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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH16 +0.70%) are up +0.73% and European stocks are up +1.89%, both at 1-week highs, as a rally in crude oil lifts energy producers. Bank stocks are also higher, led by a 11% jump in Credit Agricole, after it said it will sell back stakes in regional banks to shore up capital. Asian stocks settled mixed: Japan -1.36%, Hong Kong -1.03%, China +1.08%, Taiwan +0.03%, Australia -0.57%, Singapore -1.16%, South Korea +0.18%, India +0.82%. China's Shanghai Composite pushed up to a 3-week high on signs the government will increase stimulus after people familiar with the matter said that China's chief planning agency is making more money available to local governments to fund new infrastructure projects.
The dollar index (DXY00-0.02%) is down -0.02% and fell back from a 1-week high after dovish comments from Boston Fed President Rosengren who said that weak inflation should slow the pace of Fed interest rate hikes. EUR/USD (^EURUSD) is up +0.04%. USD/JPY (^USDJPY) is down -0.04%.
Mar T-note prices (ZNH16-0.14%) are down -4.5 ticks.
Boston Fed President Rosengren said Tuesday night that "recent global events may make it less likely that the 2% inflation target will be achieved as quickly as had been projected in recent forecasts. If inflation is slower to return to target, monetary policy normalization should be unhurried."
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +9.3% with purchase sub-index +0.2% and refi sub-index +15.8%), (2) Jan housing starts (expected +1.8% to 1.170 million, Dec -2.5% to 1.149 million), (3) Jan PPI final demand (expected -0.2% m/m and -0.6% y/y, Dec -0.2% m/m and -1.0% y/y) and Jan PPI ex food & energy (expected +0.1% m/m and +0.4% y/y, Dec +0.1% m/m and +0.3% y/y), (4) Jan industrial production (expected +0.3%, Dec -0.4%), (5) the minutes of the Jan 26-27 FOMC meeting, and (6) St. Louis Fed President James Bullard's speech about the U.S. economic outlook and monetary policy to the CFA Society of St. Louis.
There are 13 of the S&P 500 companies that report earnings today with notable reports including: Marathon Oil (consensus -$0.48), Williams Cos (0.27), Newmont Mining (0.13%), Marriott (0.76), Priceline (11.73), Dr Pepper Snapple (0.98).
U.S. IPO's scheduled to price today: none.
Equity conferences this week include: Consumer Analysts Group of New York Investor Conference on Tue.
OVERNIGHT U.S. STOCK MOVERS
Boeing (BA +3.65%) gained over 1% in pre-market trading after it said it secured a $1.3 billion order for planes from China's Okay Airways.
Kinder Morgan (KMI +4.41%) climbed over 9% in pre-market trading after a regulatory filing showed that Berkshire Hathaway added investment in the company in Q4.
HealthStream (HSTM +1.36%) was upgraded to 'Buy' from 'Hold' at Needham & Co. with a 12-month price target of $26.
Express Scrips (ESRX +1.95%) dropped over 1% in after-hours trading after it reported Q4 revenue of $26.2 billion, below consensus of $26.6 billion.
Fossil Group (FOSL +3.36%) jumped over 11% in after-hours trading after it reported Q4 GAAP EPS of $1.46, well above consensus of $1.30.
Icahn Associates Corp. said that it added almost 12 million shares of Hertz Global Holdings (HTZ +8.54%) and 4 million shares of Cheniere Energy (LNG+2.03%) to its holdings.
Concho Resources (CXO +1.14%) will replace Plum Creek Timber (PCL +5.44%) in the S&P 500 as of the close of trading Friday, Feb 19.
Agilent (A +2.37%) slid over 6% in after-hours trading after it lowered guidance on Q2 adjusted EPS to 37 cents-39 cents, below consensus of 43 cents.
Cerner (CERN +1.02%) fell 6% in after-hours trading after it reported Q4 bookings of $1.35 billion, below estimates of $1.45 billion-$1.55 billion
FMC Technologies (FMC +4.99%) lost almost 1% in after-hours trading after it reported Q4 adjusted EPS of 46 cents, below consensus of 48 cents.
Boyd Gaming (BYD +5.19%) rose over 1% in after-hours trading after it reported Q4 adjusted EPS of 16 cents, higher than consensus of 13 cents.
Terex (TEX-0.49%) jumped over 10% in pre-market trading after Zoomlion Heavy Industry Science and Technology Co. Ltd reiterated its committment to buy the company for $30 in cash.
Cheesecake Factory (CAKE +2.36%) slipped over 3% in after-hours trading after it reported Q4 revenue of $526.8 million, weaker than consensus of $528.8 million.
Kaiser Aluminum (KALU +2.29%) reported Q4 adjusted EPS of 60 cents, well below consensus of $1.09.
Mar E-mini S&Ps (ESH16 +0.70%) this morning are up +13.75 points (+0.73%) at a fresh 1-week high. Tuesday's closes: S&P 500 +1.65%, Dow Jones +1.39%, Nasdaq +2.12%. The S&P 500 on Tuesday posted a 1-week high and closed higher on carryover support from a +3.29% jump in the Shanghai Composite to a 3-week high after China Jan new yuan loans surged by a record 2.51 trillion yuan. Stocks were also boosted by reduced interest rate concerns after Philadelphia Fed President Harker said it may be "prudent" to wait for inflation to strengthen before the Fed raises interest rates again. Stocks were undercut by news that the Feb NAHB housing market index unexpectedly fell -3 to a 9-month low of 58, 2 points weaker than expectations for a report of 60.
Mar 10-year T-notes (ZNH16-0.14%) this morning are down -4.5 ticks. Tuesday's closes: TYH6 -5.00, FVH6 -2.25. Mar T-notes on Tuesday fell to a 1-week low and closed lower on the rally in stocks that curbed the safe-haven demand for T-notes. However, T-notes received a boost from Philadelphia Fed President Harker's comment that "it might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike."
The dollar index (DXY00-0.02%) this morning is down -0.024 (-0.02%). EUR/USD (^EURUSD) is up +0.0004 (+0.04%). USD/JPY (^USDJPY) is down-0.05 (-0.04%). Tuesday's closes: Dollar Index +0.928 (+0.97%), EUR/USD -0.0012 (-0.11%), USD/JPY -0.53 (-0.46%). The dollar index on Tuesday climbed to a 1-week high and settled higher on weakness in GBP/USD which fell to a 2-week low after UK Jan core CPI rose +1.2% y/y, weaker than expectations of +1.3% y/y, which dampened the prospects of a BOE interest rate increase. The dollar index was also boosted by weakness in EUR/USD after the German Feb ZEW survey expectations of economic growth fell -9.2 to a 16-month low of 1.0.
Mar WTI crude (CLH16 +1.76%) this morning is up +72 cents (+2.48%) and Mar gasoline (RBH16-0.13%) is down -0.0009 ((-0.09%). Tuesday's closes: CLH6 -0.40 (-1.36%), RBH6 -0.0682 (-6.54%). Mar crude and gasoline on Tuesday closed lower as Mar crude fell back from a 1-week high and Mar gasoline retreated from a 2-week high. Crude oil prices were undercut by the rally in the dollar index to a 1-week high and by concern that an agreement by Saudi Arabia and Russia to freeze crude output at current levels won't be enough to alleviate the global crude supply glut. Crude prices initially opened higher on the agreement between Saudi Arabia and Russia, the world's two largest oil producers, to freeze their crude production at current levels if other major oil producers would also freeze production.
GLOBAL EVENT CALENDAR02/17/2016
Weekly MBA mortgage applications, previous +9.3% with purchase sub-index +0.2% and refi sub-index +15.8%.
Jan housing starts expected +1.8% to 1.170 million, Dec -2.5% to 1.149 million. Jan building permits expected 0.3% to 1.200 million, Dec-6.1% to 1.204 million.
Jan PPI final demand expected -0.2% m/m and -0.6% y/y, Dec -0.2% m/m and -1.0% y/y. Jan PPI ex food & energy expected +0.1% m/m and +0.4% y/y, Dec +0.1% m/m and +0.3% y/y.
Jan industrial production expected +0.3%, Dec -0.4%. Jan capacity utilization expected +0.2 to 76.7%, Dec -0.4 to 76.5%. Jan manufacturing production expected +0.2%, Dec -0.1%.
Minutes of the Jan 26-27 FOMC meeting.
St. Louis Fed President James Bullard speaks about the U.S. economic outlook and monetary policy to the CFA Society of St. Louis.
UK Jan jobless claims change expected -3,000, Dec -4,300. Jan claimant count rate expected unch at 2.3%.
UK Dec average weekly earnings expected +1.9% 3-mon avg y/y, Nov +2.0% 3-mon avg y/y. Dec avg weekly earnings ex-bonus expected +1.8% 3-mon avg y/y, Nov +1.9% 3-mon avg y/y.
UK Dec ILO unemployment rate expected -0.1 to 5.0% 3-months though Dec, previous +5.1% 3-months through Nov.
Eurozone Dec construction output, Nov +0.8% m/m and +2.1% y/y.
Japan Jan trade balance expected -658.5 billion yen, Dec +140.3 billion yen. Jan exports expected -10.9% y/y, Dec -8.0% y/y. Jan imports expected -15.8% y/y, Dec -18.0% y/y.
China Jan CPI expected +1.9% y/y, Dec +1.6% y/y. Jan PPI expected -5.4% y/y, Dec -5.9% y/y.