Tuesday, November 12, 2013

Tuesday Watch

Posted by Gary .....at 12:41 AM
Evening Headlines 
Bloomberg: 
  • Philippines Declares Calamity as Fresh Storm Approaches. Philippine President Benigno Aquino declared a state of calamity to speed aid to areas ravaged by Super Typhoon Haiyan, which may have killed more than 10,000 people, as rain from a new storm complicated relief efforts. The government has 18.7 billion pesos ($429 million) to fund reconstruction after Haiyan unleashed storm surges and gale-force winds that caused vast destruction, Aquino said yesterday in a televised address. The devastation may harm the economy, the government said. The storm affected as many as 9.7 million people, according to authorities, and 22 countries have pledged assistance. Soldiers were dispatched to prevent looting as survivors scoured for food.
  • China to Take Iron Ore Pricing Control From Miners, Banga Says. China will take control of iron ore pricing in the next two years as rising supplies of the steelmaking commodity return bargaining power to buyers, former Noble Group Ltd. Vice Chairman Harry Banga said. Prices of the second-biggest seaborne commodity will fall to between $95 and $110 a metric ton, said Banga, who in May started The Caravel Group Ltd. The product traded at $135.90 a ton at the Chinese port of Tianjin yesterday. Mine expansions by producers including Rio Tinto Group and BHP Billiton Ltd. (BHP) will push the market into a surplus next year, and the 82 million-ton glut will be the most since at least 2008, Goldman Sachs Group Inc. said in August. The shift in bargaining power may also spur an expansion of the iron ore securities market in Asia, Banga said. 
  • Asian Stocks Advance as Yen Declines With Crude Oil, Gold. Asian stocks rose, led by Japanese shares, as the yen weakened against all its major peers. Crude and gold declined, while U.S. 10-year Treasury yields touched the highest level in seven weeks. The MSCI Asia Pacific Index added 0.4 percent as of 1:36 p.m. in Tokyo.
  • Rebar Swings as Investors Await Outcome of China’s Party Plenum. Steel reinforcement-bar futures in Shanghai swung between gains and losses today as investors await the conclusion of a four-day Communist Party meeting. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, swung between a gain 0.4 percent and a loss of 0.3 percent before trading little changed at 3,663 yuan ($601) a metric ton at 10:15 a.m. local time.
Wall Street Journal: 
  • Andrew Huszar: Confessions of a Quantitative Easer. We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street. I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.
Fox News: 
  • US Marines land in Philippines to aid typhoon survivors. U.S. Marines landed Monday at some of the worst-hit areas of the Philippines, bringing water, generators and other critical supplies to survivors of Friday's deadly typhoon that may have taken as many as 10,000 lives.
CNBC: 
  • Is the shoeshine boy indicator flashing red? Joseph P Kennedy is quoted as saying that he knew in 1929 that Wall Street was overly optimistic and a crash was on its way when he started to get stock tips from his shoeshine boy. Is the current rush of mom-and-pop investors back into stocks a similar signal of a correction to come? Some analysts are pointing with concern to data, such as the Yale Crash Confidence Index for individual investors which measures the likelihood of a stock market crash in the next six months as an example of a "contrarian indicator" – where increased optimism or activity in one area is sign of a forthcoming downturn. Since June, it has shown more than 30 percent of investors feel confident the stock market won't crash within six months, after mostly languishing below that level since 2007. 
Zero Hedge: 
Business Insider:
Reuters: 
  • Moody's says European telco sales to fall again next year. Europe's telecom operators will see a fifth year of revenue decline in 2014, although operating margins will stabilise, helped by cost cutting and the end of regulatory cuts to mobile call termination fees, credit rating agency Moody's said. In the absence of top-line growth, Moody's kept the negative outlook on the sector it has had since 2011 despite its view the industry was "nearing the bottom" and would soon benefit from consumers' growing appetite for surfing the web on the go.
Financial Times:
  • CICC Forecasts China to Cut Growth Target Next Near to 7%. China may lower its growth target to 7% next year as the nation implements structural reforms following the Communist party plenary meeting that started on Saturday and concludes today, citing a report by China International Capital Corp. CICC's analysts led by chief economist Peng Wensheng says the lower growth target would lead the central bank to keep a tighter monetary policy stance, a shift that seems to have started already.
Economic Information Daily:
  • China May Raise Bar for LGFV to Issue Debt. China may raise the bar for financing vehicles bond sales out of concern over local government debt risk, citing a person close to National Association of Financial Market Institutional Investors. Cities that are not classified as provincial-level or central government-administered municipalities won't be able to sell debt on the interbank market, the report said. Companies also can't sell bonds if the local governments where they are located have debt-asset ratio exceeding 100%, the report says.
Evening Recommendations
 Jefferies:
  • Rated (QCOM) Outperform, target $80.
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 137.0 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 109.75 -1.25 basis points. 
  • FTSE-100 futures +.06%.
  • S&P 500 futures +.10%.
  • NASDAQ 100 futures +.09%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (DHI)/.40
  • (DISH)/.43
  • (DF)/.14
  • (MBI)/.15
  • (YRCW)/.59
  • (PBPB)/.09
Economic Releases
7:30 am EST
  • The NFIB Small Business Optimism Index for October is estimated to fall to 93.5 versus 93.9 in September.
8:30 am EST
  • The Chicago Fed Nat Activity Index for September is estimated to rise to .15 versus .14 in August.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Lockhart speaking, Fed's Kocherlakota speaking, Fed's Fisher speaking, UK CPI, 3Y T-Note auction, China FDI, weekly retail sales reports, Wells Fargo Tech/Media/Telecom Conference, Cowen Metals/Mining/Materials Conference, Stephens Fall Investment Conference, BofA Banking/Financial Services Conference, Jefferies Energy Conference, Barclays Automotive Conference, RBC Tech/Media/Telecom Conference and the (YUM) China same-store-sales could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

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