Tuesday, February 18, 2014

Tuesday Watch

Weekend Headlines 
  • Japan Growth Trails Forecasts as Sales-Tax Increase Looms. Japan’s economy grew at less than half the forecast pace in the fourth quarter, underscoring risks to the nation’s recovery as a sales-tax increase looms in April. Gross domestic product expanded an annualized 1 percent from the previous quarter, the Cabinet Office said today in Tokyo, less than the median projection of 2.8 percent in a Bloomberg News survey of 37 economists where the lowest estimate was 1.1 percent
  • BOJ Boost to Loan Programs Signals Room for More Easing: Economy. The Bank of Japan boosted lending programs while sticking with a plan for unprecedented asset purchases, as the central bank tries to support a recovery and stamp out 15 years of deflation. The BOJ doubled a funding tool to 7 trillion yen ($68 billion) and said individual banks could borrow twice as much low-interest money as previously under a second facility. It left unchanged a pledge to expand the monetary base by 60 trillion to 70 trillion yen per year.
  • BOJ Said to Consider Refraining From 2015 Monetary-Base Forecast. The Bank of Japan is considering refraining from issuing a monetary-base forecast for 2015 to avoid signaling a commitment to its unprecedented easing for a specific time period, according to people with knowledge of the matter. In April last year, the BOJ said the monetary base will rise to 270 trillion yen ($2.65 trillion) by the end of 2014. Now, the central bank may avoid issuing any update for coming years, said the people, who asked not to be named because the talks were private. The BOJ is forecast to leave policy unchanged at a meeting ending tomorrow.
  • Asian Stocks Advance for Third Day Before BOJ Statement. Asian stocks rose, with the regional benchmark index poised for a three-week high, as the yen weakened before the Bank of Japan issues a policy statement, boosting the outlook for the nation’s exporters. Nissan Motor Co. (7201), a carmaker that gets about 80 percent of sales outside Japan, increased 1.6 percent in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, rose 2 percent in Sydney after first-half profit jumped more than analysts expected. Coca-Cola Amatil Ltd. dropped 6 percent after Australia’s largest drinks maker reported full-year profit that missed estimates. The MSCI Asia Pacific Index added 0.5 percent to 136.93 as of 9:39 a.m. in Tokyo, heading for its highest close since Jan. 24.
  • Natural Gas Rises to Nine-Day High as Storm Crosses U.S. Midwest. Futures for March delivery rose 23.7 cents, or 4.5 percent, to $5.451 per million British thermal units at the 1:15 p.m. close of electronic trading on the New York Mercantile Exchange. Volume was 80 percent below the 100-day average. Prices are up 29 percent this year.
  • Hedge Funds Raise Gold Bull Bets as Paulson Holds: Commodities. Hedge funds raised bullish gold wagers to a three-month high as signs of slowing U.S. economic growth spurred demand for haven assets. Billionaire John Paulson maintained his bullion holdings last quarter. The net-long position climbed 17 percent to 69,291 futures and options in the week ended Feb. 11, U.S. Commodity Futures Trading Commission data show. Long wagers rose 8.8 percent, the most since March. Net-bullish holdings across 18 U.S.-traded commodities rose 18 percent to 1.07 million contracts, the highest since October 2012, led by silver and coffee
  • Ibovespa Falls as Natura Drops Amid Brazil Growth Concern. The Ibovespa dropped for the third time in four sessions as companies that sell domestically including cosmetics seller Natura Cosmeticos SA sank after analysts cut Brazil’s economic growth estimates. BR Malls Participacoes led declines among real estate stocks, while utility Centrais Eletricas Brasileiras SA fell the most on the benchmark gauge. Homebuilder Brookfield Incorporacoes SA (BISA3) rallied after saying its corporate parent will offer to buy all outstanding shares for as much as 1.60 reais each to take it private. The Ibovespa fell 1.3 percent to 47,576.33 at the close of trading in Sao Paulo, with 63 stocks lower and eight higher.
Wall Street Journal:
  • Suspected Islamic Militants Kill at Least 90 in Nigerian Village. Suspected Islamic militants stormed a village along Nigeria's mountainous border with Cameroon, a local official and a witness said Sunday, killing at least 90 people. Several hundred fighters screaming "Allah akbar," or "God is great," ran through the village of Izge Saturday night, said local resident Ibrahim Musa. The town is a predominately Christian enclave in Nigeria's largely Muslim northeast, the homeland to Islamist insurgency Boko Haram. "They started shooting sporadically, killing everyone on sight," said Mr. Musa, who fled into the surrounding countryside. When he returned Sunday, he counted 90 bodies, "littered everywhere in our town." 
  • Charges Open New Front in Libor Probe. Investigation Into Alleged Rigging of Libor Broadens. British prosecutors filed criminal charges against three former bank traders for alleged fraud, opening a new front in a global investigation into alleged rigging of benchmark interest rates, with more charges in the pipeline.
Fox News:
  • Carmakers may be on the verge of an incentives war. When General Motors announced it would offer more than $7,000 in discounts on some of its big Silverado pickups, the news sent many shoppers rushing to showrooms. But it also sent shivers racing down the spines of automotive investors increasingly worried that slowing sales may trigger the sort of incentive wars that trashed industry profits during the years leading up to the recent recession.
Zero Hedge:
Business Insider:
LA Times:
San Francisco Chronicle:
  • Weak spending shows Japanese consumer doubts about Abenomics. Japanese consumers ended last year with a whimper instead of the bang many had expected, reinforcing a nagging worry that the prime minister's aggressive policies are struggling to find support among those key to its success. Economic growth figures on Monday added to evidence that concern about job security is holding back consumers, trumping the urge to spend before a rise in the national sales tax rate in April makes goods more expensive.
Financial Times:
  • Bankers play funding trick with subprime car loan deals. Pre-funding is like spending winnings before cards have been dealt. While millions of Americans have fallen out of love with their cars, Wall Street has been swept off its feet by loans used to finance sales of Volkswagens, Hondas and Fords. Car ownership rates in the US have slumped to their lowest in more than 15 years – at the same time that sales of auto asset-backed securities (auto ABS) – or bonds backed by loans that fund car purchases – have surged.
China Securities Journal:
  • Chinese Govt Guarantee on Trusts to Harm Pricing. Chinese governments and banks shouldn't continue to tolerate trust products that have "no risk" because of implicit guarantees, according to a front-page commentary. Government guarantees on off-balance-sheet wealth management products from state-owned companies and banks will harm market pricing, according to the commentary.
Weekend Recommendations
  • Bullish commentary on (EPL), (CVS), (SJM), (NPO) and (AAL).
Night Trading
  • Asian indices are -.25% to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 132.0 unch.
  • Asia Pacific Sovereign CDS Index 101.75 -2.0 basis points.
  • FTSE-100 futures +.15%.
  • S&P 500 futures +.22%.
  • NASDAQ 100 futures +.24%.
Morning Preview Links

Earnings of Note

  • (WWW)/.20
  • (GPC)/.91
  • (CPLA)/.77
  • (FDP)/-.16
  • (DUK)/.95
  • (MDT)/.91
  • (KO)/.46
  • (OII)/.84
  • (PNRA)/1.94
  • (FLS)/1.05
  • (TEX)
  • (CRMT)/.70
  • (FLR)/.98
  • (CF)/4.41
  • (ADI)/.49
Economic Releases 
8:30 am EST
  • Empire Manufacturing for February is estimated to fall to 9.0 versus 12.51 in January.
9:00 am EST
  • Net Long-Term TIC Flows for December are estimated to rise to $30.0B versus -$29.3B in November.
10:00 am EST
  • The NAHB Housing Market Index for February is estimated at 56 versus 56 in January. 
Upcoming Splits
  • (ANDE) 3-for-2
  • (OTEX) 2-for-1
Other Potential Market Movers
  • The BoJ decision, Reserve Bank of Australia Minutes, German ZEW Index and UK Inflation data could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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.

1 comment:

Stephen said...

so here comes the Star war like wars .... the future is fighting with laser guns (???) few months back US DoD has successfully tested this LAWS and announced that it had downed a drone. What about fighter jets??? supersonic jets can this down them tooo????