Morning Call For November 19, 2015

OVERNIGHT MARKETS AND NEWS

December E-mini S&Ps (ESZ15 +0.32%) are up +0.35% at a 1-week high and European stocks are up +0.91% at a 1-1/2 week high after the minutes of the Oct 27-28 FOMC meeting on Wednesday indicated the U.S. economy is strong enough to handle an interest rate increase at next month’s FOMC meeting, while policy makers stressed that the pace of tightening will be gradual. Stronger-than-expected quarterly earnings results from Salesforce.com and Keurig Green Mountain are also giving equities a boost, while an increase in M&A activity is supportive as well with Allergan up over 1% in pre-market trading after Pfizer was said to be in advanced talks to buy the company for as much as $150 billion. Asian stocks settled higher: Japan +1.07%, Hong Kong +1.41%, China +1.36%, Taiwan +1.64%, Australia +2.13%, Singapore +1.17%, South Korea +1.39%, India +1.41%. Asian markets all closed higher, with Japan’s Nikkei Stock Index at a 2-3/4 month high, after the Oct 27-28 FOMC minutes stated that the Fed’s pace of tightening will be gradual.

The dollar index (DXY00 -0.43%) is down -0.51%. EUR/USD (^EURUSD) is up +0.50%. USD/JPY (^USDJPY) is down -0.44% as the yen rallied after the BOJ left monetary policy unchanged and said “inflation expectations appear to be rising.”

Dec T-note prices (ZNZ15 +0.02%) are unchanged.

ECB Executive Board member Praet said he sees confirmation of downside risks in the global economy and that ECB policy makers are having “rich discussions” and will decide in December what further policy actions are needed and that more reductions in interest rates are “part of a toolbox.”

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly initial unemployment claims (expected -6,000 to 270,000, previous unch at 276,000) and continuing claims (expected -5,000 to 2.169 million, previous +5,000 to 2.174 million), (2) Nov Philadelphia Fed manufacturing outlook survey (expected +4.2 to -0.3, Oct +1.5 to -4.5), (3) Oct leading indicators (expected +0.5%, Sep -0.2%), (4) Atlanta Fed President Dennis Lockhart’s speech on the U.S. economy to the DeKalb Chamber of Commerce, (5) the Treasury’s auction of $13 billion 10-year TIPS, (6) Fed Vice Chair Stanley Fischer’s speech titled “Emerging Asia in Transition” at a conference hosted by the San Francisco Fed.