Monday, June 9th, 2014View Older Reports
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OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM14 -0.12%) this morning are down -0.08% and European stocks are down -0.02% after a gauge of European investor confidence unexpectedly declined to the lowest level in 6 months. U.S. Jun mini-S&P stock futures had posted a new record high and European stocks climbed to a 5-3/4 year high after Chinese May exports rose more than expected. Italian and Spanish 10-year government bond yields fell to record lows and Portugal's 10-year yield dropped to an 8-year low on expectations for the ECB to remain extremely accommodative. Spanish and Italian bank stocks were higher after JPMorgan Chase recommended buying Banco Popular Espanol SA, saying lenders in the Eurozone's most-indebted countries would benefit from the ECB's measures to combat inflation. Asian stocks closed mostly higher: Japan +0.31%, Hong Kong +0.73%, China -0.02%, Taiwan +0.31%, Australia closed for holiday, Singapore +0.17%, South Korea -0.34%, India +0.72%. Japan's Nikkei Stock Index posted a 2-3/4 month high after Japan Q1 GDP was revised higher to its fastest pace of expansion in over 2 years. Commodity prices are mixed. July crude oil (CLN14 +0.66%) is up +0.60%. July gasoline (RBN14 +0.54%) is up +0.50%. Aug gold (GCQ14 +0.30%) is up +0.30%. July copper (HGN14 -0.77%) is down -0.75% at a 1-month low. Agriculture prices are lower. The dollar index (DXY00 +0.18%) is up +0.11%. EUR/USD (^EURUSD) is down -0.15%. USD/JPY (^USDJPY) is down -0.03%. Sep T-note prices (ZNU14 -0.19%) are down -5.5 ticks.The China May trade balance widened to a surplus of +$35.92 billion, more than expectations of +$22.60 billion and the largest surplus in 5-1/3 years. May exports rose +7.0% y/y, better than expectations of +6.7% y/y, while May imports unexpectedly fell -1.6% y/y, weaker than expectations of +6.0% y/y.
The Eurozone Jun Sentix investor confidence unexpectedly fell -4.3 to 8.5, weaker than expectations of +0.5 to 13.3 and the lowest in 6 months.
ECB Executive Board member Coeure said that "the ECB will keep rates close to zero for an extremely long period" as monetary conditions diverge between the Eurozone and in the U.S. and UK where a cycle of rate rises are expected.
UK May Lloyds employment confidence rose +3 to 4, the highest since the data series began in 2004.
Japan May consumer confidence rose +2.3 to 39.3, better than expectations of +0.5 to 37.5.
The Japan May eco watchers survey outlook climbed +3.5 to 53.8, better than expectations of +1.7 to 52.0. The May eco watchers survey current rose +3.5 to 45.1, better than expectations of +3.4 to 45.0.
Japan Q1 GDP was revised higher to +1.6% q/q and +6.7% q/q annualized, higher than the previously reported +1.4% q/q and +5.6% q/q annualized and the fastest pace of expansion since Q3 of 2011.
U.S. STOCK PREVIEW
This week’s U.S. economic schedule is relatively light with key reports including Thursday’s May retail sales report (expected +0.6% headline and +0.4% ex-autos), Friday’s May PPI (expected +2.4% vs +2.1% in April), and Friday’s early-June U.S. consumer confidence index (expected +1.1 to 83.0). The Treasury will sell $62 billion of 3-year, 10-year and 30-year securities this Tuesday through Thursday. None of the Russell 1000 companies report earnings today.Equity conferences this week include: Bloomberg Next Big Thing Summit on Mon, E3 2014 Video-Game Industry Conference - Press Briefing on Mon, Goldman Sachs European Financials Conference on Tue, Harbor's Aluminum Outlook Summit on Tue, Morgan Stanley Financials Conference on Tue-Wed, Piper Jaffray Consumer Conference on Tue-Wed, Goldman Sachs Global Healthcare Conference on Tue-Thu, William Blair Growth Stock Conference on Tue-Thu, Credit Suisse Future of Payments & Commerce Conference on Wed, Goldman Sachs North American Energy Summit on Wed, Mexico Capital Projects & Infrastructure Summit on Wed, 2nd Annual Mexico Capital Projects & Infrastructure Summit on Wed-Thu, Morgan Stanley Leveraged Finance Conference on Wed-Thu, Drexel Hamilton Aerospace and Defense Conference on Thu, and Robert W. Baird & Co. Inc. Utility & Infrastructure Symposium on Thu.
OVERNIGHT U.S. STOCK MOVERS
Merck (MRK -0.43%) acquires Idenix (IDIX +4.03%) for $24.50 per share in cash or $3.85 billion.Sempra Energy (SRE -0.40%) was upgraded to 'Buy' from 'Neutral' at ISI Group.
Principal Financial Group (PFG +1.45%) was upgraded to 'Equal Weight' from 'Underweight' at Morgan Stanley.
Capital One (COF +1.23%) was upgraded to 'Buy' from 'Neutral' at Nomura.
J.M. Smucker (SJM +1.32%) was upgraded to 'Market Perform' from 'Underperform' at Wells Fargo.
Novartis (NVS +0.34%) was upgraded to 'Equalweight' from 'Underweight' at Barclays.
Dollar General (DG +0.52%) rose 4% in after-hours trading after Icahn said he may push for a merger between Dollar General and Family Dollar.
Family Dollar (FDO +0.70%) jumped over 6% in after-hours trading after billionare investor Carl Icahn reported a 9.39% stake in the company.
The FDA approved Biogen Idec's (BIIB -0.81%) Eloctate, Antihemophilic Factor, Fc fusion protein, for use in adults and children who have Hemophilia A.
Emancipation Capital reported a 5.8% passive stake in I.D. Systems (IDSY +2.30%) .
Reid Walker reported a 9.0% stake in Superior Drilling (SDPI -3.86%) .
MARKET COMMENTS
June E-mini S&Ps (ESM14 -0.12%) this morning are down -1.50 points (-0.08%). The S&P 500 index on Friday rallied to a new record high and closed higher. Bullish factors included (1) the +217,000 increase in U.S. May non-farm payrolls, slightly more than expectations of +215,000, (2) the unchanged May unemployment rate at a 5-1/2 year low of 6.3%, better than expectations of +0.1 to 6.4%, and (3) optimism in the global economy after the Bundesbank raised its German 2014 GDP forecast to +1.9% from a Dec estimate of +1.7%. Closes: S&P 500 +0.46%, Dow Jones +0.52%, Nasdaq +0.47%.Sep 10-year T-notes (ZNU14 -0.19%) this morning are down -5.5 ticks. Sep 10-year T-note futures prices on Friday erased an early rally and closed lower. T-notes had gained on carry-over support from strength in German bunds which rallied to a 1-week high. T-notes fell back and closed lower on reduced safe-haven demand after the S&P 500 climbed to a new record high and after the U.S. May unemployment rate remained unch at a 5-1/2 year low. Closes: TYU4 -5.00, FVU4 -4.50.
The dollar index (DXY00 +0.18%) this morning is up +0.087 (+0.11%). EUR/USD (^EURUSD) is down -0.0020 (-0.15%). USD/JPY (^USDJPY) is down -0.03 (-0.03%). The dollar index on Friday recovered from a 1-week low and closed higher after U.S. May payrolls were slightly stronger than expected. Dollar gains were limited after the S&P 500 rose to a record high, which reduced safe-haven demand for the dollar. Closes: Dollar Index +0.038 (+0.05%), EUR/USD -0.0019 (-0.14%), USD/JPY +0.043 (+0.04%).
July WTI crude oil (CLN14 +0.66%) this morning isup +62 cents (+0.60%). July gasoline (RBN14 +0.54%) is up +0.0148 (+0.50%). July crude and gasoline prices on Friday settled mixed. Supportive factors for crude included (1) the unchanged U.S. May unemployment rate at a 5-1/2 year low of 6.3%, which suggest labor market strength that may lead to improved fuel demand, and (2) the Bundesbank’s hike in its German 2014 GDP forecast, which signals stronger energy demand. Crude prices fell back from their best levels after the dollar index rebounded from a 1-week low and closed higher. Closes: CLN4 +0.18 (+0.18%) RBN4 -0.0173 (-0.59%).
GLOBAL EVENT CALENDAR06/09/2014
| US | 0910 ET | St. Louis Fed President James Bullard speaks on the U.S. economic outlook to the Tennessee Bankers Association annual meeting. |
| 1100 ET | USDA weekly grain export inspections. | |
| 1330 ET | Boston Fed President Eric Rosengren delivers keynote speech at the Banco de Guatemalas XXIII Cycle of Economic Lectures in Guatemala City. | |
| 1600 ET | USDA weekly crop progress. | |
| JPN | 0030 ET | Japan May bankruptcies, Apr +1.66% y/y. |
| 0100 ET | Japan May consumer confidence expected +0.6 to 37.6, Apr 37.0. | |
| 0200 ET | Japan May eco watchers survey current expected +3.4 to 45.0, Apr 41.6. May eco watchers survey outlook expected +1.7 to 52.0, Apr 50.3. | |
| 1950 ET | Japan Apr tertiary industry index expected -3.5% m/m, Mar +2.4% m/m. | |
| EUR | 0430 ET | Eurozone Jun Sentix investor confidence expected +0.5 to 13.3, May 12.8. |
| UK | 0430 ET | UK May Lloyds employment confidence, Apr 1. |
| 1901 ET | UK May BRC sales like-for-like expected +1.6% y/y, Apr +4.2% y/y. | |
| CHI | 2130 ET | China May CPI expected +2.4% y/y, Apr +1.8% y/y. May PPI expected -1.5% y/y, Apr -2.0% y/y. |
| n/a | China May new yuan loans expected +750.0 billion yuan, Apr +774.7 billion yuan. |
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