Barchart Morning Call

OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH17 -0.20%) are down -0.03% and European stocks are up +0.14%. U.S. stock futures are being dragged lower by weakness in retailers with Kohl’s down 13% and Macy's down 10% in pre-market trading after both companies cut their 2017 EPS forecasts. Losses were limited as energy producers rose with Feb WTI crude oil (CLG17 +0.79%) up +0.94% after the API reported late Wednesday that U.S. crude supplies fell -7.43 million bbl last week. Feb COMEX gold (GCG17 +0.82%) is up +0.64% at a 3-week high and the German 10-year bund yield climbed to a 2-week high on increased price pressures after Eurozone Nov producer prices posted their first year-on-year increase in more than 3 years. Asian stocks settled mixed: Japan -0.37%, Hong Kong +1.46%, China +0.21%, Taiwan +0.77%, Australia +0.30%, Singapore +1.12%, South Korea -0.43%, India +0.92%. Japan's Nikkei Stock Index closed lower as exporter stocks sold-off after USD/JPY fell to a 3-week low, which reduces exporters' earnings prospects. China's Shanghai Composite climbed to a 3-week high on signs of strength in the Chinese economy after a gauge of growth in the service sector last month expanded at the fastest pace in 17 months.

The dollar index (DXY00 -0.43%) is down -0.31% at a 3-week low. EUR/USD (^EURUSD) is up +0.07%. USD/JPY (^USDJPY) is down -0.43% at a 3-week low.

Mar 10-year T-note prices (ZNH17 +0.13%) are up +3.5 ticks at a 3-week high.

The China Dec Caixin services PMI rose +0.3 to 53.4, the fastest pace of expansion in 17 months.

Eurozone Nov PPI unexpectedly rose +0.1% y/y, stronger than expectations of -0.1% y/y and the first year-on-year increase in 3-1/3 years.


U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Dec Challenger job cuts (Nov -13.0% y/y), (2) Dec ADP employment (expected +175,000, Nov +216,000), (3) weekly initial unemployment claims (expected -5,000 to 260,000, previous -10,000 to 265,000) and continuing claims (expected -51,000 to 2.051 million, previous +63,000 to 2.102 million), (4) revised Dec Markit services PMI (prelim-Dec -1.2 to 53.4), (5) Dec ISM non-manufacturing index (expected -0.5 to 56.7, Nov +2.4 to 57.2), (6) EIA Weekly Petroleum Status Report.

Russell 1000 earnings reports today include: Monsanto (consensus $0.02), Walgreens (1.09), Constellation Brands (1.72), RPM International (0.61).

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

Equity conferences this week include: Citi Global Internet, Media and Telecommunications Conference on Tue-Thu, Goldman Sachs CEOs Unplugged Conference on Thu, J.P. Morgan CES Tech Forum on Thu, JP Morgan Chase & Co., Inc. International Tech Forum on Thu.


OVERNIGHT U.S. STOCK MOVERS

Macy's (M +1.73%) sank almost 10% in pre-market trading after it cut its 2017 EPS forecast to $2.95-$3.10 from a prior view of $3.15-$3.40 and said it plans to close 68 stores and cut 6,200 jobs.

Kohl's (KSS +4.22%) tumbled over 13% in pre-market trading after it said comparable same-store sales fell -2.1% y/y in the fiscal months of November and December combined, and then it cut its 2017 adjusted EPS forecast to $3.60-$3.65 from a November 10 estimate of $3.80-$4.00.

Adobe Systems (ADBE +0.64%) was rated a new 'Outperform' at BMO Capital Markets with a target price of $125.

McKesson (MCK +0.78%) was downgraded to 'Neutral' from 'Overweight' at JPMorgan Chase with an 18-month target price of $169.

Helix Energy Solutions Group (HLX +3.53%) sank 10% in after-hours trading after it proposed an offering of 21 million shares of common stock.

Buffalo Wild Wings (BWLD +1.32%) was downgraded to 'Neutral' from 'Outperform' at Wedbush with a price target of $155.

Mistras Group (MG +2.41%) slumped 10% in after-hours trading after it reported Q2 EPS of 26 cents, below consensus of 31 cents.

Kilroy Realty (KRC +1.48%) slid 3% in after-hours trading after it commenced an offering of 3.5 million shares of common stock.

Hudson Pacific Properties (HPP +1.23%) lost 1% in after-hours trading after holders offered 18.7 million shares of stock.

Alexion Pharmaceuticals (ALXN +3.65%) rallied over 3% in after-hours trading after a board audit committee concluded that it sees no need to restate financial results after investigating a claim made by a former employee about Soliris sales and practices.

Moelis (MC +2.65%) fell 4% in after-hours trading after it offered 5 million shares of Class A common stock.

Heron Therapeutics (HRTX +2.99%) dropped nearly 10% in after-hours trading after it forecast 2017 sales of its Sustol nausea treatment drug at $15 million to $25 million, well below consensus of $50 million.

Synergy Pharmaceuticals (SGYP +6.88%) climbed 3% in after-hours trading after it was rated a new 'Outperform' at Oppenheimer with a price target of $10.

Loxo Oncology (LOXO +5.28%) fell over 3% in after-hours trading after it proposed a public offering of common stock, although no amount or size was given.


MARKET COMMENTS

Mar E-mini S&Ps (ESH17 -0.20%) this morning are down -0.75 of a point (-0.03%). Wednesday's closes: S&P 500 +0.57%, Dow Jones +0.30%, Nasdaq +0.53%. The S&P 500 on Wednesday closed higher on strength in mining stocks after the price of copper rose +2.7% to a 2-week high and on strength in oil companies after the price of crude oil climbed +1.78%. Auto makers also saw strength after U.S. Dec auto sales soared to 18.29 million units, stronger than expectations of 17.70 million and the most in 11-1/3 years.

Mar 10-year T-notes (ZNH17 +0.13%) this morning are yp +3.5 ticks at a 3-week high. Wednesday's closes: TYH7 unch, FVH7 -0.50. Mar 10-year T-notes on Wednesday closed little changed. T-notes were undercut by weakness in German bunds on increased price pressures after the Eurozone Dec CPI rose more than expected. T-notes recovered their losses after the Dec 13-14 FOMC minutes said that most FOMC policy makers saw a gradual rate hike pace as "appropriate."

The dollar index (DXY00 -0.43%) this morning is down -0.32 (-0.31%) at a 3-week low. EUR/USD (^EURUSD) is up +0.0007 (+0.07%). USD/JPY (^USDJPY) is down -0.51 (-0.43%) at a 3-week low. Wednesday's closes: Dollar index -0.680 (-0.66%), EUR/USD +0.0084 (+0.81%), USD/JPY -0.50 (-0.42%). The dollar index on Wednesday closed lower on strength in EUR/USD after Eurozone Dec CPI rose +1.1% y/y, stronger than expectations of +1.0% y/y and the largest increase in 3-1/4 years, which dampened expectations that the ECB will expand stimulus measures. The dollar was also undercut by the comment in the Dec 13-14 FOMC meeting minutes that most FOMC members saw a gradual rate hike pace as "appropriate."

Feb WTI crude oil prices (CLG17 +0.79%) this morning are up +50 cents (+0.94%) and Feb gasoline (RBG17 -0.13%) is +0.0006 (+0.04%). Wednesday's closes: Feb crude +0.93 (+1.78%), Feb gasoline +0.0170 (+1.05%). Feb crude oil and gasoline on Wednesday closed higher on a weaker dollar and expectations for Thursday's weekly EIA crude inventories to fall -2.00 million bbl.


GLOBAL EVENT CALENDAR01/05/2017

Thursday, Jan 5

US

0730 ET

Dec Challenger job cuts, Nov -13.0% y/y.

0815 ET

Dec ADP employment change expected +175,000, Nov +216,000.

0830 ET

Weekly initial unemployment claims expected -5,000 to 260,000, previous -10,000 to 265,000. Weekly continuing claims expected -51,000 to 2.051 million, previous +63,000 to 2.102 million.

0945 ET

Revised Dec Markit services PMI, prelim-Dec -1.2 to 53.4.

1000 ET

Dec ISM non-manufacturing index expected -0.5 to 56.7, Nov +2.4 to 57.2.

1100 ET

EIA Weekly Petroleum Status Report.

1100 ET

Treasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $20 billion) and 30-year T-bonds (previous $12 billion) to be auctioned Jan 10-12.

Friday, Jan 6

US

0830 ET

Dec non-farm payrolls expected +180,000, Nov +178,000. Dec private payrolls expected +170,000, Nov +156,000. Dec manufacturing payrolls expected unch, Nov -4,000. Dec unemployment rate expected +0.1 to 4.7%, Nov -0.3 to 4.6%.

0830 ET

Dec avg hourly earnings expected +0.3% m/m and +2.8% y/y, Nov -0.1% m/m and +2.5% y/y. Dec avg weekly hours all-employees expected unch at 34.4 hours, Nov unch at 34.4 hours.

0830 ET

Nov trade balance expected -$44.7 billion, Oct -$42.6 billion.

0830 ET

USDA weekly Export Sales.

1000 ET

Nov factory orders expected -2.3%, Dec +2.7% and +0.8% ex transportation.

1215 ET

Chicago Fed President Charles Evans (voter) participates in a NABE and AEA panel discussion titled Responders of First or Last Resort: Central Bank Strategies in an Era of Ultra-Low Interest Rates.

1300 ET

Richmond Fed President Jeffrey Lacker (non-voter) speaks at the Maryland Bankers Associations Economic Outlook Forum.

U.S. STOCK CALENDAR01/05/2017

Company
Ticker
Time
Event Description
Period
Estimate

RPM International Inc

RPM US

Bef-mkt

Q2 2017 Earnings Release

Q2 2017

0.605

Constellation Brands Inc

STZ US

Bef-mkt

Q3 2017 Earnings Release

Q3 2017

1.718

Walgreens Boots Alliance Inc

WBA US

7:00

Q1 2017 Earnings Release

Q1 2017

1.093

L Brands Inc

LB US

7:30

December 2016 Sales and Revenue Call

2016

Monsanto Co

MON US

8:00

Q1 2017 Earnings Release

Q1 2017

0.017

Walgreens Boots Alliance Inc

WBA US

8:30

Q1 2017 Earnings Call

Q1 2017

Ionis Pharmaceuticals Inc

IONS US

9:30

IONIS-GCGR Rx Phase 2 Study Results Call

Monsanto Co

MON US

9:30

Q1 2017 Earnings Call

Q1 2017

RPM International Inc

RPM US

10:00

Q2 2017 Earnings Call

Q2 2017

Constellation Brands Inc

STZ US

10:30

Q3 2017 Earnings Call

Q3 2017

Gap Inc/The

GPS US

16:15

December 2016 Sales and Revenue Release

2016

L Brands Inc

LB US

December 2016 Sales and Revenue Release

2016

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