Thursday, December 18, 2014

BARCHART MORNING CALL 12/18

BARCHART MORNING CALL

OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 +1.15%) this morning are up +1.06% and European stocks are up +2.35% as energy producers gained as crude oil rallied and on carry-over support from yesterday's FOMC meeting where the Fed pledged patience on raising interest rates. European stocks also received a boost after German investor confidence rose for a second month to a 4-month high. European government bonds rose after the Swiss National Bank (SNB) introduced negative interest rates for the first time since the 1970s as the Russian financial crisis and the threat of further ECB stimulus pressured the Swiss franc. Asian stocks closed mostly higher: Japan +2.32%, Hong Kong +1.09%, China -0.44%, Taiwan +0.57%, Australia +0.95%, Singapore +0.51%, South Korea +0.04%, India +1.56%. Commodity prices are higher. Jan crude oil (CLF15 +3.22%) is up +2.32% Jan gasoline (RBF15 +3.23%) is up +2.59%. Feb gold (GCG15 +0.95%) is up +1.05%. Mar copper (HGH15 -0.05%) is up +0.35%. Agriculture prices are stronger with Mar corn at a 5-1/2 month high and Mar wheat at a 6-3/4 month high. The dollar index (DXY00 -0.01%) is down -0.10%. EUR/USD (^EURUSD) is down -0.28% at a 1-week low as the action by the SNB to introduce negative interest rates that applies on the same date as the next ECB meeting boosted speculation the ECB will expand stimulus. USD/JPY (^USDJPY) is down -0.02%. Mar T-note prices (ZNH15 -0.21%) are down -7.5 ticks.
The German Dec IFO business climate rose +0.8 to 105.5, right on expectations and the highest in 4 months. The Dec IFO current assessment was unchanged at 110.0, weaker than expectations of +0.4 to 110.4. The Dec IFO expectations rose +1.3 to 101.1, better than expectations of +0.8 to 100.5.
The Swiss National Bank (SNB) imposed a negative interest rate of -0.25% on slight deposit account balances at the SNB that will apply as of Jan 22, The SNB also expanded the target range for the 3-month Libor to -0.75% to 0.25%.
UK Nov retail sales ex autos rose +1.7% m/m, stronger than expectations of +0.3% m/m and the largest increase in 11 months. On an annual basis, Nov retail sales ex autos rose +6.9% y/y, better than expectations of +4.5% y/y. Nov retail sales including autos rose +1.6% m/m and +6.4% y/y, with the +6.4% y/y increase the largest annual gain in 10-1/2 years.
Eurozone Oct construction output rose +1.3% m/m and +1.4% y/y.
U.S. STOCK PREVIEW
Today’s initial unemployment claims report is expected to show a small +1,000 increase to +295,000 and the continuing claims report is expected to show a -79,000 decline to 2.435 million.  Today’s Nov leading indicators report is expected to show another solid increase of +0.5%, adding to the sharp increase of +0.9% seen in October.  Today’s Dec Philadelphia Fed business outlook index is expected to show a sharp -14.8 point decline to 26.0.  There are 7 of the Russell 1000 companies that report earnings today:  Nike (consensus $0.70), Accenture (1.20), Rite Aid (0.05), ConAgra (0.61), Cintas (0.78), Red Hat (0.40), SandRidge Energy (0.04).  There are no equity conferences today.
OVERNIGHT U.S. STOCK MOVERS
Rite Aid (RAD +4.30%) reported Q3 EPS of 10 cents, double consensus of 5 cents, and then raised guidance on fiscal 2015 EPS view to 31 cents-37 cents, better than consensus of 31 cents.
Joy Global (JOY +0.20%) was upgraded to 'Neutral' from 'Underperform' at Longbow.
Starwood (HOT +1.01%) was initiated with a 'Buy' at Evercore ISI with a price target of $87.
Accenture PLC (ACN +2.93%) reported Q1 EPS of $1.29, higher than consensus of $1.20.
Exxon-Mobile (XOM +3.02%) climbed over 2% in pre-market trading as crude oil rose over +$1.00 a barrel.
Navistar (NAV +4.26%) gained over 2% in after-hours trading after activist investor Carl Icahn reported a 19.99% stake in the company.
AK Steel (AKS +6.11%) climbed over 5% in after-hours trading after it said it sees Q4 EPS of 5 cents-10 cents, above consensus of 4 cents.
Discover (DFS +3.31%) was initiated with a 'Buy' at Jefferies with a price target of $75.
Sally Beauty (SBH +2.11%) was initiated with an 'Overweight' at Piper Jaffray with a price target of $37.
Tupperware Brands (TUP -0.02%) was initiated with an 'Overweight' at Piper Jaffray with a price target of $77.
Jabil Circuit (JBL +1.93%) jumped over 4% in after-hours trading after it reported Q1 core EPS of 55 cents, higher than consensus of 48 cents, and then raised guidance on fiscal 2015 core EPS view to $1.85-$2.15, above consensus of $1.79.
Herman Miller (MLHR +3.29%) slid 6% in after-hours trading after it reported Q2 EPS ex-items of 51 cents, below consensus of 52 cents.
Oracle (ORCL +1.30%) rose over 4% in after-hours trading after it reported Q2 EPS of 69 cents, beter than consensus of 68 cents.
MARKET COMMENTS
Mar E-mini S&Ps (ESH15 +1.15%) this morning are up +21.25 points (+1.06%). The S&P 500 index on Wednesday closed sharply higher: S&P 500 +2.04%, Dow Jones +1.69%, Nasdaq +1.85%. Bullish factors included (1) slack inflation pressures after U.S. Nov CPI fell -0.3% m/m, weaker than expectations of -0.1% m/m and the largest monthly decline in nearly 6 years, (2) strength in energy producers after crude oil rallied, and (3) the post-FOMC meeting statement that said the Fed will be “patient” in its approach to raising interest rates.
Mar 10-year T-notes (ZNH15 -0.21%) this morning are down -7.5 ticks. Mar 10-year T-note futures prices on Wednesday closed lower: TYH5 -22.00, FVH5 -15.00. Bearish factors included (1) the post-FOMC statement that said the labor market “improved further” and that “underutilization of labor resources continues to diminish,” which signals policy makers are a step closer to raising interest rates, and (2) reduced safe-haven demand after stocks rallied.
The dollar index (DXY00 -0.01%) this morning is down -0.089 (-0.10%). EUR/USD (^EURUSD) is down -0.0034 (-0.28% at a 1-week low. USD/JPY (^USDJPY) is down -0.02 (-0.02%). The dollar index on Wednesday posted a 1-week high and closed higher. Closes: Dollar index +1.008 (-0.38%), EUR/USD -0.01688 (-1.35%), USD/JPY +2.240 (+1.92%). Bullish factors included (1) the post-FOMC meeting statement that said the labor market “improved further,” which signals the Fed is closer to raising interest rates, and (2) weakness in EUR/USD on signs the ECB may soon expand stimulus after ECB Executive Board member Coeure said “there is a broad consensus on the ECB Governing Council to do more and we are now discussing the instruments to use.”
Jan WTI crude oil (CLF15 +3.22%) this morning is up +$1.31 (+2.32%) a barrel and Jan gasoline (RBF15 +3.23%) is up +0.0406 (+2.59%). Jan crude and Jan gasoline prices Wednesday closed higher. Closes: CLF5 +0.54 (+0.97%), RBF5 +0.0252 (+1.64%). The main bullish factor was fund short covering after prices failed to take out Tuesday’s 5-1/2 year lows. Negative factors included (1) the +5.25 million bbl surge in weekly EIA gasoline inventories to a 9-month high of 222 million bbl, three times more than expectations of +1.75 million bbl, and (2) the +2.92 million bbl increase in crude supplies at Cushing, OK, the delivery point of WTI futures, to an 8-1/2 month high of 27.8 million bbl.
GLOBAL EVENT CALENDAR12/18/2014
US0830 ETWeekly initial unemployment claims expected +1,000 to 295,000, previous -3,000 to 294,000. Weekly continuing claims expected -79,000 to 2.435 million, previous +132,000 to 2.514 million.
0830 ETUSDA weekly Export Sales.
0945 ETPreliminary Dec Markit U.S. services PMI expected +0.1 to 56.3, Nov -0.9 to 56.2.
1000 ETNov leading indicators expected +0.5%, Oct +0.9%.
1000 ETDec Philadelphia Fed business outlook expected -14.8 to 26.0, Nov +20.1 to 40.8.
1100 ETTreasury announces amount of 2-year T-notes (previous $28 billion), 2-year floating rate notes (previous $13 billion), 5-year T-notes (previous $35 billion) and 7-year T-notes (previous $29 billion) to be auctioned Dec 22-26.
1300 ETTreasury auctions $16 billion of 5-year TIPS.
GER0400 ETGerman Dec IFO business climate expected +0.8 to 105.5, Nov 104.7. Dec IFO current assessment expected +0.4 to 110.4, Nov 110.0. Dec IFO expectations expected +0.8 to 100.5, Nov 99.7.
UK0430 ETUK Nov retail sales ex autos expected +0.3% m/m and +4.5% y/y, Oct +0.8% m/m and +4.6% y/y.
0430 ETUK Nov retail sales including autos expected +0.4% m/m and +4.4% y/y, Oct +0.8% m/m and +4.3% y/y.
1905 ETUK Dec GfK consumer confidence expected +1 to -1, Nov -2.
EUR0500 ETEurozone Oct construction output, Sep -1.8% m/m and -1.7% y/y.
JPN2330 ETJapan Oct all-industry activity index expected unch m/m, Sep +1.0% m/m.
U.S. STOCK CALENDAR12/18/2014
CompanyTickerTimeEvent DescriptionPeriodEstimate
Accenture PLCACN USBef-mktQ1 2015 Earnings ReleaseQ1 20151.199
Rite Aid CorpRAD US7:00Q3 2015 Earnings ReleaseQ3 20150.054
ConAgra Foods IncCAG US7:30Q2 2015 Earnings ReleaseQ2 20150.609
Accenture PLCACN US8:00Q1 2015 Earnings CallQ1 2015
Rite Aid CorpRAD US8:30Q3 2015 Earnings CallQ3 2015
AutoZone IncAZO US9:00Annual General Meeting
AutoZone IncAZO US9:00Annual General MeetingY 2014
Progressive Corp/ThePGR US9:00Acquisition of Controlling Interest in American Strategic Insurance by Progress
ConAgra Foods IncCAG US9:30Q2 2015 Earnings CallQ2 2015
Coca-Cola Enterprises IncCCE US10:00Q4 2015 Guidance CallQ4 2015
NIKE IncNKE US16:15Q2 2015 Earnings ReleaseQ2 20150.701
NIKE IncNKE US17:00Q2 2015 Earnings CallQ2 2015
Cintas CorpCTAS US17:00Q2 2015 Earnings CallQ2 2015
Red Hat IncRHT US17:00Q3 2015 Earnings CallQ3 2015
Cintas CorpCTAS USAft-mktQ2 2015 Earnings ReleaseQ2 20150.776
Red Hat IncRHT USAft-mktQ3 2015 Earnings ReleaseQ3 20150.399
SandRidge Energy IncSD USQ3 2014 Earnings ReleaseQ3 20140.038
Madison Square Garden Co/TheMSG USAnnual General Meeting
Zillow IncZ USSpecial Meeting - M&A Vote
Posted by Jim Van Meerten at
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