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MORNING CALL 5/26

|Includes: Altaba, Inc. (AABA), BLOX, CBS, CEMDX, COST, CSRA, DG, DLTR, GES, HPQ, LGF.A, LIKAX, MAC, MCD, NAVI, NTAP, NWDMD, OI, PDCO, PLKI, PRGNF, PSTG, PVH, PWR, RTN, RUBI, SIG, SYMC, TIF, TRN, ULTA, UNM, WDC, WSM

MORNING CALL

Thursday, May 26th, 2016View Older Reports

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OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM16 +0.12%) are up +0.13% and European stocks are up +0.08% as energy producing stocks strengthen with the price of crude oil (CLN16 +0.67%) up +0.67% at a fresh 7-1/2 month high. Increased M&A activity is giving stocks a boost as well with Yahoo up nearly 4% in pre-market trading after people familiar with the matter said AT&T made a bid for the company. Mining stocks also rallied, with Arcelor Mittal and Anglo American Plc both up more than 4.5%, as the price of copper (HGN16 +0.55%) is up +0.62% at a 2-week high. Gains in European stocks were limited by weakness in bank stocks, as Banco Popular Espanol SA plunged -20% after it said it will raise about 2.5 billion euros ($2.79 billion) by selling new shares. Asian stocks settled mostly higher: Japan +0.09%, Hong Kong +0.14%, China +0.26%, Taiwan -0.02%, Australia+0.29%, Singapore +0.24%, South Korea -0.14%, India +1.88%.

The dollar index (DXY00 -0.13%) is down -0.16%. EUR/USD (^EURUSD) is up +0.21%. USD/JPY (^USDJPY) is down -0.19%.

Jun T-note prices (ZNM16 -0.01%) are little changed, down -0.5 of a tick.

Speaking in Singapore, St. Louis Fed President Bullard (voter) said that market expectations for a June interest rate hike are "substantially positive" and that the FOMC can vary the rate rise pace depending on the world and the U.S.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) St. Louis Fed President James Bullard (voter) delivers a presentation to the Official Monetary and Financial Institutions Forum in Singapore, (2) weekly initial unemployment claims (expected -3,000 to 275,000, previous -16,000 to 278,000) and continuing claims (expected -12,000 to 2.140 million, previous -13,000 to 2.152 million), (3) Apr durable goods orders (expected +0.5% and +0.3% ex-transportation, Mar +0.8% and -0.2% ex-transportation), (4) Apr pending home sales (expected +0.7% m/m and +0.1% y/y, Mar +1.4% m/m and +2.9% y/y), (5) May Kansas City Fed manufacturing activity (expected +1 to -3, Apr +2 to -4), (6) Fed Governor Jerome Powell discusses "Recent Economic Developments, the Productive Potential of the Economy, and Monetary Policy" at the Peterson Institute for International Economics in Washington D.C., (7) the Treasury's auction of $28 billion of 7-year T-notes, and (8) USDA weekly Export Sales.

There are 5 of the S&P 500 companies that report earnings today: Dollar Tree (consensus $0.81), Patterson Cos (0.75), Signet Jewelers (1.94), Ulta Salon (1.29), Dollar General (0.95).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week include: none.

OVERNIGHT U.S. STOCK MOVERS

Yahoo! (YHOO -5.17%) rose nearly 4% in pre-market trading after people familiar with the matter said AT&T made a bid for the company.

HP Inc. (HPQ +2.43%) gained 2% in European trading after it reported Q2 adjusted EPS continuing operations of 41 cents, better than consensus of 38 cents.

Williams-Sonoma (WSM +2.40%) climbed over 3% in after-hours trading after it reported Q1 adjusted EPS of 53 cents, higher than consensus of 50 cents.

NetApp (NTAP +1.23%) sank nearly 8% in after-hours trading after it reported Q4 adjusted EPS of 55 cents, weaker than consensus of 58 cents, and said it sees Q1 adjusted EPS of 34 cnts-30 cents, below consensus of 45 cents

PVH (PVH +0.91%) climbed over 6% in after-hours trading after it reported Q1 adjusted EPS of $1.50, higher than consensus of $1.43, and then raised guidance on full-year adjusted EPS to $6.45-$6.55 from a March 23 view of $6.30-$6.50.

Infoblox (BLOX +0.87%) lost over 3% in after-hours trading after it said it sees Q4 adjusted EPS of 5 cents-7 cents, below consensus of 7 cents.

Guess? (GES +1.17%) fell nearly 2% in after-hours trading after it lowered guidance on full-year adjusted EPS to 55 cents-75 cents from a March 16 estimate of 65 cents-85 cents, below consensus of 77 cents,

Trinity Industries (TRN +4.63%) gained almost 1% in after-hours trading after it reported a new $940 million order for wind towers.

CSRA (CSRA +0.79%) lost nearly 1% in after-hours trading after it reported Q4 adjusted EPS of 50 cents, better than consensus of 48 cents, but Q4 revenue of $1.29 billion was below consensus of $1.31 billion.

The Rubicon Project (RUBI +1.53%) slipped 3% in after-hours trading after CFO Todd Tappin resigned to assume the role of president at another company.

WebMD Health (WDMD) dropped over 4% in after-hours trading after it announced that it will offer $300 million of convertible notes due 2023 in a private placement.

Popeyes Louisiana Kitchen (PLKI -0.46%) slid nearly 7% in after-hours trading after it reported Q1 adjusted EPS of 58 cents, below consensus of 64 cents.

Lions Gate Entertainment (LGF +0.20%) jumped over 13% in after-hours trading after it reported Q4 adjusted EPS of 26 cents, well above consensus of 2 cents.

Pure Storage (PSTG +1.10%) tumbled 15% in after-hours trading after it reported that its Q1 operating margin dropped -45.6% versus -28.6% q/q.

Cempra (CEMP +3.43%) climbed nearly 5% in after-hours trading after it said its solithromycin had successful results in its Phase 2 study of community-acquire bacterial pneumonia conducted by Japanese partner Toyama Chemical.

Paragon Shipping (PRGN -0.63%) plunged nearly 50% in after-hours trading after it received a notice of non-compliance from NASDAQ because the company's stockholders' equity as of Dec 31, 2015 was below the $2.5 million requirement. Therefore, the company no longer meets requirement for the NASDAQ and will have to transfer its listing to the OTC market.

MARKET COMMENTS

June E-mini S&Ps (ESM16 +0.12%) this morning are up +2.75 points (+0.13%). Wednesday's closes: S&P 500 +0.70%, Dow Jones +0.82%, Nasdaq +0.72%. The S&P 500 on Wednesday rose to a 3-week high and closed higher on strength in energy producers after crude oil rallied to a 7-1/2 month high and on increased M&A activity after HP rallied by +9% after it said it will merge its enterprise-services division with Computer Sciences Corp. Stocks were undercut by the unexpected -1.6 point decline in the May Markit U.S. services PMI index to 51.2, weaker than expectations of +0.2 to 53.0.

June 10-year T-note prices (ZNM16 -0.01%) this morning are down -0.5 of a tick. Wednesday's closes: TYM6 -3.00, FVM6 -1.00. Jun T-notes on Wednesday closed lower on supply pressures as the Treasury auctioned $47 billion of 5-year T-notes and 2-year floating rate notes and on reduced safe-haven demand after the S&P 500 climbed to a 3-week high. T-notes found support from the unexpected -1.6 point decline in the May Markit U.S. services PMI index.

The dollar index (DXY00 -0.13%) this morning is down -0.150 (-0.16%). EUR/USD (^EURUSD) is up +0.0023 (+0.21%). USD/JPY (^USDJPY) is down-0.21 (-0.19%). Wednesday's closes: Dollar Index -0.217 (-0.23%), EUR/USD +0.0014 (+0.13%), USD/JPY +0.20 (+0.18%). The dollar index on Wednesday closed lower on the unexpected decline in the U.S. May Markit services PMI index, which was a sign of economic weakness that may give the Fed pause on raising interest rates. The dollar was also undercut by strength in EUR/USD after the German May IFO business climate index rose to a 5-month high.

July WTI crude oil (CLN16 +0.67%) this morning is up +33 cents (+0.67%) at a fresh 7-1/2 month high. July gasoline (RBN16 +0.14%) is up +0.0042 (+0.25%). Wednesday's closes: CLN6 +0.94 (+1.93%), RBN6 -0.0086 (-0.52%). July crude oil and gasoline on Wednesday settled mixed with July crude at a 7-1/2 month high. Crude oil prices were boosted by the -4.23 million bbl decline in weekly EIA crude inventories, more than expectations of-2.0 million bbl. Crude oil prices were also boosted by the -0.3% decline in U.S. crude production in the week ended May 20 to a 1-1/2 year low of 8.767 million bpd. Gasoline closed lower after weekly EIA gasoline stockpiles unexpectedly rose +2.04 million bbl, more than expectations of -1.5 million bbl.

GLOBAL EVENT CALENDAR05/26/2016

US 0610 ET St. Louis Fed President James Bullard (voter) delivers a presentation to the Official Monetary and Financial Institutions Forum in Singapore.
  0830 ET Weekly initial unemployment claims expected -3,000 to 275,000, previous -16,000 to 278,000. Weekly continuing claims expected-12,000 to 2.140 million, previous -13,000 to 2.152 million.
  0830 ET Apr durable goods orders expected +0.5% and +0.3% ex transportation, Mar +0.8% and -0.2% ex transportation. Apr capital goods orders non-defense ex-aircraft expected +0.3%, Mar +0.1%
  0830 ET USDA weekly Export Sales.
  1000 ET Apr pending home sales expected +0.7% m/m and +0.1% y/y, Mar +1.4% m/m and +2.9% y/y
  1100 ET May Kansas City Fed manufacturing activity expected +1 to -3, Apr +2 to -4.
  1200 ET Fed Governor Jerome Powell will discuss Recent Economic Developments, the Productive Potential of the Economy, and Monetary Policy at the Peterson Institute for International Economics in Washington D.C.
  1300 ET Treasury auctions $28 billion of 7-year T-notes.
UK 0430 ET Revised UK Q1 GDP, previous +0.4% q/q and +2.1% y/y.
  0430 ET UK Mar index of services expected +0.2% m/m and +0.6% 3-mo/3-mo, Feb +0.1% m/m and +0.7% 3-mo/3-mo.
  0430 ET UK Q1 total business investment, Q4 -2.0% q/q and +3.0% y/y.
  1905 ET UK May GfK consumer confidence expected -1 to -4, Apr -3 to -3.
JPN 1930 ET Japan Apr national CPI expected -0.4% y/y, Mar -0.1% y/y. Apr national CPI ex-fresh food expected -0.4% y/y, Mar -0.3% y/y. Apr national CPI ex food & energy expected +0.7% y/y, Mar +0.7% y/y.
  1930 ET Japan May Tokyo CPI expected -0.5% y/y, Apr -0.4% y/y. May Tokyo CPI ex-fresh food expected -0.4% y/y, Apr -0.3% y/y. May Tokyo CPI ex food & energy expected +0.6% y/y, Apr +0.6% y/y.
CHI 2130 ET China Apr industrial profits, Mar +11.1% y/y.

U.S. STOCK CALENDAR05/26/2016

Company Ticker Time Event Description Period Estimate
Patterson Cos Inc PDCO US Bef-mkt Q4 2016 Earnings Release Q4 2016 0.754
Dollar Tree Inc DLTR US Bef-mkt Q1 2017 Earnings Release Q1 2017 0.808
Signet Jewelers Ltd SIG US 7:00 Q1 2017 Earnings Release Q1 2017 1.943
Symantec Corp SYMC US 8:30 Analyst Day Y 2016  
Signet Jewelers Ltd SIG US 8:30 Q1 2017 Earnings Call Q1 2017  
PVH Corp PVH US 9:00 Q1 2017 Earnings Call Q1 2017  
Dollar Tree Inc DLTR US 9:00 Q1 2017 Earnings Call Q1 2017  
Leucadia National Corp LUK US 10:00 Annual General Meeting    
McDonald's Corp MCD US 10:00 Annual General Meeting Y 2016  
Owens-Illinois Inc OI US 10:00 Annual General Meeting Y 2016  
Patterson Cos Inc PDCO US 10:00 Q4 2016 Earnings Call Q4 2016  
Dollar General Corp DG US 10:00 Q1 2017 Earnings Call Q1 2017  
Raytheon Co RTN US 11:00 Annual General Meeting    
Costco Wholesale Corp COST US 11:00 Q3 2016 Earnings Call Q3 2016  
Navient Corp NAVI US 11:00 Annual General Meeting    
Danaher Corp DHR US 12:00 Analyst and Investor Meeting Y 2016  
Western Digital Corp WDC US 17:00 Q4 2016 Guidance Call Q4 2016  
Ulta Salon Cosmetics & Fragrance Inc ULTA US 17:00 Q1 2017 Earnings Call Q1 2017  
Ulta Salon Cosmetics & Fragrance Inc ULTA US Aft-mkt Q1 2017 Earnings Release Q1 2017 1.292
Tiffany & Co TIF US   Annual General Meeting    
Unum Group UNM US   Annual General Meeting    
CBS Corp CBS US   Annual General Meeting    
Macerich Co/The MAC US   Annual General Meeting    
Quanta Services Inc PWR US   Annual General Meeting    
Dollar General Corp DG US   Q1 2017 Earnings Release Q1 2017 0.947