Friday, December 21, 2018

12/21/2018 - **Overnight Markets and News**

**Overnight Markets and News**

*Mar E-mini S&Ps (ESH19 -0.38%) this morning are down -0.36% as the threat of a partial shutdown of the U.S. government looms if lawmakers fail to pass a spending bill by midnight tonight.  Lawmakers remain at odds over President Trump's demands for $5 billion for construction of a wall along the U.S.-Mexico border.  European stocks are down -0.49% at a fresh 2-year low as weakness in energy stocks leads the overall market lower.  Feb WTI crude oil (CLG19 -0.92%) is down -0.94% at a 16-3/4 month low as robust global oil supplies amid demand concerns continue to weigh on crude prices.  Asian stocks settled mostly lower: Japan -1.11%, Hong Kong +0.51%, China -0.79%, Taiwan +0.02%, Australia -0.69%, Singapore -0.15%, South Korea +0.09%, India -1.89%.  China's Shanghai Composite fell to a 2-month low and Japan's Nikkei Stock Index slid to a fresh 1-1/4 year low as this week's rout in global equity markets continues.  Chinese stocks failed to garner support on signs the government will boost stimulus to prop up the Chinese economy.  A statement from government leaders at China's annual Economic Work Conference in Beijing said "significant" cuts to taxes and fees will be enacted in 2019 and monetary policy will remain "prudent."

*The dollar index (DXY00 +0.33%) is up +0.29%.  EUR/USD (^EURUSD -0.23%) is down -0.24%.  USD/JPY (^USDJPY -0.07%) is down -0.07%.

*Mar 10-year T-note prices (ZNH19 -0-010) are down -1.5 ticks.

*German Jan GfK consumer confidence was uch at 10.4, stronger than expectations of -0.1 to 10.3.

*UK Dec GfK consumer confidence fell -1 to a nearly 5-1/2 year low of -14, right on expectations.

*Japan Nov national CPI rose +0.8% y/y, right on expectations.  Nov national CPI es fresh food rose +0.9% y/y, weaker than expectations of +1.0% y/y.  Nov national CPI ex fresh food & energy rose +0.3% y/y, weaker than expectations of +0.5% y/y.

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**U.S. Stock Preview**

*Key U.S. news today includes: (1) Q3 GDP (expected unrevised at +3.5% q/q annualized), (2) Nov durable goods orders (expected +1.6% and +0.3% ex transportation, Oct -4.4% and +0.1% ex transportation), (3) Nov personal spending (expected +0.3%, Oct +0.6%) and Nov personal income (expected +0.3%, Oct +0.5%), (4) Nov PCE deflator (expected unch m/m and +1.8% y/y, Oct +0.2% m/m and +2.0% y/y) and Nov core PCE deflator (expected +0.2% m/m and +1.9% y/y, Oct +0.1% m/m and +1.8% y/y), (5) final-Dec University of Michigan U.S. consumer sentiment index (expected unch at 97.5, prelim-Dec unch at 97.5), (6) Dec Kansas City Fed manufacturing activity (expected -2 to 13, Nov +7 to 15).

*Notable Russell 1000 earnings reports today include: CarMax (consensus $0.99).

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

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




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**Overnight U.S. Stock Movers**

*Facebook (FB +0.12%) is down -0.5% in pre-market trading after DZ Bank downgraded it to 'Sell' from 'Hold' with a price target of $115.

*Altria Group (MO -1.87%) was downgraded to 'Sell' from 'Neutral' at Citigroup with a price target of $45.

*NXP Semiconductors NV (NXPI +0.90%) was rated a new 'Overweight' at Piper Jaffray with a price target of $100.

*Applied Materials (AMAT -2.00%) was rated a new 'Buy' at Needham & Co with a price target of $45.

*Cintas (CTAS -3.65%) climbed more than 4% in after-hours trading after it reported Q2 revenue of $1.72 billion, better than consensus of $1.70 billon, and then forecast full-year revenue of $6.87 billion to $6.91 billion, stronger than consensus of $6.84 billion.

*Nike (NKE -2.09%) rallied more than 7% in after-hours trading after it reported Q2 EPS of 52 cents, higher than consensus of 46 cents.

*CyberArk Software Ltd (CYBR -2.39%) rose more than 2% in after-hours trading after it was upgraded to 'Buy' from 'Hold' at Deutsche Bank.

*Gritstone Oncology (GRTS -17.00%) jumped 10% in after-hours trading after the FDA granted FAST TRACK designation for its Granite-001 drug for the treatment of colorectal cancer.

*CalAmp (CAMP -2.31%) dropped 8% in after-hours trading after it reported Q3 adjusted EPS of 25 cents, weaker than consensus of 28 cents, and then forecast Q4 adjusted EPS of 23 cents to 29 cents, below consensus of 30 cents.

*Uxin Ltd (UXIN -18.22%) fell 6% in after-hours trading in continuation of Thursday’s record 18% plunge.
 


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**Market Comments**

*Mar S&P 500 E-minis (ESH19 -0.38%) this morning are down -9.00 points (-0.36%).  Thursday's closes: S&P 500 -1.58%, Dow Jones -1.99%, Nasdaq 100 -1.57%.  The S&P 500 on Thursday sold off to a 1-1/4 year low and closed lower on negative carry-over from Wednesday's hawkish FOMC meeting that bolstered fears the Fed may raise interest rates by too much in 2019 and cause a recession.  Stocks were also undercut by the apparent likelihood for a partial government shutdown on Friday night.  Energy stocks were undercut as crude oil prices plunged by -4.75% to a 1-1/4 year low.

*Mar 10-year T-notes (ZNH19 -0-010) this morning are down -1.5 ticks.  Thursday's closes: TYH9 -3.5, FVH9 -3.00.  Mar 10-year T-notes on Thursday closed higher on the plunge in global equity markets, which boosted the safe-haven demand for T-notes.  T-note prices were also bolstered by reduced inflation expectations after the 10-year T-note breakeven inflation expectations rate tumbled to a 1-1/4 year low.  T-note prices ended lower as the recovery in equity prices from their worst levels, curbed safe-haven demand for T-notes.  T-note prices were also undercut by supply pressures after the Treasury announced $131 billion of T-note and floating rate note auctions for next week, which prompted bond dealers to short T-notes as a hedge against the incoming supply.

*The dollar index (DXY00 +0.33%) this morning is up +0.278 (+0.29%), EUR/USD (^EURUSD -0.23%) is down -0.0028 (-0.24%), and USD/JPY (^USDJPY -0.07%) is down -0.08 (-0.07%).  Thursday's closes: Dollar Index -0.759 (-0.78%), EUR/USD +0.0070 (+0.62%), USD/JPY -1.20 (-1.07%).  The dollar index on Thursday tumbled to a 1-month low and closed lower on the sell-off in the S&P 500 to a 1-1/4 year low, which boosted the safe-haven demand for the yen and pushed USD/JPY down to a 3-1/4 month low.  The dollar was also undercut by concern the Fed may raise interest rates by too much in 2019 and cause a recession.

*Metals prices this morning are lower with Feb gold (GCG19 -0.41%) -4.5 (-0.35%), Mar silver (SIH19 -0.83%) -0.119 (-0.80%), and Mar copper (HGH19 -0.22%) -0.007 (-0.24%).  Thursday's closes: Feb gold +11.5 (+0.92%), Mar silver +0.051 (+0.34%), and Mar copper -0.0195 (-0.72%).  Metals on Thursday settled mixed with Feb gold at a 5-1/2 month high.  Precious metals prices were boosted by the decline in the dollar index to a 1-month low and by safe-haven demand with the plunge in the S&P 500 to a 1-1/4 year low.  Metals prices were undercut by the the unexpected -3.5 point decline in the U.S. Dec Philadelphia Fed business outlook index to a 2-1/3 year low of 9.4, which signals reduced demand for industrial metals, and by fund selling of silver as long silver positions in ETFs fell for a sixth consecutive session to a 10-1/4 month low on Wednesday.

*Feb WTI crude oil prices (CLG19 -0.92%) this morning are down -43 cents (-0.94%) at a 16-3/4 month low and Feb gasoline (RBG19 -1.10%) is -2.09 (-1.60%) at a new 2-year low.  Feb WTI crude oil (CLF19) on Thursday closed down by -$2.29 per barrel (-4.75%) and Feb Brent crude (CBG19) closed down -$2.89 (-5.05%).  Feb RBOB gasoline (RBF19) closed down by -6.53 cents per gallon (-4.75%).  The energy complex sold-off sharply Thursday with Feb WTI crude and Feb Brent crude at 1-1/4 year lows and Feb RBOB gasoline at a 2-year low.  Demand concerns fueled fund selling of energy futures after Wednesday's hawkish FOMC meeting bolstered concern Fed policy will choke off global growth and energy demand.  U.S. economic concerns are also bearish for crude prices after the S&P 500 plunged to a 1-1/4 year low and after the Dec Philadelphia Fed business outlook survey unexpectedly fell -3.5 to a 2-1/3 year low of 9.4.  Negative carry-over from Wednesday's weekly EIA data also weighed on energy prices after U.S. crude oil inventories fell by only -497,000 bbl, which was bearish relative to expectations of -2.5 mln bbl, and after crude supplies at Cushing, the delivery point for WTI futures, rose +1.09 million bbl to an 11-month high.  A slump in the dollar index to a 1-month low on Thursday failed to spark buying interest in energy futures.
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