Barchart Morning Call

By Jim Van Meerten of Barchart
Date: Monday, July 7, 2014 10:56 AM EST

OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14  -0.05%) this morning are down -0.16% and European stocks are down -0.32% after German May industrial production unexpectedly declined for a third straight month. Also, IMF Managing Director Lagarde hinted that it may cut its global growth forecasts, saying investment is still weak and that risks remain in the U.S. even as its recovery accelerates. Asian stocks closed mixed: Japan -0.37%, Hong Kong -0.02%, China -0.11%, Taiwan +0.11%, Australia -0.11%, Singapore +0.59%, South Korea -0.26%, India +0.53%. Commodity prices are mostly lower. Aug crude oil (CLQ14  +0.17%) is down -0.20%. Aug gasoline (RBQ14  -0.18%) is down -0.49%. Aug gold (GCQ14  -0.50%) is down -0.41%. Sep copper (HGU14  -0.58%) is down -0.79%. Agriculture prices are unch. The dollar index (DXY00  -0.02%) is up +0.02% at a 1-week high after Goldman Sachs revised its forecast for the Fed to start raising interest rates in Q3 of 2015 rather than Q1 of 2016, saying the economy is "accelerating to an above-trend pace.". EUR/USD (^EURUSD ) is down -0.01% at a 2-week low after German May industrial production unexpectedly plunged by the most in 2 years. USD/JPY (^USDJPY ) is down -0.12%. Sep T-note prices (ZNU14 +0.01%) are up +0.5 of a tick.

German May industrial production unexpectedly fell -1.3% m/m, weaker than expectations of unch m/m, the third straight monthly decline and the sharpest drop in 2 years. On an annual basis, May industrial production rose +1.3% y/y, weaker than expectations of +3.6% y/y.

Eurozone Jul Sentix investor confidence unexpectedly rose +1.6 to 10.1, better than expectations of -0.7 to 7.8.

UK Jun Lloyds employment confidence fell -3 points to 1.

The Japan May leading index CI fell -0.8 to 105.7, a bigger decline than expectations of -0.6 to 105.9 and the lowest in 15 months. The May coincident index was unch at 111.1, higher than expectations of -0.1 to 111.0.

U.S. STOCK PREVIEW

There are no U.S. economic reports today. None of the Russell 1000 companies report earnings today. Equity conferences this week include: MicroStrategy Global User Conference on Tue, SEMICON West Conference on Tue, and Paris Europlace Financial Forum: Europe 2020 a Driver to Global Growth? on Tue-Wed.

OVERNIGHT U.S. STOCK MOVERS

Bed Bath & Beyond (BBBY  +2.68%) was downgraded to 'Underperform' from 'Neutral' at BofA/Merrill.

Williams-Sonoma (WSM  +0.51%) and Ultratech (UTEK  -0.61%) were both upgraded to 'Buy' from 'Neutral' at BofA/Merrill.

Cinemark (CNK  +0.45%) was downgraded to 'Neutral' from 'Buy' at B. Riley.

Southern Copper (SCCO  +3.51%) was upgraded to 'Outperform' from 'Market Perform' at BMO Capital.

Charles Schwab (SCHW  +2.55%) was upgraded to 'Market Perform' from 'Underperform' at Raymond James.

Applied Materials (AMAT  +0.09%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan.

Devon Energy (DVN  +0.80%) and Western Refining (WNR  +2.58%) were both upgraded to 'Buy' from 'Neutral' at Citigroup.

Peabody ({=BTU and Coeur Mining ({=CDE were both downgraded to 'Hold' from 'Buy' at Deutsche Bank.

Deutsche Boerse (DBOEY  -0.52%) was downgraded to 'Underperform' from 'Neutral' at Credit Suisse.

DT Advanced Technologies (GTAT  -1.11%) slid over 6% in pre-market trading after Canaccord Genuity Group downgraded the stock to 'Hold' from 'Buy.'

Ebay (EBAY  +0.77%) rose nearly 1% in pre-market trading after it said it extended a collect-in-store alliance with the UK's Argos chain to 650 outlets from 150.

King Digital Entertainment (KING  -2.93%) rose nearly 3% in pre-market trading after Piper Jaffray upgraded the stock to 'Overweight' from 'Neutral.'

Archer-Daniels Midland (ADM  +0.99%) rose 0.5% in pre-market trading after it said it will acquire Wild Flowers GmbH for $3 billion.

Sandell reported an 8.4% stake in Bob Evans (BOBE  +1.17%) .

Gabelli reported an 8.45% stake in PLX Technology (PLXT  unch) .

MARKET COMMENTS

Sep E-mini S&Ps (ESU14  -0.05%) this morning are down -3.25 points (-0.16%). The S&P 500 index on Thursday posted a fresh record high and closed higher. The main bullish factor was the U.S. Jun payrolls report that showed (1) a +288,000 increase in Jun non-farm payrolls, stronger than expectations of +215,000, and (2) an unexpected -0.2 point drop in the Jun unemployment rate to 6.1%, indicating a stronger labor market than expectations of unchanged at 6.3% and the lowest in nearly 6 years. Closes: S&P 500 +0.55%, Dow Jones +0.54%, Nasdaq +0.61%.

Sep 10-year T-notes (ZNU14  +0.01%) this morning are up +0.5 of a tick. Sep 10-year T-note futures prices on Thursday slipped to a 2-week low and closed lower. Bearish factors included (1) the stronger-than-expected Jun payrolls report, and (2) reduced safe-haven demand for T-notes after the S&P 500 rallied to a new record high. Closes: TYU4 -5.50, FVU4 -5.00.

The dollar index (DXY00  -0.02%) this morning is up +0.014 (+0.02%) at a 1-week high. EUR/USD (^EURUSD ) is up +0.0001 (+0.01%). USD/JPY (^USDJPY ) is down -0.12 (-0.12%). The dollar index on Thursday closed higher after stronger-than-expected U.S. Jun non-farm payrolls boosted speculation the Fed will bring forward the timing of expected interest rate increases. EUR/USD fell back after ECB President Draghi kept open the possibility of quantitative easing by the ECB when he said "we are strongly determined to safeguard the firm anchoring of inflation expectations over the medium term" and stand ready to embark on broad-based asset purchases if necessary. Closes: Dollar index +0.256 (+0.32%), EUR/USD -0.0048 (-0.35%). USD/JPY +0.408 (+0.40%).

Aug WTI crude oil (CLQ14  +0.17%) this morning is down -21 cents (-0.20%). Aug gasoline (RBQ14  -0.18%) is down -0.0148 (-0.49%). Aug crude and gasoline prices on Thursday tumbled to 3-week lows and closed lower. Negative factors included (1) signs of increased supplies after Libya said it was opening the Es Sider and Ras Lanuf oil export facilities after it reached an agreement with rebels who have blockaded the ports for the past year, and (2) speculation Hurricane Arthur will curb fuel demand on the U.S. East coast over the Fourth of July holiday. Closes: CLQ4 -0.42 (-0.41%) RBQ4 -0.0060 (-0.20%).

GLOBAL EVENT CALENDAR07/07/2014

US 1100 ET USDA weekly grain export inspections.
  1600 ET USDA weekly crop progress.
JPN 0100 ET Japan May leading index CI expected -0.5 to 106.0, Apr 106.5. May coincident index expected -0.1 to 111.0, Apr 111.1.
GER 0200 ET German May industrial production expected +0.2% m/m and +3.5% y/y, Apr +0.2% m/m and +1.8% y/y.
EUR 0430 ET Eurozone Jul Sentix investor confidence, Jun 8.5.
UK 0430 ET UK Jun Lloyds employment confidence, May 4.

U.S. STOCK CALENDAR07/07/2014

Company Name Ticker Time Event Description Period Estimate
Bed Bath & Beyond Inc BBBY US 9:00 Annual General Meeting Y 2014  
Applied Materials Inc AMAT US 16:30 Analyst Briefing Y 2014  
Brookdale Senior Living Inc BKD US   Annual General Meeting

Disclosure: None