Tuesday, August 19, 2014

Tuesday Watch

Evening Headlines 
Bloomberg: 
  • Red Cross Says Russian Convoy Details Expected Soon. The international Red Cross is close to working out the details of a safe-passage plan for a Russian aid convoy intended for war-torn southeastern Ukraine, while four-way talks on a halt to the fighting reached an impasse in Berlin. The crisis, in which Ukrainian government troops have been battling pro-Russian separatists for months, can only be stemmed once the government in Kiev calls off its army as part of an unconditional cease-fire, Russian Foreign Minister Sergei Lavrov said yesterday in the German capital. Ukraine says it will declare a cease-fire if the pro-Russian rebels lay down their arms and Russia stops supplying them with weapons. 
  • Why Would Chinese Hackers Steal Millions of Medical Records? A group of sophisticated Chinese hackers known for its high-stakes corporate espionage has a history of stealing medical-device blueprints, prescription-drug formulas and other valuable intellectual property from large health-care companies.
  • China to Cut ‘Overly High’ Income of State-Owned Firm Executives. Chinese President Xi Jinping plans to regulate income distribution in state-owned companies, cutting the top salaries, as part of the nation’s anti-extravagance and anti-corruption campaigns. “Unreasonably high income will be adjusted,” and top managers can’t have excessive spending beyond what’s stipulated by government regulations or companies’ financial policies, according to a statement posted on the central government’s website, citing Xi. Leaders of central-government-controlled enterprises should actively support the changes, Xi was cited as saying in a meeting of the Communist Party’s reform group yesterday. 
  • RBA Sees Uncertain Growth Outlook as Rate Pause Reaffirmed. Australia’s central bank said the nation’s economic outlook remains uncertain because of the conflicting forces at play and reiterated that interest rates are set to remain on hold. Members “noted the significant uncertainties around the growth forecast and the importance of considering the risks to the forecast as well as the central projection,” the Reserve Bank of Australia said in minutes released today of its Aug. 5 meeting, where it kept the cash rate unchanged at a record-low 2.5 percent. “GDP growth was likely to have slowed to a more moderate pace in the June quarter.”
  • Asian Stocks Rise as U.S. Homebuilder Sentiment Improves. Asian stocks rose after confidence in the U.S. housing industry climbed to the highest level in seven months and tensions eased over global political conflicts. Amcor Ltd. (AMC) climbed 4.4 percent in Sydney as the packaging firm posted earnings that topped analyst estimates. Terumo Corp. advanced 3.2 percent after Credit Suisse Group AG advised buying shares of the Japanese medical-equipment maker. Don Quijote Holdings Co. (7532) sank 4.4 percent in Tokyo after the discount-store owner forecast little change in profits. The MSCI Asia Pacific Index (MXAP) gained 0.5 percent to 148.76 as of 9:41 a.m. in Hong Kong, with all of its 10 industry groups rising
Wall Street Journal: 
  • Ukrainian Refugees Caught in Crossfire. Report of Deadly Rebel Attack on Fleeing Non-Combatants Highlights Civilian Toll. Ukraine accused pro-Russian separatists of killing dozens of civilians by firing on a refugee convoy, the latest example of residents caught in the line of fire of a four-month-old war that has caused more than 2,000 deaths. Rebels denied any role in the attack, or that an attack had taken place. The U.S. State Department condemned the "shelling and rocketing" of the convoy but said it couldn't confirm who was responsible....

MarketWatch.com:
CNBC:
  • NY Fed: Firms 'widely' see Obamacare boosting health costs. Many businesses said Obamacare is jacking up their employee health coverage costs, and they expect it to do so even more next year, two new surveys of businesses by the Federal Reserve Bank of New York have found. As a result, consumers in the areas covered by the bank could be paying more next year—and some workers at the firms might need to look for a new job, the surveys found.
Zero Hedge: 
Business Insider:
Reuters:
  • Russian oil prices fall below $100/barrel, straining budget. Russian Urals crude weakened for an eight straight trading day on Monday due to weak European refining demand, falling well below $100 a barrel for the first time in a year in a move to increase the pain for Russian state finances amid Western sanctions.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are +.25 to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 102.0 -1.0 basis point.
  • Asia Pacific Sovereign CDS Index 70.5 -.75 basis point.
  • FTSE-100 futures +.16%.
  • S&P 500 futures +.10%.
  • NASDAQ 100 futures  +.15%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (DKS)/.65
  • (HD)/1.44
  • (MDT)/.92
  • (TJX)/.73 
Economic Releases 
8:30 am EST
  • The CPI for July is estimated to rise +.1% versus a +.3% gain in June.
  • The CPI Ex Food & Energy for July is estimated to rise +.2% versus a +.1% gain in June.
  • Housing Starts for July are estimated to rise to 966K versus 893K in June.
  • Building Permits for July are estimated to rise to 1000K versus 963K in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The UK inflation data and the weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

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