Monday, April 14, 2014

Monday Watch

Weekend Headlines 
  • Ukraine Tension Mounts as Police Face Gunfire in East. Tensions rose in Ukraine’s eastern regions today as gunmen seized a police station and attacked two others, prompting the government in Kiev to accuse Russia of “external aggression” to destablize the country. Protesters took over the police station in Donetsk, sparking the local police chief’s resignation. About 20 gunmen in camouflage gear blocked off the police and security service headquarters in nearby Slovyansk, seizing weapons and taking hostages, the Interior Ministry said. Police stations in nearby Krasnyi Liman and Kramatorsk came under assault as police exchanged fire with unidentified attackers, Interior Minister Arsen Avakov said. Ukraine sent special-forces troops to contain the situation, he said. 
  • Eastern Ukraine Violence Brings ‘Crunch Time’ for U.S., EU. The U.S. and European Union have reached “crunch time” to halt further destabilization in Ukraine and curb any further Russian expansion in the region. Prospects for a negotiated end to the crisis were set back after camouflaged gunmen fired on government forces near Slovyansk, about 240 kilometers (150 miles) from the Russian frontier in eastern Ukraine. There were casualties on both sides. Russia requested an emergency meeting of the United Nations Security Council at 8 p.m. in New York. The U.S. backed Ukraine’s accusation that Russia was behind the violence.
  • Japan Inflation Acceleration Risks Souring Public on Abenomics. Prime Minister Shinzo Abe’s bid to vault Japan out of 15 years of deflation risks losing public support by spurring too much inflation too quickly as companies add extra price increases to this month’s sales-tax bump. Businesses from Suntory Beverage and Food Ltd. to beef bowl chain Yoshinoya Holdings Co. have raised costs more than the 3 percentage point levy increase. This month’s inflation rate could be 3.5 percent, the fastest since 1982, according to Yoshiki Shinke, the most accurate forecaster of Japan’s economy for two years running in data compiled by Bloomberg.
  • PBOC’s Yi Says China’s Growth Rate Is Within ‘Reasonable Range'. China’s economy is growing at an acceptable pace, China’s central bank Deputy Governor Yi Gang said, adding to signals policy makers will avoid broad stimulus to counter a slowdown. “Economic growth is still within a reasonable range,” Yi said in an interview with Bloomberg News in Washington, responding to a question about whether he’s concerned that recent weakness in economic data points to a further slowdown in the world’s second-largest economy. 
  • Singapore Dollar Most Vulnerable to U.S. Rates: Chart of the Day. Singapore’s dollar has emerged as Asia’s most-vulnerable currency to prospects of higher U.S. interest rates, driving a gauge measuring the relationship to a record high.
  • China’s Top Broker Citic Takes BTIG Stake as CLSA Unit Expands. Citic Securities Co., China’s largest brokerage, acquired a stake in U.S. trading firm BTIG LLC as it expands around the world.
  • Germany Warns European Markets Not to Celebrate Prematurely. Germany’s top finance officials warned investors against prematurely celebrating an overhaul of Europe’s economies four years after they plunged into crisis. “It’s good that markets have become more confident again,” Finance Minister Wolfgang Schaeuble told reporters in Washington yesterday during the spring meetings of the International Monetary Fund. “But I’ve said that in parts they’re already exaggerating again.” Bundesbank President Jens Weidmann said yesterday at the same IMF meetings “there’s a discussion about a stability risk that’s created by financial markets in a certain way running ahead of adjustment processes.” 
  • Euro Slides Versus Most Peers as Draghi Warns of ECB Stimulus. The euro weakened versus most of its 16 major peers after European Central Bank President Mario Draghi said its strength “requires further monetary stimulus.”
  • Technology Bears Miss 20% Payouts After Giving Up on Short Sales. Bears who abandoned bets against technology companies from Facebook (FB) Inc. to Netflix Inc. (NFLX) in 2013 can only sit and watch now as the stocks tumble.
  • New York Billionaires Help Obama Policy Group Raise $6 Million. Since Obama’s campaign manager Jim Messina started the group early last year, it has brought in about $32 million. Billionaire David Shaw, who started the New York-based hedge fund D.E. Shaw & Co., wrote a $500,000 check; billionaire New York architect Jon Stryker, whose fortune comes from his family’s medical supply business, gave $100,000; Mark Gallogly, co-founder of New York’s Centerbridge Partners LP, supplied $100,000. Amy Goldman Fowler, an author and expert on seeds who’s based in New York, gave $250,000, adding to her $500,000 contribution from last year.
  • CBS CEO Moonves Reaps $200 Million in Pay Over Three Years. Leslie Moonves, chief executive officer of CBS Corp. (CBS:US), received $66.9 million in compensation last year, bringing his three-year total to almost $200 million and highlighting the rich payouts in media. His boss Sumner Redstone, who also draws a paycheck as chairman of Viacom Inc. (VIAB:US), got $109 million from CBS over those same years, according to a regulatory filing (CBS:US) today.
Wall Street Journal:
Fox News:
  • 3 dead in shootings at Jewish centers in Kansas, authorities say. A man in his 70s opened fire Sunday outside of a Jewish community center and nearby retirement community, killing three people, authorities said, while the FBI is joining local police in the search for a motive. Overland Park Police Chief John Douglass said at a news conference Sunday evening that a person who had been reported to be in critical condition earlier was among three killed in the attacks, which apparently occurred minutes apart.
  • Markets wrong to think euro crisis over: UBS chair. Debt markets think the euro zone debt crisis is over and are "underpricing" the risks, Axel Weber, former head of the Bundesbank, Germany's central bank, has warned. "Markets, when they re-price, always overshoot. But at the moment, as they're re-pricing to a normal situation, they're also overshooting," Weber, currently chairman of Swiss bank UBS, told CNBC in an interview at an International Monetary Fund meeting in Washington. "The market is probably too benign on some of the developments in Europe. It's pricing as if the problems were behind us, but what is behind us is the bad headlines, and the problems are still there," he warned.
Zero Hedge:
Business Insider:
Wall Street All-Stars:
Financial Times:
  • Fed policy maker warns on low rates stance. The US Federal Reserve’s plan to keep interest rates low even once the economy is back to normal could risk a policy mistake, a Fed policy maker has warned in an interview with the Financial Times. James Bullard, president of the St Louis Fed, said he did not see a persuasive reason to think interest rates should be below their long-run level in 2016, if unemployment and inflation are back to normal.
  • Slowdown puts 1bn middle class at risk. Almost a billion people in the developing world are at risk of slipping out of the ranks of a nascent middle class, according to FT analysis, raising questions about the durability of the past 30 years’ remarkable march out of poverty.
People's Daily:
  • China Premier Li Calls Stabilizing Economy 'Heavy Task'. The current domestic and global environment are complicated and China can't underestimate difficulties.
Night Trading
  • Asian indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 123.0 +2.5 basis points.
  • Asia Pacific Sovereign CDS Index 88.25 +1.75 basis points.
  • FTSE-100 futures -.57%.
  • S&P 500 futures -.14%.
  • NASDAQ 100 futures -.12%.
Morning Preview Links

Earnings of Note

  • (MTB)/1.61
  • (C)/1.14
  • (JBHT)/.61
Economic Releases 
8:30 pm EST
  • Retail Sales Advance MoM for March are estimated to rise +.9% versus a +.3% gain in February.
  • Retail Sales Ex Auto MoM for March are estimated to rise +.5% versus a +.3% gain in February.
  • Retail Sales Ex Auto and Gas for March are estimated to rise +.4% versus a +.3% gain in Febuary.
10:00 am EST
  • Business Inventories for February are estimated to rise +.5% versus a +.4% gain in January.
Upcoming Splits
  • (UA) 2-for-1
Other Potential Market Movers
  • The Eurozone Industrial Production data could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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 25% net long heading into the week.

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