Barchart Morning Call
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OVERNIGHT MARKETS AND NEWS
Mar E-mini S&Ps (ESH17 -0.20%) are down -0.03% and European stocks are up +0.14%. U.S. stock futures are being dragged lower by weakness in retailers with Kohl’s down 13% and Macy's down 10% in pre-market trading after both companies cut their 2017 EPS forecasts. Losses were limited as energy producers rose with Feb WTI crude oil (CLG17 +0.79%) up +0.94% after the API reported late Wednesday that U.S. crude supplies fell -7.43 million bbl last week. Feb COMEX gold (GCG17 +0.82%) is up +0.64% at a 3-week high and the German 10-year bund yield climbed to a 2-week high on increased price pressures after Eurozone Nov producer prices posted their first year-on-year increase in more than 3 years. Asian stocks settled mixed: Japan -0.37%, Hong Kong +1.46%, China +0.21%, Taiwan +0.77%, Australia +0.30%, Singapore +1.12%, South Korea -0.43%, India +0.92%. Japan's Nikkei Stock Index closed lower as exporter stocks sold-off after USD/JPY fell to a 3-week low, which reduces exporters' earnings prospects. China's Shanghai Composite climbed to a 3-week high on signs of strength in the Chinese economy after a gauge of growth in the service sector last month expanded at the fastest pace in 17 months.
The dollar index (DXY00 -0.43%) is down -0.31% at a 3-week low. EUR/USD (^EURUSD) is up +0.07%. USD/JPY (^USDJPY) is down -0.43% at a 3-week low.
Mar 10-year T-note prices (ZNH17 +0.13%) are up +3.5 ticks at a 3-week high.
The China Dec Caixin services PMI rose +0.3 to 53.4, the fastest pace of expansion in 17 months.
Eurozone Nov PPI unexpectedly rose +0.1% y/y, stronger than expectations of -0.1% y/y and the first year-on-year increase in 3-1/3 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Dec Challenger job cuts (Nov -13.0% y/y), (2) Dec ADP employment (expected +175,000, Nov +216,000), (3) weekly initial unemployment claims (expected -5,000 to 260,000, previous -10,000 to 265,000) and continuing claims (expected -51,000 to 2.051 million, previous +63,000 to 2.102 million), (4) revised Dec Markit services PMI (prelim-Dec -1.2 to 53.4), (5) Dec ISM non-manufacturing index (expected -0.5 to 56.7, Nov +2.4 to 57.2), (6) EIA Weekly Petroleum Status Report.
Russell 1000 earnings reports today include: Monsanto (consensus $0.02), Walgreens (1.09), Constellation Brands (1.72), RPM International (0.61).
U.S. IPO's scheduled to price today: none.
Equity conferences this week include: Citi Global Internet, Media and Telecommunications Conference on Tue-Thu, Goldman Sachs CEOs Unplugged Conference on Thu, J.P. Morgan CES Tech Forum on Thu, JP Morgan Chase & Co., Inc. International Tech Forum on Thu.
OVERNIGHT U.S. STOCK MOVERS
Macy's (M +1.73%) sank almost 10% in pre-market trading after it cut its 2017 EPS forecast to $2.95-$3.10 from a prior view of $3.15-$3.40 and said it plans to close 68 stores and cut 6,200 jobs.
Kohl's (KSS +4.22%) tumbled over 13% in pre-market trading after it said comparable same-store sales fell -2.1% y/y in the fiscal months of November and December combined, and then it cut its 2017 adjusted EPS forecast to $3.60-$3.65 from a November 10 estimate of $3.80-$4.00.
Adobe Systems (ADBE +0.64%) was rated a new 'Outperform' at BMO Capital Markets with a target price of $125.
McKesson (MCK +0.78%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase with an 18-month target price of $169.
Helix Energy Solutions Group (HLX +3.53%) sank 10% in after-hours trading after it proposed an offering of 21 million shares of common stock.
Buffalo Wild Wings (BWLD +1.32%) was downgraded to 'Neutral' from 'Outperform' at Wedbush with a price target of $155.
Mistras Group (MG +2.41%) slumped 10% in after-hours trading after it reported Q2 EPS of 26 cents, below consensus of 31 cents.
Kilroy Realty (KRC +1.48%) slid 3% in after-hours trading after it commenced an offering of 3.5 million shares of common stock.
Hudson Pacific Properties (HPP +1.23%) lost 1% in after-hours trading after holders offered 18.7 million shares of stock.
Alexion Pharmaceuticals (ALXN +3.65%) rallied over 3% in after-hours trading after a board audit committee concluded that it sees no need to restate financial results after investigating a claim made by a former employee about Soliris sales and practices.
Moelis (MC +2.65%) fell 4% in after-hours trading after it offered 5 million shares of Class A common stock.
Heron Therapeutics (HRTX +2.99%) dropped nearly 10% in after-hours trading after it forecast 2017 sales of its Sustol nausea treatment drug at $15 million to $25 million, well below consensus of $50 million.
Synergy Pharmaceuticals (SGYP +6.88%) climbed 3% in after-hours trading after it was rated a new 'Outperform' at Oppenheimer with a price target of $10.
Loxo Oncology (LOXO +5.28%) fell over 3% in after-hours trading after it proposed a public offering of common stock, although no amount or size was given.
MARKET COMMENTS
Mar E-mini S&Ps (ESH17 -0.20%) this morning are down -0.75 of a point (-0.03%). Wednesday's closes: S&P 500 +0.57%, Dow Jones +0.30%, Nasdaq +0.53%. The S&P 500 on Wednesday closed higher on strength in mining stocks after the price of copper rose +2.7% to a 2-week high and on strength in oil companies after the price of crude oil climbed +1.78%. Auto makers also saw strength after U.S. Dec auto sales soared to 18.29 million units, stronger than expectations of 17.70 million and the most in 11-1/3 years.
Mar 10-year T-notes (ZNH17 +0.13%) this morning are yp +3.5 ticks at a 3-week high. Wednesday's closes: TYH7 unch, FVH7 -0.50. Mar 10-year T-notes on Wednesday closed little changed. T-notes were undercut by weakness in German bunds on increased price pressures after the Eurozone Dec CPI rose more than expected. T-notes recovered their losses after the Dec 13-14 FOMC minutes said that most FOMC policy makers saw a gradual rate hike pace as "appropriate."
The dollar index (DXY00 -0.43%) this morning is down -0.32 (-0.31%) at a 3-week low. EUR/USD (^EURUSD) is up +0.0007 (+0.07%). USD/JPY (^USDJPY) is down -0.51 (-0.43%) at a 3-week low. Wednesday's closes: Dollar index -0.680 (-0.66%), EUR/USD +0.0084 (+0.81%), USD/JPY -0.50 (-0.42%). The dollar index on Wednesday closed lower on strength in EUR/USD after Eurozone Dec CPI rose +1.1% y/y, stronger than expectations of +1.0% y/y and the largest increase in 3-1/4 years, which dampened expectations that the ECB will expand stimulus measures. The dollar was also undercut by the comment in the Dec 13-14 FOMC meeting minutes that most FOMC members saw a gradual rate hike pace as "appropriate."
Feb WTI crude oil prices (CLG17 +0.79%) this morning are up +50 cents (+0.94%) and Feb gasoline (RBG17 -0.13%) is +0.0006 (+0.04%). Wednesday's closes: Feb crude +0.93 (+1.78%), Feb gasoline +0.0170 (+1.05%). Feb crude oil and gasoline on Wednesday closed higher on a weaker dollar and expectations for Thursday's weekly EIA crude inventories to fall -2.00 million bbl.
GLOBAL EVENT CALENDAR01/05/2017
| Thursday, Jan 5 | ||
| US | 0730 ET | Dec Challenger job cuts, Nov -13.0% y/y. |
| 0815 ET | Dec ADP employment change expected +175,000, Nov +216,000. | |
| 0830 ET | Weekly initial unemployment claims expected -5,000 to 260,000, previous -10,000 to 265,000. Weekly continuing claims expected -51,000 to 2.051 million, previous +63,000 to 2.102 million. | |
| 0945 ET | Revised Dec Markit services PMI, prelim-Dec -1.2 to 53.4. | |
| 1000 ET | Dec ISM non-manufacturing index expected -0.5 to 56.7, Nov +2.4 to 57.2. | |
| 1100 ET | EIA Weekly Petroleum Status Report. | |
| 1100 ET | Treasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $20 billion) and 30-year T-bonds (previous $12 billion) to be auctioned Jan 10-12. | |
| Friday, Jan 6 | ||
| US | 0830 ET | Dec non-farm payrolls expected +180,000, Nov +178,000. Dec private payrolls expected +170,000, Nov +156,000. Dec manufacturing payrolls expected unch, Nov -4,000. Dec unemployment rate expected +0.1 to 4.7%, Nov -0.3 to 4.6%. |
| 0830 ET | Dec avg hourly earnings expected +0.3% m/m and +2.8% y/y, Nov -0.1% m/m and +2.5% y/y. Dec avg weekly hours all-employees expected unch at 34.4 hours, Nov unch at 34.4 hours. | |
| 0830 ET | Nov trade balance expected -$44.7 billion, Oct -$42.6 billion. | |
| 0830 ET | USDA weekly Export Sales. | |
| 1000 ET | Nov factory orders expected -2.3%, Dec +2.7% and +0.8% ex transportation. | |
| 1215 ET | Chicago Fed President Charles Evans (voter) participates in a NABE and AEA panel discussion titled Responders of First or Last Resort: Central Bank Strategies in an Era of Ultra-Low Interest Rates. | |
| 1300 ET | Richmond Fed President Jeffrey Lacker (non-voter) speaks at the Maryland Bankers Associations Economic Outlook Forum. |
U.S. STOCK CALENDAR01/05/2017
| Company | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| RPM International Inc | RPM US | Bef-mkt | Q2 2017 Earnings Release | Q2 2017 | 0.605 |
| Constellation Brands Inc | STZ US | Bef-mkt | Q3 2017 Earnings Release | Q3 2017 | 1.718 |
| Walgreens Boots Alliance Inc | WBA US | 7:00 | Q1 2017 Earnings Release | Q1 2017 | 1.093 |
| L Brands Inc | LB US | 7:30 | December 2016 Sales and Revenue Call | 2016 | |
| Monsanto Co | MON US | 8:00 | Q1 2017 Earnings Release | Q1 2017 | 0.017 |
| Walgreens Boots Alliance Inc | WBA US | 8:30 | Q1 2017 Earnings Call | Q1 2017 | |
| Ionis Pharmaceuticals Inc | IONS US | 9:30 | IONIS-GCGR Rx Phase 2 Study Results Call | ||
| Monsanto Co | MON US | 9:30 | Q1 2017 Earnings Call | Q1 2017 | |
| RPM International Inc | RPM US | 10:00 | Q2 2017 Earnings Call | Q2 2017 | |
| Constellation Brands Inc | STZ US | 10:30 | Q3 2017 Earnings Call | Q3 2017 | |
| Gap Inc/The | GPS US | 16:15 | December 2016 Sales and Revenue Release | 2016 | |
| L Brands Inc | LB US | December 2016 Sales and Revenue Release | 2016 |
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