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Morning Call 9/19




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Barchart Morning Call

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Dec E-mini S&Ps (ESZ17 +0.05%) this morning are up +0.10% and European stocks are up +0.03% after a gauge of German investor confidence rose for the first time in 4 months. Also, energy stocks are higher with Nov WTI crude oil (CLX17 +0.58%) up +0.93% after Iraqi Oil Minister Jabbar al-Luaibi said OPEC should cut its oil output by an additional 1% to help rebalance the global oil market. Gains in stocks were limited ahead of the start of the 2-day FOMC meeting today where the Fed is expected to set out a plan to reduce its $4.5 trillion balance sheet. Asian stocks settled mostly lower: Japan +1.96%, Hong Kong -0.38%, China -0.18%, Taiwan -0.52%, Australia -0.12%, Singapore -0.49%, South Korea -0.13%, India -0.07%. China's Shanghai Composite fell to a 2-week low as exporter stocks fell on trade concerns after U.S. Trade Representative Lighthizer said China's economic model represents an "unprecedented" threat to the world trading system that can't be addressed under current global rules. Japan's Nikkei Stock Index surged to a 2-year high, led by a rally in exporter stocks, after USD/JPY climbed to a fresh 1-1/2 month high, which improves the earnings prospects of exporters with the weaker yen.

The dollar index (DXY00 -0.20%) is down -0.20%. EUR/USD (^EURUSD) is up +0.32% at a 1-week high on the stronger than expected German Sep ZEW investor confidence. USD/JPY (^USDJPY) is down -0.04%.

Dec 10-year T-note prices (ZNZ17 +0.07%) are up +2 ticks.

The German Sep ZEW survey expectations of economic growth rose +7.0 to 17.0, stronger than expectations of +2.0 to 12.0.


Key U.S. news today includes: (1) Aug housing starts (expected +1.7% to 1.175 million, Jul -4.8% to 1.155 million), (2) Aug import price index (expected +0.4% m/m and +2.2%, July +0.1% m/m and +1.5% y/y), (3) Q2 current account balance (expected -$112.4 billion, Q1 -$116.8 billion), (4) FOMC begins 2-day policy meeting, (5) EIA Weekly Petroleum Status Report.

Notable Russell 1000 earnings reports today include: FedEx (consensus $3.10) Adobe (1.01), Autozone (15.11), Bed Bath Beyond (0.95), Copart (0.31).

U.S. IPO's scheduled to price today: Krystal Biotech (KRYS), Corp (DESP), Celcuity LLC (CELC), Zai Lab (ZLAB), BEST Inc (NYSE:BSTI).

Equity conferences this week: Stephens Bank CEO Forum on Mon-Tue, CECP CEO Investor Forum on Tue, Forum International Supply Chain Expo on Tue, J.P. Morgan U.S. All Stars Conference on Tue, Raymond James North America Equities Conference on Tue, D.A. Davidson Engineering & Construction Conference on Wed, Electronic Design Process Symposium on Thu.


Michael Kors (KORS -0.60%) was upgraded to 'Outperform' from 'Market Perform' at Oppenheimer with a price target of $55.

Tesla (TSLA +1.37%) slid over 1% in pre-market trading after it was initiated with an 'Underperform' at Jeffries with a price target of $280.

Nike (NKE -0.69%) was downgraded to 'Neutral' from 'Positive' at Susquehanna.

Acacia Communications (ACIA +2.57%) was initiated a new 'Buy' at MKM Partners with a 12-month price target of $64.

Walgreens Boots Alliance ({=WBA =}) was initiated a new 'Outperform' at RBC Capital Markets with a 12-month price target of $96

Quintiles IMS Holdings (Q +0.64%) was initiated a new 'Outperform' at RBC Capital Markets with a 12-month price target of $116.

Total System Services (TSS -0.49%) was downgraded to 'Hold' from 'Buy' at Stifel.

Watts Water (WTS +4.53%) was initiated a new 'Buy' at Oppenheimer with a 12-month price target of $72.

Quality Systems (QSII -0.88%) was initiated a new 'Underperform' at RBC Capital Markets with a price target of $12.

Beacon Roofing Supply (BECN +1.15%) slid almost 5% in after-hours trading after it announced an underwritten public offering of $300 million in shares of its common stock.

Mirati Therapeutics (MRTX -3.57%) gained almost 1% in after-hours trading after it was initiated a new 'Outperform' at Oppenheimer with an 18-month price target of $18.

Steelcase (SCS +0.70%) rose almost 4% in after-hours trading after it reported Q2 revenue of $775.6 million, better than consensus of $758.3 million.

Aldeyra Therapeutics (ALDX +2.25%) dropped 12% in after-hours trading after it announced an underwritten public offering of 2.7 million shares of common stock.


Dec S&P 500 E-mini stock futures (ESZ17 +0.05%) this morning are up +2.50 points (+0.10%). Friday's closes: S&P 500 +0.15%, Dow Jones +0.28%, Nasdaq -0.11%. The S&P 500 on Monday climbed to a new record high and closed higher on carry-over support from a rally in European stocks to a 2-month high after the Bundesbank in its monthly report said, “the German economy may continue its path of strong expansion in Q3 of 2017." There was also strength in defense contractor stocks on signs of increased M&A activity after Northrop Grumman agreed to buy Orbital ATK for $7.8 billion. Stocks fell back from their best levels after the U.S. Sep NAHB housing market index fell -3 to 64, weaker than expectations of -1 to 67.

Dec 10-year T-note prices (ZNZ17 +0.07%) this morning are up +2 ticks. Friday's closes: TYZ7 -7.50, FVZ7 -3.25. Dec 10-year T-notes on Monday fell to a 1-month low and closed lower on negative carry-over from an increase in the German 10-year bund yield to a 1-month high and increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 4-month high.

The dollar index (DXY00 -0.20%) this morning is down -0.181 (-0.20%). EUR/USD (^EURUSD) is up +0.0038 (+0.32% at a 1-week high and USD/JPY (^USDJPY) fell back from a new 1-1/2 month high in overnight trade and is down -0.04 (-0.04%). Friday's closes: Dollar Index +0.164 (+0.18), EUR/USD +0.0009 (+0.08%), USD/JPY +0.74 (+0.67%). The dollar index on Monday closed higher on the rally in the S&P 500 to a new all-time high, which reduced safe-haven demand for the yen and sent USD/JPY up to a 1-1/2 month high. The dollar also found support on the rise in 10-year T-note yields to a 1-month high, which improves the dollar's interest rate differentials.

Nov crude oil (CLX17 +0.58%) this morning is up +47 cents (+0.93%) and Nov gasoline (RBX17 +0.28%) is up +0.0064 (+0.40%). Friday's closes: Nov WTI crude -0.09 (-0.18%), Nov gasoline -0.0048 (-0.30%). Nov crude oil and gasoline on Monday closed lower on a stronger dollar and on demand concerns as the refining maintenance season begins, which will reduce refinery demand for crude oil as refiners shut down for maintenance.

Metals prices this morning are higher with Dec gold (GCZ17 +0.02%) up +0.6 (+0.05%), Dec silver (SIZ17 +0.17%) +0.044 (+0.26%) and Dec copper (HGZ17 +0.32%) +0.009 (+0.29%). Friday's closes: Dec gold -14.4 (-1.09%), Dec silver -0.545(-3.08%), Dec copper +0.0200 (+0.68%). Metals on Monday settled mixed with Dec gold at a 2-week low and Dec silver at a 3-week low. Metals prices fell on a stronger dollar and on reduced safe-haven demand after the S&P 500 rose to a new record high. Copper closed higher after LME canceled warrants, a sign of demand, rose by +12,275 MT, the biggest increase in 3-months.


Tuesday, Sep 19
US 0830 ET Aug housing starts expected +1.7% to 1.175 million, Jul -4.8% to 1.155 million. Aug building permits expected -0.8%to 1.220 million, Jul -3.5% to 1.230 million.
0830 ET Aug import price index expected +0.4% m/m and +2.2%, July +0.1% m/m and +1.5% y/y. Aug import price index ex-petroleum expected +0.2%, July unchanged. Aug export price index expected +0.2% m/m, Jul +0.4% m/m and +0.8% y/y.
0830 ET Q2 current account balance expected -$112.4 billion, Q1 -$116.8 billion
1030 ET EIA Weekly Petroleum Status Report.
1030 ET FOMC begins 2-day policy meeting.
Wednesday, Sep 20
US 0700 ET Weekly MBA mortgage applications, previous +9.9% with purchase sub-index +10.9% and refi sub-index +8.9%.
1000 ET Aug existing home sales expected +0.4% to 5.46 million, Jul -1.3% to 5.44 million.
1030 ET EIA weekly Petroleum Status Report.
1400 ET FOMC announces policy decision; no change expected to 1.00%-1.25% fed funds target range but Fed may announce the start date of its balance sheet reduction program.


Name Ticker Time Description Period Estimate
AutoZone Inc AZO US Bef-mkt Q4 2017 Earnings Release Q4 17 15.113
AutoZone Inc AZO US 10:00 Q4 2017 Earnings Call Q4 17
CDW Corp/DE CDW US Annual General Meeting
Ameren Corp AEE US Fixed Income Meeting
Humana Inc HUM US Investors Meeting
Equifax Inc EFX US Investor Meeting
Best Buy Co Inc BBY US 14:00 Investor Day
Bed Bath & Beyond Inc BBBY US Aft-mkt Q2 2018 Earnings Release Q2 18 0.947
Copart Inc CPRT US Aft-mkt Q4 2017 Earnings Release Q4 17 0.308
Adobe Systems Inc ADBE US 16:05 Q3 2017 Earnings Release Q3 17 1.007
FedEx Corp FDX US 16:15 Q1 2018 Earnings Release Q1 18 3.1
Bed Bath & Beyond Inc BBBY US 17:00 Q2 2018 Earnings Call Q2 18
FedEx Corp FDX US 17:00 Q1 2018 Earnings Call Q1 18
Adobe Systems Inc ADBE US 17:00 Q3 2017 Earnings Call Q3 17