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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 +0.17%) this morning are unchanged and European stocks are up +0.01% as the markets await the U.S. Aug payrolls report later this morning. Asian stocks closed mixed: Japan -1.45%, Hong Kong +0.10%, China +0.68%, Taiwan -0.06%, Australia +0.05%, Singapore +0.29%, South Korea +0.25%, India +1.53%. Gains in European stocks were muted after German industrial output in July fell by the most in 15-months and after German exports in July declined. Commodity prices are mixed. Oct crude oil (CLV13 +0.37%) is up +0.18% and Oct gasoline (RBV13 +0.28%) is down -0.08%. Dec gold (GCZ13 -0.27%) is down -0.52% and Dec copper (HGZ13 +1.05%) is up +0.83%. Agricultural and livestock prices are mixed. The dollar index (DXY00 -0.11%) is down -0.04%. EUR/USD (^EURUSD) is down -0.11%% at a 7-week low after an unexpected decline in German July exports and weaker-than-expected German industrial production undercut the euro. USD/JPY (^USDJPY) is down -0.39%. December T-note prices (ZNZ13 +0.18%) are up +4.5 ticks.The German July trade balance shrank to a +16.1 billion euro surplus from a revised +17.0 billion euro surplus in June, narrower than expectations of a +16.5 billion euro surplus. July exports unexpectedly declined -1.1% m/m, weaker than expectations of a +0.7% m/m increase. July imports rose +0.5% m/m, weaker than expectations of +0.7% m/m.
German July industrial production fell -1.7% m/m and -2.2% y/y, weaker than expectations of -0.5% m/m and +0.9% y/y with the -1.7% m/m decline the biggest monthly drop in 15-months.
German Q2 labor costs were unch q/q and up +1.8% y/y, lower than the revised Q1 increase of +1.0% q/q and +3.7% y/y.
UK July industrial production was unch m/m and -1.6% y/y, slightly weaker than expectations of +0.2% m/m and -1.7% y/y.
UK July manufacturing production rose +0.2% m/m and fell -0.7% y/y, right on expectations.
The Japan July leading index CI rose +0.6 from June to 107.8, slightly weaker than expectations of +0.7 to 107.9. The July coincident index rose +0.9 to 106.4, weaker than expectations of +1.4 to 106.9.
U.S. STOCK PREVIEW
Today’s Aug non-farm payroll report is expected to show a respectable increase of +180,000, which would be an improvement from July’s report of +162,000. Meanwhile, today’s Aug unemployment rate is expected to be unchanged from July’s 4-3/4 year low of 7.4%. There is only one of the Russell 1000 companies that reports earnings today: Smithfield Foods (consensus $0.47).
OVERNIGHT U.S. STOCK MOVERS
Bloomberg reports that memory chip prices have jumped +19% after SK Hynix, the firm that makes almost one-third of the world's DRAM chips, suspended operations in China after a factory fire two days ago.eBay (EBAY +0.97%) was upgraded to "Outperform" from "Neutral" at RW Baird.
Constellation Brands (STZ +0.91%) was upgraded to "Buy" from "Neutral" at BofA/Merrill.
Five Below (FIVE +2.84%) was upgraded to "Buy" from "Neutral" at UBS who also raised their price target on the stock tp $45 from $39.
Stryker (SYK +0.77%) was upgraded to "Outperform" from "Neutral" at Credit Suisse.
Smith & Wesson (SWHC +3.52%) fell over 4% in after-hours trading after it reported Q1 EPS of 40 cents, stronger than consensus of 36 cents, but then gave guidance on Q2 EPS of 20 to 22 cents, below consensus of 29 cents.
M&T Bank (MTB +0.34%) was downgraded to "Neutral" from "Outperform" at Credit Suisse.
VeriFone (PAY +2.17%) rose over 5% in after-hours trading after it reported Q3 EPS of 24 cents, stronger than consensus of 20 cents.
Cooper Companies (COO -0.08%) reported Q3 EPS of $1.74, better than consensus of $1.72, and raised its guidance on fiscal 2013 EPS to $6.23-$6.28 from $6.15-$6.25, stronger than consensus of $6.22.
Gap (GPS -0.39%) reported that its August net same-store sales were up 2% y/y.
MARKET COMMENTS
Sep E-mini S&Ps (ESU13 +0.17%) this morning are unchanged. The S&P 500 index on Thursday climbed to a 1-week high and settled slightly higher as stronger-than-expected data bolstered the economic outlook. Weekly jobless claims fell -9,000 to just above a 5-year low and the Aug ISM non-manufacturing index unexpectedly climbed +2.6 to a 7-1/2 year high of 58.6, better than expectations of a -1.0 point decline to 55.0. Gains were muted by ongoing Syrian concerns along with a jump in the 10-year T-note yield to a 2-year high of 2.98%. Closes: S&P 500 +0.12%, Dow Jones +0.04%, Nasdaq 100 +0.17%.Dec 10-year T-notes (ZNZ13 +0.18%) this morning are up +4.5 ticks. Dec 10-year T-note prices on Thursday tumbled to a contract low and the 10-year T-note yield rose to a 2-year high of 2.98% after a bigger decline in weekly jobless claims and a surge in the Aug ISM non-manufacturing index to a 7-1/2 year high heightened speculation the Fed will cut its bond purchases at the Sep 17-18 FOMC meeting. Closes: TYZ3 -22.00, FVZ3 -16.00.
The dollar index (DXY00 -0.11%) this morning is down -0.032 (-0.04%). EUR/USD (^EURUSD) is down -0.0014 (-0.11%) at a 7-week low and USD/JPY (^USDJPY) is down -0.39 (-0.39%). The dollar index on Thursday climbed to a 7-week high and closed higher. Bullish factors included (1) increased prospects for the Fed to taper QE3 in 2 weeks after the Aug ISM non-manufacturing index rose to its best level in 7-1/2 years, and (2) the slide in EUR/USD to a 7-week low after ECB President Draghi said officials discussed a cut in interest rates at Thursday’s policy meeting to stem a rise in market rates. Closes: Dollar index +0.464 (+0.56%), EUR/USD -0.00867 (-0.66%), USD/JPY +0.358 (+0.36%).
Oct WTI crude oil (CLV13 +0.37%) this morning is up +20 cents (+0.18%) and Oct gasoline (RBV13 +0.28%) is down -0.0023 (-0.08%). Oct crude oil and gasoline prices on Thursday settled mixed. Crude prices rallied after weekly EIA data showed crude oil stockpiles at Cushing, OK, the delivery point for WTI futures, fell sharply by -1.8 million bbls to a 17-month low of 34.759 million bbl. Oct gasoline fell to a 2-week low on speculation that supplies are adequate as gasoline demand is expected to fall with the end of the summer driving season. Closes: CLV3 +1.14 (+1.06%), RBV3 -0.0283 (-0.99%).
GLOBAL EVENT CALENDAR09/06/2013
| US | 0800 ET | Chicago Fed President Charles Evans speaks at the AgFirst Farm Credit Bank 2013 Summit. |
| 0830 ET | Aug non-farm payrolls expected +180,000, July +162,000. Aug private payrolls expected +180,000, July +161,000. Aug manufacturing payrolls expected +5,000, July +6,000. Aug unemployment rate expected unch at 7.4%, July -0.2 to 7.4%. | |
| 0830 ET | Aug avg hourly earnings expected +0.2% m/m, July -0.1% m/m and +1.9% y/y. Aug avg weekly hours expected +0.1 to 34.5 hours, July 34.4 hours. | |
| 0830 ET | USDA weekly Export Sales. | |
| 1330 ET | Kansas City Fed President Esther George speaks on the economy at the Kansas City Feds Business Leaders Luncheon. | |
| JPN | 0100 ET | Japan July leading index CI expected +0.7 to 107.9, Jun 107.2. July coincident index expected +1.4 to 106.9, Jun 105.5. |
| 0100 ET | BOJ monthly economic report for September. | |
| GER | 0200 ET | German July current account balance expected +14.0 billion euros, Jun +17.3 billion euros. |
| 0200 ET | German July trade balance expected +16.5 billion euros, Jun +16.9 billion euros. July exports expected +0.7%, Jun +0.7% m/m. July imports expected +0.7%, Jun -1.0% m/m. | |
| 0200 ET | German Q2 labor costs, Q1 +1.1% q/q and +3.9% y/y. | |
| 0600 ET | German July industrial production expected -0.5% m/m and +0.9% y/y, Jun +2.4% m/m and +2.0% y/y. | |
| UK | 0430 ET | UK Jul industrial production expected +0.2% m/m and -1.7% y/y, Jun +1.1% m/m and +1.2% y/y. |
| 0430 ET | UK July manufacturing production expected +0.1% m/m and -0.7% y/y, Jun+1.9% m/m and +2.0% y/y. | |
| 0430 ET | UK Aug BOE/GfK inflation expectations survey for next 12-months, May +3.6%. |
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