Sunday, September 20, 2015

Monday Watch

Posted by Gary .....at 11:08 PM
Today's Headlines 
Bloomberg:
  • Tsipras Wins Big Again in Greece as Voters Ignore Euro Showdown. Alexis Tsipras will return to power in Greece following another emphatic election victory, securing a new mandate after he yielded to the demands of European leaders for more austerity in the crisis-hit country. The former prime minister’s Coalition of the Radical Left, or Syriza, received 35.5 percent of the vote, according to an official projection by the Interior Ministry based on more than half of votes counted. The center-right New Democracy, whose leader Evangelos Meimarakis conceded defeat, was expected to get 28 percent. With Syriza set to fall short of a majority in the 300-seat parliament, Tsipras, 41, will enter negotiations to build a viable government with the same coalition partner as before, scotching expectations he might do a deal with a more moderate party. In a year marked by the standoff between Greece and its European creditors, the difference now is that the new government will have little room to maneuver after Tsipras acceded to more spending cuts and tax increases in exchange for a new bailout.   
  • China's ‘Sloppy’ Policy Irks Blankfein as Yellen Cites Xi Doubts. As China’s President Xi Jinping heads to the U.S. for his first state visit, he confronts a wall of skepticism from global money managers and policy makers. From New York to London to Tokyo, finance luminaries have criticized Xi’s administration for what they characterize as a series of clumsy -- and potentially damaging -- attempts to bolster the nation’s equities and the economy. Federal Reserve Chair Janet Yellen on Thursday referred to investor concerns over the "deftness" of China’s response, a day after Goldman Sachs Group Inc.’s Lloyd Blankfein called it "awfully sloppy." "If I wanted to invest in China, I wouldn’t invest now," Blankfein, Goldman’s chief executive, told a breakfast meeting in New York last week. “I’m not going to buy after the Chinese government may have intervened.”
  • Macau Casino Analysts Capitulate on Idea of Second-Half Recovery. For Macau casinos analysts, this is what capitulation looks like. As revenue declined month after month this year, they have steadily cut their estimates for how the year will turn out. In January, they forecast a slight increase in overall casino revenue after the 2.6 percent decline in 2014, the first drop in the city’s history. That estimate kept sliding throughout the year until the median estimate from 12 analysts surveyed by Bloomberg is now for a 32 percent slump. They have given up on the idea of a second-half recovery, now assuming a $14 billion revenue decline in one year. 
  • Citic Securities Slump Seen Deepening as Bulls Lose Faith. Analysts are too optimistic on Citic Securities Co. That’s the view of Hong Kong traders at Changjiang Securities Holdings (HK) Ltd. and Geo Securities Ltd., who predict analysts will cut their recommendations as a government campaign to stop the equity rout-- from a crackdown on speculative trading to suspending initial public offerings -- reduces profits and share prices across the industry. Brokerages are also being compelled to foot a 220 billion yuan ($35 billion) rescue bill for the stock market, while an investigation into the turmoil has ensnared Citic Securities’ president.
  • New Home ‘Tsunami’ May Snap Sydney Romance With Exuberant Prices. A home-building frenzy that is shoring up Australia’s economy as the mining boom ends may also be what finally takes the steam out of one of the world’s most expensive property markets. The case in point: Green Square. Nearly 10,000 apartments will be built in one of Sydney’s newest suburbs in the next four years to satisfy investor demand, which has already sent property prices in the city to the highest ever. It will also add to the record 213,000 new home starts across the country amid slowing population and economic growth, prompting Goldman Sachs Group Inc. to warn of a supply glut by 2017. “There is a tsunami of home supply coming,” said Nigel Stapledon, head of real estate research at the University of New South Wales Business School and former chief economist at Westpac Banking Corp. “The market is going to be tested in accepting this sort of supply. It’s not like there is economic growth to support it. Income growth has gone from boom time to the lowest in a number of years and population growth has eased back.”
  • Goldman Sachs Says Euro May Weaken Up to 10 Cents on ECB Easing. Goldman Sachs Group Inc. says the euro may fall up to 10 U.S. cents as the European Central Bank is set to increase currency weakening stimulus to meet its inflation target. The investment bank predicts the ECB will maintain quantitative easing at its current rate of 60 billion euros ($67.8 billion) a month through the end of 2016, an extension of the plan that was intended to run until September 2016, and only end it completely in mid-2017.
  • Saudi Stocks Drop Most in Mideast as Fed Stirs Growth Concerns. Saudi Arabian equities fell the most in the Arab world after the Federal Reserve’s decision to keep interest rates unchanged sparked concern over global growth and the price of oil capped its third week of losses. The Tadawul All Share Index fell 1.4 percent to 7,365.98 at the close in Riyadh to the lowest in almost a month, marking a seventh day of losses. Banks made up four out of the top five contributors to the decline. Abu Dhabi’s ADX General Index advanced 0.6 percent. The Bloomberg GCC 200 Index, made up of the biggest and most liquid shares in the six-nation Gulf Cooperation Council, slipped 0.6 percent. That sent the premium it commands over MSCI Inc.’s emerging markets index on a future price-to-earnings basis to the lowest in almost five months.
  • Asian Stocks Decline on Global Growth Concern After Fed Comments. Asian stocks declined after U.S. shares fell and Federal Reserve officials argued that an interest-rate increase is still warranted this year. Markets in Japan are closed. The MSCI Asia Pacific Excluding Japan Index lost 0.6 percent to 410.10 as of 10:01 a.m. in Sydney, before markets in China and Hong Kong opened.
  • Saudi Arabia's Crude Stockpiles at Record High as Exports Fall. Saudi Arabia’s crude stockpiles rose to a record in July after exports by the world’s biggest oil shipper declined for the third time in four months. Commercial petroleum stockpiles increased to 320 million barrels, the highest since at least 2002, from 319.5 million barrels in June, according to data Sunday on the website of the Riyadh-based Joint Organisations Data Initiative. Crude exports slumped 1.2 percent to 7.28 million barrels a day after hitting a record 7.9 million barrels in March. Overseas shipments declined every month since then except in June. 
  • Not Even Glencore Can Lift the Sagging Copper Market. The biggest cuts to copper production this year haven’t been enough to overcome the drumbeat of China’s slowdown.
    While copper is still up about 2 percent after Glencore Plc said it would reduce its output, the advance has stalled on renewed fears about consumption in the country that accounts for more than 40 percent of global demand. Even a 8.3-magnitude earthquake in Chile, the world’s largest copper miner, failed to send prices soaring.
  • Wheat's Worst Plunge Since 1986 Isn't Steep Enough for Bears. Hedge funds are so down on wheat that even the worst price plunge in 29 years isn’t leaving them satisfied. Instead, a global glut has money managers ready for more losses and sticking with a net-bearish outlook for seven straight weeks. World inventories before the start of next year’s harvest are expected to climb to an all-time high as farmers reap bigger crops in the U.S., Russia and Ukraine. Wheat futures have tumbled 21 percent since the end of June, heading for the worst quarterly loss since 1986.
  • Dialog Semiconductor to Buy Atmel(ATML) for About $4.6 Billion. Dialog Semiconductor Plc, which makes chips for Apple Inc.’s iPhone and iPad, agreed to buy Atmel Corp. for $4.6 billion in cash and shares to boost its offerings as more everyday objects become connected. Atmel holders will get $4.65 in cash and 0.112 of an American Depository Share in Dialog for each Atmel common share, Kirchheim, Germany-based Dialog said in a statement on the DGAP newswire. The price is equivalent to about $10.42 per Atmel share based on Dialog’s closing stock price on Sept. 18.
Wall Street Journal: 
  • Putin’s Syria Tour de Force. Before: Russia is ‘doomed to fail.’ Now: Obama is happy to talk. Vladimir Putin doesn’t seem to share President Obama’s definition of “smarter.” Ten days ago Mr. Obama declared that the Russian President’s military deployments in Syria were “doomed to fail” and the Kremlin was “going to have to start getting a little smarter.” Mr. Putin then began sending fighter jets, and now it looks like Mr. Obama is the one who has been taken to school.
Fox News: 
  • Pope Francis meets with Fidel Castro in Cuba. Pope Francis met with Fidel Castro on Sunday after urging thousands of Cubans to serve one another and not an ideology, delivering a subtle jab at the communist system during a Mass celebrated under the gaze of an image of Che Guevara in Havana's iconic Revolution Plaza.
Zero Hedge:
Business Insider:
Financial Times:
  • Plunging oil prices put question mark over $1.5tn of projects. Plunging oil prices have rendered more than a trillion dollars of future spending on energy projects uneconomic, according to a study that suggests that the impact on industry operators is worsening. A report published Monday says $1.5tn of potential investment globally — including in North America’s shale-producing heartlands — is “out of the money” at current oil prices close to $50 a barrel and unlikely to go ahead.
Telegraph:
Weekend Recommendations
Barron's:
  • Bullish on (RL), (GM), (TAXI) and (VSI).
  • Bearish on (BABA) and (GPRO).
Night Trading
  • Asian indices are -2.0% to -.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 148.25 +19.75 basis points.
  • Asia Pacific Sovereign CDS Index 78.25 +.25 basis point.
  • S&P 500 futures -.44%.
  • NASDAQ 100 futures -.50%.

Earnings of Note
Company/Estimate 
  • (LEN)/.79
  • (RHT)/.44
  • (THO)/1.31
Economic Releases
10:00 am EST
  • Existing Home Sales for August are estimated to fall to 5.5M versus 5.59M in July.
Upcoming Splits
  • (JHX) 5-for-1
Other Potential Market Movers
  • The Fed's Williams speaking, Fed's Bullard speaking, Fed's Lockhart speaking, German PPI report and the JMP Financial Services/Real Estate conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.

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