Morning Call For November 18, 2015

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.11%) are up +0.16% ahead of the minutes of the Oct 27-28 FOMC meeting that may provide a clue as to the timing of a Fed interest rate increase. Increase M&A activity is giving U.S. stocks a lift with Fairchild Semiconductor International up nearly 7% in pre-market trading after ON Semiconductor Corp. agreed to buy the company for about $2.4 billion. European stocks are down -0.78% as a slide in metals prices has undercut mining stocks and raw material producers with the price of gold (GCZ15 +0.07%) falling to its lowest in 5-3/4 years. Asian stocks settled mixed: Japan +0.09%, Hong Kong -0.34%, China -1.01%, Taiwan -0.94%, Australia +0.29%, Singapore -1.05%, South Korea +0.07%, India -1.48%. China’s Shanghai Composite closed lower after data showed China’s home-price recovery slowed in Oct with new home price increases in 27 cities tracked by the government, fewer than 39 cities that rose in Sep. Japan’s Nikkei Stock Index rallied up to a 2-3/4 month high as the yen remained just above the recent 2-3/4 month low, which improves the earnings prospects of Japanese exporters.

The dollar index (DXY00 -0.11%) is down -0.12%. EUR/USD (^EURUSD) is up +0.27% and recovered slightly from a 7-month low after ECB Executive Board member Mersch downplayed any negative economic aspects of the Paris terrorist attacks. USD/JPY (^USDJPY) is down -0.05%.

Dec T-note prices (ZNZ15 -0.06%) are down -1.5 ticks.

ECB Executive Board member Mersch said that “we have no indication of any economic pessimism as a result of the Paris attacks, let alone weaker hard data.”

China Oct new home prices rose in 27 out of 70 cities tracked by the government m/m, less than 39 cities that rose in Sep. New home prices rose y/y n 16 of 70 cities in Oct compared with 12 cities that rose y/y in Sep.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications (previous -1.3% with purchase sub-index +0.1% and refi sub-index -2.2%), (2) an appearance by New York Fed President William Dudley, Atlanta Fed President Dennis Lockhart and Cleveland Fed President Loretta Mester on a panel about payment systems at the Clearing House Annual Conference in New York, (3) Oct housing starts (expected -3.8% to 1.160 million, Sep +6.5% to 1.206 million), (4) Dallas Fed President Rob Kaplan’s speech at the University of Houston on “A Discussion of Economic Conditions and Federal Reserve Policy, and (5) minutes from the Oct 27-28 FOMC meeting.