Morning Call For Thursday, July 13

OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU17 +0.08%) this morning are up +0.14% and European stocks are up +0.61%, both at 2-week highs after Fed Chair Yellen signaled yesterday that the Fed will be in no rush to raise interest rates as they wait to see if inflation picks up later this year. Signs of growth in the global economy are another bullish factor for stocks after Chinese trade data showed China Jun exports and imports both rose more than expected. Asian stocks settled higher: Japan +0.01%, Hong Kong +1.167%, China +.64%, Taiwan +0.38%, Australia +1.11%, Singapore +0.83%, South Korea +0.88%, India +0.73%.

The dollar index (DXY00 +0.02%) is up +0.05 and rebounded from a 9-1/4 month low in overnight trade. The dollar was under pressure from Wednesday's comments on inflation from Fed Chair Yellen that curbed expectations on the pace of future Fed rate hikes. EUR/USD (^EURUSD) is down -0.22% after ECB Governing Council member Rimsevics said QE will continue for "a few years." USD/JPY (^USDJPY) is down -0.14% at a 1-week low.

Sep 10-year T-note prices (ZNU17 +0.06%) are up +5 ticks.

ECB Governing Council Member Rimsevics said that the inflation forecast is still far from the ECB's goal and that QE will continue for "a few years."

The China Jun trade balance was in surplus by $42.8 billion, wider than expectations of $42.6 billion and the largest surplus in 5-months. Jun exports rose +11.3% y/y, stronger than expectations of +8.9% y/y. Jun imports rose +17.2% y/y, stronger than expectations of +14.5% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly initial unemployment claims (expected -3,000 to 245,000, previous +4,000 to 248,000) and continuing claims (expected -6,000 to 1.950 million, previous +13,000 to 1.956 million), (2) Jun PPI final demand (expected unch m/m and +1.9% y/y, May unch m/m and +2.4% y/y) and Jun PPI ex food & energy (expected +0.2% m/m and +2.0% y/y, May +0.3% m/m and +2.1% y/y), (3) Fed Chair Yellen appears before Senate Banking Committee on the second day of her semi-annual testimony to Congress, (4) Fed Governor Lael Brainard speaks on monetary policy at the National Bureau of Economic Research Monetary Economics Seminar Institute, (5) Treasury auctions $12 billion of 30-year T-bonds, (6) Jun monthly budget statement (expected -$31.0 billion, May -$88.426 billion), (7) USDA weekly Export Sales.

Notable Russell 3000 earnings reports today include: Delta Air Lines (consensus $1.66), Commerce Bancshares (0.70).

U.S. IPO's scheduled to price today: Akcea Therapeutics (AKCA).

Equity conferences this week: none.

OVERNIGHT U.S. STOCK MOVERS

International Paper (IP +0.30%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs with a price target of $64.

Fastenal (FAST -2.00%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a 12-month target price of $50.

Progressive (PGR +0.63%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a price target of $52.

AT&T (T +0.63%) was downgraded to 'Neutral' from 'Buy' at Bank of America/Merrill Lynch.

Intercontinental Exchange (ICE +0.69%) was upgraded to 'Outperform' from 'Sector Perform' at RBC Capital Markets with a price target of $70.

Agilent (A +1.56%) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $67.

Legg Mason (LM +1.37%) was downgraded to 'Neutral' from 'Buy' at Citigroup.

Bruker (BRKR -0.03%) slipped over 2% in after-hours trading after it was downgraded to 'Underperform' from 'Market Perform' at Wells Fargo Securities with a 12-month target price of $25.

Mallinckrodt PLC (MNK +2.44%) said the FDA granted orphan drug status to its MNK-1411 to treat Duchenne muscular dystrophy.

Amgen (AMGN -0.03%) may move higher this morning after it said late Wednesday that its final analysis of the Phase 3 trial of its Kyprolis with lenalidomide and dexamethansone met the secondary endpoint of overall survival in patients with multiple myeloma.

Box Inc. (BOX +2.08%) gained nearly 1% in after-hours trading after it named Stephanie Carlo, previous vice president of U.S. education sales at Apple, as its new COO.

Amicus Therapeutics (FOLD +1.93%) dropped over 5% in after-hours trading after it announced that it had commenced a $225 million underwritten public offering of its common stock.

China Commercial Credit (CCCR -0.32%) jumped over 10% in after-hours trading after it said it entered into a non-binding letter of intent to acquire Sorghum Investment Holdings Limited.

MARKET COMMENTS

Sep E-mini S&Ps (ESU17 +0.08%) this morning are up +3.50 points (+0.14%) at a fresh 2-week high. Wednesday's closes: S&P 500 +0.73%, Dow Jones +0.57%, Nasdaq +1.21%. The S&P 500 on Wednesday rallied to a 2-week high and closed higher on upbeat comments from Fed Chair Yellen who said the U.S. economy should continue to expand over the next few years and that the Fed's policy rate "would not have to rise all that much further" to get to a rate that keeps supply and demand in balance in the economy. There was also a rally in energy stocks as crude oil prices climbed +1.00%.

Sep 10-year T-notes (ZNU17 +0.06%) this morning are up +5 ticks. Wednesday's closes: TYU7 +11.00, FVU7 +6.25. Sep 10-year T-notes on Wednesday rose to a 1-week high and closed higher on comments from Fed Chair Yellen that had a dovish tilt as she said the Fed "would not have to rise all that much further" to get to a rate that keeps supply and demand in balance in the economy." T-notes were also supported by the Fed's Beige Book that stated wages and inflation in the 12 Fed districts remained generally subdued and that many districts noted some softening in consumer spending.

The dollar index (DXY00 +0.02%) this morning is up +0.048 (+0.05%). EUR/USD (^EURUSD) is down -0.0025 (-0.22%) and USD/JPY (^USDJPY) is down -0.16 (-0.14%) at a 1-week low. Wednesday's closes: Dollar index +0.092 (+0.10%), EUR/USD -0.0055 (-0.48%), USD/JPY -0.77 (-0.68%). The dollar index on Wednesday closed higher on comments from Fed Chair Yellen who said that the U.S. economy should continue to expand over the next few years and allow the Fed to keep raising interest rates.

Aug WTI crude oil prices (CLQ17 -0.68%) this morning are down -31 cents (-0.68%) and Aug gasoline (RBQ17 -0.93%) is -0.0138 (-0.91%). Wednesday's closes: Aug crude +0.45 (+1.00%), Aug gasoline +0.0025 (+0.16%). Aug crude oil and gasoline on Wednesday closed higher with Aug gasoline at a 5-week high. Crude oil prices were boosted by the -7.56 million bbl decline in EIA crude inventories to a 5-month low (vs expectations of -2.5 million bbl), the -1.647 million bbl drop in EIA gasoline inventories to a 6-month low (vs expectations of -550,000 bbl), and the -1.948 million bbl draw in crude stockpiles at Cushing to a 1-1/2 year low.

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