Morning Call For October 14, 2015

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.03%) are down -0.08% and European stocks are down -0.61% at a 1-week low on disappointment in company Q3 earnings results. Intel is down nearly 3% in pre-market trading after saying a slowdown in demand may curb sales at its server-chip division, and JPMorgan Chase is down over 1% in pre-market trading after Q3 earnings came in below expectations. Losses were limited on a possible increase in M&A activity as SanDisk jumped nearly 10% in pre-market trading after it was said to hire a bank to explore a potential sale of the company. Asian stocks settled lower: Japan -1.89%, Hong Kong -0.71%, China -0.93%, Taiwan -0.53%, Australia -0.11%, Singapore -0.03%, South Korea -0.45%, India-0.25%. China’s Shanghai Composite closed lower for the first time in six sessions and Japan’s Nikkei Stock Index fell to a 1-week low on deflation concerns in China after China Sep producer prices fell -5.9% y/y, the fastest pace of decline in 6-years and the 43rd consecutive month that producer prices have been negative.

The dollar index (DXY00 -0.21%) is down -0.26% at a 3-week low on speculation the slowdown in China may prompt the Fed to keep interest rates lower for longer. EUR/USD (^EURUSD) is up +0.29% at a 3-week high. USD/JPY (^USDJPY) is down -0.23% at a 1-week low.

Dec T-note prices (ZNZ15 +0.11%) are up +4.5 ticks.

China Sep CPI rose +1.6% y/y, less than expectations of +1.8% y/y. Sep PPI fell -5.9% y/y, right on expectations and matched Aug’s drop as the steepest pace of decline in 6 years.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous +25.5% with purchase sub-index +27.4% and refi sub-index +24.2%), (2) Sep final-demand PPI (expected -0.2% m/m and -0.8% y/y, Aug unch m/m and -0.8% y/y) and Sep PPI ex food & energy (expected +0.1% m/m and +1.2% y/y, Aug +0.3% m/m and +0.9% y/y), (3) Sep retail sales (expected +0.2% and -0.1% ex autos, Aug +0.2% and +0.1% ex autos), (4) Aug business inventories (expected +0.1%, Jul +0.1%), and (5) the Fed’s Beige Book.