Morning Call: U.S. and China trade tensions weigh on stocks; Dec E-mini S&Ps down -0.36%; Dollar Index down -0.07% at a 1-week low.
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 ESZ18 - S&P 500 E-Mini
SymLastChgPct
ESZ182,604.25+2.25+0.09%
DXY0097.230-0.213-0.22%
ZNZ18120-145unchunch
GCZ181,237.0s-5.7-0.46%
SIZ1814.513s-0.216-1.47%
HGZ182.7400-0.0205-0.74%
CLZ1856.76s+0.30+0.53%
RBZ181.4413s-0.0134-0.92%
PNC118.50-1.40-1.17%
SCHW41.19-0.24-0.58%
CARG34.76-0.92-2.58%
DAL53.51-0.04-0.07%
GLOB55.23-1.11-1.97%
RMAX29.63-0.65-2.15%
BIG28.50-1.20-4.04%
ICUI221.46-7.12-3.11%
NVS87.39-1.01-1.14%
COTY7.31-0.29-3.82%
AQST7.39-0.59-7.39%
CDTX2.78-0.20-6.71%

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.37%) this morning are down -0.36% on concern the U.S.-China trade skirmish may persist after U.S. Vice President Pence said on Sunday that the U.S. wasn't in a rush to end the trade war and would "not change course until China changes its ways." Also, the Asia-Pacific Economic Cooperation (APEC) summit ended in tumult as the U.S. and China failed to agree on language in a final statement, the first time no final statement was issued since the annual APEC meetings began in 1993. European stocks are up +0.08% after Eurozone Sep construction output posted its biggest increase in 1-1/2 years and after the Bundesbank predicted "fairly strong growth" for the German economy in Q4. Asian stocks settled mostly higher: Japan +0.65%, Hong Kong +0.72%, China +0.91%, Taiwan +0.32%, Australia -0.64%, Singapore -0.60%, South Korea +0.24%, India +0.90%. China's Shanghai Composite climbed to a 1-1/4 month high on speculation market support measures announced by the government since late October, including easing of trade restrictions and boosting liquidity and support for small companies, will spur domestic growth. A rebound in technology stocks lifted Japan's Nikkei Stock Index, although gains were limited as exporters weakened when USD/JPY fell to a 2-week low.

The dollar index (DXY00 -0.04%) is down -0.07% at a 1-week low. EUR/USD (^EURUSD +0.01%) is up +0.04% at a 1-wek high. USD/JPY (^USDJPY -0.01%) is down -0.01% at a 2-week low.

Dec 10-year T-note prices (ZNZ18 -0-010) are down -2 ticks.

In its monthly report, the Bundesbank said, "the German economy is expected to see fairly strong growth again in the final quarter of 2018."

Eurozone Sep construction output rose +2.0% m/m, the biggest increase in 1-1/2 years.

The Japan Oct trade balance was in deficit by -449.3 billion yen, wider than expectations of -70.0 billion yen and the largest deficit in 5 months. Oct exports rose +8.2% y/y, weaker than expectations of 8.9% y/y. Oct imports rose +19.9% y/y, stronger than expectations of +14.1% y/y and the biggest increase in 4-3/4 years.

U.S. Stock Preview

Key U.S. news today includes: (1) Nov NAHB housing market index (expected -1 to 67, Oct +1 to 68), (2) New York Fed President John Williams (voter) speaks in a moderated Q&A session at an event with business and community development leaders in New York.

Notable Russell 1000 earnings reports today include: Intuit (consensus $0.11), Agilent (0.64), L Brands (0.13).

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

Equity conferences during the remainder of this week: 121 Mining Investment Conference on Tue.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.37%) this morning are down -10.00 points (-0.36%). Friday's closes: S&P 500 +0.22%, Dow Jones +0.49%, Nasdaq 100 -0.34%. The S&P 500 on Friday closed higher on the +0.3% increase in U.S. Oct manufacturing production (slightly stronger than expectations of +0.2%) and on some optimism the trade dispute with China may soon improve after President Trump said he received a response to his demands from Beijing and that "China wants to make a deal." Stocks were undercut by weakness in technology stocks, led by an 18% plunge in Nvidia, after it forecast a weaker-than-expected Q4 outlook. There were also some global economic concerns after Fed Vice Chair Clarida said there is "some evidence" that the global economy is slowing.

Dec 10-year T-notes (ZNZ18 -0-010) this morning are down -2 ticks. Friday's closes: TYZ8 +11.00, FVZ8 +7.75. Dec 10-year T-notes on Friday rallied to a 2-month high and closed higher on comments from Fed Vice Chair Clarida who said that Fed policy is getting closer to neutral and that there is "some evidence" that the global economy is slowing. T-notes were also supported by comments from Philadelphia Fed President Harker who said he's not convinced a Fed rate hike next month is the right move and he needs to watch the data over "the next few weeks" to determine whether it is prudent to raise rates again.

The dollar index (DXY00 -0.04%) this morning is down -0.071 (-0.07%) at a 1-week low, EUR/USD (^EURUSD +0.01%) is up +0.0005 (+0.04%) at a 1-week high, and USD/JPY (^USDJPY -0.01%) is down -0.01 (-0.01%) at a 2-week low. Friday's closes: Dollar Index -0.462 (-0.48%), EUR/USD +0.0087 (+0.77%), USD/JPY -0.81 (-0.71%). The dollar index on Friday sold off to a 1-week low and closed lower on comments from Fed Vice Chair Clarida that reduced expectations for additional Fed rate hikes when he said Fed policy is getting closer to vicinity of neutral and that there is some evidence of global slowing. The dollar was also undercut by the decline in T-note yields that undercut the dollar's interest rate differentials.

Metals prices this morning are weaker with Dec gold (GCZ18 -0.17%) -0.9 (-0.07%), Dec silver (SIZ18 -0.26%) -0.027 (-0.19%), and Dec copper (HGZ18 -0.54%)
-0.018 (-0.63%). Dec Comex gold (GCZ18) on Friday closed up +$8.00 an ounce (+0.77%) and Dec Comex silver (SIZ18) closed up +0.119 (+0.83%). Dec gold rallied to a 1-week high Friday after the dollar index tumbled to a 1-week low. Comments from Fed Vice Chair Clarida on Friday undercut the dollar and reduced expectations for additional Fed rate hikes when he said that a gradual policy has served the Fed well, that policy is getting closer to vicinity of neutral, and that there is some evidence of global slowing. Brexit risks continued to boost safe-haven demand for precious metals after two cabinet ministers quit earlier this week in protest of Prime Minister May's Brexit separation deal and as speculation grows of a leadership challenge to Prime Minister May. A positive for silver Friday was the +0.3% increase in U.S. Oct manufacturing production, slightly stronger than expectations of +0.2% and a positive sign for industrial metals demand.

Dec WTI crude oil prices (CLZ18 -0.11%) this morning are up +8 cents (+0.14%) and Dec gasoline (RBZ18 -0.69%) is down -1.36 (-0.86%). Dec WTI crude oil (CLZ18) on Friday closed unchanged and Jan Brent crude (CBF19) closed up +$0.46 (+0.69%). Dec RBOB gasoline (RBZ18) closed up +2.04 cents a gallon (+1.31%). A slide in the dollar index Friday to a 1-week low was a positive factor for the energy complex. Also, confidence that OPEC+ will cut production to avert a global oil glut next year led to pre-weekend short covering after this week's rout took crude prices down to a 1-year low. Finally, geopolitical risks are on the rise after the U.S. on Thursday imposed sanctions against 17 Saudi officials over the death of U.S.-based journalist Khashoggi. Dec WTI crude oil prices gave up its gains and settled unchanged Friday after data from Baker Hughes showed active U.S. oil rigs rose by +2 rigs in the week ended Friday to a 3-1/2 year high of 888 rigs. Crude prices are still being undercut by Thursday's weekly EIA report, which showed that U.S. crude oil inventories surged by +10.27 million bbl to an 11-month high and that U.S. crude production in the week of Nov 9 rose +0.9% w/w to a new all-time high of 11.7 million bpd. U.S. crude oil inventories are currently 5.1% above the 5-year seasonal average, the highest such level since February.

Overnight U.S. Stock Movers

PNC Financial Services Group (PNC -0.22%) was downgraded to 'Market Perform' from 'Outperform' at BMO Capital Markets with a price target of $139.

Charles Schwab (SCHW -0.76%) was downgraded to 'Neutral' from 'Buy' at UBS with a price target of $51.

CarGurus (CARG +0.88%) was rated a new 'Buy' at SunTrust Robinson Humphrey with a price target of $49.

Delta Air Lines (DAL -0.36%) was rated a new 'Outperform' at Credit Suisse with a price target of $71.

Globant (GLOB +0.76%) was rated a new 'Buy' at Goldman Sachs with a price target of $65.

Re/Max Holdings (RMAX -0.72%) was upgraded to 'Overweight' from 'Equal-Weight' at Morgan Stanley with a price target of $36.

Big Lots (BIG -1.31%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a price target of $53.

ICU Medical (ICUI -0.60%) may initially open lower this morning after Pfizer, ICU Medical's largest shareholder, sold its entire stake in the company on Nov 13.

Novartis (NVS +0.58%) rallied more 2% in after-hours trading after it was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.

Coty (COTY +4.36%) rose more than 3% in after-hours trading on signs of insider buying after CEO Pierre Laubies bought 2.31 million shares of the company stock on Wednesday.

Aquestive Therapeutics (AQST +0.30%) dropped almost 6% in after-hours trading after the FDA failed to approve the company's Tadalafil Oral Film and requested more data from healthy volunteers.

Cidara Therapeutics (CDTX unch) may initially open lower this morning after it entered into an accord to sell up to $35 million of its common stock.