Morning Call: Weakness in technology stocks leads the overall market lower; Dec E-mini S&Ps down -0.39%; Jan WTI crude up +1.98% at a 1-week high.
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 ESZ18 - S&P 500 E-Mini
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Overnight Markets and News

Dec E-mini S&Ps (ESZ18 -0.46%) this morning are down -0.39% and European stocks are down -0.58% as losses in technology stocks lead the overall market lower. Shares of Apple are down nearly 1% and Apple supplier Cirrus Logic is down more than 6% in pre-market trading after Cirrus cut its Q3 revenue estimate on flagging iPhone sales. Losses in the overall market were limited as energy stocks rose with Jan WTI crude oil (CLF19 +1.89%) up +1.98% at a 1-week high. Crude oil is rising ahead of OPEC's 2-day meeting in Vienna on Thursday and Friday when the cartel is expected to announce crude production cuts. Asian stocks settled mixed: Japan -2.39%, Hong Kong +0.29%, China +0.42%, Taiwan -0.54%, Australia -1.01%, Singapore -0.72%, South Korea -1.05%, India -0.29%. China's Shanghai Composite climbed to a 2-week high and the yuan soared to a 2-1/4 month high against the dollar on positive carry-over from this past weekend when China and the U.S. agreed to a trade truce. Japan's Nikkei Stock Index fell back as losses in exporter stocks led the overall market lower when USD/JPY dropped to a 1-week low, which reduces the earnings prospects for exporters.

The dollar index (DXY00 -0.51%) is down -0.50% at a 1-week low. EUR/USD (^EURUSD +0.39%) is up +0.36% at a 1-week high after Eurozone Oct producer prices rose at the fastest pace in nearly 7 years, which is hawkish for ECB policy. USD/JPY (^USDJPY -0.76%) is down -0.76% at a 1-week low.

Mar 10-year T-note prices (ZNH19 +0-075) are up +7.5 ticks at a 3-month high.

Eurozone Oct PPI rose +0.8% m/m and +4.9% y/y, stronger than expectations of +0.5% m/m and +4.5% y/y with the +4.9% y/y gain the biggest year-on-year increase in nearly 7 years.

The UK Nov Markit/CIPS construction PMI unexpectedly rose +0.2 to a 4-month high of 53.4, stronger than expectations of -0.7 to 52.5.

UK Nov BRC sales like-for-like unexpectedly fell -0.5% y/y, weaker than expectations of +0.3% y/y and the biggest decline in 7 months.

U.S. Stock Preview

Key U.S. news today includes: (1) New York Fed President John Williams (voter) holds a Q&A with journalists during a press briefing at the New York Fed.

Notable Russell 1000 earnings reports today include: Toll Brothers (consensus $1.83), AutoZone (12.25), Dollar General (1.26), HP Enterprise (0.42), Marvell Technology (0.32).

U.S. IPO's scheduled to price today: MOGU Inc (MOGU).

Equity conferences during the remainder of this week: UBS Global Media and Communications Conference on Mon-Tue, Raymond James Technology Investors Conference on Mon-Wed, Bank of America Merrill Lynch Leveraged Finance Conference on Tue, Cowen & Co. Energy & Natural Resources Conference on Tue, SIP Network Operators Conference on Tue, Goldman Sachs U.S. Financial Services Conference on Tue, Wells Fargo Securities Technology Summit on Tue-Wed, NASDAQ Investors Conference on Tue-Wed, Barclays Global Technology, Media and Telecommunications Conference on Tue-Thu, AI Summit on Wed, Wells Fargo Securities Pipeline, MLP and Utility Symposium on Wed, Citi Global Health Care Conference on Wed-Thu, Barclays Gaming, Lodging, Leisure, Restaurant and Food Retail Conference on Wed-Thu.


Market Comments

Dec S&P 500 E-minis (ESZ18 -0.46%) this morning are down -11.00 pints (-0.39%). Monday's closes: S&P 500 +1.09%, Dow Jones +1.13%, Nasdaq 100 +1.63%. The S&P 500 on Monday rallied to a 3-week high and closed higher on relief about Saturday's 3-month US/China trade ceasefire. Stocks were also boosted by signs of strength in U.S. manufacturing activity after the U.S. Nov ISM manufacturing index unexpectedly rose +1.6 to 59.3, stronger than expectations of -0.2 to 57.5. Energy stocks rallied as crude oil prices jumped +3.97% to a 1-week high.

Mar 10-year T-notes (ZNH19 +0-075) this morning are up +7.5 ticks at a 3-month high. Monday's closes: TYH9 +4.50, FVH9 +0.50. Mar 10-year T-notes on Monday closed higher on slack inflation pressures after the Nov ISM prices paid sub-index fell -10.9 to a 17-month low of 60.7, weaker than expectations of -1.6 to 70. T-note prices were also boosted by comments from Fed Vice Chair Clarida that the Fed is more worried about inflation falling short of its 2% target than running above it.

The dollar index (DXY00 -0.51%) this morning is down -0.485 (-0.50%O at a 1-week low, EUR/USD (^EURUSD +0.39%) is up +0.0041 (+0.36%) at a 1-week high, and USD/JPY (^USDJPY -0.76%) is down -0.86 (-0.76%) at a 1-week low. Monday's closes: Dollar Index -0.232 (-0.24%), EUR/USD +0.0037 (+0.33%), USD/JPY +0.09 (+0.08%). The dollar index on Monday closed lower on dovish comments from Fed Vice Chair Clarida who said the Fed remains more concerned about inflation falling short of its 2% target than running above it. The dollar was also undercut by strength in the Chinese yuan which rallied to a 1-month high against the dollar after U.S Treasury Secretary Mnuchin said there is a "strong commitment" from China to deal with currency devaluation.

Metals prices this morning are higher with Feb gold (GCG19 +0.42%) +4.8 (+0.39%) at a 5-week high, Mar silver (SIH19 +0.94%) +0.126 (+0.87%) at a 3-week high, and Mar copper (HGH19 -0.04%) +0.003 (+0.09%). Monday's closes: Feb Comex gold (GCG19) on Monday closed up +13.6 (+1.11%) and Mar Comex silver (SIH19) closed up +0.282 (+1.98%). A weaker dollar on Monday boosted metals prices with Feb gold at a 3-1/2 week high and Mar silver at a 1-week high. Silver prices received a boost after U.S. President Trump and Chinese President Xi Jinping agreed to a truce in the U.S.-China trade war, which sent global equity markets soaring and may improve global trade prospects and increase demand for industrial metals. Also, signs of strength in U.S. manufacturing activity is positive for industrial metals prices after the U.S. Nov ISM manufacturing index unexpectedly climbed +1.6 points to 59.3, stronger than expectations of -0.2 to 57.5. An increase in inflation expectations may also boost demand for gold as an inflation hedge after the 10-year T-note breakeven inflation expectations rate climbed to a 1-1/2 week high on Monday.

Jan WTI crude oil prices (CLF19 +1.89%) this morning are up +$1.05 a barrel (+1.98%) at a new 1-week high and Jan gasoline (RBF19 +2.43%) is up +3.56 cents per gallon (+2.49%). Monday's closes: Jan WTI crude oil (CLF19) on Monday closed up by +$2.02 per barrel (+3.97%) and Feb Brent crude (CBG19) closed up +$2.45 (+4.12%). Jan RBOB gasoline (RBF19) closed up by +2.95 cents per gallon (+2.10%). Oil prices rallied sharply on Monday to a 1-week high after Saudi Arabian and Russian leaders over the weekend at the G-20 meeting agreed to extend their pact to manage crude output into 2019. Crude prices also received a boost after Alberta, Canada's largest crude producing province, announced a cut in production of crude and bitumen by 325,000 bpd from January until excess oil in storage is drawn down. A weaker dollar on Monday helped the energy complex to maintain its gains. Finally, the sharp rally in global equity markets Monday improves confidence in the economic outlook, which may lead to increased energy demand and consumption. Crude prices fell back from their best levels after Qatar, an OPEC member since 1961, said it will leave the cartel effective Jan 1 to focus on its liquefied natural gas production. Qatar is OPEC's 11th-biggest oil producer, pumping about 1 million bpd. Data released Monday showed that OPEC Nov crude production fell -10,000 bpd to 33.13 million bpd, the first decline in production in 6 months. OPEC and its allies will meet this Thursday and Friday in Vienna to decide on the size of their production cut for 2019.

Overnight U.S. Stock Movers

Cirrus Logic (CRUS +3.29%) fell more than 6% in pre-markets trading after it cut its Q3 revenue estimate to $300 million to $340 million from a previous forecast of $360 million to $400 million, citing weakness in the smartphone market.

Apple (AAPL +3.49%) was downgraded to 'Hold' from 'Buy' at HSBC.

RH (RH +6.47%) soared 18% in after-hours trading after it forecast full-year adjusted EPS of $8.33 to $8.47, well above consensus of $7.64.

Itron (ITRI +2.75%) was rated a 'Buy' at Guggenheim Securities with a price target of $70.

BorgWarner (BWA +2.83%) was rated a new 'Buy' at Jeffries with a price target of $48.

UDR Inc (UDR +0.52%) slid nearly 3% in after-hours trading after it announced that it will sell 7.15 million shares of its common stock in an underwritten public offering

Owens-Illinois (OI +0.98%) was downgraded to 'Underweight' from 'Sector Weight' at KeyBanc Capital Markets with a price target of $16.

NGL Energy Partners LP (NGL +3.45%) was rated a new 'Buy' at Guggenheim Securities with a price target of $16.

Kinder Morgan (KMI +1.35%) may initially open higher this morning after it said it sees 2019 adjusted Ebitda of $7.80 billion, higher than consensus of $7.65 billion.

Kratos Defense & Security Solutions (KTOS +0.90%) was rated a new 'Outperform' at Baird with a price target of $19.

Smartsheet (SMAR +0.59%) climbed over 5% in after-hours trading after it forecast Q4 total revenue of $49 million to $50 million, above consensus of $45.7 million.

Independence Contract Drilling (ICD +2.96%) was rated an 'Outperform' at Evercore ISI with a price target of $6.

Keane Group (FRAC +0.36%) fell 3% in after-hours trading after it announced an underwritten secondary offering from one of its stockholders of 5.25 million shares of Keane’s common stock.