Morning Call For December 9, 2015

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 -0.11%) are up +0.05% on signs of increased M&A activity as Dow Chemical and DuPont are both up more than 5% in pre-market trading after people with knowledge of the matter said the companies are in late-stage merger talks. European stocks are down -0.18% at a 1-1/2 month low due to weakness in commodity producers and miners as Anglo American Plc plunged nearly 10% to a record low. A larger-than-expected decline in German Oct exports also weighed on European equities. Losses were contained as automakers rose, led by a 4% jump in Volkswagen AG, after the carmaker said the probe into its cars’ carbon-dioxide emissions affects only 36,000 cars, far fewer than previous estimates of 800,000 cars. Asian stocks settled mostly lower: Japan -0.98%, Hong Kong -0.46%, China +0.07%, Taiwan -1.37%, Australia -0.55%, Singapore-0.52%, South Korea +0.07%, India -1.08%. Chinese stocks closed higher after China Nov consumer prices rose more than expected, which reduced deflation concerns, while Japan’s Nikkei Stock Index fell to a 3-week low as weakness in commodity and raw-material producers dragged the overall market lower.

The dollar index (DXY00 -0.44%) is down -0.36%. EUR/USD (^EURUSD) is up +0.29%. USD/JPY (^USDJPY) is down -0.26%.

Mar T-note prices (ZNH16 +0.06%) are up +1 tick.

The German Oct trade balance was in surplus by +22.5 billion euros, more than expectations of +21.7 billion euros. Oct exports fell -1.2% m/m, weaker than expectations of -0.6% m/m. Oct imports fell -3.4% m/m, weaker than expectations of -1.0% m/m and the biggest decline in 3-1/2 years.

China Nov CPI rose +1.5% y/y, higher than expectations of +1.4% y/y, Nov PPI fell -5.9% y/y, less than expectations of -6.0% y/y, but still the fastest pace of decline in 6 years.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -0.2% with purchase sub-index +7.7% and refi sub-index -6.0%), (2) Oct wholesale inventories (expected +0.2% m/m, Sep +0.5% m/m) and Oct wholesale trade sales (expected +0.2% m/m, Sep +0.5% m/m), and (3) the Treasury’s auction of $21 billion of 10-year T-notes.