Tuesday, November 19, 2013

Tuesday Watch

Posted by Gary .....at 12:29 AM
Evening Headlines 
Bloomberg: 
  • Credit-Driven China Glut Threatens Surge Into Bank Crisis. A $6.6 trillion credit binge during the past five years, encouraged by Beijing policy makers as stimulus to combat a global economic slowdown, now threatens to stoke a debt crisis. At stake are trillions of yuan in bank loans that companies producing everything from ships to steel to solar power are struggling to repay as the world’s second-largest economy heads for the weakest annual expansion since 1999. 
  • Onions Bring Tears to RBI’s Rajan as Prices Surge: India Credit. Record onion prices and the soaring cost of rice and coriander are frustrating Reserve Bank of India Governor Raghuram Rajan’s battle to curb inflation while supporting growth in Asia’s third-largest economy. The wholesale-price index for onions, a staple food for India’s 1.24 billion people, has climbed 155 percent this year, hitting an all-time high of 820.5 in September, according to the Ministry of Commerce and Industry. The index, set at 100 in 2004, has almost quadrupled in 12 months. A broader measure for food is up 19 percent in 2013, while spot prices for coriander climbed about 29 percent and basmati rice advanced 40 percent. 
  • Asia Stocks Outside Japan Rise as Hong Kong Extends Rally. Asian stocks outside Japan rose, with a regional benchmark index heading for a four-day rally, as Hong Kong stocks extended yesterday’s gains amid optimism China’s economic reforms will boost growth. China Life Insurance Co., the nation’s biggest insurer, rose 5.2 percent in Hong Kong after Citigroup Inc. named the company as one of the beneficiaries of Communist Party reforms. Olympus Corp. added 3.5 percent in Tokyo on a newspaper report the company will increase endoscope production capacity by 30 percent. Commonwealth Property Office Fund jumped 4.6 percent in Sydney after the Australian property fund received a higher competing bid. Honda Motor Co., which gets 83 percent of its revenue outside of Japan, lost 1.2 percent as the yen gained. The MSCI Asia Pacific excluding Japan Index added 0.2 percent to 478.59 as of 12:31 p.m. in Hong Kong.
  • Rubber Declines for Second Day as Yen’s Rebound Weakens Appeal. Rubber declined for a second day as Japan’s currency rebounded from a two-month low against the dollar, reducing the appeal of yen-denominated futures. The contract for delivery in April on the Tokyo Commodity Exchange lost as much as 1.4 percent to 257.5 yen a kilogram ($2,581 a metric ton) and traded at 258.4 yen at 10:17 a.m. local time. Futures have fallen 15 percent this year. 
  • Rebar Futures Swing as Investors Weigh Stockpiles, Steel Output. Steel reinforcement-bar futures in Shanghai swung between gains and losses as investors weighed falling stockpiles in China against higher steel production. Rebar for May delivery, the most-active contract by volume on the Shanghai Futures Exchange, earlier rose as much as 0.5 percent and fell as much as 0.2 percent before trading at 3,599 yuan ($591) a metric ton by 11:14 a.m. local time. The contract fell 1.9 percent last week. 
  • Treasury Volatility Approaches Record Low Before Bernanke Speech. Treasury market volatility fell to near a record low on speculation Federal Reserve Chairman Ben S. Bernanke will support the case for maintaining bond purchases in a speech today. The Merrill Lynch MOVE Index slid to a six-month low of 58.31 yesterday, approaching the record of 48.87 set May 9. Bernanke is scheduled to speak at 7 p.m. in Washington. Vice Chairman Janet Yellen, in her confirmation hearing last week to be the next central bank chairman, said she’s committed to promoting an economic recovery and will ensure stimulus isn’t removed too soon.
Wall Street Journal:
  • Gen. Dempsey Warns Syria Options Growing More Complex. The nation’s top military general warned Monday that America’s options for resolving the conflict in Syria are becoming more complex, narrowing the country’s ability to influence the outcome in the Middle East. Speaking at The Wall Street Journal CEO Council annual meeting, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said that the U.S. has few good options for dealing with a conflict that has claimed more than 100,000 lives.
  • J.P. Morgan, U.S. Reach Historic Settlement. Some $4 Billion in Aid to Homeowners Was Final Hurdle in $13 Billion Accord.
  • Marco Rubio: No Bailouts for ObamaCare. The health-care law's 'risk corridors' could result in a huge taxpayer burden. With every passing day, ObamaCare's flaws are being exposed in painful ways for the American people. What started as a broken website—and nonexistent Spanish one—is now snowballing into a full-scale disaster that makes it increasingly clear this law can't be fixed. Under ObamaCare, people are being recklessly exposed to identity theft and fraud through the dysfunctional website and navigator network.
Fox News: 
CNBC:
  • Market milestones feed fear of bubbles. "I think we're starting to get to the point where psychology is taking over," said Brad McMillan, chief investment officer for Commonwealth Financial. "You're seeing retail flows move back to equities. You have expectations in the institutions where the market is going to move up toward the end of the year. … Once you get disconnect from the fundamentals, you can drift as high as you want."
Zero Hedge: 
Business Insider: 
NY Post:
  • Census 'Faked' 2012 Election Jobs Report. In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington. The decline — from 8.1 percent in August to 7.8 percent in September — might not have been all it seemed. The numbers, according to a reliable source, were manipulated. And the Census Bureau, which does the unemployment survey, knew it.
National Journal: 
Reuters:
Telegraph: 
China Securities Journal: 
  • Guangzhou Raises Down Payment for 2nd-Home to 70%. The southern Chinese city of Guangzhou will raise the minimum down payment for 2nd-home purchasers to 70% starting Nov. 25, citing a statement from PBOC's Guangzhou branch.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.75% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 101.75 -2.25 basis points. 
  • FTSE-100 futures -.39%.
  • S&P 500 futures +.06%.
  • NASDAQ 100 futures +.09%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (SPLS)/.42
  • (DE)/1.90
  • (ADT)/.46
  • (LOW)/.47
  • (JCP)/-1.74
  • (JACK)/.39
  • (GMCR)/.75
  • (POST)/.21
  • (LTD)/.28
  • (WSM)/.54
Economic Releases
8:30 am EST
  • The 3Q Employment Cost Index is estimated to rise +.5% versus a +.5% gain in 2Q.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed Bernanke speaking, Fed's Evans speaking, Germany ZEW Index, weekly retail sales reports, Deutsche Bank SMID-Cap Conference, Morgan Stanley Consumer/Retail Conference, UBS Tech Conference and the (CHRW) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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