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OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ15-0.27%) are down -0.12% and European stocks are down -0.22% at a 1-week low as deflation concerns in China weighed on global equity markets. Miners and raw material producers are weaker after China Oct producer prices fell by the most in 6 years, which undercut industrial metals prices and sent the price of copper (HGZ15-0.65%) down -0.78% to a 2-1/2 month low. Asian stocks settled mostly lower: Japan +0.15%, Hong Kong -1.43%, China -0.18%, Taiwan -1.22%, Australia -0.40%, Singapore closed for holiday, South Korea -1.34%, India -1.45%. Japan's Nikkei Stock index bucked the trend and closed higher as bank stocks rallied after Reuters reported that the government is considering raising the deposit limit on savings accounts by between 3 million yen ($24,347) and 5 million yen this fiscal year. Losses in Chinese stocks were limited on speculation the weaker-than-expected China Oct CPI gives the PBOC more room for monetary easing.
The dollar index (DXY00 +0.13%) is up +0.20%. EUR/USD (^EURUSD) is down -0.18% on the prospects for additional easing measures from the ECB. USD/JPY (^USDJPY) is up +0.03%.
Dec T-note prices (ZNZ15 +0.15%) are up +5.5 ticks.
ECB Board member and Bank of Finland Governor Liikanen said that "decelerating growth in the emerging economies threatens to dampen global activity" and the Governing Council "is willing and able to act by using all the instruments available within its mandate if warranted in order to maintain an appropriate degree of monetary accommodation."
Reuters reports that four unnamed ECB Governing Council members say a consensus is forming around cutting the deposit rate in December, which currently stands at -0.2%. Three of the policymakers say debate is now about the size of the rate cut with some arguing that a -0.1% reduction is already priced in by markets.
China Oct CPI rose +1.3% y/y, less than expectations of +1.5% y/y and the slowest pace of increase in 5 months.
China Oct PPI fell -5.9% y/y, right on expectations and the fastest pace of decline in 6 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Oct import price index (expected -0.1% m/m and -9.4% y/y, Sep -0.1% m/m and -10.7% y/y), (2) Sep wholesale inventories (expected +0.1% m/m, Aug +0.1% m/m) and Sep wholesale trade sales (expected -0.1% m/m, Aug -1.0% m/m), (3) the Treasury's auction of $24 billion of 10-year T-notes, and (4) Chicago Fed President Charles Evans' speech on a panel at a conference on government debt management.
There are 2 of the S&P 500 companies that report earnings today: DR Horton (consensus $0.63), Rockwell Automation (1.78).
U.S. IPO's scheduled to price today: Mesoblast Ltd (MBLTY), WaVe Life Sciences (SVE), Voyager Therapeutics (VYGR), Equity Bancshares (EQBK), Advanced Accelerator (AAAP), American CareSource Holdings (GNOW).
Equity conferences today include: Morgan Stanley Global Chemicals & Agriculture Conference on Mon-Tue, Baird Healthcare Conference on Mon-Wed, Edison Electric Institute Financial Conference on Mon-Wed, Robert W. Baird & Co. Industrial Conference on Mon-Wed, Citi Financial Technology Conference on Tue, J.P. Morgan Ultimate Services Investor Conference on Tue, Mizuho Securities Technology Corporate Access Day on Tue, Mitsubishi UFJ Securities: Healthcare Conference - Seattle on Tue, Bank of America Merrill Lynch Global Energy Conference on Tue-Wed, Credit Suisse Boston Financials Conference on Tue-Wed, Credit Suisse Health Care Conference on Tue-Wed, Wells Fargo Securities Technology, Media and Telecom Conference on Tue-Wed, RBC Capital Markets Technology, Internet, Media and Telecommunications Conference on Tue-Wed, Stephens Inc Fall Investment Conference on Tue-Wed, Jefferies Energy Conference on Wed, UBS Building & Building Products CEO Conference on Wed.
OVERNIGHT U.S. STOCK MOVERS
The Gap (GPS-2.81%) slid over 4% in pre-market trading after it reported Oct same-store-sales were down -3.0% y/y, weaker than estimates of down-0.4% y/y. Gap then lowered guidance on Q3 adjusted EPS to 62 cents-63 cents, below consensus of 67 cents.
DR Horton (DHI-2.14%) reported Q4 EPS of 71 cents, higher than consensus of 63 cents.
Rockwell Automation (ROK-1.11%) reported Q4 EPS of $1.57, less than consensus of $1.78.
Synchrony Financial (SYF-4.30%) will replace Genworth (GNW +0.42%) in the S&P 500 as of the close of trading on Nov 17.
Foot Locker (FL +0.36%) was downgraded to 'Neutral' from 'Buy' at Buckingham.
Rackspace Hosting (RAX-4.21%) climbed over 7% in after-hours trading after it reported Q3 EPS of 26 cents, higher than consensus of 21 cents.
International Flavors & Fragrances (IFF +0.80%) reported Q3 EPS of $1.39, higher than consensus of $1.35.
McDermott (MDR-2.60%) rose over 5% in after-hours trading after it reported Q3 adjusted EPS of 9 cents, better than consensus of 5 cents.
Caesars Entertainment (CZR-1.72%) fell over 2% in after-hours trading after it reported a continuing operations Q3 EPS loss of -$5.44 and said that results prior to Jan of 2015 have not been adjusted to reflect its filing for Chapter 11.
Lionsgate (LGF-2.77%) tumbled 6% in after-hours trading after it reported an unexpected Q2 EPS loss of -19 cents, weaker than consensus of a 6 cent profit.
OPKO Health (OPK-0.10%) rose over 5% in after-hours trading after it reported Q3 EPS of 25 cents, much better than consensus for a -2 cent loss.
Jazz Pharmaceuticals (JAZZ-1.82%) fell nearly 4% in after-hours trading after it lowered guidance on fiscal 2015 EPS to $9.45-$9.60 from an Aug estimate of $9.45-$9.75, below consensus of $9.66.
Depomed (DEPO +1.21%) climbed 6% in after-hours trading after it reported adjusted Q3 EPS of 33 cents, better than consensus of 19 cents.
Dec E-mini S&Ps (ESZ15-0.27%) this morning are down -2.50 points (-0.12%). Monday's closes: S&P 500 -0.98%, Dow Jones -1.00%, Nasdaq -1.10%. The S&P 500 on Monday sold off to a 1-week low and closed lower on concern that the slowdown in China will undercut global growth after China Oct exports fell -6.9% y/y, more than expectations of -3.2% y/y, and after China Oct imports fell -18.8% y/y, more than expectations of -15.2% y/y. In addition, the OECD cut its global economic forecast for the second time in three months, cutting its global 2015 GDP estimate to 2.9% from a Sep forecast of 3.0%.
Dec 10-year T-notes (ZNZ15 +0.15%) this morning are up +5.5 ticks. Monday's closes: TYZ5 -0.50, FVZ5 unch. Dec T-notes on Monday posted a fresh 3-1/2 month nearest-futures low but recovered and closed little changed. T-notes were undercut by negative carryover from Friday's larger-than-expected increase in U.S. Oct non-farm payrolls and on the larger-than-expected increase in U.S. Oct average hourly earnings, which bolstered the likelihood that the Fed will raise interest rates at December's FOMC meeting. T-notes were also undercut by comments from Chicago Fed President Evans, who previously argued that the Fed should wait until next year to raise interest rates, when he said he's "not predisposed" to vote against raising interest rates at the Dec FOMC meeting. T-notes recovered nearly all of their losses on increased safe-haven demand after stocks sold off.
The dollar index (DXY00 +0.13%) this morning is up +0.195 (+0.20%). EUR/USD (^EURUSD) is down -0.0019 (-0.18%). USD/JPY (^USDJPY) is up +0.04 (+0.03%). Monday's closes: Dollar Index -0.189 (-0.19%), EUR/USD +0.0011 (+0.10%), USD/JPY +0.05 (+0.04%). The dollar index on Monday closed lower on strength in EUR/USD after the Eurozone Nov Sentix investor confidence rose more than expected. The dollar index was also undercut by the weaker-than-expected China Oct exports and imports report that signaled weakness in China's economy that may slow global growth and prompt the Fed to delay an interest rate increase.
Dec crude oil (CLZ15 +0.59%) this morning is up +12 cents (+0.27%) and Dec gasoline (RBZ15-0.30%) is down -0.0090 (-0.66%). Monday's closes: CLZ5 -0.42 (-0.95%), RBZ5 +0.0021 (+0.15%). Dec crude oil and gasoline on Monday settled mixed with Dec crude at a 1-week low. Crude oil prices were undercut by concerns about global economic growth after the weak Chinese trade report and after the OECD cut its 2015 and 2016 global GDP estimates. Gasoline prices found support on the weaker dollar and the increase in the crack spread to a 2-month high, which signals strong demand for gasoline and distillate products.
GLOBAL EVENT CALENDAR11/10/2015
Oct import price index expected -0.1% m/m and -9.4% y/y, Sep -0.1% m/m and -10.7% y/y.
Sep wholesale inventories expected +0.1% m/m, Aug +0.1% m/m. Sep wholesale trade sales expected -0.1% m/m, Aug -1.0% m/m.
USDA Nov WASDE crop production.
Treasury auctions $24 billion 10-year T-notes.
Chicago Fed President Charles Evans speaks on a panel at a conference on government debt management.
Japan Oct eco-watchers survey current expected +0.5 to 48.0, Sep 47.5. Oct eco-watchers survey outlook expected +0.2 to 49.3, Sep 49.1.