Earnings of Note Company/EPS Estimate - (CPRT)/.40
- (SPLS)/.38
Economic Releases
10:00 am EST
- ISM Manufacturing for November is estimated to fall to 55.0 versus 55.7 in October.
- ISM Prices Paid for November is estimated at 65.0 versus 65.0 in October.
- Construction Spending for October is estimated to fall -.5% versus a +.8% gain in September.
- Pending Home Sales for October are estimated to fall -1.0% versus a +6.1% gain in September.
Afternoon:
- Total Vehicle Sales for November are estimated to rise to 10.5M versus 10.45M in October.
Upcoming Splits - None of note
Other Potential Market Movers -The Fed’s Plosser speaking, API Energy Inventory report, CSFB Technology Conference, Citi Basic Materials Conference, Citi Chemical Conference, (AGO) analyst meeting, FBR Investor Conference, Piper Jaffray Healthcare Conference, (UNH) analyst day, ABC Consumer Confidence reading and the weekly retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs, Medical longs and Retail longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are falling and volume is light. Investor anxiety is very high. Today’s overall market action is bearish. The VIX is rising +1.82% and is very high at 25.20. The ISE Sentiment Index is below average at 109.0 and the total put/call is high at 1.06. Finally, the NYSE Arms has been running around average most of the day, hitting 1.12 at its intraday peak, and is currently 1.09. The Euro Financial Sector Credit Default Swap Index is falling -.45% to 79.31 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising +.96% to 106.25 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is falling -3 basis points to 21 basis points. The TED spread is now down 445 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +2.07% to 33.94 basis points. The Libor-OIS spread is down -1 basis point to 11 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.11%, which is down -54 basis points since July 7th. The 3-month T-Bill is yielding .04%, which is up +2 basis points today. Many market leading stocks are outperforming the broad market.As well, Airline, Education, REIT, Utility, Insurance, I-Bank, Bank, Internet and Oil Service stocks are all higher on the day.(XLF)/(IYR) have traded well throughout the day. The bears have been unable to gain meaningful downside traction after the morning reversal lower and some negative news items, which is a positive.On the negative side, breadth has been somewhat weak as small-caps come under pressure again. Given the gains in Asia overnight and financial sector strength, today’s broad market morning sell-off was disappointing. Healthcare-related, Gaming, Retail, Telecom, Defense and Semi shares are all underperforming.The UK sovereign debt cds is rising another +.7% today after an +8.7% gain over the last five days, which is another negative.Nikkei futures indicate a -90 open in Japan and DAX futures indicate an +12 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain hunting, stable long-term rates, less financial sector fear and seasonal strength.
- Crude oil prices may slide toward $70 a barrel in New York after breaching the bottom of a monthlong price channel, according to technical analysis by Societe Generale SA. “It is possible to drop down to the $70 mark, and we’d need to break through that for confirmation that this is a really big correction.”
- Global semiconductor sales rose 5.1% in October from the previous month -- the eighth-straight month of gains -- as companies continue to build up inventories to prepare for the holidays, according to the Semiconductor Industry Association. The $21.7 billion total was down 3.5% from last year, by far the smallest decline of 2009. "As semiconductor sales are increasingly driven by the performance of the overall global economy, our sales are reflecting the improved economic conditions in our world markets," said SIA President George Scalise. "Sales increased sequentially in all geographic regions." Chip companies in recent months have been increasingly optimistic about their prospects and those of the broader technology industry amid better-than-expected personal computer and cellphone sales and as demand for industrial applications also shows initial signs of recovery.
- Goldman’s(GS) Christmas celebration rules have a funny condition: they can't hang out in groups of twelve or more. The Business Insider wrote about the voicemail all Goldman Sachs employees received earlier this month. They were told not to organize small parties even if no firm money goes to pay for them. By "small," Goldman means exactly twelve. Starting tomorrow, they can hang out outside of Goldman in groups of eleven, but not twelve. The rule is set to stay in place for the month of December. Why? The firm believes that it would be inappropriate for its employees to be seen partying while the economy is still shaky and unemployment is high.
- Temasek Hedge highlights how these days Singapore's port has become too quiet. The Financial Times agrees. Temasek Hedge: These days, though, the view is obscured by hundreds of ships lying at anchor, some of them part of the estimated 10 per cent of the world container fleet idled due to lack of business. At the ultra-modern Pasir Panjang container terminal, stacks of empty containers piled up behind protective fencing tell a similar story.
- Success of the vote banning the construction of minarets in Switzerland means more initiatives critical of Islam may come, former Justice Minister and Swiss People’s Party member Christoph Blocher said.Initiatives like yesterday’s could be on a ban on veils covering the whole body, forced marriage, circumcision and the disregard of women’s rights, Blocher said. Blocher also said some consideration should be given to demands that Muslims seeking Swiss citizenship should distance themselves in writing from passages in the Koran that contradict human rights.
- The US economy has reached a “plateau” where it is not longer faltering and has limited signs of growth, said Bill Gates, the co-founder and chairman of Microsoft Corp.(MSFT).
- The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai's debt problems, an executive at the paper said. The National Media Council ordered the paper blocked by distributors without providing a reason, an executive at the paper in Dubai told Zawya Dow Jones. The Sunday Times edition available in the U.A.E. on Nov. 29 featured a double-page spread graphic illustrating Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum sinking in a sea of debt. The Times wasn't given a reason for the block, or a timeframe when it will be lifted, the executive said.
- The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering. “The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.” Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent. Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.
- Regulators list systemic risk institutions. Thirty global financial institutions have been selected for cross-border supervision exercises by regulators, the Financial Times reported on Monday. Compiled under the guidance of the Financial Stability Board (FSB), an international body of regulators and central bankers, the list is part of an effort to pre-empt the spread of systemic risks in the event of a future financial crisis. Those featuring in the list will also be asked to write so-called "living wills" that outline plans to wind up banks in the aftermath of a crisis. The FSB was established in the summer of 2009 to address the dangers posed by systemically-important, cross-border financial institutions through better supervision and co-ordination. The list in full, as cited by the FT:
- Hinde Gold, a gold-focused hedge fund, reduced its gold positions on Thursday night in anticipation of a sell-off in the price of bullion, the fund’s director Ben Davies told FT Alphaville. Gold had at one stage dropped as much as 5 per cent as it responded to safe haven flows into the dollar. The precious metal has since recovered to trade about 3 per cent lower at $1,155.80. Commenting on the sell-off, Davies — who had moved his fund to its maximum 50 per cent under weight gold position — said: “It happened so quickly, I’ve never seen a quicker paper liquidation in gold ever.” According to Davies, it was clear gold had become massively overbought by Thursday afternoon. However, he noted the fund – which also invests in gold-related equity stocks — was still bullish on the yellow metal further down the line. As he told FT Alphaville: In the short-term this is potentially a significant top. Our whole game plan for the season was that we were going to see a liquidity surge that would take us to new highs come mid January. But we needed an end of November correction to get us there. That sentiment, meanwhile, was echoed by Danske Bank analysts on Friday, who wrote: Gold has retreated following the rebound of the dollar, thus leaving USD1,200 untouched this time around. Momentum in bullion remains strong however with increasing speculation that central banks could get into a ‘bidding war’. The gold risk reversal, i.e. the market view of the most likely direction of the spot movement over the next maturity data, has increased a little during the autumn but not massively so, suggesting that market pricing has not quite anticipated the surge witnessed of late.
- Climate change:this is the worst scientific scandal of our generation.Our hopelessly compromised scientific establishment cannot be allowed to get away with the Climategate whitewash, says Christopher Booker. The reason why even the Guardian's George Monbiot has expressed total shock and dismay at the picture revealed by the documents is that their authors are not just any old bunch of academics. Their importance cannot be overestimated, What we are looking at here is the small group of scientists who have for years been more influential in driving the worldwide alarm over global warming than any others, not least through the role they play at the heart of the UN's Intergovernmental Panel on Climate Change (IPCC). Professor Philip Jones, the CRU's director, is in charge of the two key sets of data used by the IPCC to draw up its reports. Through its link to the Hadley Centre, part of the UK Met Office, which selects most of the IPCC's key scientific contributors, his global temperature record is the most important of the four sets of temperature data on which the IPCC and governments rely – not least for their predictions that the world will warm to catastrophic levels unless trillions of dollars are spent to avert it. Dr Jones is also a key part of the closely knit group of American and British scientists responsible for promoting that picture of world temperatures conveyed by Michael Mann's "hockey stick" graph which 10 years ago turned climate history on its head by showing that, after 1,000 years of decline, global temperatures have recently shot up to their highest level in recorded history. Given star billing by the IPCC, not least for the way it appeared to eliminate the long-accepted Mediaeval Warm Period when temperatures were higher they are today, the graph became the central icon of the entire man-made global warming movement. Since 2003, however, when the statistical methods used to create the "hockey stick" were first exposed as fundamentally flawed by an expert Canadian statistician Steve McIntyre, an increasingly heated battle has been raging between Mann's supporters, calling themselves "the Hockey Team", and McIntyre and his own allies, as they have ever more devastatingly called into question the entire statistical basis on which the IPCC and CRU construct their case. The senders and recipients of the leaked CRU emails constitute a cast list of the IPCC's scientific elite, including not just the "Hockey Team", such as Dr Mann himself, Dr Jones and his CRU colleague Keith Briffa, but Ben Santer, responsible for a highly controversial rewriting of key passages in the IPCC's 1995 report; Kevin Trenberth, who similarly controversially pushed the IPCC into scaremongering over hurricane activity; and Gavin Schmidt, right-hand man to Al Gore's ally Dr James Hansen, whose own GISS record of surface temperature data is second in importance only to that of the CRU itself. There are three threads in particular in the leaked documents which have sent a shock wave through informed observers across the world. Perhaps the most obvious, as lucidly put together by Willis Eschenbach (see McIntyre's blog Climate Audit and Anthony Watt's blog Watts Up With That), is the highly disturbing series of emails which show how Dr Jones and his colleagues have for years been discussing the devious tactics whereby they could avoid releasing their data to outsiders under freedom of information laws. They have come up with every possible excuse for concealing the background data on which their findings and temperature records were based. This in itself has become a major scandal, not least Dr Jones's refusal to release the basic data from which the CRU derives its hugely influential temperature record, which culminated last summer in his startling claim that much of the data from all over the world had simply got "lost". Most incriminating of all are the emails in which scientists are advised to delete large chunks of data, which, when this is done after receipt of a freedom of information request, is a criminal offence. But the question which inevitably arises from this systematic refusal to release their data is – what is it that these scientists seem so anxious to hide? The second and most shocking revelation of the leaked documents is how they show the scientists trying to manipulate data through their tortuous computer programmes, always to point in only the one desired direction – to lower past temperatures and to "adjust" recent temperatures upwards, in order to convey the impression of an accelerated warming. This comes up so often (not least in the documents relating to computer data in the Harry Read Me file) that it becomes the most disturbing single element of the entire story. This is what Mr McIntyre caught Dr Hansen doing with his GISS temperature record last year (after which Hansen was forced to revise his record), and two further shocking examples have now come to light from Australia and New Zealand. In each of these countries it has been possible for local scientists to compare the official temperature record with the original data on which it was supposedly based. In each case it is clear that the same trick has been played – to turn an essentially flat temperature chart into a graph which shows temperatures steadily rising. And in each case this manipulation was carried out under the influence of the CRU. What is tragically evident from the Harry Read Me file is the picture it gives of the CRU scientists hopelessly at sea with the complex computer programs they had devised to contort their data in the approved direction, more than once expressing their own desperation at how difficult it was to get the desired results. The third shocking revelation of these documents is the ruthless way in which these academics have been determined to silence any expert questioning of the findings they have arrived at by such dubious methods – not just by refusing to disclose their basic data but by discrediting and freezing out any scientific journal which dares to publish their critics' work. It seems they are prepared to stop at nothing to stifle scientific debate in this way, not least by ensuring that no dissenting research should find its way into the pages of IPCC reports. Back in 2006, when the eminent US statistician Professor Edward Wegman produced an expert report for the US Congress vindicating Steve McIntyre's demolition of the "hockey stick", he excoriated the way in which this same "tightly knit group" of academics seemed only too keen to collaborate with each other and to "peer review" each other's papers in order to dominate the findings of those IPCC reports on which much of the future of the US and world economy may hang. In light of the latest revelations, it now seems even more evident that these men have been failing to uphold those principles which lie at the heart of genuine scientific enquiry and debate. Already one respected US climate scientist, Dr Eduardo Zorita, has called for Dr Mann and Dr Jones to be barred from any further participation in the IPCC. Even our own George Monbiot, horrified at finding how he has been betrayed by the supposed experts he has been revering and citing for so long, has called for Dr Jones to step down as head of the CRU. The former Chancellor Lord (Nigel) Lawson, last week launching his new think tank, the Global Warming Policy Foundation, rightly called for a proper independent inquiry into the maze of skulduggery revealed by the CRU leaks. But the inquiry mooted on Friday, possibly to be chaired by Lord Rees, President of the Royal Society – itself long a shameless propagandist for the warmist cause – is far from being what Lord Lawson had in mind. Our hopelessly compromised scientific establishment cannot be allowed to get away with a whitewash of what has become the greatest scientific scandal of our age.
Nikkei: - Nissan Motor Co. is developing a lithium ion battery for electric vehicles that can store electricity at double the current capacity.Nissan aims to equip electric cars with the battery by 2015.The new battery will be able to power an electric vehicle for 186 miles on a single charge, about twice the distance currently possible.
Shanghai Securities News:
- China’s banks should primarily use dividend cuts and private placement as methods for boosting capital, citing China Banking Regulatory Commission Vice Chairman Jiang Dingzhi.
Weekend Recommendations
Barron's: - Made positive comments on (MON), (SYY) and (PEP).
Citigroup:
- Upgraded (WPI) to Buy, target raised to $48.
Night Trading
Asian indices are +.50% to +2.50% on avg.
Asia Ex-Japan Inv Grade CDS Index 114.5 -11.5 basis points.
S&P 500 futures +.63%.
NASDAQ 100 futures +.77%.
- The Chicago Purchasing Manager for November is estimated to fall to 53.3. versus 54.2 in October.
- The Dallas Fed Manufacturing Activity for November is estimated unch. versus a -3.3% decline in October.
Other Potential Market Movers
- The Citi Global Chemicals Conference, (LSTR) mid-quarter update, NAPM Milwaukee, Bloomberg FCI Monthly and the TAF auction could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by financial and automaker stocks in the region. I expect US stocks to open higher and to maintain gains into the afternoon.The Portfolio is 75% net long heading into the week.
