.76%, which was only 10 bp above the record low of 1.67% posted last September. The dollar index this morning is up 0.17 points as safe-haven demand continues. EUR/USD is down -0.0025 and USD/JPY is down 0.14 yen. The dollar index on Wednesday closed mildly higher: Dollar Index +0.15, EUR/USD -0.0013, USD/JPY +0.15. The dollar index on Tuesday posted a new 4-month high and EUR/USD fell to a new 4-month low on continued worries about the Greek situation. The dollar index also received some support from the stronger-than-expected U.S. housing starts and industrial production reports. The euro received some underlying support from ECB President Draghi's statement that that while the ECB's "strong preference" is for Greece to stay in the Eurozone, the ECB will continue to preserve "the integrity of our balance sheet." In addition, two ECB officials said that no immediate stimulus measures were under consideration, which provided support for the euro's interest rate differentials. July WTI crude oil prices this morning are trading slightly higher by 5 cents but July gasoline is down 0.95 cents. Crude oil and gasoline prices on Wednesday closed sharply lower: CLN12 -1.16 (-1.23%), RBN2 -0.0265 (-0.92%). Crude oil prices on Wednesday were undercut again by the stronger dollar and worries about global growth. In addition, the weekly DOE report showed a 2.13 million barrel increase in U.S. crude oil inventories, which was stronger than market expectations of 1.5 million barrels. The report put U.S. oil inventories at a new 21-3/4 year high, the highest level since August 1990. U.S. oil inventories are now 7.8% above the 5-year seasonal average, the highest such level in a year. Crude oil inventories at Cushing rose by 1.0 million barrels to a new record high of 45.127 million barrels. The Seaway Pipeline is expected to start up in reverse direction today, which means oil will start flowing from the hub at Cushing, Oklahoma to the Gulf of Mexico coast. That should cause a slow drawdown in crude oil inventories at Cushing, which is where the Nymex WTI futures contract is priced. Meanwhile, the DOE report was bullish for the products. U.S. gasoline inventories fell by -2.797 million barrels versus expectations for an increase of +800,000 barrels. Distillate inventories fell by 969,0090 barrels versus expectations of +300,000 barrels. Those reports left gasoline 1.9% below its 5-year seasonal average and distillate inventories 10.6% below the 5-year average. Distillates are now at the tightest level relative to the 5-year average since July 2003. Meanwhile, the refinery utilization rate jumped by 1.9 points to 88.3% versus expectations of +0.5 points to 86.9%. The increase in the refinery utilization rate is good news because it means refineries will be using more crude oil and producing more products, thus putting some downward pressure on U.S. crude oil inventories and boosting product inventories.

    Today's U.S. Earnings Reports

    Earnings reports (sorted by mkt cap): Wal-Mart (consensus $1.04), PCP-Precision Castpt (2.27), CRM-Salesforce.com (0.34), INTU-Intuit (2.48), RSOT-Ross Stores (0.93), AMAT-Applied Materials (0.24), GPS-Gap (0.45), DLTR-Dollar Tree (0.97), ADSK-Autodesk (0.47).

    Global Financial Calendar

    Thursday 5/17/12
    United States
    0830 ETWeekly initial unemployment claims expected -2,000 to 365,000, previous -1,000 to 367,000. Weekly continuing claims expected +6,000 to 3.235 million, previous -61,000 to 3.229 million.
    0830 ETUSDA weekly exports.
    1000 ETApr leading indicators expected +0.1%, Mar +0.3%.
    1000 ETMay Philadelphia Fed manufacturing index expected +1.5 to 10.0, Apr -4.0 to 8.5.
    1030 ETDOE natural gas storage.
    1100 ETTreasury announces amounts of 2-year T-notes (previous $35 billion), 5-year T-notes (previous $35 billion) and 7-year T-notes (previous $29 billion) to be auctioned May 22-24.
    1235 ETSt. Louis Fed President James Bullard speaks to the Rotary Club of Louisville, KY.
    1300 ETTreasury auctions $13 billion in 10-year TIPS.
    1630 ETWeekly money supply report and Fed balance sheet.
    Japan
    0000 ETJapan Apr Tokyo condo sales, Mar -6.1% y/y.
    0030 ETJapan Mar final industrial production, prelim +1% m/m and +13.9% y/y. Japan Mar final capacity utilization, prelim -1.7% m/m.
    CHI
    2130 ETChina Apr property prices.
    2135 ETChina May MNI flash business sentiment survey.

    Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

    Stocks: WMT, PCP, CRM, INTU, ROST, AMAT, GPS, DLTR, ADSK
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