Tuesday, February 25, 2014

Tuesday Watch

Evening Headlines 
  • Acting Ukraine President May Seek New Government Today. Ukraine’s acting president, Oleksandr Turchynov, told parliament he expects lawmakers to vote today on a national unity government led by a prime minister people would trust. Turchynov, an opposition politician who was elected parliament speaker Feb. 22, indicated yesterday that he expects to move quickly to fill the government vacuum so officials can seek the economic aid needed to fend off default, even as Russia questioned the legitimacy of the political transition.
  • Erdogan Resignation Demanded by Turkish Opposition Over Tape. Turkey’s main opposition party called on Prime Minister Recep Tayyip Erdogan to step down as his office dismissed alleged wiretapped conversations between the prime minister and his son as fake. Erdogan’s office said the alleged recording, published on YouTube and centering on how to conceal money from the police, was an “unethical” montage, and pledged legal action. Haluk Koc, deputy chairman of the Republican party, said in a televised press conference that “it’s unacceptable for someone who’s in the middle of these dirty relationships to govern Turkey after this hour.”  
  • Yuan Drops Most Since 2012 on Speculation PBOC Wants Volatility. China’s yuan tumbled the most in more than a year on speculation the central bank wants an end to the currency’s steady appreciation to ward off speculators before a possible widening of the trading band. The yuan fell 0.2 percent to 6.1107 per dollar as of 1:04 p.m. in Shanghai, sliding for a sixth day, according to China Foreign Exchange Trade System prices. It dropped as much as 0.44 percent earlier. The spot rate was within 0.13 percent of the central bank’s reference rate, which was set at 6.1184 today. The currency traded 0.77 percent stronger than the fixing on average this year and the maximum allowed gap is 1 percent.
  • Asian Stocks Rise to Highest in Month as Rupiah Rallies. Asian stocks climbed, with the regional benchmark index rising to its highest in a month, while the Indonesia’s rupiah led gains in emerging-market currencies. Nickel and lead advanced. The MSCI Asia Pacific Index added 0.6 percent by 10:44 a.m. in Tokyo. 
Wall Street Journal: 
  • Liberals vs. the IRS. Even the left doesn't want the tax man regulating speech. The media have remained quiet about the IRS targeting of conservative nonprofit groups and even quieter about the proposed IRS rule to restrict their political speech. Maybe our colleagues will snap out of their slumber now that the objections are coming from liberals.
Fox News: 
Zero Hedge: 
Business Insider:
China Securities Journal:
  • Small China Developers 'Capital Chain' May Break. Some small and medium-sized Chinese property companies may be knocked out of the market because their "capital chains" may break as banks tighten lending to the property sector, according to a front-page commentary written by reporter Wan Jing. The leverage ratio at property companies is high and financing demand will like be "huge" this year, the commentary said.
Evening Recommendations
  • Rated (ADBE) Positive, $83.
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 134.0 -4.0 basis points.
  • Asia Pacific Sovereign CDS Index 105.75 +1.0 basis point.
  • FTSE-100 futures -.10%.
  • S&P 500 futures -.10%.
  • NASDAQ 100 futures -.06%.
Morning Preview Links

Earnings of Note

  • (UTHR)/1.50
  • (AMT)/.96
  • (ODP)/.03
  • (TOL)/.18
  • (HD)/.71
  • (BLMN)/.26
  • (DPZ)/.76
  • (M)/2.17
  • (EIX)/.68
  • (FSLR)/1.02
  • (RGR)/1.38
  • (CPRT)/.37
  • (CBRL)/1.56
Economic Releases
9:00 am EST
  • The House Price Index for December is estimated to rise +.3% versus a +.1% gain in November.
  • The S&P/CaseShiller 20 City MoM SA for December is estimated to rise +.6% versus a +.88% gain in November.
10:00 am EST
  • Consumer Confidence for February is estimated to fall to 80.0 versus 80.7 in January.
  • Richmond Fed Manufacturing for February is estimated to fall to 5.0 versus 12.0 in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Tarullo speaking, G7 Meetings, German GDP report, $32B 2Y T-Note auction, weekly retail sales reports, (VC) investor day, (JPM) investor day and the (PWR) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

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