Sunday, July 17, 2016

Monday Watch

Today's Headlines
  • Payback Time in Turkey as Coup Survivor Erdogan Cracks Down. Turkish President Recep Tayyip Erdogan ordered massive reprisals for the failed attempt to oust him in a coup, with thousands of army officers and judges swept up in a nationwide wave of arrests. The resurgent leader, whose grip on power seemed to have been shaken just a day earlier, also pressed the U.S. to extradite the cleric he accuses of being the ringleader. Well past midnight, supporters of Erdogan’s government were celebrating in city centers that had been engulfed in bloody gun battles and airstrikes the previous night.
  • Chaos Plays Into Erdogan’s Hands After a Career Shaped by CoupsThe political career of Turkish President Recep Tayyip Erdogan has been shaped by military coups, real or imagined, for more than four decades. Friday’s attempt is likely to prove the most consequential, and potentially empowering, of them all. Whatever goals the rebels had, they may have ended up securing Erdogan’s position at a time of multiplying challenges to his popularity: Islamic State terror attacks, a war with militant Kurds, a failing foreign policy and weakened economic growth. 
  • China June Home Prices Rise in Fewer Cities Amid Slower Sales. China’s home-price gains tapered off last month, as second-tier cities joined some of the nation’s largest hubs in imposing housing curbs to cool surging prices. New-home prices excluding government-subsidized housing climbed in 55 cities in June, down from 60 in May, among the 70 tracked, the National Bureau of Statistics said Monday. Prices dropped in 10 cities, compared with four a month earlier. They were unchanged in five cities in June.
  • $7,000-a-Month ‘Shameless China’ Blogger Loses All With One Post. At the peak of her WeChat blogging career, Laura Lian was earning about $7,000 a month. Writing satirical articles for more than 220,000 fans, she won backing from an investor and quit her public-relations job. Then it all came tumbling down. Internet authorities shut down her blog, calledShameless China, with no warning. It happened just after she posted an article mocking Chinese men’s hairstyles, including former President Jiang Zemin’s slick-backed coiffure. “It didn’t dawn on me how serious the situation was,” Lian said. “I didn’t realize I was never getting back this account and all my followers.”
  • Abe’s Enforcer Rules Out Deficit Bonds to Fund Stimulus Package. Japan’s top government spokesman ruled out the issuance of deficit bonds to fund an economic stimulus package planned for the autumn, hinting at the use of construction bonds for longer-term investments. “We want to make full use of every possible resource, including for financing, to make it robust,” Chief Cabinet Secretary Yoshihide Suga said in an interview Saturday at his offices in Tokyo. “I want to make it clear that we are not planning to issue” deficit bonds, the 67-year-old said. In his first speech after winning an upper house election on July 10, Prime Minister Shinzo Abe outlined plans for a “bold” stimulus package. He said it would include funds for regional infrastructure, such as bringing forward the construction of maglev and other high-speed train lines and improving facilities at ports for tourist cruise ships. 
  • Oil Producers Prepare for Second-Half Slump as Rally Sputters. Oil producers aren’t betting on the rally. After surviving two years of low prices, they’re gearing up for a third by buying protection against a renewed downturn. Laredo Petroleum Inc. said July 14 that it hedged more than two million barrels of 2017 output earlier this month. Drillers have increased bets on falling prices by 29 percent this year. Crude has declined more than 10 percent since hitting a 2016 peak in early June, stoking fears of another second-half slump. It was July that broke the back of last year’s bull-run, with oil plummeting 21 percent. The prospect of a repeat has drillers doing everything they can to raise cash, from selling stocks and bonds to adding fresh hedges.
  • Gold’s in ‘Major Bull Market’ and May Surpass $1,500, DBS Says. Gold is in a major bull market and may surge to more than $1,500 an ounce as low interest rates buoy demand and the U.S. presidential election looms, according to DBS Group Holdings Ltd., which foresaw this year’s rally and is now advising investors to buy any declines.
Wall Street Journal: 
  • Coup Attempt in Turkey Highlights Risks for Emerging Markets. Analysts See Dangers in Reach for Yield. The failed coup in Turkey highlights the pitfalls facing global investors fleeing low returns in the West for hard-to-assess, idiosyncratic risks in emerging markets.
  • Corporate Profits Set to Shrink for Fourth Consecutive Quarter. S&P 500 companies expected to report earnings decline of 4.7%.
  • As Rates Sink, Housing Bubbles Rise. Canada, Australia and Sweden are among central banks caught between supporting their economies and addressing financial threats.
  • Turkey Faces Its Iran 1979 Moment. Empowered by surviving a coup, Erdogan may be tempted to encourage an Islamist counterrevolution. Turkey is at a pivotal point in its history following the failed coup attempt of July 15. President Recep Tayyip Erdogan, having survived the coup plot, won fresh legitimacy and gained a new ally: religious fervor in the streets. Mr. Erdogan can use this impetus either to become an executive-style president, or he can encourage the forces of religion to take over the country, crowning himself as an Islamic leader.
  • Had bullish commentary on (CI), (BAC), (KW) and (MSG). 
Fox News:
  • 3 law enforcement officers killed, 3 others injured in Baton Rouge shooting. (video) The Louisiana governor called the shooting of Baton Rouge deputies and officers "an absolutely unspeakable heinous attack" Sunday, as the city mourned the deaths of three officers and prayed for the recovery of one "fighting for his life." Louisiana Gov. John Bel Edwards described Sunday morning's deadly ambush on six Baton Rouge officers as "unjustifiable" and said, "the violence, the hatred just has to stop." 
Zero Hedge: 
Business Insider:
ABC News:
  • Facebook Post Defines How It Was to Be Black and an Officer. Baton Rouge police officer Montrell Jackson, who was killed Sunday, had written a Facebook post expressing how difficult it was for him to be both a black man and a police officer. The message was posted July 8, just three days after a black man was shot and killed by police in Baton Rouge. Here is the post:
The Daily Caller:
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 119.75 -.75 basis point.
  • Asia Pacific Sovereign CDS Index 47.0 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.62 +.09%.
  • S&P 500 futures +.15%.
  • NASDAQ 100 futures +.17%.

Earnings of Note
  • (BAC)/.44
  • (CALM)/-.19
  • (SCHW)/.30
  • (HAS)/.39
  • (JBHT)/.97
  • (PETS)/.31
  • (BRO)/.44
  • (EMC)/.41
  • (IBM)/2.88
  • (IEX)/.93
  • (NFLX)/.92
  • (RMBS)/.13
  • (STLD)/.56
  • (VMW)/.95
  • (YHOO)/.10   
Economic Releases
10:00 am EST
  • The NAHB Housing Market Index for July is estimated at 60.0 versus 60.0 in June.
4:00 pm EST
  • Net Long-Term TIC Flows for May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The (KMX) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted 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 50% net long heading into the week.

No comments: