Monday, November 18, 2013

Monday Watch

Posted by Gary .....at 12:28 AM
Weekend Headlines 
Bloomberg:
  • China Reform Plan Sets Scene for Local Clampdown: Economy. China’s Communist Party signaled a bigger focus on fiscal concerns during President Xi Jinping’s tenure, setting the scene for a clampdown to control the finances of indebted regional authorities. Local governments will be able to sell bonds to fund construction and officials will be rated on measures including borrowing levels, the party said Nov. 15. An easing of the one-child policy and extra land rights for farmers also featured in the biggest package of reforms since at least the 1990s. 
  • China Homes Prices Jumped in October Led by Guangzhou, Shenzhen. New home prices in China’s four major cities rose the most since January 2011, raising concerns of a bubble as homebuyers were emboldened by a lack of new nationwide property curbs. New home prices in October jumped 21 percent from a year earlier in the southern city of Guangzhou and 20 percent in nearby Shenzhen, 18 percent in Shanghai and 16 percent in Beijing, the National Bureau of Statistics said in a statement today. Prices rose in 69 of the 70 cities tracked by the government. Shenzhen and Shanghai this month raised minimum down payments for second homes to 70 percent, following a similar move by Beijing in March, as local authorities struggle to contain price gains. Housing sales jumped 33 percent in the first 10 months of this year as Premier Li Keqiang refrained from adding new nationwide restrictions that would hurt economic growth.
  • Thailand Cuts Economic Growth Forecast as Exports Falter. Thailand cut its growth forecast for the year after the economy expanded less than analysts estimated last quarter and weakening exports damp the outlook for consumption and investment. Gross domestic product rose 1.3 percent in the three months through September from the previous quarter, the National Economic & Social Development Board said in Bangkok today. It revised a contraction in the second quarter to no growth from the previous three months. GDP grew 2.7 percent from a year earlier, compared to a median estimate of 2.9 percent in a Bloomberg survey of 15 analysts.
  • Asian Stocks Extends Two-Week High After China Reforms. Asian stocks rose for a third day, with the benchmark index extending a two-week high, after China vowed to carry out the broadest expansion of economic freedoms since at least the 1990s. China Mengniu Dairy Co., a maker of milk products, jumped 4.8 percent after policy makers pledged to relax the nation’s one-child policy. China Galaxy Securities Co. jumped 7.2 percent in Hong Kong as prospects for financial reform boosted brokerages. Dwango Co. soared by the daily limit in Tokyo for a second day after saying Nintendo Co. bought a stake in the company that provides content through mobile phones. The MSCI Asia Pacific Index added 0.8 percent to 142.64 as of 12:33 p.m. in Tokyo after closing at the highest level since Oct. 31 last week.
  • WTI Drops as Saudi Arabia’s Oil Exports Surge to Eight-Year High. WTI for December delivery slid as much as 34 cents to $93.50 a barrel in electronic trading on the New York Mercantile Exchange and was at $93.60 at 2:34 p.m. Sydney time. The contract climbed 8 cents to $93.84 on Nov. 15. The volume of all futures traded was about 37 percent below the 100-day average. 
  • Rebar Swings as Investors Weigh China Reforms, Weak Demand. Steel reinforcement-bar futures in Shanghai swung between gains and losses as investors weighed China’s reform plans against weak demand in winter. Rebar for May delivery, the most-active contract by volume on the Shanghai Futures Exchange, was little changed at 3,593 yuan ($590) a metric ton at 11:21 a.m. local time, after rising and falling as much as 0.2 percent. 
  • Rubber Declines From Two-Week High as Stockpiles in China Expand. Rubber fell from a two-week high after data showed stockpiles in China swelled to a nine-year high, boosting concern that demand from the largest user is waning. The contract for delivery in April on the Tokyo Commodity Exchange lost as much as 1.1 percent to 259.3 yen a kilogram ($2,586 a metric ton) and traded at 261.5 yen at 11:05 a.m. local time.
  • CME(CME) Hack Draws FBI Probe While Renewing Market Structure Anxiety. The computer intrusion at CME Group Inc. has spurred a federal investigation and renewed concerns about the trustworthiness of electronic markets. The Chicago Mercantile Exchange’s owner said yesterday that its systems were hacked in July and some customer information was compromised. CME Group said there’s no evidence that transactions on its electronic-trading system or its clearing services were affected. 

Wall Street Journal:
  • Strains With Israel Over Iran Snarl U.S. Goals in Mideast. As Netanyahu Embraces Hollande, State Department Weighs Another Kerry Visit. The Obama administration's overtures to Iran are straining the U.S. alliance with Israel in ways not seen in decades, compounding concerns about the White House's ability to manage the Middle East's proliferating security crises, said current and former American diplomats. In a sign of Israel's growing disaffection with Washington, French President François Hollande was given a hero's welcome when he arrived in Tel Aviv on Sunday for a three-day visit that would showcase Paris's hard line against Iran's nuclear program ahead of international talks in Geneva this week.
  • High-Risk Patients Fuel More Health-Law Worry. High-Risk Health-Insurance Pools Gain Brief Second Life. So-called high-risk pools for people rejected by commercial health-insurance companies were supposed to be largely phased out when President Barack Obama's health law kicked in. Instead, they are gaining a brief second life in some states due to the problems with the federal health-insurance exchange created by the law. The development may represent short-term good news for the law, because it would keep some people with costly medical conditions out of the new policies, at least temporarily. But it adds to the uncertainty for insurers, analysts say, increasing concerns that could cause rates to rise for everyone next year.
  • UnitedHealth(UNH) Culls Doctors From Medicare Advantage Plans. Physicians in 10 States Notified; Insurer Cites 'Funding Pressure' From Federal Government. UnitedHealth Group Inc., the nation's largest provider of privately managed Medicare Advantage plans, has dropped thousands of doctors from its networks in recent weeks—spurring protest from lawmakers and physician groups and leaving many elderly patients unsure about whether they need to switch plans to keep seeing their doctors. Doctors in at least 10 states have received termination letters, some citing "significant changes and pressures in the health-care environment." The notices also tell doctors they can appeal within 30 days. That means many physicians and patients won't know for sure who is in or out of UnitedHealth's Medicare Advantage networks before the open-enrollment period to switch Medicare plans ends on Dec. 7.
  • Geithner Heads to Private Equity. Former Treasury Secretary Is Joining Warburg Pincus. Former U.S. Treasury Secretary Timothy Geithner, one of the architects of the federal government's rescue of the financial system, is joining private-equity firm Warburg Pincus LLC. Mr. Geithner, who has spent most of his career outside the private sector, said in an interview he plans to start in March at the New York-based firm, known for its role in buyouts of companies including eye-care firm Bausch & Lomb Inc., luxury retailer Neiman Marcus Group Inc. and stadium concessionaire Aramark Corp.
  • On Wish List: Boost From Holiday Sales. Will American consumers give the economy a boost in coming weeks with their holiday shopping sprees—or leave it with a lump of coal? Many signs point to the coal. Morgan Stanley is predicting the weakest holiday shopping season since 2008, which was in the depth of the last recession. Consumer sentiment dropped in November to its lowest point in nearly two years, a preliminary reading of the Thomson-Reuters/University of Michigan index showed.
  • ObamaCare's Union Favor. The White House may let Big Labor dodge a reinsurance tax. The Affordable Care Act's greatest hits keep coming, and one that hasn't received enough attention is a looming favor for President Obama's friends in Big Labor. Millions of Americans are losing their plans and paying more for health care, and doctors are being forced out of insurance networks, but a lucky few may soon get relief.
Marketwatch.com:
  • Is Dr. Copper a liar? Dr. Copper looks sick — and needs a doctor — but according to the SPX, everything is wonderful. The world is blissful. Then again, which market is reflecting "the truth" about the underlying fundamentals? If it is the SPX, then we should expect a major upturn in copper demand, and in copper prices. Conversely, if copper speaks the truth — and prices continue to deteriorate, then the equity indices in general, and the SPX in particular, are in for a rude awakening and a forthcoming major downside reversal.
Fox News:
  • Liz Cheney rips Obama on health care, says he 'lied'. (video) Republican Liz Cheney turned up the flames Sunday in her bid to win a Senate seat in Wyoming -- suggesting President Obama lied about his signature health care law while also taking shots at her incumbent opponent and the liberal media.
CNBC:
  • Caught in unemployment's revolving door. The long-term jobless, after all, tend to be in poorer health, and to have higher rates of suicide and strained family relations. Even the children of the long-term unemployed see lower earnings down the road. The consequences are grave for the country, too: lost production, increased social spending, decreased tax revenue and slower growth. Policy makers and academics are now asking whether an improving economy might absorb those workers in time to prevent long-term economic damage.
Business Insider:
New York Times:
  • Washington Insurance Official Is Ousted. The insurance commissioner for the District of Columbia was dismissed from his job just a day after he publicly questioned a decision by President Obama to reverse a provision of the Affordable Care Act, a person with knowledge of the events said on Sunday.
Washington Post:
  • Capital gains: Spending on contracts and lobbying propels a wave of new wealth in D .C. So much money to be had if you know where to look. The avalanche of cash that made Washington rich in the last decade has transformed the culture of a once staid capital and created a new wave of well-heeled insiders. The winners in the new Washington are not just the former senators, party consiglieri and four-star generals who have always profited from their connections. Now they are also the former bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible.
The Economist:
  • Haunted housing. Even big developers and state-owned newspapers are beginning to express fears of a property bubble. IN CHINA, property prices can keep going up forever. At least, that is what optimists seem to think.
Financial Times:
  • Yellen respite for EM may prove temporary. Emerging markets suffered a bout of fevered selling in the summer, as investors absorbed the import of the US Federal Reserve’s plans to start scaling back its vast stimulus programme. Now, their malaise is starting to look more like a persistent winter flu. Each time a run of stronger US data prompts speculation that Fed “tapering” is imminent, the pressure on emerging markets ratchets up – as it has this month, sending the more fragile currencies tumbling against the dollar.
  • Hedge funds get ‘too cosy’ with prime brokers. Concerns are arising over the “cosy” relationships that tie hedge funds to prime brokers, as claims surface that hedge funds inappropriately reward brokers for sending new investors their way. Tens of billions of dollars each year in indirect and direct commissions are paid by hedge funds to brokers. And analysts, some of whom declined to go on the record, warn that hedge funds are incentivised to pay fat commissions and award larger trading volumes to those that find investors for their funds.
  • Federal Reserve considering a delay to Volcker rule. The Federal Reserve is considering a delay in the compliance date for the highly anticipated Volcker regulation, giving banks additional time to conform with its provisions, according to people familiar with the matter.
FAZ:
  • EBA to Take Tough Stance on Europe Banks, Chief Enria Says. EBA will take a tough stance in its bank stress tests as so far as "too few banks in Europe have been unwound and disappeared from the market," Chairman Andrea Enria said. Govts "tend to keep their national banks in the market," which has slowed the reparation process. Says EBA will test banks "in much more detail" than previously. Says criteria for assessing assets such as high-yield government bonds on banks' balance sheets will be "unilateral and conservative".
The Economic Times:
Nikkei:
  • Japan Considers Cutting Solar Incentive. Industry ministry may cut price that utilities pay for solar by 20% over two years.
Sydney Morning Herald:
  • First-home crisis triggers call for action. (graph) A record plunge in first-home buyer activity has sparked calls for a national debate on housing affordability. While the housing market has reached boom levels in a low interest-rate environment, first-home buyers are being squeezed out of the property market, making up a record low 6.8 per cent of new housing loan commitments in NSW in September, a sharp fall from the peak of 34 per cent in May 2009. Across Australia, the proportion of first-home buyers taking out loans sank to 12.5 per cent for the month. Property prices in Sydney have soared by 13.2 per cent over the year, according to RP Data.
Night Trading
  • Asian indices are -.25% to +1.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 132.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 104.0 -3.5 basis points.
  • FTSE-100 futures -.06%.
  • S&P 500 futures -.08%.
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (TSN)/.70
  • (URBN)/.45
  • (CRM)/.09
  • (JEC)/.87
  • (CTB)/.53
Economic Releases
9:00 am EST
  • Net Long-Term TIC Flows for September are estimated to rise to $20.0B versus -$8.9B in August.
10:00 am EST
  • The NAHB Housing Market Index for November is estimated at 55 versus 55 in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Kocherlakota speaking, Fed's Plosser speaking, Fed's Dudley speaking, Eurozone trade balance, Barclays Growth Conference, (ALTR) investor meeting, (RAI) investor day and the (RVBD) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

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