U.S. Week Ahead by Reuters (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE:
I expect US stocks to finish the week modestly lower on rising
global growth fears, Eurozone debt angst, rising US "fiscal cliff"
concerns, Mid-east unrest, rising US election uncertainty, high
food/energy prices, more shorting, technical selling and earnings
worries. My intermediate-term trading indicators are giving neutral
signals and the Portfolio is 25% net long heading into the week.
Sunday, October 21, 2012
Friday, October 19, 2012
Weekly Scoreboard*
Indices
ETFs
Stocks
*5-Day Change
- S&P 500 1,433.19 +.32%
- DJIA 13,343.51 +.11%
- NASDAQ 3,005.62 -1.26%
- Russell 2000 821.0 -.25%
- Value Line Geometric(broad market) 356.98 +.41%
- Russell 1000 Growth 657.68 -.57%
- Russell 1000 Value 717.86 +1.33%
- Morgan Stanley Consumer 843.15 +.37%
- Morgan Stanley Cyclical 993.28 +2.46%
- Morgan Stanley Technology 654.88 -1.02%
- Transports 5,082.16 +.74%
- Utilities 483.76 +1.74%
- Bloomberg European Bank/Financial Services 85.32 +2.81%
- MSCI Emerging Markets 41.73 +1.04%
- Lyxor L/S Equity Long Bias 1,059.85 +.62%
- Lyxor L/S Equity Variable Bias 801.22 +.33%
- NYSE Cumulative A/D Line 158,839 +1.23%
- Bloomberg New Highs-Lows Index 264 +265
- Bloomberg Crude Oil % Bulls 21.2 -17.50%
- CFTC Oil Net Speculative Position 206,472 -3.34%
- CFTC Oil Total Open Interest 1,580,619 +2.45%
- Total Put/Call 1.12 +8.74%
- OEX Put/Call 1.24 +30.53%
- ISE Sentiment 89.0 +2.30%
- NYSE Arms 2.50 +43.67%
- Volatility(VIX) 17.06 +5.70%
- S&P 500 Implied Correlation 49.31 +.10%
- G7 Currency Volatility (VXY) 7.58 +1.07%
- Smart Money Flow Index 11,482.26 +.50%
- Money Mkt Mutual Fund Assets $2.568 Trillion +.20%
- AAII % Bulls 28.7 -6.28%
- AAII % Bears 44.6 +14.7%
- CRB Index 306.05 -.16%
- Crude Oil 90.05 -1.73%
- Reformulated Gasoline 269.63 -6.83%
- Natural Gas 3.62 +.56%
- Heating Oil 313.45 -2.65%
- Gold 1,724.0 -1.79%
- Bloomberg Base Metals Index 210.30 -.71%
- Copper 363.75 -1.66%
- US No. 1 Heavy Melt Scrap Steel 347.67 USD/Ton unch.
- China Iron Ore Spot 115.30 USD/Ton +.70%
- Lumber 310.80 +4.82%
- UBS-Bloomberg Agriculture 1,666.79 +1.10%
- ECRI Weekly Leading Economic Index Growth Rate +6.1% +40 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.1659 +5.90%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 112.25 -.03%
- Citi US Economic Surprise Index 53.2 +3.8 points
- Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 10/24
- US Dollar Index 79.62 -.07%
- Yield Curve 147.0 +8 basis points
- 10-Year US Treasury Yield 1.76% +10 basis points
- Federal Reserve's Balance Sheet $2.829 Trillion +1.28%
- U.S. Sovereign Debt Credit Default Swap 31.75 -15.56%
- Illinois Municipal Debt Credit Default Swap 191.0 -2.88%
- Western Europe Sovereign Debt Credit Default Swap Index 105.53 -22.57%
- Emerging Markets Sovereign Debt CDS Index 177.92 -9.68%
- Saudi Sovereign Debt Credit Default Swap 83.56 -1.87%
- Iraq Sovereign Debt Credit Default Swap 453.98 +3.77%
- China Blended Corporate Spread Index 376.0 -20 basis points
- 10-Year TIPS Spread 2.50% +3 basis points
- TED Spread 22.5 -1.25 basis points
- 2-Year Swap Spread 10.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -25.25 -.25 basis point
- N. America Investment Grade Credit Default Swap Index 92.77 -4.04%
- European Financial Sector Credit Default Swap Index 162.50 -8.87%
- Emerging Markets Credit Default Swap Index 213.06 -3.52%
- CMBS Super Senior AAA 10-Year Treasury Spread 90.0 -7 basis points
- M1 Money Supply $2.401 Trillion +1.81%
- Commercial Paper Outstanding 943.60 -2.20%
- 4-Week Moving Average of Jobless Claims 365,500 +1,500
- Continuing Claims Unemployment Rate 2.5% -10 basis points
- Average 30-Year Mortgage Rate 3.37% -2 basis points
- Weekly Mortgage Applications 964.0 -4.19%
- Bloomberg Consumer Comfort -34.8 +3.7 points
- Weekly Retail Sales +1.70% +10.0 basis points
- Nationwide Gas $3.71/gallon -.10/gallon
- U.S. Heating Demand Next 7 Days 44.0% below normal
- Baltic Dry Index 1,010 +9.07%
- China (Export) Containerized Freight Index 1,177.71 -.84%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 unch.
- Rail Freight Carloads 250,826 -.11%
- Large-Cap Value +1.33%
- Small-Cap Growth -.65%
- Homebuilders +7.29%
- Drugs +2.29%
- Insurance +2.22%
- Defense +2.05%
- Energy +1.82%
- Internet -2.98%
- Restaurants -3.34%
- Oil Tankers -5.03%
- Computer Services -5.61%
- Education -17.12%
- CYMI, ETH, AEGR, BMI, WCC, ISRG, PNFP, WLK, EWBC and PJC
- LH, DGX, GOV, DBD, TZOO, FTNT, ALGN, RATE and APOL
ETFs
Stocks
*5-Day Change
Stocks Falling Sharply into Final Hour on Rising Global Growth Fears, US Fiscal Cliff Worries, Rising Eurozone Debt Angst, Earnings Concerns
Today's Market Take:
Broad Market Tone:
Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Slightly Above Average
- Market Leading Stocks: Underperforming
- VIX 17.08 +13.64%
- ISE Sentiment Index 98.0 -19.67%
- Total Put/Call 1.15 +35.29%
- NYSE Arms 2.54 +237.60%
- North American Investment Grade CDS Index 93.44 bps +2.81%
- European Financial Sector CDS Index 162.42 bps +2.58%
- Western Europe Sovereign Debt CDS Index 105.75 bps -1.19%
- Emerging Market CDS Index 213.81 bps +1.88%
- 2-Year Swap Spread 10.75 +1.0 basis point
- TED Spread 22.5 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -25.25 unch.
- 3-Month T-Bill Yield .09% -1 basis point
- Yield Curve 148.0 -5 basis points
- China Import Iron Ore Spot $115.30/Metric Tonne -.17%
- Citi US Economic Surprise Index 53.20 -.7 point
- 10-Year TIPS Spread 2.51 -1 basis point
- Nikkei Futures: Indicating -130 open in Japan
- DAX Futures: Indicating -35 open in Germany
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 25% Net Long
Today's Headlines
Bloomberg:
CNBC:
Zero Hedge:
Reuters:
Telegraph:
Handelsblatt:
- Spanish Notes Drop as Rajoy Says Under No Pressure to Seek Aid. Spanish government notes fell, with two-year yields rising from the lowest in more than six months, after Prime Minister Mariano Rajoy said he was not facing pressure to seek a sovereign bailout.The two-year securities dropped for the first time in four days as Rajoy’s comments at a European Union summit in Brussels fueled concern a delay in asking for aid will prolong the nation’s debt crisis. German bunds advanced, pushing the yield down from near the highest in a month. Italian bonds completed a third weekly gain after the Treasury said yesterday it received orders for more than 18 billion euros ($23.6 billion) of retail securities it was selling to investors. “The market is still very sensitive regarding the bailout request” from Spain, said Michael Leister, a fixed-income strategist at Commerzbank AG in London. “Our view is that the market will have to wait to get clarity.”
- EU Leaders Agree On Bank Oversight Amid Merkel Questions. German Chancellor Angela Merkel said it’s an open question whether European policy makers can meet the deadline they’d set hours earlier to establish a euro-area bank supervisor by year-end. “There are complicated questions to clarify and we’ll see in December if we complete it or not,” Merkel told reporters after a two-day European Union summit in Brussels wrapped up today. “For now, the political will is there.” The comments underscore Germany’s go-slow approach that may stymie plans laid down in June to break the link between banks and governments that has worsened the region’s debt crisis. She also ruled out allowing Spain to shift bank-bailout loans off its balance sheet if they are made before the new system starts operating.
- European Stocks Fall as EU Leaders Fail to Discuss Spain. Bankia SA led lenders lower, losing 14 percent as a gauge of banks contributed most to the Stoxx Europe 600 Index’s drop. Aggreko Plc (AGK) fell 7.2 percent after it said bad-debt provisions would hurt full-year results. Spectris Plc (SXS) surged 12 percent after it reported a 12 percent increase in sales last quarter and said it will meet its full-year targets. Carrefour SA (CA) advanced 5.9 percent after it agreed to sell its Colombian unit. The Stoxx 600 fell 0.8 percent to 274.08 at the close of trading. French President Francois Hollande said additional assistance for Spain wasn’t discussed at the summit of European leaders in Brussels.
- Greece Nears Aid Revival as Samaras Wins EU Summit Praise. Greek Prime Minister Antonis Samaras moved closer to winning a delayed aid disbursement when European leaders praised his government’s budget-cutting push. At his first European Union summit since becoming premier in June, Samaras said record unemployment showed the price Greece was paying for austerity demanded by the euro area as a condition for emergency loans. He urged parallel steps to kick- start the economy and stuck to a request for two extra years until 2016 to meet targets for narrowing the budget deficit, prompting signs of European goodwill.
- China Might Have Overstated Growth in Standard Chartered View. A slowdown in electricity production and an “unimpressive” reading in a manufacturing survey are reasons September’s pickup in factory output was “a bit difficult to believe,” Standard Chartered said in an Oct. 18 note. Electricity output slowed to a 1.5 percent year-over-year growth rate in September from 2.7 percent in August, according to the National Bureau of Statistics. Power production was down 11 percent from August.
- Wealthy Advised to Sell for Gains Before Unfriendly 2013. Sell. That’s the message from some financial advisers, who are telling wealthy clients that the remainder of 2012 amounts to a last-chance sale on federal tax rates. Taxes are set to rise in January in the U.S., pushing the top rate on dividends to 43.4 percent from 15 percent and the top rate on capital gains to 23.8 percent from 15 percent. Even if Congress averts the so-called fiscal cliff of tax increases on investments, income and estates, pressure to reduce budget deficits will mean higher taxes eventually, said Ron Florance of Wells Fargo & Co. (WFC) The answer is to take advantage of historically low rates and move taxable income and investment gains into this year, said Florance, managing director of investment strategy at the company’s private bank. “It’s the opposite of what people normally do,” said Florance, whose clients usually have at least $1 million in investable assets. “You’re paying taxes today in anticipation of higher rates in the future.”
- Swaps Rule Sends Wall Street Into Clearing Limbo: Credit Markets. The securities industry misinterpreted rules it assumed allowed as many as nine months to start moving swaps into clearinghouses that are meant to limit risks to the financial system. Firms dealing in $648 trillion of outstanding swaps contracts expected that trading during a phase-in period wouldn’t need to be processed by central clearinghouses, according to an Oct. 5 e-mail sent to clients by Davis Polk & Wardwell LLP, which represents the Securities Industry and Financial Markets Association. They were wrong, misreading one sentence in 17,000 words of regulation. Unless lobbyists convince the Commodity Futures Trading Commission to soften the deadlines, derivatives users that speculate on or hedge against losses on everything from changes in interest rates to corporate bankruptcies may need to find cash and Treasuries to back the trades sooner than they anticipated.
- McDonald’s(MCD) Profit Falls 3.5% as U.S. Growth Slows. McDonald’s Corp. (MCD), the world’s largest restaurant chain by sales, reported third-quarter profit fell 3.5 percent as sales growth slowed at U.S. stores. Net income (MCD) dropped to $1.46 billion, or $1.43 a share, from $1.51 billion, or $1.45, a year earlier, the Oak Brook, Illinois-based company said today in a statement. Foreign- currency exchange-rate fluctuations reduced net income by 8 cents a share in the third quarter. Analysts projected $1.47, the average of 26 estimates compiled by Bloomberg. Chief Executive Officer Don Thompson, who took the helm in July, has tried to draw budget-conscious Americans with a new extra-value menu. Sales at U.S. stores open at least 13 months rose 1.2 percent in the quarter, marking the slowest growth in 11 quarters. Analysts projected an increase of 1.7 percent, according to 21 estimates compiled by Consensus Metrix.
- Republicans Press Obama on Libya Security Before Debate. Top Republicans on a House oversight panel demanded that President Barack Obama say whether the White House staff played any role in decisions on security at the U.S. consulate in Benghazi, Libya, raising new questions days before a presidential debate on foreign policy. “Your administration has not been straightforward with the American people in the aftermath of the attack” on Sept. 11 that killed U.S. Ambassador to Libya Chris Stevens and three other Americans, House Oversight and Government Reform Committee Chairman Darrell Issa and Representative Jason Chaffetz, who heads a subcommittee, said today in a letter to Obama. In addition to repeating criticism of the administration’s changing accounts of the attack, the Republicans said the panel found requests from personnel in Libya for increased security beforehand had been turned down because the administration was eager for a “normalization” of relations with that country after the rebellion that ousted ruler Muammar Qaddafi. “These critical foreign policy decisions are not made by low or mid-level career officials –- they are typically made through a structured and well-reasoned process that includes the National Security Council at the White House,” wrote Issa of California and Chaffetz of Utah.
- Honeywell(HON) CFO Says China Growth May Slow to 23-Year Low. Honeywell International Inc., the maker of cockpit controls and thermostats, is forecasting 2013 economic growth in China may decelerate to less than 7 percent, the slowest pace since 1990. The euro area will remain in recession next year and U.S. growth will likely be 1.8 percent, said Dave Anderson, chief financial officer of the Morris Township, New Jersey-based manufacturer. The company plans to cut costs and introduce new products to keep earnings growth in 2013 at a similar level as this year, he said. “It wouldn’t be surprising to us if China didn’t break 7 percent GDP growth in 2013,” Anderson said in a telephone interview. “Our expectation is that there’s going to be relatively muted growth overall in 2013.”
- Tech Stocks Spark Dow Fall. Technology and materials shares paced a broad stock-market decline, as the tech-oriented Nasdaq Composite traded at its lowest level since August. The Dow Jones Industrial Average fell 195 points, or 1.4%, to 13354, in Friday afternoon trading. The index's stumble comes on the 25th anniversary of Black Monday, when the Dow tumbled more than 20% in a single day. The Standard & Poor's 500-stock index lost 23 points, or 1.6%, to 1432, and the Nasdaq gave up 65 points, or 2.2%, to 3008.
- Germany Takes Hard Line on Spanish Banks. German Chancellor Angela Merkel took a hard line on Spain Friday, saying that Madrid will have to keep on its own balance sheet the tens of billions of dollars it is about to inject into its banks and won't be able to transfer them to the euro-zone bailout fund. That position, laid out after a two-day summit of European Union leaders in Brussels, would mean that Spanish borrowing from the euro zone to bolster the capital of shaky banks—estimated to be as much as €60 billion ($78.72 billion)—will swell the country's already-heavy debt load.
- Failed U.S. Deals Stir Tensions With China.
- Spain's Largest Unions Call Nationwide Strike. Spain's largest unions Friday called a nationwide strike, warning Prime Minister Mariano Rajoy of their opposition to his austerity policies as he negotiates the terms of an international financial bailout. The strike announced by the General Workers Union and the Labor Federation will take place on Nov. 14, in tandem with planned general strikes in Greece and Portugal. Heavy budget cuts and high jobless rates have increased social tensions during the persistent debt crisis across peripheral euro zone nations.
CNBC:
Zero Hedge:
- Chart Of The Day: Q4 Deja Vu Dead Cat Bounces Again.
- Q3 Earnings Season To Date: Revenue Beats: 41%; Misses 59%. (graphs)
- Spain's Regional Bailout Fund: A Drop In A Bucket Of Insolvency.
- Europe Ends Winning Week By Giving Half Of It Back.
- This Is The Housing Bubble Beneath The "Recovery".
- Why Rajoy's 'Delay-And-Pray' Strategy Won't Work.
- GALLUP: ROMNEY LEADS BY SIX POINTS.
- Nassim Taleb's New Paper Explains Why Governments Always Miss Their Own Budget Targets.
- The Economist Behind The Existing Home Sales Report Said Something Very Important Today. Here's what NAR chief economist Lawrence Yun had to say about that: "The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production." This speaks to a troubling dynamic that's been developing in the market for new homes. In recent months, homebuilders have been ramping up the construction of new homes. In a new report from the Census, housing starts surged to a their highest levels since 2008. The problem is that new home sales haven't been keeping up pace. Here's a chart from TD Securities economist Millan Mulraine:
- Microsoft(MSFT) Was Asked A Critical Question About Its Future Yesterday — And Its Response Wasn't Encouraging.
- Everyone's Talking About The Growing Odds Of An Electoral College Nightmare.
Reuters:
- GE(GE) cautious on 2013 after sales miss Wall Street target. General Electric Co reported weaker-than-expected third-quarter revenue, hurt by unfavorable exchange rates, and set a cautious tone for 2013, saying it expects the tough economic environment to continue. The largest U.S. conglomerate on Friday reported a 2.8 percent rise in sales, with revenue down at its aviation and healthcare arms, while the stronger U.S. dollar crimped overall results by diminishing the value of its foreign sales. Its shares fell almost 3 percent. "We're not assuming that Europe gets any better," Chief Executive Officer Jeff Immelt told investors on a conference call. "We're looking at '13 being kind of like '12, with the big variable being the fiscal cliff."
- Protests, gunfire in Lebanon after Beirut killing. Sunni Muslims took to the streets and burned tyres across Lebanon in protest against the killing of senior intelligence official Wissam al-Hassan in a car bomb on Friday, witnesses said. Protesters, infuriated by the death of the prominent Sunni, blocked roads in the eastern Bekaa valley region, the northern area of Akkar, neighbourhoods of the capital Beirut and in the southern city of Sidon. Former Lebanese Prime Minister Saad al-Hariri accused Syrian President Bashar al-Assad - a member of an offshoot of Shi'ite Islam - of being behind the huge car bomb which killed Hassan and at least seven other people in central Beirut on Friday. The attack has brought the violence in neighbouring Syria to the Lebanese capital, confirming fears that the conflict is infecting the surrounding region.
- Al Qaeda attack on Yemen army base kills 24. Al Qaeda killed 16 soldiers in an attack on an army base in south Yemen on Friday, medical and military sources said, in a further show of strength by Islamist militants despite a U.S. campaign of drone strikes to neutralise them. Militants tightened their hold on parts of Yemen during an uprising that ousted veteran president Ali Abdullah Saleh in February, raising concern for the security of top oil exporter Saudi Arabia next door and nearby shipping lanes.
Telegraph:
Handelsblatt:
- BlackRock's(BLK) Fink Says Market to Stay Volatile. Political risks, which are high at the moment, will continue to cause financial-market volatility, BlackRock CEO Laurence D. Fink said in a guest commentary. Public attention is shifting to U.S. from European debt crisis. European govts raising taxes adn cutting benefits has led to uncertainty and has put a brake on consumption.
- Spanish Banks Resist Taking Stakes in Bad Bank. Bank of Spain governor Luis Maria Linde met executives of lenders including Santander, BBVA, La Caixa, Banco Sabadell, Bankinter, Kutxabank and Unicaja. Lenders don't like to take part in the bad bank as Bank of Spain has yet to clear purchase prices to be applied by the bad bank. Lenders also want clarification on possible inclusion in the bad bank of new types of assets, including real estate, such as consumer loans.
Bear Radar
Style Underperformer:
- Small-Cap Growth -2.20%
- 1) Restaurants -4.60% 2) Education -4.45% 3) Coal -4.01%
- GE, CMG, GOOG, MCD, MMR, PGI, FHN, BCS, SBGI, CATY, E, GORO, CPNO, VOC, ATHN, HWAY, BOOM, APD, PH, SHAW, WAC, AEGR, AFFY, CCC, CEB, XXIA, CPHD, BJRI, MCS, TNC, THC, DIOD, PNRA, MLU, VRA, PRU, SBUX, ORB, MDF, UTEK, BKW, ARIA, VRTX, APOL, JACK and NAV
- 1) TRIP 2) NAV 3) MRVL 4) SPLS 5) ETN
- 1) MRVL 2) ETFC 3) AMD 4) APD 5) CSX
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