Monday, January 11th, 2016
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OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH16 +0.33%) are up +0.50% and European stocks are up +0.74%. The Mar E-mini S&P had posted a 3-1/4 month low in overnight trade when China's Shanghai Composite slid over 5% to a 3-3/4 month low, but recovered their losses and moved higher as they attempt to stabilize ahead of Q4 company earnings season that begins this week. European stocks were led higher by a rally in automakers, with Volkswagen, BMW AG, and Daimler AG all up over 1.5%. Asian stocks settled lower: Japan closed for holiday, Hong Kong -2.76%, China -5.33%, Taiwan -1.34%, Australia -1.17%, Singapore -1.54%, South Korea -1.22%, India -0.44%. China's Shanghai Composite closed down % after China Dec producer prices fell for a record 46th consecutive month and declined at the fastest pace in 6-1/2 years, which pessimism over China's economy. The Shanghai Composite closed on its lows even as the yuan strengthened against the dollar, after Beijing News cited Premier Li Keqiang as saying policy makers won't seek strong stimulus or flood the economy with too much investment to boost demand.
The dollar index (DXY00 -0.08%) is down -0.03%. EUR/USD (^EURUSD) is down -0.20%. USD/JPY (^USDJPY) is up +0.38% as it recovered from a 4-1/2 month low after a rally in U.S. and European stocks curbed safe-haven demand for the yen.
Mar T-note prices (ZNH16 -0.12%) are down -4.5 ticks.
Eurozone Jan Sentix investor confidence fell -6.1 to 9.6, weaker than expectations of -4.3 to 11.4 and a 1-year low.
China Dec CPI rose +1.6% y/y, right on expectations. Dec PPI fell -5.9% y/y, weaker than expectations of -5.8% y/y and matched the fastest pace of decline in 6-1/4 years.
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Atlanta Fed President Dennis Lockhart speaks on the U.S. economic outlook and monetary policy to the Rotary Club of Atlanta, (2) Dallas Fed President Rob Kaplan speaks on economic conditions and monetary policy at the North Texas Economic Forum.
There are 3 of the Russell 1000 companies that report earnings today: Alcoa (consensus $0.02), Global Payments (0.75), Lumentum Holdings (0.28).
U.S. IPO's scheduled to price today: none.
Equity conferences this week: North American International Auto Show (Detroit) - Press Days on Mon-Tue, J.P. Morgan Health Care Conference on Mon-Thu, Needham & Company Growth Conference on Tue, Deutsche Bank Global Auto Conference on Tue-Wed.
OVERNIGHT U.S. STOCK MOVERS
Wyndham Worldwide (WYN -0.30%) was upgraded to 'Hold' from 'Sell' at Deutsche Bank.
Ilumina (ILMN -1.52%) is up 6% in pre-market trading after it raised guidance on 2016 core adjusted EPS to $3.80-$3.90, higher than estimates of $3.76.
Whiting Petroleum (WLL +3.05%) was upgraded to 'Outperfom' from 'Market Perform' at Wells Fargo Securities.
Williams-Sonoma (WSM -3.22%) was downgraded to 'Neutral' from 'Outperform' at Wedbush.
M&T Bank (MTB -2.05%) was downgraded to 'Neutral' from 'Buy' at Goldman Sachs.
Statoil (STO -2.74%) was added to the 'Conviction Sell' list at Goldman Sachs.
L'oreal (LRLCY -0.45%) was added to the 'Conviction Buy' list at Goldman Sachs.
Keycorp (KEY -2.13%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.
Cheniere Energy (LNG +0.11%) climbed nearly 3% in after-hours trading after Baupost raised its stake in eh company to 15.01% from 9.60% in September.
HCA Holdings (HCA -0.03%) rose nearly 6% in after-hours trading after the company said its fiscal 2015 adjusted EBITDA will be about $7.9 billion, higher than consensus of $7.77 billion.
Affymetrix (AFFX -1.39%) surged over 40% in after-hours trading after Thermo Fisher Scientific TMO acquired the company for $1.3 billion or $14 a share.
Actuity Brands (AYI -3.73%) fell over 3% in after-hours trading, adding on to Friday's -3.7% decline, after the company reported Q1 revenue of $736.6 million, below estimates of $740.1 million.
Mar E-mini S&Ps (ESH16 +0.33%) this morning are up +9.50 points (+0.50%). Friday's closes: S&P 500 -1.08%, Dow Jones -1.02%, Nasdaq -0.81%. The S&P 500 on Friday erased an early rally and fell to a 3-1/4 month low on weakness in energy producers as crude oil prices declined and on concern that the recent weakness in Chinese stocks has yet to run its course. Stocks initially opened higher on carry-over support from a +1.97% rally in China's Shanghai Composite and the +292,000 increase in U.S. Dec non-farm payrolls, stronger than expectations of +200,000.
Mar 10-year T-notes (ZNH16 -0.12%) this morning are down -4.5 ticks. Friday's closes: TYH6 +9.50, FVH6 +6.50. Mar T-notes on Friday posted a 2-1/4 month high and closed higher on (1) a lack of wage pressures after U.S. Dec average hourly earnings were unch m/m and up +2.5% y/y (weaker than expectations of +0.2% m/m and +2.7% y/y) (2) weaker commodity prices that reduced inflation expectations as the 10-year T-note breakeven inflation rate fell to a 2-week low, and (3) increased safe-haven demand after the S&P 500 gave up an early rally and fell to a 3-1/4 month low.
The dollar index (DXY00 -0.08%) this morning isdown -0.030 (-0.03%) . EUR/USD (^EURUSD) is down -0.0022 (-0.20%). USD/JPY (^USDJPY) is up +0.45 (+0.38%). Friday's closes: Dollar Index +0.321 (+0.33%), EUR/USD -0.0010 (-0.09%), USD/JPY -0.41 (-0.35%). The dollar index on Friday settled higher on the stronger-than-expected U.S. Dec payroll report, which bolsters the case for the Fed to continue to raise interest rates. In addition, there was weakness in EUR/USD after German Nov industrial production unexpectedly fell -0.3% m/m, weaker than expectations of +0.5% m/m. The dollar was undercut by the slide in stocks, which boosted safe-haven demand for the yen as USD/JPY tumbled to a 4-1/2 month low.
Feb crude oil (CLG16 -1.54%) this morning is down -54 cents (-1.63%) and Feb gasoline (RBG16 +0.20%) is down -0.0056 (-0.50%). Friday's closes: CLG6 -0.39 (-1.17%), RBG6 -0.0241 (-2.10%). Feb crude oil and gasoline on Friday closed lower on a stronger dollar and on concern that the turmoil in China will exacerbate a global oil glut. Losses in crude oil were limited after U.S. Dec non-farm payrolls rose more than expected in a sign of U.S. economic strength.
GLOBAL EVENT CALENDAR01/11/2016
|US||1100 ET||USDA weekly grain export inspections.|
|1240 ET||Atlanta Fed President Dennis Lockhart speaks on the U.S. economic outlook and monetary policy to the Rotary Club of Atlanta.|
|1750 ET||Dallas Fed President Rob Kaplan speaks on economic conditions and monetary policy at the North Texas Economic Forum.|
|EUR||0430 ET||Eurozone Jan Sentix investor confidence expected -4.4 to 11.3, Dec 15.7.|
|UK||1901 ET||UK Dec BRC sales like-for-like expected +0.5% y/y, Nov -0.4% y/y.|
|JPN||n/a||Japanese markets closed for Coming-of-Age Day.|
U.S. STOCK CALENDAR01/11/2016
|American Airlines Group Inc||AAL US||Bef-mkt||December 2015 Sales and Revenue Release - Traffic Results||2015|
|Sirona Dental Systems Inc||SIRO US||13:00||Extraordinary Shareholders Meeting|
|Alcoa Inc||AA US||16:03||Q4 2015 Earnings Release||Q4 2015||0.024|
|Alcoa Inc||AA US||17:00||Q4 2015 Earnings Call||Q4 2015|
|United Continental Holdings Inc||UAL US||17:00||December 2015 Sales and Revenue Release - Operational Performance||2015|
|DENTSPLY International Inc||XRAY US||Special Meeting - M&A Vote|
|Sirona Dental Systems Inc||SIRO US||Special Meeting - M&A Vote|
|Global Payments Inc||GPN US||Q2 2016 Earnings Release||Q2 2016||0.753|
|Lumentum Holdings Inc||LITE US||Q2 2016 Earnings Release||Q2 2016||0.283|