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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU13 -0.06%) this morning are up +0.03%, although European stocks are down -0.70% after the Bundesbank warned in its monthly report that the ECB could still raise interest rates if inflation pressures emerge. Asian stocks closed mixed: Japan +0.79%, Hong Kong -0.24%, China +1.18%, Taiwan -0.31%, Australia -0.03%, Singapore -0.76%, South Korea -0.14%, India -1.56%. Japanese stocks closed higher and found support after Japan's July exports increased +12.2% y/y, the fastest pace in 2-1/2 years. Commodity prices are mixed. Sep crude oil (CLU13 -0.38%) is down -0.30% and Sep gasoline (RBU13 +0.17%) is up +0.26%. Dec gold (GCZ13 +0.16%) is up +0.18% at a 2-month high, and Sep copper (HGU13 -0.92%) is down -0.40%. Agricultural prices are higher with Nov soybeans up +1.69% at a 3-week high on a lack of rainfall in the U.S. Midwest. The dollar index (DXY00 unch) is unchanged. EUR/USD (^EURUSD) is up +0.21% and USD/JPY (^USDJPY) is up +0.45%. September T-note prices (ZNU13 -0.21%) are down -10 ticks as the 10-year T-note yield climbed to a new 2-year high of 2.873%.The Japan July traded balance widened to a deficit of -1.024 trillion yen from a revised Jun deficit of -182.3 billion yen, the biggest deficit in 6-months and larger than expectations of -773.5 billion yen. Japan July exports climbed +12.2% y/y, the most in 2-1/2 years, although weaker than expectations of +12.8% y/y, while July imports rose +19.6%, higher than expectations of +16.0% and the most in 3-years.
The Japan Jun leading index CI was revised higher to 107.2 from the originally reported 107.0, and the Jun coincident index CI was also revised higher to 105.5 from the originally reported 105.2.
The UK Aug Rightmove house prices fell -1.8% m/m and rose +5.5% y/y. The -1.8% m/m drop was the first monthly decline in 8-months, although the +5.5% y/y rise was the biggest annual increase in 3-years.
In its monthly report released today, the Bundesbank said that the ECB could raise interest rates if inflation pressures increase, even as the ECB pledges to keep borrowing costs low saying the ECB's commitment "is not an imperative statement, and it doesn't represent a change" in the monetary policy stance." The report also said that "forward guidance doesn't rule out an increase in the benchmark rate if greater inflation pressure emerges."
U.S. STOCK PREVIEW
This week’s U.S. economic calendar is relatively light and attention with focus mainly on whether the Fed will taper QE3 at the next FOMC meeting on Sep 17-18. There are no U.S. economic reports today. There is only one of the S&P 500 companies that reports earnings today: Urban Outfitters (consensus $0.48). Equity conferences this week include CRM Evolution Conference & Exhibition 2013 on Tue-Wed, Morgan Stanley Semiconductor & Semi-Cap Equipment Corporate Access Day on Wed, Citi One on One Midstream/Infrastructure Conference on Wed, and Raymond James Bank Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Cablevision (CVC -1.07%) was downgraded to "Neutral" from "Buy" at Nomura.PulteGroup (PHM +2.33%) was upgraded to "Outperform" from "Market Perform" at Wells Fargo.
Apache (APA -1.59%) was downgraded to a "Hold" from "Buy" at Stifel.
The Korea Economic Daily News reported that Samsung (SSNLF -3.25%) will launch a 12 inch tablet PC, the biggest screen of any tablet released so far.
Dollar General (DG -1.93%) was upgraded to "Overweight" from "Neutral" at JPMorgan.
Kaiser Aluminum (KALU +0.87%) was upgraded to "Buy" from "Neutral" at Sterne Agee.
Norwegian Cruise Line (NCLH -2.50%) was upgraded to "Buy" from "Neutral" at UBS.
Ross Stores (ROST -0.20%) was initiated with an "Overweight" at Barclays with a price target of $80.
Public Storage (PSA -2.21%) was upgraded to "Sector Perform" from "Underperform" at RBC Capital.
Phillips 66 Partners (PSXP -0.55%) was initiated with an "Overweight" at JPMorgan with a price target of $39 a share.
Carl Icahn reports a 9.98% stake in Chesapeake (CHK +0.04%) .
MARKET COMMENTS
Sep E-mini S&Ps (ESU13 -0.06%) this morning are up +0.50 of a point (+0.03%). The S&P 500 index on Friday fell to a 1-1/4 month low and closed lower after the preliminary Aug U.S. consumer confidence index (Univ of Michigan) unexpectedly fell -5.1 to a 4-month low of 80.0, weaker than expectations of +0.1 to 85.2. Positives for stocks included (1) July housing starts rose +5.9% to 896, 000, near expectations, and (2) U.S. Q2 non-farm productivity rose +0.9%, better than expectations of +0.6%. Closes: S&P 500 -0.33%, Dow Jones -0.20%, Nasdaq 100 -0.08%.Sep 10-year T-notes (ZNU13 -0.21%) this morning are down -10 ticks as the 10-year T-note yield rose to a new 2-year high overnight at 2.873%. Sep 10-year T-note prices on Friday posted a contract low and the 10-year T-note yield rose to a 2-year high of 2.86% as bearish sentiment toward Treasuries persists on expectations the Fed will soon taper its bond buying. Another negative for T-notes is reduced safe-haven demand for Treasuries from the European sovereign debt crisis after the yield premium of Spain’s and Italy’s 10-year bonds over German bunds shrank to their lowest levels in 2 years. Closes: TYU3 -16.5, FVU3 -6.75.
The dollar index (DXY00 unch) this morning is unchanged. EUR/USD (^EURUSD) is up +0.0028 (+0.21%) and USD/JPY (^USDJPY) is up +0.44 (+0.45%). The dollar index on Friday closed higher on speculation that recent U.S. economic data is strong enough to allow the Fed to cut back on its dollar-negative bond buying program. Closes: Dollar index +0.093 (+0.11%), EUR/USD -0.00196 (-0.15%), USD/JPY +0.149 (+0.15%).
Sep WTI crude oil (CLU13 -0.38%) this morning is down -32 cents (-0.30%) and Sep gasoline (RBU13 +0.17%) is up +0.0076 (+0.26%). Sep crude oil and gasoline prices on Friday settled mixed. Sep crude posted a 2-week high on concern the ongoing civil unrest in Egypt may spread throughout the Middle East and lead to a disruption of the region’s oil supplies. Gasoline prices closed lower on concern U.S. gasoline supplies will build as the end of the summer driving season nears, and after U.S. Aug University of Michigan consumer confidence unexpectedly fell to a 4-month low. Closes: CLU3 +0.13 (+0.12%), RBU3 -0.0170 (-0.57%).
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