Morning Call

OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14 -0.59%) this morning are down -0.56% and European stocks are down -0.86%, both at 1-1/2 week lows, as company earnings results disappointed. Samsung, the world’s biggest smartphone maker, fell 3.7% in South Korea and led technology stocks lower after it reported Q2 net income that fell short of consensus, while Lufthansa dropped nearly 6% after Europe’s second-largest airline said Q2 profit fell and predicted travel markets will remain weak in the second half of this year. Standard & Poor’s said Argentina was in default after it missed an interest payment on $13 billion of debt. Asian stocks closed mixed: Japan -0.16%, Hong Kong +0.10%, China +1.22%, Taiwan -1.39%, Australia +0.18%, Singapore +0.61%, South Korea -0.55%, India -0.74%. China’s Shanghai Stock Index climbed to its highest level in 7-1/2 months on speculation government stimulus and reform measures will boost economic growth. Commodity prices are mixed. Sep crude oil (CLU14 -0.72%) is down -0.74%at a 2-week low as it fell below $100 a barrel on dollar strength. Sep gasoline (RBU14 -0.56%) is down -0.69% at a 3-1/2 month low. Aug gold (GCQ14-0.05%) is up +0.05%. Sep copper (HGU14 -0.06%) is up +0.11%. Agriculture and livestock prices are lower. The dollar index (DXY00 +0.08%) is up +0.06%. EUR/USD (^EURUSD) is down -0.07% after weaker-than-expected Eurozone Jul CPI boosted the prospects for additional ECB easing measures. USD/JPY (^USDJPY) is up +0.08%. Sep T-note prices (ZNU14 -0.01%) are unchanged.

The Eurozone Jul CPI estimate unexpectedly weakened to +0.4% y/y, lower than expectations of unch at +0.5% y/y and the slowest pace of increase in 4-3/4 years. The Jul core CPI rose +0.8% y/y, right on expectations.

The Eurozone Jun unemployment rate unexpectedly fell -0.1 to 11.5%, better than expectations of no change at 11.6% y/y and the lowest in 1-3/4 years.

The German Jul unemployment change fell -12,000, over double expectations of -5,000 and the first decrease in 3 months. The Jul unemployment rate remained unchanged at 6.7%, right on expectations and the lowest since data for a reunified Germany began in 1991.

German Jun retail sales were mixed as sales rose +1.3% m/m, better than expectations of +1.0% m/m, but rose only +0.4% y/y, less than expectations of +1.3% y/y.

UK Jul GfK consumer confidence unexpectedly fell -3 points to -2, weaker than expectations of +1 to 2.

UK Jul nationwide house prices rose +0.1% m/m and +10.6% y/y, less than expectations of +0.5% m/m and +11.3% y/y.

Japan Jun labor cash earnings rose +0.4% y/y, less than expectations of +0.8% y/y.

U.S. STOCK PREVIEW

Today’s weekly initial unemployment claims report is expected to show a +16,000 gain to 300,000, reversing most of last week’s -19,000 decline to 284,000. Meanwhile, today’s continuing claims report is expected to show a -8,000 decline to 2.492 million, matching last week’s decline of -8,000 to 2.500 million. Today’s Q2 employment cost index is expected to strengthen to +0.5% q/q (+2.0% annualized) from +0.3% (+1.2% annualized) in Q1. Today’s July Chicago PMI report is expected to show a +0.4 point increase to 63.0, recovering some of the sharp -2.9 point loss to 62.6 seen in June.

There are 51 of the S&P 500 companies that report earnings today with notable reports including: Mastercard (consensus $0.77), Exxon (1.86), Kellogg (1.02), Expedia (0.76), CME Group (0.79), Time Warner (1.90), ConocoPhillips (1.61), Marathon Petroleum (2.20), ADP (0.63), Excelon (0.50). Equity conferences this week include the following: Institute of Validation technology on Tue-Thu, and Marcus Evans 13th Annual Outage Management for Power Plants Conference on Tue-Thu.

OVERNIGHT U.S. STOCK MOVERS

CME Group (CME +0.44%) reported Q2 EPS of 77 cents, below consensus of 79 cents.

Avon Products (AVP +0.39%) reported Q2 EPS of 20 cents, weaker than consensus of 21 cents.

Con-way (CNW +0.19%) reported Q2 EPS of 91 cents, well above consensus of 75 cents.

Lam Research (LRCX -1.32%) reported Q4 adjusted EPS of $1.25, better than consensus of $1.23.

Western Digital (WDC +0.38%) reported Q4 EPS of $1.85, stronger than consensus of $1.74.

Unum Group (UNM -0.46%) reported Q2 EPS of 94 cents, higher than consensus of 87 cents.

Endurance Specialty (ENH -0.19%) terminated its offer to acquire Aspen Insurance (AHL -0.63%) .

Hologic (HOLX +1.68%) reported Q3 EPS of 37 cents, better than consensus of 34 cents, and then raisd guidance on fiscal 2014 EPS view ex-items to $1.44-$1.45 from $1.37-$1.40, higher than consensus of $1.40.

Allstate (ALL -0.28%) gained nearly 3% in after-hours tradng after it reported Q2 operating EPS of $1.01, well above consensus of 70 cents.

MetLife (MET +0.65%) reported Q2 EPS of $1.39, less than consensus of $1.41.

Kraft Foods (KRFT -0.90%) dropped over 2% in after-hours trading after it reported Q2 EPS of 80 cents, weaker than consensus of 83 cents.

Fortune Brands (FBHS +0.11%) reported Q2 EPS of 55 cents, higher than consensus of 54 cents, although Q2 revenue of $1.14 billion was slightly less than consensus of $1.17 billion.

Whiting Petroleum (WLL -0.13%) rose over 1% in after-hours trading after it reported adjusted Q2 EPS of $1.40, stronger than consensus of $1.28.