Sunday, August 23, 2015

Weekly Outlook

Week Ahead by Bloomberg. 
Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as China bubble-bursting fears, Asian currency concerns and commodity weakness offset central bank hopes, short-covering and bargain-hunting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.

Saturday, August 22, 2015

Today's Headlines

Bloomberg:   
  • Stocks Fall Most in 4 Years as China Dread Sinks Global Markets. Turbulence in financial markets gathered momentum amid intensifying concern over slowing global growth, pushing the Dow Jones Industrial Average into a correction and giving other stock gauges their worse losses since 2011. More than $3.3 trillion has been erased from the value of global equities after China’s decision to devalue its currency spurred a wave of selling across emerging markets. The worries over slower economic growth come as a strong dollar and plunge in oil prices take a toll on corporate earnings at the same time the Federal Reserve is contemplating the first boost to interest rates since 2006. “For much of this year, the glass was considered half full and now people the last 48 hours are thinking it’s looking more empty,” George Hashbarger, who oversees $224 million as chief executive officer and portfolio manager at Knoxville, Tennessee-based Quintium Advisors LLC, said by phone. “This is more like October than it is buy-the-dip.” Volatility surged as Standard & Poor’s 500 Index capped the worst week in three years while Europe entered a correction and stocks from Hong Kong to Indonesia tumbled into bear markets. Junk bond yields rose to the highest since October 2012 and U.S. Treasuries had the largest weekly gain in five months. Oil sank below $40 a barrel for the first time since 2009 and was set for its longest losing streak since 1986. The S&P 500 dropped 3.2 percent, the most since November 2011, to below 2,000. The index is down more than 7 percent from a record after sinking below a trading range that has supported it for most of the year. The Dow Jones Industrial Average fell more than 500 points, as is down 10 percent from its record high in May.  
  • World’s Richest People Lose $182 Billion as Market Rout Deepens. The world’s 400 richest people lost $182 billion this week from their collective fortunes as weak manufacturing data from China and a rout in commodities sent global markets plunging. The weekly drop for the Bloomberg Billionaires Index, a group that includes Warren Buffett and Glencore Plc’s Ivan Glasenberg, was the biggest since tracking of the expanded list began in September 2014. The combined net worth of the index members fell by $76 billion on Friday alone, when the Standard & Poor’s 500 Index of U.S. stocks ended its worst week since 2011.
  • JPMorgan Warns This Emerging-Market Credit Strength May Fizzle. Try figuring this one out: Emerging-market stocks have gotten pummeled over the past few weeks while corporate bonds from the same regions have outperformed many other assets. How does this make sense? It doesn’t really, especially as China shows more signs of slowing, said Scott McKee, head of an emerging-markets corporate-debt group at JPMorgan Chase & Co.’s asset-management unit. “There’s a long list of fundamental issues that we could go through that suggest that emerging markets should be doing worse than other fixed-income sectors at the moment,” McKee said in a telephone call this week. “I don’t really understand why it’s been as resilient as it has been.” A growing number of investors seem to agree with McKee, who recommends cutting holdings of the debt below index weightings. Almost $2.5 billion was pulled from emerging-market debt funds over the past week, the biggest withdrawal since the beginning of 2014, according to EPFR Global data. Asia credit funds saw their largest outflow on record, according to Wells Fargo & Co. data. 
  • Koreas Locked in Talks as Kim’s Deadline for Attack Passes. North Korea and South Korea will continue talks Sunday aimed at defusing tensions across their heavily fortified border, after Kim Jong Un’s threat to launch an attack passed without incident. The talks adjourned at 4:15 a.m. and will resume at 3 p.m. local time, South Korean presidential spokesman Min Kyung-wook said, according to the Associated Press. Kim’s top military aide Hwang Pyong So and South Korean President Park Geun Hye’s chief security adviser Kim Kwan Jin met at the border village of Panmunjom.
  • Largest Korea ETF Sees Worst Money Outflow on Record Amid Crisis. The iShares MSCI South Korea Capped ETF, the largest exchange-traded fund tracking the country’s stocks, had the biggest weekly withdrawal since inception in 2000 amid investor concern over a revival of tensions on the Korean peninsula and an escalating selloff in emerging markets. Traders pulled $195.4 million from the ETF, whose top holdings include Samsung Electronics Co. and Hyundai Motor Co., in the five trading days ended Aug. 21, according to data compiled by Bloomberg. The fund, which has $3.1 billion in assets, fell 7.2 percent in New York to an almost four-year low of $45.67 during the week and is down 27 percent from a high in April.
  • Treasuries Log $67 Billion Weekly Rally as Fed Countdown Stalls. While Federal Reserve policy makers have suggested an interest-rate increase is in the cards this year, their plans are facing renewed scrutiny from bond markets. As stocks tumbled this week and oil fell below $40 a barrel for the first time since 2009, Treasuries investors saw the value of their holdings swell by $67 billion, the most since early July, according to Bank of America Merrill Lynch bond indexes. The appeal of government debt grew as declining commodity prices and tumbling inflation expectations suggest global demand is weakening.
  • Kazakh Premier Sees Oil-Nation Currency Pegs Axed as Crude Falls. Currency pegs in crude-producing nations are set to topple as the world enters a “new era” of low oil prices, according to the prime minister of Kazakhstan, which rattled markets this week with its surprise decision to abandon control of the exchange rate. “At the end of the day, most of the oil-producing countries will go into the free floating regime,” including Saudi Arabia and the United Arab Emirates, Karim Massimov said in an interview on Saturday in the capital, Astana. “I do not think that for the next three to five, maybe seven years, the price for commodities will come back to the level that it used to be at in 2014.” Central Asia’s biggest oil producer cut the tenge loose on Thursday, triggering a 22 percent slide to a record low versus the dollar. The move followed China’s shock devaluation of the yuan the week before, which drove down oil prices on concern global growth will stutter and raised the prospect other nations with managed exchange rates will allow their currencies to weaken to stay competitive.
  • Brazil Stocks Enter Bear Market Amid Developing-Nation Selloff. The rout in developing nations sent Brazilian stocks into a bear market as Latin America’s largest economy heads toward the worst recession in 25 years. The real led world losses. The stock gauge extended its slump since its May peak to 21 percent after the weakest Chinese manufacturing data since the global financial crisis accelerated a selloff in riskier assets. State-owned oil producer Petroleo Brasileiro SA fell for a seventh day after crude sank below $40 a barrel. The real posted the biggest decline among 16 global major currencies. “The Brazilian market is on the verge of a nervous breakdown,” Alvaro Bandeira, an economist at Banco Modal, said from Rio de Janeiro. “There’s just awful news coming from all fronts. It’s really discouraging.”
  • Brazil Has Yet Another Big Mess on Its Hands After State Default. Engulfed by political and economic crises, Brazil can ill afford to be beset by more problems. Yet that’s exactly what is happening after its southernmost state of Rio Grande do Sul defaulted on a 280 million real ($80.9 million) payment to the federal government this month -- the first since the nation’s municipal-debt meltdown in 1997. The state, proportionally the most-indebted in Brazil, is in such distress that it didn’t pay salaries to public workers in July.
  • Taiwan’s Stocks Enter Bear Market Amid China Economic Concerns. Taiwan’s stocks entered a bear market amid concern China’s economic slowdown and currency devaluation will curb demand for the island’s technology products. The Taiex index fell 3 percent to 7,786.92 at the close, the lowest level since June 2013. The benchmark gauge has tumbled more than 20 percent from a 15-year high on April 27, the threshold for a bear market. Taiwan Semiconductor Manufacturing Co., the biggest stock in the Taiex, dropped 4 percent. 
  • Africa Running Out of Options as China to Kazakhstan Devalue. Currency devaluations from Kazakhstan to China are heaping pressure on African central banks to relinquish control of their exchange rates as they run down reserves faster than any other region. From Nigeria to Uganda, African policy makers are burning through their foreign reserves and tightening monetary policy to prop up their currencies. Thursday’s move by Kazakhstan, central Asia’s largest crude exporter, to abandon its currency peg has intensified speculation that authorities in Africa will devalue or halt intervening in their foreign-exchange markets.  
  • Snipers, Vehicle Moves Among Classified Data E-Mailed to Clinton. The e-mail painted a vivid picture of a fast-deteriorating situation in Libya’s bloody civil war, complete with snipers shooting people, armed forces on the move and diplomatic personnel preparing to evacuate. The message, dated April 10, 2011, was forwarded to “H,” for Hillary Clinton, then the secretary of state. It came from one of her closest aides, Huma Abedin, who is now vice chairman of her presidential campaign.
 Wall Street Journal
  • Two U.S. Military Men Praised for Actions on French Train. Members of Air Force and Oregon National Guard subdued a gunman loaded with weapons. Authorities praised two U.S. military members and their friend who tackled and subdued a man armed with guns and a box cutter on a Paris-bound train Friday as it sped through Belgium, breaking up what could have been a deadly terrorist attack. 
CNBC: 
Zero Hedge:
NY Times:
Reuters:
  • Exclusive: Dozens of Clinton emails were classified from the start, U.S. rules suggest. For months, the U.S. State Department has stood behind its former boss Hillary Clinton as she has repeatedly said she did not send or receive classified information on her unsecured, private email account, a practice the government forbids. While the department is now stamping a few dozen of the publicly released emails as "Classified," it stresses this is not evidence of rule-breaking. Those stamps are new, it says, and do not mean the information was classified when Clinton, the Democratic frontrunner in the 2016 presidential election, first sent or received it. But the details included in those "Classified" stamps — which include a string of dates, letters and numbers describing the nature of the classification — appear to undermine this account, a Reuters examination of the emails and the relevant regulations has found.
Financial Times:
Telegraph:
Bild-Zeitung:
  • ESM's Regling Says Greece Won't Get Money Without Reforms. European Stability Mechanism head Klaus Regling says next Greek government needs to bear in mind reforms must be implemented to get help from partners, citing itv.
Focus:
  • German Majority Says Euro Bailout Not in Their Interest. 47% of Germans think government backing for euro-rescue program isn't serving German interests, citing TNS Emnid poll. 43% backing government on euro-rescue action.

Friday, August 21, 2015

Market Week in Review

  • S&P 500 1,970.89 -5.77%*
 photo bbb_zpsv27aijbp.png
The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
  • S&P 500 1,970.89 -5.77%
  • DJIA 16,459.75 -5.82%
  • NASDAQ 4,706.04 -6.78%
  • Russell 2000 1,156.79 -4.61%
  • S&P 500 High Beta 29.59 -7.59%
  • Goldman 50 Most Shorted 120.14 -8.27% 
  • Wilshire 5000 20,585.55 -5.63%
  • Russell 1000 Growth 957.23 -5.72%
  • Russell 1000 Value 952.28 -5.73%
  • S&P 500 Consumer Staples 489.37 -4.81%
  • Solactive US Cyclical 120.72 -5.81%
  • Morgan Stanley Technology 997.15 -7.12%
  • Transports 7,872.06 -5.37%
  • Utilities 597.65 -1.10%
  • Bloomberg European Bank/Financial Services 107.70 -6.65%
  • MSCI Emerging Markets 33.51 -4.82%
  • HFRX Equity Hedge 1,180.02 -1.43%
  • HFRX Equity Market Neutral 1,007.65 -.32%
Sentiment/Internals
  • NYSE Cumulative A/D Line 226,584 -2.64%
  • Bloomberg New Highs-Lows Index -1040 -647
  • Bloomberg Crude Oil % Bulls 24.39 -28.58%
  • CFTC Oil Net Speculative Position 225,843 -8.6%
  • CFTC Oil Total Open Interest 1,676,233 -3.47%
  • Total Put/Call 1.68 +66.34%
  • OEX Put/Call 2.84 +234.12%
  • ISE Sentiment 60.0 -31.0%
  • NYSE Arms 2.89 +151.30%
  • Volatility(VIX) 28.03 +118.47%
  • S&P 500 Implied Correlation 57.94 +4.49%
  • G7 Currency Volatility (VXY) 9.59 +5.38%
  • Emerging Markets Currency Volatility (EM-VXY) 11.40 +6.05%
  • Smart Money Flow Index 17,021.57 +.24%
  • ICI Money Mkt Mutual Fund Assets $2.686 Trillion +.41%
  • ICI US Equity Weekly Net New Cash Flow -$2.294 Billion
  • AAII % Bulls 26.8 -11.9%
  • AAII % Bears 33.3 -7.8%
Futures Spot Prices
  • CRB Index 191.34 -3.35%
  • Crude Oil 40.45 -4.1%
  • Reformulated Gasoline 154.81 -6.42%
  • Natural Gas 2.67 -4.80%
  • Heating Oil 146.24 -5.74%
  • Gold 1,159.20 +4.15%
  • Bloomberg Base Metals Index 145.17 -2.20%
  • Copper 230.35 -1.69%
  • US No. 1 Heavy Melt Scrap Steel 210.67 USD/Ton -9.0%
  • China Iron Ore Spot 56.10 USD/Ton -1.13%
  • Lumber 245.40 -3.39%
  • UBS-Bloomberg Agriculture 1,019.45 -2.15%
Economy
  • ECRI Weekly Leading Economic Index Growth Rate -.4% -60.0 basis points
  • Philly Fed ADS Real-Time Business Conditions Index .1524 -6.39%
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 126.25 +.05%
  • Citi US Economic Surprise Index -18.2 -13.8 points
  • Citi Eurozone Economic Surprise Index 16.9 +8.1 points
  • Citi Emerging Markets Economic Surprise Index -8.6 -2.3 points
  • Fed Fund Futures imply 66.0% chance of no change, 34.0% chance of 25 basis point hike on 9/17
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.02 +9.24%
  • US Dollar Index 94.99 -1.67%
  • Euro/Yen Carry Return Index 144.93 +.48%
  • Yield Curve 142.0 -5.0 basis points
  • 10-Year US Treasury Yield 2.04% -16.0 basis points
  • Federal Reserve's Balance Sheet $4.449 Trillion -.04%
  • U.S. Sovereign Debt Credit Default Swap 16.0 -3.03%
  • Illinois Municipal Debt Credit Default Swap 248.0 +8.95%
  • Western Europe Sovereign Debt Credit Default Swap Index 23.66 +5.74%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 81.52 +16.17%
  • Emerging Markets Sovereign Debt CDS Index 329.56 +7.12%
  • Israel Sovereign Debt Credit Default Swap 72.50 +8.39%
  • Iraq Sovereign Debt Credit Default Swap 746.44 +8.98%
  • Russia Sovereign Debt Credit Default Swap 419.24 +11.4%
  • iBoxx Offshore RMB China Corporates High Yield Index 118.51 -.73%
  • 10-Year TIPS Spread 1.54% -9.0 basis points
  • TED Spread 31.25 +8.25 basis points
  • 2-Year Swap Spread 22.75 -1.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +2.75 basis points
  • N. America Investment Grade Credit Default Swap Index 82.12 +6.92%
  • America Energy Sector High-Yield Credit Default Swap Index 1,871.0 -1.56%
  • European Financial Sector Credit Default Swap Index 83.82 +9.74%
  • Emerging Markets Credit Default Swap Index 354.99 +3.44%
  • CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 101.0 -2.0 basis points
  • M1 Money Supply $3.048 Trillion -2.17%
  • Commercial Paper Outstanding 1,057.0 -.20%
  • 4-Week Moving Average of Jobless Claims 271,500 +5,250
  • Continuing Claims Unemployment Rate 1.7% unch.
  • Average 30-Year Mortgage Rate 3.93% -1 basis point
  • Weekly Mortgage Applications 411.70 +3.57%
  • Bloomberg Consumer Comfort 41.1 +.4 point
  • Weekly Retail Sales +1.70% -20.0 basis points
  • Nationwide Gas $2.63/gallon -.02/gallon
  • Baltic Dry Index 1,014.0 -3.89%
  • China (Export) Containerized Freight Index 844.42 +3.03%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0 unch.
  • Rail Freight Carloads 276,443 +.74%
Best Performing Style
  • Small-Cap Value -4.1%
Worst Performing Style
  • Large-Cap Growth -5.7%
Leading Sectors
  • Gold & Silver +5.1%
  • Coal +4.8%
  • Homebuilders +.5%
  • Utilities -.7%
  • Telecom -1.5%
Lagging Sectors
  • Semis -7.7% 
  • Social Media -8.1%
  • Energy -8.1%
  • Gaming -8.6%
  • Alternative Energy -10.0%
Weekly High-Volume Stock Gainers (11)
  • OMER, ZU, CTRN, KMPH, NPBC, LZB, TECD, IQNT, SLH, DAR and CENTA
Weekly High-Volume Stock Losers (12)
  • DV, URBN, PRTY, HAIN, BPMC, AEO, AZPN, EL, TFM, AAVL, SSI and LOCO
Weekly Charts
ETFs
Stocks
*5-Day Change

Stocks Falling Substantially into Afternoon on China Bubble-Bursting Fears, Global Growth Worries, Emerging Markets Currency Concerns, Energy/Transport Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Heavy
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 23.64 +23.56%
  • Euro/Yen Carry Return Index 144.96 +.06%
  • Emerging Markets Currency Volatility(VXY) 11.38 +1.97%
  • S&P 500 Implied Correlation 56.51 -1.96%
  • ISE Sentiment Index 63.0 -10.0%
  • Total Put/Call 1.73 +33.08%
  • NYSE Arms 1.77 +30.50% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 81.87 +1.53%
  • America Energy Sector High-Yield CDS Index 1,868.0 +.77%
  • European Financial Sector CDS Index 83.56 +4.44%
  • Western Europe Sovereign Debt CDS Index 23.66 +4.74%
  • Asia Pacific Sovereign Debt CDS Index 80.51 +4.29%
  • Emerging Market CDS Index 363.98 +4.96%
  • iBoxx Offshore RMB China Corporates High Yield Index 118.51 -.37%
  • 2-Year Swap Spread 22.75 unch.
  • TED Spread 31.25 +2.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +.25 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .02% unch.
  • Yield Curve 143.0 +2.0 basis points
  • China Import Iron Ore Spot $56.10/Metric Tonne +.47%
  • Citi US Economic Surprise Index -18.2 -1.1 points
  • Citi Eurozone Economic Surprise Index 16.9 +6.8 points
  • Citi Emerging Markets Economic Surprise Index -8.6 -2.2 points
  • 10-Year TIPS Spread 1.5 -4.0 basis points
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.02 -.03
Overseas Futures:
  • Nikkei 225 Futures: Indicating -346 open in Japan 
  • China A50 Futures: Indicating -114 open in China
  • DAX Futures: Indicating -54 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my index hedges and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long

Bear Radar

Style Underperformer:
  • Large-Cap Growth -2.09%
Sector Underperformers:
  • 1) Airlines -3.03% 2) Energy -2.91% 3) Restaurants -2.55%
Stocks Falling on Unusual Volume:
  • TFM, SSI, HQH, INTU, PGP, HQL, NDSN, ROST, DGRW, DE, OXLC, SCTY, QQEW, INDY, CLM, SCSC, HIBB, DIS, SNN, TREE, QQQX, UFS, SUNE, DQ, XIV, UVE, GIMO, SCTY, INTU, TREE, XPO, GTN, AXTA, SBUX, ABMD, AFSI, HAL, NLS, MTX, BOOT, NFLX, CVRR, UA, NTI, EMES, AMBA, DE, ROST and SUNE
Stocks With Unusual Put Option Activity:
  • 1) SBGI 2) AMD 3) FXY 4) EWC 5) HCA
Stocks With Most Negative News Mentions:
  • 1) BHI 2) AAL 3) PBR 4) INTU 5) DE
Charts: