OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (
ESZ13 +0.13%) this morning are up +0.07% at a 1-week high and European stocks are up +0.09%. Asian stocks closed higher: Japan +1.48%, Hong Kong +1.16%, China +1.61%, Taiwan +0.06%, Australia +1.63%, Singapore +0.31%, South Korea +1.31%, India +1.26%. Global stocks are higher on speculation that U.S. lawmakers will reach an agreement to extend the borrowing authority of the U.S. to Nov 22 from Oct 17 and give lawmakers more time to hammer out a permanent deal to raise the debt limit. Credit-default swaps on 5-year U.S. Treasuries slipped
-3.3 bp to 34.4 bp, a 1-week low. Commodity prices are mostly weaker. Nov crude oil (
CLX13 -1.31%) is down
-1.24% and Nov gasoline (
RBX13 -0.38%) is down
-0.53 % after the IEA in its monthly report boosted its 2014 non-OPEC crude production estimate by +300,000 barrels a day from last month's estimate to 56.4 million barrels a day. The IEA also cut its global oil demand estimate for 2014 to 92 million barrels a day from 92.1 million forecast last month. Dec gold (
GCZ13 -0.56%) is down
-0.83% and Dec copper (
HGZ13 +0.20%) is up +0.28%. Agricultural and livestock prices are mixed with Dec corn down
-0.86% at a 3-year low after the EPA said it is considering a cut in the 2014 biofuel mandate for ethanol to 13 billion gallons from 13.8 billion gallons. The dollar index (
DXY00 -0.13%) is down
-0.15%. EUR/USD (
^EURUSD) is up +0.36% and USD/JPY (
^USDJPY) is up +0.13%. December T-note prices (
ZNZ13 +0.04%) are up +2.5 ticks.
Speaking last night at the Economic Club of New York, ECB President Draghi suggested the ECB could cut interest rates further if market conditions warrant when he said that "The Governing Council has unanimously agreed to incorporate an easing bias that explicitly provides for further rate reductions, should the volatility in money market conditions return to the levels observed in early summer."
Eurozone Aug construction output unexpectedly fell
-0.1% m/m, weaker than expectations of +0.8% m/m, but rose +4.0% y/y, more than expectations of +3.9% y/y and the biggest annual gain in 1
-3/4 years. July was revised higher to +2.8% m/m and +2.7% y/y from the originally reported +2.2% m/m and +2.0% y/y.
The German Sep Wholesale price index rose +0.7% m/m and fell
-2.2% y/y, the biggest annual decline in 3
-3/4 years.
The German Sep CPI (EU harmonized) was left unrevised at unch m/m and +1.6% y/y.
U.S. STOCK PREVIEW
Today’s Sep PPI and retail sales reports have been postponed due to the government shut-down but today’s U.S. consumer confidence index will be released as usual since it is compiled by a non-governmental organization. Today’s early-Oct U.S. consumer confidence index from the University of Michigan is expected to show a
-1.6 point decline to 75.9, adding to the sharp
-4.6 point decline to 77.5 seen in September. There are three of the Russell 1000 companies that report earnings today: JPMorgan Chase (consensus $1.29), Wells Fargo (0.97), and Chimera Investment (0.11). Equity conferences during the remainder of this week include: IIF Annual Membership Meeting 2013 on Fri.
OVERNIGHT U.S. STOCK MOVERS
JPMorgan Chase (
JPM +3.49%) reported Q3 EPS ex-items of $1.42, better than consensus of $1.19.
J.B. Hunt (
JBHT +1.85%) was upgraded to "Buy" from "Neutral" at BofA/Merrill.
Deutsche Bank (
DB +3.95%) was downgraded to "Underperform" from "Neutral" at Macquarie.
Johnson & Johnson (
JNJ +2.12%) was upgraded to "Neutral" from "Sell" at Goldman.
BNP Paribas (
BNPQY +3.48%) was upgraded to "Outperform" from "Neutral" and Societe Generale (
SCGLY +3.86%) was upgraded to "Neutral" from "Underperform" at Macquarie.
Pharmacyclics (
PCYC +2.16%) was upgraded to "Buy" from "Neutral" at Goldman.
Merck (
MRK +0.47%) was downgraded to "Hold" from "Buy" and Eli Lilly (
LLY +2.48%) was downgraded to "Underperform" from "Hold "at Jefferies.
Southeastern reported a 4.8% passive stake in Wendy's (
WEN +2.58%) .
Wells Fargo downgraded the Consumer Staples sector to "Underweight" from "Overweight" citing downward earnings momentum with U.S. consumer disposable income growth near 50-year lows and commodity prices on the verge of deflation.
Safeway (
SWY +2.50%) reported Q3 EPS of 27 cents, well ahead of consensus of 16 cents, and said that it intends to exit the Chicago market, where it operates 72 Dominick's stores, by early 2014.
Wells Fargo reported a 12.1% passive stake in Pike Electric (
PIKE +3.18%) .
Micron (
MU +1.54%) reported Q4 EPS ex-gains of 20 cents, below consensus of 25 cents.
MARKET COMMENTS
Dec E-mini S&Ps (
ESZ13 +0.13%) this morning are up +1.25 points (+0.07%) at a fresh 1-week high. The S&P 500 index on Thursday rallied to a 1-week high and closed sharply higher on signs that U.S. lawmakers were near an agreement to raise the debt limit. Speculation is that lawmakers will raise the debt limit temporarily for 6 weeks without policy conditions to give Congress more time to hammer out a CR and a long-tern increase in the debt ceiling. Stocks shrugged of the larger-than-expected increase in weekly initial unemployment claims by +66,000 to a 6-month high of 374,000. Closes: S&P 500 +2.18%. Dow Jones +2.18%, Nasdaq 100 +2.17%.
Dec 10-year T-notes (
ZNZ13 +0.04%) this morning are up +2.5 ticks. Dec 10-year T-note prices on Thursday tumbled to a 2-week low on reduced safe-haven demand as stocks rallied sharply on speculation U.S. lawmakers were near an agreement on raising the debt ceiling. T-notes recovered from their worst levels on strong demand for the Treasury’s $13 billion 30-year T-bond auctions that had a bid-to-cover of 2.64, well above the 12-auction average of 2.25. Closes: TYZ3
-9.00, FVZ3
-1.75.
The dollar index (
DXY00 -0.13%) this morning is down
-0.124 (
-0.15%). EUR/USD (
^EURUSD) is up +0.0049 (+0.36%) and USD/JPY (
^USDJPY) is up +0.13 (+0.13%). The dollar index on Thursday jumped to a 2-week high and closed higher on signs that U.S. lawmakers may finally reach a compromise to lift the debt ceiling. The dollar fell back from its best levels after U.S. weekly jobless claims rose more-than-expected to a 6-month high, which bolstered speculation the Fed will maintain QE3. Closes: Dollar index +0.041 (+0.05%), EUR/USD
-0.0004 (
-0.03%), USD/JPY +0.819 (+0.84%).
Nov WTI crude oil (
CLX13 -1.31%) this morning is down -$1.28 (
-1.24%) and Nov gasoline (
RBX13 -0.38%) is down
-0.0144 (
-0.53%). Nov crude oil and gasoline prices on Thursday closed sharply higher on signs that U.S. lawmakers may finally agree on a short-term increase in the debt ceiling, which boosted stocks and most commodities. Gasoline prices also received a boost on concern over supplies on the U.S. East Coast after the Phillips 66 Bayway refinery in New Jersey and the PBF Energy refinery in Delaware, with a combined 420,000 barrels a day of capacity, were shut for planned maintenance. Closes: CLX3 +1.40 (+1.38%), RBX3 +0.0751 (+2.86%).
GLOBAL EVENT CALENDAR10/11/2013
| US | 0830 ET | Sep PPI expected +0.2% m/m and +0.6% y/y, Aug +0.3% m/m and +1.4% y/y (subject to postponement). Sep PPI ex food & energy expected +0.1% m/m and +1.2% y/y, Aug unch m/m and +1.1% y/y. |
| 0830 ET | Sep retail sales expected unch m/m and +0.4% m/m ex autos, Aug +0.2% and +0.1% ex autos.(subject to postponement). |
| 0955 ET | Preliminary U.S. Oct University of Michigan consumer confidence expected -1.6 to 75.9, Sep -4.6 to 77.5. |
| 1000 ET | Aug business inventories expected +0.3%, July +0.4% (subject to postponement). |
| 1100 ET | Fed Governor Jerome Powell speaks on a panel on monetary policy at the 2013 Institute of International Finance Annual Membership meeting. |
| 1200 ET | Oct WASDE crop production report. |
| 1300 ET | Boston Fed President Eric Rosengren speaks on Communicating Monetary Policy at the Zero Bound at the Council on Foreign Relations. |
| n/a | World Bank and IMF annual meeting in Washington, D.C. |
| GER | 0200 ET | German Sep wholesale price index, Aug -0.6% m/m and -1.7% y/y. |
| 0200 ET | Revised German Sep CPI (EU harmonized), previous unch m/m and +1.6% y/y. |
| UK | 0430 ET | UK Aug construction output expected +0.8% m/m and +3.7% y/y, July +2.2% m/m and +2.0% y/y. |
| EUR | 0830 ET | ECB Executive Board member Peter Praet participates in the Global Economic Outlook session at the 2013 annual membership meeting for the Institute for International Finance. |
| CHI | n/a | China Sep trade balance expected +$26.17 billion, Aug +$28.52 billion. Sep exports expected +5.5% y/y, Aug +7.2% y/y. Sep imports expected +7.0% y/y, Aug +7.0% y/y. |
U.S. STOCK CALENDAR10/11/2013
| Company Name | Ticker | Time | Event Description | Period | Estimate |
|---|
| JPMorgan Chase & Co | JPM US | 7:00 | Q3 2013 Earnings Release | Q3 2013 | 1.288 |
| Wells Fargo & Co | WFC US | 8:00 | Q3 2013 Earnings Release | Q3 2013 | 0.973 |
| JPMorgan Chase & Co | JPM US | 8:30 | Q3 2013 Earnings Call | Q3 2013 | |
| Chimera Investment Corp | CIM US | | Q2 2012 Earnings Release | Q2 2012 | 0.107 |
