Barchart Morning Call
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OVERNIGHT MARKETS AND NEWS
Dec E-mini S&Ps (ESZ17 -0.02%) this morning are down -0.09% and European stocks are down -0.56% as weakness in crude oil drags energy stocks lower. Nov WTI crude oil (CLX17 -0.32%) is down -0.32% at a 2-week low after API data late Tuesday showed U.S. gasoline supplies rose +4.91 million bbl, much more than expectations of +1.0 million bbl. European stocks also fell after data showed that Eurozone Aug retail sales unexpectedly fell -0.5% m/m, the biggest decline in 1-3/4 years. Another negative for European markets was the slump in Spain's IBEX Stock Index by -2.56% to a 6-1/2 month low amid the escalating crisis in Spain where the state of Catalonia is trying to secede and form its own independent republic. Asian stocks settled mixed: Japan +0.06%, Hong Kong +0.73%, Australia -0.87%, Singapore -0.29%, India +0.55%. China, Taiwan and South Korea were closed for holidays. Japan's Nikkei Stock Index climbed to a new 2-year high as the rally in the S&P 500 to a fresh record high Tuesday gave a boost to other global bourses.
The dollar index (DXY00 -0.07%) is down -0.27%. EUR/USD (^EURUSD) is up +0.22%. USD/JPY (^USDJPY) is down -0.39%.
Dec 10-year T-note prices (ZNZ17 +0.15%) are up +6.5 ticks.
The UK Sep Markit/CIPS services PMI unexpectedly rose +0.4 to 53.6, stronger than expectations of no change at 53.2.
Eurozone Aug retail sales unexpectedly fell -0.5% m/m, weaker than expectations of +0.3% m/m and the biggest decline in 1-3/4 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -0.5% with purchase sub-index +2.8% and refi sub-index +3.5%), (2) Sep ADP employment (expected +143,000, Aug +237,000), (3) revised-Sep Markit U.S. services PMI (expected unchanged at 55.1, prelim-Sep -0.9 to 55.1), (4) Sep ISM non-manufacturing PMI (expected +0.2 to 55.5, Aug +1.4 to 55.3), (5) Fed Chair Janet Yellen delivers opening remarks at a community banking conference in St. Louis, (6) EIA weekly Petroleum Status Report.
Notable Russell 1000 earnings reports today include: Acuity Brands (consensus $2.44), RPM Intl (0.84), PepsiCo (1.43), Monsanto (-0.42), Lamb Weston (0.49).
U.S. IPO's scheduled to price today: Rhythm Pharmaceuticals (RYTM).
Equity conferences this week: Deutsche Bank U.S. Leveraged Finance Conference on Mon-Wed, Japan Pack Trade Show on Tue, Linley Processor Conference on Wed, Petaluma Area Chamber of Commerce Business Conference on Fri.
OVERNIGHT U.S. STOCK MOVERS
Kraft Heinz (KHC -0.04%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
Waste Management (WM +0.65%) was downgraded to 'Hold' from 'Buy' at Stifel.
Jack in the Box (JACK -1.24%) was upgraded to 'Outperform' from 'Market Perform' at Telsey Advisory Group with a 12-month target price of $118.
Lennar (LEN +4.79%) was upgraded to 'Buy' from 'Neutral' at MKM Partners with a target price of $64.
Winnebago Industries (WGO -0.54%) was downgraded to 'Hold' from 'Buy' at Stifel.
Tesla (TSLA +1.94%) gained nearly 1% in after-hours trading after Nomura initiated coverage on the stock as a 'Buy' saying there will be an "unprecedented run-up" in Tesla's revenue to $58 billion in 20121 from $8 billion in 2016.
Global Blood Therapeutics (GBT -4.19%) rose 3% in after-hours trading after holder Point72 Asset Management reported a 5.2% stake in the company.
CytomX Therapeutics (CTMX -1.30%) surged over 30% in after-hours trading after it entered into a strategic collaboration with Amgen to co-develop immuno-oncology therapies.
Newlyn Genetics (NLNK +5.00%) slid over 6% in after-hours trading after it announced that it intends to offer up to $50 million shares of its common stock in an underwritten public offering.
Office Depot (ODP +1.32%) tumbled over 10% in after-hours trading after it acquired CompuCom for about $1 billion.
Intelsat SA (I +10.95%) gained 4% in after-hours trading after RBC Capital Markets said the company's joint proposal with Intel for sharing of C-band spectrum in 5G networks was a potential "gold mine."
Rigel Pharmaceuticals (RIGL -4.15%) dropped 7% in after-hours trading after it announced that it intends to offer up to $40 million shares of its common stock in an underwritten public offering.
MARKET COMMENTS
Dec S&P 500 E-mini stock futures (ESZ17 -0.02%) this morning are down -2.25 points (-0.09%). Tuesday's closes: S&P 500 +0.22%, Dow Jones +0.37%, Nasdaq +0.22%. The S&P 500 on Tuesday rose to a new record high and closed higher on strength in airline stocks, led by a 6% jump in Delta Air Lines, after it reported Sep total system traffic was up +0.3%. There was also strength in U.S. automakers after U.S. Sep total vehicle sales surged to 18.47 million units, the most in 12 years.
Dec 10-year T-note prices (ZNZ17 +0.15%) this morning up +6.5 ticks. Tuesday's closes: TYZ7 +2.50, FVZ7 +1.75. Dec 10-year T-notes on Tuesday closed higher on a report from Politico that U.S. Treasury Secretary Mnuchin favors Jerome Powell over Kevin Warsh for Fed chairman, which is supportive for T-notes as Powell as seen as more dovish that Warsh. There was also some short-covering after Dec T-note prices failed to take out Monday's 2-1/2 month low.
The dollar index (DXY00 -0.07%) this morning is .down -0.257 (-0.27%) EUR/USD (^EURUSD) is up +0.0026 (+0.22%) and USD/JPY (^USDJPY) is down -0.44 (-0.39%). Tuesday's closes: Dollar Index -0.288 (-0.31%), EUR/USD +0.0011 (+0.09%), USD/JPY +0.08 (+0.07%). The dollar index on Tuesday closed lower on strength in EUR/USD which recovered from a 1-1/2 month low and moved higher after Eurozone Aug PPI rose +0.3% m/m, the largest increase in 7 months, which bolstered the case for the ECB to taper QE. The dollar was also undercut by the decline in the 10-year T-note yield, which reduces the dollar's interest rate differentials.
Nov crude oil (CLX17 -0.32%) this morning is down -16 cents (-0.32%) at a 2-week low and Nov gasoline (RBX17 -0.45%) is down -0.0053 (-0.34%). Tuesday's closes: Nov WTI crude -0.04 (-0.08%), Nov gasoline +0.0102 (+0.66%). Nov crude oil and gasoline on Tuesday settled mixed. Crude oil prices were supported by a weaker dollar and by expectations for Wednesday's EIA data to show that U.S. crude supplies fell -500,000 bbl last week. Crude closed lower on increased OPEC crude output after OPEC Sep crude production rose +120,000 bpd to 32.38 million bpd.
Metals prices this morning are mixed with Dec gold (GCZ17 +0.30%) +8.0 (+0.63%), Dec silver (SIZ17 +1.02%) +0.19 (+1.14%) and Dec copper (HGZ17 -0.10%) -0.008 (-0.25%). Tuesday's closes: Dec gold -1.2 (-0.09%), Dec silver -0.004(-0.02%), Dec copper +0.008 (+0.27%). Metals on Tuesday settled mixed with Dec gold at a 1-3/4 month low. Metals prices were boosted by a weaker dollar and by the rally in the S&P 500 to a new record high, which bolsters confidence in the economic outlook and industrial metals demand. Gold and silver closed lower after a rally in the S&P 500 to new record high reduced safe-haven demand for precious metals.
GLOBAL EVENT CALENDAR10/04/2017
| Wednesday, Oct 4 | ||
| US | 0700 ET | Weekly MBA mortgage applications, previous -0.5% with purchase sub-index +2.8% and refi sub-index +3.5%. |
| 0815 ET | Sep ADP employment change expected +143,000, Aug +237,000. | |
| 0945 ET | Revised Sep Markit services PMI expected unchanged at 55.1, prelim-Sep -0.9 to 55.1. Revised Sep Markit composite PMI, prelim-Sep -0.7 to 54.6. | |
| 1000 ET | Sep ISM non-manufacturing PMI expected +0.2 to 55.5, Aug +1.4 to 55.3. | |
| 1030 ET | EIA weekly Petroleum Status Report. | |
| 1515 ET | Fed Chair Janet Yellen delivers opening remarks at a community banking conference in St. Louis. | |
| Thursday, Oct 5 | ||
| US | 0730 ET | Sep Challenger job cuts, Aug +5.1% y/y. |
| 0830 ET | Weekly initial unemployment claims expected -7,000 to 265,000, previous +12,000 to 272,000. Weekly continuing claims expected +16,000 to 1.950 million, previous -45,000 to 1.934 million. | |
| 0830 ET | Aug trade balance expected -$42.7 billion, Jul -$43.7 billion. | |
| 0830 ET | USDA weekly Export Sales. | |
| 0910 ET | Fed Governor Jerome Powell speaks on Treasury markets and Treasury market practices at an event in New York. | |
| 0915 ET | San Francisco Fed President John Williams (non-voter) delivers keynote speech at the St. Louis Feds Community Banking in the 21st Century Research and Policy Conference. | |
| 1000 ET | Aug factory orders expected +1.0%, Jul -3.3% and +0.5% ex transportation. | |
| 1000 ET | Philadelphia Fed President Patrick Harker (voter) speaks at the Investing in Americas Workforce conference. | |
| 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 Oct 11-12. | |
| 1630 ET | Kansas City Fed President Esther George (non-voter) speaks at the Investing in Americas Workforce conference. |
U.S. STOCK CALENDAR10/04/2017
| Name | Ticker | Time | Description | Period | Estimate |
|---|---|---|---|---|---|
| RPM International Inc | RPM US | Bef-mkt | Q1 2018 Earnings Release | Q1 18 | 0.842 |
| Acuity Brands Inc | AYI US | Bef-mkt | Q4 2017 Earnings Release | Q4 17 | 2.435 |
| PepsiCo Inc | PEP US | 06:00 | Q3 2017 Earnings Release | Q3 17 | 1.431 |
| Monsanto Co | MON US | Bef-mkt | Q4 2017 Earnings Release | Q4 17 | (0.419) |
| PepsiCo Inc | PEP US | 07:45 | Q3 2017 Earnings Call | Q3 17 | |
| Boston Properties Inc | BXP US | 08:00 | Investor Meeting | ||
| Lamb Weston Holdings Inc | LW US | 08:30 | Q1 2018 Earnings Release | Q1 18 | 0.494 |
| Monsanto Co | MON US | 09:30 | Q4 2017 Earnings Call | Q4 17 | |
| Acuity Brands Inc | AYI US | 10:00 | Q4 2017 Earnings Call | Q4 17 | |
| RPM International Inc | RPM US | 10:00 | Q1 2018 Earnings Call | Q1 18 | |
| Lamb Weston Holdings Inc | LW US | 10:00 | Q1 2018 Earnings Call | Q1 18 | |
| salesforce.com Inc | CRM US | 11:30 | Investor Meeting | ||
| Mallinckrodt PLC | MNK US | 12:00 | Investor Meeting | ||
| Telephone & Data Systems Inc | TDS US | Roadshow - Day 3 | |||
| United States Cellular Corp | USM US | Roadshow - Day 3 | |||
| BWX Technologies Inc | BWXT US | 13:00 | Investor and Analyst Day |
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