Monday, May 04, 2015

Monday Watch

Today's Headlines 
Bloomberg: 
  • Greece Targets May Agreement as Breakthrough Remains Elusive. Greece said it would push for an agreement with its creditors on a reforms agenda in May amid signs that the two sides are still far apart after four days of intensive negotiations. Differences remain on issues ranging from fiscal assumptions to asset sales and labor and pension reforms, according to three people familiar with the negotiations. Still, progress has been made in a much improved atmosphere, they said. Another official said that Greece should have enough cash to get through the week and make a 200-million-euro payment to the International Monetary Fund on May 6. The people spoke on condition of anonymity as the talks are confidential. Negotiations resume Monday.
  • Greek Nerves Turning Asian Money Off Europe, ADB Economist Says. Asian companies are thinking twice about their dealings with European partners as jitters persist over whether Greece will splinter the euro area, the Asian Development Bank’s chief economist said. “The private sector is trying to adjust their strategy,” Shang-Jin Wei said in aninterview in Frankfurt on Thursday. “If a firm used to depend very heavily on the European market, they are trying to look for ways to diversify their trading relations. Any CEO worth his salt will try to adjust their weighting.”
  • Westpac(WBK) Falls Most Since 2011 as Cash Profit Misses Estimates. Westpac Banking Corp. dropped the most in more than three and a half years after the lender said first-half profit missed estimates and it would raise about A$2 billion ($1.6 billion) in capital. Shares fell as much as 4.9 percent, the biggest intraday drop since September 2011, and were 3.9 percent lower at A$35.28 at 10:25 a.m. in Sydney. 
  • China’s Stocks Drop for Second Day After HSBC Manufacturing Data. China’s stocks fell for a second day, led by energy and financial companies, after a manufacturing index weakened last month. China Petroleum & Chemical Corp. and Yanzhou Coal Mining Co. slid at least 2 percent. Industrial Bank Co. and Citic Securities Co. paced declines for financial shares. The final Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 48.9, missing analysts’ estimates and signaling a contraction. The Shanghai Composite Index dropped 0.6 percent to 4,416.81 at 9:56 a.m. local time.  
Wall Street Journal:
  • IMF to Brighten View of China’s Yuan. Fund on verge of declaring China’s currency fairly valued for the first time in more than a decade. The International Monetary Fund is close to declaring China’s yuan fairly valued for the first time in more than a decade, a milestone in the country’s efforts to open its economy that would blunt U.S. criticism of Beijing’s currency policy.
  • U.S. Will Change Stance on Secret Phone Tracking. Justice Department will reveal more about the use of such devices and launch a review. The Justice Department will start revealing more about the government’s use of secret cellphone tracking devices and has launched a wide-ranging review into how law-enforcement agencies deploy the technology, according to Justice officials.
Fox News:
MarketWatch.com:
  • Icahn: Junk bonds now ‘even more dangerous’ than stock market. Carl Icahn is worried about U.S. stocks, but it’s junk bonds that really give him the willies. “What’s even more dangerous than the actual stock market is the high-yield market,” said the billionaire activist investor, speaking on an episode of the show “Wall Street Week” that aired Sunday. Money keeps pouring into high-yield bond funds, even though that market is “ridiculously high,” Icahn said. “When they start coming down, there is going to be a great run to the exits,” he added. High-yield is the best performer in U.S. fixed-income returns in the year so far. The billionaire activist investor said he’s “very concerned” about the stock market, and he’s hedged in preparation for a correction. Below are a few other nuggets from his appearance on the show.
CNBC: 
  • Pricy robots 'Tug' hospital supplies. (video) Traveling 115 miles, roving robots make their way around the University of California, San Francisco Medical Center, transporting medication, linens and medical waste.
Reuters:
  • China April HSBC PMI shows biggest drop in factory activity in a year. China's factories suffered their fastest drop in activity in a year in April as new orders shrank, a private business survey showed on Monday, hardening the case for fresh policy stimulus to halt a slowdown in the world's second-largest economy. The HSBC/Markit Purchasing Managers' Index (PMI) fell to 48.9 in April - the lowest level since April 2014 - from 49.6 in March, as demand faltered and deflationary pressures persisted.
Telegraph:
CBCnews:
  • ISIS reportedly executes Yazidi prisoners. Extremist group also claims Iraq car bomb attack that killed 19. The militant group Islamic State of Iraq and Syria (ISIS) is reported to have carried out another attack on members of a religious minority. Yazidi legislators are looking into reports the extremists killed as many as 300 Yazidi prisoners on Friday near Mosul, Iraq's second-largest city, which is under ISIS control.
Night Trading
  • Asian indices are -.25% to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 105.0 -.75 basis point.
  • Asia Pacific Sovereign CDS Index 60.5 -.25 basis point.
  • S&P 500 futures -.08%.
  • NASDAQ 100 futures -.14%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (CVC)/.17
  • (CNA)/.81
  • (CTSH)/.69
  • (DO)/.41
  • (D)/.96
  • (L)/.71
  • (MGM)/.13
  • (SYY)/.41
  • (TSN)/.72
  • (APC)/-.62
  • (CAR)/.14
  • (IM)/.44
  • (IDTI)/.26
  • (RGR)/.68
  • (THC)/.31
Economic Releases
9:45 am EST
  • ISM New York for April.
10:00 am EST
  • Factory Orders for March are estimated to rise +2.0% versus a .2% gain in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Williams speaking, Fed's Evans speaking, Fed's Tarullo speaking, Fed's Rosengren speaking, Eurozone PMI report and the (MCD) turnaround presentation could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate 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 week.

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