Morning Call For Friday, Dec. 15

OVERNIGHT MARKETS AND NEWS

Mar. E-mini S&Ps (ESH18 +0.22%) this morning are up +0.16% and European stocks are down -0.34% at a 1-week low. Investors continue to pour money into U.S. equity funds at the expense of European stock funds. According to Bank of America Merrill Lynch. data from EPFR Global fund flow shows stock funds tracking U.S. stocks attracted $7.8 billion in the week to Dec 13, the largest inflow in 6-months, while investors withdrew -$2.1 billion from European funds, the most in more than a year. Losses in retail sticks are undercutting European shares after Hennes $ Mauritz AB plunged 15% when it reported a slump in quarterly sales. European stocks declined even after the Bundesbank raised its German GDP forecasts for this year and next year. Asian stocks settled mostly lower: Japan -0.62%, Hong Kong -1.09%, China -0.80%, Taiwan -0.44%, Australia -0.24%, Singapore -0.55%, South Korea +0.46%, India +0.65%. Japan's Nikkei Stock Index fell to a 1-week low, despite an increase in business confidence after the Q4 Tankan large manufacturing business conditions rose +3 to an 11-year high of 25, which boosted the yen and undercut exporter companies.

The dollar index (DXY00 +0.05%) is up +0.03%. EUR/USD (^EURUSD) is up +0.20%. USD/JPY (^USDJPY) is down -0.20% to a 1-week low.

Mar 10-year T-note prices (ZNH18 -0.06%) are down -4 ticks.

The Bundesbank raised its German 2017 GDP forecast to 2.6% from a prior estimate of 1.9% and raised its 2018 GDP forecast to 2.5% from an earlier estimate of 1.7%. The Bundesbank also kept its German 2017 core inflation estimate unchanged at 1.3% and lowered its 2018 core inflation estimate to 1.6% from a prior estimate of 1.7%.

The Japan Q4 Tankan large manufacturing business conditions rose +3 to an 11-year high of 25, stronger than expectations of +2 to 24.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Dec Empire manufacturing general business conditions index (expected -0.6 to 18.8, Nov -10.8 to 19.4), (2) Nov industrial production (expected +0.3%, Oct +0.9%) and Nov manufacturing production (expected +0.3%, Oct +1.3%).

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