Wednesday, January 7th, 2015View Older Reports
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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 +0.59%) this morning are up +0.63% and European stocks are up +1.29% amid optimism that weaker-than-expected Eurozone Dec inflation bolsters the case for the ECB to begin quantitative easing. The Eurozone Dec CPI fell a more-than-expected -0.2% y/y, the biggest decline in 5-1/4 years. Energy producers are leading the rise in stocks as the price of crude oil gained. The Greek 10-year bond yield climbed to a 1-1/4 year high of 10.196% and sent the Greek ASE Stock Index tumbling to a 2-1/4 year low. European economic growth remains divergent after the Italy Nov unemployment rate unexpectedly rose +0.1 to a record high 13.4% (data from 1977), while the German Dec unemployment rate unexpectedly fell -0.1 to 6.5%, the lowest since data for a reunified Germany began in 1991. Asian stocks closed mixed: Japan +0.01%, Hong Kong +0.83%, China +0.08%, Taiwan +0.35%, Australia -0.21%, Singapore +0.50%, South Korea +0.25%, India -0.29%. Commodity prices are mixed. Feb crude oil (CLG15 +0.02%) is up +0.06%. Feb gasoline (RBG15 -1.02%) is down -0.67%. Feb gold (GCG15 -0.48%) is down -0.52%. Mar copper (HGH15 -0.38%) is down -0.33%. Agriculture prices are higher. The dollar index (DXY00 +0.46%) is up +0.58% at a new 9-year high. EUR/USD (^EURUSD) is down -0.52% at an 8-3/4 year low after the larger-than-expected decrease in Eurozone Dec CPI strengthened the case for the ECB to begin large-scale asset purchases. USD/JPY (^USDJPY) is up +0.63%. Mar T-note prices (ZNH15 -0.12%) are down -4 ticks.Eurozone Dec CPI fell -0.2% y/y, more than expectations of -0.1% y/y and the fastest pace of decline in 5-1/4 years. Dec core CPI rose +0.8% y/y, a larger increase than expectations of +0.7% y/y.
The Eurozone Nov unemployment rate was unchanged at 11.5%, right on expectations.
The German Dec unemployment change fell -27,000 to a record low 2.841 million, more than expectations of -5,000 and the most in 8 months. The Dec unemployment rate unexpectedly fell -0.1 to 6.5%, better than expectations of unch and the lowest since data for a reunified Germany began in 1991.
German Nov retail sales rose +1.0% m/m, better than expectations of +0.2% m/m. On an annual basis, Nov retail sales unexpectedly fell -0.8% y/y, worse than expectations of +0.6% y/y.
U.S. STOCK PREVIEW
Today’s Dec ADP employment report is expected to show a solid increase of +225,000, which would be mildly above November’s rise of +208,000 and the 6-month moving average of +222,000. Today’s Nov trade deficit is expected to narrow modestly to -$42.0 billion from -$43.4 billion in October. There are 3 of the Russell 1000 companies that report earnings today: Monsanto (consensus $0.35), RPM International (0.55), MSC Industrial Direct (0.98). Equity equity conferences during the remainder of this week include: Citi Global Internet, Media & Telecommunications Conference on Tue-Wed, Goldman Sachs Global Energy Conference on Wed-Thu, and Evercore ISI Utility Conference on Thu-Fri.
OVERNIGHT U.S. STOCK MOVERS
Eli Lilly (LLY +0.50%) said it sees fiscal 2015 adjusted EPS of $3.10-$3.20, lower than consensus of $3.21 and that it sees fiscal 2015 revenue of $20.3 billion-$20.8 billion, below consensus of $20.88 billion.Joy Global (JOY -2.07%) and Terex (TEX -3.23%) were both downgraded to 'Hold' from 'Buy' at KeyBanc.
The WSJ reports that 3G is discussing a possible acquisition of PepsiCo (PEP -0.76%) or Campbell Soup (CPB -0.67%) .
UnitedHealth (UNH -0.20%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
Cigna (CI +0.40%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.
Sanofi (SNY +2.52%) was downgraded to 'Sell' from 'Neutral' at Citigroup.
Viking Global Investors reported a 5.5% passive stake in Mohawk (MHK -0.89%) .
J.C. Penney (JCP +1.86%) surged 19% in pre-market trading after it reported Nov/Dec same-store-sales were up 3.7%, at the upper end of guidance range of 2.0% - 4.0%.
Point72 Asset reported a 6.0% passive stake in Shutterfly (SFLY -3.85%) .
Point72 Asset reported an 8.7% passive stake in Kindred Healthcare (KND -1.44%) .
Nordstrom (JWN -0.63%) and Signet Jewelers (SIG -2.35%) were both initiated with an 'Outperform' at Cowen.
American Eagle (AEO +0.36%) was upgraded to 'Market Perform' from 'Underperform' at Cowen.
Micron (MU -2.69%) fell 5% in after-hours trading after it reported Q1 adjusted EPS of 97 cents, better than consensus of 92 cents, but reported Q1 revenue of $4.57 billion, below consensus of $4.62 billion. Micron also said it expects Q2 revenue of $4.1 billion-$4.3 billion, below consensus of $4.53 billion.
MARKET COMMENTS
Mar E-mini S&Ps (ESH15 +0.59%) this morning are up +12.50 points (+0.63%). The S&P 500 index on Tuesday fell to a 2-1/2 week low and closed lower: S&P 500 -0.89%, Dow Jones -0.74%, Nasdaq -1.20%. Bearish factors included (1) the -0.7% drop in U.S. Nov factory orders, weaker than expectations of -0.5%, (2) the -3.1 point decline in the Dec ISM non-manufacturing index, weaker than expectations of -1.3 to a 6-month low of 58.0, and (3) a slide in energy producers after the price of crude oil slumped to a new 5-1/2 year low.Mar 10-year T-notes (ZNH15 -0.12%) this morning are down -4 ticks. Mar 10-year T-note futures prices on Tuesday rose to a 2-1/2 month high and closed higher. Closes: TYH5 +19.0, FVH5 +12.25. Bullish factors included (1) carry-over support from a plunge in the 10-year German bund yield to a record low 0.441% on speculation the ECB will embark on QE at its Jan 22 policy meeting, and (2) weaker-than-expected U.S. economic data on Nov factory orders and the Dec ISM non-manufacturing index.
The dollar index (DXY00 +0.46%) this morning is up +0.529 (+0.58%) at a new 9-year high. EUR/USD (^EURUSD) is down -0.0062 (-0.52%) at an 8-3/4 year low. USD/JPY (^USDJPY) is up +0.75 (+0.63%). The dollar index on Tuesday closed slightly higher, but remained below Monday’s 9-year high: Dollar index +0.121 (+0.13%), EUR/USD -0.00429 (-0.36%), USD/JPY -1.255 (-1.05%). The main supportive factor was weakness in EUR/USD on speculation the ECB is closer to large-scale sovereign-bond purchases and on concern that Jan 25 elections in Greece may put the anti-austerity Syriza party into power and lead to Greece’s departure from the Eurozone. Limiting gains in the dollar was a fall in USD/JPY fell to a 2-week low as a slide in stocks boosted the safe-haven demand for the yen.
Feb WTI crude oil (CLG15 +0.02%) this morning is up +3 cents (+0.06%) and Feb gasoline (RBG15 -1.02%) is down -0.0091 (-0.67%). Feb crude and Feb gasoline on Tuesday dropped to new 5-1/2 year lows and closed lower: CLG5 -2.11 (-4.22%), RBG5 -0.0334 (-2.42%). Bearish factors included (1) dollar strength, (2) weaker-than-expected U.S. economic data on Nov factory orders and the Dec ISM non-manufacturing index, which signals reduced energy demand, and (3) expectations that Wednesday’s weekly EIA data will show crude supplies increased by +700,000 bbl.
GLOBAL EVENT CALENDAR01/07/2015
| US | 0700 ET | Weekly MBA mortgage applications, previous +0.9% with purchase sub-index +1.3% and refi sub-index +1.1%. |
| 0815 ET | Dec ADP employment change expected +225,000, Nov +208,000. | |
| 0830 ET | Nov trade balance expected -$42.0 billion, Oct -$43.4 billion. | |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1400 ET | Minutes of the Dec 16-17 FOMC meeting. | |
| 1830 ET | Chicago Fed President Charles Evans discusses the role and impact of monetary policy in an uncertain economy at an event in Chicago. | |
| GER | 0200 ET | German Nov retail sales expected +0.2% m/m and +0.6% y/y, Oct +1.6% m/m and +1.7% y/y. |
| 0330 ET | German Dec Markit construction PMI, Nov 53.5. | |
| 0355 ET | German unemployment change expected -5,000, Nov -14,000. Dec unemployment rate expected unch at 6.6%. | |
| UK | 0400 ET | UK Dec new car registrations, Nov +8.0% y/y. |
| 0430 ET | UK Dec Lloyds business barometer, Nov 42. | |
| EUR | 0500 ET | Eurozone Dec CPI expected -0.1% y/y, Nov +0.3% y/y. Dec core CPI expected +0.7% y/y, Nov +0.7% y/y. |
| 0500 ET | Eurozone Nov unemployment rate expected unch at 11.5%. |
U.S. STOCK CALENDAR01/07/2015
| Company | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| RPM International Inc | RPM US | 7:30 | Q2 2015 Earnings Release | Q2 2015 | 0.55 |
| MSC Industrial Direct Co Inc | MSM US | 7:30 | Q1 2015 Earnings Release | Q1 2015 | 0.976 |
| Monsanto Co | MON US | 8:00 | Q1 2015 Earnings Release | Q1 2015 | 0.347 |
| MSC Industrial Direct Co Inc | MSM US | 8:30 | Q1 2015 Earnings Call | Q1 2015 | |
| Eli Lilly & Co | LLY US | 9:00 | Q4 2015 Guidance Call | Q4 2015 | |
| Monsanto Co | MON US | 9:30 | Q1 2015 Earnings Call | Q1 2015 | |
| RPM International Inc | RPM US | 10:00 | Q2 2015 Earnings Call | Q2 2015 | |
| Acuity Brands Inc | AYI US | 11:00 | Annual General Meeting | Y 2015 | |
| Rovi Corp | ROVI US | 17:30 | Investor and Analyst Day | Y 2015 | |
| Apollo Education Group Inc | APOL US | Annual General Meeting1/7 |
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