Tuesday, September 17, 2013

Tuesday Watch

Evening Headlines 
Bloomberg:  
  • Assad Cheered in Damascus for Canny Survivor’s Delaying Tactics. Osama Salloum was on the balcony of his Damascus apartment last week when a procession of honking cars celebrating President Bashar al-Assad’s birthday passed by. The 34-year-old accountant joined the youths waving flags and singing patriotic songs not only because he wanted to mark Assad’s Sept. 11 birthday, “but also to express gratitude for the government’s wise policies that prevented a U.S. strike,” he said. “Syrian diplomacy has borne the best of fruits.” 
  • Kerry Says U.S. Isn’t Wavering on Seeking Assad’s Ouster. Secretary of State John Kerry said the U.S. isn’t softening its opposition to Syrian President Bashar al-Assad by making a deal that envisions his cooperation in securing and eliminating Syrian chemical weapons over the next nine months. Speaking to reporters in Paris shortly before a United Nations report confirmed the use in Syria of the nerve agent sarin, Kerry said yesterday that there’s no conflict between sending international chemical-weapons experts to work with Assad’s regime and the “strategic goal” of ending his rule. 
  • RBA Says Rate Cuts Still Possible, Signals No Moves Imminent. Australia’s central bank repeated it retains the option of reducing interest rates and said a further drop in the currency would aid the economy as resource investment slows, minutes of the Sept. 3 meeting showed. “Members agreed that the bank should again neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them,” the Reserve Bank of Australia said in notes of the meeting, at which it left its benchmark rate at a record low, released in Sydney today. “Some further decline in the exchange rate would be helpful.” 
  • China Stocks Fall for Third Day, Longest Losing Streak in Month. China’s stocks fell for a third day, the longest stretch of losses in a month, after foreign investment data trailed economists’ estimates. Consumer-staples producers and Shanghai-based port operators and airlines slid. Shanghai International Port (Group) Co. dropped the most in four weeks after UBS AG downgraded the stock to sell. China Eastern Airlines Corp. retreated at least 5 percent for a second day before details of the Shanghai free-trade zone will be released later this month. Kweichow Moutai Co. led declines for consumer-staples companies. A report showed foreign-direct investment grew 0.6 percent last month, compared with the median estimate of 12.5 percent growth compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) fell 0.8 percent to 2,212.66 at 10:34 a.m.
  • Asia Stocks Fall From Four-Month High Before Fed Meeting. Asian stocks fell, with the benchmark regional index declining from a four-month high, as the Federal Reserve begins a two-day policy meeting at which it is forecast to reduce the pace of its U.S. bond buying. Samsung Electronics Co. (005930), Asia’s biggest technology company, sank 2.5 percent in Seoul, retreating from the highest level since May. Daiichi Sankyo Co. (4568), a drugmaker that owns 64 percent of Ranbaxy Laboratories Ltd., tumbled 5.7 percent in Tokyo after U.S. regulators restricted imports from one of the Indian drugmaker’s facilities. Japan’s Topix index rose 0.4 percent as the equity market reopened after a holiday. The MSCI Asia Pacific Index slipped 0.3 percent to 138.32 as of 11:38 a.m. in Hong Kong as nine of the 10 industry groups on the gauge declined.
  • Rebar Trades Near Six-Week Low as China Steel Output Gains. Steel reinforcement-bar futures in Shanghai traded near the lowest in more than six weeks as output climbed in China, the biggest user. Rebar for delivery in January on the Shanghai Futures Exchange fell as much as 0.3 percent to 3,636 yuan ($594) a metric ton and was at 3,642 yuan at 10:06 a.m. local time. Futures declined to 3,628 yuan yesterday, the lowest intra-day level for a most-active contract since July 31.
  • Fed Leader Doubt Erodes Low-Rate Message as QE Taper Looms. Federal Reserve officials will gather in their Washington board room this week to decide on policies that will unfold over the next two to three years without knowing who will lead the institution during that time. Yesterday’s announcement that Lawrence Summers has withdrawn his name from Obama’s list of candidates to succeed Fed Chairman Ben S. Bernanke threatens to weaken the central bank’s policy message by leaving the succession unsettled just as it considers scaling back record accommodation
  • NYSE Reviewing Upgrade as Possible Cause of Options Outage. NYSE Euronext (NYX:US) is looking into whether a software upgrade at a subsidiary disrupted a price feed that briefly halted U.S. options exchanges today. Securities Industry Automation Corp., the NYSE unit that oversees the quote dissemination service linking U.S. options markets, is focusing on a programming update that may have led to today’s halt, said Rich Adamonis, an NYSE Euronext spokesman.
Wall Street Journal: 
  • At Least 13 Killed in Washington Navy Yard Shooting. Pursuit of Another Potential Shooter Continues. A man who had been forced out of the military after a 2010 gun arrest opened fire inside a Navy building Monday morning, killing 12 people and injuring about a dozen more as he sprayed bullets into a cafeteria of unsuspecting military workers, officials said. Authorities said the alleged gunman, Aaron Alexis of Fort Worth, Texas, was killed in a shootout with police at the scene, but that wasn't the end to a chaotic day in the nation's capital that saw security officials lock down military buildings and the U.S. Senate, and cancel the Washington Nationals game scheduled later in the evening.
  • Yellen Is Now Top Fed Hopeful. White House Leans to Vice Chairwoman After Summers's Withdrawal From Consideration. Federal Reserve Vice Chairwoman Janet Yellen emerged as the front-runner to become the White House's nominee to lead the central bank, a day after Lawrence Summers pulled out of the contest amid congressional resistance, according to people familiar with the matter. 
  • How China Lost Its Mojo: One Town's Story. Once Booming Yantian Looks for New Sources of Growth. Not long ago, this factory town in southeastern China was an emblem of the country's massive export boom. Today, it is a symbol of China's struggle to sustain a growth streak. Low wages, easy access to overseas markets, and a business-savvy leadership helped transform Yantian in the 1990s from a sleepy agricultural hamlet to a manufacturing hub with close to 150,000 people. By 1998, more than 400 foreign firms set up shop, churning out electronics, toys and watches for export. A golf course and high-end hotel sprang up to keep Japanese and Hong Kong factory bosses amused.
  • GM(GM) Developing Car to Rival Tesla(TSLA). Cost of Advanced Battery-Technology Remains Hurdle to Building Longer-Range Vehicles. General Motors Co. is developing an electric car that can go 200 miles on a charge for around $30,000, officials at the largest U.S. auto maker said, offering a challenge to luxury electric-car startup Tesla Motors Inc. Doug Parks, GM's vice president of global product programs, disclosed the effort on Monday at GM's battery laboratory and test facility in Warren, Mich., but didn't say when the car would be available. He said while the technology is available now, the cost of the batteries remains too high to be able to pull off the feat today.
  • Obama Feels a Pinch From Congressional Democrats. Resistance to Summers for Fed Role Suggests Softening Clout Ahead of Budget Talks. The Democratic uproar that sank Lawrence Summers's chances of taking charge of the Federal Reserve suggests that President Barack Obama's clout on Capitol Hill is eroding ahead of crucial decisions about government spending and the debt ceiling. Mr. Obama often singles out House Republicans for blocking his agenda in Congress. But as his second term plays out, he also is confronting restive factions within his own party that are uneasy with some of his policies.
Fox News:
CNBC:
Zero Hedge: 
Business Insider: 
Reuters: 
  • Mosaic(MOS) cuts 3rd-quarter outlook for potash, phosphate. U.S. fertilizer company Mosaic Co cut its third-quarter outlook for the price and sales volume of potash and phosphate on Monday, saying crop nutrient markets had softened in the wake of the breakup of the Belarusian Potash Company (BPC). The company's shares eased 0.9 percent in New York after markets closed.
Telegraph: 
  • Mario Draghi risks row with Germany over bank plan. Mario Draghi has put the European Central Bank on a collision course with Berlin after insisting that Europe needs a single authority to wind up failing banks — just two days after Germany said the idea was legally questionable.
 Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 131.0 -4.0 basis points.
  • Asia Pacific Sovereign CDS Index 108.75 -6.5 basis points.
  • FTSE-100 futures -.15%.
  • S&P 500 futures -.14%.
  • NASDAQ 100 futures -.05%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (ADBE)/.34
  • (FDS)/1.19
Economic Releases
8:30 am EST  
  • The Consumer Price Index for August is estimated to rise +.2% versus a +.2% gain in July.
  • The CPI Ex Food & Energy for August is estimated to rise +.2% versus a +.2% gain in July.
9:00 am EST 
  • Net Long-Term TIC Flows for July are estimated at -$15.0B versus -$66.9B in June. 
10:00 am EST
  • The NAHB Housing Market Index for September is estimated to fall to 58 versus 59 in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Housing Price data, Eurozone Trade Balance report, UK Inflation Data, Germany ZEW Index, CBO Long Term Budget Forecast, weekly retail sales report, CSFB Chemical/Agricultural Conference, RBC Capital Financial Institutions Conference and the CSFB Small/Mid-Cap Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

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