OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (
ESZ13 +0.28%) this morning are up +0.45% and European stocks are up +0.59% on speculation that any economic effect from a temporary shutdown of the U.S. government will be limited. The next major hurdle for U.S. lawmakers is to raise the $16.7 trillion debt ceiling by Oct 17, the day the Treasury said that measures to avoid exceeding the limit will be exhausted. The Congressional Budget Office (CBO) estimates the U.S. will run out of money to pay all of its obligations at some point between Oct 22 and Oct 31 without action by Congress. Asian stocks closed mostly higher: Japan up +0.20%, Hong Kong and China closed for holidays, Taiwan +0.16%, Australia
-0.23%, Singapore +0.43%, South Korea +0.22%, India +0.71%. Japanese stocks closed higher and received a boost from an increase in business confidence after the Japan Q3 Tankan climbed to a nearly 6-year high. Commodity prices are mixed. Nov crude oil (
CLX13 +0.11%) is up +0.10% and Nov gasoline (
RBX13 -0.58%) is down
-0.37%. Dec gold (
GCZ13 -0.05%) is up +0.32% and Dec copper (
HGZ13 -0.78%) is down
-0.51%. Agricultural and livestock prices are weaker. The dollar index (
DXY00 -0.21%) is down _0.22% at a 7
-1/2 month low as the partial shutdown of the U.S. government boosted speculation the Fed may maintain QE3. EUR/USD (
^EURUSD) is up +0.13% at a 7
-3/4 month high and USD/JPY (
^USDJPY) is down
-0.51%. December T-note prices (
ZNZ13 -0.20%) are down
-8 ticks.
The Japan Q3 Tankan large manufacturing business conditions rose to 12 from 4 in Q2, stronger than expectations of an increase to 7 and its best level since Q4 of 2007. The Q3 Tankan large manufacturing outlook rose to 11 from 10 in Q2, better than expectations of no change at 10.
The Japan Aug jobless rate unexpectedly rose +0.3 to 4.1%, when expectations were for no change at 3.8%. The Aug job-to-applicant ratio rose +0.01 to 0.95, right on expectations and the highest in 5
-1/3 years.
Japan Aug overall household spending unexpectedly fell
-1.6% y/y, weaker than expectations of a +0.2% y/y increase, and Aug labor cash earnings fell
-0.6% y/y, weaker than expectations of
-0.3% y/y.
Japan Sep vehicle sales climbed +12.4% y/y, the most in 14 months.
The China Sep manufacturing PMI rose +0.1 to 51.1, weaker than expectations of +0.6 to 51.6, but still the fastest pace of expansion in 17 months.
German Sep unemployment unexpectedly rose +25,000 when expectations were for a decline of
-5,000. The Sep unemployment rate unexpectedly rose +0.1 to 6.9%, when expectations were for no change at 6.8%.
The German Sep PMI manufacturing was unexpectedly revised lower to 51.1 from the originally reported 51.3.
The Eurozone Aug unemployment rate remained unchanged at 12.0% from July which was revised down to 12.0% from the originally reported 12.1%.
UK Sep PMI manufacturing unexpectedly fell
-0.4 to 56.7, weaker than expectations of +0.3 to 57.5.
U.S. STOCK PREVIEW
A shut-down of nonessential government services today appeared imminent as of early Monday evening as House Republicans were insisting on a continuing resolution (CR) with a 1-year Obamacare delay and other add-ons, while the Senate was insisting on a clean CR with no Obamacare restrictions or other add-ons. Today’s Sep ISM manufacturing index is expected to show a
-0.6 point decline to 55.1, more than giving back the +0.3 point increase to 55.7 seen in August. Today’s Sep total vehicle sales is expected to fall to 15.65 million units from 16.02 million in August. There are two of the Russell 1000 companies that report earnings today: Walgreen (consensus $0.73), Global Payments (0.95).
Equity conferences this week include: ECCO-ESMO-ESTRO European Cancer Congress Meeting on Mon-Tue, World Business Forum New York 2013 on Tue, IPAA Oil & Gas Investment Symposium on Tue, Milken Institute Summit-London on Tue, JMP Securities Financial Services and Real Estate Conference on Tue, Johnson Rice & Company Energy Conference on Tue-Wed, Deutsche Bank Leveraged Finance Conference on Tue-Wed, and Wells Fargo Securities Retail & Restaurant Summit on Tue-Wed.
OVERNIGHT U.S. STOCK MOVERS
Nike (
NKE -1.36%) was upgraded to "Buy" from "Hold" at Argus.
Agilent (
A -0.74%) was downgraded to "Hold" from "Buy" at Stifel.
T-Mobile (
TMUS -0.38%) was upgraded to "Outperform" from "Perform" at Oppenheimer.
Walgreen (
WAG -1.30%) reported Q4 EPS of 73 cents, right on expectations.
Wells Fargo (
WFC -0.65%) announced that it will pay Freddie Mac (
FMCC +0.80%) $780 million in a loan settlement that resolves all repurchase liabilities related to loans sold to Freddie Mac prior to Jan. 1, 2009.
The FDA approved the drug Brintellix, co-marketed by Takeda Pharmaceuticals (
TKPYY +0.59%) and Lundbeck, to treat adults with major depressive disorder.
Pratt & Whitney (
UTX -1.41%) was awarded a $2.5 billion government contract for various weapons systems spare parts.
Raytheon (
RTN -2.12%) was awarded a $230 million government contract modification for operation and sustainment efforts of the X-Band radar in support of the Missile Defense Agency’s Sensors Program.
Clarcor (
CLC +0.87%) boosted its quarterly dividend to 17 cents from 13.5 cents per share.
Mercury Systems (
MRCY +1.94%) was awarded a $3.9 million contract from the U.S. Navy for advanced Digital RF Memory jammers.
Diamond Foods (
DMND -2.57%) reported Q4 adjusted EPS of 9 cents, better than consensus for a
-3 cent loss.
Paychex (
PAYX +0.72%) reported Q1 EPS of 44 cents, better than consensus of 43 cents.
MARKET COMMENTS
Dec E-mini S&Ps (
ESZ13 +0.28%) this morning are up +7.50 points (+0.45%). The S&P 500 index on Monday dropped to a 3-week low and closed lower on concern the U.S. budget impasse in Washington will lead to a government shutdown that derails economic growth. Another negative for stocks was concern over global economic growth after the China Sep HSBC/Markit manufacturing PMI was unexpectedly revised downward to 50.2 from 51.2. The S&P 500 recovered from its worst levels after the Sep Chicago PMI rose +2.7 to 55.7, stronger than expectations of +1.3 to 54.3 and the fastest pace of expansion in 4 months. Closes: S&P 500
-0.60%, Dow Jones
-0.84%, Nasdaq 100
-0.37%.
Dec 10-year T-notes (
ZNZ13 -0.20%) this morning are down
-8 ticks. Dec 10-year T-note prices on Monday closed higher and the 10-year T-note yield fell to a 1
-1/2 month low. Increased safe-haven demand boosted T-note prices when stocks retreated on speculation that the ongoing political wrangling in Washington over a continuing resolution and a hike in the debt ceiling will lead to a government shutdown Tuesday. T-note prices fell back from their best levels after the stronger-than-expected Chicago Sep PMI bolstered expectations for the Fed to taper QE3. Closes: TYZ3 +1.50, FVZ3 +2.25.
The dollar index (
DXY00 -0.21%) this morning is down
-0.180 (
-0.22%) at a fresh 7
-1/2 month low. EUR/USD (
^EURUSD) is up +0.0018 (+0.13%) at a 7
-3/4 month high and USD/JPY (
^USDJPY) is down
-0.50 (
-0.51%). The dollar index on Monday tumbled to a 7
-1/2 month low. Bearish factors included (1) a lack of confidence in the dollar as political wrangling in Washington threatens a partial government shutdown Tuesday and as a decision on raising the U.S. debt ceiling is needed within the next 3 weeks, and (2) strength in the yen on increased safe-haven demand as global stocks fell on the U.S. budget impasse as USD/JPY slipped to a 4-week low. Closes: Dollar index
-0.3-2 (
-0.38%), EUR/USD +0.0001 (+0.01%), USD/JPY
-0.023 (
-0.02%).
Nov WTI crude oil (
CLX13 +0.11%) this morning is up +10 cents (+0.10%) and Nov gasoline (
RBX13 -0.58%) is down
-0.0097 (
-0.37%). Nov crude oil and gasoline prices on Monday closed lower on concern U.S. economic growth and energy demand will suffer if the government shuts down because of the political turmoil in Washington. Nov crude oil prices fell to a 2
-3/4 month low also due to reduced Middle East tensions after the U.S. opened direct nuclear negotiations with Iran. Closes: CLX3
-0.54 (
-0.52%), RBX3
-0.0320 (
-1.20%).
GLOBAL EVENT CALENDAR10/01/2013
| US | 1000 ET | Aug construction spending expected +0.4%, July +0.6%. |
| 1000 ET | Sep ISM manufacturing index expected -0.6 to 55.1, Aug +0.3 to 55.7. Sep ISM prices paid expected +1.0 to 55.0, Aug +5.0 to 54.0. |
| 1630 ET | API weekly U.S. oil statistics. |
| 1700 ET | Sep total vehicle sales expected 15.65 million, Aug 16.02 million. Sep domestic vehicle sales expected 12.20 million, Aug 12.44 million. |
| 1800 ET | Fed Vice Chairman Janet Yellen speaks at the Economic Club of New York. |
| JPN | 0100 ET | Japan Sep vehicle sales, Aug -6.4% y/y. |
| GER | 0355 ET | German Sep unemployment change expected -5,000, Aug +7,000. Sep unemployment rate expected unch at 6.8%, Aug 6.8%. |
| 0355 ET | Revised German Sep PMI manufacturing expected no change at 51.3. |
| UK | 0430 ET | UK Sep PMI manufacturing expected +0.3 to 57.5, Aug 57.2. |
| EUR | 0500 ET | Eurozone Aug unemployment rate expected unch at 12.1%, July 12.1%. |
U.S. STOCK CALENDAR10/01/2013
| Company Name | Ticker | Time | Event Description | Period | Estimate |
|---|
| Walgreen Co | WAG US | 7:30 | Q4 2013 Earnings Release | Q4 2013 | 0.727 |
| Plum Creek Timber Co Inc | PCL US | 8:00 | Investor and Analyst Meeting | Y 2013 | |
| Walgreen Co | WAG US | 8:30 | Q4 2013 Earnings Call | Q4 2013 | |
| Ford Motor Co | F US | 9:30 | September 2013 Sales and Revenue Release | 2013 | |
| Federal Realty Investment Trust | FRT US | 10:00 | Analyst Day | Y 2013 | |
| Ford Motor Co | F US | 10:00 | September 2013 Sales and Revenue Call | 2013 | |
| Paychex Inc | PAYX US | 10:30 | Q1 2014 Earnings Call | Q1 2014 | |
| United Technologies Corp | UTX US | 11:00 | Analyst Meeting | Y 2013 | |
| General Motors Co | GM US | 11:00 | September 2013 Sales and Revenue Call | 2013 | |
| Splunk Inc | SPLK US | 14:30 | Investor and Analyst Meeting | Y 2013 | |
| Global Payments Inc | GPN US | 17:00 | Q1 2014 Earnings Call | Q1 2014 | |
| Mid-America Apartment Communities Inc | MAA US | Aft-mkt | Mid-America Communities Replaces Monster Worldwide in S&P MidCap 400 | | |
| Mid-America Apartment Communities Inc | MAA US | Aft-mkt | Monster Worldwide Replaces Mid-America Communities in S&P SmallCap 600 | | |
| Global Payments Inc | GPN US | Aft-mkt | Q1 2014 Earnings Release | Q1 2014 | 0.947 |
| Pinnacle West Capital Corp | PNW US | | Investor Meeting -Day2 | Y 2013 | |
| TECO Energy Inc | TE US | | Roadshow - Day 2 | Y 2013 | |
| General Motors Co | GM US | | September 2013 Sales and Revenue Release | 2013 | |
