Wednesday, March 09, 2016

Thursday Watch

Posted by Gary .....at 10:41 PM
Evening Headlines
Bloomberg:  
  • China Inflation Fastest Since Mid-2014 as Food Prices Jump. China’s consumer price rose the most since mid-2014 in February as food costs jumped amid the week-long Lunar New Year holidays, where millions binge on roast pork, duck, seafood and veggies. The consumer-price index rose 2.3 percent in February from a year earlier, up from 1.8 percent in January, as food prices surged 7.3 percent. Raising question marks over the durability of that pickup, non-food prices moderated from a month earlier to a 1 percent increase and services inflation slowed. The producer-price index fell 4.9 percent, narrowing from a 5.3 percent decrease in January, extending declines to a record 48 months.
  • Japanese Utilities Plunge After Court Injunction on Reactors. (video) Kansai Electric Power Co. led a tumble by Japanese power utilities after a court injunction prevented the company from operating two of its nuclear reactors, threatening the country’s slow return to atomic power five years after the Fukushima disaster. Kansai Electric, Japan’s second-largest power utility, dropped as much as 17 percent to 1,023 yen in Tokyo and was trading at 1,035 yen at 10:04 a.m., headed for the biggest drop since 1974. The 20-member Topix Electronic Power & Gas Index slumped 5.4 percent, compared with a 0.8 percent rise in the broader index.
  • Korea Holds Rate at Record Low Amid Debt, Capital Outflows. (video) The Bank of Korea held the benchmark interest rate unchanged for a ninth month amid concern that another cut could aggravate risks from rising debt levels and capital outflows. The decision to keep the seven-day repurchase rate at a record low 1.5 percent was forecast by 11 of 18 economists in a Bloomberg survey. The remaining seven expected a 25 basis-point cut. DBS Group, HSBC Holdings and Goldman Sachs Group were among those who forecast no change Thursday but expect a move next quarter.
  • Draghi Marks a Year of QE With Suspense of `No Limits' Stimulus. A year and a day since the European Central Bank started its unprecedented bond-buying program, adding to an ultra-loose monetary policy that includes negative interest rates, President Mario Draghi is still struggling. Investors and economists predict yet more stimulus will be announced on Thursday to stave off deflation in the euro area. The rate decision is due at 1:45 pm. in Frankfurt, with Draghi holding a media briefing 45 minutes later. Here are five things to watch for:
  • China's Stocks Drop for Second Day After Inflation Accelerates. China’s stocks fell for a second day, led by banks and commodity producers, after data showed inflation accelerated last month. The Shanghai Composite Index slid 0.8 percent as of 10:11 a.m. The benchmark gauge pared losses in the last half hour of trading on Wednesday on speculation state-backed funds were repeating a recent pattern of intervening to prop up the market. Industrial & Commercial Bank of China Ltd. and PetroChina Co., long considered to be targets of government buying, slumped more than 1 percent. The consumer-price index rose 2.3 percent in February from a year earlier, compared with the forecast for a 1.8 percent gain.
  • Asian Stocks Head for First Gain This Week on Stimulus Outlook. Asian stocks climbed for the first day this week amid speculation central banks will provide additional stimulus to bolster global economic growth. The MSCI Asia Pacific Index gained 0.4 percent to 125.51 as of 9:04 a.m. in Tokyo, halting three days of losses.
  • Once-Treasured Pipelines Facing a `Culling' as Drillers Go Bust. For years, the pipeline partnerships that kept America’s shale oil and natural gas flowing were the darlings of the energy investment world, thanks to their high payouts and dependable, long-term contracts. Not anymore. The Alerian MLP Index, tracking 49 of these master limited partnerships including Enterprise Products Partners LP, Energy Transfer Partners LP and Williams Partners LP, is off to its worst start of a year ever. And that’s after plunging 37 percent in 2015 because of the collapse in oil prices and investors’ concerns that the partnerships can’t sustain their payouts. A judge’s decision on Tuesday allowing a bankrupt driller to reject its pipeline contracts dealt yet another blow to the midstream companies that have been banking on their upstream customers keeping up payments to weather the worst energy industry downturn in decades. Now analysts and investors are projecting a “culling” of these once-treasured partnerships, with the smaller ones targeted as the first to go under.
  • Don't Let Rally Fool You: Commodity Firms Face Debt Cliff. (video)
  • Are There Hiccups on the Horizon for the Housing Market? (video)
  • When Trump Steaks at a Trump Event Aren’t Really ‘Trump Steaks’. When Republican presidential front-runner Donald Trump showed off a pile of beautifully marbled steaks atop a butcher board at a Tuesday campaign event, he called them “Trump steaks.” That’s true in the sense that they were steaks, and they were on a Trump property. But they weren’t steaks from Trump’s fabled, now defunct, Trump Steaks business. They were from Bush Brothers Provision Co., a West Palm Beach, Florida, purveyor that counts Trump-affiliated properties among its customers, said John Bush, whose family owns the company. Photographs posted on Twitter showed plastic wrapping on the meat at the televised event where Trump celebrated primary victories in Michigan and Mississippi. The packaging matched that used by Bush Brothers, Bush said.
Wall Street Journal: 
  • Eighth Democratic Presidential Debate – Live Coverage. 
  • Forget the ‘Greenspan Put’; Fear the ‘Yellen Call’. A stronger market might be all the Federal Reserve needs to get back to raising rates. Before investors get too comfortable with the rebound in share prices, they should beware the “Yellen call.” That is the opposite of the so-called Greenspan put that investors once thought underpinned share prices. And while that was supportive, the Yellen call is likely to keep stocks in check for some time.
  • Hillary’s Michigan Droop. Bernie Sanders’s upset shows Clinton’s campaign weakness. Progressive journalists and other sophisticates are gloating about the turmoil Donald Trump has fomented within the Republican Party, and they’d better enjoy the feeling while it lasts. Hillary Clinton’s thunderclap defeat in the Michigan primary shows the Democrats are saddled with a weak candidate who has a sack load of political liabilities as heavy as Mr. Trump’s.
  • The Polls Trump Hasn’t Won. He says that he will beat Hillary, yet guess who is the only GOP contender trailing her. The rules of political proportionality can be kind, as they were Tuesday to Sen. Bernie Sanders.
Fox News:
  • Sanders camp sees opportunity as Southern state voting wraps. (video) Bernie Sanders is showing no signs of slowing down after pulling off an upset victory in Michigan and sees an opportunity ahead to gain ground, as his campaign suggests one of Hillary Clinton’s biggest built-in advantages is about to become irrelevant. To date, Clinton’s “firewall” of Southern states has delivered her a string of victories, most recently in Mississippi. Across the Deep South, black voters who make up a majority of the Democratic primary electorate there went overwhelmingly for Clinton.
Zero Hedge:
Business Insider:
Reuters:
  • Valeant(VRX) gives Pershing Square 1 board seat, adds 2 other directors. Embattled Valeant Pharmaceuticals International Inc said on Wednesday it has added a representative from shareholder Pershing Square Capital Management to its board of directors as well as two other new directors. 
  • Nasdaq(NDAQ) to buy ISE options exchange from Deutsche Boerse. Nasdaq Inc (NDAQ.O) said on Wednesday it would buy U.S. options exchange operator International Securities Exchange for $1.1 billion from Deutsche Boerse AG (DB1Gn.DE), the latest deal to emerge from a spate of exchange merger talks. ISE operates three electronic options exchanges which together account for more than 15 percent of U.S. volume, while Nasdaq operates another three. Combined, Nasdaq would command more than 40 percent of the market, extending its lead as the No. 1 U.S. options exchange operator.
Telegraph:
  • Britain warned it wields no power in German dominated EU. Britain has little or no say over decisions made in a European Union increasingly dominated by German interests, Iceland’s prime minister has said. A leader of non-EU member state, Iceland’s Sigmundur Gunnlaugsson warned larger member states like the UK wield “diminishing power” in institutions still under the sway of the Franco-German alliance. 
  • How a Brexit could save Europe from itself. It is those who love Europe, its diversity, its history and its humanity who should be the most enthusiastic about Brexit. A paradox? Not at all. The European Union, as currently constituted, has run out of road. It is doomed to fail, sooner or later, with catastrophic consequences for our part of the world, and the only way forward is for one major country to break ranks and show that there can be a better alternative consistent with Europe’s core enlightenment values.
21st Century Business Herald:
  • Shanghai Studies Tightening Home Purchase Limits. Shanghai authorities held a meeting on Tuesday to discuss the effect of stricter home purchase policies on stabilizing the real estate market and cracking down on speculative investment, citing a person who attended the meeting. Regulators at the meeting recommended tighter mortgage policy for 2nd-home buyers, differentiated transaction taxes and enhanced scrutiny over leveraged financing, according to another report.
  • PBOC's Pan Says P2P Lender Regulation Needed. Regulation of peer-to-peer lending platforms is needed because of past problems, citing PBOC Deputy Governor Pan Gongsheng. Internet finance is fast developing and may amplify financing risks, Pan said.
Night Trading 
  • Asian equity indices are -.50% +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 145.75 -3.5 basis points. 
  • Asia Pacific Sovereign CDS Index 68.75 -2.75 basis points. 
  • Bloomberg Emerging Markets Currency Index 70.38 +.03%. 
  • S&P 500 futures +.19%. 
  • NASDAQ 100 futures +.16%.
Morning Preview Links

Earnings of Note
Company/Estimate 
  • (CSIQ)/.73
  • (CBK)/-.14
  • (DG)/1.26
  • (PRTY)/.75
  • (ASPS)/1.03
  • (FNSR)/.22
  • (TFM)/.48
  • (ULTA)/1.54
  • (PAY)/.46
  • (ZUMZ)/.50
Economic Releases 
8:30 am EST
  • Initial Jobless Claims for last week are estimated to fall to 275K versus 278K the prior week.
  • Continuing Claims are estimated to fall to 2250K versus 2257K prior.
12:00 pm EST
  • 4Q Household Change in Net Worth.
2:00 pm EST
  • The Monthly Budget Deficit for February is estimated at -$196.3B versus -$192.4B in January.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The ECB rate decision, Mario Draghi press conference, $12B 30Y T-Bond auction, Bloomberg March US Economic Survey, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Susquehanna Semi/Storage/Tech conference, JPMorgan Gaming/Lodging/Restaurant/Leisure conference, (AKAM) general meeting, (AXP) investor day and the (UTX) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial 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 day.

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