Overnight Markets And News

Mar E-mini S&Ps (ESH19 -0.12%) this morning are down -0.08% on weakness in retail stocks, led by a 4% decline in Best Buy in pre-market trading, after it was downgraded to 'Underperform‘ at Bank of America/Merrill Lynch. Also weighing on the market is concern there could be a partial shutdown of the U.S. government Friday night if lawmakers and President Trump fail to resolve funding for President Trump's wall along the Mexican border. European stocks are down -0.49% as weakness in retailers drags the overall market lower. UK's Asos Plc plunged nearly 40% after it cut its full-year sales-growth guidance and warned the Christmas shopping season got off to a disastrous start. Losses in the overall market were limited as energy stocks advanced with Jan WTI crude oil (CLF19+1.11%) up +1.19% after last Friday afternoon's data from Baker Hughes showed active U.S. oil rigs fell to an 8-week low. Asian stocks settled mostly higher: Japan +0.62%, Hong Kong -0.03%, China +0.16%, Taiwan +0.14%, Australia +1.00%, Singapore +1.21%, South Korea +0.29%, India +0.85%. China's Shanghai Composite recovered from a 2-week low and eked out a small gain as a rally in energy producers lifted the overall market.

The dollar index (DXY00 -0.25%) is down -0.32%. EUR/USD (^EURUSD +0.30%) is up +0.33%. USD/JPY (^USDJPY -0.07%) is down -0.10%.

Mar 10-year T-note prices (ZNH19 +0-020) are up +2 ticks.

Eurozone Nov CPI was revised lower to +1.9% y/y from the originally reported +2.0% y/y, the slowest pace of increase in 6 months. Nov core CPI was left unrevised at +1.0% y/y.

China Nov new home prices rose +0.98% m/m and +10.3% y/y. Home prices rose in 63 cities in Nov, down from 65 that rose in Oct.

U.S. Stock Preview

Key U.S. news today includes: (1) Dec Empire manufacturing index (expected -3.3 to 20.0, Nov +2.2 to 23.3), (2) Dec NAHB housing market index (expected +1 to 61, Nov -8 to 60).

Notable Russell 1000 earnings reports today include: Oracle (consensus $0.78), Red Hat (0.87), HEICO (0.48).

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

Equity conferences during the remainder of this week: none.

Market Comments

Mar S&P 500 E-minis (ESH19 -0.12%) this morning are down -2.00 points (-0.08%). Friday's closes: S&P 500 -1.91%, Dow Jones -2.02%, Nasdaq 100 -2.56%. The S&P 500 on Friday closed sharply lower on concern about the health of the global economy after China Nov industrial production growth eased to a 10-year low of +5.4% y/y and after the Eurozone Dec Markit manufacturing PMI fell -0.4 to a 2-3/4 year low of 51.4 (weaker than expectations of unchanged at 51.8). There were also signs of a slowdown in U.S. manufacturing activity after the U.S. Dec Markit manufacturing PMI fell -1.4 to a 1-year low of 53.9, weaker than expectations of -0.3 to 55.0. Energy stocks were weak as crude oil prices fell -2.62%.

Mar 10-year T-notes (ZNH19 +0-020) this morning are up +2 ticks. Friday's closes: TYH9 +5.0, FVH9 +4.00. Mar 10-year T-notes on Friday closed higher on the sell-off in global equity markets on economic growth concerns, which boosted the safe-haven demand for T-notes. T-note prices were also boosted by the slide in the 10-year T-note breakeven inflation expectations rate to a 1-1/4 year low.

The dollar index (DXY00 -0.25%) this morning is down -0.31 (-0.32%), EUR/USD (^EURUSD +0.30%) is up +0.0037 (+0.33%), and USD/JPY (^USDJPY -0.07%) is down -0.11 (-0.10%). Friday's closes: Dollar Index +0.379 (+0.39%), EUR/USD -0.0055 (-0.48%), USD/JPY -0.24 (-0.21%). The dollar index on Friday rallied to a 1-1/2 year high and closed higher on the slightly stronger-than-expected U.S. Nov retail sales report of +0.2% (+0.9% in the retail sales control group). There was also weakness in EUR/USD which fell to a 2-week low after Eurozone Dec Markit PMI fell more than expected (-0.4 to 51.4) to its slowest pace of growth in 2-3/4 years.

Metals prices this morning are mixed with Feb gold (GCG19 +0.17%) +2.0 (+0.16%), Mar silver (SIH19 +0.33%) +0.033 (+0.23%), and Mar copper (HGH19 -0.89%) -0.024 (-0.85%). Friday's closes: Feb Comex gold (GCG19) on Friday closed down -6.0 (-0.48%) and Mar Comex silver (SIH19) closed down -0.218 (-1.47%). Feb gold and Mar silver retreated to 1-week lows Friday due to dollar strength as the dollar index surged to a 1-1/2 year high. An easing of trade tensions between the U.S. and China also reduced safe-haven demand for precious metals after China said it will remove the retaliatory 25% tariff on automobiles imported from the U.S. for three months starting Jan 1. Concern about global demand for industrial metals undercut silver prices after China Nov industrial production rose a weaker-than-expected +5.4% y/y, the slowest pace in 10 years, and after the Eurozone Dec Markit manufacturing PMI showed a larger-than-expected -0.4 point decline to 51.4, the slowest pace of expansion in 2-3/4 years. Finally, fund selling of silver continues as long silver positions in ETFs fell to a 5-1/2 month low Thursday. On the positive side for gold is recent stock market volatility that has boosted demand for gold as a store of wealth after long gold positions in ETFs rose to a 4-1/2 month high Thursday.

Jan WTI crude oil prices (CLF19 +1.11%) this morning are up +61 cents (+1.19%) and Jan gasoline (RBF19 +1.30%) is up +2.16 cents (+1.51%). Friday's closes: Jan WTI crude oil (CLF19) on Friday closed down by -$1.48 per barrel (-2.62%) and Feb Brent crude (CBG19) closed down -$1.17 (-1.90%). Jan RBOB gasoline (RBF19) closed down by -4.39 cents per gallon (-2.97%). The energy complex was under pressure Friday due to strength in the dollar as the dollar index soared to a 1-1/2 year high. Also, economic weakness in China, the world's second-largest crude consumer, raised energy demand concerns after China Nov industrial production rose a less-than-expected +5.4% y/y, the slowest pace in 10 years. On the positive side was positive U.S. economic data after U.S. Nov retail sales rose +0.2%, slightly stronger than expectations of +0.1%. The early-afternoon Baker Hughes data was also supportive since it showed that active U.S. oil rigs in the week ended December 14 fell by -4 rigs to a 1-3/4 month low of 873, although that was still high at only 15 rigs below the recent 3-3/4 year high of 888 rigs posted in the week ended Nov 16.

Overnight U.S. Stock Movers

Best Buy (BBY -1.00%) is down 4% in pre-market trading after it was downgraded to 'Underperform' from 'Neutral' at Bank of America/Merrill Lynch.

Illinois Tool Works (ITW -1.65%) was downgraded to 'Sell' from 'Hold' at Deutsche Bank with a price target of $125.

Lululemon Athletica (LULU -0.90%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $151.

Sherwin-Williams (SHW +0.03%) was upgraded to 'Overweight' from 'Neutral" at JPMorgan Chase with a price target of $415.

Skechers (SKX -2.59%) was rated a new 'Buy' at Stifel with a price target of $32.

LyondellBasell (LYB -1.60%) was upgraded to 'Buy' from 'Hold' at Deutsche Bank with a price target of $95.

TE Connectivity Ltd (TEL -0.79%) may open higher initially this morning after its board added $1.5 billion to its share repurchase program and recommended the annual dividend rate be increased by about 4.5%.

Raytheon (RTN -1.50%) may open higher initially this morning after it reported that it had won a $149.4 million contract from the U.S. Navy for the engineering, manufacturing and development of the Standard Missle-2 Block IIIC.

Yangtze River Port & Logistics Ltd (YRIV -7.69%) jumped 13% in after-hours trading on signs of insider buying after CEO Liu reported to the SEC that he bought $1.7 million in shares of the company's stock.

Anworth Mortgage Asset (ANH +1.34%) may open lower initially this morning after it unexpectedly cut its quarterly dividend to 13 cents a share from 14 cents a share.

Catalyst Pharmaceuticals (CPRX -4.88%) rose 3% in after-hours trading on signs of insider buying after company Director O'Keefe reported a purchase of 20,000 shares of the company's stock.