Overnight Markets And News

Dec E-mini S&Ps (ESZ18 -0.53%) this morning are down -0.50% and European stocks are down -0.28% ahead of Saturday's meeting between U.S. President Trump and Chinese President Xi Jinping that could decide the course of the trade war. Energy stocks are also weaker, with Jan WTI crude oil (CLF19 -1.65%) down -1.77%, after Russian Energy Minister Novak told Tass news agency that current oil prices are fine, and that Russia will hold oil output steady until the end of the year. European stocks were undercut on signs of slower economic growth after German Oct retail sales unexpectedly declined and after the Eurozone Oct unemployment rate inched higher. Asian stocks settled mostly higher: Japan +0.40%, Hong Kong +0.21%, China +0.81%, Taiwan +0.03%, Australia -1.58%, Singapore +0.26%, South Korea -1.02%, India +0.07%. China's Shanghai Composite rebounded from a 1-month low and closed higher on optimism a wider trade conflict between the U.S. and China can be averted after President Trump said he is very close to "doing something" with China ahead of his planned meeting with Chinese President Xi Jinping on Saturday. The Shanghai Composite had tumbled to a 1-month low early in the session on signs of a slowdown in China's economy after the China Nov manufacturing PMI fell -0.2 to 50.0 the slowest pace of expansion in 2-1/4 years. Japanese stocks moved higher on signs of a recovery in Japan after Japan Oct industrial production rose +2.9% m/m, the biggest increase in 3-3/4 years.

The dollar index (DXY00 +0.18%) is up +0.17%. EUR/USD (^EURUSD -0.23%) is down -0.26%% after Eurozone Nov core CPI rose less than expected, which is dovish for ECB policy. USD/JPY (^USDJPY +0.04%) is up +0.04%.

Dec 10-year T-note prices (ZNZ18 +0-060) are up +6 ticks.

Eurozone Nov CPI rose +2.0% y/y, right on expectations. Nov core CPI rose +1.0% y/y, weaker than expectations of +1.1% y/y.

The Eurozone Oct unemployment rate was unch at 8.1%, weaker than expectations of -0.1 to 8.0%.

German Oct retail sales unexpectedly fell -0.3% m/m, weaker than expectations of +0.4% m/m ad the fourth consecutive month that retail sales have declined.

The China Nov manufacturing PMI fell -0.2 to 50.0, weaker than expectations of no change at 50.2 and the slowest pace of expansion in 2-1/4 years.

Japan Nov consumer confidence unexpectedly fell -0.1 to a nearly 2-year low of 42.9, weaker than expectations of +0.2 to 43.2.

Japan Oct industrial production rose +2.9% m/m, stronger than expectations of +1.2% m/m and the biggest increase in 3-3/4 years.

The Japan Oct jobless rate unexpectedly rose +0.1 to 2.4%, weaker than expectations of no change at 2.3%. The Oct job-to-applicant ratio fell -0.02 to 1.62, weaker than expectations of +0.01 to 1.65.

U.S. Stock Preview

Key U.S. news today includes: (1) New York Fed President John Williams (voter) speaks on the global economy at a meeting of the Group of 30 in New York, and (2) Nov Chicago PMI (expected +0.1 to 58.5, Oct -2.0 to 58.4).

Notable Russell 1000 earnings reports today include: none.

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

Equity conferences during the remainder of this week: none.

Market Comments

Dec S&P 500 E-minis (ESZ18 -0.53%) this morning are down -13.75 points (-0.50%). Thursday's closes: S&P 500 -0.22%, Dow Jones -0.11%, Nasdaq 100 -0.30%. The S&P 500 on Thursday closed lower on caution ahead of the Saturday trade meeting between Presidents Trump and Xi. Stocks were also undercut by the unexpected increase in U.S. weekly jobless claims by +10,000 to a 6-month high of 234,000 (weaker than expectations of -4,000 to 220,000) and by the unexpected decline in U.S. Oct pending home sales by -2.6% m/m (weaker than expectations of +0.5% m/m and the biggest decline in 9 months). Stocks found some support on signs of strength in U.S. consumer spending after U.S. Oct personal spending rose +0.6%, stronger than expectations of +0.4% and the biggest increase in 7 months.

Dec 10-year T-notes (ZNZ18 +0-060) this morning are up +6 ticks. Thursday's closes: TYZ8 +1.50, FVZ8 +0.25. Dec 10-year T-notes on Thursday rallied to a 2-1/2 month high and closed higher on carry-over support from Wednesday when Fed Chair Powell opened the door for a potential pullback in rate hikes next year after he said rates are "just below" the range of neutral estimates. T-notes were also supported by slack inflation pressures after the U.S. Oct core PCE deflator, the Fed's preferred inflation gauge, rose +1.8% y/y, weaker than expectations of +1.9% y/y and the smallest pace of increase in 8 months.

The dollar index (DXY00 +0.18%) this morning is up +0.16 (+0.17%), EUR/USD (^EURUSD -0.23%) is own -0.0030 (-0.26%), and USD/JPY (^USDJPY +0.04%)is up +0.05 (+0.04%). Thursday's closes: Dollar Index -0.008 (-0.01%), EUR/USD +0.0027 (+0.24%), USD/JPY -0.20 (-0.18%). The dollar index on Thursday closed slightly lower on the weaker-than-expected U.S. economic data on weekly jobless claims and Oct pending home sales and on the smaller-than-expected +1.8% y/y increase in the U.S. Oct PCE core deflator, which was dovish for Fed policy.

Metals prices this morning are lower with Dec gold (GCZ18 -0.22%) -2.2 (-0.18%), Dec silver (SIZ18 -0.62%) -0.073 (-0.51%), and Dec copper (HGZ18 -0.38%) -0.011 (-0.38%). Dec Comex gold (GCZ18) on Thursday closed up +0.50 an ounce (+0.04%) and Dec Comex silver (SIZ18) closed down -0.052 (-0.36%). Dec gold closed higher Thursday on positive carry-over from Wednesday when Fed Chair Powell said that interest rates are "just below" the range of estimates of the neutral level, which bolstered speculation the Fed may be close to pausing its interest rate increases. Gains in gold prices were limited on signs of slack inflation that reduces demand for gold as an inflation hedge after the U.S. Oct core PCE deflator eased to +1.8% y/y from Sep's +2.0%, weaker than expectations of +1.9% and the smallest pace of increase in 8 months. A stronger dollar on Thursday weighed on metals prices and silver closed lower on signs of fund selling after long silver positions in ETF's fell to a 2-week low on Wednesday of 529.354 million troy ounces.

Jan WTI crude oil prices (CLF19 -1.65%) this morning are down -91 cents (-1.77%) and Jan gasoline (RBF19 -1.95%) is -3.01 (-2.11%). Jan WTI crude oil (CLF19) on Thursday closed up +$1.16 per barrel (+2.31%) and Jan Brent crude (CBF19) closed up +$0.75 (+1.28%). Jan RBOB gasoline (RBF19) closed up +5.15 cents a gallon (+3.74%). Jan WTI crude oil rebounded from a 13-1/2 month low and Jan Brent crude recovered from a 13-month low and closed higher Thursday after Reuters reported that Russia accepts the need for an oil production cut and is in talks with Saudi Arabia over timing and size of a reduction. Russian Energy Minister Novak said Russia hopes to find a solution together with OPEC+ producers that would benefit the global market. Crude prices earlier fell to yearly lows on negative carry-over from Wednesday's EIA data that showed U.S. crude inventories unexpectedly rose +3.58 million bbl to a 1-year high, more than expectations of a -1.0 million bbl decline and the tenth consecutive weekly increase. Also, reports last week indicated that Saudi Arabian oil output has increased to a record 11.2 million bpd from 10.8-10.9 million bpd earlier in November. Russian President Putin will meet Saudi Crown Prince Mohammed Bin Salam this weekend in Buenos Aires and may discuss oil markets before OPEC and its allies meet next week in Vienna. Market expectations are for OPEC+ to announce a cut of 1.1 million bpd in crude production.

Overnight U.S. Stock Movers

Waters (WAT +0.63%) was downgraded to 'Sell' from 'Neutral' at Goldman Sachs with a price target of $180.

Cree (CREE -0.28%) was downgraded to 'Underweight' from 'Neutral' at JPMorgan Chase with a price target of $35.

Palo Alto Networks (PANW -0.28%) climbed nearly 3% in after-hours trading after it reported Q1 revenue of $656 million, better than consensus of $632 million, and then forecast Q2 revenue of $675 million to $685 million, above consensus of $668.9 million.

Workday (WDAY -0.36%) jumped 8% in after-hours trading after it reported Q3 adjusted EPS of 31 cents, well above consensus of 15 cents.

PVH Corp (PVH -1.03%) dropped 7% in after-hours trading after it reported Q3 revenue of $2.52 billion, below consensus of $2.53 billion, and then cut its 2018 revenue growth estimate for Calvin Klein to 7% from an August estimate of 8%.

Anadarko Petroleum (APC +2.23%) was rated a new 'Outperform' at Cowen with a price target of $75.

Splunk (SPLK +2.51%) rose more than 5% in after-hours trading after it reported Q3 revenue of $481 million, stronger than consensus of $432.9 million, and then forecast full-year revenue of $1.74 billion, higher than consensus of $1.69 billion.

Diamondback Energy (FANG +2.00%) was rated a new 'Outperform' at Cowen with a price target of $147.

AT&T (T -0.55%) gained 1% in after-hours trading after it said it sees 2019 free cash flow in the $26 billion range and sees 2019 gross capital investment in the $23 billion range.

Sprouts Farmers Market (SFM +1.50%) fell nearly 4% in after-hours trading after CEO Amin Maredia said he will leave the company on Dec 30 to pursue other interests.

Ambarella (AMBA -2.60%) rallied 14% in after-hours trading after it reported Q3 adjusted EPS of 21 cents, stronger than consensus of 9 cents.

GameStop (GME -2.53%) tumbled more than 12% in after-hours trading after it reported Q3 comparable sales rose +2.1%, weaker than consensus of +3.4%, and then forecast full-year adjusted EPS of $2.55 to $2.75, below consensus of $2.94.

Yext (YEXT +2.13%) dropped 10% in after-hours trading after it forecast Q4 adjusted loss per share of -9 cents to -10 cents, the midpoint wider than consensus of -9.1 cents.

Arbor Realty Trust (ABR -0.33%) fell 4% in after-hours trading after it announced a public offering of 8.7 million share of its common stock.

Amtech Systems (ASYS -1.24%) plunged 17% in after-hours trading after it forecast Q1 revenue of $27 million to $29 million, below consensus of $32.1 million.