OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 +0.05%) this morning are up +0.05% at a new record nearest-futures high as U.S. stock indexes continue their rally to fresh record highs on expectations for strong Q4 quarterly corporate earnings. European stocks are up +0.26% at a 2-month high after the Eurozone Nov unemployment rate fell to a nearly 9-year low of 8.7% and after German Nov industrial production jumped +3.4% m/m, the largest monthly increase in nearly 8 years. Energy stocks are higher as well with Feb WTI crude oil (CLG18 +0.53%) up +0.45% at a 2-1/2 year high. Asian stocks settled mostly higher: Japan +0.57%, Hong Kong +0.36%, China +0.13%, Taiwan -0.01%, Australia +0.09%, Singapore +0.36%, South Korea -0.31%, India +0.26%. China's Shanghai Composite rallied to a 1-1/2 month high and Japan's Nikkei Stock Index rose to a new 26-year high on optimism the global economic expansion will continue.

The dollar index (DXY00 +0.18%) is up +0.18% at a 1-week high as the increase in the 10-year T-note yield to a 9-1/2 month high improves the dollar's interest rate differentials. EUR/USD (^EURUSD) is down -0.32% at a 1-1/2 week low. USD/JPY (^USDJPY) is down -0.38%.

Mar 10-year T-note prices (ZNH18 -0.03%) are down -1.5 ticks at a contract low and the 10-year T-note yield rose to a 9-1/2 month high of 2.503% after a surprise cut in purchases of long-dated Japanese government bonds by the BOJ, which fueled long-liquidation on concern the BOJ may soon exit its QE program. The BOJ cut its purchase of 10-year to 25-year debt by 10 billion yen ($89 million), the first cut since 2016.

The Eurozone Nov unemployment rate fell -0.1 to a nearly 9-year low of 8.7%, right on expectations.

German Nov industrial production rose +3.4% m/m, stronger than expectations of +1.8% m/m and the biggest monthly increase in 8 years.

The German Nov trade balance increased to a surplus of +23.7 billion euros, wider than expectations of +21.3 billion euros. Nov exports jumped +4.1% m/m, stronger than expectations of +1.2% m/m and the biggest increase in nearly 3-years. Nov imports rose +2.3% m/m, stronger than expectations of +0.4% m/m.

Japan Nov labor cash earnings rose +0.9% y/y, stronger than expectations of +0.6% y/y. Nov real cash earnings rose +0.1% y/y, stronger than expectations of -0.1% y/y.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Nov JOLTS job openings (expected +29,000 to 6.025 million, Oct -181,000 to 5.996 million), 92) Minneapolis Fed President Neel Kashkari (voter) speaks in a moderated Q&A at an event in Wayzata, MN, (3) Treasury auctions $24 billion of 3-year T-notes.

Notable Russell 1000 earnings reports today include: Acuity Brands (consensus $2.08).

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

Equity conferences this week: J.P. Morgan Health Care Conference on Mon-Thu, Goldman Sachs Global Energy Conference on Tue, JP Morgan CES Tech Forum on Tue, ICR Conference on Tue, Citi Global TMT West Conference on Tue-Wed.

OVERNIGHT U.S. STOCK MOVERS

FedEx (FDX +1.03%) was upgraded to 'Buy' from 'Neutral' at UBS with a price target of $302.

Carnival (CCL -0.38%) was upgraded to 'Outperform' from 'Neutral' at Credit Suisse with a price target of $78.

American Airlines Group (AAL -0.99%) was upgraded to 'Buy' from 'Underperform' at Bank of America/Merrill Lynch with a price target of $64.

Ormat Technologies (ORA +0.31%) was rated a new 'Buy' at Guggenheim Securities with a 12-month target price of $72.

Allstate (ALL -0.47%) was cut to 'Market Perform' from 'Outperform' at Wells Fargo Securities.

Encore Capital Group (ECPG -1.10%) was rated a new 'Outperform' at Oppenheimer with an 18-month target price of $53.

Seagate Technology PLC (STX +7.13%) gained over 1% in after-hours trading after it reported preliminary Q2 revenue of $2.90 billion, better than consensus of $2.74 billion.

Credit Acceptance Corp (CACC +0.37%) was rated a new 'Outperform' at Oppenheimer with an 18-month target price of $355.

Urban Outfitters (URBN -1.52%) fell almost 6% in after-hours trading after it said holiday comparable sales in stores fell -1%, even as net sales for the two months ended Dec 31 rose +3.6% over the same period last year.

A Schulman (SHLM -0.51%) climbed more than 5% in after-hours trading after it reported Q1 revenue of $674.6 million, better than consensus of $625 million.

Adamas Pharmaceuticals (ADMS -5.52%) rallied over 5% in after-hours trading after it reported a full commercial launch of its Gocovri, its treatment of dyskinesia for Parkinson's patients, which was approved by the FDA in Aug.

elf Beauty (ELF +1.10%) dropped nearly 6% in after-hours trading after it cut its view for compound annual net sales and adjusted Ebitda growth to 10%-15% for fiscal 2016 through 2019, down from 20% projected for each year previously.

Big 5 Sporting Goods (BGFV +3.29%) slumped over 17% in after-hours trading after it reported Q4 revenue of $243.2 million, well below consensus of $263.5 million.

MARKET COMMENTS

Mar S&P 500 E-mini stock futures (ESH18 +0.05%) this morning are up +1.25 points (+0.05%) at a fresh record nearest-futures high. Monday's closes: S&P 500 +0.17%, Dow Jones -0.05%, Nasdaq +0.35%. The S&P 500 on Monday climbed to a fresh record high and settled higher on upbeat comments from San Francisco Fed President Williams who said, "we're in a pretty good situation; the economy is doing great, and I'm not worried about inflation suddenly taking off." The U.S. stock market was also supported by strength in technology stocks.

Mar 10-year T-note prices (ZNH18 -0.03%) this morning are down -1.5 ticks at a contract low. Monday's closes: TYH8 -1.00, FVH8 -0.25. Mar 10-year T-notes on Monday fell to a 2-week low and closed lower on the rally in the S&P 500 to a new record high and on supply pressures as the Treasury auctions $56 billion of T-notes and T-bonds this week. T-notes found some support from Atlanta Fed President Bostic's comment that he would need to see "the inflation numbers start to move more in line with my expectations" before he backs three or four rate hikes this year.

The dollar index (DXY00 +0.18%) this morning is up +0.165 (+0.18%) at a 1-week high. EUR/USD (^EURUSD) is down -0.0038 (-0.32%) at a 1-1/2 week low and USD/JPY (^USDJPY) is down -0.43 (-0.38%). Monday's closes: Dollar Index +0.409 (+0.44%), EUR/USD -0.0062 (-0.52%), USD/JPY +0.04 (+0.04%). The dollar index on Monday climbed to a 1-week high and settled higher on hawkish comments from San Francisco Fed President Williams who said, three Fed rate hikes this year "makes sense to me" and on the increase in the 10-year T-note yield, which boosts the dollar's interest rate differentials.

Feb crude oil (CLG18 +0.53%) this morning is up +28 cents (+0.45%) at a 2-1/2 year nearest-futures high and Feb gasoline (RBG18 +0.77%) is +0.0112 (+0.63%). Monday's closes: Feb WTI crude +0.29 (+0.47%), Feb gasoline +0.0060 (+0.34%). Feb crude oil and gasoline on Monday closed higher on carry-over support from Friday's Baker Hughes report showing that U.S. active oil rigs fell to a 7-week low. Crude oil prices were also supported by continued concern about internal political tensions in Iran, OPEC's third-largest crude producer. Crude oil prices were undercut by the rally in the dollar index to a 1-week high.

Metals prices this morning are mixed with Feb gold (GCG18 -0.34%) -4.8 (-0.36%), Mar silver (SIH18 -0.43%) -0.099 (-0.58%), and Mar copper (HGH18 +0.43%) +0.013 (+0.39%). Monday's closes: Feb gold -1.9 (-0.14%), Mar silver -0.141 (-0.82%), Mar copper -0.0055 (-0.17%). Metals on Monday closed lower with Mar copper at a 2-week low. Metals prices were undercut by the rally in the dollar index to a 1-week high and by hawkish comments from San Francisco Fed President Williams who said three Fed rate hikes this year "makes sense to me," which spurred long liquidation in precious metals.

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