Wednesday, April 6th, 2016View Older Reports
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OVERNIGHT MARKETS AND NEWS
Jun E-mini S&Ps (ESM16 +0.18%) are up +0.18% and European stocks are up +0.10% as energy producing stocks are higher with a +2.90% rally in crude oil. Crude oil shot higher late yesterday after the API reported that weekly U.S. crude supplies fell -4.3 million bbl. Also, a 2% gain in Cisco Systems in pre-market trading is giving technology stocks a lift after J.P. Morgan Chase raised its recommendation on the stock to neutral from underweight. European stocks also received a boost after German Feb industrial production fell less than expected. Weakness in drug companies tempered stock index gains after Pfizer decided to terminate its $160 billion merger with Allergan Plc. Asian stocks settled mixed: Japan -0.11%, Hong Kong +0.15%, China -0.08%, Taiwan -1.67%, Australia +0.44%, Singapore +0.37%, South Korea +0.59%, India +0.07%. Japan's Nikkei Stock Index dropped to a 1-1/2 month low as a rally in the yen to a 17-month high against the dollar fueled a sell-off in exporter stocks.
The dollar index (DXY00 +0.29%) is up +0.29%. EUR/USD (^EURUSD) is down -0.28%. USD/JPY (^USDJPY) is down -0.02%.
German Feb industrial production fell -0.5% m/m, a smaller decline than expectations of -1.8% m/m.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Key U.S. reports today include: (1) weekly MBA mortgage applications (previous -1.0% with purchase sub-index +2.1% and refi sub-index -3.3%), (2) Cleveland Fed President Loretta Mester's speech on the U.S. economic outlook and monetary policy at an event hosted by the Cleveland Associations for Business Economics, CFA Society Cleveland and Risk Management Association of Northern Ohio, (3) the minutes of the Mar 15-16 FOMC meeting, (4) St. Louis Fed President James Bullard's welcoming remarks at a lecture in St. Louis, and (5) Dallas Fed President Rob Kaplan's speech on a moderated panel at the World Affairs Council of Dallas/Fort Worth.
There are 8 of the Russell 1000 companies that report earnings today: Acuity Brands (consensus $1.57), Bed Bath & Beyond (1.81), RPM International (0.15), Constellation Brands (1.15), Monsanto (2.42), Global Payments (0.67), MSC Industrial Direct (0.79), SunEdison (-0.74).ip
U.S. IPO's scheduled to price today: Aeglea BioTherapeutic (AGLE).
Equity conferences during the remainder of this week include: Cowen & Co Retail & Luxury Day on Thu
OVERNIGHT U.S. STOCK MOVERS
Cisco Systems (CSCO -1.99%) rose over 2% in pre-market trading after it was upgraded to 'Neutral' from 'Underweight' at J.P. Morgan Chase.
Pfizer (PFE +2.08%) climbed over 1% in pre-market trading after people familiar with the matter said the compnay is terminating its $160 billion merger with Allergan Plc after new U.S. tax proposals aimed at curbing corporate inversions. Allergan Plc (AGN -14.77%) is down over 1% in pre-market trading following the news.
Wells Fargo (WFC -2.04%) was downgraded to 'Neutral' from 'Buy' at Guggenheim Securities.
Fifth Third Bancorp (FITB -1.85%) was downgraded to 'Neutral' from 'Buy' at Sterne Agee CRT with a 12-month price target of $18.
Apple (AAPL -1.18%) was rated a new 'Strong Buy' at Needham & Co. with a 12-month price target of $150.
Huntington Bancshares (HBAN -1.05%) was upgradd to 'Buy' from 'Neutral at Sterne Agee CRT with a 12-month price target of $11.50.
Nvidia (NVDA -0.14%) was downgraded to 'Hold' from 'Buy' at Stifel.
Biogen (BIIB +0.61%) was rated a new 'Market Perform' at BMO Capital Markets with a 12-month price target of $283.
PulteGroup (PHM +2.03%) was upgraded to 'Equal-weight' from 'Underweight' at Barclays.
Wynn Resorts Ltd. (WYNN -2.66%) dropped over 1% in after-hours trading after it reported preliminary Q1 Macau revenue of $603 million-$613 million, compared to $705.4 million in Q1 of 2015.
Cree (CREE -0.58%) slumped over 15% in after-hours trading after it reported preliminary Q3 adjusted EPS of 13 cents-15 cents, well below consensus of 24 cents.
SEI Investments (SEIC -0.75%) was upgraded to 'Market Perform' from 'Underperform' at Keefe, Bruyette & Woods with a 12-month price target of $45.
Actuity Brands (AYI +2.19%) fell over 3% in after-hours trading in sympathy with the sharp decline in Cree Inc.
A Schulman (SHLM -0.38%) fell nearly 4% in after-hours trading after it reported Q2 revenue of $591.8 million, below consensus of $595.4 million.
MARKET COMMENTS
June E-mini S&Ps (ESM16 +0.18%) this morning are up 3.75 points (+0.18%). Tuesday's closes: S&P 500 -1.01%, Dow Jones -0.75%, Nasdaq -0.91%. The S&P 500 on Tuesday closed lower on a slide in European stocks to a 5-week low after German Feb factory orders unexpectedly fell -1.2% m/m, the most in 6 months, and on the larger-than-expected U.S. Feb trade deficit of -$47.1 billion, bigger than expectations of a -$46.2 billion, which is negative for U.S. Q1 GDP. Stocks were also undercut by global growth concerns after IMF Managing Director Lagarde said that the downside risks for growth have increased and "we don't see much by way of upside."
June 10-year T-note prices (ZNM16 -0.08%) this morning are down -3.5 ticks. Tuesday's closes: TYM6 +11.50, FVM6 +7.00. Jun T-notes on Tuesday rose to a 5-week high and settled higher on carryover support from a rally in German bunds to an 11-1/4 month high and on increased safe-haven demand as stocks sold off.
The dollar index (DXY00 +0.29%) this morning is up +0.273 (+0.29%). EUR/USD (^EURUSD) is down -0.0032 (-0.28%). USD/JPY (^USDJPY) is down-0.02 (-0.02%). Tuesday's closes: Dollar Index +0.121 (+0.13%), EUR/USD -0.0007 (-0.06%), USD/JPY -1.00 (-0.90%). The dollar index on Tuesday closed higher on the larger-than-expected increase in the Mar ISM non-manufacturing index and on hawkish comments by Chicago Fed President Evans who said it would be "appropriate" for two more interest rate hikes this year. Gains in the dollar were limited after USD/JPY plunged to a 17-month low.
May WTI crude oil (CLK16 +2.65%) is up +$1.04 a barrel (+2.90%). May gasoline (RBK16 +0.55%) is up +0.0061 (+0.44%). Tuesday's closes: CLK6 +0.19 (+0.50%), RBK6 +0.0101 (+0.73%). May crude and gasoline on Tuesday closed higher on comments from Kuwait's OPEC governor who said that oil-producing countries can come to an agreement to cap crude production at January levels even if Iran doesn't join the move. Crude oil prices were undercut by expectations that Wednesday's weekly EIA data will show that U.S. crude inventories rose +3.0 million bbl.
GLOBAL EVENT CALENDAR04/06/2016
U.S. STOCK CALENDAR04/06/2016
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- March E-mini S&Ps this morning are mildly higher by +0.27% on support from a 0.72% rally in European stocks on news that Eurozone banks will repay more LTRO loans next week than the market had expected. Starbucks is up +2.6% in overnight trading while Microsoft is down 1.2% after their respective earnings reports. Asian stocks today closed mixed. Japan closed sharply higher by +2.88% while Hong Kong closed -0.08% and China closed -0.43%. Commodity prices are little changed this morning. March crude oil is up +0.32%, March gasoline is down -0.02%, Feb gold is down -0.25%, March copper is up +0.30%, and agriculture prices are mixed. The dollar index is mildly lower by -0.15% as EUR/USD rallied by +0.51% on news of the larger-than-expected LTRO loan payoffs by Eurozone banks. USD/JPY is up +0.72%. March 10-year T-note prices are down -13.5 ticks on reduced safe-haven demand after the LTRO payoff news.
- Treasury Secretary Timothy Geithner leaves office today. His successor, current budget chief Jack Lew, has yet to be confirmed by the Senate.
- The ECB today said that Eurozone banks will pay off 137.2 billion euros of their 3-year LTRO loans next week at the first opportunity to make early repayment. That was well above the market consensus of 80 billion euros and indicated that Eurozone banks in the aggregate are in better shape than earlier thought. During the worst of the Eurozone debt crisis, the ECB provided about 1 trillion euros of 3-year loans to banks through its "Longer-Term Refinancing Operations" program.
- The German IFO business climate index of +1.8 to 104.2 was stronger than market expectations for a 0.6 point increase to 103.0 and was the third consecutive monthly increase.
- The UK Q4 GDP report of -0.3% q/q was weaker than market expectations of -0.1% y/y and fell back into negative territory after the Q3 report of +0.9% q/q. On a year-on-year basis, Q4 GDP was unchanged after Q3's slight +0.1% increase.
- Japan's Dec CPI of -0.1% y/y was a little stronger than market expectations of -0.2% y/y but was still in deflationary territory. The Dec core CPI of -0.6% y/y showed an even larger decline.
Market Comments- March E-mini S&Ps this morning are up +4.00 points (+0.27%) on support from the +0.72% rally in European stocks and the positive LTRO payoff news. The S&P 500 index on Thursday opened lower on Apple's sharp overnight sell-off due to disappointment in its earnings and sales report, but stocks recovered and settled mixed. The S&P 500 climbed to a fresh 5-year high on improved global economic prospects the 0.4 point increase in China's Jan HSBC flash manufacturing PMI to a 2-year high of 51.9 and the unexpected -5,000 drop in U.S. initial unemployment claims to a 5-year low of 330,000. Other bullish factors included the +0.5% increase in Dec leading indicators (vs expectations of +0.4%), and a rally in European stocks on the 1.4 point rise to 47.5 in the Eurozone Jan manufacturing PMI. The Nasdaq posted a 1-week low and finished lower on the plunge in Apple. Closes: S&P 500 unch, Dow Jones +0.33%, Nasdaq -1.40%.
- March 10-year T-notes this morning are sharply lower by -13.5 ticks due to reduced safe-haven demand with the news that Eurozone banks will make larger-than-expected early payoffs on their LTRO loans, providing further good news for the Eurozone debt crisis. March 10-year T-note prices on Thursday retreated from a 3-week high posted in the overnight session on increased safe-haven demand when stocks prices fell after Apple reported weaker-than-expected earnings. However, T-note prices fell back and closed lower when the S&P 500 shed its losses and rebounded to a fresh 5-year high after weekly initial jobless claims unexpectedly fell to a 5-year low. Closes: TYH3 -2.0, FVH3 -1.0.
- The dollar index this morning is down -0.12 (-0.15% and EUR/USD is up +0.0068 (+0.51%) on the LTRO payoff news. USD/JPY is up +0.65 (+0.72%) as the yen continues to see weakness on the stimulus plan by Prime Minister Abe . The dollar index on Thursday erased an early rally and closed little changed, undercut by reduced safe-haven demand, after the S&P 500 climbed to a fresh 5-year high. USD/JPY surged to a fresh 2-1/2 year high when Japanese Deputy Economy Minister Nishimura said the yen's slide isn't over and that the yen at 100 per dollar would be acceptable. Closes: Dollar index +0.029 (+0.04%), EUR/USD +0.0059 (+0.44%), USD/JPY +1.718 (+1.94%).
- March WTI crude oil this morning is up +0.31 (+0.32%) and March gasoline is down -0.0006 (-0.02%). Mar crude oil and gasoline Thursday closed higher on improved global economic growth prospects after China's Jan HSBC flash manufacturing PMI rose to a 2-year high of 51.9 and U.S. weekly initial unemployment claims unexpectedly fell to a 5-year low of 330,000. Other bullish factors included increased speculation that the Seaway pipeline will soon reopen and resume full crude shipments, which will curb crude inventories at Cushing where Nymex WTI oil futures are priced, along with the unexpected -1.74 million bbl decline in weekly DOE gasoline inventories, which were expected to increase +1.25 million bbl. Negative factors for crude prices included the 2.81 million bbl increase in weekly DOE crude stockpiles, larger than expectations of +2.15 million bbl and the 508,000 bbl increase in weekly DOE distillate inventories, stronger than expectations of unchanged. CLH3 +0.72 (+0.76%), RBH3 +0.0278 (+0.98%).
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Today's U.S. Earnings ReportsEarnings reports (ranked by market cap): PG-Procter & Gamble (consensus $1.11), HON-Honeywell (1.10), HAL-Halliburton (0.61), KMB-Kimberley-Clark (1.36), COV-Covidien (1.06), WY-Weyerhaeuser (0.19), SXL-Sunoco Logistics (0.94), NVR-NVR Inc (7.14), SEIC-SEI Investments (0.32), OSK-Oshkosh (0.31), PB-Prosperity Bankshares (0.84), MOG/A-Moog ((0.82), WERN-Werner (0.35).
Global Financial CalendarFriday 1/25/13 United States 1000 ET Dec new home sales expected +2.1% to 385,000, Nov +4.4% to 377,000. 1500 ET USDA Cattle on Feed. Germany 0400 ET German Jan IFO business climate expected 103.0, Dec 102.4. Jan IFO current assessment expected 107.3, Dec 107.1. Jan IFO expectations expected 98.5, Dec 97.9. United Kingdom 0430 ET UK Q4 GDP expected -0.1% m/m and +0.2% y/y, Q3 +0.9% q/q and unchanged y/y. 0430 ET UK Nov index of services expected -0.1% m/m and +0.5% y/y, Oct +0.1% m/m and +1.1% 3-mo/3-mo.
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