BARCHART MORNING CALL 9/16

BARCHART MORNING CALL

Tuesday, September 16th, 2014View Older Reports

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OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ14 -0.09%) this morning are down -0.14% and European stocks are down -0.39% as the FOMC starts a 2-day policy meeting. European stocks were also undercut after German investor confidence fell for a ninth consecutive month to a 23-month low. The ruble fell to a record low for a fourth day as it dropped to an all-time low of 38.88 per dollar as additional sanctions and closed access to foreign-exchange liquidity pummels Russia's currency. Asian stocks closed mostly lower: Japan -0.23%, Hong Kong -0.91%, China -1.99%, Taiwan -0.91%, Australia -0.51%, Singapore -1.20%, South Korea +0.34%, India -1.21%. China's Shanghai Stock Index dropped to a 1-week low after China Aug foreign direct investment unexpectedly declined for a second month. Commodity prices are mixed. Oct crude oil (CLV14 -0.36%) is down -0.24%. Oct gasoline (RBV14 +0.06%) is up +0.18%. Dec gold (GCZ14 +0.34%) is up +0.42%. Dec copper (HGZ14 +0.70%) is up +0.53%. Agriculture and livestock prices are mixed. The dollar index (DXY00 -0.03%) is down -0.02%. EUR/USD (^EURUSD) is up +0.01%. USD/JPY (^USDJPY) is down -0.06%. Dec T-note prices (ZNZ14 +0.15%) are up +6.5 ticks.
The German Sep ZEW survey of economic growth expectations fell -1.7 to 6.9, a smaller decline than expectations of -3.6 to 5.0, but still the lowest in 23 months. The Sep ZEW survey current situation tumbled -18.9 to 25.4, a much bigger decline than expectations of -4.3 to 40.0 and the lowest in 13 months.
China Aug foreign direct investment unexpectedly fell for a second month as it plunged -14.0% y/y, much weaker than expectations of +0.8% y/y.
UK Aug CPI rose +0.4% m/m and +1.5% y/y, right on expectations, while Aug core CPI rose +1.9% y/y, more than expectations of +1.8% y/y.
UK Jul ONS house prices rose +11.7% y/y, a larger increase than the +10.2% y/y gain in Jun and the most in 7 years.

U.S. STOCK PREVIEW

Today’s Aug final-demand PPI index is expected to edge higher to +1.8% y/y from +1.7% in July. Meanwhile, the Aug core final-demand PPI is expected to rise to +1.8% y/y from +1.6% in July. The market is unanimously expecting the FOMC after its 2-day meeting that begins today to announce another $10 billion cut in QE3 to $15 billion. Fed Chair Yellen will hold a press conference on Wednesday after the FOMC meeting and the FOMC will release updated forecasts. There are two earnings reports today from the Russell 1000 companies: FactSet (consensus $1.31), Adobe Systems (0.26).
Equity conferences this week include: Citi Investment Research Investor Meetings on Mon, Morgan Stanley Industrials Conference on Mon-Tue, Bank of America Merrill Lynch Global Consumer & Retail Conference on Tue, J.P. Morgan U.S. All Stars Conference on Tue, J.P. Morgan U.S. All Stars Conference on Tue, Morgan Stanley Marcellus-Utica Summit on Tue, RBC Capital Markets Financial Institutions Conference on Tue, Bank of America Merrill Lynch Media, Communications & Entertainment Conference on Tue-Wed, Bank of America Merrill Lynch Power & Gas Leaders Conference on Tue-Wed, Deutsche Bank Access Energy Conference on Tue-Wed, Credit Suisse Basic Materials Conference on Tue-Thu, Bank of America Merrill Lynch Global Healthcare Conference on Wed, Capital Link Global Commodities Energy & Freight Forum on Wed, Wolfe Research Power & Gas Leaders Conference on Wed-Thu, Morningstar Management Behind the Moat Conference on Wed-Thu, UBS Houston Energy Bus-less Tour on Wed-Thu, Credit Suisse Chemical & Ag Science Conference on Thu, Imperial Capital Global Opportunities Conference on Thu, MKM Partners Entertainment, Leisure & Internet Conference on Thu, 5th Annual Summit Internal Audit on Thu-Fri, GTC 7th CNS Partnering & Deal-Making on Thu-Fri, Imperial Capital Global Opportunities Conference on Thu, Tokyo Game Show 2014 on Fri, and Zelman & Associates Housing Summit on Fri.

OVERNIGHT U.S. STOCK MOVERS

Con-way (CNW +0.38%) was downgraded to 'Neutral' from 'Outperform' at RW Baird.
Arch Coal (ACI -3.05%) and Peabody (BTU -2.22%) were both downgraded to 'Reduce' from 'Neutral' at Nomura.
TRW Automotive (TRW -0.78%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase.
AngloGold (AU +1.64%) was upgraded to 'Overweight' from 'Neutral' at HSBC.
Terex (TEX -6.43%) was upgraded to 'Buy' from 'Hold' at Stifel.
Cummins (CMI -0.48%) was downgraded to 'Market Perform' from 'Outperform' at Wells Fargo.
Anglo American (AAUKY +0.84%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank.
Science Application International Corporation (SAIC -0.06%) has been awarded a $423.8 million government bridge contract for maintenance, repair, and operations in New Jersey.
Microsoft (MSFT -0.96%) was upgraded to 'Outperform' from 'Sector Perform' at RBC Capital.
Adobe (ADBE -1.00%) was downgraded to 'Sector Perform' from 'Outperform' at RBC Capital.
Glenview Capital Management reported a 6.15% passive stake in Fossil (FOSL -2.60%) .

MARKET COMMENTS

Dec E-mini S&Ps (ESZ14 -0.09%) this morning are down -2.75 points (-0.14%). The S&P 500 Index on Monday dropped to a 3-week low and closed lower: S&P 500 -0.07%, Dow Jones +0.26%, Nasdaq -0.97%. Bearish factors included (1) the unexpected -0.1% decline in U.S. Aug industrial production, weaker than expectations of +0.3% and the first decline in 7 months, (2) the OECD’s cut its 2014 U.S. GDP forecast to 2.1% from a May estimate of 2.6%, and (3) concern that a slowdown in China’s economy will undercut global economic growth after China Aug industrial production rose by only +6.9% y/y, weaker than expectations of +8.8% y/y and the smallest pace of increase in 5-1/2 years.
Dec 10-year T-notes (ZNZ14 +0.15%) this morning are up +6.5 ticks. Dec 10-year T-note futures prices on Monday recovered from a 1-1/2 month low and closed higher. Bullish factors included (1) the unexpected decline in U.S. Aug industrial production, and (2) increased safe-haven demand for T-notes after the S&P 500 fell to a 3-week low. Closes: TYZ4 +5.50, FVZ4 +4.00.
The dollar index (DXY00 -0.03%) this morning is down -0.020 (-0.02%). EUR/USD (^EURUSD) is up +0.0001 (+0.01%) and USD/JPY (^USDJPY) is down -0.06 (-0.06%). The dollar index on Monday closed little changed. Negative factors for the dollar included (1) the OECD’s cut in its 2014 U.S. GDP forecast to 2.1% from a May estimate of 2.6% and (2) the unexpected decline in U.S. Aug industrial production. Closes: Dollar index +0.024 (+0.03%), EUR/USD -0.00225 (-0.17%), USD/JPY -0.122 (-0.11%).
Oct WTI crude oil (CLV14 -0.36%) this morning is down -22 cents (-0.24%) and Oct gasoline (RBV14 +0.06%) is up +0.0046 (+0.18%). Oct crude and gasoline prices on Monday shook off early losses and closed higher: CLV4 +0.65 (+0.70%), RBV4 +0.00133 (+0.53%). Bullish factors included (1) a weaker dollar, and (2) the larger-than-expected increase in the Sep Empire manufacturing index to the fastest pace of expansion in 4-3/4 years. Crude prices had opened lower with Oct gasoline at a 10-1/4 month low on bearish factors that included (1) Chinese demand concerns after China Aug industrial production rose at the slowest pace in 5-1/2 years, and (2) the unexpected decline in U.S. Aug industrial production.

GLOBAL EVENT CALENDAR09/16/2014

US	0830 ET	Aug PPI final demand expected unch m/m and +1.8% y/y, Jul +0.1% m/m and +1.7% y/y. Aug PPI final demand ex food & energy expected +0.1% m/m and +1.8% y/y, Jul +0.2% m/m and +1.6% y/y.
	1030 ET	FOMC begins 2-day policy meeting.
UK	0430 ET	UK Aug CPI expected +0.4% m/m and +1.5% y/y, Jul -0.3% m/m and +1.6% y/y. Aug core CPI expected +1.8% y/y, Jul +1.8% y/y.
	0430 ET	UK Aug RPI expected +0.4% m/m and +2.4% y/y, Jul -0.1% m/m and +2.5% y/y. Aug RPI ex-mortgage interest payments expected +2.5% y/y, Jul +2.6% y/y
	0430 ET	UK Aug PPI input prices expected -0.4% m/m and -6.9% y/y, Jul -1.6% m/m and -7.3% y/y. Aug PPI output prices expected -0.1% m/m and -0.3% y/y, Jul -0.1% m/m and -0.1% y/y. Aug PPI output core expected unch m/m and +0.9% y/y, Jul unch m/m and +0.9% y/y
	0430 ET	UK Jul ONS house prices, Jun +10.2% y/y.
GER	0500 ET	German Sep ZEW survey economic growth expectations expected -3.6 to 5.0, Aug 8.6. Sep ZEW survey current situation expected -4.3 to 40.0, Aug 44.3.
EUR	0500 ET	Eurozone Q2 labor costs, Q1 +0.9% y/y.

U.S. STOCK CALENDAR09/16/2014

Company Name	Ticker	Time	Event Description	Period	Estimate
FactSet Research Systems Inc	FDS US	7:00	Q4 2014 Earnings Release	Q4 2014	1.308
FactSet Research Systems Inc	FDS US	11:00	Q4 2014 Earnings Call	Q4 2014
Adobe Systems Inc	ADBE US	17:00	Q3 2014 Earnings Call	Q3 2014
Adobe Systems Inc	ADBE US	Aft-mkt	Q3 2014 Earnings Release	Q3 2014	0.264
MetLife Inc	MET US	19:30	Investor Day - Asia
Varian Medical Systems Inc	VAR US		Investor Meeting	Y 2014
Yum! Brands Inc	YUM US		Investor & Analyst Conference - Day 2	Y 2014
LPL Financial Holdings Inc	LPLA US		Roadshow - Chicago	Y 2014