Morning Call 10/6

Barchart Morning Call

Barchart.com - Fri Oct 6, 6:42AM CDT

OVERNIGHT MARKETS AND NEWS

Dec E-mini S&Ps (ESZ17 -0.06%) this morning are down -0.04% ahead of this morning's U.S. Sep payrolls report as the market consolidates this week's sharp gains to a new record high Thursday. European stocks are down -0.22%, led by losses in Spanish banks, as the financial and political squeeze on the separatist government in Catalonia tightens. Catalan President Puigdemont risks economic damage and isolation if he goes ahead with plans to declare independence based on a referendum that was considered illegal under Spain's constitution. Other Spanish companies may join Spain's banks in deciding to relocate their headquarters out of Catalonia as the crisis persists. Losses in European stocks were limited on signs of strength in the German economy, Europe's largest, after German Aug factory orders rose +3.6% m/m, the biggest increase in 8-months. GBP/USD tumbled -0.40% to a 4-week low on concern the political movement in the UK to try to remove Prime Minister May from power would throw the Brexit negotiations into chaos. Asian stocks settled higher: Japan +0.30%, Hong Kong +0.28%, Taiwan +0.14%, Australia +1.04%, Singapore +0.90%, India +0.70%. China and South Korea remain closed for holidays. Japan's Nikkei Stock Index climbed to a new 2-year high on carry-over support from the rally in U.S. stocks Thursday to a record high.

The dollar index (DXY00 +0.01%) is up +0.04% at a 1-1/2 month high. EUR/USD (^EURUSD) is down -0.04% at a 1-1/2 month low as the political crisis in Spain weighs on the euro. USD/JPY (^USDJPY) is up +0.10%.

Dec 10-year T-note prices (ZNZ17 -0.11%) are down -4 ticks.

UK Q2 unit labor costs rose +1.6% y/y, the slowest pace of increase since Q4 of 2015.

Japan Aug labor cash earnings rose +0.9% y/y, stronger than expectations of +0.5% y/y and the biggest increase in 13-months.

The Japan Aug leading index CI rose +1.6 to 106.8, weaker than expectations of +1.9 to 107.1 but still a 3-1/2 year high. The Aug coincident index rose +1.9 to 117.6, stronger than expectations of +1.8 to 117.5.

German Aug factory orders jumped +3.6% m/m, stronger than expectations of +0.7% m/m and the largest increase in 8-months.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Sep non-farm payrolls (expected +80,000, Aug +156,000) and Sep unemployment rate (expected unch at 4.4%, Aug +0.1 to 4.4%), (2) Sep avg hourly earnings (expected +0.3% m/m and +2.5% y/y, Aug +0.1% m/m and +2.5% y/y), (3) Atlanta Fed President Raphael Bostic (non-voter) speaks at the “Investing in America’s Workforce” conference, (4) Aug wholesale trade sales (expected unch m/m, Jul -0.1% m/m), (5) New York Fed President William Dudley (voter)will deliver a speech on “The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility” at an event in New York, (6) Dallas Fed President Robert Kaplan (voter) speaks in a moderated Q&A at an “Investing in America’s Workforce” conference in Dallas, (7) Aug consumer credit expected +$15.54 billion, Jul +$18.499 billion.

Notable Russell 1000 earnings reports today include: Costco (consensus $2.02), Constellation Brands (2.17), Global Payments (1.10), Yum China Holdings (0.56).

U.S. IPO's scheduled to price today: Switch (SWCH).

Equity conferences this week: Petaluma Area Chamber of Commerce Business Conference on Fri.

OVERNIGHT U.S. STOCK MOVERS

Goldman Sachs (GS +2.39%) was downgraded to 'Market Perform' from 'Market Outperform' at Vining Sparks.

Bank of America (BAC +1.63%) was downgraded to 'Market Outperform' from 'Strong Buy' at Vining Sparks.

Albemarle (ALB +1.04%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.

Kraft Heinz (KHC +0.62%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a price target of $90.

Microchip (MCHP -0.33%) was initiated as a new 'Buy' at Argus with a price target of $106.

Marathon Petroleum (MPC -0.11%) was upgraded to 'Buy' from 'Hold' at Edward Jones with a price target of $63.

Green Dot (GDOT +2.71%) was initiated with a 'Buy' rating at Craig-Hallum with a price target of $70.

Valero Energy (VLO -0.54%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase.

HollyFrontier (HFC -2.56%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase.

Yum China Holdings (YUMC +0.20%) climbed almost 4% in after-hours trading after it reported Q3 revenue of $2.04 billion, higher than consensus of $1.98 billion.

Costco Wholesale (COST +1.13%) fell over 1% in after-hours trading even after it reported Q4 revenue of $43.3 billion, better than consensus of $41.62 billion.

Annaly Capital Management (NLY +0.41%) slid nearly 3% in after-hours trading after it announced that it intends to make a public offering of 65 million shares of its common stock.

Synchronoss Technologies (SNCR -0.09%) surged nearly 20% in after-hours trading after it entered into an exclusivity pact with Siris Capital Group.

MARKET COMMENTS

Dec S&P 500 E-mini stock futures (ESZ17 -0.06%) this morning are down -1.00 point (-0.04%). Thursday's closes: S&P 500 +0.56%, Dow Jones +0.50%, Nasdaq +0.97%. The S&P 500 on Thursday accelerated up to a new record high and settled higher on the -12,000 fall in U.S. weekly jobless claims to 260,000, a bigger decline than expectations of -7,000 to 265,000, and on the U.S. Aug factory orders report of +1.2%, stronger than expectations of +1.0%. There was also strength in energy stocks after crude oil prices rose +1.62%.

Dec 10-year T-note prices (ZNZ17 -0.11%) this morning are down -4 ticks. Thursday's closes: TYZ7 -5.50, FVZ7 -3.75. Dec 10-year T-notes on Thursday closed lower on the stronger-than-expected U.S. Aug factory orders report of +1.2%, and on comments from Philadelphia Fed President Harker who said that he has already "penciled in" a third 25 bp Fed rate hike in Dec and that he projects three more rate increases in 2018. T-notes were also undercut by reduced safe-haven demand with the rally in the S&P 500 to a new record high.

The dollar index (DXY00 +0.01%) this morning is up +0.038 (+0.04%) at a 1-1/2 month high. EUR/USD (^EURUSD) is down -0.0005 (-0.04%) at a 1-1/2 month low and USD/JPY (^USDJPY) is up +0.11 (+0.10%). Thursday's closes: Dollar Index +0.503 (+0.54%), EUR/USD -0.0048 (-0.41%), USD/JPY +0.06 (+0.05%). The dollar index on Thursday closed higher on hawkish comments from Philadelphia Fed President Harker who said he has already "penciled in" a third 25 bp rate hike by the Fed in Dec. The dollar index was also boosted by the increase in 10-year T-note yields, which boosts the dollar's interest rate differentials.

Nov crude oil (CLX17 -0.91%) this morning is down -53 cents (-1.04%) and Nov gasoline (RBX17 +0.24%) is +0.0007 (+0.04%). Thursday's closes: Nov WTI crude +0.81 (+1.62%), Nov gasoline +0.0309 (+1.96%). Nov crude oil and gasoline on Thursday closed higher with Nov gasoline at a 1-week high. Crude oil prices were supported by the prospects for an extension of crude oil production cuts between OPEC and Russia after Saudi King Salman bin Abdulaziz made a trip to Moscow to meet Russian President Putin and said Saudi Arabia wants to continue cooperation with Russia to maintain stability on the world oil market. Crude oil prices were also boosted by the increase in the crack spread to a 1-week high, which gives incentive for refiners to increase their crude purchases to refine crude oil into gasoline.

Metals prices this morning are mixed with Dec gold (GCZ17 -0.13%) -1.5 (-0.12%), Dec silver (SIZ17 -0.02%) -0.003 (-0.02%) and Dec copper (HGZ17 -0.05%) +0.002 (+0.05%) at a 3-week high. Thursday's closes: Dec gold -3.6 (-0.28%), Dec silver +0.014 (+0.08%), Dec copper +0.0875 (+2.96%). Metals on Thursday settled mixed with Dec copper at a 3-week high. Metals prices were boosted by the stronger-than-expected U.S. Aug factory orders report of +1.2% that was positive for industrial metals demand, and by the -2,450 MT decline in LME copper inventories, a sign of tighter supplies. Metals prices were undercut by a stronger dollar and by reduced safe-haven demand for stocks with the rally in the S&P 500 to a new record high.

GLOBAL EVENT CALENDAR10/06/2017

		Friday, Oct 6
US	0830 ET	Sep non-farm payrolls expected +80,000, Aug +156,000. Sep private payrolls expected +72,000, Aug +165,000. Sep manufacturing payrolls expected +8,000, Aug +36,000. Sep unemployment rate expected unch at 4.4%, Aug +0.1 to 4.4%.
	0830 ET	Sep avg hourly earnings expected +0.3% m/m and +2.5% y/y, Aug +0.1% m/m and +2.5% y/y. Sep avg weekly hours all-employees expected unch at 34.4 hours, Aug -0.1 to 34.4 hours.
	0915 ET	Atlanta Fed President Raphael Bostic (non-voter) speaks at the Investing in Americas Workforce conference.
	1000 ET	Aug wholesale trade sales expected unch m/m, Jul -0.1% m/m. Revised Aug wholesale inventories expected unchanged at +1.0%, prelim-Aug +1.0% m/m.
	1215 ET	New York Fed President William Dudley (voter)will deliver a speech on The Monetary Policy Outlook and the Importance of Higher Education for Economic Mobility at an event in New York.
	1245 ET	Dallas Fed President Robert Kaplan (voter) speaks in a moderated Q&A at an Investing in Americas Workforce conference in Dallas.
	1500 ET	Aug consumer credit expected +$15.54 billion, Jul +$18.499 billion.
		Monday, Oct 9
US	n/a	U.S. government offices and cash Treasury trading closed for Columbus Day. Exchanges open.

U.S. STOCK CALENDAR10/06/2017

Name	Ticker	Time	Description	Period	Estimate
Constellation Brands Inc	STZ US	Bef-mkt	Q2 2018 Earnings Release	Q2 18	2.166
Leucadia National Corp	LUK US	08:30	Investor Meeting
Clorox Co/The	CLX US	09:00	Analyst Day
Constellation Brands Inc	STZ US	10:30	Q2 2018 Earnings Call	Q2 18
Telephone & Data Systems Inc	TDS US		Roadshow - Day 4
United States Cellular Corp	USM US		Roadshow - Day 4
RPM International Inc	RPM US		Annual General Meeting
Global Payments Inc	GPN US		Q3 2017 Earnings Release	Q3 17	1.098
Leucadia National Corp	LUK US		Investor Day
Symantec Corp	SYMC US	12:00	Annual General Meeting
Oracle Corp	ORCL US	14:00	Analyst Meeting
Costco Wholesale Corp	COST US	16:15	Q4 2017 Earnings Release	Q4 17	2.017
Yum China Holdings Inc	YUMC US	16:30	Q3 2017 Earnings Release	Q3 17	0.564
Costco Wholesale Corp	COST US	17:00	Q4 2017 Earnings Call	Q4 17
Yum China Holdings Inc	YUMC US	20:00	Q3 2017 Earnings Call	Q3 17

Barchart Morning Call 11/1

Barchart Morning Call

BC - 21 mins ago

Overnight Developments

• Dec E-mini S&Ps this morning are slightly lower by -0.04%. European stocks are up +0.55% and the big Asian stock markets closed higher with Japan up +0.21%, Hong Kong up +0.83%, and China up +1.91% on increases in China's manufacturing PMI reports. Commodity prices are up +0.46% this morning with Dec crude oil up +0.24%, Dec gasoline +0.24%, Dec gold +0.32%, Dec copper +1.02%, and agricultural prices trading mostly higher. The dollar index is slightly higher by +0.09% while EUR/USD is down -0.08%. Dec 10-year T-note prices are down 6 ticks.
• China's two manufacturing PMI reports both rose and suggested that the Chinese manufacturing sector may be bottoming out. The Oct PMI from the China Federation of Logistics and Purchasing and the National Bureau of Statistics rose +0.4 points to 50.2 from 49.8 in Sep, which was in line with market expectations. The manufacturing PMI rose back above the expansion-contraction level of 50.0 for the first time since July when the index fell below 50.0 in August and September. Meanwhile, the Chinese Oct manufacturing PMI from HSBC rose 1.6 points to 49.5 from 47.9 and was 0.4 points stronger than the flash report and market expectations of 49.1. The HSBC index has been below 50.0 for 12 consecutive months.
• The Oct UK Oct PMI manufacturing index fell by -0.6 points to 47.5 from Sep's revised 48.1 (prelim 48.4) and was 0.5 points weaker than market expectations for a report of 48.0.
• The U.S. Labor Department will release the U.S. Oct unemployment report as originally scheduled on Friday, according to a statement yesterday by the Labor Department. There had been some doubts about an on-time release considering that the federal government was closed on Monday and Tuesday.
• The Northeastern U.S. continues to see major power outages with about 6 million electricity customers still having no power, although that is down from 8.5 million in the immediate aftermath of the storm.
• U.S. Treasury Secretary Geithner and ECB President Draghi will attend the G-20 meeting in Mexico City to be held this coming Sunday-Monday (Nov 4-5), thus reducing its importance. Finance ministers from France and Brazil also will not attend. The market is not expecting anything of consequence to come out of the meeting in any case.
  Market Comments
  • Dec E-mini S&Ps this morning are down -0.50 points (-0.04%) as the market braces for a heavy slate of U.S. economic reports today and continues to total up the damage from Hurricane Sandy. However, the market is seeing support from a +0.55% rally in the Euro Stoxx 50 index and from rallies in Asian stocks on the rise in China's two manufacturing PMI reports. U.S. stocks on Wednesday erased an early rally and closed mostly lower on concern about the economic damage from Hurricane Sandy and after the Oct Chicago purchasing managers index rose less than expected and remained in contraction mode (+0.2 to 49.9) for a second month: S&P 500 +0.02%, Dow Jones -0.08%, Nasdaq -0.67%. Supportive factors included the smaller-than-expected increase in the Q3 employment cost index (+0.4%), strength in automakers and a rally in home-improvement stocks amid speculation that they will benefit by spending to rebuild from Hurricane Sandy.
  • Dec 10-year T-notes this morning are down 6 ticks on the strength in global stocks. Dec 10-year T-note prices Wednesday closed higher on speculation Hurricane Sandy will cut U.S. economic growth along with month-end buying by dealers who bought longer-term Treasuries to match adjustments in duration of bond indexes used as performance benchmarks: TYZ2 +11.5, FVZ2 +8.0. Other bullish factors included the smaller than expected increase in the Oct Chicago purchasing managers index (+0.2 to 49.9) and dovish comments from Minneapolis Fed President Kocherlakota who said that the subdued outlook for inflation suggests current monetary policy is currently "too tight," which suggests he favors additional Fed stimulus measures.
  • The dollar index this morning is trading slightly higher by +0.07 (+0.09%). EUR/USD is down -0.0010 (-0.08%) and USD/JPY is up +0.25 (+0.31%). The dollar index Wednesday erased early losses and closed little changed on concern Greece will have problems making the spending cuts it needs to make in order to receive further aid: Dollar index -0.012 (-0.02%), EUR/USD -0.0002 (-0.02%), USD/JPY +0.024 (+0.03%). EUR/USD shed gains and closed little changed after comments from German Finance Minister Schaeuble increased European sovereign debt concerns when he said that the timely payment of Greece's next tranche of aid was "ambitious."
  • Dec WTI crude oil prices this morning are up +0.21 (+0.24%) and Dec gasoline is up +0.0064 (+0.24%). Dec crude oil and gasoline prices on Wednesday closed higher as refiners in the Northeast began to resume operations after being closed for Hurricane Sandy, which increases their demand for crude: CLZ2 +0.56 (+0.65%), RBZ2 +0.0145 (+0.55%). The weekly DOE inventory report, which will be released today, is expected to show crude stockpiles rose +1.75 million barrels, gasoline supplies slipped -500,000 barrels, distillate stocks dropped -1.4 million barrels and the refinery utilization rate climbed +0.1 to 87.3%. Today's DOE report is for the week ended Oct 26 and will not show any direct effects from Hurricane Sandy, which made landfall on Monday, Oct 29.
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    Today's U.S. Earnings Reports Earnings reports (ranked by market cap): XOM-Exxon (Consensus:$1.96), PFE-Pfizer (0.53), AIG-AIG (0.87), EPD-Enterprise Products (0.61), LVS-Las Vegas Sands (0.60), SBUX-Starbucks (0.45), APA-Apache (2.24), EXC-Exelon (0.72), PCLN-Priceline (11.80), ADP-ADP (0.62), NEM-Newmont Mining (0.89), EL-Estee Lauder (0.77), FE-FirstEnergy (1.06), SE-Spectra Energy (0.31), K-Kellogg (0.81), MPC-Marathon Petroleum (3.23), PEG-Public Service Enterprises (0.72), NLY-Annaly Capital (0.47), EIX-Edision (1.00), VNO-Vornado Realty Trust (0.61), SIRI-Sirius XM Radio (0.02), CI-Cigna (1.36), HCA-HCA Holdings (0.79), ESV-Ensco (1.30), CHK-Chesapeake Energy (0.10), SWN-Southwestern Energy (0.33), TDC-Teradata (0.67), WPI-Watson Pharmaceutical (1.28), LNKD-LinkedIn (0.11), IVZ-Invesco (0.44), VRTX-Vertex Pharm (0.34), RSG-Republic Services (0.49).
    Global Financial Calendar
    

    Global Calendar - Thursday 11/1/12
    Today's News (ET release time)
    United States
    0730 ET	Oct Challenger job cuts, Sep -70.80% y/y.
    0815 ET	Oct ADP employment change expected +135,000, Sep +162,000.
    0830 ET	Weekly initial unemployment claims expected +1,000 to 370,000, previous -23,000 to 369,000. Weekly continuing claims expected -4,000 to 3.250 million, previous -2,000 to 3.254 mln.
    0830 ET	Q3 non-farm productivity expected +1.8% y/y, Q2 +2.2%. Q3 unit labor costs expected +0.8%, Q2 +1.5%.
    0830 ET	USDA weekly U.S. Export Sales.
    1000 ET	Oct ISM manufacturing index expected -0.5 to 51.0, Sep +1.9 to 51.5. Oct ISM prices paid index expected -1.5 to 56.5, Sep +4.0 to 58.0.
    1000 ET	Oct consumer confidence (Conference Board) expected +2.7 to 73.0, Sep 70.3 (postponed from Tuesday).
    1000 ET	Sep construction spending expected +0.7%, Aug -0.6% m/m.
    1230 ET	Atlanta Fed President Dennis Lockhart speaks to Chattanooga Downtown Rotary in Chattanooga, TN.
    1630 ET	Weekly money supply report and Fed balance sheet.
    1700 ET	Oct total vehicle sales expected 14.9 mln, Sep 14.88 mln. Oct domestic vehicle sales expected 11.48 mln, Sep 11.49 mln.
    1700 ET	Boston Fed President Eric Rosengren speaks on U.S. economic outlook at Babson College.
    Japan
    0100 ET	Japan Oct vehicle sales, Sep -8.1% y/y.
    United Kingdom
    0300 ET	UK Oct nationwide house prices expected +0.1% m/m and -1.2% y/y, Sep -0.4% m/m and -1.4% y/y.
    0530 ET	UK Oct manufacturing PMI expected -0.4 to 48.0, Sep 48.4.

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