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17
January 2017
OVERNIGHT MARKETS AND NEWS
Mar E-mini S&Ps (ESH17
-0.30%) are down -0.50% and European stocks are down -0.76% at a 2-week low.
Stocks and the dollar sold-off after comments from President-elect Trump raised
concerns over a trade war with China when he told the WSJ that the U.S. dollar
is "too strong" in part because China holds down its currency. The
slump in the dollar has also boosted gold prices with Feb COMEX gold (GCG17
+1.41%) up +1.66% at a 1-3/4 month high. Also undercutting European stocks is
Brexit concerns after an unnamed person familiar with the matter said the UK
Prime Minister May will say today that the UK will pull out of the European
Union's single market for goods and services and seek a new trading
relationship with the EU. Asian stocks settled mixed: Japan -1.48%, Hong Kong
+0.54%, China +0.17%, Taiwan +0.67%, Australia -0.85%, Singapore -0.01%, South
Korea +0.46%, India -0.19%. China's Shanghai Composite erased early losses and
closed higher on signs that state-sponsored funds bought stocks before Chinese
President Xi Jinping spoke at the World Economic Forum in Davos, Switzerland.
Japan's Nikkei Stock Index sold-off to a 1-1/4 month low as exporter companies
declined after USD/JPY tumbled to a 1-1/2 month low, which reduces the
prospects for exporters' earnings.
The dollar index (DXY00
-0.71%) is down -0.66% at a 1-1/4 month low after President-elect Trump said
the dollar is "too strong." EUR/USD (^EURUSD) is up +0.96% at a 1-1/4
month high after the German Jan ZEW survey expectations of economic growth rose
to a 7-month high. USD/JPY (^USDJPY) is down -1.06% at a 1-1/2 month low as a
slide in stocks boosts the safe-haven demand for the yen.
Mar 10-year T-note prices
(ZNH17 +0.24%) are up +16.5 ticks.
President-elect Trump told
the WSJ that the U.S. dollar is "too strong" in part because China
holds down its currency. He added that "our companies can't compete with
them (China) because our currency is too strong and it's killing us."
The German Jan ZEW survey
expectations of economic growth rose +2.8 to 16.6, weaker than expectations of
+4.6 to 18.4, but still the highest in 7 months.
U.S. STOCK PREVIEW
Key U.S. news today
includes: (1) Jan Empire manufacturing survey general business conditions index
(expected -0.8 to 8.2, Dec +7.5 to 9.0), (2) New York Fed President Dudley
(voter) speaks at a National Retail Federation Conference on consumer behavior,
(3) San Francisco Fed President John Williams (non-voter) speaks at the
Sacramento Business Review Economic Forecast event, (4) USDA weekly grain
export inspections.
S&P 500 earnings
reports today include: Morgan Stanley (consensus $0.65), UnitedHealth Corp
(2.07), Comerica (0.94), CSX (0.50), United Continental (1.75), Linear
Technology (0.53).
U.S. IPO's scheduled to
price today: Meridian Waste Solutions (MRDN).
Equity conferences today:
TD Securities Mining Conference on Wed, ACI Future of Polyolefins Summit on
Thu.
OVERNIGHT U.S. STOCK MOVERS
Chipotle Mexican Grill (CMG
+0.34%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase with a
price target of $375.
Everest Re Group Ltd (RE
-0.24%) was downgraded to 'Underperform' from 'Neutral' at Macquarie Research
with a 12-month target price of $186.
Morgan Stanley (MS +0.41%)
is up nearly 2% in pre-market trading after it reported Q4 EPS of 81 cents,
higher than consensus of 65 cents.
AmerisourceBegen (ABC
+0.91%) was upgraded to 'Outperform' from 'Market Perform' at Leerink Partners
with a 12-month target price of $95.
Twitter (TWTR -0.75%) was
downgraded to 'Neutral' from 'Buy' at UBS with a 12-month target price of $18.
HCA Holdings (HCA +0.35%)
was upgraded to 'Market Outperform' from 'Market Perform' at Avondale Partners
LLC with a 12-month target price of $96.
The Container Store Group
(TCS -1.06%) was downgraded to 'Underweight' from 'Equal-weight' at Morgan
Stanley.
Disney (DIS +0.49%) was
upgraded to 'Buy' from 'Neutral' at Goldman Sachs who cited Disney's fiscal
year 2018 film slate as its "best ever" as they raised their price
target on the stock to $134 from $109.
Concho Resources (CXO
+0.28%) filed a 2.2 million share shelf registration for stock holder Endurance
Resources.
Citigroup estimates that
Coherus Biosciences (CHRS +0.56%) could add $7 a share if the U.S. Supreme
Court decides that biosimilars don't need to issue a 180-day marketing notice
and Coherus can launch its low-cost alternative to Amgen's Neulasta 6 months
earlier.
Delphi Automotive PLC (DLPH
+0.80%) says it sees a $300 million pretax charge in Q4 related to ongoing
litigation from unsecured claims against DPH Holdings resulting from a 2005
bankruptcy filing.
MARKET COMMENTS
Mar E-mini S&Ps (ESH17
-0.30%) this morning are down -11.25 points (-0.50%). Friday's closes: S&P
500 +0.18%, Dow Jones -0.03%, Nasdaq +0.36%. The S&P 500 on Friday closed
higher on upbeat comments from Fed Chair Yellen on Thursday evening who said
the U.S. economy faces no serious short-term obstacles and that "the labor
market is generally strong and wage growth is beginning to pick up." In
addition, bank stocks rallied after JPMorgan Chase, Wells Fargo. and Bank of
America all reported stronger-than-expected earnings results. Stocks were
undercut by the U.S. Dec retail sales report of +0.6% m/m and +0.2% ex autos,
which was weaker than expectations of +0.7% and +0.5% ex autos. In addition,
the Jan University of Michigan U.S. consumer sentiment index fell by -0.1 point
to 98.1, weaker than expectations of +0.3 to 98.5.
Mar 10-year T-notes (ZNH17
+0.24%) this morning are up +16.5 ticks. Friday's closes: TYH7 -3.50, FVH7
-2.00. Mar 10-year T-notes on Friday closed lower on Fed Chair Yellen's comment
late Thursday night that the U.S. economy faces no serious short-term obstacles
with unemployment at a low level and wage growth beginning to pick up, which
bolsters the case for additional Fed rate hikes. T-notes were also undercut by
increased price pressures at wholesale level after the U.S. Dec PPI ex food
& energy rose +0.2% m/m and +1.6% y/y, stronger than expectations of +0.1%
m/m and +1.5% y/y.
The dollar index (DXY00
-0.71%) this morning is down -0.67 (-0.66%) at a 1-1/4 month low. EUR/USD
(^EURUSD) is up +0.0102 (+0.96%) at a 1-1/4 month high. USD/JPY (^USDJPY) is
down -1.21 (-1.06%) at a 1-1/2 month low. Friday's closes: Dollar index -0.16
(-0.16%), EUR/USD +0.0030 (+0.28%), USD/JPY -0.23 (-0.20%). The dollar index on
Friday closed lower on the weaker-than-expected U.S. Dec retail sales and Jan
University of Michigan U.S. consumer sentiment index reports. In addition,
there was strength in EUR/USD after the German Dec wholesale price index rose
+1.2% m/m and +2.8% y/y, the fastest pace of increase in 4 years, which will
discourage the ECB from further easing.
Feb WTI crude oil prices
(CLG17 +1.60%) this morning are up +61 cents (+1.16%) and Feb gasoline (RBG17
+1.96%) is up +0.0292 (+1.81%) at a 1-week high. Friday's closes: Feb crude
-0.49 (-0.92%), Feb gasoline +0.0019 (+0.12%). Feb crude oil and gasoline on
Friday settled mixed. Crude oil prices were boosted by a weaker dollar and by a
decline in U.S. active oil rigs for the first time in the last eleven week.
Baker Hughes reported that active U.S. oil rigs fell by -7 rigs to 522 rigs in
the week ended Jan 13. Crude oil prices fell on comments from OPEC
Secretary-General Mohammad Barkindo who said it is still premature to judge
compliance of oil cuts from OPEC members.The Total Investment & Insurance
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