Morning Call For March 21, 2016


OVERNIGHT MARKETS AND NEWS

Jun E-mini S&Ps (ESM16 +0.06%) are up +0.11% at a 2-1/2 month high and received a boost on increased M&A activity after Sherwin-Williams agreed to buy Valspar Corp. for about $9.3 billion. Valspar surged 31% in pre-market trading and Sherwin-Williams is up over 2%. European stocks are up +0.38% on increased M&A prospects as well after people familiar with the matter said that Monsanto has approached BASF SE and Bayer AG about possible merger prospects. Asian stocks settled mixed: Japan closed for holiday, Hong Kong +0.06%, China +2.15%, Taiwan +0.02%, Australia -0.32%, Singapore -0.90%, South Korea -0.14%, India +1.33%. China’s Shanghai Composite climbed to a 2-1/4 month high as brokerage stocks rallied after the government loosened controls on margin lending. China Securities Finance Corp., the state-backed agency that provides funding to brokerages for margin trading, said it will restart offering loans to securities firms for periods ranging from 7 days to 182 days.

The dollar index (DXY00 +0.02%) is down -0.01%. EUR/USD (^EURUSD) is up +0.10%. USD/JPY (^USDJPY) is down -0.08%.

Jun T-note prices (ZNM16 -0.05%) are down -1.5 ticks.

Richmond Fed President Lacker said that recent data suggests the upside risks to inflation have increased, even if the increase has been small, and that he is “reasonably confident that, barring subsequent shocks, inflation will move back to the FOMC’s 2% objective over the medium term.”

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) Richmond Fed President Jeffrey Lacker’s speech about the outlook for inflation and inflation expectations at an event hosted by the Banque of France, (2) Feb Chicago Fed national activity index (expected -0.03 to 0.25, Jan +0.62 to 0.28), (3) Feb existing home sales (expected -2.9% to 5.31 million, Jan +0.4% to 5.47 million), (4) Atlanta Fed President Dennis Lockhart’s speech on the U.S. economy to the Rotary Club of Savannah.

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