Morning Call: Optimism the U.S.-China trade conflict can be resolved pushes stocks higher; Dec E-mini S&Ps up +0.73%.
Related Stocks
 ESZ18 - S&P 500 E-Mini
SymLastChgPct
ESZ182,458.90s-26.85-1.08%
CLF1947.20s+0.96+2.08%
DXY0096.003-0.036-0.04%
ZNH19121-280-0-010-0.03%
GCG191,289.5+1.1+0.09%
SIH1915.615-0.005-0.03%
HGH192.6470+0.0125+0.47%
RBF191.3237s-0.0025-0.19%
LULU141.13+1.40+1.00%
SIX61.97-0.23-0.37%
JAZZ128.00+0.75+0.59%
PLAY52.04+1.27+2.50%
FSLR46.86+0.13+0.28%
PVTL17.19+0.36+2.14%
LAND11.33-0.10-0.87%
AEO19.74-0.09-0.45%
HAIN18.18+0.39+2.19%
ARWR14.66+0.44+3.09%
FLDM8.65+0.04+0.46%
MRNS3.37+0.07+2.12%

Overnight Markets and News

Dec E-mini S&Ps (ESZ18 +0.71%) this morning are up +0.73% and European stocks are up +1.32% on optimism for the U.S.-China trade outlook. The CFO of Huawei Technologies was granted bail in Canada and President Trump said he would consider intervening in the case if it helps get a trade deal with China. Energy stocks are higher as Jan WTI crude oil (CLF19 +1.78%) climbs +1.78% after API data late Tuesday showed U.S. crude inventories fell -10.2 million bbl last week. European stocks rose on stronger-than-expected Eurozone Oct industrial production although gains were limited on Brexit concerns ahead of a no confidence vote tonight for UK Prime Minister May in her leadership of the Conservative Party. GBP/USD is up +0.46% after UK Prime Minster May said a leadership challenge would delay Brexit, or even risk it being canceled altogether and that she "will contest the vote with everything she has." Asian stocks settled higher: Japan +2.15%, Hong Kong +1.61%, China +0.31%, Taiwan +1.13%, Australia +1.39%, Singapore +1.33%, South Korea +1.43%, India +1.79%. Asian markets moved higher on speculation progress was being made for a resolution to the U.S-China trade conflict.

The dollar index (DXY00 -0.03%) is down -0.03%. EUR/USD (^EURUSD +0.13%) is up +0.10%. USD/JPY (^USDJPY +0.02%) is up +0.04%.

Mar 10-year T-note prices (ZNH19 -0-010) are up +0.5 of a tick.

Eurozone Oct industrial production rose +0.2% m/m and +1.2% y/y, stronger than expectations of +0.1% m/m and +0.7% y/y.

Japan Oct core machine orders rose +7.6% m/m and +4.5% y/y, weaker than expectations of +9.7% m/m and +5.0% y/y.

The Japan Oct tertiary industry index jumped +1.9% m/m, much stronger than expectations of +0.8% m/m and the largest increase in 4-1/2 years.

Japan Nov PPI of -0.3% m/m and +2.3% y/y was weaker than expectations of -0.1% m/m and +2.4% y/y with the -0.3% m/m decline the largest monthly drop in 2-1/4 years.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +2.0% to 340.5 with purchase sub-index +0.8% to 249.9 and refi sub-index +6.2% to 836.4), (2) EIA weekly Petroleum Status Report, (3) Treasury auctions $24 billion of 10-year T-notes, (4) Nov monthly budget statement (expected -$196.0 billion, Oct -$100.5 billion).

Notable Russell 1000 earnings reports today include: Nordson Corp (consensus $1.47).

U.S. IPO's scheduled to price today: CF Finance Acquisition Corp (CFFAU).

Equity conferences during the remainder of this week: BMO Prescriptions for Success Healthcare Conference on Wed, Imperial Capital Security Investor Conference on Wed.

Market Comments

Dec S&P 500 E-minis (ESZ18 +0.71%) this morning are up +19.25 points (+0.73%). Tuesday's closes: S&P 500 -0.04%, Dow Jones -0.22%, Nasdaq 100 +0.32%. The S&P 500 on Tuesday closed lower on ramped up U.S. political risks after President Trump threatened to shut down the U.S. government if his demand for funding for a border wall is not met. Stocks were also undercut by increased wholesale price pressures after U.S. Nov core PPI rose +0.3% m/m and +2.7% y/y, stronger than expectations of +0.1% m/m and +2.5% y/y. Stocks were supported by strength in auto stocks on a report that China is moving toward cutting tariffs on cars made in the U.S. to 15% from the current 40%. There was also strength in energy stocks as crude oil prices rose +1.27%.

Mar 10-year T-notes (ZNH19 -0-010) this morning are up +0.5 of a tick. Tuesday's closes: TYH9 -7.50, FVH9 -4.50. Mar 10-year T-notes on Tuesday closed lower signs of faster wholesale price pressures after U.S. core PPI rose more than expected. There was also weak demand for the Treasury's $38 billion auction of 3-year T-notes that had a bid-to-cover ratio of 2.59, weaker than the 12-auction average of 2.80. T-notes were supported by carry-over support from a rally in German 10-year bunds to a 6-1/2 month high and by reduced inflation expectations after the 10-year T-note breakeven inflation expectations rate dropped to a 13-1/2 month low.

The dollar index (DXY00 -0.03%) this morning is down -0.027 (-0.03%), EUR/USD (^EURUSD +0.13%) is up +0.0011 (+0.10%), and USD/JPY (^USDJPY +0.02%) is up +0.04 (+0.04%). Tuesday's closes: Dollar Index +0.254 (+0.26%), EUR/USD -0.0039 (-0.34%), USD/JPY +0.05 (+0.04%). The dollar index on Tuesday climbed to a 4-week high and closed higher on weakness in EUR/USD which fell to a 1-week low amid concern French President Macron's 2019 budget plan will boost the budget deficit to 3.4% of GDP, above the EU's 3.0% limit and prompt a downgrade of France's debt rating. There was also weakness in GBP/USD which fell to a new to a 1-1/2 year low on reports of a potential no-confidence vote against UK Prime Minister May in the British Parliament.

Metals prices this morning are mixed with Feb gold (GCG19 +0.10%) +2.2 (+0.18%), Mar silver (SIH19 +0.66%) +0,112 (+0.77%), and Mar copper (HGH19 -0.20%)
-0.006 (-0.22%). Tuesday's closes: Feb Comex gold (GCG19) on Tuesday closed down -2.2 (-0.18%) and Mar Comex silver (SIH19) closed up +0.023 (+0.16%). Feb gold erased an early rally and closed lower after the dollar index rallied to a 4-week high. Gold prices were pressured further after inflation expectations declined as the 10-year T-note breakeven inflation expectations rate tumbled to a 13-3/4 month low, which curbs demand for gold as an inflation hedge. Gold still has support from the recent turmoil in global equity markets that boosted demand for gold as a store of wealth after long gold positions in ETFs on Monday rose to a 4-1/4 month high. Mar silver raced up to a 1-month high Tuesday on speculation that industrial metals demand will improve on a report that China is moving toward cutting tariffs on cars made in the U.S. to 15% from the current 40%. On the negative side for silver, long silver positions in ETFs fell to a 5-1/4 month low Monday.

Jan WTI crude oil prices (CLF19 +1.78%) this morning are up +92 cents (+1.78%) and Jan gasoline (RBF19 +1.94%) is up +2.76 (+1.92%). Tuesday's closes: Jan WTI crude oil (CLF19) on Tuesday closed up by +$0.65 per barrel (+1.27%) and Feb Brent crude (CBG19) closed up +$0.60 (+1.00%). Jan RBOB gasoline (RBF19) closed up by +2.09 cents per gallon (+1.47). Crude prices moved higher Tuesday after Libya declared force majeure at its Sharara oil field when an armed group forced a production halt at the oil field that will cause a loss of -315,000 bpd of crude output. Another bullish factor is the outlook for smaller global crude production after Russian Energy Minister Novak said Russia will cut its oil production by 50,000 to 60,000 bpd starting in Jan. Finally, signs that China and the U.S are continuing trade talks eased global trade tensions and fueled a rally in global equity markets, which improves confidence in the economic outlook that may lead to improved energy demand. Crude prices fell back from their best levels Tuesday after the dollar index rose to a 4-week high.

Overnight U.S. Stock Movers

Lululemon Athletica (LULU +1.60%) was upgraded to 'Buy' from 'Neutral' at Citigroup with a price target of $152

Six Flags Entertainment (SIX -2.33%) was rated a new 'Buy' at Berenberg with a price target of $70.

Jazz Pharmaceuticals Plc (JAZZ +0.52%) was rated a new 'Outperform' at Oppenheimer with a price target of $180.

Dave & Buster's Entertainment (PLAY -2.78%) tumbled 15% in after-hours trading after it reported Q3 comparable sales fell -1.3%, weaker than expectations of -0.7%.

First Solar (FSLR -1.76%) gained nearly 2% in after-hours trading after it forecast 2019 net sales of $3.25 billion to $3.45 billion, well above consensus of $2.95 billion.

Pivotal Software (PVTL -1.28%) jumped 6% in after-hours trading after it raised its full-year revenue forecast to $657 million to $659 million from a prior forecast of $647 million to $653 million.

Gladstone Land Corp (LAND -1.26%) fell almost 5% in after-hours trading after it announced that it intends to sell $13 million of its common stock in an underwritten public offering.

American Eagle Outfitters (AEO -2.51%) lost 3% in after-hours trading after it reported Q3 comparable sales rose +8%, weaker than consensus of +8.4%, and then forecast Q4 adjusted EPS of 40 cents to 42 cents, below consensus of 45 cents.

Hain Celestial Group (HAIN -1.98%) rallied 6% in after-hours trading after its board approved of a strategy committee to evaluate strategic alternatives for the company.

Arrowhead Pharmaceuticals (ARWR -0.29%) slid 4% in after-hours trading after it reported a fiscal 2018 loss per share of -65 cents, wider than consensus of -40 cents.

Fluidigm (FLDM -1.17%) dropped 11% in after-hours trading after it announced that it intends to sell $40 million of its common stock in an underwritten public offering.

Marinus Pharmaceuticals (MRNS -2.67%) slumped 9% in after-hours trading after it announced that it intends to sell 12 million shares of its common stock in an underwritten public offering.