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Morning Call 3/15

|Includes: ABUS, BKS, BNFT, BW, CTRP, CVTI, DDD, ESIO, FRSH, INO, NDLS, SMTC, TACO, TLRD, WSM, Exxon Mobil Corporation (XOM), ZEN

Summary

News.

Earnings.

Conference calls.

Morning Call: Global Stocks Mixed; Jun E-Mini S\&Ps Down -0.05%; German 10-Year Bund Yield Falls To A 1-1/2 Month Low Of 0.574%.

Barchart - 4 minutes ago

Overnight Markets And News

Jun E-mini S&Ps this morning (ESM18 +0.06%) are down slightly by -0.05% on trade concerns after incoming White House economic adviser Kudlow said the U.S. will take a tougher line on trade with China. European stocks are up +0.18 on reduced interest rate concerns along with upbeat comments from ECB Governing Council member Villeroy de Galhau. The 10-year German bund yield fell to a 1-1/2 month low of 0.574% and ECB Governing Council member Villeroy de Galhau said "we see a welcome alignment of stars against a background of robust recovery across Europe and gradual progress on inflation." Asian stocks settled mixed: Japan +0.12%, Hong Kong +0.34%, China -0.01%, Taiwan -0.18%, Australia -0.24%, Singapore -0.61%, South Korea +0.23%, India -0.44%. Chinese stocks fell back on trade concerns after incoming White House economic adviser Kudlow signaled the Trump administration was readying a larger round of tariffs against Chinese imports when he said China has earned a "tough response" for not playing by the rules of trade.

The dollar index (DXY00 +0.28%) is up +0.08% after incoming White House economic adviser Kudlow said, "I have no reason to believe that President Trump opposes a sound and stable dollar." EUR/USD (^EURUSD -0.32%) is down -0.04%. USD/JPY (^USDJPY -0.33%) is down -0.39% at a 1-week low.

Jun 10-year T-note prices (ZNM18 +0-025) are up +2 ticks at a 1-month high after Wednesday's weak U.S. Feb retail sales data bolstered speculation the FOMC will not signal a faster pace of interest rate increases when it meets next week.

ECB Governing Council member Villeroy de Galhau said "we see a welcome alignment of stars against a background of robust recovery across Europe and gradual progress on inflation," although any escalation in protectionism would be a "real risk" to the global economy.

EU Feb new car registrations rose +4.3% y/y to 1,125,397 million units and year-to-date are up +5.8% y/y to 2,378,965.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected -3,000 to 228,000, previous +21,000 to 231,000) and continuing claims (expected +33,000 to 1.903 million, previous -64,000 to 1.870 million), (2) Mar Empire manufacturing index (expected +1.9 to 15.0, Feb -4.6 to 13.1), (3) Mar Philadelphia Fed business outlook index (expected -2.8 to 23.0, Feb +3.6 to 25.8), (4) Feb import price index (expected +0.2% m/m and +3.5% y/y, Jan +1.0% m/m and +3.6% y/y) and Feb import prices ex petroleum (expected +0.2% m/m, Jan +0.5% m/m), (5) USDA weekly Export Sales, (6) Mar NAHB housing market index (expected unch at 72, Feb unch at 72).

Notable Russell 1000 earnings reports today include: Adobe Systems (consensus $1.44), Dollar General (1.48), Broadcom (5.04), Jabil (0.62), Ulta Beauty (2.78).

U.S. IPO's scheduled to price today: Zscaler Inc (NASDAQ:ZS).

Equity conferences this week: Enterprise Connect on Mon-Thu, Barclays Global Healthcare Conference on Tue-Thu, JP Morgan Aviation, Transportation & Industrials Conference on Tue-Thu.

Market Comments

Jun S&P 500 E-mini stock futures (ESM18 +0.06%) this morning are down -1.25 points (-0.05%). Wednesday's closes: S&P 500 -0.57%, Dow Jones -1.00%, Nasdaq -0.08%. The S&P 500 on Wednesday closed lower on concern about consumer spending after the U.S. Feb retail sales of -0.1% and +0.2% ex autos, which was weaker than expectations of +0.3% and +0.4% ex autos. There was also continued concern about the Trump administration's trade policies with the upcoming U.S. retailiation package for Chinese IP violations. U.S. stocks received some support from the Chinese Feb industrial production report of +7.2% year-to-date, stronger than expectations of +6.2% year-to-date and the fastest pace in 3 years.

Jun 10-year T-note prices (ZNM18 +0-025) this morning are up +2 ticks at a 1-month high. Wednesday's closes: TYM8 +7.00, FVM8 +2.25. Jun 10-year T-notes on Wednesday climbed to a 1-1/2 week high and settled higher on the weaker-than-expected U.S. Feb retail sales report and on reduced inflation expectations after the 10-year T-note breakeven inflation rate fell to a 4-week low.

The dollar index (DXY00 +0.28%)this morning is up +0.071 (+0.08%). EUR/USD (^EURUSD -0.32%) is down -0.0005 (-0.04%) and USD/JPY (^USDJPY -0.33%) is down -0.41 (-0.39%) at a 1-week low. Wednesday's closes: Dollar Index +0.040 (+0.04%), EUR/USD -0.0022 (-0.18%), USD/JPY -0.26 (-0.24%). The dollar index on Wednesday closed higher on the +2.5% y/y increase in U.S. Feb PPI ex food & energy, the largest year-on-year increase in 6 years, which bolsters the case for continued Fed rate hikes. There was also weakness in EUR/USD on dovish comments from ECB President Draghi who said monetary policy will remain patient, persistent and prudent as "we still need to see further evidence that inflation dynamics are moving in the right direction."

Apr crude oil (CLJ18 -0.08%) this morning is up +11 cents (+0.18%) and Apr gasoline (RBJ18 -0.39%) is -0.0062 (-0.32%). Wednesday's closes: Apr WTI crude +0.25 (+0.41%), Apr gasoline +0.0380 (+2.01%). Apr crude oil and gasoline on Wednesday closed higher on the -6.27 million bbl decline in weekly EIA gasoline supplies (more than expectations of -1.1 million bbl) and the increase in the crack spread to a 2-week high, which gives refineries incentive to purchase crude oil to refine into gasoline. Crude oil prices were undercut by the +0.1% increase in U.S. crude production the week of Mar 9 to a record 10.381 million bpd and by the +5.02 million bbl increase in weekly EIA crude inventories, more than double expectations of +2.5 million bbl.

Metals prices this morning are weaker with Apr gold (GCJ18 -0.61%) -3.0 (-0.33%), May silver (SIK18 -0.92%) -0.047 (-0.28%), and May copper (HGK18 -1.49%) -0.024 (-0.74%). Wednesday's closes: Apr gold -1.5 (-0.11%), May silver -0.090 (-0.54%), May copper ({=HGK18=}) +0.0205 (+0.65%). Metals on Wednesday settled mixed with May copper at a 2-week high. Precious metals prices were undercut by a stronger dollar and by reduced demand for gold as an inflation hedge after the 10-year T-note breakeven inflation rate fell to a 4-week low. Copper prices were supported by the stronger-than-expected China Feb industrial production report, which was supportive for copper demand.

Overnight U.S. Stock Movers

Exxon Mobil (XOM +1.81%) was upgraded to 'Buy' from 'Reduce' at HSBC with a price target of $82.50.

Williams-Sonoma (WSM +4.04%) rose nearly 6% in after-hours trading after it reported Q4 comparable sales were up +5.4%, better than consensus of +3.3%.

Zendesk (ZEN -3.80%) fell over 2% in after-hours trading after it proposed a private offering of $500 million of convertible senior notes due 2023.

CTrip (CTRP -2.34%) slid almost 4% in after-hours trading after it reported Q4 revenue of $987.5 million, below consensus of $1 billion.

Semtech (SMTC +14.76%) climbed almost 8% in after-hours trading after it reported Q4 adjusted EPS of 42 cents, higher than consensus of 41 cents.

Electro Scientific Industries (ESIO +6.05%) was rated a new 'Buy' at Stifel with a price target of $36.

Covenant Transportation Group (CVTI +18.83%) rallied nearly 8% in after-hours trading after it projected Q1 EPS at 17 cents to 23 cents, well above consensus of 8 cents.

Benefitfocus (BNFT -12.30%) tumbled 13% in after-hours trading after it forecast Q1 revenue of $57.5 million to $59.5 million, well below consensus of $68.3 million.

Tailored Brands (TLRD -4.52%) rallied 7% in after-hours trading after it reported Q4 net sales of $859.9 million, above consensus of $810 million.

Del Taco Restaurants (TACO -11.57%) dropped over 5% in after-hours trading after it reported Q4 revenue of $146.5 million, below consensus of $147.6 million.

Arbutus Biopharma (ABUS -1.77%) jumped 8% in after-hours trading after it reported a 2017 adjusted loss of -$1.09 a share, narrower than consensus of -$1.24 a share.

3D Systems (DDD +10.53%) climbed nearly 6% in after-hours trading after it reported Q4 gross margin of +48.2%, better than consensus of +47.9%.

Noodles & Co (NDLS +17.89%) gained almost 6% in after-hours trading after it reported Q4 comparable sales fell -0.9%, a smaller decline than expectations of -2.7%.

Papa Murphy's Holding (FRSH +5.61%) climbed over 10% in after-hours trading after it forecast 2018 same-store sales growth of flat to a low single digit increase, better than consensus of down -1.2%.

Babcock & Wilcox Enterprises (BW +0.89%) slid 3% in after-hours trading after holder Viex Capital said it reduced its stake in the company to 4.6% from 6.4%.

Inovio Pharmaceuticals (INO +5.15%) rose almost 5% in after-hours trading after it reported a Q4 loss of -24 cents a share, narrower than consensus of -30 cents a share.

Barnes & Noble (BKS +5.63%) jumped 7% in after-hours trading after it forecast 2019 Ebitda of $175 million to $200 million, stronger than consensus of $145.3 million.