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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH16-0.08%) are down -0.18% and European stocks are down -0.49% after G-20 finance ministers meeting over the weekend in Shanghai disappointed financial markets by not coming up with coordinated stimulus to support the global economy. Weakness in bank stocks is leading the overall market lower with Goldman Sachs and Bank of America both down at least 1.1% in pre-market trading. Stock prices recovered from their worst levels, however, after China cut its reserve requirement ratio for banks by 50 bp to 17.00% from 17.50%. Asian stocks settled mostly lower: Japan -1.00%, Hong Kong -1.30%, China -2.86%, Taiwan closed for holiday, Australia +0.02%, Singapore +0.65%, South Korea -0.25%, India -0.66%. China's Shanghai Composite fell to a 1-month low after G-20 officials failed to come up with a coordinated plan to boost global growth, while Japanese stocks also fell after the yen rallied against the dollar, which undercut exporter stocks.
The dollar index (DXY00 +0.15%) is up +0.17% at a 3-week high. EUR/USD (^EURUSD) is down -0.41% at a 4-week high after Eurozone CPI unexpectedly fell at the fastest pace in a year, which bolsters the case for the ECB to expand stimulus when it convenes next week. USD/JPY (^USDJPY) is down -0.95%.
Mar T-note prices (ZNH16 +0.04%) are up +3.5 ticks on carryover support from a rally in German bunds to a 10-1/4 month high after Eurozone Feb CPI unexpectedly fell by the most in a year.
After Chinese financial markets closed today, the PBOC cut the required reserve ratio for China's biggest banks by 50 bp to 17.00% from 17.50%, effective March 1.
Eurozone Feb CPI unexpectedly fell -0.2% y/y, weaker than expectations of unch y/y and the fastest pace of decline in a year. Feb core CPI rose +0.7% y/y, weaker than expectations of +0.9% y/y and the smallest increase in 10 months.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Feb Milwaukee ISM (expected -0.36 to 50.00, Jan +1.83 to 50.36), (2) Feb Chicago PMI (expected -3.1 to 52.5, Jan +12.7 to 55.6), (3) Jan pending home sales (expected +0.5% m/m and +4.1% y/y, Dec +0.1% m/m and +3.1% y/y), (4) Feb Dallas Fed manufacturing activity (expected +4.6 to -30.0, Jan -13.0 to -34.6), (5) New York Fed President William Dudley's speech at a symposium in Hangzhou, China co-hosted by the PBOC and the New York Fed, and (6) USDA weekly grain export inspections.
There are 2 of the S&P 500 companies that report earnings today: NRG Energy (consensus $0.18), Endo Intl (1.27).
U.S. IPO's scheduled to price today: Shimmick Construction (SCCI).
Equity conferences this week include: BMO Capital Markets Global Metals and Mining Conference on Mon-Tue, J.P. Morgan Global High Yield & Leveraged Finance Conference on Mon-Tue, Morgan Stanley Technology Media & Technology Conference on Mon-Thu, Barclays Power & Utility Credit Conference on Tue, Goldman Sachs Media & Telecom Conference on Tue, Canaccord Genuity Musculoskeletal Conference on Tue, JMP Securities Technology Conference on Tue, Longbow Research Basic Materials Investor Conference on Tue, Pacific Crest Securities Emerging Technology Summit on Tue-Wed, UBS Natural Gas & Electric Utilities Conference on Wed, Bank of America Merrill Lynch Global Agriculture and Chemicals Conference on Wed-Thu, Bank of America Refining Conference on Thu, Citi Asset Management, Broker Dealer & Exchanges Investor Conference on Thu, Gabelli & Company Waste & Environmental Services Conference on Thu, Simmons Energy Conference on Thu-Fri.
OVERNIGHT U.S. STOCK MOVERS
Morgan Stanley (MS +2.15%) and Goldman Sachs (GS +1.35%) are both down at least 1% in pre-market trading.
Valeant Pharmaceuticals (VRX-4.79%) slumped 7% in pre-market trading after the company withdrew its financial forecast and delayed releasing its quarterly results as its CEO returns from leave.
Federal-Mogul Holdings (FDML +12.93%) may be active today after Carl Icahn, the company's biggest shareholder, offered to buy the rest of the company for $7 a share, well above Friday's closing price of $4.98.
General Motors (GM +0.44%) was downgraded to 'Hold' from 'Buy at Argus Research.
Dillard's (DDS +3.73%) was downgraded to 'Sell' from 'Hold' at Deutsche Bank.
Southwestern Energy (SWN-5.76%) was downgraded to 'Underperform' from 'Market Perform' at Raymond James.
Dynegy (DYN +3.06%) was upgraded to 'Buy' from 'Neutral' at Guggenheim with a price target of $22.
FormFactor (FORM +1.64%) said it sees Q1 revenue of $65 million-$70 million, below consensus of $70.3 million.
Cleco (CNL-1.03%) reported Q4 operating EPS of 38 cents, below consensus of 42 cents.
New Jersey Resources (NJR-2.58%) will replace StanCorp in the S&P MidCap 400 as of the close of trading on Monday, March 7.
Business Insider reports that Bank of America (BAC +3.08%) is preparing for "significant" job cuts of over 5% across its global investment banking and markets business.
Atlas Resource Partners LP (ARP-5.63%) was downgraded to 'Sell' from 'Hold' at Stifel.
Mar E-mini S&Ps (ESH16-0.08%) this morning are down -3.50 points (-0.18%). Friday's closes: S&P 500 -0.19%, Dow Jones -0.34%, Nasdaq -0.13%. The S&P 500 on Friday fell back from a 1-1/2 month high and closed lower on concern the Fed may continue to raise interest rates after the U.S. Jan PCE core deflator rose +0.3% m/m and +1.7% y/y, stronger than expectations of +0.2% m/m and +1.5% y/y. Stocks received support from the +0.95% rally in the Shanghai Composite after the PBOC said it sees room for further monetary easing and from the +0.5% increase in U.S. Jan personal spending, stronger than expectations of +0.3% and the biggest increase in 8 months.
Mar 10-year T-notes (ZNH16 +0.04%) this morning are up +3.5 ticks. Friday's closes: TYH6 -23.00, FVH6 -16.25. Mar T-notes on Friday closed lower on the stronger-than-expected Jan personal spending and income reports and on the +1.7% y/y increase in the U.S. Jan PCE core deflator, stronger than expectations of +1.5% y/y and the largest increase in nearly 3 years.
The dollar index (DXY00 +0.15%) this morning is up +0.171 (+0.17%) at a 3-weeek high. EUR/USD (^EURUSD) is down -0.0045 (-0.41%) at a 4-week low. USD/JPY (^USDJPY) is down -1.08 (-0.95%). Friday's closes: Dollar Index +0.861 (+0.89%), EUR/USD -0.0084 (-0.76%), USD/JPY +1.00 (+0.88%). The dollar index on Friday climbed to a 3-week high and settled higher on the stronger-than-expected U.S. Q4 GDP and Jan personal spending and income reports, which bolster confidence in the U.S. economic outlook. In addition, EUR/USD slid to a 3-week low after German Feb CPI fell-0.2% y/y, weaker than expectations of unch y/y and the fastest pace of decline in 13 months, which supports the case for the ECB to expand stimulus.
Apr WTI crude (CLJ16 +0.49%) this morning is down -4 cents (-0.12%) and Apr gasoline (RBJ16-0.32%) is down -0.0093 (-0.72%). Friday's closes: CLJ6-0.29 (-0.88%), RBJ6 -0.0171 (-1.30%). Apr crude and gasoline on Friday fell back from 3-week highs and closed lower on the rally in the dollar index to a 3-week high and the ongoing crude oil supply glut with EIA crude inventories at a record high. A bullish factor for crude was the late-Friday report from Baker Hughes that the active U.S. oil rig count fell -13 to 400 in the week ended Feb 26, the 10th straight decline and the fewest number of active rigs in 6 years.
GLOBAL EVENT CALENDAR02/29/2016
Feb Milwaukee ISM expected -0.36 to 50.00, Jan +1.83 to 50.36.
Feb Chicago PMI expected -3.1 to 52.5, Jan +12.7 to 55.6.
Jan pending home sales expected +0.5% m/m and +4.1% y/y, Dec +0.1% m/m and +3.1% y/y.
Feb Dallas Fed manufacturing activity expected +4.6 to -30.0, Jan -13.0 to -34.6.
USDA weekly grain export inspections.
New York Fed President William Dudley speaks at a symposium in Hangzhou, China co-hosted by the PBOC and the New York Fed.
Japan Jan housing starts expected -0.3% y/y to 870,000 annualized, Dec -1.3% y/y to 860,000 annualized.
Japan Jan construction orders, Dec +14.8% y/y.
Japan Jan jobless rate expected unch at 3.3%. Jan job-to-applicant ratio expected unch at 1.27.
Japan Jan overall household spending expected -2.7% y/y, Dec -4.4% y/y
Japan Q4 capital spending expected +10.0% y/y, Q3 +11.2% y/y. Q4 capital spending ex-software expected +8.7% y/y, Q3 +11.2% y/y.
Revised Japan Feb Nikkei manufacturing PMI.
German Jan import price index expected -1.0% m/m and -3.4% y/y, Dec -1.2% m/m and -3.1% y/y.
German Jan retail sales expected +0.3% m/m and +1.8% y/y, Dec +0.6% m/m and +1.5% y/y.
UK Jan net consumer credit expected +1.4 billion pounds, Dec +1.2 billion pounds.
UK Jan M4 money supply, Dec -0.2% m/m and +0.2% y/y.
UK Jan mortgage approvals expected 73,700, Dec 70,800.
Eurozone Feb CPI estimate expected unch y/y, Jan +0.3% y/y. Feb core CPI expected +0.9% y/y, Jan +1.0% y/y.
China Feb manufacturing PMI expected unch at 49.4, Jan -0.3 to 49.4. Feb non-manufacturing PMI, Jan 53.5.