Monday, April 7th, 2014
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OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps (ESM14 -0.39%) this morning are down -0.34% at a 1-week low and European stocks are down -0.81% as a slide in internet and technology stocks in pre-market trading has dragged the June mini-Nasdaq futures down -0.68% to a fresh 2-month low. Friday's slide in stocks within the Nasdaq Composite Index continues today on concern that the recent rally in the index to a 13-1/2 year high has stretched valuations too far. Concern that tensions are building again in Ukraine is also undercutting European stocks after pro-Russian demonstrators seized administration buildings in Ukraine's east. Ukraine Prime Minister Yatsenyuk said Russia was sending agents into eastern Ukraine to stir up separatist unrest that would give Russian President Putin an excuse to send Russian troops into Ukraine. Asian stocks closed mostly lower: Japan -1.69%, Hong Kong -0.59%, China closed for holiday, Taiwan -0.14%, Australia -0.17%, Singapore -0.60%, South Korea +0.16%, India -0.07%. Asian stocks were undercut after the World Bank lowered its GDP forecast for developing East Asia this year to 7.1%, down from an Oct estimate of 7.2% as growth in China moderates. The World Bank also lowered its GDP forecast for China this year down to 7.6% from an Oct forecast of 7.7%. Commodity prices are mixed. May crude oil (CLK14 -0.58%) is down -0.49%. May gasoline (RBK14 -0.62%) is down -0.62%. Jun gold (GCM14 -0.28%) is down -0.20%. May copper (HGK14 -0.17%) is down -0.13% at a 1-week low after the World Bank cut its China GDP forecast. Agriculture prices are mixed. The dollar index (DXY00 -0.13%) is down -0.09%. EUR/USD (^EURUSD) is up +0.18%. USD/JPY (^USDJPY) is down -0.03%. June T-note prices (ZNM14 +0.06%) are up +2.5 ticks.
ECB Governing Council member Nowotny said he sees no "immediate need" for further ECB action on additional stimulus and ECB Executive Board member Mersch said there's no imminent risk of deflation.
The Eurozone Apr Sentix investor confidence unexpectedly rose +0.2 to 14.1, better than expectations of unchanged at 13.9 and its best level in 3 years.
German Feb industrial production rose +0.4% m/m and +4.8% y/y, better than expectations of +0.3% m/m and +4.7% y/y, although Jan was revised lower to +0.7% m/m and +4.9% y/y from the originally reported +0.8% m/m and +5.9% y/y.
The UK Mar Lloyds employment confidence was unchanged at -2, right on expectations.
The Japan Feb composite index of leading indicators fell -4.6 to 108.5, a bigger decline than expectations of -4.3 to 108.8 and the lowest level in 6-months. The Feb coincident index fell -1.8 to 113.4, right on expectations.
U.S. STOCK PREVIEW
Today's Feb U.S. consumer credit report is expected to show an increase of +$14.0 billion, a little stronger than Jan's report of +$13.7 billion. None of the Russell 1000 companies report earnings today. Equity and industry conferences this week include: BNEF Summit on Mon-Wed, IPAA Oil & Gas Investment Symposium on Tue, Noble Financial NAB Financial Forum on Tue, and New Economic Summit (NES) 2014 on Tue-Wed.
OVERNIGHT U.S. STOCK MOVERS
C.R. Bard (BCR -0.07%) was downgraded to 'Neutral' from 'Buy' at BofA/Merrill.
Netflix (NFLX -4.90%) was upgraded to 'Outperform' from 'Perform' at Oppenheimer.
Under Armour (UA -7.39%) was upgraded to 'Buy' from 'Neutral' at Sterne Agee.
Analog Devices (ADI -1.96%) was upgraded to 'Neutral' from 'Sell' at Goldman.
Mattel (MAT -1.23%) was downgraded to 'Underperform' from 'Market Perform' at BMO Capital.
Intel (INTC -0.95%) was upgraded to 'Outperform' from 'Sector Perform' at Pacific Crest.
PBF Energy (PBF -0.87%) was upgraded to 'Buy' from 'Neutral' at Citigroup.
Statoil (STO +0.54%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs.
Blackstone (BX -2.26%) will acquire Gates Global for $5.4 billion.
SAC Capital lowered its passive stake in Diamond Foods (DMND -3.07%) to 4.0% from 9.0%.
June E-mini S&Ps (ESM14 -0.39%) this morning are down -6.25 points (-0.34%) at a 1-week low. The S&P 500 on Friday rallied to a new record high but fell back and closed lower. Bearish factors included (1) the +192,000 increase in U.S. Mar non-farm payrolls, less than expectations of +200,000, although Feb was revised +22,000 higher to +197,000 from +175,000, and (2) the plunge in biotechnology and computer and internet-related stocks as concern over their high multiples fueled profit taking and long liquidation. Closes: S&P 500 -1.25%, Dow Jones -0.96%, Nasdaq -2.70%.
Jun 10-year T-notes (ZNM14 +0.06%) this morning are up +2.5 ticks. Jun 10-year T-note futures prices on Friday rebounded from early losses and closed higher after stocks tumbled. T-notes also found support from (1) the smaller-than-expected increase in U.S. Mar non-farm payrolls, and (2) the unchanged Mar unemployment rate of 6.7%, higher than expectations of -0.1 to 6.6%. Closes: TYM4 +22.50, FVM4 +13.50.
The dollar index (DXY00 -0.13%) this morning is down -0.074 (-0.09%). EUR/USD (^EURUSD) is up +0.0024 (+0.18%). USD/JPY (^USDJPY) is down -0.03 (-0.03%). The dollar index on Friday retreated from a 5-week high and closed lower on speculation the smaller-than-expected increase in U.S. Mar payrolls may prompt the Fed to slow its pace of QE3 tapering. EUR/USD fell to a 5-week low on negative carry-over from ECB President Draghi's comments on Thursday that the ECB may consider additional stimulus measures to stave off deflation. Closes: Dollar index -0.052 (-0.06%), EUR/USD -0.00173 (-0.13%), USD/JPY -0.614 (-0.59%).
May WTI crude oil (CLK14 -0.58%) this morning is down -50 cents (-0.49%) and May gasoline (RBK14 -0.62%) is down -0.0182 (-0.62%). May crude and gasoline prices on Friday closed higher. Bullish factors included (1) strength in the U.S. Mar payrolls report, which is positive for the economic outlook and fuel demand, and (2) the stronger-than-expected German Feb factory orders, which was a positive indicator for Eurozone energy demand. Closes: CLK4 +0.85 (+0.85%). RBK4 +0.0195 (+0.67%).
GLOBAL EVENT CALENDAR04/07/2014
|US||1100 ET||USDA weekly grain export inspections.|
|1145 ET||St. Louis Fed President James Bullard speaks about the U.S. economy and monetary policy to the Asia Pacific Business Outlook Conference at USC.|
|1500 ET||Feb consumer credit expected +$14.0 billion, Jan +$13.698 billion.|
|JPN||0100 ET||Japan Feb leading index CI expected -2.3 to 108.8, Jan 113.1. Feb coincident index expected -1.8 to 113.4, Jan 115.2.|
|UK||0430 ET||UK Mar Lloyds employment confidence, Feb -2.|
|EUR||0430 ET||Eurozone Apr Sentix investor confidence expected unch at 13.9, Mar 13.9.|
|0900 ET||ECB Vice President Vitor Constancio presents the ECBs annual report to the European Parliament in Brussels.|
|GER||0600 ET||German Feb industrial production expected +0.3% m/m and +4.7% y/y, Jan +0.8% m/m and +5.0% y/y.|
U.S. STOCK CALENDAR04/07/2014
|Company Name||Ticker||Time||Event Description||Period||Estimate|
|Principal Financial Group Inc||PFG US||8:00||Roadshow -Tokyo Day 1||Y 2014|
|AO Smith Corp||AOS US||Annual General Meeting|
|Cheniere Energy Inc||LNG US||Analyst Day|