Wednesday, January 14th, 2015View Older Reports
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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 -0.56%) this morning are down -0.30% and European stocks are down -0.04% after the World Bank cut its global growth outlook for this year. A slide in commodity producers is leading the overall market lower after the price of copper plunged to a 5-1/2 year low. European stocks recovered from their worst levels after an aide to the EU's top court said a bond-buying program by the ECB is "in principle" in line with European Union treaties. Asian stocks closed lower: Japan -1.71%, Hong Kong -0.43%, China -0.33%, Taiwan -0.56%, Australia -0.95%, Singapore -0.45%, South Korea -0.12%, India -0.29%. Commodity prices are lower on demand concerns after the World Bank cut its global GDP forecast. Feb crude oil (CLG15 -0.31%) is down -0.04%. Feb gasoline (RBG15 -0.41%) is down -0.24%. Feb gold (GCG15 -0.36%) is down -0.48%. Mar copper (HGH15 -5.30%) is down -5.12% at a 5-1/2 year low. Agriculture prices are weaker with Mar corn and Mar soybeans at 1-1/4 month lows and Mar wheat at a 1-3/4 month low. The dollar index (DXY00 unch) is down -0.03%. EUR/USD (^EURUSD) is down -0.14% at a 9-year low after an aide to the EU's top court gave a green light to the ECB's bond-buying program. USD/JPY (^USDJPY) is down -0.81%. Mar T-note prices (ZNH15 +0.11%) are up +4 ticks.The World Bank cut its 2015 global GDP forecast to 3.0%, down from a 3.4% estimate in Jun, saying risks to the global economy are "significant and tilted to the downside." The World Bank lowered its 2015 Eurozone GDP forecast to 1.1% from a Jun estimate of 1.8% and cut its 2015 China GDP estimate to 7.1% from 7.5%, but upgraded its 2015 U.S GDP projection to 3.2% from 3.0%.
A senior adviser at the European Union's highest appeals court said the ECB's Outright Monetary Transactions (OMTs) bond-buying program is "compatible" with European Union treaties. Germany's top court had expressed doubts about the legality of the OMT program and this legal endorsement paves the way for the ECB to implement additional bond buying when it meets on Jan 22.
Eurozone Nov industrial productions rose +0.2% m/m and fell -0.4% y/y, better than expectations of unch m/m and -0.7% y/y.
Japan Dec machine tool orders rose +33.8% y/y, less than Nov's 36.6% increase but still the sixteenth consecutive month of gains.
U.S. STOCK PREVIEW
Today’s Dec retail sales report is expected to show a decline of -0.1% m/m after November’s strong increase of +0.7%. The Fed today will release its Beige Book survey of the economy ahead of the next FOMC meeting on Jan 29-30.The Treasury today will sell $13 billion of 30-year T-bonds, concluding this week’s $58 billion coupon package. There are three of the Russell 1000 companies that report earnings today: JPMorgan Chase (consensus $1.32), Wells Fargo (1.02), Greif (0.77). Equity conferences during the remainder of this week include: JP Morgan Health Care Conference on Mon-Wed, Deutsche Bank Global Auto Industry Conference on Tue-Wed, and Biomarkers from Research to Clinic Conference on Fri.
OVERNIGHT U.S. STOCK MOVERS
Foot Locker (FL -2.04%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs.JPMorgan Chase (JPM +0.02%) was downgraded to 'Underweight' from 'Neutral' at HSBC.
Viacom (VIAB +0.32%) was downgraded to 'Sell' from 'Buy' at Citigroup.
Travelers (TRV +0.15%) and Allstate (ALL +0.60%) were downgraded to 'Underperform' from 'Neutral' at Macquarie.
KB Home (KBH -16.29%) was downgraded to 'Neutral' from 'Outperform' at Credit Suisse.
BlackRock (BLK +0.30%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.
Chesapeake (CHK +0.90%) , Resolute Energy (REN -9.88%) and Marathon Oil (MRO -1.33%) were all downgraded to 'Underweight' from 'Equal Weight' at Barclays.
JPMorgan Chase (JPM +0.02%) reported Q4 EPS of $1.33, better than consensus of $1.32.
Stryker (SYK +0.21%) said it sees Q4 adjusted EPS of $1.43-$1.45, below consensus $1.46, and then lowered guidance on fiscal 2014 EPS to $4.72-$4.74, less than consensus of $4.75.
Integrated Core Strategies reported a 4.9% passive stake in Gulfport Energy (GPOR -2.82%) .
Portolan Capital reported a 5.12% passive stake in Datawatch (DWCH -1.80%) .
Tesla (TSLA +1.01%) fell over 4% after CEO Musk said Q4 China sales declined significantly.
Cintas (CTAS +1.15%) announced that its Board of Directors approved an additional $500 million share repurchase program.
GameStop (GME -2.96%) rose over 6% in after-hours trading after it said that comparable holiday same-store-sales decreased -3.1%, comprised of -3.3% in the U.S. and -2.7% internationally, but said it backs its fiscal 2014 EPS view of $3.40-$3.55, within the range of consensus at $3.49.
CSX (CSX -1.06%) reported Q4 EPS of 49 cents, right on consensus, although Q4 revenue of $3.20 billion was better than consensus of $3.18 billion.
MARKET COMMENTS
Mar E-mini S&Ps (ESH15 -0.56%) this morning are down -6.00 points (-0.30%). The S&P 500 index on Tuesday closed lower: S&P 500 -0.26%, Dow Jones -0.15%, Nasdaq -0.09%. Bearish factors included (1) weakness in commodity producers after the price of copper fell to a 5-1/4 year low, (2) a slide in energy producers after crude oil fell to a 5-1/2 year low, and (3) a fall in homebuilders after KB Home slumped when it said its Q1 profit margins will contract.Mar 10-year T-notes (ZNH15 +0.11%) this morning are up +4 ticks. Mar 10-year T-note futures prices on Tuesday posted a 2-3/4 month high and closed higher. Closes: TYH5 +15.50, FVH5 +9.00. Bullish factors included (1) the plunge in crude oil to a 5-1/2 year low that undercut inflation expectations as the U.S. 10-year breakeven inflation expectations rate dropped to a 4-1/4 year low, and (2) the slide in stocks that boosted the safe-haven demand for Treasuries.
The dollar index (DXY00 unch) this morning is down -0.024 (-0.03%). EUR/USD (^EURUSD) is down -0.0017 (-0.14%) at a fresh 9-year low. USD/JPY (^USDJPY) is down -0.96 (-0.81%). The dollar index on Tuesday closed higher: Dollar index +0.327 (+0.36%), EUR/USD -0.00611 (-0.52%), USD/JPY -0.419 (-0.35%). The main bullish factor for the dollar was weakness in EUR/USD which fell to a 9-year low on expectations for the ECB to expand stimulus after (1) ECB Executive Board member Coeure said the ECB is “in a position to take a decision on Jan 22,” and (2) ECB Governing Council member Nowotny said policy makers must treat the threat of deflation seriously and “we shouldn’t wait too long with a reaction.”
Feb WTI crude oil (CLG15 -0.31%) this morning is down -2 cents (-0.04%) and Feb gasoline (RBG15 -0.41%) is down -0.0030 (-0.24%). Feb crude oil and Feb gasoline on Tuesday closed lower as Feb crude posted a 5-1/2 year low and Feb gasoline slid to a 5-3/4 year low: CLG5 -0.18 (-0.39%), RBG5 -0.0061 (-0.48%). Bearish factors included (1) a stronger dollar, and (2) expectations for Wednesday’s weekly EIA crude inventories to climb +1.75 million bbl. Crude prices recovered from their worst levels on signs of strong Chinese demand after China Dec crude imports rose +19.5% m/m to a record 30.4 MMT.
GLOBAL EVENT CALENDAR01/14/2015
| US | 0700 ET | Weekly MBA mortgage applications, previous +11.1% with purchase sub-index +4.5% and refi sub-index +16.0%. |
| 0800 ET | Philadelphia Fed President Charles Plosser speaks on the economy and monetary policy at the Greater Philadelphia Chamber of Commerce. | |
| 0830 ET | Dec retail sales expected -0.1% m/m and unch ex autos, Nov +0.7% and +0.5% ex autos. | |
| 0830 ET | Dec import price index expected -2.7% m/m and -5.2% y/y, Nov -1.5% m/m and -2.3% y/y. | |
| 1000 ET | Nov business inventories expected +0.3%, Oct +0.2%. | |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1300 ET | Treasury auctions $13 billion 30-year T-bonds. | |
| 1400 ET | Fed Beige Book. | |
| JPN | 0100 ET | Japan Dec machine tool orders, Nov +36.6% y/y. |
| 1850 ET | Japan Dec PPI expected -0.3% m/m and +2.1% y/y, Nov -0.2% m/m and +2.7% y/y. | |
| 1850 ET | Japan Nov machine orders expected +4.4% m/m and -6.3% y/y, Oct -6.4% m/m and -4.9% y/y. | |
| EUR | 0500 ET | Eurozone Nov industrial production expected unch m/m and -0.7% y/y, Oct +0.1% m/m and +0.7% y/y. |
| UK | 1901 ET | UK Dec RICS house price balance expected 10%, Nov 13%. |
U.S. STOCK CALENDAR01/14/2015
| Company | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| JPMorgan Chase & Co | JPM US | 7:00 | Q4 2014 Earnings Release | Q4 2014 | 1.316 |
| Wells Fargo & Co | WFC US | 8:00 | Q4 2014 Earnings Release | Q4 2014 | 1.016 |
| JPMorgan Chase & Co | JPM US | 8:30 | Q4 2014 Earnings Call | Q4 2014 | |
| CSX Corp | CSX US | 8:30 | Q4 2014 Earnings Call | Q4 2014 | |
| Wells Fargo & Co | WFC US | 10:00 | Q4 2014 Earnings Call | Q4 2014 | |
| Forest City Enterprises Inc | FCE/A US | 10:00 | Business Update Call | ||
| Mohawk Industries Inc | MHK US | 11:00 | Acquisition of IVC Group by Mohawk Industries, Inc Call | ||
| Linear Technology Corp | LLTC US | 11:30 | Q2 2015 Earnings Call | Q2 2015 | |
| Domino's Pizza Inc | DPZ US | 12:30 | Investor Day | Y 2015 | |
| Greif Inc | GEF US | Aft-mkt | Q4 2014 Earnings Release | Q4 2014 | 0.774 |
| NRG Energy Inc | NRG US | 19:00 | Investor Meeting - Day 1 | Y 2015 |
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