Thursday, December 13, 2018

12/13/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Dec E-mini S&Ps (ESZ18 -0.02%) this morning are down -0.10% and European stocks are up +0.02%.  U.S. equity futures and European stocks shed overnight gains as weakness in energy stocks drags the overall market lower.  Jan WTI crude oil (CLF19 -1.33%) is down -1.17% on concern that crude production cuts by OPEC+ will be insufficient to avert a global oil surplus.  Stocks had pushed higher in overnight trade on signs of a thaw in American-China trade relations.  The U.S. Soybean Council reported that China bought 1.5 MMT to 2.0 MMT of U.S. soybeans, its first purchase since both countries began tit-for-tat tariffs.  Mining stocks are higher as reduced trade tensions between the U.S. and China lifts copper prices, with Mar COMEX copper (HGH19 +0.51%) up +0.45% at a 1-week high.  European stocks found support on reduced Brexit concerns after UK Prime Minister May beat back an attempt by members of her Conservative Party to oust her from power with a no-confidence vote.  Gains in European stocks were limited on a report that the ECB will lower its Eurozone 2018 inflation and economic growth forecasts when its policy meeting concludes later this morning.  Asian stocks settled higher: Japan +0.99%, Hong Kong +1.29%, China +1.23%, Taiwan +0.43%, Australia +0.14%, Singapore +0.36%, South Korea +0.35%, India +0.42%.  China's Shanghai Composite and Japan's Nikkei Stock Index both climbed to 1-week highs as woes over global trade tensions ease on signs that the U.S. and China are both willing to compromise to end their trade disputes.

*The dollar index (DXY00 -0.07%) is down -0.07%.  EUR/USD (^EURUSD +0.10%) is up +0.09%.  USD/JPY (^USDJPY +0.14%) is up 0.13%.

*Mar 10-year T-note prices (ZNH19 +0-015) are up +2 ticks.

*German Nov CPI (EU harmonized) was left unrevised at +0.1% m/m and +2.2% y/y.

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**U.S. Stock Preview**

*Key U.S. news today includes: (1) weekly initial unemployment claims (expected -5,000 to 226,000, previous -4,000 to 231,000) and continuing claims (expected +18,000 to 1.649 million, previous -74,000 to 1.631 million), (2) Nov import price index (expected -1.0% m/m and +1.3% y/y, Oct +0.5% m/m and +3.5% y/y) and Nov import price index ex-petroleum (expected -0.1% m/m, Oct +0.2% m/m), (3) Treasury auctions $16 billion of 30-year T-bonds.

*Notable Russell 1000 earnings reports today include: Adobe (consensus $1.88), Costco (1.62).

*U.S. IPO's scheduled to price today: 360 Finance (QFIN), Legacy Housing Corp (LEGH).

*Equity conferences during the remainder of this week: none.




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**Overnight U.S. Stock Movers**

*Five Below (FIVE +1.94%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $122.

*Ultimate Software Group (ULTI +0.06%) was upgraded to 'Outperform' from 'In-line' at Evercore ISI with a price target of $310.

*XPO Logistics (XPO -9.63%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $83.

*Procter & Gamble (PG +0.13%) was upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch with a price target of $108.

*Oxford Industries (OXM +1.20%) dropped nearly 10% in after-hours trading after it reported Q3 net sales of $233.7 million, weaker consensus of $243 million, and then forecast full-year adjusted EPS of $4.20 to $4.35, well below consensus of $4.60.

*Ryder System (R +0.10%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $63.

*Tailored Brands (TLRD +1.51%) sank 24% in after-hours trading after it reported Q3 net sales of $812.7 million, weaker than consensus of $819.5 million, and then forecast full-year adjusted EPS of $2.30 to $2.35, the midpoint below consensus of $2.35.

*Hannon Armstrong Sustainable Infrastructure Capital (HASI -0.65%) fell 4% in after-hours trading after it announced it will sell 5 million shares of its common stock in an underwritten public offering.

*Echo Global Logistics (ECHO -2.07%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $28.

*Applied Genetic Technologies (AGTC +7.36%) plunged more than 32% in after-hours trading after it said it saw no clinical activity in its XLRS clinical study in the treatment of Retinoschisis.

*Limelight Networks (LLNW +1.26%) tumbled 17% in after-hours trading after it forecast 2018 adjusted EPS of 15-cents to 20 cents, below consensus of 21 cents, and forecast 2018 revenue of $195 million to $196 million, weaker than consensus of $202.5 million.
 


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**Market Comments**

*Dec S&P 500 E-minis (ESZ18 -0.02%) this morning are down -2.75 points (-0.10%).  Wednesday's closes: S&P 500 +0.54%, Dow Jones +0.64%, Nasdaq 100 +0.89%.  The S&P 500 on Wednesday closed higher on carry-over support from a sharp rally in European stocks after UK Prime Minister May survived a party leadership vote.  Stocks were also boosted by optimism about the outlook for U.S.-China trade after the CFO of Huawei Technologies was granted bail in Canada and as President Trump said he would consider intervening in the case if it helps get a trade deal with China.

*Mar 10-year T-notes (ZNH19 +0-015) this morning are up +2 ticks.  Wednesday's closes: TYH9 -6.00, FVH9 -3.00.  Mar 10-year T-notes on Wednesday closed lower on the sharp rally in stocks that reduced safe-haven demand for T-notes, and on weak demand for the Treasury's $24 billion auction of 10-year T-notes that had a 2.35 bid-to-cover ratio, below the 12-auction average of 2.51. 

*The dollar index (DXY00 -0.07%) this morning is down -0.064 (-0.07%), EUR/USD (^EURUSD +0.10%) is up +0.0010 (+0.09%), and USD/JPY (^USDJPY +0.14%) is up +0.15 (+0.13%).  Wednesday's closes: Dollar Index +0.254 (+0.26%), EUR/USD +0.0052 (+0.46%), USD/JPY -0.09 (-0.08%).  The dollar index on Wednesday closed lower on strength in GBP/USD which rose +1.14% after UK Prime Minister May survived a party leadership vote in Parliament.  There was also strength in EUR/USD after Eurozone Oct industrial production rose +0.2% m/m, stronger than expectations of +0.1% m/m.

*Metals prices this morning are mixed with Feb gold (GCG19 -0.24%) -3.7 (-0.30%), Mar silver (SIH19 -0.44%) -0.071 (-0.48%), and Mar copper (HGH19 +0.51%) +0.013 (+0.45%) at a 1-week high.  Wednesday's closes: Feb Comex gold (GCG19) on Wednesday closed up +2.8 (+0.22%) and Mar Comex silver (SIH19) closed up +0.223 (+1.52%).  Metals prices moved higher Wednesday due to a weaker dollar.  Gold prices also have support from the recent stock market volatility that has boosted demand for gold as a store of wealth as long gold positions in ETFs rose to a 4-1/4 month high Tuesday.  Mar silver posted a 1-month high Wednesday on optimism for the U.S.-China trade outlook after the CFO of Huawei Technologies was granted bail in Canada and President Trump said he would consider intervening in the case if it helps get a trade deal with China.  A slightly stronger-than-expected Eurozone Oct industrial production report of +0.2% m/m (vs expectations of +0.1% m/m) on Wednesday also gave silver prices a lift on signs of stronger demand for industrial metals.

*Jan WTI crude oil prices (CLF19 -1.33%) this morning are down -60 cents (-1.17%( and Jan gasoline (RBF19 -0.73%) is -0.63 (-0.44%).  Wednesday's closes: Jan WTI crude oil (CLF19) on Wednesday closed down by -$0.50 per barrel (-0.97%) and Feb Brent crude (CBG19) closed down -$0.05 (-0.08%).  Jan RBOB gasoline (RBF19) closed down by -1.94 cents per gallon (-1.35%).  Crude prices moved lower Wednesday after weekly EIA crude inventories fell -1.21 million bbl, a smaller decline than expectations of -3.5 million bbl, and after crude supplies at Cushing, the delivery point of WTI futures, rose +1.15 million bbl to an 11-month high.  Crude prices fell further in afternoon trade on signs of unrest within OPEC after Iran's Oil Minister said "serious political disagreements" exist within OPEC.  A weaker dollar on Wednesday limited losses in the energy complex.




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