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December 2016
OVERNIGHT MARKETS AND NEWS
Mar E-mini S&Ps are up +0.12% as energy producing stocks
climb with Jan WTI crude oil up +0.21%. Crude oil rose after Libyan
oil-facility guards prevented two of the country's biggest oil fields from
resuming production. European stocks are down -0.09%, led by losses in mining
stocks, as the price of Mar COMEX copper falls -1.42% to a 4-week low. Losses
in European stocks were contained on signs that economic growth in Europe may
be picking up steam after the German IFO business climate index climbed to a
2-3/4 year high. Asian stocks settled mostly lower: Japan -0.05%, Hong Kong
-0.85%, China -0.16%, Taiwan -0.94%, Australia +0.53%, Singapore -0.84%, South
Korea -0.24%, India -0.43%.
The dollar index is down -0.01%. EUR/USD is down -0.21%%
after ECB Governing Council member Visco said the ECB stands ready to expand
asset purchases if inflation fails to climb toward the ECB's target. USD/JPY is
down -0.52% ahead of the conclusion of the BOJ's 2-day policy meeting.
Mar 10-year T-note prices are up +6 ticks. The Total
Investment & Insurance Solutions
ECB Governing Council member and Bank of Italy Governor
Visco said "the macroeconomic forecasts produced by the Eurosystem still
indicate a vey slow trend in inflation to drop back to levels in line with the
ECB's target. If the macroeconomic environment were to become less favorable,
the Governing Council stands ready to further strengthen the program by
expanding the monthly asset purchase rate and or its duration."
China Nov new home prices rose in 55 of the 70 cites tracked
by the governemnt, down from 62 cities that rose in Oct. Nov new home prices
fell in 11 cities, compared with 7 that fell in Oct.
The German Dec IFO business climate rose +0.6 to 111.0,
stronger than expectations of +0.2 to 110.6 and the highest in 2-3/4 years. The
Total Investment & Insurance Solutions
U.S. STOCK PREVIEW
Key U.S. news today includes: (1) Dec Markit services PMI
(expected +0.6 to 55.2, Nov -0.1 to 54.7), (2) USDA weekly grain export
inspections.
Russell 1000 earnings reports today include: Lennar
(consensus $1.28).
U.S. IPO's scheduled to price today: travel none.
Equity conferences this week: none. The Total Investment
& Insurance Solutions
OVERNIGHT U.S. STOCK MOVERS
Bristol-Myers Squibb (BMY -0.05%) was upgraded to 'Buy' from
'Hold' at Jeffries with a price target of $69.
ETrade (ETFC -2.04%) was upgraded to 'Buy' from 'Hold' at
SunTrust Robinson Humphrey with a price target of $40.
Costco (COST +0.19%) was upgraded to 'Buy' from 'Neutral' at
Citigroup.
Carnival Cruise Lines (CCL -2.76%) dropped over 4% in
pre-market trading after it was downgraded to 'Hold' from 'Buy' at Berenberg.
Ambac Financial Group (AMBC +0.15%) was downgraded to 'Sell'
from 'Neutral' at MKM Partners.
BorgWarner (BWA +0.71%) was downgraded to 'Market Perform'
form 'Outperform' at Wells Fargo Securities.
United Technologies (UTX +0.36%) was upgraded to
'Outperform' from 'Neutral' at Credit Suisse with a 12-month target price of
$125.
Lowe's (LOW -0.96%) was downgraded to 'Neutral' from 'Buy'
at Citigroup.
Gulfport Energy (GPOR -5.65%) was upgraded to 'Buy' from
'Neutral' at Guggenheim Securities with a 12-month target price of $30.
Rsp Permian (RSPP +1.10%) was upgraded to 'Buy' from
'Neutral' at Guggenheim Securities with a 12-month target price of $55.
Continental Resources (CLR -0.63%) was rated new 'Market
Perform' at FBR Capital Markets with a 12-month target price of $56. The Total
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MARKET COMMENTS
Mar E-mini S&Ps this morning are up +2.75 points
(+0.12%). The S&P 500 on Friday closed lower: S&P 500 -0.18%, Dow Jones
-0.04%, Nasdaq -0.38%. Bullish factors included (1) the -18.7% plunge in U.S.
Nov housing starts to 1.090 million, weaker than expectations of -7.0% to 1.23
million, (2) the -4.7% decline in U.S. Nov building permits to 1.201 million,
weaker than expectations of -1.6% to 1.24 million, and (3) heightened
geopolitical tensions after China seized a U.S. drone in international waters
in the South China Sea.
Mar 10-year T-notes this morning are up +6 ticks. Mar
10-year T-notes on Friday closed lower: TYH7 -3.00, FVH7 +0.50. Bearish factors
included (1) hawkish comments from Richmond Fed President Lacker who said he
thinks the Fed "will need more than three rate hikes" in 2017, and
(2) comments from St. Louis Fed President Bullard who said the Fed the Fed
should consider shrinking its balance sheet starting next year.
The dollar index this morning is down -0.010 (-0.01%).
EUR/USD is down -0.0022 (-0.21%). USD/JPY is down -0.61 (-0.52%). The dollar
index on Friday closed lower: Dollar index -0.210 (-0.20%), EUR/USD +0.0037
(+0.36%), USD/JPY -0.25 (-0.21%). Bearish factors included (1) the
weaker-than-expected U.S. Nov housing starts and building permits, and (2) the
action by the New York Fed to cut its U.S. Q4 GDP estimate to 1.8% from a Dec 2
estimate of 2.7%, citing negative contributions from capacity utilization,
industrial production and housing.
Jan WTI crude oil prices this morning are up +11 cents (+0.21%)
and Jan gasoline is +0.0030 (+0.19%). Jan crude oil and gasoline on Friday
closed higher: Jan crude +1.13 (+2.22%), Jan gasoline +0.0165 (+1.07%). Bullish
factors included (1) a weaker dollar, and (2) the increase in the crack spread
to a 2-week high, which may boost refinery demand for crude to refine into
gasoline and distillate products.The Total Investment & Insurance Solutions
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