Wednesday, December 2nd, 2015View Older Reports
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OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ15 unch) are up +0.08% at a 4-week high and European stocks are up +0.28% ahead of speeches today and tomorrow from Fed Chair Yellen. European stocks and government bonds also rose after weaker-than-expected Eurozone Nov CPI reinforced the argument for the ECB to expand stimulus when it meets tomorrow. Gains in European stocks were muted as ArcelorMittal tumbled over 6% and pulled other mining companies lower after Vale SA predicted steel prices will slump more next year. Asian stocks settled mixed: Japan -0.37%, Hong Kong +0.44%, China +2.33%, Taiwan -0.07%, Australia -0.15%, Singapore +0.47%, South Korea -0.84%, India -0.20%. China's Shanghai Composite closed up over 2% as financial companies and property stocks rallied on prospects for additional monetary stimulus from the PBOC.
The dollar index (DXY00 +0.30%) is up +0.28%. EUR/USD (^EURUSD) is down -0.36% after the slower-than-expected Eurozone Nov consumer prices bolstered the outlook for additional ECB easing. USD/JPY (^USDJPY) is up +0.20%.
Mar T-note prices (ZNH16 -0.06%) are unchanged.
Comments Tuesday night from Fed Governor Brainard suggest she sees the federal funds rate topping out at a lower level than in previous expansions. She said "a broad deterioration in foreign growth prospects, together with greater risk sensitivity in the wake of the crisis and changes in the rate of potential output growth, may be contributing to a 'new normal.'" This new normal "implies a delay in the date of liftoff and a shallower path for the federal funds rate over several years."
The Eurozone Nov CPI estimate rose +0.1% y/y, less than expectations of +0.2% y/y. The Nov core CPI rose +0.9% y/y, less than expectations of +1.1% y/y.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -3.2% with purchase sub-index -0.5% and refi sub-index -4.8%), (2) Atlanta Fed President Dennis Lockhart speech on the U.S. economy to the Broward Workshop in Fort Lauderdale, FL, (3) Nov ADP employment change (expected +190,000, Oct +182,000), (4) Fed Chair Janet Yellen's welcoming remarks at the National College Fed Challenge Finals, (5) revised Q3 non-farm productivity (expected +2.2% vs last +1.6%) and revised Q3 unit labor costs (expected +1.0% vs last +1.4%), (6) Fed Governor Danial Tarullo's opening remarks at an Economic Growth and Regulatory Paperwork Reduction Act Outreach meeting, (7) Nov New York ISM (Oct +21.3 to 65.8), (8) Fed Chair Janet Yellen speech to the Economic Club of Washington, (9) the Fed's Beige Book, (10) San Francisco Fed President John Williams' speech on the economic outlook to community leaders in Portland, Oregon.
There are 4 of the Russell 1000 companies report earnings today: Brown-Forman (consensus $1.00), PVH Corp (2.47), Synopsys (0.65), Avago Technologies (2.38).
U.S. IPO's scheduled to price today: Sabre Corp (SABR), Rice Midstream Partners (RMP), Travelport Worldwide (TVPT), ChromaDex Corp (CDXC),
Equity conferences during the remainder of this week include: Credit Suisse Technology Conference on Tue, Citi Basic Materials Conference on Tue-Wed, Cowen and Company Ultimate Energy Conference on Tue-Wed, Piper Jaffray Health Care Conference on Tue-Wed, Credit Suisse Global Industrials Conference on Tue-Thu, Credit Suisse Technology, Media & Telecom Conference on Tue-Thu, Citi Global Financial Conference on Wed, J.P. Morgan Fintech & Specialty Finance Forum on Wed, Wells Fargo Connected Commerce Investor Summit on Wed, NASDAQ OMX Group, Inc. Investor Program on Wed-Thu, ASEAN Business Summit on Wed-Thu, Bank of America Merrill Lynch Leveraged Finance Conference on Thu.
OVERNIGHT U.S. STOCK MOVERS
Yahoo! (YHOO -0.30%) jumped over 8% in pre-market trading after the WSJ cited people familiar with the matter as saying the company's board will consider the sale of its main Internet business.
Fitbit (FIT +1.74%) rose nearly 3% in pre-market trading after the U.S. International Trade Commission said it would investigate a patent complaint filed by Fotbit against Jawbone Inc.
Bristol-Myers Squibb (BMY +1.87%) was upgraded to 'Buy' from 'Neutral' at Guggenheim Securities with a price target of $82.
Lockheed Martin (LMT +0.47%) won a Pentagon contract worth $914 million to upgrade F-16 aircraft for Singapore's military.
Louisiana-Pacific (LPX -2.45%) was added to the 'Top Pick' list at RBC.
Bob Evans (BOBE +0.13%) slid nearly 5% in after-hours trading after it lowered guidance on its fiscal 2016 revenue estimate to $1.35 billion from a prior view of $1.33 billion-$1.39 billion, below consensus of $1.36 billion.
Mobileye (MBLY -0.32%) rose 1% in after-hours trading after the stock was rated a new 'Buy' at Evercore ISI with a price target of $68.
Powell Industries (POWL -0.31%) slumped 10% in after-hours trading after it reported Q4 adjusted EPS of 45 cents, below consensus of 48 cents, and then lowered guidance on fiscal 2016 adjusted EPS to 65 cents-$1.05, well below consensus of $1.62.
Guidewire Software (GWRE +2.06%) rose over 4% in after-hours trading after it reported Q1 adjusted EPS of 7 cents, over double consensus of 3 cents.
Ascena Retail (ASNA +3.97%) jumped over 7% in after-hours trading after it reported Q1 adjusted EPS of 36 cents, higher than consensus of 29 cents.
Culp (CFI +2.66%) reported Q2 EPS of 41 cents, better than consensus 40 cents, although Q2 revenue of $77.0 million was below consensus of $77.6 million.
OncoGenex Pharmaceuticals (OGXI +1.55%) plunged over 25% in after-hours trading after it said some patients in its prostate cancer drug study did not respond to treatment with its custirsen drug.
MARKET COMMENTS
Dec E-mini S&Ps (ESZ15 unch) this morning are up +1.75 points (+0.08%) at a 4-week high. Tuesday's closes: S&P 500 +1.07%, Dow Jones +0.95%, Nasdaq +1.11%. The S&P 500 on Tuesday rallied to a 3-week high and settled higher on speculation that any Fed interest rate hikes will be slow and shallow after the Nov ISM manufacturing index unexpectedly fell -1.5 to a 6-1/3 year low of 48.6, weaker than expectations of +0.4 to 50.5. The S&P 500 also received a boost from a rally in China's Shanghai Composite that shook off early losses and closed up +0.32% after the China Nov manufacturing PMI unexpected fell -0.2 to a 3-1/4 year low of 49.6 and fueled speculation that the PBOC will expand stimulus.
Mar 10-year T-notes (ZNH16 -0.06%) this morning are unchanged. Tuesday's closes: TYH6 +16.50, FVH6 +10.25. Mar T-notes on Tuesday jumped to a 1-month high and closed higher on speculation that the Fed will move to raise interest rates very gradually after the Nov ISM manufacturing index unexpectedly contracted by the most in 6-1/3 years. T-notes also received a boost from a lack of inflation pressures after the Nov ISM prices paid sub-index contracted at its steepest pace in 9 months.
The dollar index (DXY00 +0.30%) this morning is up +0.275 (+0.28%). EUR/USD (^EURUSD) is down -0.0038 (-0.36%). USD/JPY (^USDJPY) is up +0.25 (+0.20%). Tuesday's closes: Dollar Index -0.375 (-0.37%), EUR/USD -0.0028 (-0.26%), USD/JPY +0.31 (+0.25%). The dollar index on Tuesday closed lower on the unexpected contraction in the Nov ISM manufacturing index, which bolsters the outlook for a gradual pace of Fed tightening, and strength in EUR/USD after the Eurozone Oct unemployment rate unexpectedly fell to a nearly 4-year low.
Jan crude oil (CLF16 -1.12%) this morning is down -43 cents (-1.03%) and Jan gasoline (RBF16 -1.71%) is down -0.0214 (-1.57%). Tuesday's closes: CLF6 unch, RBF6 +0.0526 (+4.02%). Jan crude oil and gasoline on Tuesday settled mixed with Jan crude at a 1-week low and Jan gasoline at a 3-week high. Crude oil prices were undercut by news that China's Nov manufacturing PMI contracted by the most in 3-1/4 years and the Nov ISM manufacturing index contracted by the most in 6-1/3 years. Crude oil is also seeing weakness on expectations that OPEC will keep its crude production quotas unchanged when it meets on Friday. Supportive factors included the weaker dollar and strength in gasoline prices after the crack spread jumped to a 2-1/2 month high when the EPA increased the level of renewable fuels that must be blended with gasoline.
GLOBAL EVENT CALENDAR12/02/2015
| US | 0700 ET | Weekly MBA mortgage applications, previous -3.2% with purchase sub-index -0.5% and refi sub-index -4.8%. |
| 0810 ET | Atlanta Fed President Dennis Lockhart speaks on the U.S. economy to the Broward Workshop in Fort Lauderdale, FL. | |
| 0815 ET | Nov ADP employment change expected +190,000, Oct +182,000. | |
| 0830 ET | Fed Chair Janet Yellen delivers welcoming remarks at the National College Fed Challenge Finals. | |
| 0830 ET | Revised Q3 non-farm productivity expected +2.2% vs last +1.6%. Revised Q3 unit labor costs expected +1.0% vs last +1.4%. | |
| 0900 ET | Fed Governor Danial Tarullo makes opening remarks at an Economic Growth and Regulatory Paperwork Reduction Act Outreach meeting. | |
| 0945 ET | Nov New York ISM, Oct +21.3 to 65.8. | |
| 1030 ET | EIA Weekly Petroleum Status Report. | |
| 1225 ET | Fed Chair Janet Yellen speaks to the Economic Club of Washington. | |
| 1400 ET | Fed Beige Book. | |
| 1540 ET | San Francisco Fed President John Williams delivers a speech on the economic outlook to community leaders in Portland, Oregon. | |
| UK | 0430 ET | UK Nov Markit/CIPS construction PMI expected -0.3 to 58.5, Oct 58.8. |
| EUR | 0500 ET | Eurozone Nov CPI expected +0.2% y/y, Oct unch y/y. Nov core CPI expected +1.1% y/y, Oct +1.1% y/y. |
| 0500 ET | Eurozone Oct PPI expected -0.4% m/m and -3.2% y/y, Sep -0.3% m/m and -3.1% y/y. |
U.S. STOCK CALENDAR12/02/2015
| Company | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| Brown-Forman Corp | BF/B US | 8:00 | Q2 2016 Earnings Release | Q2 2016 | 0.996 |
| Brown-Forman Corp | BF/B US | 10:00 | Q2 2016 Earnings Call | Q2 2016 | |
| Microsoft Corp | MSFT US | 11:00 | Annual General Meeting | Y 2015 | |
| Synopsys Inc | SNPS US | 17:00 | Q4 2015 Earnings Call | Q4 2015 | |
| Avago Technologies Ltd | AVGO US | 17:00 | Q4 2015 Earnings Call | Q4 2015 | |
| PVH Corp | PVH US | Aft-mkt | Q3 2016 Earnings Release | Q3 2016 | 2.466 |
| Synopsys Inc | SNPS US | Aft-mkt | Q4 2015 Earnings Release | Q4 2015 | 0.654 |
| Avago Technologies Ltd | AVGO US | Aft-mkt | Q4 2015 Earnings Release | Q4 2015 | 2.377 |
| Costco Wholesale Corp | COST US | 21:00 | November 2015 Sales and Revenue Release | 2015 | |
| AutoNation Inc | AN US | November 2015 Sales and Revenue Release | 2015 | ||
| Copart Inc | CPRT US | Annual General Meeting | |||
| Delta Air Lines Inc | DAL US | November 2015 Sales and Revenue Release - Traffic Results | 2015 |
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