BARCHART MORNING CALL 10/1

BARCHART MORNING CALL

Thursday, October 1st, 2015View Older Reports

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OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.29%) are up +0.65% and European stocks are up +0.59% at a 1-week high on signs of stabilization in Chinese manufacturing activity that pushed up the price of oil (CLX15 +2.24%) by +2.42% and fueled a rally in energy and basic-resource companies. Copper prices (HGZ15 +0.26%) also climbed +0.56% to a 1-week high, which gave miners a lift with Anglo American Plc and BHP Billiton both up nearly 3%. Asian stocks settled higher: Japan +1.92%, Hong Kong and China closed for holiday, Taiwan +1.40%, Australia +1.80%, Singapore +0.39%, South Korea +0.81%, India +0.25%. An unexpected increase in the China Sep manufacturing PMI bolstered confidence in China's economic outlook and gave global stocks a lift, while a bigger than expected decline in Japan Q3 Tankan large manufacturing business conditions undercut the yen and gave Japanese stocks a lift on speculation that the BOJ may need to expand stimulus.

The dollar index (DXY00 -0.04%) is up +0.03%. EUR/USD (^EURUSD) is down -0.27%. USD/JPY (^USDJPY) is up +0.08%.

Dec T-note prices (ZNZ15 +0.01%) are down -2 ticks.

The China Sep manufacturing PMI unexpectedly rose +0.1 to 49.8, better than expectations of no change at 49.7. The Sep non-manufacturing PMI remained unch at 53.4.

The Japan Q3 Tankan large manufacturing business conditions fell -3 from last quarter to 12, a bigger decline than expectations of -2 to 13.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Sep Challenger job cuts (Aug +2.9% y/y), (2) weekly initial unemployment claims (expected +4,000 to 271,000, previous +3,000 to 267,000) and continuing claims (expected -12,000 to 2.230 million, previous -1,000 to 2.242 million), (3) final-Sep Markit manufacturing PMI (expected unch at 53.0, prelim-Sep unch at 53.0), (4) Aug construction spending (expected +0.5%, Jul +0.7% m/m), (5) Sep ISM manufacturing index (expected -0.5 to 50.6, Aug -1.6 to 51.1), (6) San Francisco Fed President John Williams' speech on the economic outlook to Salt Lake Area Community Leaders, and (7) Sep total vehicle sales (expected 17.60 million, Aug 17.72 million).

There are 2 of the Russell 2000 companies that report earnings today: McCormick & Co (consensus $0.87), Micron Technology (0.87).

U.S. IPO's scheduled to price today include: Novocure (NVCR), Civitas Solutions (CIVI).

Equity conferences during the remainder of this week include: Leerink Partners Rare Disease Roundtable Conference on Thu.

OVERNIGHT U.S. STOCK MOVERS

SanDisk (SNDK +10.67%) was raised to 'Overweight' from 'Equalweight' at Morgan Stanley with a price target of $75.

McCormick (MKC +1.22%) reported Q3 EPS of 85 cents, below consensus of 87 cents.

Microsoft (MSFT +1.89%) was raised to 'Neutral' from 'Underperform' at Bank of America.

Universal Health Services (UHS +3.01%) was raised to 'Overweight' from 'Sector Weight' at Keybanc Capital Markets with a $145 price target.

Celgene (CELG +2.69%) was raised to 'Overweight' from 'Neutral' at JPMorgan Chase with a $152 price target.

Bristol-Meyers Squiibb (BMY +0.42%) received approval from the U.S. FDA for its Opdivo, Yervoy regiment usedto treat metastatic melanoma.

Schnitzer (SCHN +0.74%) raised guidance on Q4 adjusted continuing operation EPS to 27 cents-30 cents, above consensus of 24 cents.

Verisk Analytics (VRSK +2.30%) rose nearly 5% in after-hours trading after it was announced the company will replace Joy Global in the S&P 500 as of the close of trading on Oct 7.

Joy Global (JOY +0.95%) fell over 2% in after-hours trading after it was announced the company will be replaced in the S&P 500 by Verisk Analytics.

PBF Energy (PBF +2.21%) climbed over 4% in after-hours trading after the company said it bought the 155,000 barrel-per-day Torrance, CA, refinery from Exxon Mobil for $537.5 million plus working capital to be valued at closing.

Concho Resources (CXO +1.76%) fell 4% in after-hours trading after it announced an offering of 7 million shares of common stock.

Northrop Grumman (NOC +1.47%) won a U.S. Air Force contract worth up to $3.2 billion to build and service the Global Hawk drone.

MARKET COMMENTS

Dec E-mini S&Ps (ESZ15 +0.29%) this morning are up +12.50 points (+0.65%). Wednesday's closes: S&P 500 +1.91%, Dow Jones +1.47%, Nasdaq +2.39%. The S&P 500 on Wednesday closed sharply higher on the +200,000 increase in the Sep ADP employment change, stronger than expectations of +190,000. There was also bargain hunting in raw-material producers and health-care stocks that have been beaten down recently. The main bearish factor for stocks was the -5.7 point decline in the Sep Chicago PMI to a 4-month low of 48.7.

Dec 10-year T-notes (ZNZ15 +0.01%) this morning are down -2 ticks. Wednesday's closes: TYZ5 -2.50, FVZ5 -1.00. Dec T-note prices on Wednesday closed lower on the the sharp rally in stocks, which curbed safe-haven demand for Treasuries, and on the stronger-than-expected Sep ADP employment report of +200,000. T-notes found underlying support from the decline in the Sep Chicago PMI to a 4-month low.

The dollar index (DXY00 -0.04%) this morning is up +0.030 (+0.03%). EUR/USD (^EURUSD) is own -0.0030 (-0.27%). USD/JPY (^USDJPY) is up +0.10 (+0.08%). Wednesday's closes: Dollar Index +0.495 (+0.52%), EUR/USD -0.0072 (-0.64%), USD/JPY +0.14 (+0.12%). The dollar index on Wednesday closed higher on the larger-than-expected increase in Sep ADP employment report, which bolsters the case for a Fed interest rate increase this year. There was also weakness in EUR/USD on speculation the ECB may expand stimulus measures to fight deflation after Eurozone Sep CPI unexpectedly fell-0.1% y/y, weaker than expectations of unch y/y and the first decline in 6 months.

Nov crude oil (CLX15 +2.24%) this morning is up +$1.09 a barrel (+2.42%) and Nov gasoline (RBX15 +3.06%) is up +0.0419 (+3.07%). Wednesday's closes: CLX5 -0.14 (-0.31%), RBX5 -0.0170 (+1.26%). Nov crude oil and gasoline Wednesday settled mixed. Crude oil and gasoline were undercut by the unexpected +3.955 million bbl increase in EIA crude inventories (vs expectations of -500,000 bbl) and the unexpected +3.254 million bbl jump in EIA gasoline inventories (vs expectations of -500,000 bbl). Supportive factors included the -0.4% decline in U.S. crude production in the week ended Sep 25 to a 9-3/4 month low of 9.1 million bpd and the -1.068 million bbl decline in crude inventories at Cushing to a 6-1/2 month low.

GLOBAL EVENT CALENDAR10/01/2015

US	0730 ET	Sep Challenger job cuts, Aug +2.9% y/y.
	0830 ET	Weekly initial unemployment claims expected +4,000 to 271,000, previous +3,000 to 267,000. Weekly continuing claims expected -12,000 to 2.230 million, previous -1,000 to 2.242 million.
	0830 ET	USDA weekly Export Sales.
	0945 ET	Final-Sep Markit manufacturing PMI expected unch at 53.0, prelim-Sep unch at 53.0.
	1000 ET	Aug construction spending expected +0.5%, Jul +0.7% m/m.
	1000 ET	Sep ISM manufacturing index expected -0.5 to 50.6, Aug -1.6 to 51.1. Sep ISM new orders sub-index, Aug -4.8 to 51.7. Sep ISM employment sub-index, Aug -1.5 to 51.2. Sep ISM prices paid sub-index expected +1.0 to 40.0, Aug -5.0 to 39.0.
	1100 ET	Treasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $21 billion) and 30-year T-bonds (previous $13 billion) to be auctioned Oct 6-8.
	1430 ET	San Francisco Fed President John Williams speaks on the economic outlook to Salt Lake Area Community Leaders.
	n/a	Sep total vehicle sales expected 17.60 million, Aug 17.72 million. Sep domestic vehicle sales expected 13.80 million, Aug 13.80 million.
JPN	0100 ET	Japan Sep vehicle sales, Aug +2.3% y/y.
	1930 ET	Japan Aug jobless rate expected unch at 3.3%. Aug job-to-applicant ratio expected unch at 1.21.
	1930 ET	Japan Aug overall household spending expected +0.3% y/y, Jul -0.2% y/y.
GER	0355 ET	Revised German Sep Markit/BME manufacturing PMI, previous -0.8 to 52.5.
EUR	0400 ET	Revised Eurozone Sep Markit manufacturing PMI, previous -0.3 to 52.0.
	0930 ET	ECB President Mario Draghi speaks at the Atlantic Council Global Citizens Award ceremony in Washington, D.C.
UK	0430 ET	UK Sep Markit manufacturing PMI expected -0.2 to 51.3, Aug 51.5.

U.S. STOCK CALENDAR10/01/2015

Company	Ticker	Time	Event Description	Period	Estimate
McCormick & Co Inc/MD	MKC US	Bef-mkt	Q3 2015 Earnings Release	Q3 2015	0.866
McCormick & Co Inc/MD	MKC US	8:00	Q3 2015 Earnings Call	Q3 2015
Clorox Co/The	CLX US	9:00	Analyst Day	Y 2015
Dunkin' Brands Group Inc	DNKN US	9:00	Investor & Analyst Day	Y 2015
Ford Motor Co	F US	9:15	September 2015 Sales and Revenue Release	2015
Ford Motor Co	F US	10:00	September 2015 Sales and Revenue Call	2015
Home Properties Inc	HME US	10:00	Extraordinary Shareholders Meeting - M&A Vote	Y 2015
General Motors Co	GM US	10:00	Business Update Call
Macerich Co/The	MAC US	11:00	Investor Meeting	Y 2015
Micron Technology Inc	MU US	16:30	Q4 2015 Earnings Call	Q4 2015
Micron Technology Inc	MU US	Aft-mkt	Q4 2015 Earnings Release	Q4 2015	0.335
Rite Aid Corp	RAD US		September 2015 Sales and Revenue Release
John Wiley & Sons Inc	JW/A US		Annual General Meeting
Ameren Corp	AEE US		Investor Meeting - Boston	Y 2015

Barchart Morning Call 4/5

Barchart Morning Call

Barchart.com - 1 hr 52 mins ago

Overnight Developments

• Global stocks this morning are mostly lower with the Euro Stoxx 50 down -0.55% at a 2-1/2 month low and Jun S&Ps down -5.50 points at a 1-1/2 week low. Treasuries rose and the dollar index climbed to a 2-1/2 week high as stocks added to this week's losses on concern European authorities will struggle to keep the region's debt crisis from spreading. The euro slipped to a 2-1/2 week low against the dollar and 5-year German bund yields fell to a record low 0.719% after the yield spread between Spanish and German 10-year maturities reached 400 bp for the first time since Dec 12, while the extra yield investors demand to hold 10-year French bonds instead of benchmark German bunds widened to 126 bp, the most in 2-months. The yields on French bonds rose despite decent demand for its auction of 8.44 billion euros of debt, close to the maximum target. France sold 4.32 billion euros of 10-year debt at a yield of 2.98%, higher than a similar auction last month of 2.91%, although the bid-to-cover ratio was 2.65, higher than last month's 2.47, a sign of strong demand. Another negative for stocks and the euro was Feb German industrial production which fell -1.3% m/m and -1.0% y/y, weaker than expectations of -0.5% m/m and +0.3% y/y. As expected, the BOE held its benchmark interest rate at 0.50% and kept the asset purchase target at 325 billion pounds
• Asian stocks today closed mixed with Japan down -0.53%, China +2.36%, Australia -0.32%, South Korea +0.61%, India closed for holiday. Most Asian stock markets were under pressure on concern Europe won't be able to contain its debt crisis. Japan's Nikkei 225 Stock Index tumbled to a 4-week low after companies that do business in Europe slid while exporters as a whole weakened as the yen rose against the dollar. Japanese stocks pared a loss and closed well above their lows after a rejection of a BOJ nominee came as a victory for lawmakers pressing for more monetary easing. China's Shanghai Stock Index closed higher after the government said it will more than double the amount foreigners can invest in Chinese assets, but gains were limited as the country's big banks fell after Prime Minister Wen Jiabao pledged to break the "monopoly" enjoyed by the largest lenders who are able to make easy profits because it's hard to borrow money elsewhere. South Korea's Kospi Index finished higher after Q1 South Korea foreign direct investment rose +17% y/y, the most in 3 quarters.

Overnight U.S. Stock News

• June S&Ps this morning are trading down -5.50 points. The U.S. stock market Wednesday settled sharply lower on an increase in European sovereign-debt concerns after weak demand was seen at a Spanish debt auction and after the Mar ISM non-manufacturing index fell more than expected: Dow Jones -0.95%, S&P 500 -1.02%, Nasdaq Composite -1.46%. The Dow and the Nasdaq fell to 1-week lows. Bearish factors Wednesday included (1) carry-over weakness from a fall in European stocks on concern the region's debt crisis may spread to Spain after credit-default swaps to insure its government debt jumped to a 4-month high as demand dropped at a Spanish bond auction and after Spanish Prime Minister Rajoy said Spain's situation is one of "extreme difficulty," (2) the larger-than-expected decline in the Mar ISM non-manufacturing index (-1.3 to 56.0 versus expectations of -0.5 to 56.8), and (3) weakness in energy producers after crude oil plunged to a 1-1/2 month low after weekly DOE crude supplies rose by the most since Aug 2008.
• Bullish factors Wednesday included (1) the larger-than-expected increase in the Mar ADP employment change along with the upward revision to Feb (Mar +209,000, stronger than expectations of 206,000, and Feb revised up to +230,000 from the originally reported +216,000) and (2) comments from Richmond Fed President Lacker who said "downside risks have diminished now relative to where they were 4 to 5 months ago," and the U.S. economy should expand from 2% to 3% this year.

Today's Market Focus

• June 10-year T-notes this morning are up +16.5 ticks. T-note prices Wednesday rebounded from a 1-week low and settled higher early on increased safe-haven demand over concern the European debt crisis may worsen along with the weaker-than-expected Mar ISM non-manufacturing index: TYM2 +14.5, FVM2 +9.2, EDU2 -1.5. Bullish factors Wednesday included (1) increased safe-haven demand for Treasuries on concern the European debt crisis may spread to Spain after credit-default swaps to insure its government debt jumped to a 4-month high as demand dropped at a Spanish bond auction and after Spanish Prime Minister Rajoy said Spain's situation is one of "extreme difficulty," (2) the larger-than-expected decline in the Mar ISM non-manufacturing index (-1.3 to 56.0 versus expectations of -0.5 to 56.8), and (3) the action by the Fed to purchase $1.866 billion of Treasuries as part of it Operation Twist program to replace $400 billion of short-term debt in its holdings with longer maturities in an attempt to keep borrowing costs down. Bearish factors included (1) the larger-than-expected increase in the Mar ADP employment change along with the upward revision to Feb (Mar +209,000, stronger than expectations of 206,000, and Feb revised up to +230,000 from the originally reported +216,000) and (2) comments from Richmond Fed President Lacker who said U.S. economic growth will probably accelerate to about 3% next year, which will warrant an increase in interest rates.
• The dollar index this morning is stronger and at a 2-1/2 week high with the dollar/yen -0.53 yen and the euro/dollar -0.72 cents. The dollar index Wednesday rallied to a 1-1/2 week high and settled higher as the euro fell when ECB President Draghi said the economic outlook remained subject to "downside risks" and after Spanish bond yields surged on weak demand for its government debt: Dollar Index +0.295, USD/JPY -0.356, EUR/USD -0.00910. Bullish factors included (1) the fall in the euro to a 2-1/2 week low against the dollar after ECB President Draghi said the economic outlook remained subject to "downside risks as the remaining tensions in euro area sovereign debt markets are expected to dampen economic momentum," (2) increased safe-haven demand for the dollar on concern over contagion of the European debt crisis to Spain after credit-default swaps to insure its government debt jumped to a 4-month high of 457 bp after it sold 2.59 billion euros of bonds at auction, less than the maximum target of 3.5 billion euros, and after Prime Minister Rajoy said Spain's situation is one of "extreme difficulty," and (3) the weaker than expected Feb German factory orders, which is euro negative. Bearish factors included (1) the larger-than-expected decrease in the Mar ISM non-manufacturing index, which is dollar negative and (2) the unexpected upward revision to the Mar Euro-Zone PMI composite index, which is euro positive.
• May crude oil prices this morning are up +35 cents a barrel and May gasoline is -0.60 of a cent per gallon. Crude oil and gasoline prices Wednesday sold-off and settled sharply lower as the dollar rallied and after weekly DOE crude supplies surged to a 9-1/2 month high and U.S. crude output rose to a 12-year high: CLK12 -$2.54, RBK -6.18. May crude dropped to a 1-1/2 month low. Bearish factors included (1) the rally in the dollar index to a 1-1/2 week high, which reduces investment demand in commodities, (2) the much larger-than-expected increase in weekly DOE crude inventories which rose by the most since Aug 2008 to their highest level in 9-1/2 months (+9.01 million bbl to 362.4 million bbl versus expectations of +2.2 million bbl), (3) the +3.9% increase in U.S. crude production for the week ended Mar 30 to 6.049 million barrels day, the highest in 12 years, (4) the unexpected increase in weekly DOE distillate stockpiles (+19,000 bbl versus expectations of -450,000), and (5) the larger-than-expected decline in the Mar ISM non-manufacturing index, which indicates reduced fuel demand. Bullish factors included (1) the larger-than-expected increase in the Mar ADP employment change, which signals economic strength that is beneficial for fuel demand and (2) the unexpected upward revision to the Mar Euro-Zone PMI composite index, which indicates increased energy consumption.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): KMX-CarMax (BEST earnings consensus $0.40), STZ-Constellation Brands (0.38), RPM-RPM International (0.01), PIR-Pier 1 Imports (0.48), SCHN-Schnitzer Steel Industries (0.32), WDFC-WD-40 Co. (0.54), AZZ-AZZ Inc. (0.82).
Global Financial Calendar

Thursday 4/5/12
United States
0730 ET	Mar Challenger job cuts, Feb +2.0% y/y.
0830 ET	Weekly initial unemployment claims expected -4,000 to 355,000, previous -5,000 to 359,000. Weekly continuing claims expected +10,000 to 3.350 million, previous -41,000 to 3.340 million..
0910 ET	St. Louis Fed President James Bullard speaks on the U.S. economy and monetary policy at an event in St. Louis.
1030 ET	Mar ICSC chain store sales, Feb +4.1% y/y.
1100 ET	Treasury announces amounts of 3-year T-notes (previous $32 billion), 10-year T-notes (previous $21 billion) and 30-year T-bonds (previous $13 billion) to be auctioned Apr 10-12.
1630 ET	Weekly money supply report and Fed balance sheet.
United Kingdom
0430 ET	Feb U.K. industrial production expected +0.4% m/m and -2.1% y/y, Jan -0.4% m/m and -3.8% y/y.
0430 ET	Feb U.K. manufacturing production expected +0.1% m/m and +0.1% y/y, Jan +0.1% m/m and +0.3% y/y.
0700 ET	BOE announces interest rate decision and asset purchase target (expected no change to the 0.50% benchmark rate and no change to the 325 billion asset purchase target).
Germany
0600 ET	Feb German industrial production expected -0.5% m/m and +0.3% y/y, Jan +1.6% m/m and +1.8% y/y.
Canada
0830 ET	Mar Canada net change in employment expected +10,000, Feb -2,800. Mar unemployment rate expected unchanged at 7.4%, Feb -0.2 to 7.4%.
1000 ET	Mar Ivey purchasing managers index expected +0.5 to 67.0, Feb +2.4 to 66.5.

Barchart.com provides Financial Quotes, Charts and Technical Analysis for Stock and Commodity Traders.

Barchart Morning Call 1/9

Barchart Morning Call

Barchart.com - 49 mins ago

Overnight Developments

• Global stocks this morning are mixed with the Euro Stoxx 50 down -0.28% and Mar S&Ps down -0.10 of a point. Stocks and commodities are mixed while Treasuries are weaker as German Chancellor Merkel and French President Sarkozy meet in Berlin to discuss measures to rescue the euro over the next 3 months. Treasuries weakened after St. Louis Fed President Bullard said late Saturday that the Fed probably won't begin a new round of bond purchases (QE 3) following last Friday's "encouraging" jobs report. Nov German exports rose +2.5% m/m, stronger than expectations of +0.5%, which lifted the euro off of a 1-1/4 year low against the dollar. The euro may succumb to additional bouts of short covering after the CFTC late last Friday reported that futures traders increased their net short positions against the euro to a record 138,909 contracts in the week ended Jan 3. Gains in the euro may be limited however, after the Markit iTraxx SovX Western Europe Index of credit-default swaps that insure European sovereign debt rose to a record 386 bp. Stock gains may also be limited after Nov German industrial production fell -0.6% m/m and rose +3.6% y/y, weaker than expectations of -0.5% m/m and +3.9% y/y.
• Asian stocks today closed mostly lower with Japan closed for holiday, China up +3.40%, Australia -0.08%, South Korea -1.06%, India -0.22%. China's Shanghai Stock Index posted a 2-week high and closed higher on speculation the government is relaxing monetary policies to bolster economic growth. Dec China new loans increased by 640.5 billion yuan, the highest amount in 8 months and stronger than expectations of 575 billion yuan, while Dec China M2 money supply growth expanded at a +13.6% y/y pace, the fastest pace since July and stronger than expectations of +12.9% y/y. Comments from Chinese Premier Wen Jiabao also boosted stocks when the Shanghai Securities News reported that he called for measures to boost confidence in the stock market including reforming initial public offerings and improving companies' dividend payouts.

Overnight U.S. Stock News

• March S&Ps this morning are trading little changed, up +0.10 of a point. The US stock market last Friday settled mixed as European recession concerns overshadowed stronger-than-expected U.S. employment data and calls by Fed members for additional easing: Dow Jones -0.45%, S&P 500 -0.25%, Nasdaq Composite +0.16%. The Nasdaq posted a 1-3/4 month high. Bearish factors included (1) carry-over weakness from a fall in European stocks on concern Europe may be headed for recession after Dec Euro-Zone economic confidence fell to a 2-year low (-0.5 to 93.3), Nov Euro-Zone retail sales weakened more than expected (-0.8% m/m), and Nov German factory orders plunged -4.8% m/m, the most in 2-3/4 years, and (2) weakness in bank stocks after Sanford C. Bernstein and Ticonderoga Securities LLC cut their Q4 bank earnings estimates and said a weak Q4 dimmed prospects for a capital-markets rebound in the first half of this year.
• Bullish factors last Friday included (1) the larger-than-expected increase in Dec non-farm payrolls (+200,000 versus expectations of +150,000), (2) the unexpected decline in the Dec unemployment rate which fell to its lowest level in 2-3/4 years (-0.2 to 8.5% versus expectations of +0.1 to 8.7%), (3) the larger-than-expected increase in Dec manufacturing payrolls (+23,000 versus expectations of +5,000), (4) the unexpected increase in Dec average weekly hours (+0.1 to 34.4 versus expectations of unchanged at 34.3), which may prompt employers to boost hiring as current employees work more hours, and (5) comments from New York Fed President Dudley who said the Fed may consider further monetary easing to improve the economic outlook.

Today's Market Focus

• March 10-year T-notes this morning are down -2 ticks. T-note prices last Friday fell to a 1-week low after the stronger-than-expected Dec U.S. non-farm payrolls report but then erased their losses and settled higher on dovish Fed comments along with concern Europe may be headed for recession: TYH2 +8, FVH2 +3.2, EDM2 +5.5. Bullish factors included (1) comments from New York Fed President Dudley that suggests he favors additional Fed easing when he said "because the outlook for unemployment is unacceptably high relative to our dual mandate and the outlook for inflation is moderate, I believe it is appropriate to continue to evaluate whether we could provide additional accommodation in a manner that produces more benefits than costs," (2) comments from Boston Fed President Rosengren who said "he expects that inflation is likely to be below 2.0% not only in 2012 but also over the next several years" and that the Fed should "further purchases of mortgage-backed securities to help provide a more rapid recovery in housing," and (3) recession concerns in Europe after Dec Euro-Zone economic confidence fell to a 2-year low and Nov Euro-Zone retail sales and Nov German factory orders both weakened more than expected. Bearish factors included (1) the larger-than-expected increase in Dec non-farm payrolls (+200,000 versus expectations of +150,000), (2) the unexpected decline in the Dec unemployment rate which fell to its lowest level in 2-3/4 years (-0.2 to 8.5% versus expectations of +0.1 to 8.7%), and (3) a pickup in inflation expectations after the spread between 2-year T-notes and TIPS, or breakeven rate, widened to 1.682 percentage points, a 5-month high.
• The dollar index this morning is lower with the dollar/yen -0.13 yen and the euro/dollar +0.40 cents. The dollar index last Friday soared to a 13-month high and finished higher as U.S. economic data points to strength in the U.S. economy while Europe may be headed for recession: Dollar Index +0.318, USDJPY -0.148, EURUSD -0.00726. Bullish factors included (1) the slump in the euro to a 1-1/4 year low against the dollar on recession concerns after Dec Euro-Zone economic confidence fell to a 2-year low and Nov Euro-Zone retail sales and Nov German factory orders both weakened more than expected, and (2) the stronger-than-expected Dec U.S. non-farm payrolls and the unexpected decline in the Dec U.S. unemployment rate to a 2-3/4 year low, which signals economic strength that is dollar supportive. Bearish factors included (1) comments from New York Fed President Dudley who said the Fed may consider further monetary easing to improve the economic outlook and (2) dollar negative comments from Boston Fed President Rosengren who said the Fed should "further purchases of mortgage-backed securities to help provide a more rapid recovery in housing."
• Feb crude oil prices this morning are down -36 cents a barrel and Feb gasoline is -0.19 of a cent per gallon. Crude oil prices last Friday settled mixed as a stronger dollar and European recession concerns offset strong U.S. payrolls and Iran concerns: CLG12 -$0.25, RBG12 +1.51. Bearish factors included (1) the rally in the dollar index to a 13-month high, which reduces investment demand for commodities, and (2) signs that the European economy may be headed for recession after the Dec Euro-Zone economic confidence fell to a 2-year low and Nov Euro-Zone retail sales and Nov German factory orders both weakened more than expected. Bullish factors included (1) the larger-than-expected increase in Dec U.S. non-farm payrolls and the unexpected decline in the Dec U.S. unemployment rate to a 2-3/4 year low, which is positive for economic growth and energy demand and (2) heightened geopolitical concerns after an EU official said European foreign ministers are likely to agree to block Iranian oil imports at a meeting on Jan 30, which may prompt Iran to try to close the Strait of Hormuz where one-sixth of the world's crude supplies flow through each day.

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): AA-Alcoa (BEST earnings consensus -$0.01), AYI-Acuity Brands (0.66), SCHN-Schnitzer Steel (0.23), MG-Mistras Group (0.25), SMSC-Standard Microsystems (0.33).
Global Financial Calendar

Monday 1/9/12
United States
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
1240 ET	Atlanta Fed President Dennis Lockhart will speak about the U.S. economy to the Rotary Club of Atlanta.
1500 ET	Nov consumer credit expected +$7.000 billion, Oct $7.646 billion.
Germany
0200 ET	Nov German trade balance expected +12.0 billion euros, Oct +11.6 billion euros. Nov exports expected +0.5% m/m, Oct -3.5% m/m. Nov imports expected +0.5% m/m, Oct -0.7% m/m.
0600 ET	Nov German industrial production expected -0.5% m/m and +4.1% y/y, Oct +0.8% m/m and +4.1% y/y.
Euro-Zone
0430 ET	Jan Euro-Zone Sentix investor confidence, Dec -2.8 to -24.0.
0730 ET	German Chancellor Angela Merkel and French President Nicolas Sarkozy meet in Berlin; joint press conference to follow.
Canada
0830 ET	Nov Canada building permits expected -3.0% m/m, Oct +11.9% m/m.
1030 ET	Q4 Canada business outlook of future sales expected 8.0, Q3 6.0.
United Kingdom
1901 ET	Dec U.K. RICS house price balance expected -19%, Nov -17%.
Japan
n/a	Japanese markets closed for Coming-of-Age Day.

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