Wednesday, November 25, 2015

Morning Market Internals

Posted by Gary .....at 11:46 AM
NYSE Composite Index:
0 comments

Tuesday, November 24, 2015

Wednesday Watch

Posted by Gary .....at 10:20 PM
Evening Headlines
Bloomberg:
  • U.S. Urges Russia, Turkey to Cool Standoff Over Downed Warplane. (video) U.S. President Barack Obama and the NATO military alliance called for a de-escalation of tensions between Turkey and Russia, as their war of words over the downing of a Russian fighter jet threatened to undermine efforts for a united front against Islamic State. Turkey shot down the plane near its border with northwestern Syria early Tuesday, drawing an angry rebuke from President Vladimir Putin and marking the first direct clash between foreign powers embroiled in the Syrian civil war. Turkey said the pilots ignored repeated warnings about violating its airspace, while Putin called the attack “a stab in the back from the accomplices of terrorism.” 
  • China's Earliest Monthly Economic Indicators Flash Warning Sign. China’s economy is still showing a muted response to waves of monetary and fiscal easing as of the half-way mark for the last quarter of the year, some of the earliest indicators suggest. A privately compiled purchasing managers’ index and a gauge based on search engine interest in small and medium-sized businesses deteriorated this month, while a sentiment indicator dropped sharply from October. Combined, the reports make gloomy reading ahead of official releases, the earliest of which will be manufacturing and services PMI reports due Dec. 1. Six interest-rate cuts in a year and expedited fiscal spending have yet to revive growth as overcapacity and weakness in old drivers like manufacturing and residential construction weigh on the world’s second-biggest economy. If official data confirm the sluggishness, Premier Li Keqiang’s growth goal may be missed for a second-straight year.Here’s a look at what the economy’s earliest tea leaves show:
  • Stevens Says `Chill Out' on Rates as Australia Bows to Slowdown. Australia’s central bank Governor Glenn Stevens says markets should “chill out” on prospects for another interest-rate cut as the nation’s Treasury bowed to mounting evidence that the economy’s speed limit for growth had declined. Stevens, who stood pat for the past six months at a record-low 2 percent cash rate, told economists Tuesday evening in Sydney they should enjoy the festive season and then reassess the economic data in February. “I’m more than content to lower it if that actually helps but is that the best thing to do at any particular time?” Stevens said in response to a question on the cash rate. “We’ve got Christmas. We should just chill out, come back and see what the data says.”   
  • Asian Stocks Retreat as Japan Slides on Yen Amid Syria Tensions. Asian stocks fell, dragged lower by Japanese shares as the yen gained after Turkey downed a Russian warplane, fueling demand for haven assets. The MSCI Asia Pacific Index lost 0.1 percent to 134.37 as of 9:02 a.m. in Tokyo. 
  • If China Killed Commodities Super Cycle, Fed Is About to Bury It. For commodities, it’s like the 21st century never happened. The last time the Bloomberg Commodity Index of investor returns was this low, Apple Inc.’s best-selling product was a desktop computer, and you could pay for it with francs and deutsche marks. The gauge tracking the performance of 22 natural resources has plunged two-thirds from its peak, to the lowest level since 1999. That shows it’s back to square one for the so-called commodity super cycle, a hunger for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade until 2011.
  • BlackRock(BLK) Sees More Commodity Pain on Slowing China, Dollar. The world’s largest money manager says the worst commodity selloff in a generation still has room to run. “We’re still unfortunately heading lower,” Russ Koesterich, global chief investment strategist at BlackRock Inc., said in a Bloomberg TV interview. “We’re seeing a slowdown in demand as the global economy slows, particularly commodity-intensive economies like China.” Raw materials are headed for a fifth annual loss after slumping on Monday to the lowest level since 1999 as economic growth in China slows amid gluts of everything from crude oil to base metals. A strengthening dollar as the Federal Reserve prepares to raise U.S. interest rates was adding a headwind to prices, according to Koesterich.
  • Nickel Slides With Copper After Metals Climb Most in Six Weeks. Nickel and copper declined amid concerns over Chinese demand after industrial metals posted their biggest increase in more than six weeks. Nickel fell as much as 1.5 percent and copper lost 0.5 percent. The London Metal Exchange index of six metals climbed 2.2 percent on Tuesday, the most since Oct. 9, as traders closed out some bearish bets and crude oil prices surged. Nickel slumped this week to the lowest in more than a decade, while copper and aluminum plumbed six-year lows. 
  • Energy Companies Risk $2.2 Trillion as Climate Goals Cut Demand. Oil, natural gas and coal producers are risking $2.2 trillion by investing in projects for which there will be no demand if the world meets a United Nations target of limiting the rise in temperature to less than 2 degrees Celsius, a non-profit think tank said. No new coal mines are needed, oil demand will peak around 2020 and growth in gas will disappoint industry expectations, Carbon Tracker Initiative said Wednesday in a report. The U.S. has the greatest exposure with $412 billion of projects at risk up to 2025, followed by Canada with $220 billion, China $179 billion, Russia $147 billion and Australia $103 billion, according to the think tank. 
  • Introducing the New OPEC Member That Likes Lower Oil Prices. After defending the interests of oil-exporting nations for five decades, OPEC has made a surprising choice with its newest member: a country that consumes about twice as much crude as it pumps. Indonesia will rejoin the Organization of Petroleum Exporting Countries as its 13th nation next month, almost seven years after suspending its membership. The country says that as OPEC’s only Asian constituent it will provide a vital link to the region where demand is growing fastest. Still, saddled with an oil-import bill of about $13 billion last year, Indonesia makes an unlikely addition to the exporters’ club. “If you’re accepting net-oil importers into the organization, it speaks volumes about the marginalization of OPEC,” said Seth Kleinman, head of energy strategy at Citigroup Inc. Indonesia is “never going to cut” supply, he said.
  • Airlines Bet on Long Oil Slump After Millions Lost to Hedging. Two of the world’s biggest airlines are betting that oil prices won’t rally any time soon, growing more cautious after losing hundreds of millions of dollars on hedges. United Continental Holdings Inc. and Delta Air Lines Inc. have reduced fuel hedging as oil plunged close to a six-year low. They’ve become more like American Airlines Group Inc., the biggest global carrier, which closed its last hedging position in 2014. “There is a growing realization that American’s approach was the smarter one,” Bob Mann, president of airline consultant R.W. Mann & Co., said in a phone interview. “These programs have not met expectations, costs are very high and the results have underperformed.”
  • Junk-Bond Losses Pile Up as Traders Flee Any Whiff of Bad News. The morning after cancer-center firm 21st Century Oncology Inc. cut its earnings forecast for 2015 last week, money manager Rajay Bagaria woke up to find his holdings of the junk-rated company’s bonds had lost 19 percent of their market value overnight. Investors who own Chesapeake Energy Corp.’s $11.3 billion of bonds watched about a third of their value disappear over the past three weeks. Similar free-falls have appeared on the computer screens of traders in debt of retailer Men’s Wearhouse Inc., gambling-equipment maker Scientific Games Corp. and the owner of New York Sports Club. By one measure tracked by Deutsche Bank AG analysts, the debt of the riskiest companies is selling off at four times the rate of the least-risky junk borrowers -- a ratio that’s typically 1.6 times.
Wall Street Journal: 
  • Turkey Shoots Down Russian Military Jet. Turkish officials say jet violated its airspace; Russia says jet was over Syria. Turkish F-16s shot down a Russian military jet along the Syrian border on Tuesday, sparking fury in Moscow that threatened to undercut efforts to create a new international coalition to confront expanding Islamic State terrorism. The Turkish strike, captured by dramatic video, marked the first time since 1952 that a North Atlantic Treaty Organization member has shot down a Russian warplane. As Russian helicopters searched for the two pilots, President Vladimir Putin accused Turkey of a “stab in the back” and of aiding terrorists, and state media began a propaganda blitz against Turkey. The Defense Ministry suspended military contacts, Foreign Minister Sergei Lavrov canceled a Wednesday meeting in Istanbul and Russian tourists were urged to stay away from Turkey, one of the most popular vacation destinations.
  • Falling Corporate Profits Blur U.S. Growth Outlook. GDP revs up as inventories proved less of a drag, but headwinds loom. Profits at U.S. companies during the third quarter posted their largest annual decline since the recession, underscoring the competitive pressure from a strong dollar and weak global demand that could limit businesses’ ability to support stronger economic growth in the coming months. 
  • Federal Judge Chides Obama Administration Over Guantanamo Policies. Judge Royce Lamberth is puzzled that the government stalls detainee hearings while saying it wants prison closed.
  • For Poor Countries, Well-Worn Path to Development Turns Rocky.
  • Congress Can Cool Off Obama’s Climate Plans. At the Paris talks next week, the U.S. may make harmful commitments on spending and carbon. When the U.N. climate-change talks convene in Paris next week, the risks will be high for American taxpayers. President Obama wants a climate deal and is willing to pay dearly to get it. The inevitable outcome is a plan with unproven benefits and unreachable goals, but very real costs. It will be up to Congress to check the president’s ambition of committing the U.S. to an international green scheme that will produce little or no return.
  • Turkey’s Warning Shot. Putin may be testing NATO’s resolve, and the Turks need U.S. support. A pair of Turkish F-16s shot down a Russian Su-24 over Turkish airspace on Tuesday, and Russian President Vladimir Putin called it a “stab in the back” that would have “serious consequences for Russian-Turkish relations.” This is what we mean when we say the last months of the Obama Administration will be the most dangerous since the end of the Cold War.
Fox News: 
Zero Hedge:
Reuters:
  • HP Inc(HPQ) profit forecast misses Street on weak PC, printer sales. HP Inc, which houses former Hewlett-Packard Co's legacy printer and PC business, forecast adjusted profit for the first quarter below market expectations as it struggles with weak sales of PCs and printers. However, Hewlett Packard Enterprise Co, which is headed by Meg Whitman and holds the corporate hardware and services businesses, maintained its adjusted profit forecast for the year. HP Inc's shares were down 7.1 percent in extended trading on Tuesday, while HPE's shares were up 2.3 percent.
  • Macau's house of cards topples as investors lose big on junkets. The theft of millions of dollars from investors in a Macau junket operator has sparked months of protests and hastened the demise of a business model that greased the wheels of the $44 billion global gambling hub for over a decade.
Financial Times: 
  • States warn US climate plan is illegal. State officials in West Virginia and Texas are sending a letter to the governments of China, India and other countries, arguing that US President Barack Obama’s plan to cut greenhouse gas emissions is unlawful and likely to be struck down in court. In an intervention aimed at the international climate talks that begin in Paris next Monday, the attorneys-general of the two states warn that there are “significant legal limits [on Mr Obama’s] ability either to carry out the promises he has made in advance of Paris 2015 or to enforce any agreement arising out of the summit.”
Telegraph:
Evening Recommendations 
  • None of note
Night Trading 
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.50 +2.5 basis points.
  • Asia Pacific Sovereign CDS Index 70.0 +1.75 basis points.
  • Bloomberg Emerging Markets Currency Index 71.04 +.13%.
  • S&P 500 futures -.08%.
  • NASDAQ 100 futures -.10%.
Morning Preview Links 

 Earnings of Note 
Company/Estimate
  • (DE)/.74
  • (DCI)/.34
Economic Releases
8:30 am EST
  • Personal Income for October is estimated to rise +.4% versus a +.1% gain in September.
  • Personal Spending for October is estimated to rise +.3% versus a +.1% gain in September.
  • The PCE Core for October is estimated to rise +.1% versus a +.1% gain in September.
  • Durable Goods Orders for October are estimated to rise +1.7% versus a -1.2% decline in September.
  • Durables Ex Transports for October are estimated to rise +.3% versus a -.4% decline in September.    
  • Cap Goods Orders Non-Defense Ex-Air for October are estimated to rise +.2% versus a -.3% decline in September.
  • Initial Jobless Claims for last week are estimated to fall to 270K versus 271K the prior week.
  • Continuing Claims are estimated to fall to 2161K versus 2175K prior.
9:00 am EST
  • The FHFA House Price Index for September is estimated to rise +.4% versus a +.3% gain in August.
9:45 am EST
  • Preliminary Markit US Services PMI for November is estimated to rise to 55.1 versus 54.8 in October. 
10:00 am EST
  • New Home Sales for October are estimated to rise to 500K versus 468K in September.
  • Final Univ. of Mich. Consumer Sentiment for November is estimated at 93.1 versus a prior estimate of 93.1. 
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,195,000 barrels versus a +252,000 barrel gain the prior week. Gasoline supplies are expected to rise by +280,000 barrels versus a +1,009,000 barrel gain the prior week. Distillate inventories are estimated to fall by -425,000 barrels versus a -791,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.34% versus a +.8% gain prior.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Japan Leading Index, weekly Bloomberg Consumer Comfort Index, weekly MBA Mortgage Applications report and the 5Y/7Y T-Note auction could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity 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 day.
0 comments

Stocks Reversing Slightly Higher into Afternoon on Buyout Speculation, Oil Bounce, Short-Covering, Commodity/Hospital Sector Strength

Posted by Gary .....at 2:44 PM
Broad Equity Market Tone:
  • Advance/Decline Line: About Even
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 15.62 unch.
  • Euro/Yen Carry Return Index 136. 22 -.21%
  • Emerging Markets Currency Volatility(VXY) 10.35 +.68%
  • S&P 500 Implied Correlation 56.11 -1.84%
  • ISE Sentiment Index 81.0 -26.36%
  • Total Put/Call 1.07 +3.88%
  • NYSE Arms .65 -49.70% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 85.66 +.97%
  • America Energy Sector High-Yield CDS Index 1,314.0 -.56%
  • European Financial Sector CDS Index 70.47 +1.21%
  • Western Europe Sovereign Debt CDS Index 19.08 +.26%
  • Asia Pacific Sovereign Debt CDS Index 69.12 +1.46%
  • Emerging Market CDS Index 316.75 +.61%
  • iBoxx Offshore RMB China Corporate High Yield Index 124.34 +.08%
  • 2-Year Swap Spread 5.75 -1.0 basis point
  • TED Spread 27.0 -1.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -49.0 +1.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 70.97 +.36%
  • 3-Month T-Bill Yield .16% +5.0 basis points
  • Yield Curve 131.0 -2.0 basis points
  • China Import Iron Ore Spot $43.89/Metric Tonne -1.92%
  • Citi US Economic Surprise Index -17.2 -4.4 points
  • Citi Eurozone Economic Surprise Index 35.40 +2.6 points
  • Citi Emerging Markets Economic Surprise Index 2.80 +.3 point
  • 10-Year TIPS Spread 1.64 unch.
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 2.05 -.45
Overseas Futures:
  • Nikkei 225 Futures: Indicating -29 open in Japan 
  • China A50 Futures: Indicating -57 open in China
  • DAX Futures: Indicating +15 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my biotech/tech sector longs 
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
  • Market Exposure: 50% Net Long
0 comments

Bear Radar

Posted by Gary .....at 2:12 PM
Style Underperformer: 
  • Large-Cap Growth -.11%
Sector Underperformers: 
  • 1) Airlines -2.82% 2) Disk Drives -1.16% 3) Networking -.91%
Stocks Falling on Unusual Volume:
  • ADRO, BLOX, MSCC, SIG, KBIO, TECD, DL, FMS, CTRN, CBRL, PF, LLL, LILAK, CDW, GBT, SJM, VRSN, UVE, IART, SHOP, PDCO, EV, PCLN, SRPT, CUK, RWT and WMS
Stocks With Unusual Put Option Activity: 
  • 1) AKS 2) HON 3) OIH 4) TIF 5) DAL
Stocks With Most Negative News Mentions: 
  • 1) BLOX 2) XBIT 3) CMCSA 4) PCLN 5) EXPE
Charts:
0 comments

Bull Radar

Posted by Gary .....at 1:54 PM
Style Outperformer:
  • Small-Cap Value +.39%
Sector Outperformers: 
  • 1) Gold & Silver +3.51% 2) Oil Service +3.43% 3) Coal +2.46%
Stocks Rising on Unusual Volume: 
  • BDBD, BECN, CPRT, PANW, TEDU, BURL, DLTR, CLVS, ADI, TASR and POST
Stocks With Unusual Call Option Activity: 
  • 1) A 2) ADT 3) LC 4) CREE 5) ASNA
Stocks With Most Positive News Mentions: 
  • 1) TASR 2) DE 3) HRL 4) PANW 5) ADI
Charts: 
0 comments

Morning Market Internals

Posted by Gary .....at 12:02 PM
NYSE Composite Index:
0 comments
Subscribe to: Posts (Atom)