Wednesday, March 11th, 2015View Older Reports
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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH15 +0.37%) this morning are up +0.44% as the market recovers from yesterday's plunge and European stocks are up +1.74% after a plunge in EUR/USD to an 11-3/4 year low has fueled a rally in European exporters as the slide in EUR/USD boosts their earnings prospects. European government bond yields continue to fall as the 10-year German bund yield dropped to a record low 0.198% as the ECB buys Eurozone sovereign debt for a third day. Asian stocks closed mixed: Japan +0.31%, Hong Kong -0.75%, China +0.11%, Taiwan -0.14%, Australia -0.53%, Singapore -0.58%, South Korea +0.16%, India -0.18%. Chinese stocks rebounded from early losses and closed higher on speculation the government may boost stimulus measures to support the economy after Chinese Feb industrial production and retail sales rose less-than-expected. Japanese stocks recovered from losses and closed higher as the rally in USD/JPY Tuesday to a 7-1/2 year high improved the earnings prospects of Japanese exporters. Commodity prices are mixed. Apr crude oil (CLJ15 +0.39%) is up +0.08%. Apr gasoline (RBJ15 -0.83%) is down -0.92% at a 2-1/2 week low. Apr gold (GCJ15 -0.19%) is down -0.24%. May copper (HGK15 +0.32%) is up +0.36%. Agriculture prices are higher. The dollar index (DXY00 +0.85%) is up +0.78% at an 11-1/2 year high. EUR/USD (^EURUSD) is down -1.17% at an 11-3/4 year low. USD/JPY (^USDJPY) is up +0.35%. Jun T-note prices (ZNM15 -0.16%) are down -5 ticks.ECB President Draghi said the aim of QE is to return inflation to the ECB's goal of 2.0% and "we can deploy and will deploy monetary policy in a way that can and will stabilize inflation in line with our objective."
China Feb retail sales rose +10.7% year-to-date, weaker than expectations of +11.6% year-to-date and the slowest pace of increase in 11 years.
China Feb industrial production rose +6.8% year-to-date, weaker than expectations of +7.7% year-to-date and the slowest pace of increase in 5-3/4 years.
UK Jan industrial production unexpectedly fell -0.1% m/m, weaker than expectations of +0.2% m/m. On an annual basis, Jan industrial production rose +1.3% y/y, right on expectations. UK Jan manufacturing production fell -0.5% m/m and rose +1.9% y/y, weaker than expectations of +0.2% m/m and +2.6% y/y.
Japan Feb PPI was unch m/m and rose +0.5% y/y, slightly stronger than expectations of unch m/m and +0.4% y/y.
Japan Jan machine orders fell -1.7% m/m and rose +1.9% y/y, stronger than expectations of -4.0% m/m and -1.0% y/y.
U.S. STOCK PREVIEW
The Treasury today will sell $21 billion of 10-year T-notes. There are three of the Russell 1000 companies that report earnings today: Memorial Resource Development (consensus $0.13), Axalta Coating Systems (0.23), Tahoe Resources (0.10).Equity conferences during the remainder of this week include: Deutsche Bank Media, Internet & Telecom Conference on Mon-Wed, 11th Annual Private Banking Asia 2015 on Mon-Wed, Piper Jaffray Technology, Media and Telecommunications Conference on Tue-Wed, RBC Capital Markets Financial Institutions Conference on Tue-Wed, Credit Agricole Global High Yield Conference on Wed, Goldman Sachs TMT Leveraged Finance Conference on Wed, Barclays Capital Health Care Conference on Tue-Thu, Deutsche Bank Regional Banks Summit on Thu, Nomura - Conference: US Software Conference - New York on Thu.
OVERNIGHT U.S. STOCK MOVERS
Brown Shoe (BWS +0.25%) reported Q4 adjusted EPS of 20 cents, better than consensus of 16 cents.Tiffany (TIF -1.15%) was upgraded to 'Overweight' from 'Neutral' at Atlantic Equities.
Citigroup kept its 'Buy' rating on Actavis (ACT -2.04%) and raised its price target on the stock to $360 from $325.
Scotts Miracle-Gro (SMG -0.50%) was upgraded to 'Buy' from 'Neutral' at SunTrust.
Credit Suisse (CS +6.67%) was upgraded to 'Overweight' from 'Underweight' at JPMorgan Chase.
Skyworks (SWKS -0.99%) will replace PetSmart (PETM -0.01%) in the S&P 500 as of today's close.
EMC (EMC -3.27%) was downgraded to 'Market Perform' from 'Outperform' at Wells Fargo.
L-3 Communications (LLL -1.91%) was initiated with a 'Buy' at Buckingham with a price target of $155.
Credit Suisse initiated Buffalo Wild Wings (BWLD -1.77%) with an 'Underperform' and a price target of $175.
Credit Suisse initiated YUM! Brands (YUM -1.96%) with an 'Underperform' and a price target of $74.
Credit Suisse initiated Dunkin' Brands (DNKN +0.21%) with an 'Outperform' and named it a Top Pick with a $56 price target.
Verifone (PAY -2.75%) reported Q1 EPS of 44 cents, better than consensus of 41 cents, but then lowered guidance on fiscal 2015 EPS view to $1.78-1.82 from $1.85-$1.90, below consensus of $1.90.
MARKET COMMENTS
Mar E-mini S&Ps (ESH15 +0.37%) this morning are up +9.00 points (+0.44%). The S&P 500 index on Tuesday sold off to a 1-month low and closed sharply lower: S&P 500 -1.70%, Dow Jones -1.85%, Nasdaq -1.90%. Bearish factors included (1) comments from Dallas Fed President Fisher who said the Fed should raise interest rates before the economy reaches full employment as policy makers are better off tightening monetary policy earlier and more gradually than later and more quickly, (2) deflation concerns in China after China Feb PPI fell -4.8% y/y, weaker than expectations of -4.3% y/y and the fastest pace of decline in 5-1/3 years, and (3) concern that the 12% rally in the dollar index over the past 3 months to an 11-1/2 year high will undercut the profitability of multi-national U.S. companies.Jun 10-year T-notes (ZNM15 -0.16%) this morning are down -5 ticks. Jun 10-year T-note futures prices on Tuesday closed higher. Closes: TYM5 +16.00, FVM5 +7.00. Bullish factors included (1) carry-over support from a rally in German bunds to an all-time high as the ECB bought European government bonds in the second day of its QE program, (2) reduced inflation expectations after the 10-year T-note inflation breakeven rate fell to a 2-week low, and (3) increased safe-haven demand for T-notes after the S&P 500 tumbled to a 1-month low.
The dollar index (DXY00 +0.85%) this morning is up +0.767 (+0.78%) at an 11-1/2 year high. EUR/USD (^EURUSD) is down -0.0125 (-1.17%) at an 11-3.4 year low. USD/JPY (^USDJPY) is up +0.43 (+0.35%). The dollar index on Tuesday surged to an 11-1/2 year high and closed higher: Dollar index +1.030 (+1.06%), EUR/USD -0.01541 (-1.42%), USD/JPY -0.022 (-0.02%). Bullish factors included (1) hawkish comments from Dallas Fed President Fisher who said the Fed should raise interest rates before the economy reaches full employment, and (2) weakness in EUR/USD which slumped to an 11-3/4 year low as the ECB bought European government bonds on the second day of its QE program. USD/JPY fell back from a 7-1/2 year high and closed lower as the slide in stocks fueled safe-haven demand for the yen.
Apr WTI crude oil (CLJ15 +0.39%) this morning is up +4 cents (+0.08%) and Apr gasoline (RBJ15 -0.83%) is down -0.0167 (-0.92%) at a 2-1/2 week low. Apr crude oil and gasoline prices on Tuesday closed lower with Apr crude at a 1-week low and Apr gasoline at a 1-1/2 week low: CLJ5 -1.71 (-3.42%), RBJ5 -0.0602 (-3.21%). Bearish factors included (1) the rally in the dollar index to an 11-1/2 year high, (2) the slump in the S&P 500 to a 1-month low, and (3) expectations for Wednesday’s weekly EIA crude inventories to increase by +4.5 million bbl.
GLOBAL EVENT CALENDAR03/11/2015
| US | 0700 ET | Weekly MBA mortgage applications, previous +0.1% with purchase sub-index -0.2% and refi sub-index +0.5%. |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1300 ET | Treasury auctions $21 billion 10-year T-notes. | |
| 1630 ET | Fed releases bank stress test results. | |
| GER | 0300 ET | German Q4 labor costs, Q3 +0.2% q/q and +2.3% y/y. |
| EUR | 0400 ET | ECB President Mario Draghi speaks at a conference in Frankfurt, GE. |
| UK | 0530 ET | UK Jan industrial production expected +0.2% m/m and +1.3% y/y, Dec -0.2% m/m and +0.5% y/y. |
| 0530 ET | UK Jan manufacturing production expected +0.2% m/m and +2.6% y/y, Dec +0.1% m/m and +2.4% y/y. | |
| 2001 ET | UK Feb RICS house price balance expected 6%, Jan 7%. | |
| JPN | 1950 ET | Japan Jan tertiary index expected +0.5% m/m, Dec -0.3% m/m. |
| 1950 ET | Japan Q1 BSI large manufacturing business conditions, Q4 8.1. Q1 BSI large all-industry business conditions expected 6.0, Q4 5.0. |
U.S. STOCK CALENDAR03/11/2015
| Company | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| Memorial Resource Development Corp | MRD US | Bef-mkt | Q4 2014 Earnings Release | Q4 2014 | 0.131 |
| Axalta Coating Systems Ltd | AXTA US | Bef-mkt | Q4 2014 Earnings Release | Q4 2014 | 0.225 |
| Principal Financial Group Inc | PFG US | 7:30 | Investor Conference | Y 2015 | |
| Axalta Coating Systems Ltd | AXTA US | 8:00 | Q4 2014 Earnings Call | Q4 2014 | |
| General Electric Co | GE US | 8:30 | Investor Meeting - Technology | Y 2015 | |
| Analog Devices Inc | ADI US | 9:00 | Annual General Meeting | ||
| NextEra Energy Inc | NEE US | 13:00 | Investor Conference | Y 2015 | |
| MetLife Inc | MET US | 14:30 | Investor Meeting | Y 2015 | |
| Memorial Resource Development Corp | MRD US | 15:00 | Q4 2014 Earnings Call | Q4 2014 | |
| Skyworks Solutions Inc | SWKS US | Aft-mkt | Skyworks Solutions Replaces PetSmart Inc. in S&P 500 | ||
| Skyworks Solutions Inc | SWKS US | Aft-mkt | Maximus Inc. Replaces Skyworks Solutions in S&P MidCap 400 | ||
| PetSmart Inc | PETM US | Aft-mkt | Skyworks Solutions Replaces PetSmart Inc. in S&P 500 | ||
| Tahoe Resources Inc | THO CN | Aft-mkt | Q4 2014 Earnings Release | Q4 2014 | 0.103 |
| Energen Corp | EGN US | Investment Community Meeting - Day 3 | Y 2015 | ||
| Franklin Resources Inc | BEN US | Annual General Meeting |
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