Tue Dec 16 2014
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Live Index – Tue, 16 Dec 2014 Premarket

PREMARKET WORLD NEWS

March E-mini S&Ps (ESH15 -0.67%) this morning are down -0.18% and European stocks are down -0.35% at a 1-3/4 month low on Chinese economic concerns after a gauge of Chinese manufacturing activity contracted for the first time in 7 months. Losses were limited after Eurozone Dec manufacturing activity expanded at the fastest pace in 5 months and after a gauge of German investor expectations climbed at the fastest pace in 8 months. The Russian ruble plunged to a record low of 73.8238 per dollar even after the Bank of Russia unexpectedly raised its key interest rate to 17.0% from 10.5% as the plunge in oil prices exacerbates the collapse in the ruble. Asian stocks closed mostly lower: Japan -2.01%, Hong Kong -1.55%, China +2.68%, Taiwan -0.39%, Australia -0.65%, Singapore -2.40%, South Korea -0.75%, India -1.97%. Japan’s Nikkei Stock Index fell to a 1-month low after exporters sold-off as the yen rallied to a 4-week high against the dollar, which reduces the earnings prospects of exporters. Chinese stocks bucked the trend and closed higher on speculation economic weakness will prompt the government into expanding stimulus. Commodity prices are weaker. Jan crude oil (CLF15 -2.99%) is down -3.02% at a 5-1/2 year low as the rout in crude prices continues. Jan gasoline (RBF15 -2.91%) is down -3.10% % at a 5-1/2 year low. Feb gold (GCG15 +0.60%) is down -0.16%. Mar copper (HGH15 -0.47%) is down -0.56%. Agriculture prices are mostly lower. The dollar index (DXY00 -0.73%) is down -0.77% at a 2-week low. EUR/USD (^EURUSD) is up +0.90% at a 2-1/2 week high. USD/JPY (^USDJPY) is down -1.80% at a 4-week low. Mar T-note prices (ZNH15 +0.64%) are up +20.5 ticks at a 2-month high as the plunge in crude oil to a 5-1/2 year low undercuts inflation expectations along with carry-over support from a rally in German bunds as the 10-year bund yield sank to a record low of 0.566%.

The China Dec HSBC manufacturing PMI fell -0.5 to 49.5, a bigger decline than expectations of -0.2 to 49.8 and the slowest pace of expansion in 7 months.

The German Dec ZEW survey expectations of economic growth rose +23.4 to 34.9, a much larger increase than expectations of +8.5 to 20.0 and the highest in 8 months. The Dec ZEW survey current situation climbed +6.7 to 10.0, a larger increase than expectation sf +1.7 to 5.0

The Eurozone Dec Markit manufacturing PMI rose +0.7 to 50.8, more than expectations of +0.4 to 50.5 and the fastest pace of expansion in 5 months. The Eurozone Dec composite PMI rose +0.6 to 51.7, a larger increase than expectations of +0.4 to 51.5.

Bundesbank President Weidmann said there’s no need for the ECB to expand monetary stimulus into sovereign-bond buying even if slumping oil prices cause deflation, saying “such a development initially requires no monetary response, as long as no second round effects are to be seen.”

UK Nov CPI unexpectedly fell -0.3% m/m, weaker than expectations of unch m/m and matched July’s decline as the biggest monthly fall in 10 months. On an annual basis, Nov CPI rose +1.0% y/y, less than expectations of +1.2% y/y and the slowest pace of increase in 12-1/3 years. Nov core CPI rose +1.2%, less than expectations of +1.5% y/y and the smallest increase in 5-3/4 years.

U.S. STOCK PREVIEW

The 2-day FOMC meeting begins today.  The market is expecting today’s Nov housing starts report to show an increase of +3.1% to 1.040 million units, more than reversing October’s -2.8% m/m decline to 1.009 million units.  There are 3 the Russell 1000 companies that report earnings today:  Navistar (consensus $ 0.0), FactSet (1.32), Darden Restaurants (0.27).  Equity conferences this week include: Macquarie Mobile Corporate Day on Tue, and Sanford C. Bernstein Technology Innovation Summit on Tue-Wed.

PREMARKET U.S. STOCKS

Microsoft (MSFT -0.60%) was downgraded to ‘Underperform’ from ‘Neutral’ at BofA/Merrill Lynch.

Hess Corp. (HES -1.62%) and EOG Resources (EOG -1.19%) were both downgraded to ‘Equal Weight’ from ‘Overweight’ at Morgan Stanley.

According to The New York Times, thw Royal Bank of Scotland (RBS -2.75%) and Lloyds (LYG -1.28%) failed a stress test performed by the Bank of England.

Dollar Tree (DLTR +0.68%) was downgraded to ‘Hold’ from ‘Buy’ at Deutsche Bank.

Macerich (MAC -0.37%) was downgraded to ‘Neutral’ from ‘Buy’ at Citigroup.

Autodesk (ADSK -1.14%) was downgraded to ‘Underperform’ from ‘Neutral’ at BofA/Merrill Lynch.

Bloomberg reported that Olam (OLMIY -1.98%) will acquire Archer Daniel’s (ADM -0.04%) cocoa business for $ 1.3 billion.

Boeing (BA +1.08%) climbed 2.7% in pre-market trading after it raised its dividend 25% and authorized a $ 12 billion share repurchase plan.

Goldman Sachs (GS -1.74%) was initiated with a ‘Buy’ at Guggenheim with a price target of $ 215.

Bank of America (BAC -1.63%) was initiated with a ‘Buy’ at Guggenheim with a price target of $ 20.

VeriFone (PAY +0.15%) reported Q4 EPS of 44 cents, higher than consensus of 41 cents.

MARKET COMMENTS

Mar E-mini S&Ps (ESH15 -0.67%) this morning are down -3.50 points (-0.18%). The S&P 500 index on Monday slipped to a 1-1/2 month low and closed lower: S&P 500 -0.63%, Dow Jones -0.58%, Nasdaq -1.00%. Bearish factors included (1) weakness in energy producers after crude oil slumped to a 5-1/2 year low, and (2) the unexpected -13.24 point drop in the Dec Empire manufacturing index to -3.58, weaker than expectations of +2.24 to 12.40 and the slowest pace of expansion in 23 months. A positive for stocks was the strong +1.3% increase in U.S. Nov industrial production, the largest increase in 4-1/2 years.

Mar 10-year T-notes (ZNH15 +0.64%) this morning are up +20.5 ticks at a fresh 2-month high. Mar 10-year T-note futures prices on Monday retreated from a 2-month high and closed lower: TYH5 -9.50, FVH5 -8.00. Bearish factors included (1) the stronger-than-expected U.S. Nov industrial production, and (2) long liquidation pressures ahead of the Tue/Wed FOMC meeting. Supportive factors included (1) the plunge in crude oil to a 5-1/2 year low, which prompted the 10-year breakeven inflation expectations rate to tumble to a 4-1/4 year low, and (2) increased safe-haven demand for Treasuries after the S&P 500 fell to a 1-1/2 month low.

The dollar index (DXY00 -0.73%) this morning is down -0.679 (-0.77%) at a 2-week low. EUR/USD (^EURUSD) is up +0.0112 (+0.90%) at a 2-1/2 week high. USD/JPY (^USDJPY) is down -2.12 (-1.80%) at a 4-week low. The dollar index on Monday closed higher. Closes: Dollar index +0.097 (+0.11%), EUR/USD -0.00251 (-0.10%), USD/JPY -0.923 (-0.78%). Bullish factors included (1) weakness in emerging market currencies as the Brazilian real fell to a 9-3/4 year low and the Russian ruble plunged to a record low against the dollar, and (2) speculation the FOMC will prepare the markets for an interest rate hike with a hawkish post-FOMC meeting statement on Wednesday.

Jan WTI crude oil (CLF15 -2.99%) this morning is down -$ 1.69 a barrel (-3.02%) at a new 5-1/2 year low and Jan gasoline (RBF15 -2.91%) is down -0.0488 (-3.10%) at a 5-1/2 year low. Jan crude and Jan gasoline prices Monday slumped to 5-1/2 year lows and closed lower. Closes: CLF5 -1.90 (-3.29%), RBF5 -0.0209 (-1.31%). Bearish factors included (1) a stronger dollar, and (2) comments from UAE Energy Minister Al-Mazrouei that OPEC will stand by its decision not to cut oil output even if crude prices fall as low as $ 40 a barrel and will wait at least three months before considering an emergency meeting.

GLOBAL EVENT CALENDAR12/16/2014
US0830 ETNov housing starts expected +3.1% to 1.040 million, Oct -2.8% m/m to 1.009 million. Nov building permits expected -2.5% to 1.065 million, Oct +5.9% to 1.092 million.
0945 ETPreliminary Dec U.S. Markit manufacturing PMI expected +0.7 to 55.5, Nov -1.1 to 54.8.
1030 ETFOMC begins 2-day policy meeting.
EUR0200 ETEurozone Nov new car registrations, Oct +6.5% y/y.
0400 ETEurozone Dec Markit manufacturing PMI expected +0.4 to 50.5, Nov 50.1. Dec composite PMI expected +0.4 to 51.5, Nov 51.1.
GER0330 ETGerman Dec Markit/BME manufacturing PMI expected +0.8 to 50.3, Nov 49.5. Dec Market services PMI expected +0.4 to 52.5, Nov 52.1.
0500 ETGerman Dec ZEW survey expectations of economic growth expected +8.5 to 20.0, Nov 11.5. Dec ZEW current situation expected +1.7 to 5.0, Nov 3.3.
UK0430 ETUK Nov CPI expected unch m/m and +1.2% y/y, Oct +0.1% m/m and +1.3% y/y. Nov core CPI expected +1.5% y/y, Oct +1.5% y/y.
0430 ETUK Nov RPI expected unch m/m and +2.2% y/y, Oct unch m/m and +2.3% y/y. Nov RPI ex-mortgage interest payments expected +2.3% y/y, Oct +2.4% y/y.
0430 ETUK Nov PPI input prices expected -1.5% m/m and -9.2% y/y, Oct -1.5% m/m and -8.4% y/y.
0430 ETUK Nov PPI output prices expected -0.3% m/m and -0.6% y/y, Oct -0.3% m/m and -0.5% y/y. Nov PPI output core expected unch m/m and +1.0% y/y, Oct +0.1% m/m and +0.9% y/y.
0430 ETUK Oct ONS house prices expected +11.4% y/y, Sep +12.1% y/y.
JPN1850 ETJapan Nov trade balance expected -992.0 billion yen, Oct -736.9 billion yen. Nov exports expected +7.0% y/y, Oct +9.6% y/y. Nov imports expected +1.7% y/y, Oct +3.1% y/y.
U.S. STOCK CALENDAR12/16/2014
CompanyTickerTimeEvent DescriptionPeriodEstimate
Navistar International CorpNAV USBef-mktQ4 2014 Earnings ReleaseQ4 20140.003
FactSet Research Systems IncFDS US7:00Q1 2015 Earnings ReleaseQ1 20151.319
CVS Health CorpCVS US8:00Analyst DayY 2014
3M CoMMM US8:00Q4 2015 Guidance CallQ4 2015
Unum GroupUNM US8:30Investor MeetingY 2014
Navistar International CorpNAV US9:00Q4 2014 Earnings CallQ4 2014
Liberty Property TrustLPT US10:00Q4 2015 Guidance CallQ4 2015
T-Mobile US IncTMUS US10:30Un-Carrier Event
FactSet Research Systems IncFDS US11:00Q1 2015 Earnings CallQ1 2015
AECOM Technology CorpACM US11:00Analyst MeetingY 2014
Amdocs LtdDOX US11:30Analyst & Investor DayY 2014
Colfax CorpCFX US13:00Investor MeetingY 2014
General Electric CoGE US15:00Investor MeetingY 2014
FactSet Research Systems IncFDS US15:00Annual General Meeting
Dow Chemical Co/TheDOW US17:00ITC Announce’s Judge’s Findings on Organik vs. Dow Chemical Trade Secret Case
Darden Restaurants IncDRI US17:00Q2 2015 Earnings CallQ2 2015
Darden Restaurants IncDRI USAft-mktQ2 2015 Earnings ReleaseQ2 20150.273
Ameren CorpAEE USInvestor MeetingY 2014
Hudson City Bancorp IncHCBK USAnnual General MeetingY 2014

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