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OVERNIGHT MARKETS AND NEWS
Sep E-mini S&Ps (ESU16 +0.35%) this morning are mildly higher by +5.25 (+0.25%) on carry-over support from last Friday's strong U.S. June payroll report of +287,000 combined with today's +4% rally in the Nikkei index on positive Sunday election results in Japan. Asian stocks today closed higher across the board: Japan +3.98%, Hong Kong +1.54%, Chinese Shanghai Composite +0.23%, Taiwan +1.68%, Australia +2.04%, Singapore +1.02%, South Korea +1.46%, India +1.84%, Turkey +1.01%. European stocks are higher nearly across the board this morning with the Euro Stoxx 50 index up +0.47%, the FTSE up +0.52%, and the German DAX up +0.97%.
The Nikkei index today rallied sharply by +4% after Prime Minister Abe's ruling LDP party won a convincing victory in Sunday's upper house election, thus ensuring that PM Abe can focus on new stimulus measures to help the economy. Abe has on June 1 said that he will take "broad, bold" measures to support the economy that will include delaying the planned sales-tax increase. There have been reports that a new fiscal stimulus package could be as large as 20 trillion yen ($200 billion) in the current fiscal year. The LDP party won 56 of the 121 upper house seats in contention, giving Mr. Abe a ruling supermajority after including uncontested seats and the 14 seats won by junior coalition party Komeito.
Energy Minister Andrea Leadsom today withdrew from the UK Conservative leadership race, thus giving Home Secretary Theresa May a clear path to becoming the new Conservative Party leader and prime minister. That news is positive for Britain since it reduces political uncertainty and should help the Conservative Party navigate its way on negotiating a Brexit deal with Europe. The British pound this morning rallied on the news that Ms. Leadsom dropped out of the race due to the reduced political uncertainty.
The dollar index (DXY00 +0.26%) is up +0.34 (+0.35%) this morning while EUR/USD (^EURUSD) is down -0.0008 (-0.07%) and USD/JPY (^USDJPY) is sharply higher by +1.78 (+1.77%). The yen is weaker on reduced safe-haven demand with the rally in global stocks. The dollar index is higher on continued support from the strong U.S. interest differentials combined with increased confidence about the U.S. economy after last Friday's strong U.S. payroll report.
Sep 10-year T-note prices (ZNU16-0.27%) this morning are down -5.5 ticks due to reduced safe-haven demand with the global rally in stocks today and carry-over weakness from last Friday's strong U.S. payroll report.
Commodity prices this morning are up strongly by +0.71% due to strength in metals and ag prices, which has overshadowed weakness in petroleum prices. Sep copper (HGU16 +1.63%) this morning is up +0.036 (+1.68%) and Sep silver (SIU16 +1.62%) is up +0.351 (+1.75%) due to expectations for a new Japanese fiscal stimulus package combined with continued optimism from last Friday's stronger-than-expected payroll report of +287,000. Gold prices (GCQ16 +0.07%) are slightly higher by +2.1 (+0.15%) despite the stronger dollar.
Aug WTI crude oil prices (CLQ16-0.64%) this morning are down -0.66 (-1.45%) and Aug gasoline prices (RBQ16 +0.06%) are down -0.0097 (-0.71%) due to carry-over downward pressure from last Friday's news from Baker Hughes that active U.S. oil rigs rose by +10 rigs to 351 in the week ended July 8, adding to the previous week's +11 rig increase. The 2-week gain of +6.4% in the U.S. oil rig count may indicate that U.S. oil production will be on the rise again with oil companies reopening some rigs due to higher oil prices.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Kansas City Fed President Esther George (voter) speaks on the U.S. economy at the Mid-America Labor Management Conference, (2) Treasury auctions $24 billion of 3-year T-notes, (3) USDA weekly grain export inspections, and (4) USDA Weekly Crop Progress.
Russell 1000 companies reporting earnings today: Alcoa (consensus $0.09).
U.S. IPO's scheduled to price today: LINE Corp (LN)
Equity conferences this week include: none.
Sep E-mini S&Ps this morning are mildly higher by +5.25 (+0.25%) on carry-over support from last Friday's strong U.S. June payroll report of +287,000 combined with today's +4% rally in the Nikkei index on positive Sunday election results in Japan. Friday's closes: S&P 500 +1.53%, Dow Jones +1.40%, Nasdaq +1.54%. The S&P 500 on Friday rallied to an 11-1/2 month high and closed higher on the +287,000 increase in U.S. Jun non-farm payrolls, stronger than expectations of +180,000 and the largest increase in 8 months, which bolstered confidence in the U.S. economy.
OVERNIGHT U.S. STOCK MOVERS
Nintendo (7974 Japan) rallied sharply by +25% today, adding to last Friday's rally of +9% after the runaway success of the company's new Pokeman GO phone game that challenges players to find Pokeman characters in the physical world.
HeartWare International (HTWR +0.19%) was downgraded to 'Market Perform' from 'Outperform' at Leerink Partners.
A U.S. Court of Appeals in San Francisco said that Monster Beverage (MNST +0.24%) can be sued over false advertising claims related to the caffeine content of its drinks.
T2 Biosystems (TTOO-30.09%) gained over 1% in after-hours trading after Tiger Management reported a 5.2% passive stake in the company.
Biostar Pharmaceutical (BSPM-8.40%) slipped -2% in after-hours trading after GeoInvesting said the recent 260% surge in the stock price warrants some "due diligence" to confirm the market's euphoria.
BorgWarner (BWA +3.91%) rose 0.3% in after-hour trading after GIC Private reported a new 5.09% passive stake in the company.
Network-1 Technologies (NTIP +2.55%) jumped 17% in after-hours trading after its subsidiary, Mirror World Technologies, agreed to settled its patent litigation against Apple. NTIP will receive $25 million from Apple for the settlement.
Sep 10-year T-note prices this morning are down -5.5 ticks due to reduced safe-haven demand with the global rally in stocks today and carry-over weakness from last Friday's strong U.S. payroll report. Friday's closes: TYU6 +3.50. FVU6 +1.00. Sep T-notes on Friday closed higher on signs of tepid U.S. wage growth after Jun average hourly earnings rose +0.1% m/m and +2.6% y/y, slightly weaker than expectations of +0.2% m/m and +2.7% y/y. T-note prices were undercut by reduced safe-haven demand as the stock market rallied and by the much larger-than-expected +278,000 increase in U.S. Jun non-farm payrolls.
The dollar index is up +0.34 (+0.35%) this morning while EUR/USD is down -0.0008 (-0.07%) and USD/JPY is sharply higher by +1.78 (+1.77%). The yen is weaker on reduced safe-haven demand with the rally in global stocks. The dollar index is higher on continued support from the strong U.S. interest differentials combined with increased confidence about the U.S. economy after last Friday's strong U.S. payroll report. Friday's closes: Dollar Index -0.026 (-0.03%), EUR/USD -0.0012 (-0.11%), USD/JPY -0.23 (-0.23%). The dollar index on Friday posted a 1-1/2 week high but fell back and closed little changed. The dollar was undercut by the smaller-than-expected increase in U.S. Jun average hourly earnings, which signals tepid wage growth that may keep the Fed from raising interest rates. On the bullish side was the strong U.S. payroll report and the slide in EUR/USD to a 1-1/2 week low after German May exports unexpectedly fell -1.8% m/m, weaker than expectations of +0.4% m/m and the biggest decline in 9 months.
Aug WTI crude oil prices this morning are down -0.66 (-1.45%) and Aug gasoline prices are down -0.0097 (-0.71%) due to carry-over downward pressure from last Friday's news from Baker Hughes that active U.S. oil rigs rose by +10 rigs to 351 in the week ended July 8, adding to the previous week's +11 rig increase. Friday's closes: CLQ6 +0.27 (+0.60%), RBQ6 +0.0077 (+0.56%). Aug crude and gasoline on Friday closed higher on the larger-than-expected increase in U.S. Jun non-farm payrolls, which bolstered confidence in the U.S. economy and in energy demand. Crude oil prices were also boosted by ongoing rebel attacks in Nigeria after Agip Oil reported several of their oil pipelines in the Nigeria Delta were damaged by rebel attacks.
GLOBAL EVENT CALENDAR07/11/2016
Monday, July 11, 2016
Kansas City Fed President Esther George (voter) speaks on the U.S. economy at the Mid-America Labor Management Conference.
USDA weekly grain export inspections.
Treasury auctions $24 billion of 3-year T-notes.
USDA Weekly Crop Progress.
Tuesday, July 12, 2016
Fed Governor Danial Tarullo delivers opening remarks at a conference on shadow banking.
St. Louis Fed President James Bullard (voter) delivers a presentation at a breakfast meeting of the NABE.
May wholesale inventories expected +0.2% m/m, Apr +0.6% m/m. May wholesale trade sales expected +0.5% m/m, Apr +1.0% m/m.
May JOLTS job openings, Apr +118,000 to 5.788 million.
USDA Jul WASDE crop production.
Treasury auctions $20 billion of 10-year T-notes.
Minneapolis Fed President Neel Kashkari (non-voter) holds a town hall forum at Northern Michigan University on the state of the economy and the role of the Federal Reserve.
Japan May tertiary industry index expected -0.8% m/m, Apr +1.4% m/m.
German Jun wholesale price index, May +0.9% m/m and -2.3% y/y.
Revised German Jun CPI (EU harmonized), prelim-Jun +0.1% m/m and +0.2% y/y.
China Jun trade balance expected +$46.00 billion, May +$49.98 billion. Jun exports expected -5.0% y/y, May 4.1% y/y. Jun imports expected -6.2% y/y, May -0.4% y/y.
U.S. STOCK CALENDAR07/11/2016
Q2 2016 Earnings Call
Q2 2016 Earnings Release
TD Ameritrade Holding Corp
June 2016 Sales and Revenue Release
Spirit Airlines Inc
June 2016 Sales and Revenue Release - Traffic Results
Special Meeting - M&A Vote
United Continental Holdings Inc
June 2016 Sales and Revenue Release - Traffic Results