Tuesday, June 10, 2014

Wednesday Watch

Posted by Gary .....at 11:42 PM
Evening Headlines 
Bloomberg:
  • World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start. The World Bank cut its global growth forecast amid weaker outlooks for the U.S., Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates. The Washington-based lender predicts the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent. The U.S. forecast was reduced to 2.1 percent from 2.8 percent while outlooks for Brazil, Russia, India and China were also lowered.
  • Ukraine Crisis Chokes East Europe Growth, World Bank Says. Economic growth in eastern Europe will slow “sharply” this year because of dwindling demand from Russia, which may face wider sanctions from the U.S. and the European Union if it fails to help end violence in Ukraine. Expansion will slow to 1.7 percent this year in the post-communist east from 2.2 percent last year, the Washington-based lender said on its website. The forecast includes the Czech Republic, Poland and Russia, which are considered high income by the World Bank. 
  • China Building Dubai-Style Fake Islands in South China Sea. Sand, cement, wood and steel are the latest tools in China’s territorial arsenal as it seeks to literally reshape the South China Sea. Chinese ships carrying construction materials regularly ply the waters near the disputed Spratly Islands, carrying out work that will see new islands rise from the sea, according to Philippine fishermen and officials in the area. China’s efforts are reminiscent of Dubai’s Palm resort-style land reclamation, they say. 
  • Euro Drops as Aussie Yields Track Treasuries; Topix Rises. The euro slipped against most major peers and Australian bonds followed Treasuries lower before a sale of 10-year U.S. notes. Japanese stocks rose, with the Asian benchmark equity gauge near a one-year high, and nickel fell. The euro weakened 0.2 percent versus the dollar by 11:06 a.m. in Tokyo, falling against 15 of 16 peers. The yield on 10-year Australian notes climbed six basis points after the rate on equivalent U.S. Treasuries hit a four-week high. Japan’s Topix (TPX) added 0.4 percent as the MSCI Asia Pacific Index extended its highest close since May 21 last year.
  • China’s Record Oil Hoarding Seen Keeping Crude Above $100. China is hoarding crude at the fastest pace in at least a decade, shielding itself from supply disruptions and helping keep prices above $100 a barrel. The country imported a record volume in April as it emulates steps taken by the U.S. in the 1970s to create a strategic petroleum reserve, government data show. Chinese President Xi Jinping is building stockpiles as his nation clashes with Vietnam over resources in the South China Sea and faces potential risks to oil sales from Russia, Africa and the Middle East because of sanctions and violence.
  • Al-Qaeda Offshoot Seizes Iraq’s Second City in Threat to Maliki. Fighters from a breakaway al-Qaeda group seized control of Mosul, Iraq’s second-biggest city, driving out government forces and highlighting Prime Minister Nouri al-Maliki weakening grip on the country. The city is entirely in the hands of the Islamic State of Iraq and Levant, or ISIL, with no army or police presence remaining, Noureddin Qablan, the vice chairman of Nineveh provincial council, said by phone late yesterday. Maliki called for parliament to declare a state of emergency, and pledged swift action to recapture the city in a televised speech. 
  • Obama Popularity Hits Low in Poll After Prisoner Exchange. President Barack Obama’s favorability ratings hit the lowest point of his presidency in a Bloomberg National Poll, with just 44 percent of Americans saying they have positive feelings about him. That drop in personal popularity has become a broader drag on the public’s perception of his performance in office. Obama, already given poor marks on the economy and health care, also gets low ratings on two recent political firestorms: the management of the Department of Veterans Affairs and the deal that freed the last U.S. prisoner of war in Afghanistan, according to the poll. His job-approval rating fell to 43 percent -- near the level at the end of 2013 after the botched rollout of the Affordable Care Act, his signature health-care law.
  • Even Toilets Aren’t Safe as Hackers Target Home Devices. Come home to a hot iron and smoldering clothes this afternoon? Soon, it may not be a sign of forgetfulness, but rather evidence that you’ve been hacked. In coming years, your smartphone will be able to lock your house, turn on the air conditioning, check whether the milk is out of date, or even heat up your iron. Great news, except that all that convenience could also let criminals open your doors, spy on your family or drive your connected car to their lair.
Wall Street Journal:
  • Officials Predicted Detainees in Bowe Bergdahl Swap Would Rejoin Taliban. Classified Assessment Says Two of the Men Would Return to Senior Positions. Before the U.S. transferred five Afghan Taliban detainees to secure the freedom of Sgt. Bowe Bergdahl, American intelligence officials predicted that two of the men would return to senior positions with the militant group, according to U.S. officials. The classified assessment, a consensus of spy agencies compiled during the prisoner-swap deliberations, said two others of the five were likely to assume active roles within the Taliban, while only one of the five released detainees was considered likely to end...
  • U.S. Tax Enforcement Plans Put Korean Banks in Spotlight. The Foreign Account Tax Compliance Act, or FATCA, is causing a stir in South Korea—particularly among those who hold American citizenship or permanent residency, and those within the Korean financial institutions that manage money for this group.
  • Volatility Traders Have More to Fear than Fear Itself. The latest big worry to hit markets is an unusual one: calm. With stock prices high and various gauges of risk low, investors appear to have thrown caution to the wind. That isn't entirely true, though. Exchange-traded notes that profit handsomely from market-shaking events have boomed since the financial crisis. But they have two big shortcomings: They may not work as designed in another financial crisis since their value depends on...
  • The Short Unhappy Life of ObamaCare. By 2024 there will be more than 40 million uninsured, roughly 10% more than today. President Obama claims the debate over the Affordable Care Act is "over," but in coming weeks and months expect it to intensify. Health-insurance companies will soon begin releasing preliminary rate estimates for next year's plans. Industry experts say consumers should once again brace for significantly higher premiums. Fearing the political fallout before November's elections, the administration last month quietly...
  • The Fall of Mosul. A strategic disaster assisted by Obama's withdrawal from Iraq. So much for al Qaeda being on a path to defeat, as President Obama used to be fond of boasting. On Tuesday fighters for the Islamic State of Iraq and al-Sham, an al Qaeda affiliate known as ISIS, seized total control of the northern city of Mosul—with nearly two million people—after four days of fighting. Thousands of civilians have fled for their lives, including the governor of Nineveh province, who spoke of the "massive collapse" of the Iraqi army. This could also describe the state of U.S. policy in Iraq. ...
Fox News:
MarketWatch.com:
  • Fed needs to start raising rates, top forecaster says. The Federal Reserve needs to start raising interest rates pretty soon or find itself staring at another financial crisis, said Joseph LaVorgna, chief U.S. economist for Deutsche Bank and the winner of the MarketWatch Forecaster of the Month award for May.
Zero Hedge: 
Business Insider: 
Reuters:
  • MSCI says will not add China A shares to emerging index, to remain on review. Equity index provider MSCI on Tuesday said it will not add China's mainland-based A shares to its benchmark emerging markets index but that the shares will remain on review for a possible move in 2015. China, the world's largest emerging market, is already the biggest component of the MSCI emerging market index, which is benchmarked by more than $1.3 trillion global assets under management.
South China Morning Post:
  • China Property Collapse Would Shave 1% Off GDP, Fitch Says. Bursting of real estate bubble would also cause "serious problems" for the nation's banks, citing Jonathan Cornish, Fitch's head of north Asia banks.
  • Hong Kong Retailers Cut Size of Shops as Spending Drops. Luxury retailers are taking smaller shop space of 300 square feet, down from 500 square feet, as Chinese shoppers focus on daily necessities, citing property brokers. Leasing activity had declined by 20% to 30% in the past two months, with increasing number of empty shops: Pat Wong, senior regional sales director at Centaline Property Agency's retail department. Retail rents may fall as much as 15% this year.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 100.50 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 74.5 -.5 basis point.
  • FTSE-100 futures +.17%.
  • S&P 500 futures -.06%.
  • NASDAQ 100 futures  -.07%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (HRB)/3.23
  • (RH)/.10
Economic Releases
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,654,550 barrels versus a -3,431,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +745,450 barrels versus a +210,000 barrel gain the prior week. Distillate inventories are estimated to rise by +1,090,910 barrels versus a +2,012,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.16% versus a +.9% gain prior.
2:00 pm EST
  • The Monthly Budget Deficit is estimated to come in at -$131.0B.
Upcoming Splits
  • (SXL) 2-for-1
Other Potential Market Movers
  • The $21B 10Y T-Note auction, weekly MBA mortgage applications report and the USDA's WASDE report could impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)