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MORNING CALL 4/5

|Includes: Allergan plc (AGN), D, DIS, DNKN, DRI, FITB, FSLR, GD, HRL, NATI, NOC, NVDA, PE, RTWRF, SBUX, TSLA, UAL, WBA

MORNING CALL

Tuesday, April 5th, 2016

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OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM16 -0.66%) are down -0.78% and European stocks are down -2.15% at a 5-week low on concern that global economic growth is faltering. German Feb factory orders unexpectedly fell by the most in 6 months and IMF Managing Director Lagarde said the world economy's outlook has dimmed. A -0.22% fall in crude oil prices to a 1-month low has also undercut energy producing stocks. The slide in stocks has boosted demand for government debt as the yield on the 10-year German bund has tumbled to an 11-1/4 month low of 0.081%. Asian stocks settled mostly lower: Japan-2.42%, Hong Kong -1.57%, China up+1.45%, Taiwan closed for holiday, Australia -1.42%, Singapore -1.21%, South Korea -1.02%, India -2.03%. The plunge in USD/JPY to a 17-month low fueled selling in Japanese exporters as Japan's Nikkei Stock Index fell to a 1-1/2 month low. Chinese stocks bucked the trend as the Shanghai Composite rallied to a 2-1/2 month high on optimism that government efforts to spur economic growth are kicking in.

The dollar index (DXY00 +0.28%) is up +0.21%. EUR/USD (^EURUSD) is down -0.25%. USD/JPY (^USDJPY) is down -0.92% to a 17-month low.

Jun T-note prices (ZNM16 +0.31%) are up +15 ticks at a 5-week high on carryover support from a rally in German bunds to an 11-1/4 month low.

IMF Managing Director Lagarde said the world economy's outlook has dimmed over the last 6 months, exacerbated by China's slowdown, lower commodity prices and the risk of financial tightening in many countries. This suggests the IMF will downgrade its growth forecast when it releases its updated World Economic Outlook on Apr 12.

Chicago Fed President Evans said "I believe it will be appropriate to make two more rate hike this year and then follow a very gradual path of rate increases thereafter." Evans projects U.S. 2016 economic growth at 2.0-2.5% and that the U.S. consumer is the "linchpin" behind the outlook.

German Feb factory orders unexpectedly fell -1.2% m/m, weaker than expectations of +0.3% m/m and the biggest decline in 6 months.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Key U.S. reports today include: (1) Chicago Fed President Charles Evans' speech on the economy and monetary policy at the Credit Suisse Asian Investment Conference in Hong Kong, (2) Feb U.S. trade balance (expected -$46.2 billion, Jan -$45.68 billion), (3) final-Mar Markit services PMI (expected +0.2 to 51.2, prelim-Mar +1.3 to 51.0), (4) Mar ISM non-manufacturing PMI (expected +0.8 to 54.2, Feb -0.1 to 53.4), and (5) Feb JOLTS job openings (expected -53,000 to 5.488 million, Jan +260,000 to 5.541 million).

There are 2 of the Russell 1000 companies that report earnings today: Darden Restaurants (consensus $1.20), Walgreens (1.28).

U.S. IPO's scheduled to price today: none.

Equity conferences during the remainder of this week include: Cowen & Co Retail & Luxury Day on Thu

OVERNIGHT U.S. STOCK MOVERS

Allergan (AGN +3.53%) dropped 22% in pre-market trading after the U.S. Treasury Department said it will introduce regulations to make it more difficult to engage in a tax strategy known as "earnings stripping," which enables U.S. subsidiaries to curb their tax bills as interest payments to their foreign parent companies are tax deductible.

Tesla (TSLA +3.96%) slipped 3% in pre-market trading after it reported Q1 deliveries of 14,820 vehicles, below consensus of 16,000.

Fifth Third Bancorp (FITB -0.30%) was downgraded to 'Market Perform' from 'Outperform' at BMO Capital Markets.

Hormel Foods (HRL -0.82%) was downgraded to 'Underweight' from 'Hold' at BB&T Capital Markets.

Northrop Grumman (NOC +0.43%) was rated a new 'Buy' at Guggenheim with a price target of $226.

General Dynamics (GD -0.49%) was rated a new 'Buy' at Guggenheim with a price target of $153.

Raytheon (RTN +0.80%) was rated a new 'Buy' at Guggenheim with a price target of $144.

Disney (DIS -0.39%) dropped 2% in pre-market trading after COO Thomas Staggs said he will step down next month.

Starbucks (SBUX -1.26%) was rated a new 'Buy' at Evercore ISI.

National Instruments (NATI -0.37%) slumped 10% in after-hours trading after it lowered guidance on Q1 adjusted EPS to 14 cents-15 cents, well below consensus of 23 cents.

Dominion Resources (D -1.07%) lost over 1% in after-hours trading after it announced a 10.2 million share secondary stock offering.

United Continental Holdings ({=UAL said it had reached tentative agreements on new contracts with its nearly 30,000 International Association of Machinists & Aerospace Workers (IAM) represented employees.

Dunkin' Brands (DNKN -0.19%) fell 2% in after-hours trading after it was initiated with a 'Sell" at Evercore ISI with a price target of $39.

Parsley Energy (PE -1.27%) dropped over 1% in after-hours trading after it announced a 16 million share offering of Class A common stock.

MARKET COMMENTS

June E-mini S&Ps (ESM16 -0.66%) this morning are down -16.00 points (-0.78%). Monday's closes: S&P 500 -0.32%, Dow Jones -0.31%, Nasdaq-0.45%. The S&P 500 on Monday closed lower on weakness in energy producers after the price of crude oil fell to a 1-month low and on hawkish comments from Boston Fed President Rosengren who said that predictions of just one interest-rate hike before Dec 31 are "unduly pessimistic." Stocks were also undercut by -0.8% decline in U.S. Feb factory orders ex-transportation, weaker than expectations of -0.5%.

June 10-year T-note prices (ZNM16 +0.31%) this morning are up +15 ticks at a 5-week high. Monday's closes: TYM6 +5.50, FVM6 +2.75. Jun T-notes Monday climbed to a 1-month high on the weaker-than-expected U.S. Feb factory orders report ex-transporation of -0.8% and on carryover support from a rally in German bunds to a 1-month high after ECB Executive Board member Praet said that the ECB will continue to act "forcefully" if needed to counter the risk of low inflation in the Eurozone becoming entrenched.

The dollar index (DXY00 +0.28%) this morning is up +0.197 (+0.21%). EUR/USD (^EURUSD) is down -0.0029 (-0.25%). USD/JPY (^USDJPY) is down-1.02 (-0.92%) at a 17-month low. Monday's closes: Dollar Index -0.109 (-0.12%), EUR/USD unch, USD/JPY -0.35 (-0318%). The dollar index in Monday closed lower on strength in the yen as USD/JPY fell to a 2-week low and on the weaker-than-expected decline in U.S. Feb factory orders ex-transportation.

May WTI crude oil (CLK16 +0.08%) is down -8 cents (-0.22%) at a fresh 1-month low. May gasoline (RBK16 +0.80%) is up +0.0096 (+0.70%). Monday's closes: CLK6 -1.33 (-3.62%), RBK6 -0.0256 (-1.83%). May crude oil and gasoline on Monday closed lower with May crude at a 1-month low. Crude oil prices saw continued weakness from reduced optimism about an OPEC oil production freeze after Saudi Arabia's deputy crown prince last Friday said that Saudi Arabia will not agree to freeze production at the upcoming April 17 meeting in Doha if Iran does not agree as well.

GLOBAL EVENT CALENDAR04/05/2016

US 0100 ET Chicago Fed President Charles Evans speaks on the economy and monetary policy at the Credit Suisse Asian Investment Conference in Hong Kong.
  0830 ET Feb trade balance expected -$46.2 billion, Jan -$45.68 billion.
  0945 ET Final-Mar Markit services PMI expected +0.2 to 51.2, prelim-Mar +1.3 to 51.0. Final-Mar Markit composite PMI, prelim-Mar +1.1 to 51.1.
  1000 ET Mar ISM non-manufacturing PMI expected +0.8 to 54.2, Feb -0.1 to 53.4.
  1000 ET Feb JOLTS job openings expected -53,000 to 5.488 million, Jan +260,000 to 5.541 million.
GER 0200 ET German Feb factory orders expected +0.3% m/m and +2.2% y/y, Jan -0.1% m/m and +1.1% y/y.
  0355 ET Revised German Mar Markit services PMI, preliminary +0.2 to 55.5.
EUR 0400 ET Revised Eurozone Mar Markit composite PMI, preliminary +0.7 to 53.7.
  0500 ET Eurozone Feb retail sales expected unch m/m and +1.9% y/y, Jan +0.4% m/m and +2.0% y/y.
UK 0430 ET UK Mar Markit/CIPS services PMI expected +0.8 to 53.5, Feb 52.7.
  1901 ET UK Mar BRC shop price index, Feb -2.0% y/y.

U.S. STOCK CALENDAR04/05/2016

Company Ticker Time Event Description Period Estimate
Darden Restaurants Inc DRI US Bef-mkt Q3 2016 Earnings Release Q3 2016 1.199
Walgreens Boots Alliance Inc WBA US 7:00 Q2 2016 Earnings Release Q2 2016 1.28
Walgreens Boots Alliance Inc WBA US 8:30 Q2 2016 Earnings Call Q2 2016  
Darden Restaurants Inc DRI US 8:30 Q3 2016 Earnings Call Q3 2016  
NVIDIA Corp NVDA US 14:30 Investor Day Y 2016  
First Solar Inc FSLR US   Analyst Meeting Y 2016