Morning Call For January 22, 2016

OVERNIGHT MARKETS AND NEWS

March E-mini S&Ps (ESH16 +1.44%) are up sharply by +1.48% and European stocks are up +2.75% on speculation central banks around the world will act to support the global economy. ECB President Draghi on Thursday hinted at expanding stimulus at next month’s ECB meeting, while the Nikkei Asian Review reported today that the BOJ is considering additional easing at next week’s BOJ meeting. Energy producers and mining stocks are higher with Chevron and Freeport-McMoRan both up over 2% in pre-market trading as the price of crude oil and copper rallied. Asian stocks settled higher: +5.88%, Hong Kong +2.90%, China +1.25%, Taiwan +1.20%, Australia +1.07%, Singapore +1.75%, South Korea +2.23%, India +1.98%. Chinese stocks rallied on speculation of further stimulus by the PBOC after China’s vice president Li Yuanchao said the government is willing to intervene to tap down market volatility, while Japanese stocks surged as the yen fell to a 1-week low against the dollar, which boosted exporters.

The dollar index is up +0.22%. EUR/USD is down -0.39%. USD/JPY is up +0.41% at a 1-week high as he rally in global equities reduces the safe-haven demand for the yen.

Mar T-note prices are down -14.5 ticks.

The Nikkei Asian Review reported that the BOJ is considering steps to counter the hit to inflation from the recent plunge in crude oil. The BOJ meets on Jan 28-29 and the report bolsters speculation the BOJ will expand easing measures.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Dec Chicago Fed national activity index (expected +0.15 to -0.15, Nov -0.13 to -0.30), (2) Markit preliminary-Jan U.S. manufacturing PMI (expected -0.2 to 51.0, Dec -1.6 to 51.2), (3) Dec existing home sales (expected +9.2% to 5.20 million, Nov -10.5% to 4.76 million), and (4) Dec leading indicators (expected -0.1%, Nov +0.4%).

There are 6 of the S&P 500 companies that report earnings today: GE (consensus $0.49), Kansas City Southern (1.10), SunTrust Banks (0.87), Synchrony Financial (0.63), Rockwell Collins (1.04), Legg Mason (0.70).