Wednesday, December 02, 2015

Thursday Watch

Posted by Gary .....at 10:37 PM
Evening Headlines
Bloomberg:
  • Two Suspects Shot Dead After at Least 14 Killed in California Gun Rampage. Two suspects were shot dead by police Wednesday after a gun rampage left 14 dead at a social services center in San Bernardino, California. The suspects, a man and a woman, were armed with assault rifles and handguns and were dressed in "assault-style clothing", said police at a press conference. More than 17 victims were left injured when gunmen opened fire at the Inland Regional Center, which serves people with developmental disabilities, at about 11.a.m. San Bernardino Police Chief Jarrod Burguan said at a news conference Wednesday evening that police had found what they believed to be an explosive device at the scene of the shooting.
  • Rousseff to Face Impeachment in Brazil Beset by Recession. Brazil’s President Dilma Rousseff will face impeachment proceedings in Congress, marking a deepening of the political crisis that is dragging Latin America’s largest economy further into recession. Lower house President Eduardo Cunha told reporters in Brasilia on Wednesday he has accepted one of 34 requests to impeach the president on charges that range from illegally financing her re-election to doctoring fiscal accounts this year and last. Cunha said he "profoundly regrets" what’s happening. "May our country overcome this process." The impeachment hearings could take months, involving several votes in Congress that ultimately may result in the president’s ouster. Rousseff would challenge any impeachment proceedings in the Supreme Court, according to a government official with direct knowledge of her defense strategy. The presidential press office said the government will make a statement shortly.
  • Why China's Millennials Are Happy to Own Nothing. Two decades ago, Tyler Xiong and his parents had to live in a commune guided by the strict socialist teachings of Mao Zedong. Today Xiong, a 28-year-old tech entrepreneur, voluntarily lives among 500 people in a co-sharing community near Beijing’s Silicon Valley. Xiong has two pairs of shoes and fewer than 10 outfits. He has no use for a car and uses Didi Taxi, a local Uber equivalent. His philosophy: if you can rent it, why own it.
  • Under the Hood of Korean GDP Lies a Disappointing Exports Story. Here’s one takeaway from data Thursday that showed South Korea’s gross domestic product in the third quarter was better than initially estimated, growing at the fastest pace in more than five years: Net exports were the biggest drag on the economy’s growth since 2013.
  • Back to Reality for Hollande as Voters Flock to Le Pen Message. After three weeks spent decrying terrorists and occupying the world stage, French President Francois Hollande faces an abrupt return to domestic reality this weekend in the form of surging support for the far-right National Front that could give his party an electoral defeat. Voters head to the polls for the first round of regional elections Sunday. By the time results of the second round are in on Dec. 13, the anti-immigrant, anti-euro National Front may well win power in two or three of 12 regional assemblies for the first time and trounce Hollande’s Socialists in the popular vote, polls show.
  • Why the Euro and Dollar Will Reach Parity by Year-End. (video)  
  • Ringgit Drops as Oil Slide to Six-Year Low Dims Revenue Outlook. Malaysia’s ringgit fell after Brent crude’s slide to a six-year low dimmed prospects for Asia’s only major net exporter of oil. The commodity has dropped 26 percent this year, helping make the ringgit the region’s worst-performing currency and threatening to derail government efforts to cut the budget deficit. Malaysia is also the world’s second-biggest producer of palm oil, leaving the country extra vulnerable to the slowdown in China. “It’s the same old story with commodities, in particular oil, under pressure,” said Sue Trinh, Hong Kong-based senior currency strategist at Royal Bank of Canada. “That’s clearly a negative for the Malaysian ringgit.” The ringgit weakened 0.3 percent to 4.2465 a dollar as of 9:40 a.m. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. It has weakened 18 percent in 2015.
  • Asian Stocks Slide Second Day as Drop in Oil Hits Energy Shares. Asian stocks fell for a second day, following U.S. equities lower, as a drop in oil weighed on energy shares. The MSCI Asia Pacific Index lost 0.2 percent to 133.59 as of 9:01 a.m. in Tokyo, with material and energy companies leading losses among the regional measure’s 10 industry groups.
  • In One OPEC Nation, the Rig Count Is Soaring Before Vienna Talks. All across the Americas, drilling rigs are being idled as oil prices hover near six-year lows. In Colombia, more than 57 percent have been pulled; in Mexico, 42 percent. Then there’s Venezuela. Starved for hard currency needed to ease a crushing recession and struggling to shore up slumping output, the state oil giant known as PDVSA has been adding rigs at a furious pace to search for new sources of crude. The number has climbed 19 percent this year, signaling a new push that comes at the same time the OPEC nation is urging its fellow members to cut output at Friday’s meeting to support prices. It’s a sacrifice that Venezuelan President Nicolas Maduro -- the successor to his mentor, the late Hugo Chavez -- isn’t willing to take in his own country, though, as a shortage of dollars fuels widespread shortages and runaway inflation and puts the opposition on the verge of taking control of congress in elections this weekend. 
  • Iron Ore May Be on Cusp of $30s as Supply Gains, Demand Sags. Iron ore may be on the cusp of dropping into the $30s a metric ton as the biggest producers expand supply and the onset of winter in China dulls demand that’s been hurt by the slowdown in growth in the world’s top user. Miners’ shares retreated in Sydney. “The outlook remains grim for iron ore fines because end-demand from construction and manufacturing is uncertain,” said Jessica Fung, an analyst at BMO Capital Markets in Toronto. “Steel inventories have been building.”Spot ore with 62 percent content delivered to Qingdao fell 2.6 percent to $41.13 a dry ton on Wednesday, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to 2009. It’s dropped each day this week, losing 7.6 percent.
  • Copper Drops as Metals Resume Losses After Yellen Rate Signal. Copper declined with other metals as cuts announced by Chinese smelters failed to support prices and comments by the chair of the Federal Reserve strengthened the dollar. The metal used in power cables and wiring fell 0.4 percent in London, extending a 1.5 percent slump on Wednesday. The metal traded at $4,543 a metric ton by 9:55 a.m. Shanghai time, just $100 above its lowest level in more than six years reached last month. Zinc dropped 0.7 percent, nickel slid 0.8 percent and aluminum slipped 0.8 percent. 
  • JPMorgan(JPM), BofA(BAC), Citigroup(C) Among Eight U.S. Banks Cut by S&P. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. are among eight large U.S. banks that had credit grades cut one level by Standard & Poor’s on the prospect that the U.S. government is less likely to provide aid in a crisis. After signaling the move last month, S&P lowered its long-term issuer credit, senior unsecured, and nondeferrable subordinated debt ratings, according to a statement Wednesday. Firms affected also include Wells Fargo & Co., Goldman Sachs Group Inc., Morgan Stanley, Bank of New York Mellon Corp. and State Street Corp.
  • U.S. Health Spending Up Most Since '07, Fueled by Obamacare. U.S. health-care spending jumped 5.3 percent last year, the biggest increase since President Barack Obama took office, as millions of people gained insurance coverage under Obamacare. Spending on hospitals, doctors, drugs and other health-care expenses hit $3 trillion in 2014, or 17.5 percent of the economy, according to a study released Wednesday by government actuaries. Enrollment in private health plans increased by 2.2 million people to 189.9 million, while 7.7 million more people were covered by Medicaid, the U.S.-funded, state run program for the poor, bringing the total to 65.9 million. 
  • For Facebook's(FB) Zuckerberg, Charitable Is in Eye of Beholder. However philanthropic the intentions of Mark Zuckerberg, he isn’t bound to give a penny of his $45 billion to charity despite his announcement Tuesday. In a widely publicized letter to his newborn daughter, Zuckerberg with his wife, Priscilla Chan, said they would give 99 percent of their Facebook Inc. shares to “advance” various missions, including promoting equality and curing disease. Although this step has been widely interpreted as Zuckerberg and Chan pledging their fortune to charity, they didn’t announce the establishment of a nonprofit group or a charitable foundation. Instead, they will set up a limited liability company. That’s right, an ordinary company. The vehicle can donate to charity, but it doesn’t have to give away some every year, as a foundation would. It can also make investments and participate in “policy debates.” That means it could turn a profit and make donations to political candidates and pay lobbyists. “This is not a charitable foundation,” said Victor Fleischer, a tax law professor at the University of San Diego. What they’ve done “is essentially nothing more than a promise to give some money to charity in the future. But the structure somewhat resembles a family office, used both for investment and charitable purposes. The level of activities in the charitable versus investment and political pieces isn’t specified.”
Wall Street Journal:
  • Yellen Signals Fed on Track to Raise Rates in December. Fed chief says gains in labor market bolster her confidence that inflation will return to 2%. Federal Reserve Chairwoman Janet Yellen signaled she’s ready to raise short-term interest rates this month barring a surprise that shakes her confidence in the economy. She also suggested she sees dissension within her ranks, which could complicate her moves toward ending seven years of near-zero rates.
  • French Authorities Close Four Mosques During State of Emergency. Authorities suspect members of mosques had been nurturing Islamist radicalization.
  • U.S. Oil Falls Below $40 Amid New Signs of Glut. OPEC-U.S. battle for market share leaves flood of oil. Oil prices fell below $40 a barrel Wednesday amid a growing glut, putting more pressure on an industry that already is a major weak spot for global growth.
    The immediate cause was a 10th straight weekly rise in U.S. inventories of crude oil at a time of year when they are expected to shrink. The market’s broader problem, however, is that producers in OPEC and the U.S. are locked in a battle for market share that has left the world...
  • 5 Questions About the ECB's Thursday Meeting.
  • YouTube Seeks Streaming Rights to TV Shows, Movies. YouTube is seeking streaming rights to TV series and movies to bolster its new subscription service, intensifying its rivalry with Netflix Inc., Amazon.com Inc. and Hulu in the competitive market for online video.
  • Some Merrill Brokers Could See Cut in Base Pay. The move is the company’s biggest compensation change since 2009. Some Merrill Lynch brokers will see their base pay trimmed by 2% to 8% next year unless they increase the fees and commissions they generate.
  • Obama’s Illegal Guantanamo Power Play. The president plans to close the facility and ship detainees to U.S. soil, despite a ban by Congress. Two days after terrorists rampaged in Paris, the Obama administration announced that it had transferred five prisoners—including a former Osama bin Laden bodyguard—from the U.S. prison facility at Guantanamo Bay, Cuba, to the United Arab Emirates.
  • America at Obama’s End. Hope and change was the promise. What happened? We are near the end of the seventh year of Barack Obama’s presidency, and by any measure the United States is a fractured nation. Its people are more divided politically than any time in recent memory. Personally, many are anxious, angry or just down. Whatever Mr. Obama promised in that famous first Inaugural Address, any sense of a nation united and raised up is gone. This isn’t normal second-term blues. It’s a sense of bust.
Breaking News:
Fox News:
  • Shootout follows manhunt for suspects in California massacre, 1 believed at large. (video) Police chasing a black SUV believed to be the getaway car for three suspects who shot up an office holiday party in San Bernardino, Calif., Wednesday, murdering 14 people, captured or killed two suspects and were going house-to-house pursuing a third who fled on foot. The shootout occurred less than two miles from the social services center where the massacre occurred hours earlier, and police sources told Fox KTTV they believe the suspects in the SUV were the ones responsible for the earlier attack. There were conflicting reports about two suspects, with some saying they were killed and others that they were captured. The suspect who remained at large was initially believed to be inside a nearby residence, but police were seen going house-to-house looking for him. Police Chief Jarrod Burguan warned all area residents to remain indoors. "It's still, again a very active, fluid situation," said San Bernardino Police spokeswoman Vickie Cervantes, who said the chase began after police doing "follow-up work" in the wake of the mass shooting located the suspects' vehicle.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Breitbart: 
@Breaking911:
New York Daily News: 
  • EXCLUSIVE: Father of San Bernardino shooting suspect Syed Farook says son worked as health tech inspecting restaurants, hotels. A man who identified himself as Farook’s father told the Daily News his son worked as a health technician inspecting restaurants and hotels. “I haven’t heard anything. He worked in a county office,” Farook's dad told The News. “He’s married and has a kid. We’re estranged because my wife got the divorce, and they are together. She doesn’t want to see me.” Farook said he hasn’t seen his son in some time. “He was very religious. He would go to work, come back, go to pray, come back. He’s Muslim.”
Evening Recommendations 
  • None of note
Night Trading 
  • Asian equity indices are -.75% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 129.0 -.25 basis point.
  • Asia Pacific Sovereign CDS Index 68.25 +1.0 basis point.
  • Bloomberg Emerging Markets Currency Index 70.18 -.09%.
  • S&P 500 futures unch.
  • NASDAQ 100 futures +.03%.
Morning Preview Links 

 Earnings of Note 
Company/Estimate
  • (CM)/2.34
  • (DG)/.87
  • (KR)/.39
  • (LE)/.30
  • (MDT)/1.00
  • (MIK)/.36
  • (SHLD)/-2.84
  • (TITN)  
  • (TTC)/.39
  • (TD)/1.13
  • (BKS)/-.32
  • (COO)/2.10
  • (MRVL)/.14
  • (OVTI)/.32
  • (ULTA)/1.05
  • (ZUMZ)/.29   
Economic Releases
7:30 am EST
  • Challenger Job Cuts for November.
8:30 am EST
  • Initial Jobless Claims are estimated to rise to 269K versus 260K the prior week.
  • Continuing Claims are estimated to fall to 2190K versus 2207K prior. 
9:45 am EST:
  • Final Markit US Services PMI for November is estimated at 56.5 versus a 56.5 prior estimate.
10:00 am EST
  • ISM Non-Manufacturing for November is estimated to fall to 58.0 versus 59.1 in October.
  • Factory Orders for October are estimated to rise +1.4% versus a -1.0% decline in September.
  • Factory Orders Ex Transports for October are estimated to rise +.2% versus a -.6% decline in September.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, Fed's Fischer speaking, Fed's Mester speaking, ECB rate decision/press conference, weekly Bloomberg Consumer Confidence Index, weekly EIA natural gas inventory report, (ALK) investor day and the (SKX) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology 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 day.

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