Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.29 +5.4%
- Euro/Yen Carry Return Index 150.97 -.27%
- Emerging Markets Currency Volatility(VXY) 9.24 -.11%
- S&P 500 Implied Correlation 50.63 unch.
- ISE Sentiment Index 178.0 +93.48%
- Total Put/Call .65 -10.96%
Credit Investor Angst:
- North American Investment Grade CDS Index 62.34 -2.20%
- European Financial Sector CDS Index 87.20 -.30%
- Western Europe Sovereign Debt CDS Index 59.69 -.43%
- Emerging Market CDS Index 273.80 +.03%
- 2-Year Swap Spread 10.5 +1.0 basis point
- TED Spread 18.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .07% +1.0 basis point
- Yield Curve 265.0 +6.0 basis points
- China Import Iron Ore Spot $134.20/Metric Tonne unch.
- Citi US Economic Surprise Index 52.20 +2.0 points
- Citi Emerging Markets Economic Surprise Index -6.40 +.3 point
- 10-Year TIPS Spread 2.23 +2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +99 open in Japan
- DAX Futures: Indicating +49 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- China’s Dec. New Home Prices Rise Most in 2013: SouFun. China’s
new home prices in December jumped by the most last year even as the
country’s biggest cities tightened property controls to moderate price
gains. The average price rose 12 percent from a year earlier to 10,833 yuan ($1,789) per square meter (10.76 square feet),
SouFun Holdings Ltd., the nation’s biggest real estate website
owner, said in an e-mailed statement yesterday based on a survey
of 100 cities. Prices climbed 0.7 percent from November.
- China’s Tianjin to Begin Restricting Car Population, Xinhua Says. China’s
northern Tianjin municipality will begin restricting its car population
next year to control traffic congestion and air pollution, the official
Xinhua News Agency reported. Only 100,000 new license plates will be issued in Tianjin
next year, of which 60,000 will be distributed by lottery and
the rest auctioned off for a minimum bid of 10,000 yuan ($1,650)
each, according to Xinhua. Government departments will be banned
from buying new official cars and all proceeds from the auctions
will go to support public transportation, Xinhua reported,
citing a plan approved by the Tianjin government.
- Revlon to Exit Operations in China, Cut 1,100 Jobs. Revlon Inc. (REV), the maker of cosmetics under its namesake and Almay brands, will cease operations in
China and eliminate about 1,100 positions, including 940 beauty
advisers, as it restructures its struggling business.
- Toyoda Predicts Emerging Markets Slowdown to Persist This Year. A
slowdown in emerging markets will extend into this year, compounding
uncertainty over demand in China and at home, according to a group
representing Japan’s auto manufacturers. “A deceleration is seen in
emerging markets that have been growing rapidly until now,” Akio Toyoda,
president of Toyota Motor Corp. (7203) and chairman of the Japan
Automobile Manufacturers Association, said in a statement. “This year,
the situation is unpredictable.” Slowing demand in emerging markets including India,
Thailand, Brazil and Russia has marred an earnings boom for
Japanese exporters as the weaker yen drives up profits.
- Europe Stocks Post Best Year Since 2009 Before U.S. Data. European stocks
advanced, with the Stoxx Europe 600 Index posting its biggest annual
gain since 2009, amid shortened trading hours for New Year’s Eve before
American consumer confidence and housing data. SBM Offshore NV added 1
percent for its longest winning streak in two months. Real estate companies gained, with Land
Securities Group Plc and Unibail-Rodamco SE increasing more than
1.5 percent. Banco Comercial Portugues SA dropped 1.3 percent
for its worst two-day slump in almost six months.
The Stoxx 600 added 0.3 percent to 328.04 at 1:53 p.m. in
London, extending its rise this year to 17 percent as the European Central Bank pledged to keep interest rates low for an
extended period.
- U.S. 10-Year Yield Climbs to 2-Year High as Data Stoke Fed Bets. Treasuries fell, pushing 10-year
note yields to the highest level in more than two years, as
gains in U.S. consumer confidence and home sales bolstered bets the Federal Reserve will end bond purchases next year.
Thirty-year bond yields also reached the highest since
2011. The 10-year yield climbed six basis points, or 0.06
percentage point, to 3.03 percent at 2 p.m. New York time, according to
Bloomberg Bond Trader prices. It was the highest level since July 2011.
- Copper Falls, Capping Annual Drop, as Global Supply Gains. Copper
prices fell in London, capping a 7.2 percent annual decline, as
inventories in 2013 climbed for the first time in four years. Stockpiles monitored by the London Metal Exchange gained 14 percent this year.
Mine openings and expansion from Peru to Mongolia will leave a supply
surplus of 127,000 metric tons in 2014, Barclays Plc has forecast.
Economic growth in China, the world’s biggest user of the metal, has
slowed every year since
2010.
- Commodities Set for First Drop in 5 Years as Corn to Gold Tumble. Commodities headed for the first
annual drop in five years as supply exceeded demand for corn to
sugar to nickel and after investors lost faith in precious
metals as a store of value amid signs economies are improving. The
Standard & Poor’s GSCI gauge of 24 raw materials fell 0.4
percent to 633.51 by 1:44 p.m. in London for a 2 percent decline this
year. Corn led the retreat with a 39 percent plunge, with silver and
gold the next worst performers.
Commodity-fund investments fell by a record $88 billion to $332
billion in the first 11 months, Barclays Plc estimates.
Fox News:
- Politicians, companies see green as FAA approves drone test sites. Are drones the engine of the next economic boom? Officials in the six states selected Monday to develop drone test
sites certainly seem to think so. Despite concern about government
surveillance dominating the headlines this year, those behind the
successful bids ended 2013 cheering over the possibility of a new
commercial drone industry. "This is wonderful news for Nevada that creates a huge opportunity
for our economy," Senate Majority Leader Harry Reid, D-Nev., said in a
statement, after his state was selected as one of the six sites.
- Passengers, crew stuck on ship trapped in Antarctic ice ring in 2014. Passengers and crew who set off on an expedition to prove climate
change are ringing in the new year in the same place where they have
been for the past week: stuck in ice at the bottom of the world. The 74 scientists, tourists and crew on the Russian ship MV Akademik
Shokalskiy, which has been trapped near Antarctica since last Tuesday,
are expecting to be airlifted from the ship by a helicopter.
MarketWatch:
CNBC:
ZeroHedge:
ValueWalk:
Business Insider:
NY Post:
c/net:
Reuters:
- Chinese recycling tycoon says he wants to buy New York Times. An eccentric Chinese recycling
magnate said on Tuesday he was preparing to open negotiations to
buy the New York Times Co. Chen
Guangbiao, a well-known philanthropist, is something of a celebrity in
China. During a particularly murky bout of pollution in January, the
ebullient
and tireless self-promoter handed out free cans of "fresh air."
Boersen-Zeitung:
- Merkel
Adviser Opposes ECB Bond Purchases. ECB buying bonds if European
governments fail to implement reforms to combat sovereign debt crisis
wouldn't be "healthy," citing Christoph Schmidt, head of German
Chancellor Angela Merkel's council of economic advisers.
Style Underperformer:
Sector Underperformers:
- 1) Restaurants -.21% 2) REITs -.20% 3) Oil Tankers -.18%
Stocks Falling on Unusual Volume:
- UNXL, USLV, RUTH, KNDI, AXDX, EXAS, ADUS, APFC, FNGN, DGLD, MGNX, DEST, ACHC, ENZY, CTRP, SATS, ELLI, CLFD and DGX
Stocks With Unusual Put Option Activity:
- 1) AVP 2) ITB 3) IEF 4) DXJ 5) YHOO
Stocks With Most Negative News Mentions:
- 1) IBM 2) JCP 3) BTU 4) TWTR 5) WU
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.32% 2) Airlines +.86% 3) I-Banks +.85%
Stocks Rising on Unusual Volume:
- ICLD, HTZ, NQ, ONVO, MRVL and TWTR
Stocks With Unusual Call Option Activity:
- 1) HTZ 2) DG 3) AET 4) ONVO 5) UNXL
Stocks With Most Positive News Mentions:
- 1) STT 2) NFLX 3) HPQ 4) AAPL 5) WAG
Charts:
Evening Headlines
Bloomberg:
- China Approves Listing of Five Companies as IPOs Set to Resume. China's securities regulator gave
approvals for five companies to sell shares publicly in Shanghai
and Shenzhen, paving the way for the resumption of initial
offerings after a more than one-year freeze. About 50 companies are expected to complete the IPO
approval preparations and list or be ready to do so by the end of January, the China Securities Regulatory Commission said in a statement last month. There
are more than 760 companies in the queue for approval and it will take
about a year to complete an audit of all the applications, the
regulator said. Another several companies will likely receive approvals
in the next few days, the China Securities Journal reported today,
citing unidentified people at the companies.
- Asia Stocks Outside Japan Rise Third Day as Consumer Shares Gain.
Asian stocks outside Japan rose, with a regional gauge extending gains
into a third day as consumer and utilities companies advanced. HanKore
Environment Tech Group Ltd. (BIOT) soared 35 percent in Singapore after a
filing showed China Everbright International Ltd. plans to transfer
water-industry investments to the company. Sinopec Kantons Holdings Ltd.
gained 4.6 percent in Hong Kong after the oil trader said its
controlling shareholder China Petroleum & Chemical Corp. is
considering a asset injection of natural gas pipelines. Perseus Mining
Ltd., a gold producer, sank 3.9 percent in Sydney as the precious metal
headed for its biggest annual decline since 1981. The MSCI Asia Pacific excluding Japan Index climbed 0.2 percent to 467.69 as of 12:06 p.m. in Hong Kong.
- Rebar Set for Monthly Loss Amid Concern on Local Government Debt.
Steel reinforcement-bar futures
swung between gains and losses, heading for a monthly decline, amid
speculation that rising local government debt may prompt China to rein
in spending. Rebar for May delivery on the Shanghai Futures Exchange lost as much as 0.3 percent and gained as much as 0.2 percent
before trading little changed at 3,574 yuan ($590) a metric ton
at 10:56 a.m. Beijing time. The most-active contract fell 2.7
percent this month, bringing losses this year to 10 percent.
- Corn Set for Worst Drop Since ’60 as Crop Prices Slump on Output. Corn is heading for the worst year
since at least 1960 and wheat is poised for the biggest annual
loss in five years as global production climbs to a record. Futures
for corn plunged 39 percent this year to $4.23 a bushel by 11:35 a.m. in
Singapore today as wheat dropped 23 percent to $6.005 a bushel.
Soybeans fell 7.1 percent to $13.10.
- Yen Set for Biggest Decline Since 1979 on Outlook for BOJ Policy.
The yen is set for its biggest annual drop against the dollar since
1979 amid speculation the Bank of Japan will maintain unprecedented
stimulus to support Prime Minister Shinzo Abe’s economic strategy.
The yen has fallen 16 percent in 2013 against a basket of
nine other developed-nation currencies tracked by Bloomberg
Correlation-Weighted Indexes, the biggest slide within the
gauge. Hedge funds and other large speculators increased bets on
a drop in the yen against the dollar to the most since July
2007.
- Ringgit Posts Worst Annual Drop Since 1997 Crisis as Fed Tapers. Malaysia’s ringgit posted its worst
annual loss since the 1997 Asian financial crisis on concern
capital inflows will slow as the Federal Reserve trims its record monetary stimulus.
The Fed announced on Dec. 18 that it will start cutting monthly bond
purchases by $10 billion to $75 billion in January and pledged to keep
interest rates near zero until inflation and
unemployment improve. Malaysia’s government bonds returned 0.9
percent in 2013, the smallest increase in four years, according
to an index compiled by HSBC Holdings Plc.
- Russia Bombings Raise Prospect of Olympics as Target. Two
bomb attacks in southern Russia before the country hosts the Winter
Olympics are raising concerns that the location, the nations represented
and the international platform may make the games a major target for
terrorists. Four U.S. and European counterterrorism experts said the
main threat is attacks by the Muslim separatist groups in the
north Caucasus that are at war with the Russian government. They
are the leading suspects in the suicide bombings at the train
station in Volgograd two days ago and on a trolleybus in the
city yesterday that killed more than 30 people.
- Apple’s(AAPL) Cook, Gore Should Face E-Book Queries, U.S. Says. Apple
Inc. faces opposition from the
U.S. in its bid to block an antitrust monitor appointed in a
electronic books price-fixing case from interviewing top executives and
directors, including chief executive officer Tim Cook and board member
Al Gore. The government said the monitor, former Justice Department
inspector general Michael Bromwich, should be allowed to interview the
company’s leaders, as such activities are “standard procedure in
monitorships,” according to a filing today in Manhattan federal court.
Bromwich was appointed in
October by U.S. District Judge Denise Cote to evaluate Apple’s
antitrust compliance policies.
Wall Street Journal:
- China Says Terrorist Group Behind Police Station Attack. Authorities Identify Eight People Shot Dead and a Ninth Arrested on Monday in Xinjiang. Police have identified the eight people shot
dead by authorities on Monday and a ninth arrested outside a police
station in China's far western region of Xinjiang as members of a
terrorist group carrying out a premeditated attack, state media
reported. A report on the Xinjiang
government's news portal late Monday said the assailants hurled
explosives at the Yarkand county police station. After the clash, it
said, police recovered 25 other explosive devices and nine machetes at
the scene. Investigators said the group formed in August and began
gathering funds and materials for the "organized, premeditated, violent
terrorist attack," according to the report on Tianshan.net.
- FAA Authorizes Commercial-Drone Testing. Six Operators Selected to Conduct Research, Setting Stage for Eventual Widespread Use. Aviation officials on Monday selected a
handful of universities and state agencies to operate sites for drone
testing, in a step toward eventually integrating commercial unmanned
aircraft into the U.S. aviation system. Under
the six operators chosen by the Federal Aviation Administration,
research will be conducted by industry experts and academics on the safe
operation of drones, or unmanned aerial vehicles, across a broad array
of geographical areas, climates and types of airspace.
- Tom Coburn: The Year Washington Fled Reality. 'Message discipline' can win elections but is not a healthy way to run a country. The past year may go down not only as the least productive ever in Washington but as one of the worst for the republic. In
both the executive branch and Congress, Americans witnessed an
unwinding of the country's founding principles and of their government's
most basic responsibilities. The rule of law gave way to the rule of
rulers. And the rule of reality—in which politicians are entitled to
their own opinions but not their own facts, as Sen.
Daniel Patrick Moynihan
liked to say—gave way to some politicians' belief that they were
entitled to both their own opinions and their own facts. It's no wonder
the institutions of government barely function.
CNBC:
Zero Hedge:
Business Insider:
The Blaze:
Reuters:
- Fed's Fisher says his FOMC vote will reflect concerns on bond buying. Dallas Federal Reserve Bank
President Richard Fisher said his votes on the central bank's
policy panel in 2014 will reflect his concern that the Fed's
bond-buying risks stoking inflation and exposing the institution
politically.
In an interview conducted on Dec. 2 but posted to the
Internet as a podcast on Monday, Fisher called the excess
reserves piling up in the U.S. banking system potential "tinder"
for inflation, and he said the central bank's plans to
eventually unwind its extraordinary policies relied on an
untested "theoretical exit strategy." "I expect that my own voting behavior will reflect this
concern I've just stated," Fisher said in the interview hosted
by the private educational foundation Liberty Fund. "I worry
about the fact that we've already painted ourselves into a
corner that's going to be very hard to get out of."
- Reduced Fed support reflected in January bond-buying plan. The Federal Reserve plans to
purchase about $40 billion in longer-dated federal government
debt in 18 operations next month, the New York Fed said on
Monday, reflecting the U.S. central bank's decision to trim its support for the economy.
In what came as a surprise to some investors, earlier this month the
Fed decided to cut its bond-buying program, known as quantitative
easing, by $10 billion to $75 billion per month. It reduced purchases of
both Treasuries and mortgage bonds by $5
billion each.
- South Korea, China alarmed over yen slide. China and South Korea’s anxiety over the rapidly falling yen came to the
fore on Monday as senior officials said their exporters could be hurt
by Japan’s attempts to pull its moribund economy out of a two-decade
slump.
Telegraph:
- A world economy on the brink of fracture. What will happen in 2014? The Chinese economy will slow; the price of oil will
sink; Germany will slide into recession; the EU will remain intact and the
internet will begin to Balkanise.
Caixin:
- China to Ban Trust Sales By Wealth-Management Agents. China Banking Regulatory Commission plans to ban wealth management agents from signing agreements with trust companies to sell products.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 128.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 104.75 +1.5 basis points.
- NASDAQ 100 futures +.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- The S&P/CS 20 City MoM SA for October is estimated to rise +.95% versus a +1.03% gain in September.
9:45 am EST
- The Chicago Purchasing Manager report for December is estimated to fall to 60.8 versus 63.0 in November.
10:00 am EST
- Consumer Confidence for December is estimated to rise to 76.2 versus 70.4 in November.
Upcoming Splits
Other Potential Market Movers
- The China Govt Manufacturing PMI, German Retail Sales report and weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by financial and industrial
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.
Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.45 +7.95%
- Euro/Yen Carry Return Index 151.33 +.36%
- Emerging Markets Currency Volatility(VXY) 9.25 -.11%
- S&P 500 Implied Correlation 50.53 +2.62%
- ISE Sentiment Index 91.0 -1.09%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.73 +.75%
- European Financial Sector CDS Index 87.73 +2.57%
- Western Europe Sovereign Debt CDS Index 59.85 -1.0%
- Emerging Market CDS Index 273.87 +.14%
- 2-Year Swap Spread 9.5 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -3.75 -2.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .06% unch.
- Yield Curve 259.0 -2.0 basis points
- China Import Iron Ore Spot $134.20/Metric Tonne +.15%
- Citi US Economic Surprise Index 50.20 +.8 point
- Citi Emerging Markets Economic Surprise Index -6.70 +2.3 points
- 10-Year TIPS Spread 2.21 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +54 open in Japan
- DAX Futures: Indicating +49 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- China’s Swelling Local Debt Adds Urgency to Xi Fiscal Repair Job. China’s local-government debt
swelled to 17.9 trillion yuan ($2.95 trillion), underscoring
risks to the financial system as President Xi Jinping rolls out
economic reforms. Debt including contingent liabilities rose about 13 percent
in the six months through June, based on figures in a report by
the National Audit Office, posted on its website yesterday. That
followed a 48 percent increase over the previous two years. China’s borrowing spree in recent years has evoked
comparisons to debt surges that tipped Asian nations into crisis
in the late 1990s and preceded Japan’s lost decades. The audit
result adds pressure for Xi, yesterday named head of a Communist
Party leading group for reform, to repair a fiscal system that
starves local governments of tax revenue.
- China Says Abe Closed Door to Meetings After Visiting Shrine.
China ruled out talking to Japanese Prime Minister Shinzo Abe, saying
he “closed the door” to any meetings with Chinese leaders after visiting
a site that memorializes fallen Japanese soldiers including war
criminals. “Chinese people don’t welcome him,” Foreign Ministry
spokesman Qin Gang said at a briefing in Beijing today. “What
Abe needs to do now is confess his mistakes to the Chinese
government and the Chinese people.”
- Europe Stocks Decline.
Swatch Group AG, the world’s largest watchmaker, lost 0.8
percent after a fire caused damage at one of its workshops.
International Personal Finance Plc (IPF) rallied 10 percent after Numis
Securities Ltd. recommended buying the stock following a 26 percent drop
in the past two days. Vedanta Resources Plc increased 4 percent after
its Sesa Sterlite Ltd. won approval to restart its iron-ore mines in
Karnataka, India. The Stoxx 600 slipped 0.2 percent to 327.13 at the close of trading in London.
- Natural Gas Advances on Forecasts for Cold Start to New Year.
Natural gas advanced in New York on speculation that an unusually cold
start to the new year will stoke demand for the heating fuel. Gas gained
as much as 2.4 percent as Commodity Weather Group LLC predicted a
push of below-normal temperatures into the Northeast, Midwest and South
through Jan. 8. The high in New York City on Jan. 3 will be 18 degrees
Fahrenheit (minus 8 Celsius), 21 below normal, according to AccuWeather Inc. The low in Chicago on Jan. 2 will drop to 6 degrees, 13 below normal, and Dallas will be 31 degrees, 6 lower than average, according to AccuWeather in State College, Pennsylvania.
Wall Street Journal:
- Second Blast in Russia Stokes Olympic Security Fears. Suicide Bombing Is Volgograd's Second Within 24 Hours.
A suicide bomber struck in the southwest
Russian city of Volgograd on Monday morning, killing at least 14 people
aboard a crowded trolley bus in the city's second terrorist attack in
less than 24 hours, stoking security fears in the country ahead of the
Winter Olympics. Russian President Vladimir Putin ordered security to be
tightened around the country after the second attack, which comes less
than six weeks before the games are set
to start in the Black Sea resort of Sochi. The repeated attacks, and
risk of additional violence, threaten to tarnish an event on which Mr.
Putin has staked his personal pride and spent $50 billion to stage.
- Chinese Funds Look to Hedge Their Bets. Chinese
funds focused on the nation's domestic stocks are increasingly looking
to hedge their bets. While short selling, or betting that a stock's
price will fall, remains uncommon in China because of the high cost of
borrowing stocks, hedge funds are using CSI-300 index futures and other
methods to limit their risk. And fund managers say they expect
regulators to roll out more products that will allow them to better
hedge in the future. "More and more [local] funds are using hedging
strategies" to protect themselves during market declines, said
Martin Bao,
assistant portfolio manager at Shanghai-based Broadvision Investment
Management.
Fox News:
- 'Stuck in our own experiment': Leader of trapped team insists polar ice is melting. The leader of a scientific expedition whose ship remains stranded in
Antarctic ice says the team, which set out to prove climate change, is
"stuck in our own experiment." But Chris Turney, a professor of climate change at Australia’s
University of New South Wales, said it was “silly” to suggest he and 73
others aboard the MV Akademic Shokalskiy were trapped in ice they’d
sought to prove had melted. He remained adamant that sea ice is melting,
even as the boat remained trapped in frozen seas.
- Drones, placentas and transgender students: New laws in 2014 cover much ground. You may have heard that Colorado residents will be able to legally buy pot next year. But did you know that in Oregon, mothers will be able to take their
placentas home after giving birth? And in Illinois, it will be illegal
for police to use a surveillance drone in most cases without a warrant. These are just a few of the thousands of new laws and regulations going into effect next year -- mostly on Wednesday.
CNBC:
ZeroHedge:
Business Insider:
Forbes:
IBD:
Reuters:
Bild:
-
Schaeuble
Says Low-Rate Policies Can't Last Forever. German Finance Minister
Wolfgang Schaeuble in Bild-Zeitung interview says "low-interest rate
policies of the central banks can't last forever." Schaeuble says
expansive monetary polices lead to problems for long-term investments.
Xinhua:
- China to Keep Child Policy, Birth Level Stable. China will keep
child policy stable and ensure that birth level won't be volatile,
citing a statement from the State Council on improving child policy.
China will seek to manage the imbalance proportion of newborns' gender
and strictly control births thta aren't in accordance with policy.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -.83% 2) Coal -.78% 3) Energy -.53%
Stocks Falling on Unusual Volume:
- TWTR, MYGN, NOAH, NMM, IEP, OILT, CSV, VISN, LNG, PKX, MSB, NM, BMA, SEAS, OKS, TYL, MONT, ACOR, SODA, STMP, SALE, PINC, ESI, HAR, PCLN and CLMT
Stocks With Unusual Put Option Activity:
- 1) CTB 2) LLY 3) TIF 4) X 5) WHR
Stocks With Most Negative News Mentions:
- 1) MYGN 2) NFLX 3) HD 4) WFC 5) SBUX
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +.93% 2) Networking +.58% 3) Hospitals +.47%
Stocks Rising on Unusual Volume:
- KNDI, CROX, ORMP, ICLD, INVN, NQ and KRO
Stocks With Unusual Call Option Activity:
- 1) CROX 2) INVN 3) SYMC 4) GALE 5) DTV
Stocks With Most Positive News Mentions:
- 1) AAPL 2) TWTR 3) FB 4) WFC 5) BX
Charts:
Weekend Headlines
Bloomberg:
- China’s Media Condemns Abe as Boycott Calls Grow on Weibo. Japanese Prime Minister Shinzo Abe’s
visit to a war shrine drew condemnation from China’s state media
as Chinese consumers took to social media to call for a boycott
of Japan’s goods. “Japan has no future if it continues on its revisionist
path,” the People’s Daily, the Communist Party mouthpiece, said
in an editorial yesterday. The Global Times called for Abe and
senior Japanese government officials who visited the Yasukuni
Shrine in Tokyo to be barred from China. The China Daily said
the pilgrimage was an “intolerable insult” and called for the
country to reconsider the relationship with Japan in terms of
security, diplomacy and the economy. An Internet survey on the Sina Weibo microblog service had
respondents voting about three-to-one in support of a boycott of
Japanese products. User comments include people urging a tougher
stance against Japan to owners of Japanese-brand cars musing
about the need to put up patriotic slogans to avoid vandalism.
- Record
Money Rate Set to Last on $18 Trillion Debt: China Credit. China's
benchmark money-market rate will probably stay near a record in the
coming quarter as policy makers seek to cut overall debt that a
state-run researcher estimates has topped $18 trillion. The seven-day
repurchase rate will average 4.5%, according to the median estimate of
11 analysts and traders in a Bloomberg survey. That's near the
unprecedented 4.65% in the three months that started Oct. 1, and up from
3.2% in the first quarter. The average LIBOR for borrowing dollars for a
week was .13% on Dec. 24. China needs to deleverage because total
liabilities in the world's second-largest economy reached 111.6 trillion
yuan($18.4 trillion) in 2012 and accounted for 215% of GDP, Li Yang,
vice president of the Chinese Academy of Social Sciences government
think tank, wrote in an article published in Shanghai Securities News
last week.
- China Warns Officials on Terror Attacks as Xi Shows Frugality. Chinese officials and police have
been told to step up safety precautions in “key regions” and
be on alert for terrorist attacks during the New Year and Spring
Festival holidays amid ethnic tensions in Xinjiang. The order was given in a circular issued by the Communist
Party Central Committee and the State Council, the Xinhua News
Agency reported on Dec. 27. The document also reminded officials
to avoid extravagance and reiterated a ban on the use of public
funds for gift giving and entertainment.
- China Cash-for-Votes Scandal Shows Xi’s Graft Challenge.
A cash-for-votes scandal in China’s southern city of Hengyang that
snared more than 500 lawmakers underscores the challenges facing Xi
Jinping as he enters his second year in charge of the world’s
second-biggest economy. The unprecedented electoral fraud, which led to the
resignations of almost the entire city People’s Congress, was
disclosed on Dec. 28, less than a week after the ruling
Communist Party issued a new plan to fight corruption and
described the situation as “critical and complicated.”
- Abe Ends Year on Flagging Support, Needs Unified Cabinet.
Japanese Prime Minister Shinzo Abe
this month completed a year in office with public support
falling to the lowest yet. Abe’s fortunes next year will ride in
part on the ability of his top spokesman to keep the cabinet
unified as the government pushes economic and military reform.
- Asian Stocks Rise on Japan; Aussie Slips While Gas Gains.
Asian stocks climbed, with Japan’s Nikkei 225 Stock Average poised for
its biggest annual gain since 1972, as the yen touched a five-year low
versus the dollar. Australia’s currency dropped, while natural gas rose.
The MSCI Asia Pacific Index added 0.2 percent by 12:01 p.m.
in Tokyo, gaining for a 10th day, as the Nikkei 225 rose 0.4
percent.
- Rubber Falls, Extending Annual Decline as China Inventory Rises.
Rubber futures fell in Tokyo, heading for a yearly loss, as growing
stockpiles in China increased concern that demand may slow in the
biggest buyer of the commodity used in tires. The contract for delivery
in June on the Tokyo Commodity Exchange lost as much as 1 percent to
274.5 yen a kilogram ($2,605 a metric ton) before trading at 275.7 yen
at 11:51 a.m. local time. Futures gained 2 percent this month while
dropping 8.9 percent during volatile trading in 2013 that saw the
material slump into a bear market in April and bounce back into a bull
market in August.
- Rebar Climbs as Ore Prices Gain on Australian Supply Concern. Steel reinforcement-bar futures rose
for a third day in Shanghai as prices of raw-material iron ore advanced on concern that Australian supplies will be disrupted. Rebar for May delivery on the Shanghai Futures Exchange gained as much as 0.4 percent to 3,628 yuan ($598) a metric ton
and traded at 3,616 yuan at 10:03 a.m. local time.
- Turkey’s Economic Vulnerability Exposed as Graft Divides. Turkey’s
Prime Minister Recep Tayyip Erdogan enters the last week of 2013
reeling from a corruption probe that has splintered his party and
highlighted economic vulnerabilities as investors unload the nation’s
risk. Erdogan took his defense of his administration to the road
over the weekend, addressing supporters at six election rallies and
lashing out at prosecutors heading the graft investigation, which his
Finance Minister Mehmet Simsek called a “soft coup.”
Flyers for the ruling Justice and Development, or AK Party, say
it’s in a “struggle for liberation” as it seeks a fourth term
in power amid ambitions to lead the country to 2023.
- Draghi Sees No ‘Immediate’ Need for More Rate Cuts, Spiegel Says.
European Central Bank President Mario Draghi sees no need for further
cuts to the institution’s benchmark rate amid “encouraging signs” that
the euro crisis may be resolved, Der Spiegel reported, citing an
interview. “At the moment we see no immediate need to act” on the main refinancing rate, the magazine cited Draghi as saying.
“The crisis isn’t over, but there are many encouraging signs.”
- Volcker Rule Treatment of TruPS-Backed CDOs Getting U.S. Review. U.S. regulators said they are
reviewing whether it would be “appropriate and consistent”
with the Volcker Rule to allow exemption of some collateralized debt obligations backed by trust-preferred securities. The Federal Reserve, Federal Deposit Insurance Corp., Securities and Exchange Commission and Office of the Comptroller
of the Currency will address the matter by Jan. 15, the agencies
said in a statement yesterday.
Wall Street Journal:
- Google(GOOG), Apple(AAPL) Forge Auto Ties. Consumer Electronics Show to Spotlight In-Car Digital Race.
Technology giants Google Inc. and Apple Inc. are about to expand their
battle for digital supremacy to a new front: the automobile. Next week
at the Consumer Electronics Show in Las Vegas, Google and German auto
maker Audi AG NSU.XE 0.00% plan to announcethat they are working
together to develop in-car
entertainment and information systems that are based on Google's
Android software, people familiar with the matter said.
- Reimbursement for Breast-Cancer Risk Test to Be Cut.
The rate cut goes into effect on Jan. 1, 2014, with consequences for
genetic-testing companies, particularly Myriad Genetics Inc.(MYGN), the
dominant supplier of screenings for mutations in the genes known as
BRCA1 and BRCA2. Medicare will pay a maximum of $1,440 for the
BRCA test, a 48.5% decline from the rate of $2,795 it paid in 2013,
according to a notice published Friday afternoon on the website of the
Centers for Medicare and Medicaid Services.
- Saudis Pledge $3 Billion to Support Lebanon's Army. Grant Seeks to Bolster Armed Forces Against Iranian-Backed Hezbollah. Saudi Arabia pledged $3 billion to bolster
Lebanon's armed forces, in a challenge to the Iranian-allied Hezbollah
militia's decadeslong status as Lebanon's main power broker and security
force. Lebanese President
Michel Sleiman
revealed the Saudi gift on Lebanese national television Sunday,
calling it the largest aid package ever to the country's defense bodies.
The Saudi pledge compares with Lebanon's 2012 defense budget, which the
Stockholm International Peace Research Institute put at $1.7 billion.
- Patients Cram In Tests Before Health-Law Start. Some Top Hospitals and Experts Are Left Out of 2014 Plans Under Health Law. Thousands of people are cramming in tests,
elective procedures and specialist visits before year's end, seeking out
top research hospitals and physician groups that will be left out of
some 2014 insurance plans under the new health law, health-care
providers say. Many insurers offering
plans under the law are slimming down their networks of doctors and
hospitals in a bid to lower the cost of policies, which begin coverage
Wednesday. Health insurers are
especially focused on paring academic teaching and research hospitals
from their networks because they generally charge more than community
hospitals for similar services.
- A Large New Tax on Small Business. The latest ObamaCare levy takes effect Jan. 1.
ObamaCare
includes so many taxes that it's hard to keep track, but one of the
worst takes effect on Jan. 1. This beaut is a levy on health insurance
premiums that targets the small business and individual markets. At
$8 billion in 2014 and $101 billion over the next decade, the insurance
tax is larger than ObamaCare's taxes on medical devices and
prescription drugs combined. The Internal Revenue Service classifies the
tax as a "fee" but it functions like an excise tax on premiums. The IRS
collects an annual flat amount specified by the Affordable Care Act to be allocated among the insurers according to market share.
Fox News:
- 'Completely false': Sources on ground in Benghazi challenge NYT report. Fifteen months after the Sept. 11 attack in Benghazi which killed
Ambassador Chris Stevens and three other Americans, the narrative of the
attack continues to be shaped, and reshaped, by politicians and the
press. But a New York Times report published over the weekend has angered
sources who were on the ground that night. Those sources, who continue
to face threats of losing their jobs, sharply challenged the Times’
findings that there was no involvement from Al Qaeda or any other
international terror group and that an anti-Islam film played a role in
inciting the initial wave of attacks. “It was a coordinated attack. It is completely false to say anything
else. … It is completely a lie,” one witness to the attack told Fox
News. The controversial Times report has stirred a community that normally
remains out of sight and wrestles with how to reveal the truth, without
revealing classified information.
CNBC:
Business Insider:
New York Times:
- Markets on Edge as China Moves to Curb Risky Lending.
China’s financial system is in danger of becoming too big to bail out.
Official bank lending has more than doubled since the global
financial
crisis, growing nearly twice as fast as the overall economy. The even
bigger problem, however, appears to come from the rise of a shadow
banking system that has allowed a number of companies and individuals,
often with political connections, to borrow from state-controlled banks
at low interest rates and relend the money at much higher rates to
private businesses desperate for credit at almost any price.
Weekly Standard:
- Times Ignores Evidence of Al Qaeda Link to Benghazi. Contradicts previous reporting from the New York TImes. While much of Kirkpatrick’s reporting is admirable and while these
details add to our knowledge of certain aspects of the attack, they do
not tell the whole story. And that’s where the piece ultimately fails.
The Blaze:
- Ex-CIA Analyst Absolutely Rips NYT Benghazi Report. A former analyst for the CIA skewered the New York Times’ bombshell
report on Benghazi Saturday, contending that it was a “politicized
article” aimed at harming the GOP. “I thought it was a politicized article,” Fred Fleitz told Fox News. “It
tries to say that Anwar al-Sharia — that the Republican attempts to tie
that to terrorism is a stretch, when even CNN says they’re at least
sympathetic to Al Qaeda.”
Telegraph:
- Eurozone 'sleepwalking into a decades-long deflation trap’. World's largest bond fund Pimco says falling prices are the biggest risk to
the currency bloc in the new year. The eurozone is “sleepwalking” its way towards a Japanese-style deflationary
trap that could last decades, the world’s largest bond fund has warned.
Welt am Sonntag:
- Merkel Adviser Says Germany May Revert Back to 'Sick Man'.
Germany took steps this yr to become "sick man of Europe" again and many
European countries are already more attractive for investment, citing
Christoph Schmidt, head of Chancellor Angela Merkel's council of
economic advisers. Germany pursuing switch to renewable energies by
itself threatens competitiveness of its cos, citing Schmidt. Germany
pursuing switch to renewable energies by itself threatens
competitiveness of its companies, he said. Schmidt rejects CDU/SPD
coalition plans to introduce minimum wage, expand welfare spending
without freeing funds elsewhere. Germany stalling on own reforms will
harm its credibility and negotiating position in combating euro crisis.
Bild:
- Bundesbank's
Weidmann Says Euro Crisis May Return. While euro area is currently "in
rehab," calm in financial markets may be deceiving, citing Bundesbank
President Jens Weidmann. Euro countries need to stay on reform course;
framework for solid state finances must be strengthened; financial
markets/banks must be better regulated/supervised, citing Weidmann.
Prolonged periods of low interest rates can lead to governments delaying
necessary reforms, or to banks/companies without sustainable business
models being kept alive artificially, Weidmann said. Periods of low
interest rates can also lead to speculation about bubbles, for example
in real-estate, citing Weidmann.
El Pais:
- Spain Govt Needs to Carry Out More Reforms, Trichet Says. Spain needs to carry out more reforms as it still has problems to fix, former ECB President Jean-Claude Trichet says in an interview. Reforms carried out in Spain aren't enough, he said. The global crisis isn't over and the epicenter remains in Europe, Trichet said.
Weekend Recommendations
Barron's:
- Bullish commentary on (KO), (WEN), (LORL) and (CKEC).
- Bearish commentary on (EA).
Night Trading
- Asian indices are unch. to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 127.50 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 103.25 +.5 basis point.
- NASDAQ 100 futures +.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Pending Home Sales for November are estimated to rise +1.0% versus a -.6% decline in October.
10:30 am EST
- Dallas Fed Manufacturing Activity for Dec. is estimated to rise to 2.0 versus 1.9 in November.
Upcoming Splits
Other Potential Market Movers
- The German retail sales report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and industrial
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 week.
