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Morning Call 1/8

|Includes: AL, ASGN, BOMN, CAT, CTXS, DBD, EA, ESNT, Grubhub Inc. (GRUB), H, QCOM, RDN, SF
Summary

News.

Earnings.

Conference calls.

Barchart Morning Call

Barchart.comMon Jan 8, 6:44AM CST

OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 -0.14%) this morning are down -0.11% on profit-taking as they fell back from a new record nearest-futures high posted in overnight trade. European stocks are up +0.26% at a 1-3/4 month high on increased optimism in the European economic outlook. Eurozone Dec economic confidence rose +1.4 to a 17-year high of 116.0 and the Eurozone Dec business climate indicator rose to its highest (1.66) since the data series began in 1985. Asian stocks settled higher: Japan closed for holiday, Hong Kong +0.28%, China +0.52%, Taiwan +0.33%, Australia +0.13%, Singapore +0.65%, South Korea +0.70%, India +0.58%. China's Shanghai Composite rose to a 1-1/2 month high, led by a rally in energy stocks and airlines, after the Chinese government said it would support mergers in the coal sector and would give airlines more freedom in setting fares.

The dollar index (DXY00 +0.34%) is up +0.34% after San Francisco Fed President Williams said three Fed rate hikes this year "makes sense to me." EUR/USD (^EURUSD) is down -0.34% at a 1-week low. USD/JPY (^USDJPY) is up +0.04% at a 2-week high as the rally in global equity markets curbs safe-haven demand for the yen.

Mar 10-year T-note prices (ZNH18 +0.06%) are up +2 ticks.

San Francisco Fed President Williams said, "we're in a pretty good situation: the economy is doing great, and I'm not worried about inflation suddenly taking off." He added that three Fed rate hikes this year "makes sense to me."

Eurozone Dec economic confidence rose +1.4 to a 17-year high of 116.0, stronger than expectations of +0.2 to 114.8. The Dec business climate indicator rose +0.17 to a record high of 1.66 (data from 1985), stronger than expectations of +0.1 to 1.50.

Eurozone Nov retail sales rose +1.5% m/m stronger than expectations of +1.3% m/m and the biggest increase in 13-months.

The Eurozone Jan Sentix investor confidence rose +1.8 to 32.9, stronger than expectations of +0.2 to 31.3.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) USDA weekly grain export inspections, (2) San Francisco Fed President John Williams (non-voter) participates in a panel discussion on “Should the Fed stick with 2% inflation target or rethink it” at a conference at the Brookings Institute, (3) Nov consumer credit (expected +$18.0 billion, Oct +$20.519 billion), (4) Boston Fed President Eric Rosengren (non-voter) speaks at an inflation targeting conference at the Brookings Institute on “Should the Fed stick with the 2% inflation target or rethink it?”

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences this week: Consumer Electronics Show on Mon, J.P. Morgan Health Care Conference on Mon-Thu, Goldman Sachs Global Energy Conference on Tue, JP Morgan CES Tech Forum on Tue, ICR Conference on Tue, Citi Global TMT West Conference on Tue-Wed.

OVERNIGHT U.S. STOCK MOVERS

GrubHub (GRUB +1.52%) was downgraded to 'Neutral' from 'Outperform' at Wedbush.

Caterpillar (CAT +1.58%) was upgraded to 'Overweight' from 'Neutral' at JPMorgan Chase with a price target of $200.

Hyatt Hotels (H -2.22%) was upgraded to 'Outperform' from 'Market Perform' at Raymond James with a 12-month target price of $82.

Electronic Arts (EA +4.85%) was upgraded to 'Outperform' from 'Market Perform' at BMO Capital Markets with a price target of $130.

Citrix Systems (CTXS +0.86%) was downgraded to 'Equal-Weight' from 'Overweight' at Barclays.

Essent Group Ltd (ESNT +1.01%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $61.

Radian Group (RDN +0.58%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $28.

Stifel Financial (SF +2.69%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $77.

Qualcomm (QCOM +0.67%) confirmed that its processors are affected by the chip vulnerabilities Meltdown and Spectre.

Air Lease (AL +1.02%) said it "expects the overall net impact of the Tax Act to be favorable" and it expects revaluation to result in 40% reduction in its deferred tax liability.

On Assignment (ASGN +1.65%) said it sees a 58 cents to 64 cents a share income tax benefit from the new U.S. tax law as it raised its Q4 adjusted EPS estimate to $1.32-$1.41 from a prior view of 74 cents-77 cents.

Atlantic Investment said it cut its stake in Diebold Nixdorf (DBD +2.66%) to 6.8% from a 9.0% stake reported Nov 15.

Boston Omaha (BOMN -6.78%) jumped 7% in after-hours trading after it announced a recent $10 million equity investment in Dream Finders Holdings LLC.

MARKET COMMENTS

Mar S&P 500 E-mini stock futures (ESH18 -0.14%) this morning are down -3.00 points (-0.11%). Friday's closes: S&P 500 +0.70%, Dow Jones +0.88%, Nasdaq +1.04%. The S&P 500 index on Friday rallied to a new record high and closed higher on the +1.3% increase in U.S. Nov factory orders (stronger than expectations of +1.1% m/m) and on the U.S. Dec average hourly earnings report of +2.5% y/y (right on expectations), which may help boost consumer spending and help sustain the economic expansion. The +148,000 increase in U.S. Dec non-farm payrolls was weaker than expectations of +190,000 and suggested some year-end economic weakness, but was dovish for Fed policy and partially supportive for stocks.

Mar 10-year T-note prices (ZNH18 +0.06%) this morning are up +2 ticks. Friday's closes: TYH8 -5.00, FVH8 -2.25. Mar 10-year T-notes on Friday closed lower on the rally in the S&P 500 to a new record high, which reduced safe-haven demand for T-notes, and on increased inflation expectations after the 10-year T-note breakeven inflation rate jumped to a new 9-1/2 month high.

The dollar index (DXY00 +0.34%) this morning is up +0.311 (+0.34%) . EUR/USD (^EURUSD) is down -0.0041 (-0.34%) at a 1-week low and USD/JPY (^USDJPY) is up +0.05 (+0.04%) at a 2-week high. Friday's closes: Dollar Index +0.096 (+0.10%), EUR/USD -0.0039 (-0.32%), USD/JPY +0.30 (+0.27%). The dollar index on Friday closed higher on weakness in EUR/USD after Eurozone Dec core CPI rose less than expected, which was dovish for ECB monetary policy, and on the rally in the S&P 500 to a new record high, which reduced the safe-haven demand for the yen and sent USD/JPY up to a 1-week high.

Feb crude oil (CLG18 +0.44%) this morning is up +30 cents (+0.49%) and Feb gasoline (RBG18 unch) is +0.0008 (+0.04%). Friday's closes: Feb WTI crude -0.57 (-0.92%), Feb gasoline -0.0209 (-1.16%). Feb crude oil and gasoline on Friday closed lower on a stronger dollar and on long liquidation pressure on speculation that the recent run-up in oil prices to a 2-1/2 year high will lead to increased U.S. shale oil production.

Metals prices this morning are lower with Feb gold (GCG18 -0.12%) -1.3 (-0.10%), Mar silver (SIH18 -0.46%) -0.085(-0.49%) and Mar copper (HGH18 +0.05%) -0.0003 (-0.08%). Friday's closes: Feb gold +0.7 (+0.05%), Mar silver +0.016 (+0.09%), Mar copper -0.0335 (-1.03%). Metals on Friday settled mixed with Mar silver at a 1-1/2 month high and Mar copper at a 2-week low. Metals prices were boosted by the smaller-than-expected increase in U.S. Dec nonfarm payrolls, which was dovish for Fed policy, and by the smaller-than-expected increase in Eurozone Dec core CPI, which was dovish for ECB policy. Metals prices were undercut by a stronger dollar and by the +9,952 MT increase in weekly Shanghai copper inventories to a 5-week high of 160,441 MT.

GLOBAL EVENT CALENDAR01/08/2018

Monday, Jan 8
US 1100 ET USDA weekly grain export inspections.
1335 ET San Francisco Fed President John Williams (non-voter) participates in a panel discussion on Should the Fed stick with 2% inflation target or rethink it at a conference at the Brookings Institute.
1500 ET Nov consumer credit expected +$18.0 billion, Oct +$20.519 billion.
1600 ET Boston Fed President Eric Rosengren (non-voter) speaks at an inflation targeting conference at the Brookings Institute on Should the Fed stick with the 2% inflation target or rethink it?
Tuesday, Jan 9
US 1000 ET Nov JOLTS job openings expected +29,000 to 6.025 million, Oct -181,000 to 5.996 million.
1000 ET Minneapolis Fed President Neel Kashkari (voter) speaks in a moderated Q&A at an event in Wayzata, MN.
1300 ET Treasury auctions $24 billion of 3-year T-notes.

U.S. STOCK CALENDAR01/08/2018

Vantiv Inc VNTV US 9:00 Extraordinary Shareholders Meeting - M&A Vote