Indices
- Russell 2000 1,168.43 +.34%
- S&P 500 High Beta 30.44 -.62%
- Wilshire 5000 19,360.50 -.13%
- Russell 1000 Growth 861.56 +.03%
- Russell 1000 Value 923.23 -.37%
- S&P 500 Consumer Staples 433.24 -.86%
- Morgan Stanley Cyclical 1,471.11 -.05%
- Morgan Stanley Technology 918.22 +2.11%
- Transports 7,427.46 -.52%
- Bloomberg European Bank/Financial Services 114.01 +2.35%
- MSCI Emerging Markets 40.06 +.14%
- HFRX Equity Hedge 1,173.95 +.49%
- HFRX Equity Market Neutral 955.63 +.34%
Sentiment/Internals
- NYSE Cumulative A/D Line 200,668 +.38%
- Bloomberg New Highs-Lows Index 554 -94
- Bloomberg Crude Oil % Bulls 38.24 unch.
- CFTC Oil Net Speculative Position 327,351 -1.11%
- CFTC Oil Total Open Interest 1,623,027 +.20%
- Total Put/Call .70 -6.67%
- ISE Sentiment 132.0 +24.53%
- Volatility(VIX) 12.44 +2.47%
- S&P 500 Implied Correlation 51.56 +5.61%
- G7 Currency Volatility (VXY) 7.81 +1.03%
- Emerging Markets Currency Volatility (EM-VXY) 8.64 +1.89%
- Smart Money Flow Index 11,926.38 -.25%
- ICI Money Mkt Mutual Fund Assets $2.700 Trillion -.52%
- ICI US Equity Weekly Net New Cash Flow -$3.362 Billion
- AAII % Bulls 38.99 -10.6%
- AAII % Bears 21.49 -14.04%
Futures Spot Prices
- Reformulated Gasoline 262.04 -2.19%
- Heating Oil 302.37 +2.52%
- Bloomberg Base Metals Index 195.30 +2.39%
- US No. 1 Heavy Melt Scrap Steel 383.0 USD/Ton +1.06%
- China Iron Ore Spot 127.30 USD/Ton -2.60%
- UBS-Bloomberg Agriculture 1,331.62 -.15%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 3.7% +120 basis points
- Philly Fed ADS Real-Time Business Conditions Index .0006 +107.9%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 120.33 +.09%
- Citi US Economic Surprise Index 66.60 +1.1 points
- Citi Emerging Markets Economic Surprise Index 4.80 +5.7 points
- Fed Fund Futures imply 32.0% chance of no change, 68.0% chance of 25 basis point cut on 1/29
- US Dollar Index 81.18 +.69%
- Euro/Yen Carry Return Index 147.34 -.80%
- Yield Curve 245.0 -4 basis points
- 10-Year US Treasury Yield 2.82% -4 basis points
- Federal Reserve's Balance Sheet $4.029 Trillion +1.09%
- U.S. Sovereign Debt Credit Default Swap 27.50 -1.24%
- Illinois Municipal Debt Credit Default Swap 151.0 -2.72%
- Western Europe Sovereign Debt Credit Default Swap Index 49.68 -.63%
- Asia Pacific Sovereign Debt Credit Default Swap Index 107.10 +.09%
- Emerging Markets Sovereign Debt CDS Index 219.0 +1.39%
- Israel Sovereign Debt Credit Default Swap 93.0 -6.1%
- South Korea Sovereign Debt Credit Default Swap 68.50 +2.24%
- China Blended Corporate Spread Index 333.50 +5.5 basis points
- 10-Year TIPS Spread 2.25% -2.0 basis points
- 2-Year Swap Spread 13.25 +1.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +.5 basis point
- N. America Investment Grade Credit Default Swap Index 64.66 +.33%
- European Financial Sector Credit Default Swap Index 85.50 -.58%
- Emerging Markets Credit Default Swap Index 291.98 +4.29%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 108.0 -2.0 basis points
- M1 Money Supply $2.645 Trillion -.18%
- Commercial Paper Outstanding 1,035.60 -2.20%
- 4-Week Moving Average of Jobless Claims 335,000 -14,000
- Continuing Claims Unemployment Rate 2.3% +10 basis points
- Average 30-Year Mortgage Rate 4.41% -10 basis points
- Weekly Mortgage Applications 386.10 +11.9%
- Bloomberg Consumer Comfort -31.0 -2.6 points
- Weekly Retail Sales +2.90% -70 basis points
- Nationwide Gas $3.30/gallon -.01/gallon
- Baltic Dry Index 1,398 -18.05%
- China (Export) Containerized Freight Index 1,115.55 +1.60%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 +16.7%
- Rail Freight Carloads 235,987 +26.3%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (39)
- CANN, PTCT, SRPT, KIN, RTRX, CTRL, TLOG, FMI, ALNY, DTLK, NPO, NLNK, RENT, OCRX, BEAM, PMC, ECYT, MRTX, APFC, FRAN, GTI, AOL, ATRC, WWE, LOCK, CEC, BLUE, IXYS, GHL, ARCP, ISRG, MFRM, COLE, RPTP, JW/A, NCS, ALSN, CLVS and SKT
Weekly High-Volume Stock Losers (20)
- TPH, DSW, SSI, ETM, AAN, SGI, LKQ, SHLD, BYD, SBGI, SCVL, FIVE, NXST, PSMT, LIN, FWM, GME, USNA, BBY and NUS
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 12.60 +.56%
- Euro/Yen Carry Return Index 147.13 -.74%
- Emerging Markets Currency Volatility(VXY) 8.64 -.46%
- S&P 500 Implied Correlation 52.36 +.52%
- ISE Sentiment Index 128.0 -20.50%
- Total Put/Call .72 -7.69%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.11 +.25%
- European Financial Sector CDS Index 85.50 +.33%
- Western Europe Sovereign Debt CDS Index 49.68 -.63%
- Emerging Market CDS Index 292.19 +1.42%
- 2-Year Swap Spread 13.25 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -1.0 -1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 244.0 -2 basis points
- China Import Iron Ore Spot $127.30/Metric Tonne -.78%
- Citi US Economic Surprise Index 66.60 -2.6 points
- Citi Emerging Markets Economic Surprise Index 4.8 +3.2 points
- 10-Year TIPS Spread 2.24 unch.
Overseas Futures:
- Nikkei Futures: Indicating +39 open in Japan
- DAX Futures: Indicating -30 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- ICBC Won’t Repay Troubled China Trust Product, Official Says. Industrial
& Commercial Bank of China Ltd. is rejecting calls to bail out a
troubled 3 billion-yuan ($495 million) trust product, a bank official
with knowledge of the matter said, stoking concern that the nation’s
first default on such high-yield investments may be looming. ICBC,
which distributed the product sold by a trust company to raise funds for
Shanxi Zhenfu Energy Group, won’t assume primary responsibility after
the coal miner collapsed, according to the executive, who asked not be
identified while negotiations continue. China’s largest bank may be
forced to repay investors, most of whom were Beijing-based ICBC’s own
private banking clients, Guangzhou Daily reported yesterday.
- European Stocks Climb as Commodity Producers, Accor Rise.
European stocks rose to their highest level in six years as mining
companies rallied, and a report showed builders started work on more
houses in the U.S. last month than economists had forecast. Glencore
Xstrata Plc and Rio Tinto Group both climbed at least 1.5 percent,
pushing a gauge of commodity producers to its biggest three-day gain
since August. Accor SA rose 1.6 percent as Europe’s largest hotel
operator said that 2013 profit
probably reached the upper end of its forecast. Royal Dutch
Shell Plc slipped after saying that higher exploration costs and
lower volumes will hurt fourth-quarter earnings. The Stoxx Europe 600 Index added 0.6 percent to 335.82 at
the close.
Wall Street Journal:
- Obama’s Plan Leaves Unanswered Questions. The
U.S. government would no longer store nearly every American’s phone
records, under major intelligence reforms laid out Friday by President
Barack Obama. But someone would. And who that will be remains a mystery. The phone companies don’t want to do it, and communications experts
caution that it may be a difficult technical matter to get those
companies to combine their data sets in a way that is useful to
government counter-terrorism programs. The president spoke is broad terms – about the terror dangers that
led to the growth of bulk surveillance programs, the potential risks
those programs create, and the challenges of privacy in the digital age.
Fox News:
MarketWatch:
ZeroHedge:
ValueWalk:
- Paul Singer To Warn Of Derivatives Catastrophe At Davos. Paul Singer’s speech and later debate on the topic “Are Markets Safer
Now?” is expected to shake the very foundation of the elite event,
according to a letter to investors reviewed by ValueWalk. “We can only assume that the reason the global financial system is
still… overleveraged, opaque, reliant upon the implicit and explicit
support of governments for its very existence… is that fixing the
problem would be too painful for powerful special interest groups,” the
rough draft says, setting up for the next warning and pointing to
government bailouts and the political lobbying machine that ensures they
remain intact.
Business Insider:
NY Times:
- Hurdles Remain for Apple(AAPL) in China Despite New Deal. Apple is counting on a long-awaited agreement with China Mobile, the
world’s largest cellular operator, to reverse its fortunes in China. But
the initial reception was muted on Friday, when customers were finally
able to buy iPhones from China Mobile. Instead of the round-the-block lines that have greeted Apple product
introductions in China and other countries in the past, only about a
dozen customers showed up to buy iPhones at the opening of a store in
Beijing – despite the presence of a special guest, the Apple chief
executive, Timothy D. Cook.
Reuters:
- At least six US merchants suffering Target(TGT)-style attacks: Report. The
cyber security firm IntelCrawler said on Friday that it has
uncovered six ongoing attacks at merchants across the United States
whose credit card processing systems are infected with the same type of
malicious software used to steal data from some 40 million credit cards
at Target Inc.
- Brazil's jobless rate revised up under new methodology. The new report, called PNAD Continua, showed Brazil's
average jobless rate stood at 7.4 percent in 2012 and 7.7
percent in the first half of 2013, government statistics agency
IBGE said on Friday. Under a previous methodology that included only six major
metropolitan areas, Brazil's average unemployment rate
was estimated at 5.5 percent in 2012 and 5.7 percent
in the first half of 2013.
- Spain's bad loans ratio reaches new record high at 13.08 pct in Nov. Spanish
banks' bad loans as a percentage of total lending reached a fresh
record high of 13.08 percent in November, up from 12.99 pct in October,
Bank of Spain data showed on Friday. The ratio has been steadily
climbing as households and small companies struggle with debts and as
banks, fighting to improve
their own capital quality ahead of Europe-wide stress tests,
rein in lending. Bad debts rose month on month by 1.5 billion euros ($2.04
billion) to 192.5 billion euros in November. Total credit,
meanwhile, rose slightly by 2.6 billion euros to 1.47 trillion
euros, the data showed.
Style Underperformer:
Sector Underperformers:
- 1) Homebuilders -1.12% 2) Alt Energy -1.11% 3) Restaurants -.83%
Stocks Falling on Unusual Volume:
- RDEN, SSNI, BBY, BJRI, SLM, AAWW, PBCT, QIWI, INTC, COF, MAIN, ASML, CPA, IBCP, RGR, CNW, MAS, SINA, BUD, UPS, EW, MTB, LKQ, GNRC, RESI, CAKE, SPLS, IGTE, PBCT, PGEM, COTY, RGR, ZLTQ, GTI and NUS
Stocks With Unusual Put Option Activity:
- 1) SPLS 2) ILMN 3) HON 4) UPS 5) INTC
Stocks With Most Negative News Mentions:
- 1) UPS 2) JPM 3) AAWW 4) SINA 5) RDEN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.83% 2) Gaming +1.08% 3) Biotech +.59%
Stocks Rising on Unusual Volume:
- LIVE, SWKS, ILMN, KERX, AXP, FEYE, NUS, MS, EA, GPRE, AUXL, OMED, ICPT, GOGO, TWTR and ANGI
Stocks With Unusual Call Option Activity:
- 1) SLM 2) ATHN 3) MDVN 4) KERX 5) TJX
Stocks With Most Positive News Mentions:
- 1) IBM 2) MS 3) TWTR 4) AMZN 5) AXP
Charts:
Evening Headlines
Bloomberg:
- JPMorgan(JPM) Sees Asian Currencies Extending Rout on Economy. Asian
currencies are poised to extend declines amid concern an increase in
borrowing costs in China and a weakening yen threaten economic growth in
the region, JPMorgan Chase & Co. said. “A trend of bearish” Asian currencies will “kick off,” JPMorgan analysts including Hong Kong-based Bert Gochet wrote
in a report yesterday. “Worries over China’s tight liquidity stance
generate downside risks to growth.” China’s money market rates jumped in
December to a six-month high, raising concern that tighter lending
conditions may slow the world’s second-largest economy. The yen’s 15
percent
decline over the past year is fueling speculation that a cheaper
currency may help Japanese companies to grab export market
shares from its competitors in South Korea and Taiwan.
- BOJ Silence on Exit Strategy Stokes Concern as Prices Rise. Japan’s
success in rekindling inflation is raising the stakes for policy makers
to map out the endgame for monetary stimulus, given the risk of a surge
in yields when the Bank of Japan winds down bond purchases. With
the BOJ’s benchmark inflation gauge past halfway to Governor Haruhiko
Kuroda’s 2 percent target, yields on 10-year government securities are
still the world’s lowest at 0.67
percent -- held down by central bank purchases of unprecedented
scale. Even so, Kuroda, who meets with fellow board members next
week, says it’s “too early” to discuss an exit strategy.
- Chinese Developers Face Tighter Financing, Local Curbs, S&P Says. Chinese
developers face risks such
as narrowing financing channels and more property tightening measures by
local governments this year, according to Standard & Poor’s.
Developers’ balance sheets and access to funding are likely to weaken in
2014, while big cities including Beijing and Shanghai may impose
further curbs if prices rise too fast, S&P
Hong Kong-based analyst Bei Fu said on a conference call today.
The credit-rating company maintained a stable outlook for the
sector, though said developers that overly expanded in the past
18 months could be downgraded.
- China Money Rate Jumps This Week as Cash Demand Seen Increasing. China’s benchmark money-market rate
jumped this week on speculation banks are hoarding funds to meet
increased customer withdrawals before holidays at the end of
this month. The gauge of interbank funding availability rose for a
second day today after the central bank refrained from adding
cash to markets this week and as official data signaled policy
makers are reining in credit growth. The People’s Bank of China
has suspended liquidity injections via reverse-repurchase
operations after pumping in 29 billion yuan ($4.8 billion) on
Dec. 24. Bank lending fell 23 percent in December, official data
showed. The Chinese New Year holidays start Jan. 31.
- Asian Stocks Fall as Aussie Bonds Rally; Baht Strengthens. Asian stocks fell as U.S. bank
earnings disappointed and investors waited for Chinese economic
data due next week. Australian bonds rallied and Thailand’s baht headed for its biggest weekly advance since September. The MSCI Asia Pacific Index dropped 0.3 percent at 10:52
a.m. in Tokyo.
- Rebar Heads for Sixth Weekly Drop on Iron Ore, Chinese Economy. Steel reinforcement-bar futures in
Shanghai headed for a sixth weekly loss after iron ore fell to a six-month low and on concern that Chinese demand is weakening. Rebar for May delivery on the Shanghai Futures Exchange
fell as much as 0.8 percent to 3,455 yuan ($571) a metric ton,
before trading at 3,456 yuan at 9:52 a.m. local time. The
contract declined 1 percent this week.
- Numerous Retailers Said Hit by Data Attacks Similar to Target’s. Numerous retailers were probably hit
by an unprecedented series of hacking attacks that extends
beyond thefts of credit-card data from Target Corp. and Neiman
Marcus Group, according to a security company working with the
Secret Service. The attacks on retailers may involve multiple groups of
hackers who appear to be working from a sophisticated piece of
software code that began circulating on underground websites
last June, according to a report from iSIGHT Partners, a Dallas,
Texas-based security company that tracks cyber criminals.
- Google(GOOG) Unveils Smart Contact Lens Project to Monitor Glucose. The
Mountain View, California-based company said in a blog post today that
it’s testing an ocular device that’s designed to measure glucose levels
in tears, as the company pursues long-term projects at its secretive X
Lab research group. The lenses
use a tiny wireless chip and glucose sensor to provide readings
once per second, project co-founders Brian Otis and Babak Parviz
wrote in the post.
Wall Street Journal:
- China Beige Book: ‘Credit Transmission Is Broken’. Although China’s economic prospects strengthened in the fourth
quarter, the credit landscape remains largely bleak as many borrowers
are shut off from bank credit and many new loans are made to roll over
old ones, according to a survey of businesses here. The China Beige Book, a quarterly survey of Chinese businesses and
banks, concluded that the country’s “credit transmission is broken.”
While banks have money to lend, “fewer and fewer firms are doing the
borrowing,” the fourth-quarter report said, noting that this suggests
“that credit is largely being siphoned off by a privileged elite.”
- Intel's(INTC) Profit Rises, But So Do Concerns. Chip Maker's Shares Slump After 2014 Forecast for Flat Revenue Growth Amid Ailing PC Market.
Intel Corp. INTC -0.49% said sales of chips for the ailing personal
computer market improved in the fourth quarter, but demand for larger
systems was weaker
than expected. The Silicon Valley
giant's guidance for the current quarter and for all of 2014 also
concerned analysts, sending Intel's shares down more than 3% in
after-hours trading Thursday. Intel said
net income rose 6.4% for the period ended in December, while revenue
rose 2.6%. The company's closely watched gross profit margin was 62% in
the quarter, compared with its prior projection of about 61%.
- Stores Confront New World of Reduced Shopper Traffic. E-Commerce
Not Only Siphons Off Sales, but Changes Shopping Habits. Best Buy Co.
on Thursday became the latest retailer to chime in with weak
holiday results. Like other chains, the electronics retailer blamed the
race to offer the deepest discounts, a game of brinkmanship that hurt
profit margins and held back revenue. But
there is a deeper malaise at work: A long-term change in shopper habits
has reduced store traffic—perhaps permanently—and shifted pricing power
away from malls and big-box retailers.
- CEO Corbat's Cachet Is Diminished as Citi's(C) Latest Results Disappoint. For Citigroup Inc. Chief Executive Michael Corbat, his first full year at the helm ended with a thud. The
New York bank, the third-largest in the U.S. by assets, on Thursday
reported fourth-quarter and full-year results that showed Mr. Corbat
wasn't as successful as many investors had hoped at cutting costs and
generating profit growth.
- IRS Targeting and 2014. Democrats are working hard to make sure conservative groups are silenced in the 2014 midterms. President
Obama
and Democrats have been at great pains to insist they knew
nothing about IRS targeting of conservative 501(c)(4) nonprofits before
the 2012 election. They've been at even greater pains this week to
ensure that the same conservative groups are silenced in the 2014
midterms. That's the big, dirty secret
of the omnibus negotiations. As one of the only bills destined to pass
this year, the omnibus was—behind the scenes—a flurry of horse trading.
One of the biggest fights was over GOP efforts to include language to
stop the IRS from instituting a new round of 501(c)(4) targeting. The
White House is so counting on the tax agency to muzzle its political
opponents that it willingly sacrificed any manner of its own priorities
to keep the muzzle in place.
Fox News:
- Senate passes $1.1 trillion spending bill. Congress sent President Barack Obama a $1.1 trillion government-wide
spending bill Thursday, easing the harshest effects of last year's
automatic budget cuts after tea party critics chastened by October's
partial shutdown mounted only a faint protest.
CNBC:
- Elizabeth Arden(RDEN): Lack of deep discounts hurt us.
Beauty products maker Elizabeth Arden estimated quarterly results
below analysts' expectations, saying sales were hurt by its refusal to
discount deeply even as other retailers offered heavy promotions. Shares
of the company, which also withdrew its full-year forecast, fell 21
percent in trading after the bell. In
2013, U.S. retailers offered the biggest promotions since the 2008
recession to get shoppers to spend in a shortened holiday season. "Our
results were significantly impacted by an increased level of highly
promotional and discounted activity globally and weaker than anticipated
holiday retail sales and replenishment orders at a number of our
non-prestige retail accounts in North America," Chief Executive E. Scott
Beattie said in a statement.
- Money worries keep Gen Y from getting wheels. (video)
Generation Y members are still worried about the affordability of
buying or leasing a car, according to a new study from Deloitte. Among
Gen Y respondents—whom the study defines as people born between
1977 and 1994—61 percent plan to buy or lease a car within the next
three years and 23 percent within the next year; 8 percent have no plans
to buy or lease a vehicle.
Zero Hedge:
Business Insider:
NY Times:
- Banks Keep Their Mortgage Litigation Reserves a Secret. From JPMorgan Chase’s $13 billion settlement over mortgage securities to lawsuits brought by
bondholders, a barrage of litigation has been raining down on Wall
Street banks. Yet the banks are not disclosing a number that is crucial
for assessing their ability to deal those legal costs. And, curiously,
the regulator that has sway over companies’ disclosure practices has not
called on the industry to reveal this important figure so that
investors can weigh the institutions’ health.
Reuters:
- U.S. Fed balance sheet grows to $4 trillion. The
U.S. Federal Reserve's
balance sheet reached $4 trillion in the latest week as its latest
stimulus program aimed to help the economy added more Treasuries and
mortgage-backed securities to its holdings, central bank data released on Thursday showed. On Jan. 15, the Fed's liabilities, which are a broad gauge
of its lending to the financial system, rose to $4.029 trillion
from $3.986 trillion a week earlier.
The Guardian:
- NSA collects millions of text messages daily in 'untargeted' global sweep. The National Security Agency has collected almost 200 million text
messages a day from across the globe, using them to extract data
including location, contact networks and credit card details, according
to top-secret documents. The untargeted collection and storage of SMS messages – including
their contacts – is revealed in a joint investigation between the
Guardian and the UK’s Channel 4 News based on material provided by NSA
whistleblower Edward Snowden.
The Hindu:
- Abe’s grandfather shown as ‘war criminal'. China on Thursday threw open to journalists for the first time a museum
in this north-eastern city — where the Japanese occupation of China
first began in 1931 — that showcases the atrocities committed by
invading forces and also describes the grandfather of current Japanese
Prime Minister Shinzo Abe – at the time a Japanese leader – as “a
Class-A war criminal.”
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 140.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 106.50 unch.
- NASDAQ 100 futures +.12%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Housing Starts for December are estimated to fall to 990K versus 1091K in November.
- Building Permits for December are estimated to rise to 1014K versus 1007K in November.
9:15 am EST
- Industrial Production for December is estimated to rise +.3% versus a +1.1% gain in November.
- Capacity Utilization for December is estimated to rise to 79.1% versus 79.0% in November.
- Manufacturing Production for December is estimated to rise +.3% versus a +1.1% gain in November.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for January is estimated to rise to 83.5 versus 82.5 in December.
10:00 am EST
- JOLTs Job Openings for November are estimated to rise to 3930 versus 3925 in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Lacker speaking, China Dec. Property Prices and the UK retail sales report could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial 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 day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Mixed
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 12.49 +1.71%
- Euro/Yen Carry Return Index 148.15 -.12%
- Emerging Markets Currency Volatility(VXY) 8.71 +.11%
- S&P 500 Implied Correlation 51.52 +1.66%
- ISE Sentiment Index 159.0 +43.24%
- Total Put/Call .77 +2.67%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.72 +1.66%
- European Financial Sector CDS Index 85.23 +.78%
- Western Europe Sovereign Debt CDS Index 50.0 unch.
- Emerging Market CDS Index 285.86 +1.51%
- 2-Year Swap Spread 12.5 -.25 basis point
- TED Spread 20.5 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap .5 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% -1 basis point
- Yield Curve 246.0 -3 basis points
- China Import Iron Ore Spot $128.30/Metric Tonne -1.0%
- Citi US Economic Surprise Index 69.20 -3.5 points
- Citi Emerging Markets Economic Surprise Index 1.6 +1.1 points
- 10-Year TIPS Spread 2.24 -3 basis points
Overseas Futures:
- Nikkei Futures: Indicating -31 open in Japan
- DAX Futures: Indicating +23 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- China Growth Seen Slowing as Momentum Weakens. China’s factory output and investment growth probably weakened in December, adding to signs the world’s second-largest economy is losing momentum as analysts forecast 2014 expansion at the lowest in 24 years. Industrial-production gains slowed to a five-month low of 9.8 percent and gross domestic product grew 7.6 percent from a
year earlier in the October-December period, based on the median
estimates of analysts before data due Jan. 20. Expansion will
moderate to 7.4 percent this year as investment slows and
overcapacity is squeezed, according to a survey last month.
- China’s IPO Freeze Ends as Neway to Debut Amid Pricing Crackdown. Neway Valve (Suzhou) Co. (603699), a maker of industrial valves, will become the first company to start trading in China today after a freeze on initial public offerings that lasted more than 15 months. The company and existing owners raised 1.5 billion yuan ($241 million) after selling 82.5 million shares at 17.66 yuan each, according to a statement on the Shanghai stock exchange. The deal values Neway Valve at 46.5 times its 2012 earnings,
compared with 33.9 times for its listed industry peers, the
company said Jan. 8.
- Severe Smog in North China Prompts Warnings to Stay Inside.
China warned people in its northern regions to stay indoors today as
air pollution in Beijing averaged 18 times World Health
Organization-recommended levels. The concentration of PM2.5, fine
particulates that pose the greatest risk to human health, was 447
micrograms per cubic meter at 10 p.m. near Tiananmen Square in Beijing,
compared with an average of 456 over the past 24 hours, the Beijing
Municipal Environmental Monitoring Center said on its website. The WHO
recommends exposure to no higher than 25 micrograms per cubic meter over
a day.
- Brazil Swap Rates Surge After Central Bank Signal; Real Drops.
Brazil’s swap rates rose the most in three months as the central bank
signaled it will extend the world’s biggest increases in borrowing costs
after a surprise quickening of inflation last year. Swap rates on
contracts maturing in January 2015 climbed 19 basis points, or 0.19
percentage point, to 10.93 percent at 1:23 p.m. in Sao Paulo. The real
depreciated 0.2 percent to 2.3634 per U.S. dollar. The central
bank lifted the target lending rate, known as the Selic, by a
half-percentage point for a sixth straight meeting yesterday, raising it
to 10.50 percent. The decision came after the government reported last
week that consumer prices rose 5.91 percent in 2013 even as central bank President
Alexandre Tombini said in October that inflation would be less
than the prior year’s 5.84 percent.
- Rowdy Teen Swarms Throw a Scare Into Brazil’s Shopping Centers. Mass visits to malls sustained
beyond the holiday season would appear to be a retailer’s dream.
In Brazil, they’re cause for concern. A gathering on Jan. 11 at the Shopping Metro Itaquera in
Sao Paulo drew about 3,000 young people who began to jump, sing,
shout and scare shoppers, leading the mall to shut down briefly
and ask them to vacate the premises, according to the mall.
Outside, police launched tear gas canisters and, once the mall
reopened, young people unaccompanied by parents weren’t allowed
entry.
- European Rally Belies Slog Ahead With Debt at Record.
The rally in European bond and
stocks markets masks the slog that looms as the euro area
confronts record unemployment and debt. Spain, whose banks were bailed
out in 2012, sold 2.66 billions euros ($3.62 billion) of three-year debt
at the lowest yield on record today. The Euro Stoxx 50 Index has gained
19 percent in the past six months to its highest since the collapse of
Lehman Brothers Holdings Inc. in September 2008. “Markets are
breaking record after record but the recovery remains feeble,” Isabelle
Job-Bazille, chief economist at Credit Agricole in Paris, said today in
an interview. “A lag between financial markets and the real economy may
be normal,
but markets are being very optimistic. Structural brakes on the
recovery are still there, notably the debt burden.”
- Metals, Currency Rigging Worse Than Libor, Bafin Chief Says. Germany’s top financial regulator said possible manipulation of currency rates and prices for precious metals is worse than the Libor-rigging scandal, which has already led to fines of about $6 billion. The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based -- unlike Libor and Euribor -- typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today.
- Bears in Retreat as Put-Call Ratio Hits Nine-Year Low: Options.
By one measure, demand for insurance against equity losses is drying up
in the options market. For every 100 bullish contracts that changed
hands on the CBOE, 73 bearish ones traded on average in the past 20
days, the lowest ratio since December 2004. "There is very little fear
that's been baked into the market," Edward Painvin, CIO of Chase
Investment Counsel Corp., said by phone. "There is definitely an element
of greed that's involved by the simple fact that people are not willing
to pay up for safety." The last time the CBOE put-to-call ratio was
this low, in December 2004, the S&P 500 dropped three out of the
following four months, with losses reaching as much as 7.2% from March
to April.
- Quality of U.S. Emergency Room Care Falls, Physicians Say. With Obamacare bearing down on them,
a doctors’ group said emergency rooms are less able to provide
quality care, and more resources will be needed to handle an
expected surge of patients from the new law. Hospitals have fewer beds available, causing delays in ERs
that saw visits climb to 130 million in 2010, according to a
report from the Dallas-based American College of Emergency
Physicians. Federal funding for disaster preparedness has
fallen, so the hospitals are also less prepared to handle a
sudden influx of injured patients, the group said. “This report card is sounding an alarm,” Alex Rosenau,
the physicians’ group president, said today on a conference
call. “The need for emergency care is increasing, the role of
emergency care is expanding, and this report card is saying that
the policies are failing.”
- U.S. Said to Plan Tighter Limits on Racial Profiling in Probes. The U.S. Justice Department will soon
extend its ban on the use of racial profiling during federal
investigations, according to a law enforcement official briefed
on the matter. The Justice Department under Attorney General Eric Holder
has been reviewing the guidelines for federal investigations for
several years, according to the official, and is planning to
expand the definition to prohibit profiling based on religion,
national origin, sexual orientation and gender.
Fox News:
- World's greatest hacker calls Healthcare.gov security 'shameful'. Security expert -- and once the world's most-wanted cyber criminal --
Kevin Mitnick submitted a scathing criticism to a House panel Thursday
of ObamaCare's Healthcare.gov website, calling the protections built
into the site "shameful" and "minimal." In a letter submitted as testimony to the House Science, Space and
Technology Committee, Mitnick wrote: "It's shameful the team that built
the Healthcare.gov site implemented minimal, if any, security best
practices to mitigate the significant risk of a system compromise."
- 'Not looking good': Coal workers see future dim amid regulation burden. Far below the Appalachian Mountains, in a space barely big enough to
stand up straight, Bobby Combs works a job his father and his
grandfather worked. Coal-mining is the highest-paying job available to him in eastern
Kentucky. As he skillfully maneuvers a massive machine and rips into a
seam of coal, though, Combs wonders if the family tradition ends with
him. "It's not looking good," he says, dirt smudging his face.
ZeroHedge:
Business Insider:
Reuters:
- Best Buy(BBY) shares tumble on weak holiday sales, margin forecast. Best Buy Co (BBY.N) shares tumbled about 30 percent on Thursday
after the world's largest consumer electronics chain reported
disappointing holiday sales and warned of a bigger-than-expected decline
in quarterly operating margins.
The company blamed
intense discounting by rivals, tight supplies of phones and high-end
tablets industrywide, and weak traffic in December. The
news, which knocked off almost $4 billion of Best Buy's market value,
was the latest evidence that holiday sales at many chains came at the
expense of profit.
- "True" euro zone stress test could show $1 trillion hole in banks - study. An
objective stress test of the
euro zone's biggest banks could reveal a capital shortfall of more than
770 billion euros ($1 trillion) and trigger further public bailouts, a
study by an advisor to the EU's financial risk watchdog and a Berlin
academic has found. The study and others published ahead of the EU
stress tests, whose results are due in November, are important because
they set the expectations against which markets will judge the
credibility of the European Central Bank's attempt to prove its
banks can withstand another crisis without taxpayer help.
NY Daily News:
Financial Times:
- US banks take on more risk. US
banks shrank their holdings of safe securities by more than 3 per cent
last year, a development that is likely to further stoke the debate
about whether new rules are encouraging them to buy riskier assets.
Telegraph:
Jakarta Post:
- China's bird flu cases continue to rise. The number of human H7N9 bird flu infections continues to rise
nationwide with about 20 new cases reported in the first two weeks of
2014. On Wednesday, three new H7N9 cases were reported from Shanghai and Fujian and Zhejiang provinces.
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true
Style Underperformer:
Sector Underperformers:
- 1) Road & Rail -2.54% 2) Retail -1.91% 3) HMOs -1.83%
Stocks Falling on Unusual Volume:
- BBY, NUS, RESI, BPT, IGTE, CLC, CSX, TSRA, ALLT, USNA, FUL, JKS, AGIO, C, DECK, CBL, MRC, CTRL, LOGI, ASML, FET, HGG, GNRC, MDVN, TX, FET, NSC, ULTA, KR and SPLS
Stocks With Unusual Put Option Activity:
- 1) COH 2) BK 3) DECK 4) AMAT 5) C
Stocks With Most Negative News Mentions:
- 1) BBY 2) GS 3) HLF 4) NUS 5) CSX
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Biotech +.76% 2) Gold & Silver +.39% 3) Utilities +.21%
Stocks Rising on Unusual Volume:
- CEC, GLOG, SRPT, YRCW, NAT, SEAS, CVLT, SCTY, SPWR, SPLK, AOL, LNKD and TXTR
Stocks With Unusual Call Option Activity:
- 1) ZIOP 2)NUS 3) SRPT 4) VVUS 5) CSX
Stocks With Most Positive News Mentions:
- 1) AMZN 2) SCHW 3) UNH 4) MRVL 5) NFLX
Charts:
