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14 July 2016
OVERNIGHT MARKETS AND NEWS
Sep E-mini S&Ps (ESU16 +0.65%) are up +0.75% at a new
all-time nearest-futures high and European stocks are up +1.27% at a 2-1/2 week
high on speculation world central banks will increase stimulus measures in
order to support economic growth. The stock indexes fell back from their best
levels and GBP/USD jumped +1.45% to a 2-week high after the BOE unexpectedly
voted 8-1 to keep the benchmark
interest rate unchanged at 0.50% and voted 9-0 to maintain the asset purchase target
at 375 billion pounds, although the post meeting statement said that "
most members of the committee expect monetary policy to be loosened in
August." JPMorgan Chase is up over 2% in pre-market trading and is leading
financial stocks higher after it reported Q2 EPS of $1.55, better than consensus
of $1.43. Energy producing stocks are also higher with the price of crude oil (CLQ16 +1.50%) up +1.18% and mining stocks
and raw-material producers are up as well with the price of copper (HGU16 +0.20%) up +0.09%. Asian stocks
settled mostly higher: Japan +0.95%, Hong Kong +1.12%, China -0.22%, Taiwan +0.10%, Australia
+0.43%, Singapore -0.13%, South
Korea +0.22%, India +0.46%.
A rally in USD/JPY to a 2-1/2 week high gave
Japanese exporter stocks a boost and led Japan's Nikkei Stock Index higher. The
yen has weakened and Japanese stocks have pushed higher this week after Prime
Minster Abe's party won upper-house elections and promised more stimulus.
The dollar index (DXY00 -0.26%) is up +0.08%. EUR/USD (^EURUSD)
is up +0.17%. USD/JPY (^USDJPY) is up +0.84% at a 2-1/2 week high.
Sep T-note prices (ZNU16 -0.28%) are down -7.5 ticks. The
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Key U.S. news today
includes: (1) weekly MBA mortgage applications (previous +14.2% with purchase
sub-index +4.3% and refi sub-index +20.8%), (2) Jun import price index
(expected +0.5% m/m and -4.6% y/y, May +1.4% m/m and -5.0% y/y), (3) the Treasury's auction of
$12 billion of 30-year T-bonds, (4) Jun monthly budget statement (expected
+$23.0 billion, May -$52.507 billion), (5) Fed Beige Book, (6) Philadelphia Fed
President Patrick Harker (non-voter) speaks on the economic outlook at an event
in Philadelphia, and (7) EIA Weekly Petroleum Status Report.
S&P 500 companies
reporting earnings today: JPMorgan Chase (consensus $1.43), Blackrock (4.77),
Delta ((1.42), Omnicom (1.33), Progressive Corp (0.33).
U.S. IPO's scheduled to
price today: AdvancePierre Foods Holdings (APFH), Ageagle Aerial System (UAVS).
Equity conferences this week include: none. The
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JPMorgan Chase (JPM -0.06%) climbed over 2% in pre-market
trading after it reported Q2 EPS of $1.55, higher than consensus of $1.43.
Procter & Gamble (PG +0.16%) was upraded to 'Buy' from
'Neutral' at UBS with a 12-month price target of $96.
Newmont Mining (NEM +2.30%) was upgraded to 'Buy' from
'Sell' at Veritas Investment Research with a 12-month price target of $42.
Yum! Brands (YUM -0.57%) climbed over 3% in pre-market
trading after it reported Q2 adjusted EPS of 75 cents, better than consensus of
74 cents, and then forecast operating profit growth this year up "at
least" 14%, higher than an April view of up 12%.
Eaon Corp PLC (ETN -0.14%) was downgraded to 'Neutral'
from 'Buy' at Bank of America/Merrill Lynch.
The WSJ reports that
Viacom (VIA -1.20%) is in talks to sell a 49%
stake in its Paramount Pictures move studio to China's Dalian Wanda.
LSB Industries (LXU -2.91%) dropped 2% in after-hours
trading after it registered 4.5 million shares for top holder LSB Funding.
Coeur Mining (CDE +5.34%) was upgraded to 'Outperform'
from 'Sector Perform' at RBC Capital Markets with a 12-month target price of
$18.
Novovure Ltd. (NVCR -1.97%) jumped nearly 6% in
after-hours trading after the FDA approved its second-generation Optune System
for glioblastoma patients.
Lions Gate Entertainment
(LGF +1.12%) fell 1% in after-hours trading
after it was downgraded to 'Market Perform' from 'Outperform' at Bernstein.
Summit Materials (SUM -0.18%) said its preliminary Q2
adjusted EPS will be 43 cents-44 cents,
below consensus of 47 cents.
Monsanto (MON -1.17%) gained over 1% in after-hours
trading after people familiar with the matter said the company has revived
talks with BASF about a possible combination of their agrochemicals businesses.
Philadelphia Fed President Harker (non-voter)
said "considering the economic projections, he anticipates it may be
appropriate for up to two additional rate hikes this year and that the funds
rate will approach 3% by the end of 2018." The
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Sep E-mini S&Ps (ESU16 +0.65%) this morning are up +16.00
points (+0.75%) at a fresh all-time nearest-futures high. Wednesday's closes:
S&P 500 +0.01%, Dow Jones +0.13%, Nasdaq -0.26%.
The S&P 500 on Wednesday climbed to a new record high and closed slightly
higher on a rally in mining stocks and raw-material producers after copper
prices rose +1.22% to a 2-1/4 month high. Stocks were also boosted by the Fed
Beige Book comment that "the outlook was generally positive across broad
segments of the economy." Stocks were undercut by a sell-off in energy
producer stocks after crude oil prices fell sharply by -4.38%.
Sep 10-year T-note
prices (ZNU16 -0.28%) this morning are down -7.5 ticks.
Wednesday's closes: TYU6 +10.00, FVU6 +3.75. Sep T-bonds on Wednesday closed
higher on the slide in stocks and on strong demand for the Treasury's $12
billion auction of 30-year T-bonds that had a bid-to-cover ratio of 2.48,
higher than the 12-auction average of 2.34.
The dollar index (DXY00 -0.26%) this morning is up +0.073
(+0.08%), EUR/USD (^EURUSD) is up +0.0019 (+0.17%) and USD/JPY
(^USDJPY)
is up +0.88 (+0.84%) at a 2-1/2 week high. Wednesday's closes: Dollar index -0.225 (-0.23%), EUR/USD +0.0029 (+0.26%),
USD/JPY -0.20 (-0.19%). The dollar index on Wednesday
closed lower on the the steeper-than-expected decline in China May imports,
which signals weakness in China's economy that may restrain global growth and
keep the Fed from raising interest rates. The dollar was undercut by the Fed
Beige Book that said the U.S. economy grew "modestly" amid
"slight" price pressures, which bolsters the case for the Fed to
refrain from raising interest rates.
Aug WTI crude oil (CLQ16 +1.50%) prices this morning are up +53
cents (+1.18%) and Aug gasoline prices (RBQ16 +2.07%) are up +0.0197 (+1.43%).
Wednesday's closes: CLQ6 -2.05 (-4.38%), RBQ6 -0.0517 (-3.62%). Aug crude oil and gasoline
on Wednesday closed sharply lower on comments by Iranian Deputy Oil Minister
Ali Kardor who said his country is pushing to raise its crude production to 4.0
million bpd by the end of Sep, earlier than previous forecasts for output to
rise to 4.0 million bpd by year end. Crude oil and gasoline prices were also
undercut by the unexpected +1.21 million bbl increase in EIA gasoline
stockpiles (more than expectations of -1.0 million bbl) and the +0.7% increase in
U.S. crude production to 8.485 million bpd, the first increase in five weeks. The Total Investment & Insurance Solutions
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