Barchart Morning Call
Friday, April 26, 2013
June E-mini SPs this morning are trading mildly lower by -0.27% on some long liquidation pressure ahead of this morning’s U.S. Q1 GDP report, which is expected to show a significant improvement to +3.0% from +0.4% in Q4. E-minis are also seeing weakness due to this morning’s -0.94% sell-off in the Euro Stoxx 50 index. Asian stocks today closed mostly lower: Japan -0.30%, Hong Kong +0.65%, China CSI 300 index -0.83%, Taiwan unch, Australia -0.10%, Singapore +0.33%, South Korea -0.57%, India -0.62%, Turkey -0.42%. Commodity prices are slightly lower by -0.06% this morning. June WTI crude oil is down -0.75%, June gasoline is down -0.67%, June natural gas is down -0.29%, June gold is up +0.16%, May copper is down -1.20%, and agriculture prices are mixed. The dollar index is slightly lower by -0.07% while EUR/USD is down -0.03%. USD/JPY is down -0.59%. June 10-year T-note futures prices are up 4 ticks.
The Senate late yesterday before leaving for a week-long recess approved a bill that would halt air-traffic controller furloughs by allowing the FAA to move about $250 million among accounts within its budget. The House is in session today and could approve the bill and pass it along to the President for his signature. That would end four days of flight delays that are causing disruptions for airlines as well as businesses.
The Bank of Japan at its 2-day policy meeting left its aggressive new QE plan unchanged. The median estimate of BOJ board members is that Japan’s core inflation rate, excluding fresh food and sales tax increases, will rise to +1.9% y/y in the 2015-16 fiscal year (starting in April 2015) from the current -0.5% y/y level. The general market opinion is that the BOJ will have significant difficulty hitting that target given the deflationary forces in the Japanese economy. The BOJ may ease further later this year if inflation has not started rising quickly enough.
Japan’s March national CPI eased to -0.9% y/y from -0.7% in Feb and was weaker than market expectations of -0.8%. March CPI ex-fresh food fell by -0.5% y/y from -0.3% y/y in Feb and was weaker than market expectations of -0.4% y/y. Tokyo’s April CPI improved to -0.7% y/y from -1.0% in March. The April Tokyo CPI ex-fresh food improved to -0.3% y/y from -0.5% in March.
The German March import price index fell to -2.3% y/y from -1.6% in Feb and was in line with market expectations.
Eurozone March M3 eased to +2.6% y/y from +3.1% in Feb and was weaker than market expectations of +3.0%.
Today’s U.S. Q1 GDP report is expected to show a fairly strong increase of +3.0% (q/q annualized), up from the weak Q4 report of +0.4%. Today’s final-April U.S. consumer confidence index from the University of Michigan is expected to show a +1.2 point increase to 73.5 from the early-April level of 72.3. Sixteen of the SP 500 companies are scheduled to release earnings today. Of the 258 of the SP 500 companies that have released earnings thus far, 74% beat the consensus, which is well above the long-run average of 63%.
June E-mini SPs this morning are down -4.25 points (-0.27%) on this morning’s -0.94% sell-off in the Euro Stoxx 50 index and on some trepidation ahead of today’s Q1 GDP report (expected +3.0%). The SP 500 index on Thursday climbed to a 1-1/2 week high and settled higher. Bullish factors centered on (1) strong Q1 earnings results so far this reporting season as 73% of the 236 of the SP 500 companies that have reported earnings results have beaten estimates, (2) the -16,000 drop in U.S. weekly jobless claims to a 2-momth low of 339,000, better than expectations of -2,000 to 350,000, and (3) reduced global growth concerns after U.K. Q1 GDP rose +0.3% q/q and +0.6% y/y, stronger than market expectations of +0.1% q/q and +0.4% y/y. Closes: SP 500 +0.40%, Dow Jones +0.17%, Nasdaq 100 +0.51%.
- Of the 14 SP 500 companies that have released earnings this morning, all but two reported above consensus earnings. Companies reporting above-consensus earnings include: Weyerhaeuser (WY -0.10%) ($0.26 vs $0.23 consensus), Tyco (TYC +1.24%) (0.42 vs 0.39), Covidien (COV +0.11%) ((1.12 vs 1.09), Aon (AON +0.21%) (1.11 vs 1.10), LyondellBasell (LYB +0.98%) (1.56 vs 1.45), DR Horton (DHI +2.12%) (0.32 vs 0.19), VF Corp (VFC +2.62%) (2.43 vs 2.19), Simon Property Group (SPG -0.47%) (2.05 vs 1.90), Ventas (VTR -0.77%) (1.03 vs 1.00), DTE Energy (DTE -0.59%) (1.34 vs 1.07), and Goodyear (GT +3.44%) (0.45 vs 0.30). The two companies reporting below-consensus earnings were: American Electric Power (AEP -0.28%) (0.80 vs 0.81), and National Oilwell Varco (NOV +0.06%) (1.29 vs 1.36).
- Apple’s (AAPL +0.72%) share of the smartphone market in Q1 with its iPhone declined to 18% from 23% a year-earlier, according to a WSJ report today.
- Universal Health (UHS -0.35%) reported Q1 adjusted EPS of $1.22, better than consensus of $1.21.
- Dresser-Rand (DRC +0.11%) reported Q1 EPS of 43 cents, better than consensus of 41 cents.
- Lockheed Martin (LMT +0.59%) was awarded a $45.65 million government contract modification on a contract for C-5 Reliability Enhancement and Re-engining Program.
- Pfizer (PFE -1.11%) fell nearly 3% in after-hours trading after the European Medicines Agency’s Committee for Medicinal Products adopted a negative opinion for Xeljanz for the treatment of adult patients with moderate-to-severe active rheumatoid arthritis.
- Wynn Resorts (WYNN +2.59%) reported Q1 adjusted EPS of $2.03, much higher than consensus of $1.55.
- J.C. Penney (JCP +0.33%) jumped nearly 7% in after-hours trading after George Soros reported a 7.91% passive stake in the company.
- Principal Financial (PFG +0.51%) reported Q1 EPS of 79 cents, higher than consensus of 74 cents.
- Starbucks (SBUX +1.12%) reported Q2 EPS of 51 cents, higher than consensus of 48 cents, and raised guidance on fiscal 2013 to $2.12-$2.18 from $2.06-$2.15.
- Expedia (EXPE +1.23%) reported Q1 adjusted EPS of 25 cents, higher than consensus of 23 cents.
- Avery Dennison (AVY -1.66%) raised its quarterly dividend 2 cents to 29 cents per share.
- Amazon.com (AMZN +2.20%) rallied over 1% in after-hours trading after it reported Q1 EPS of 18 cents, higher than consensus of 9 cents.
June 10-year T-notes this morning are up 4 ticks on lower U.S. and European stock indexes and on some relief that this week’s $99 billion T-note auction package is over. June 10-year T-note futures prices on Thursday closed slightly lower. Negative factors included the larger-than-expected decline in U.S. weekly unemployment claims to their lowest level in 2 months (-16,000 to 339,000 vs. expectations of -2,000 to 350,000), and the rally in stocks, which reduced the safe-haven demand of Treasuries. Closes: TYM3 -1.5, FVM3 -0.50.
The dollar index this morning is slightly lower by -0.06 points (-0.07%), EUR/USD is down -0.0004 (-0.03%), and USD/JPY is down -0.59 yen (-0.59%). The dollar index on Thursday retreated and closed moderately lower. Bearish factors included the rally in equities, which reduces the safe-haven demand for the dollar, and strength in GBP/USD which rallied to a 2-month high after stronger-than-expected U.K. Q1 GDP. EUR/USD was on the defensive after Spain’s Q1 unemployment rate rose more than expected to a new record 27.2%, along with heightened speculation of an ECB rate cut next Thursday. Closes: Dollar index -0.283 (-0.34%), EUR/USD -0.003 (-0.02%), USD/JPY -0.258 (-0.26%).
June WTI crude oil this morning is down -0.70 (-0.75%) and June gasoline is down -0.0187 (-0.67%). June crude oil and gasoline closed higher on Thursday as June crude oil posted a 1-1/2 week high. Bullish factors included (1) a weaker dollar, (2) the rally in the SP 500 to a 1-1/2 week high, (3) the larger-than-expected decline in weekly U.S. jobless claims, and (4) the stronger than expected U.K. Q1 GDP, which reduces global growth concerns. Closes: CLM3 +2.21 (+2.42%), RBM3 +0.0588 (+2.14%).
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Barchart U.S. Morning Call is written by the experienced members of the Commodity Research Bureau and the Barchart Research Team. Commodity Research Bureau (CRB) has been providing research to the financial and commodity community since 1934. If you have any questions for our analysts, please contact us at support@crbtrader.com.
Sent every morning, “Morning Call” summarizes overnight global market news, along with a U.S. market forecast for the day ahead. It Includes upcoming earnings reports, a global financial calendar, and quote board overview of where the markets are standing.
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