OVERNIGHT MARKETS AND NEWS
December E-mini S&Ps (ESZ14 +0.69%) this morning are up +0.65% at a record high and European stocks are up +2.03% at a 1-1/2 month high after China cut interest rates for the first time in over 2 years. European stocks and government bonds received an additional boost after ECB President Draghi reiterated his commitment to raising inflation as fast as possible, which suggests the ECB may implement full-blown quantitative easing. Asian stocks closed mostly higher: Japan +0.33%, Hong Kong +0.37%, China +1.83%, Taiwan +0.14%, Australia -0.22%, Singapore +0.90%, South Korea +0.38%, India +0.95%. The Asian markets have yet to react to the news that China lowered interest rates as the PBOC cut rates after the Asian markets were closed. However, during today's trading session the Shanghai Stock Index rallied after the PBOC added money to the banking system to stem a cash squeeze. A cash shortage stemming from new share sales spiked China's 7-day repurchase rate, a gauge of cash availability in the banking system, by as much as 322 bp to a 9-1/2 month high of 6.50%. According to two people with direct knowledge of the matter, the PBOC offered 50 billion yuan ($8.2 billion) into the banking system using Short-term Liquidity Operations in an attempt to bring down money-market rates. Commodity prices are mixed. Dec crude oil (CLF15 +2.43%) is up +1.86% at a 1-week high. Dec gasoline (RBF15 +2.47%) is up +2.15% at a 1-week high. Dec gold (GCZ14 +0.47%) is up +0.22%. Dec copper (HGZ14 +1.32%) is up +1.37%. Agriculture prices are lower. The dollar index (DXY00 +0.64%) is up +0.71%. EUR/USD (^EURUSD) is down -0.85%. USD/JPY (^USDJPY) is down -0.22% as the yen fell after Japanese Finance Minister Aso said the speed of the yen's depreciation has been "too rapid." Dec T-note prices (ZNZ14 -0.09%) are down -5.5 ticks.
The People's Bank of China (PBOC) cut interest rates for the first time since Jul 2012 as they lowered the 1-year deposit rate by -25 bp to 2.75% and cut the 1-year lending rate by -40 bp to 5.60% effective Nov 22.
ECB President Draghi said that shorter-term inflation expectations "have been declining to levels that I would deem excessively low" and that "we will do what we must to raise inflation and inflation expectations as fast as possible, as our price-stability mandate requires."
UK Oct public sector net borrowing rose +7.1 billion pounds, slightly more than expectations of +7.0 billion pounds. Sep was revised lower to an increase of +10.6 billion pounds from the originally reported +11.1 billion pounds.
U.S. STOCK PREVIEWThere are no major U.S. economic reports today. There are 2 of the Russell 1000 companies that report earnings today: Foot Locker (consensus $0.79), Sirona Dental Systems (0.90). Equity conferences today include: Morgan Stanley European Technology, Media & Telecoms Conference on Fri.
OVERNIGHT U.S. STOCK MOVERS
Foot Locker (FL +1.44%) reported Q3 EPS of 83 cents, better than consensus of 79 cents.
Citigroup reiterates its 'Buy' rating on DISH Network (DISH -3.27%) and raised its price target on the stock to $94 from $79.
Intel (INTC +4.66%) was downgraded to 'Sell' from 'Underperform' at CLSA.
eBay (EBAY -0.73%) was downgraded to 'Sell' from 'Hold' at Evercore ISI.
Dillard's (DDS +9.28%) was downgraded to 'Neutral' from 'Buy' at BofA/Merrill Lynch.
Park West Asset Management reported a 5.1% passive stake in Eagle Pharmaceuticals (EGRX +1.28%) .
Yum! Brands (YUM +2.08%) board authorized the company to repurchase up to $1 billion in additional shares of common stock.
Marvell (MRVL -0.52%) reported Q3 EPS of 29 cents, right on consensus, although Q3 revenue of $930.14 million was below consensus of $976.14 million.
Autodesk (ADSK -1.17%) rose over 3% in after-hours trading after it reported Q3 adjusted EPS of 25 cents, above consensus of 22 cents.
The Fresh Market (TFM +0.43%) fell nearly 2% in after-hours trading after it reported Q3 adjusted EPS of 27 cents, weaker than consensus of 28 cents.
GameStop (GME +0.60%) dropped over 10% in after-hours trading after it reported Q3 adjusted EPS of 57 cents, less than consensus of 61 cents.
The Gap (GPS +1.52%) slipped over 3% in after-hours trading after it reported Q3 EPS with benefits of 80 cents, above consensus of 79 cents, but then lowered guidance on fiscal 2014 EPS view to $2.73-$2.78, below consensus of $2.82.
Ross Stores (ROST +1.28%) climbed over 4% in after-hours trading after it reported Q3 EPS of 93 cents, better than consensus of 87 cents, and then raised guidance on fiscal 2014 EPS to $4.28-$4.32, higher than consensus of $4.27.
Intuit (INTU -0.75%) rose nearly 2% in after-hours trading after it reported a Q1 adjusted EPS loss of -10 cents, less than consensus of a -20 cent loss.
Dec E-mini S&Ps (ESZ14 +0.69%) this morning are up +13.25 points (+0.65%) at a new record high. The S&P 500 index on Thursday shook off early losses and closed higher: S&P 500 +0.20%, Dow Jones +0.19%, Nasdaq +0.46%. Bullish factors included (1) the +1.5% increase in U.S. Oct existing home sales to a 13-month high of 5.26 million, better than expectations of -0.4% to 5.15 million, and (2) the +20.1 point surge in the Nov Philadelphia Fed manufacturing index to a 20-3/4 year high of 40.8, stronger than expectations of -2.2 to 18.5. Negative factors centered on global growth concerns after (1) the China Nov HSBC manufacturing PMI fell -0.4 to a 6-month low of 50.0, and (2) the unexpected -0.7 decline in the Eurozone Nov composite PMI to 51.4, the weakest pace of expansion in 16 months.
Dec 10-year T-notes (ZNZ14 -0.09%) this morning are down -5.5 ticks. Dec 10-year T-note futures prices on Thursday closed higher: TYZ4 +5.50, FVZ4 +3.50. Bullish factors included (1) reduced inflation concerns after the 10-year inflation breakeven rate fell to a 16-month low, and (2) global economic concerns after manufacturing activity slowed in China and in the Eurozone. T-notes fell back from their best levels after (1) Oct existing home sales rose more-than-expected to a 13-month high, and (2) the Nov Philadelphia manufacturing index unexpectedly rose to its fastest pace of expansion in 20-3/4 years.
The dollar index (DXY00 +0.64%) this morning is up +0.622 (+0.71%). EUR/USD (^EURUSD) is down -0.0107 (-0.85%). USD/JPY (^USDJPY) is down -0.26 (-0.22%). The dollar index on Thursday closed little changed. Closes: Dollar index -0.056 (-0.60%), EUR/USD +0.00148 (+0.12%), USD/JPY +0.241 (+0.20%). Dollar losses were limited on (1) signs of strength in the U.S. economy after Oct existing home sales rose to a 13-month high and Oct leading indicators rose more than expected, and (2) weakness in the yen as USD/JPY posted a new 7-year high as Japanese lawmakers prepare for early elections in which Prime Minister Abe will seek a new mandate for economic stimulus.
Jan WTI crude oil (CLF15 +2.43%) this morning is up +$1.26 a barrel (+1.66%) at a 1-week high and Jan gasoline (RBF15 +2.47%) is up +0.0434 (+2.15%) at a 1-week high. Jan crude and Dec gasoline on Thursday closed higher. Closes: CLF5 +1.35 (+1.81%), RBF5 +0.0055 (+0.27%). Bullish factors included (1) a weaker dollar, and (2) strength in the U.S. economy after U.S. Oct existing home sales unexpectedly rose to a 13-month high and the Nov Philadelphia Fed manufacturing index unexpectedly surged to its fastest pace of expansion in 20-3/4 years.
GLOBAL EVENT CALENDAR11/21/2014
U.S. STOCK CALENDAR11/21/2014