Tuesday, November 26, 2013

Tuesday Watch

Posted by Gary .....at 12:21 AM
Evening Headlines 
Bloomberg:
  • China Said to Plan Crackdown on Banks’ Evasion of Lending Limits. China has drafted rules banning banks from evading lending limits by structuring loans to other financial institutions so that they can be recorded as asset sales, two people with knowledge of the matter said. The rules drafted by the China Banking Regulatory Commission ban borrowers from using resale or repurchase agreements to move assets off their balance sheets, said the people, who asked not to be identified because they aren’t authorized to discuss the rules publicly. 
  • U.S. to Continue Flights in Defense Zone Claimed by China. The U.S. won’t change its flight operations to comply with China’s newly claimed air defense zone in the East China Sea, a Pentagon spokesman said today. “We will not in any way change how we conduct our operations,” Army Colonel Steve Warren told reporters at the Pentagon. U.S. pilots won’t register their flight plans or identify their transponder or frequency, Warren said.
  • India Office Boom Turns Glut With Vacancies: Real Estate. India’s slowing economy has left its big cities with a glut of office space, pushing up vacancy rates, freezing development and prompting some builders to convert commercial projects into housing. Vacancy rates in the financial center of Mumbai and capital New Delhi topped 20 percent in the third quarter, the highest in Asia after Chengdu, China, where 32 percent of offices are empty, according to broker Cushman & Wakefield Inc. Six Indian cities are among the 10 office markets with the worst vacancies in the region, according to Cushman. 
  • India Growth Seen Below 5% for Longest Spell Since 2005: Economy. India’s economic growth probably held below 5 percent for a fourth straight quarter, the longest stretch in data going back to 2005, as Prime Minister Manmohan Singh struggles to boost investment and tame elevated inflation. Gross domestic product rose 4.6 percent in July through September from a year earlier, compared with 4.4 percent in the prior quarter, according to the median of 25 estimates in a Bloomberg News survey ahead of a report due on Nov. 29.
  • Most Asia Stocks Fall as Valuations Approach 6-Month High. Most Asian stocks fell, dragging the regional benchmark index lower for the first time in three days, after valuations climbed to near the highest level in six months. Honda Motor Co. (7267) slid 0.9 percent as the yen strengthened against the dollar, weakening the earnings prospects for Japanese carmakers. Doosan Engineering & Construction Co. (011160) slumped 15 percent after the Korea Economic Daily said the Seoul-based provider of civil engineering and architectural services will sell redeemable convertible preferred shares. Perseus Mining Ltd. rose 5.5 percent in Sydney, leading a rebound in gold producers after the precious metal climbed. The MSCI Asia Pacific Index slid 0.1 percent to 141.68 as of 11:01 a.m. in Hong Kong, with about four shares falling for every three that advanced.
  • Rubber Drops to Two-Week Low After Forecast Surplus May Widen. Rubber declined to a two-week low after a forecast that the global surplus of the commodity will widen through 2015 as production increases. Futures for delivery in April on the Tokyo Commodity Exchange lost as much as 1.8 percent to 256 yen a kilogram ($2,523 a metric ton), matching the intraday low on Nov. 12. Futures traded at 257.3 yen at 11:42 a.m. local time, extending losses for this year to 15 percent. 
  • Rebar Rises in Shanghai on More Signs Output Will Fall in Hebei. Steel reinforcement-bar futures in Shanghai climbed on further signs that output will decline in Hebei province, the largest producing region in China. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, rose as much as 0.6 percent to 3,657 yuan ($600) a metric ton, the highest price since Nov. 13. Futures traded at 3,653 yuan at 10:32 a.m. local time. 
  • Paris Office Market Wilts to 10-Year Low as Taxes Crimp Spending. The office take-up in and around Paris is set to fall by 30 percent this year to a 10-year low of 1.8 million square meters, according to broker DTZ. That’s less than in 2009, when the French economy contracted the most since World War II. A tax burden that’s reached a record high under President Francois Hollande and an economy in its second year of stagnation amid the European debt crisis are weighing on spending decisions.
Wall Street Journal:
  • Stephens: Worse Than Munich. In 1938, Chamberlain bought time to rearm. In 2013, Obama gives Iran time to go nuclear. To adapt Churchill : Never in the field of global diplomacy has so much been given away by so many for so little.
Fox News:
  • Deal in hand, will Iran follow path of North Korea? Now that the Obama administration has its nuclear deal with Iran, the big question is can Tehran be trusted to make good on its promises -- or, will it follow the path of North Korea? "I am concerned this agreement could be a dangerous step that degrades our pressure on the Iranian regime without demonstrable actions on Iran's part to end its pursuit of a nuclear weapons capability -- a situation that would be reminiscent of our experience over two decades with North Korea," Sen. John McCain, R-Ariz., said in a statement. Critics of the newly struck deal with Iran cite the United States' bruising experience with North Korea over the past two decades. The rogue nation repeatedly led on the U.S. and other nations, only to renege time after time.
  • Almost 80 million with employer health care plans could have coverage canceled, experts predict. Almost 80 million people with employer health plans could find their coverage canceled because they are not compliant with ObamaCare, several experts predicted. Their losses would be in addition to the millions who found their individual coverage cancelled for the same reason. Stan Veuger of the American Enterprise Institute said that in addition to the individual cancellations, "at least half the people on employer plans would by 2014 start losing plans as well." There are approximately 157 million employer health care policy holders.
CNBC:
Zero Hedge:
Boston Globe: 
The Daily Beast:
  • World Doubts Obama Will Enforce Red Line on Iran. The Iran gambit has risks and, if a final deal isn’t achieved after six months, the possibility of war rises. World leaders say President Obama’s credibility to enforce the deadline has been badly damaged.
Reuters:
  • U.S. diners plan even fewer restaurant visits next year-survey. U.S. diners, who have been cutting back on restaurant visits, plan to eat out even less frequently in 2014, according to a new survey from consultancy AlixPartners. For the first time in the five years that AlixPartners has conducted the survey, participants said the No. 1 reason for dining out less was the desire to eat healthier. That answer just edged out the need to trim personal spending.
MNI:
  • ECB's Noyer Says Euro Area Recovery Weak, Fragile. European Central Bank governing council member and Bank of France governor Christian Noyer said euro area's recovery is weak and fragile, citing Noyer as speaking today at a forum in Beijing.
    The Obama administration will press ahead Friday with tough requirements for new coal-fired power plants, moving to impose for the first time strict limits on the pollution blamed for global warming. The proposal would help reshape where Americans get electricity, away from a coal-dependent past into a future fired by cleaner sources of energy. It's also a key step in President Barack Obama's global warming plans, because it would help end what he called "the limitless dumping of carbon pollution" from power plants.
    Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
Kyodo:
  • Suga Says Japan Can't Be Bound by China Airspace Zone. Japan told its airline operators that they are not bound by the China airspace defense zone, citing remarks by Chief Cabinet Secretary Yoshihide Suga.
NHK:
  • Chinese embassy prepares for unexpected occurrence. The Chinese embassy in Tokyo is urging Chinese residents in Japan to register their contact details in case of unexpected emergencies. Officials posted the notification online on November 8th. That's about 2 weeks before China announced a new air defense identification zone over the East China Sea. The zone covers the Japan-controlled Senkaku Islands, which are also claimed by China and Taiwan.
Nikkei:
  • Japan, U.S. May Deploy Unmanned Plane to East China Sea. Japan, U.S. may deploy Global Hawk unmanned surveillance aircraft to East China Sea after China announced an air defense zone in the region.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 129.75 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 101.0 -.75 basis point. 
  • FTSE-100 futures -.03%.
  • S&P 500 futures +.13%.
  • NASDAQ 100 futures +.14%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (BKS)/-.03
  • (PLCE)/1.85
  • (TIF)/.58
  • (BWS)/.58
  • (CHS)/.24
  • (DSW)/.58
  • (CBRL)/1.58
  • (EV)/.60
  • (HPQ)/1.00
  • (ADI)/.58
  • (ZLC)/-.85
  • (FRED)/.20
Economic Releases
8:30 am EST
  • Building Permits for October are estimated at 930K.
9:00 am EST
  • The S&P/CS 20 City MoM SA for September is estimated to rise +.9% versus a +.93% gain in August.
  • The House Price Index for September is estimated to rise +.4% versus a +.3% gain in August.
10:00 am EST
  • Consumer Confidence for November is estimated to rise to 72.6 versus 71.2 in October.
  • Richmond Fed Manufacturing for November is estimated to rise to 4.0 versus 1.0 in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The $35B 5Y T-Note auction, UK nationwide home prices, weekly retail sales reports and the (JEC) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and automaker 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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