Wednesday, February 19, 2014

Wednesday Watch

Evening Headlines 
  • Ukraine Fighting Kills at Least 18 as Kiev Barricades Burn. Clashes in Ukraine between police and anti-government activists killed at least 18 people and left hundreds injured in the bloodiest episode of the country’s three-month standoff. Eleven civilians and seven policemen were confirmed dead during clashes yesterday and through the night as security forces moved to clear out the main protest camp in Kiev. Thousands gathered on central Independence Square, with burning barricades ringing protesters hurling firebombs at officers backed by water cannons and military vehicles. 
  • Kuroda Easing Doomed as Yen Seen Missing 120 Level. Strategists’ forecasts signal the Bank of Japan will fail to reach its 2 percent inflation target as yen declines next year won’t be sufficient. Japan’s currency will tumble 11 percent to 115 per dollar in 2015, according to a Bloomberg of analysts, short of the 120 level economists estimate will be needed for consumer prices to reach the BOJ’s goal. The breakeven rate, which reflects bond investors’ expectation of future inflation, signal a 1.16 percent increase in the cost of living in the coming decade. The figure is 2.16 percent in the U.S. and 1.35 percent in Germany.
  • China Cuts Treasury Holdings Most Since 2011 Amid Taper. China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases. The Communist nation reduced its position in U.S. government bonds by $47.8 billion, or 3.6 percent, to $1.27 trillion, the largest decline since December 2011, according to U.S. Treasury Department data released yesterday. At the same time, international investors increased holdings by 1.4 percent, or by $78 billion, in December, pushing foreign holdings to a record $5.79 trillion.
  • Lew Tells G-20 Risks Linger as Emerging Markets Cloud Outlook. U.S. Treasury Secretary Jacob J. Lew said risks including volatility in emerging markets and China’s economic agenda are clouding the global outlook, requiring nations to focus on boosting growth and job creation. “There has been considerable volatility in global markets, especially in several emerging markets,” Lew said in a letter yesterday to his Group of 20 colleagues. “We are monitoring these developments closely.”
  • Most Asian Stocks Fall as Baht Weakens; Oil Extends Climb. Most Asian stocks fell, snapping a three-day advance in the regional index, while Thailand’s baht led declines in higher-yielding currencies. Oil gained before stockpiles data and silver slipped. The MSCI Asia Pacific Index lost 0.1 percent by 10:54 a.m. in Tokyo and Standard & Poor’s 500 Index (SPX) futures were down 0.1 percent.
Wall Street Journal:
  • Brazil Stocks Close Lower, Pulled Down by Stop-Loss Orders. Brazilian shares closed lower Tuesday, with some stocks plummeting as stop-loss orders kicked in after the benchmark index dropped below important levels. The Ibovespa index declined 2.1% to 46599, with shares including PDG Realty, Anhanguera Educacional Participacoes and Marfrig dropping more than 8%
Fox News:
  • The China risk you may have forgotten about. China's shadow-banking problems may have grabbed headlines, but its long-bubbling property sector continues to pose risks to the economy, analysts said. The property market is the biggest concern about China right now, Adrian Mowat, chief Asian and emerging market equity strategist at JPMorgan, told CNBC. 
Zero Hedge:
Business Insider:
  • U.S. concerned about Japan domestic demand outlook. The United States expressed concern on Tuesday about whether domestic demand will remain a principal driver of Japan's economy. "Japan's economy has been largely driven by domestic demand over the last two years, but the outlook for domestic demand has clouded," U.S. Treasury Secretary Jack Lew said in a letter to members of the Group of 20, which includes many of the world's largest economies.
South China Morning Post:
  • China Said to Push Media to Avoid Foreign-Bank Researchers. Central govt's propaganda debt instructs sr editors to be "cautious" about who they invite to talk about the nation's economy, citing economic researchers working for state-owned media. Govt concerned about what's said about problems, challenges. While there's no "black list or white list," media clearly encouraged to invite economists, analysts from domestic banks, brokerages to speak, esp. on live broadcasts. CBRC reduces meetings with economists from foreign banks; only "small number" of trusted people invited.
People's Daily:
  • China Should Boost Risk Control on LGFV Credit, CBRC Head Writes. China should strengthen risk controls on credit to local government financing vehicles, property market and industries with overcapacity, China Bnaking Regulatory Commission Chairman Shang Fulin writes in an article. The overall risk to the banking system is controllable, while regional risk are increasing, Shang wrote.
Evening Recommendations
  • Rated (URI) Buy, target $99.
  • Rated (OSK) Buy, target $66.
Night Trading
  • Asian equity indices are -.50% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 132.0 unch.
  • Asia Pacific Sovereign CDS Index 101.75 unch.
  • FTSE-100 futures -.12%.
  • S&P 500 futures -.10%.
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note

  • (MGM)/.00
  • (DVN)/1.08
  • (LL)/.72
  • (EV)/.59
  • (SNPS)/.52
  • (MAR)/.49
  • (WMB)/.21
  • (CAR)/.12
  • (VECO)/-.33
  • (JACK)/.66
  • (SWY)/.48
  • (TSLA)/.25
  • (REV)/.82
Economic Releases
8:30 am EST
  • PPI Final Demand for January is estimated to rise +.1% versus a +.1% gain in Deember.
  • The PPI Ex Food and Energy for January is estimated to rise +.1% versus unch. in December.
  • Housing Starts for January are estimated to fall to 950K versus 999K in December.
  • Building Permits for January are estimated to fall to 975K versus 986K in December.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Lockhart speaking, Fed's Bullard speaking, Fed's Williams speaking, China HSBC Manufacturing PMI, Japan Trade Balance, weekly retail sales reports, weekly MBA mortgage applications report and the Barclays Industrial Select Conference 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

1 comment:

Stock Market Investment Strategies said...