Morning Call For Sept. 8, 2014

OVERNIGHT MARKETS AND NEWS

September E-mini S&Ps (ESU14 -0.14%) this morning are down -0.16% and European stocks are down -0.41%, led by a slide in UK bank stocks after a poll showed a majority of voters favored Scottish independence. According to the YouGov Plc poll for the Sunday Times, 51% of Scottish voters favor breaking away from the UK, less than 2 weeks before Scottish voters vote on the referendum on Sep 18. Another negative for European stocks was the plunge in the Eurozone Sep Sentix investor confidence to a 14-month low. Asian stocks closed mixed: Japan +0.23%, Hong Kong -0.20%, China, Taiwan and South Korea closed for holiday, Australia -0.39%, Singapore -0.20%, India +1.08%. Commodity prices are mixed. Oct crude oil (CLV14 -0.62%) is down -0.66% at a 7-3/4 month low on Chinese demand concerns after China Aug imports unexpectedly fell by the most in 5 months. Oct gasoline (RBV14 -0.60%) is down -0.82%. Dec gold (GCZ14 -0.02%) is down -0.11%. Dec copper (HGZ14 +0.87%) is up +0.90% at a 1-week high. Agriculture prices are weaker. The dollar index (DXY00 +0.21%) is up +0.24%. EUR/USD (^EURUSD) is down -0.03%. USD/JPY (^USDJPY) is up +0.11%. GBP/USD is down -1.24% as the British pound sank to a 9-1/2 month low against the dollar amid speculation a Scotland breakaway from the UK would encourage the BOE to keep interest rates lower for longer. Dec T-note prices (ZNZ14 +0.14%) are up +5.5 ticks.

The China Aug trade balance unexpectedly widened to a record surplus of $49.84 billion from $47.30 billion in July, more than expectations for the trade balance to shrink to a $40.00 billion surplus. Aug exports rose +9.4% y/y, stronger than expectations of +9.0% y/y, and Aug imports unexpectedly fell -2.4% y/y, weaker than expectations of +3.0% y/y and the biggest decline in 5 months.

The Eurozone Sep Sentix investor confidence dropped -12.5 points to -9.8, a bigger decline than expectations of -1.3 to 1.4 and the lowest in 14 months.

The German Jul trade balance widened to a record 23.4 billion euro surplus from a 16.6 billion euro surplus in Jun, a larger surplus than expectations of 16.8 billion euros. Jul exports rose +4.7% m/m, stronger than expectations of +0.6% m/m and the biggest increase in 2 years. Jul imports unexpectedly fell -1.8% m/m, weaker than expectations of +0.2% m/m.

The German Jul current account balance unexpectedly widened to a 21.7 billion euros surplus from an upward revised +17.2 billion euro surplus in Jun, a bigger surplus than expectations of 14.0 billion euros and the most in 8 months.

UK Aug Halifax house prices rose +0.1% m/m and +9.7% y/y, less than expectations of +0.3% m/m and +10.0% y/y.

Japan Q2 GDP was revised lower to -7.1% q/q annualized from the previously reported -6.8% q/q annualized, a larger decline than expectations of -7.0% q/q annualized and the biggest pace of contraction in 5 years.

U.S. STOCK PREVIEW

The markets this week will focus on the situation in the Ukraine, anticipation of next week's FOMC meeting, the Treasury's sale of 3, 10 and 30-year securities, and this week's light U.S. economic calendar. There is one Russell 1000 companie that reports earnings today: Campbell Soup (consensus: $0.49).

Equity conferences this week include: Jefferies Big Data and Cloud Summit on Mon, Morgan Stanley Healthcare Conference on Mon-Wed, Barclays Global Financial Services Conference on Mon-Wed, D.A. Davidson Engineering & Construction Conference on Tue, KeyBanc Capital Markets Basic Materials & Packaging Conference on Tue, 4G World 2014/Tower & Small Cell Summit on Tue, Gabelli & Company Aerospace Conference on Tue, Gabelli Aircraft Suppliers Conference on Tue, Raymond James North American Equities Conference on Tue, Deutsche Bank dbAccess Technology Conference on Tue-Wed, RBC Capital Market Global Industrials Conference on Tue-Wed, UBS Best of Americas Conference on Tue-Thu, Latin Markets Mexico Energy Summit on Wed, Pareto Oil & Offshore Conference on Wed, Longbow Research - Industrial Manufacturing & Technology Investor Conference on Wed, Goldman Sachs Communacopia Conference on Wed-Fri, UBS Global Paper & Forest Products Conference on Thu, BIO Latin America Conference on Thu, and Credit Suisse Asian Technology Conference on Thu.

OVERNIGHT U.S. STOCK MOVERS

Ford (F -0.75%) slipped over 2% in pre-market trading after Morgan Stanley downgraded the stock to 'Underweight' from 'Equal Weight.'

Campbell Soup (CPB +0.66%) reported Q4 adjusted continuing operating EPS of 49 cents, right on consensus, although Q4 revenue of $1.85 billion was less than consensus of $1.87 billion.

Citigroup initiated a 'Buy' rating on AIG (AIG -0.34%) with a price target of $68.

Bank of America (BAC -0.56%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.

General Electric (GE +0.54%) will sell its appliances business to Electrolux AB (ELUXY -1.84%) for $3.3 billion.

Yahoo! (YHOO +1.02%) climbed over 3% in pre-market trading after Alibaba Group Holding Ltd. said it plans to raise as much as $21.1 billion in an intial public offering.

Facebook (FB +1.72%) rose over 2% in pre-market trading after it reported that daily views on its platform exceeded 1 billion.

Biotechnology Value Fund reported a 19.7% stake in Targacept (TRGT-3.31%) .

Starboard Value raises its stake in RealD (RLD +0.83%) to 9.1% from 7.9%.

Teledyne Technologies reported a 5.65% stake in Bolt Technology (BOLT-0.09%) .

MARKET COMMENTS

Sep E-mini S&Ps (ESU14 -0.14%) this morning are down -3.25 points (-0.16%). The S&P 500 Index on Friday recovered from a 2-week low and closed higher: S&P 500 +0.50%, Dow Jones +0.40%, Nasdaq +0.59%. Bullish factors included (1) speculation the Fed will be slow to raise interest rates after the weaker-than-expected Aug payrolls report, and (2) reduced tensions in Ukraine after the Ukraine government and pro-Russian separatists agreed to a cease-fire. Stocks had opened lower after the Aug payroll report showed (1) a +142,000 increase in Aug non-farm payrolls, less than expectations of +225,000 and the fewest in 8 months, and (2) no increase in Aug manufacturing payrolls, less than expectations of +18,000 and the fewest in 13 months.

Dec 10-year T-notes (ZNZ14 +0.14%) this morning are up +5.5 ticks. Dec 10-year T-note futures prices on Friday closed higher. The main bullish factor Friday was the smaller-than-expected increase in Aug non-farm payrolls that rose by the least in 8 months, which bolstered speculation the Fed will maintain record stimulus well into next year. Prices came off of their best levels on (1) reduced safe-haven demand after Ukraine and pro-Russian separatists agreed to a cease-fire, and (2) after stocks shook off early losses and closed higher. Closes: TYZ4 +2.50, FVZ4 +5.25.

The dollar index (DXY00 +0.21%) this morning is up +0.203 (+0.24%). EUR/USD (^EURUSD) is down -0.0004 (-0.03%) and USD/JPY (^USDJPY) is up +0.12 (+0.11%). The dollar index on Friday fell back from a 13-3/4 month high and closed lower. Bearish factors included (1) long liquidation in the dollar on speculation the Fed will be slow to raise interest rates after Aug non-farm payrolls rose less than expected, and (2) the larger-than-expected +1.9% increase in German Jul industrial production, the most in 2-1/3 years and also supportive for EUR/USD. Closes: Dollar index -0.081 (-0.10%), EUR/USD +0.0005 (+0.04%), USD/JPY -0.230 (-0.22%).

Oct WTI crude oil (CLV14 -0.62%) this morning is down -62 cents (-0.66%) at a 7-3/4 month low and Oct gasoline (RBV14 -0.60%) is down -0.0211 (-0.82%). Oct crude and gasoline prices on Friday closed lower: CLV4 -1.16 (-1.23%), RBV4 -0.0165 (-0.63%). Bearish factors included (1) the smaller-than-expected increase in U.S. Aug non-farm payrolls, which suggests slower economic growth and energy demand, and (2) speculation that scheduled autumn U.S. refinery maintenance will reduce refinery demand for crude.

GLOBAL EVENT CALENDAR09/08/2014

U.S. STOCK CALENDAR09/08/2014