Morning Call For Thursday, Dec. 20

UK Dec CBI retailing reported sales fell -32 to a 14-month low of -13, weaker than expectations of -4 to 15.

U.S. Stock Preview

Key U.S. news today includes: (1) weekly initial unemployment claims (expected +9,000 to 215,000, previous -27,000 to 206,000) and continuing claims (expected +2,000 to 1.663 million, previous +25,000 to 1.661 million), (2) Dec Philadelphia Fed business outlook index (expected +2.1 to 15.0, Nov -9.3 to 12.9), (3) Nov leading indicators (expected unch m/m, Oct +0.1%), (4) Treasury auctions $14 billion of 5-year TIPS.

Notable Russell 1000 earnings reports today include: NIKE (consensus $0.46), Carnival (0.70), Accenture (1.86), Walgreens (1.43), Conagra (0.56), Cintas (1.71).

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 +0.19%) this morning are up +10.00 points (+0.40%). Wednesday's closes: S&P 500 -1.54%, Dow Jones -1.49%, Nasdaq 100 -2.29%. The S&P 500 on Wednesday slumped to a new 14-1/2 month low and closed lower on the hawkish interpretation of the FOMC meeting where the Fed dots only reduced the forecast to two rate hikes in 2019 from three rate hikes, versus market hopes for a more clear cut signal that the Fed would be firmly on pause in early 2019. Stocks found some support from the unexpected +1.9% increase in U.S. Nov existing home sales to 5.32 million, stronger than expectations of -0.4% to 5.20 million.

Mar 10-year T-notes (ZNH19 -0-015) this morning are down -1.5 ticks. Wednesday's closes: TYH9 +10.0, FVH9 +4.25. Mar 10-year T-notes on Wednesday rallied to a contract high and closed higher on ideas that the Fed will raise interest rates by too much in 2019 and cause a recession. T-note prices were also boosted by the slump in stocks, which boosted the safe-haven demand for T-notes.

The dollar index (DXY00 -0.69%) this morning is down -0.703 (-0.72%) at a 1-month low, EUR/USD (^EURUSD +0.76%) is up +0.0086 (+0.76%) at a 1-1/2 month high, and USD/JPY (^USDJPY -0.63%) is down -0.74 (-0.66%) at a 1-3/4 month low. Wednesday's closes: Dollar Index -0.069 (-0.07%), EUR/USD +0.0015 (+0.13%), USD/JPY -0.04 (-0.04%). The dollar index on Wednesday dropped to a 1-week low and closed lower on the sell-off in stocks that boosted the safe-haven demand for the yen and caused a drop in USD/JPY to a 1-1/2 month low. The dollar was also undercut by the FOMC's cut in its U.S. 2019 GDP estimate to 2.3% from a Sep estimate of 2.5%.

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