Sunday, March 27, 2016

Monday Watch

Posted by Gary .....at 10:23 PM
Today's Headlines
Bloomberg: 
  • Saudi Stocks Lead Mideast Declines as Easter Weighs on Trading. Saudi stocks led Middle Eastern markets lower as oil languished near $40 a barrel and the Easter weekend holiday in Europe sapped volumes. Equities in Dubai extended the longest losing streak in more than two months. The Tadawul All Share Index sank for a fourth day, losing 1.5 percent to 6,256.68 at the close in Riyadh. About 4.8 billion riyals ($1.3 billion) of shares traded, or 17 percent less than the market’s daily average over the past year. Jabal Omar Development Co.’s 9.3 percent plunge was the biggest contributor to declines. The DFM General Index lost 1.2 percent on less than half the average daily turnover value over the past year. The Bloomberg GCC 200 Index, which tracks the biggest companies in the six-nation Gulf Cooperation Council, slid 1.2 percent.
  • Japan Stocks Rise as Yen Weakens for Seventh Day After U.S. GDP. Japanese stocks rose as the yen fell for a seventh day after data showed the U.S. economy grew at a faster pace than previously estimated.The Topix index advanced 0.6 percent to 1,374.80 at 9:32 a.m. in Tokyo, extending last week’s 1.6 percent gain. All but four of the gauge’s 33 industry groups increased. The Nikkei 225 Stock Average added 0.7 percent to 17,120.37.
  • Oil Enthusiasts Stay Out of Rally Led by Shrinking Bearish Bets. Oil enthusiasts haven’t been jumping on board the latest rally. As crude has soared 50 percent since Feb. 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace. The liquidation of short positions during the last seven weeks covered by data from the U.S. Commodity Futures Trading Commission was the largest on record. "The rally has come from shorts getting scared out of their positions, and you’re not seeing a lot of money coming in on the long side," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "It really calls into question the fortitude and staying power of the rally." Short positions on West Texas Intermediate crude, or bets that prices will fall, have dropped by 131,617 contracts since Feb. 2, the biggest liquidation in CFTC data going back a decade. To close out a bearish position, traders buy back futures and options, putting upward pressure on prices. In the same period, bullish wagers fell by 971.
  • It Only Took a Month for Funds to Grow Wary of a Copper Rally. It’s been barely a month since investors first started betting on a copper rally, and they’re already on the retreat. Money managers cut their wagers on price gains for a second straight week, pulling back just before futures capped the worst slump in a month. Tuesday’s attacks in Brussels sapped confidence in the global growth outlook, while a recovery for the dollar weighed on demand for commodities as alternative assets. Money managers reduced their net-long holdings in copper by 4.4 percent to 23,011 U.S. futures and options in the week ended March 22, according to Commodity Futures Trading Commission data released three days later.
  • Sanders Says He's Seized Momentum After Crushing Caucus Wins. Bernie Sanders said he’s seized the momentum in the race for the 2016 Democratic presidential nomination after trouncing Hillary Clinton in three caucuses. The Vermont senator won Saturday in landslides. He received 73 percent of the vote in Washington state, the day’s biggest prize in terms of delegates; 70 percent in Hawaii, and 82 percent in Alaska, the Associated Press reported. Those wins followed similarly lopsided results in Utah and Idaho on March 22. “We’ve won the last five out of six contests, all of them with landslide victories,” Sanders said Sunday on CNN’s “State of the Union.” “We’re heading to the west coast, which is the most progressive part of America. We think we’re going to do very well there.”
Wall Street Journal:
  • Terror Network’s Web Sprawls Beyond Brussels and Paris. Multiple recent arrests suggest a wider Islamic State presence in Europe than previously thought. A pan-European effort to crack the Islamic State network behind the Paris and Brussels attacks is yielding an unsettling discovery—a web of interlocking terror cells whose dimensions authorities say they are still trying to grasp.
  • Donald Trump’s Weakness in Big Suburbs Could Hurt Him in November. Republican front-runner has lost the primary in key counties of general-election battlegrounds. Donald Trump has dominated the Republican primaries so far despite a weakness that could prove damaging in a general election: He is losing many of the populous suburbs where the battle for the White House is often won and lost.
Fox News: 
  • Blast in crowded Pakistan park kills at least 65. (video) An explosion ripped through a crowded Pakistan park where Christians were celebrating Easter on Sunday, killing at least 65 people, officials told the Associated Press. A Taliban faction, Jamaat-ul-Ahrar, claimed responsibility for the attack and said Christians were the target of the blast, Reuters reported. The mostly-Muslim country has a small Christian community, accounting for less than two percent of Pakistan's total population. About 300 people were injured when the bomb detonated in the parking area of Gulshan-e-Iqbal Park in the eastern city of Lahore.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
  • Chinese firms hiring less, capex hits five-year low: Beige Book private survey. Capital expenditure by Chinese companies fell to the lowest in at least five years in the first quarter, a private survey showed, highlighting persistent weakness in the economy even as the government ratchets up policy support to head off a sharper slowdown. The quarterly survey of over 2,200 firms by China Beige Book International (CBB) also showed less hiring by companies, marking the second consecutive quarter of downward pressure on employment as executives scale back borrowing and spending. Only 33 percent of firms reported capital expenditure growth in the first quarter, the lowest in the survey's five-year history. The share of firms reporting capex growth has fallen by over 40 percent since the second quarter of 2014.
 Financial Times:
Night Trading
  • Asian indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 153.75 +2.5 basis points.
  • Asia Pacific Sovereign CDS Index 58.25 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 71.21 -.02%.
  • S&P 500 futures +.3%.
  • NASDAQ 100 futures +.36%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (CALM)/.99
  • (MRVL)/.09 
Economic Releases 
8:30 am EST
  • Personal Income for February is estimated to rise +.1% versus a +.5% gain in January.
  • Personal Spending for February is estimated to rise +.1% versus a +.5% gain in January.
  • Real Personal Spending for February is estimated unch. versus a +.4% gain in January.
  • The PCE Core MoM for February is estimated to rise +.2% versus a +.3% gain in January.  
10:00 am EST
  • Pending Home Sales MoM for February are estimated to rise +1.1% versus a -2.5% decline in January.
10:30 am EST
  • Dallas Fed Manufacturing Activity for March is estimated to rise to -27.0 versus -31.8 in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The 2Y T-Note auction, Japan unemployment rate and the (SHPG) annual meting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

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