Evening Headlines
Bloomberg:
- Moody’s to Assess U.K.’s Aaa Rating in 2013 Amid Slowing Economy. The U.K.’s top Aaa rating will be
assessed at the beginning of next year as the nation’s economy
slows amid government efforts to reduce deficits and Europe’s
debt crisis, according to Moody’s Investors Service. The economic recovery in the U.K. is likely to be slower
than forecast as the private and public sectors reduce their
debt loads, Moody’s said yesterday in a report. The government’s
Autumn Statement, scheduled to be released in December, may
reveal “the likely speed of fiscal consolidation, the growth
outlook and, most importantly, the assurances offered that the
debt trajectory will stabilize and start to decline within the
rating horizon,” Moody’s said. Moody’s negative outlook “is driven by in part concern
that the government’s efforts to achieve fiscal consolidation
and reduce debt are being hampered by weaker than expected
economic prospects,” Sarah Carlson, a London-based analyst at
Moody’s, said in a telephone interview. The outlook also
considers “the risks posed by the ongoing euro-area sovereign
debt crisis,” she said.
- Container-Rate Plunge Shows Mediterranean Cast Adrift.
Europe’s sovereign-debt crisis has led to a collapse in the rates
container lines charge on routes from China to the Mediterranean,
creating a two-tier price structure as they boost fees for destinations
further north. The cost of a container shipment from Shanghai to
Spain or Italy has tumbled 46 percent to $955 in five months, according
to ICAP Plc, with the spread between south- and north-European
rates widening to $436 as of Nov. 2 from $42 a week earlier.
- French Transaction Tax Misses Mark as Speculators Find Loopholes.
As France begins collecting its financial-transactions tax this month,
it is becoming evident that President Francois Hollande’s levy is
hitting all but the
people it was aimed at: speculators. Hollande, who called finance his “main adversary” during
his election campaign, pushed through in August a 0.2 percent
transaction tax on share purchases, making France the first and
only country so far in Europe to have such a levy. Many
investors have been escaping the tax using so-called contracts
for difference, or CFDs, offered by prime brokers that let them
bet on a stock’s gain or loss without owning the shares. “The target was supposed to be finance with a capital F,
which is sort of a black box,” said Jacques Porta, who helps
manage $627 million at Ofi Patrimoine in Paris. “Instead, we
are punishing small investors who aren’t to blame and already
are frightened off by losses in the market.”
- Xi Jinping Replaces Hu Jintao as China Communist Party Leader. Xi
Jinping replaced Hu Jintao as head of the Chinese Communist Party,
ushering in the fifth generation of leaders set to run the world’s
second-biggest economy over the next decade. He was also named chairman
of the party’s Central Military Commission. Xi, 59, succeeds Hu as
general secretary of the 82 million- member party that has run China
since 1949, the official Xinhua News Agency announced. He’s
joined on the elite Politburo Standing Committee by Li Keqiang, 57,
whose new party rank indicates he will replace Premier Wen Jiabao at a
March meeting. Xi and Li are both young enough to serve two full
five-year terms, stretching their tenures to 2022. Xinhua named seven
members to the Standing Committee. The new leadership inherits an
economy set to expand this year at the slowest pace since 1999, stymied
by lagging growth in the U.S. and European Union, its two biggest export
markets.
- China’s Stocks Slump to Seven-Week Low as New Leaders Announced. China’s
stocks fell, dragging down the benchmark index to a seven-week low, as
the ruling party announced the nation’s new leaders. China Construction
Bank Corp. (939) led declines among lenders after a report showed the
industry’s bad loans rose for a fourth quarter. Jiangxi Copper Co., the
biggest Chinese copper producer, dropped 1.3 percent as Citigroup Inc.
cut its rating on the stock. Citic Securities Co. slid to the lowest in
more than two months after it received a warning from its regulator. The Shanghai Composite Index (SHCOMP) retreated 0.6 percent to 2,043.50 at the 11:30 a.m. local-time break, heading for the
lowest close since Sept. 26.
- Panasonic Plans 8,000 Job Cuts Amid Second Straight Loss. Panasonic Corp. (6752) plans to cut 8,000
jobs in the second half of this fiscal year as the Japanese TV
maker restructures amid falling demand and a rising yen.
- Ranks of Poor Americans at Record High Even With Aid. The
ranks of poor Americans remained at a record high number last year,
even after government-aid programs such as food stamps, housing vouchers
and heating subsidies were included, the U.S. Census Bureau said today.
The bureau said 49.7 million Americans, or 16.1 percent, are in
poverty, up from 49.1 million, or 16 percent, in 2010, according to a
new measure the government is using to supplement the official figures
released in September. The new method, designed to offer a more
comprehensive measure of poverty, includes government aid as income,
while subtracting child-care costs, work-related expenses and medical
out-of-pocket fees. The official measure, which includes only pretax cash income and
is used to determine eligibility for aid programs, put the poverty rate
at 15.1 percent, the bureau said.
- I’m Uncle Sam, and I’m a Debt-aholic by Caroline Baum.
- Texas Instruments(TXN) Eliminating 1,700 Jobs to Cut Expenses. Texas
Instruments Inc. (TXN) is cutting 1,700 jobs to reduce expenses by
about $450 million a year, part of a shift away from chips that run
mobile electronics to focus on
components for cars, industrial equipment and other devices. The
measures will result in costs of $325 million, incurred mostly in the
current quarter, Texas Instruments said today in a statement.
Wall Street Journal:
- In Final Days, Petraeus Hurt by Libya Clash, Then Affair. In David Petraeus's final days at the helm of the Central
Intelligence Agency, his relations with chiefs of other U.S. agencies,
including his boss, National Intelligence Director James Clapper, took a
contentious turn. At issue was whether the CIA should break its
silence about its role in Benghazi, Libya, to counter criticism that
increasingly was being leveled at the agency and Mr. Petraeus, said
senior officials involved in the discussions. Mr. Petraeus wanted
his aides to push back hard and release their own timeline of the Sept.
11 attacks on the U.S. diplomatic compound in Benghazi.
- Impending China Bad Debt Headache Likely Bigger Than Expected. China’s
incoming generation of new leaders aren’t likely to get much
of a honeymoon, with a long list of social and economic issues already
clogging up the to-do list. One of those is China’s bad loan problem –
and it’s probably already worse than the numbers suggest. That was one
finding of a recent report by China Orient Asset
Management Corp. – one of the four ‘bad banks’ that were set up over a
decade ago to help the major banks deal with their mountainous piles of
nonperforming loans – after surveying the players involved in working
out, disposing of, buying and sitting on the country’s bad loans. According to the report, 65.39% of bankers said that the real level of
nonperforming loans, or NPLs, is higher than the level reported on
banks’ books. The survey said that no respondents thought NPLs were
lower than their stated book value.
- FHA Set to Ask for Taxpayer Funds.
- Barack Obama's Persuasion Army. The
president has finally made the permanent campaign a reality. The job of
the Obama persuasion army was to make sure that those
targets never stopped having their heads filled via emails, phone calls,
meetings and such with what Barack Obama was saying as president. USA
Today reported, for example, that when Mr. Obama delivered his State of
the Union speech last January—a half-year before Mitt Romney was the
official GOP nominee—the campaign's persuasion army held 2,700 house
parties.
These field operations were the reason
the nation's 44th president had to do 153 fundraisers this year. This
wasn't just a presidency. It was a political corporation producing
political product.
CNBC:
Zero Hedge:
Business Insider:
The Blaze:
Reuters:
- Analysis: U.S. credit rating could again take hit in 2013. In 2011, the
United States emerged from a damaging budget battle with a downgrade of
its pristine triple-A rating for the first time in history. In 2013, it
could be dealt even a bigger blow. The battle over avoiding the
so-called fiscal cliff is the first of a likely series of partisan
confrontations in Washington in the coming year that, if not resolved,
could cause more downgrades of the U.S. credit rating.
- BP(BP) expected to admit to criminal misconduct in 2010 spill. BP Plc is expected to
plead guilty to criminal misconduct in the 2010 Deepwater
Horizon disaster through a plea agreement it has reached with
the U.S. Department of Justice that may be announced as soon as
Thursday, according to two sources familiar with discussions. The sources, who spoke to Reuters on condition of anonymity,
said that BP would plead guilty in exchange for a waiver of
future prosecution on the charges.
- Chuck Schwab says "fiscal cliff" resolution not likely by Dec 31. Investors should brace for
volatility over the next few months as U.S. politicians are
unlikely to agree on a budget deal by year end, though that
could lead to some good buying opportunities, Charles "Chuck"
Schwab, founder and chairman of his namesake firm, said on
Wednesday. There is a high probability the United States will go over
the "fiscal cliff" - a $600 billion mix of tax increases and
spending cuts set to kick in on Jan. 1 that threatens to derail
the economic recovery - though a resolution is likely by the
spring, he said at the Schwab IMPACT conference in Chicago. "Certainly our president for the next four years has
presented his position pretty clearly, I think, through the
election process, and I think we have a very difficult time
seeing a reasonable resolution by December 31," Schwab said.
- U.S. regulators cut JPMorgan's(JPM) ability to trade power. U.S. federal energy regulators voted on
Wednesday to ban JPMorgan Chase from trading in a
segment of the electricity market for six months, marking a
hefty penalty for the Wall Street bank.
- US regulators report possible link between caffeine shot, deaths. The U.S. Food and Drug Administration
confirmed on Wednesday the receipt of reports that another
caffeine drink, 5-hour Energy, may have been involved in a
number of deaths - in this case 13 over the past four years.
- Petraeus to testify before closed House hearing on Benghazi. General David Petraeus, who
stepped down from his post as CIA director after the revelation
of an extramarital affair, is scheduled to testify on Friday at
a closed-door congressional hearing about the attack on the U.S.
consulate in Benghazi. The House Permanent Select Committee on Intelligence said in
a statement on Wednesday that Petraeus will testify on Friday
morning.
- Japan manuf outlook down 4th mth in row -Reuters Tankan. Sentiment
among Japanese manufacturers fell for a fourth straight month, a
Reuters poll showed, providing more evidence that the world's
third-biggest economy is slipping into recession amid a global slowdown
and tensions with China.
- U.S. growth potential shifts to lower gear-CBO. The U.S. economy is recovering at an agonizingly slow pace largely because its
potential growth rate has been stunted by structural shifts to
its workforce and a dearth of investment, the non-partisan
Congressional Budget Office said on Wednesday. In a new report that offered a gloomy outlook for U.S.
growth prospects, the CBO said the cumulative rate of growth in
U.S. output since the end of the recession in 2009 was running
nearly nine percentage points below the average for previous
recoveries.
- Euro zone seen sinking into recession as Germany struggles. The
euro zone likely slipped into its second recession since 2009 in the
July-September period, as the three-year debt crisis slowed economic
growth in Germany to a crawl. Economists expect EU statistics office
Eurostat to say on Thursday that the bloc's output shrank 0.2 percent
in the third quarter, as it did in the second quarter. That would put
the 9.4 trillion euro ($12 trillion) economy, which generates a fifth
of global output, officially in recession, although Italy and Spain have
been contracting for months and Greece is suffering an outright
depression. "The distress in more vulnerable member states has
progressively started to affect the remainder of the (European) Union,"
senior European Commission official Marco Buti said in a report this
month forecasting a 0.4 percent contraction for the euro zone in all of
2012. Hopes for a recovery next year are also fading, with the
European Commission saying the economy will flatline in 2013.
Munhwa Ilbo:
- North Korea has been placing more soldiers, artillery pieces, bunkers and attack helicopters near the western sea border with South Korea since the regime's leader Kim Jong Un visited the area in August, citing South Korean military officials.
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 126.25 -.25 basis point.
- Asia Pacific Sovereign CDS Index 90.75 -.5 basis point.
- FTSE-100 futures -1.01%.
- S&P 500 futures +.20%.
- NASDAQ 100 futures +.16%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (PERY)/.23
- (DLTR)/.49
- (HP)/1.24
- (SSI)/-.30
- (PLCE)/1.60
- (WMT)/1.07
- (VIAB)/1.17
- (TGT)/.96
- (GME)/.32
- (ROST)/.72
- (GPS)/.63
- (INTU)/-.06
- (DELL)/.40
- (AMAT)/.03
- (SHLD)/-2.13
- (ADSK)/.43
Economic Releases
8:30 am EST
- The Consumer Price Index for October is estimated to rise +.1% versus a +.6% gain in September.
- The CPI Ex Food & Energy for October is estimated to rise +.1% versus a +.1% gain in September.
- Empire Manufacturing for November is estimated to fall to -8.0 versus -6.16 in October.
- Initial Jobless Claims are estimated to rise to 375K versus 355K the prior week.
- Continuing Claims are estimated to rise to 3181K versus 3127K prior.
10:00 am EST
- The Philly Fed for November is estimated to fall to 2.0 versus 5.7 in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bernanke speaking, Fed's Plosser speaking, Fed's Dudley speaking, Fed's Fisher speaking, Fed's Evans speaking, Fed's Lacker speaking, Eurozone GDP reports, Eurozone CPI, US bank stress tests, weekly EIA natural gas inventory report, Bloomberg November US Economic Survey, weekly Bloomberg Consumer Comfort Index, 3Q Mortgage Delinquencies, 3Q MBA Mortgage Foreclosures, UBS Building/Building Products Conference, (FFIV) analyst day, (PG) analyst meeting and the (QCOM) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining.
- Volume: Around Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- VIX 17.77 +6.73%
- ISE Sentiment Index 97.0 +.1%
- Total Put/Call 1.06 +27.71%
- NYSE Arms 1.16 +11.92%
Credit Investor Angst:
- North American Investment Grade CDS Index 108.55 bps +1.65%
- European Financial Sector CDS Index 181.30 bps +.79%
- Western Europe Sovereign Debt CDS Index 119.87 bps +2.54%
- Emerging Market CDS Index 242.80 bps +1.82%
- 2-Year Swap Spread 11.5 -.5 basis point
- TED Spread 21.5 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -27.5 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .10% +1 basis point
- Yield Curve 133.0 -1 basis point
- China Import Iron Ore Spot $122.40/Metric Tonne +.08%
- Citi US Economic Surprise Index 57.0 -3.7 points
- 10-Year TIPS Spread 2.39 -3 basis points
Overseas Futures:
- Nikkei Futures: Indicating +19 open in Japan
- DAX Futures: Indicating -45 open in Germany
Portfolio:
- Slightly Higher: On gains in my Retail sector longs, index hedges and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 25% Net Long
Bloomberg:
- Europe Protests Austerity With Strikes in Spain, Italy. Spanish workers staged a second general strike this year as
unions across Europe prepared the biggest coordinated protests yet
against budget cuts that policy makers say are unavoidable and labor
leaders called economic suicide. In Spain, unions said most auto
and metal workers joined the strike and demand for electricity was 12
percent below usual. One of Portugal’s two biggest labor groups also
called a strike. Partial walkouts are planned in Greece and Italy, and
French unions are urging workers to join protest marches. Opposition
to the cuts in health, education and welfare benefits demanded by
AAA-rated euro members such as Germany and Finland is growing along with
evidence that those measures are failing to rein in the budget deficits
or bring down borrowing costs. Demands for less austerity are gaining
traction as the International Monetary Fund recommends nations including
Spain slow the pace of budget cuts. “This is a strike against
the suicidal economic policies of the government,” Ignacio Fernandez
Toxo, head of Spain’s CCOO union, told supporters late yesterday.
- Italy Yields Decline at Sale as German Notes Fetch Negative Rate. Italy
sold 3.5 billion euros ($4.46 billion) of three-year notes at the
lowest rate in more than two years and the Treasury tapped growing
demand for the country’s
debt to auction longer-dated securities. The nation attracted bids for 1.5 billion euros of bonds
due in 2023 and 2029, its first sale of debt due in more the 15
years since May 2011. The German government sold two-year notes
at a negative yield for only the second time on record.
- Portuguese Economy Contracts for an Eighth Straight Quarter.
Portugal’s economy shrank for an eighth quarter and unemployment rose
to a euro-era record as the government implemented austerity measures in
an attempt to rein in its budget deficit and curb debt. Gross
domestic product declined 0.8 percent in the third quarter from the
second quarter, when it fell 1.1 percent, the National Statistics
Institute said in a preliminary report today. Economists projected a
decrease of 0.6 percent, the median of nine estimates in a Bloomberg
survey showed. The jobless rate rose to 15.8 percent in the three months
through
September from 15 percent in the second quarter, the Lisbon-
based statistics institute said in a separate statement.
- European Stocks Decline on Output Drop, Greek Recession. European
(SXXP) stocks fell for the fifth day in six as industrial production
dropped the most in at least three years, Greece’s recession deepened,
and company results from ICAP Plc (IAP) to Mediaset SpA disappointed
investors. ICAP retreated 9.7 percent after the world’s largest
broker of transactions between banks reported a slump in earnings.
Mediaset declined 3.2 percent after the broadcaster cut its full-year
profit forecast. Banca Monte dei Paschi di Siena SpA (BMPS) slid 4.6
percent after posting an unexpected loss.
- Turkey, Israel Warn Syria Against Violations of Territory. Turkey scrambled its warplanes and
warned that it will respond to any violation of its airspace as
Syrian jets bombed a rebel-held town near the border for a third
day. Israel also vowed to defend its borders. Turkish soldiers were monitoring the fighting from newly
dug foxholes in the town of Ceylanpinar as gunfire crackled
across the border, NTV television showed today. Authorities used
loudspeakers to warn residents to stay away as a Syrian jet
dropped four bombs on the town of Ras al-Ayn, the state-run
Anatolia news agency said. Several bullets hit houses,
businesses and government buildings without causing casualties
today, Anatolia said.
- Oil Advances in New York After Airstrikes by Israel.
Oil advanced after an Israeli
airstrike killed a leader of Hamas’s militant wing in the Gaza Strip,
bolstering concern that unrest in the Middle East will intensify curbing
supplies. Futures rose as much as 1.4 percent after the attack, which
killed Ahmed al-Jabari and another man, according to Ashraf al-
Qedra, a spokesman for the Hamas-run Health Ministry. The strike follows
the firing of about 115 rockets from Gaza into Israel this week. Oil
fell earlier as U.S. retail sales declined for the first time in four
months in October. “The Israeli strike on Gaza has raised the security
premium,” said John Kilduff, a partner at Again Capital LLC, a New
York-based energy hedge fund. “The Israelis made it clear that this
may be the first of many strikes. This episode raises tension in an
already troubled region.” Crude oil for December delivery advanced
61 cents, or 0.7 percent, to $85.99 a barrel at 11:12 a.m. on the New
York Mercantile Exchange.
- Thousands Seen Dying If Terrorists Attack ‘Vulnerable’ U.S. Grid. A terrorist attack on the U.S. power
grid could be more destructive than superstorm Sandy, possibly
costing hundreds of billions of dollars and leading to thousands
of deaths, the National Academy of Sciences said. While such an event probably wouldn’t kill people
immediately, it could cause widespread blackouts for weeks or
months, according to a recently declassified report released
today by the Academy. If it occurred during extreme weather,
heat stress or exposure to cold may lead to “hundreds or even
thousands of deaths,” the authors of the study wrote.
- Wholesale Prices in U.S. Unexpectedly Fall on Fuel, Vehicles. Wholesale prices in the U.S.
unexpectedly fell in October for the first time in five months
as energy and vehicle costs dropped. The 0.2 percent decline in the
producer price index came after a 1.1 percent increase the prior month,
Labor Department figures showed today in Washington. The median estimate
in a Bloomberg survey of 73 economists called for a 0.2 percent rise.
Excluding volatile food and energy, the so-called core measure
decreased 0.2 percent, the first drop since November 2010.
- Fed Says ‘a Number’ on FOMC Saw Need for Additional QE. A number of Federal Reserve
officials said the central bank may need to expand its monthly
purchases of bonds next year after the expiration of Operation
Twist, according to minutes of their last meeting. “A number of
participants indicated that additional asset
purchases would likely be appropriate next year after the
conclusion of the maturity-extension program,” according to the record
of the Federal Open Market Committee’s Oct. 23-24 gathering released
today in Washington.
CNBC:
- How 'Fiscal Cliff' Could Affect Mortgage Interest Deduction.
It is arguably one of the most popular U.S. tax deductions, and for some
it is the necessary stimulus to buy a home. The mortgage interest
deduction, however, is now at risk, due to negotiations over the
so-called “fiscal cliff”—the year-end deadline for large spending cuts
and the expiration of tax cuts. While
it is impossible at this point to know what the outcome will be, it is
certainly worth running through the possibilities.
- Why More Bankers May Be Starting Hedge Funds. The hedge fund industry is expected to see a wave of new launches in the next year by
traders who have lost their jobs at investment banks or who have left in
search of better pay.
Forbes:
- Qihoo Reportedly Launches Mobile Search; Baidu(BIDU) Slides. Qihoo 360, the China-based Internet software provider, has shaken up the country’s
Internet search market with its recent entry into the business. As a
provider of a popular Web browser, Qihoo was well positioned for a rapid
takeoff in the search sector, and in fact appears to be causing
considerable trouble for sector leader Baidu.
Reuters:
- Greece Sinks Deeper into Depression in Third Quarter. Greece's economic slump deepened
in the third quarter, with output shrinking 7.2 percent on an
annual basis as the debt-laden country heads into its sixth year
of depression and struggles to meet its bailout targets. The contraction was deeper than the second quarter's 6.3
percent drop and follows the passage of a tough 2013 budget by
Prime Minister Antonis Samaras's government that is expected to
continue to smother growth for most of next year. Since 2009, the Mediterranean state's economic decline -
which Samaras has dubbed Greece's "Great Depression" - has wiped
a fifth off economic output and sent unemployment to a record
high, putting one in four Greeks out of work. The reading could point to an even grimmer outlook, analysts
said, because it was offset by better-than-expected returns from
the country's vital tourism sector, which accounts for a fifth
of Greece's 215 billion euro economy. A new wave of wage and pension cuts and tax hikes agreed
with the country's international lenders for 2013, coupled with
a liquidity shortage, was expected to add to the economic
misery, making recovery even more distant."The recession will continue to deepen until the first half
of 2013, due to the implementation of all the cuts," said
Xenophon Damalas, head of investment services at Marfin Egnatia
bank in Athens.
- France considers broad tax clampdown on web companies.
Telegraph:
Immerisia:
- Greece to Tax Capital Gains on Stocks at 20%. The rate will apply
to capital gains on stocks, mutual funds and real estate, citing a copy
of draft legislation for tax changes. Greece will apply 3 income tax
bands of 21%, 36% and 45%. Tax on deposit interest will increase to 15%
from 10%. Greece will increase the corporate tax rate to 26% from 20%.
Australian Financial Review:
- Australia on Same Path as Spain: S&P. Australia
must get its budget into surplus by 2014 to help avoid revision of its
AAA credit rating, warns the global director of pubic finance at
Standard & Poor’s Financial Services.
Israel Defense Forces:
Style Underperformer:
Sector Underperformers:
- 1) Homebuilders -2.50% 2) Gold & Silver -2.43% 3) Steel -2.03%
Stocks Faling on Unusual Volume:
- CEL, ACHN, PTNR, MCP, SNTA, BSBR, GDP, CLMT, IOC, IDCC, BBEP, UBNT, BAC, SEP, STMP, NMM, BRP, FFC, SAND, PFL, AWF, FCT, PHK, EMD, GNT, IAG, ARII, IVR, JRO, ERC, GGN, MED, GORO, BIDU, HPI, HTS, FUN, EVEP, DMND, VTA, AMTG, EDD, CMO, CYS, PHK, MAIN, WMC, NTI and TCAP
Stocks With Unusual Put Option Activity:
- 1) DHI 2) MOS 3) CBS 4) ANF 5) AKS
Stocks With Most Negative News Mentions:
- 1) ACI 2) PZZA 3) POT 4) GM 5) EXC
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Networking +.69% 2) Retail +.49% 3) Internet +.25%
Stocks Rising on Unusual Volume:
- CSCO, FFIV, ANF, FB, CLNE, ARO and CAVM
Stocks With Unusual Call Option Activity:
- 1) SQNM 2) ANF 3) IAG 4) ARO 5) CLWR
Stocks With Most Positive News Mentions:
- 1) SYY 2) ACM 3) ANF 4) GIS 5) CSCO
Charts:
Evening Headlines
Bloomberg:
- Spain Makes Progress on Repossessions Deal as Talks Continue.
Spain’s government and the
opposition plan to meet for a third time today, after they made
progress toward a deal to stem home repossessions while Prime Minister
Mariano Rajoy prepared to face a general strike. Talks between
government and Socialist Party officials that began Nov. 12 will
reconvene at 6:30 p.m. as the two sides work on “urgent measures” to
limit evictions in cases of mortgage default, said a government
spokesman, who asked not to be named in line with government policy. The
government plans to pass a decree enforcing the measures at a cabinet
meeting tomorrow, the spokesman said. Rajoy, who faces a general strike
today amid mounting
social disquiet at spending cuts and Spain’s economic crisis,
pledged measures to stem evictions on Nov. 9 after a woman
committed suicide as officials tried to seize her home. Rajoy is
trying to respond to outrage over foreclosures amid a taxpayer-
funded bank bailout without inflicting further losses on a
financial system crippled by the collapse of a debt-fueled
housing boom.
- China Vehicle Prices Fall for Sixth
Straight Month, NDRC Says. China's vehicle prices fell for the sixth
straight month in October, according to the National Development Reform
Commission, as dealerships cut prices to clear inventories. Prices of
locally produced vehicles fell 1.3% from a year earlier, with
passenger-vehicle prices dropping 1.8%, the NDRC's price monitoring
bureau said. "Market demand this year has been weak and dealers'
inventories at both the local carmakers and foreign brands have been
piling up," Cheng Xiaodong, head of vehilce-price monitoring at the
NDRC, said in an interview. Average vehicle prices in the world's
largest auto market may again come under pressure in the fourth quarter
as dealerships slash prices further to meet year-end sales goals, the
NDRC said. Vehicle sales growth may lag behind gdp expansion this year,
the China Association for Automotive Manufacturers forecast Oct. 28.
- Most Chinese Stocks Decline as Party Concludes Congress. Most
Chinese stocks fell as the ruling party’s meeting to choose new leaders
drew to a close. Consumer discretionary shares slid while aluminum
stocks rose. China International Travel Service Corp. (601888), the
largest tourism company by market value, tumbled by the 10 percent daily
limit on a plan to sell new shares. Aluminum Corp. of China Ltd.
jumped 5.5 percent after the China Securities Journal reported the
government will start buying aluminum to add to reserves. Vice President
Xi Jinping and Vice Premier Li Keqiang were re- appointed to the
central committee today, while the members of the Politburo Standing
Committee, the top decision-making body,
will be elected tomorrow in Beijing. “The party congress hasn’t
generated any exciting news for
economic reforms and the market is a bit disappointed,” said
Wang Weijun, a strategist at Zheshang Securities Co. in
Shanghai.
- Gold to Advance to $2,000 on Money Printing, Deutsche Bank Says.
Gold will probably rally to a record
above $2,000 an ounce next year as central banks ramp up
stimulus to sustain the recovery, according to Raymond Key,
London-based global head of metals trading at Deutsche Bank AG. “We’ll
take out $2,000, we’ll go higher,” Key said in an
interview in Hong Kong, where he attended the London Bullion Market
Association’s annual conference. “That’s on the view that they’ll
continue to print money.”
- Treasuries See U.S. Falling Over Cliff as Yields Converge.
The biggest Treasury rally in five months is underlining market concern
that President Barack Obama and House Republicans will fail to avert
$607 billion in mandated spending cuts and tax increases starting Jan.
1. Yields on 10-year Treasuries dropped the most in one day since May to
1.62 percent after Obama’s re-election Nov. 6. A figure below 1.7
percent indicates that investors expect gross domestic product to shrink
by 0.3 percent next year as the so- called fiscal cliff takes effect,
according to JPMorgan Chase & Co.
- Palestinian Monetary Authority Readies for UN Bid Repercussions. Palestinian Monetary Authority
Governor Jihad Al Wazir said he has readied the financial system
to withstand the repercussions that may follow a planned
statehood bid at the United Nations as soon as this month. Palestinian Authority President Mahmoud Abbas said Nov. 11
he’ll resist global pressure to drop the bid or wait until after
Israeli elections on Jan. 22. That decision may spur Israel to
halt the transfer of tax revenue to the Palestinian Authority,
Israeli Finance Minister Yuval Steinitz said this week.
- Barak Says Israel to Hit Hamas Until Deterrence Restored. Israeli Defense Minister Ehud Barak,
who directed Israel’s 2008 ground invasion of the Gaza Strip, is
considering new measures to stop missile attacks from the Hamas-
ruled territory. Between meetings with top generals and fellow cabinet
ministers, Barak said that military operations will intensify if
Palestinian rocket barrages continue, even as Egypt’s Muslim
Brotherhood leadership seeks to broker a cease-fire.
- Debt-Fueled U.S. Car Sales May Need Income Help: Economy. A
rebound in U.S. auto sales has been buoyed by the
return of easy lending, even to borrowers with flawed credit histories.
Some economists question whether the gains can be sustained without a
boost in hiring. Auto loans were up 5.5 percent in
the second quarter from the same time last year, with riskier buyers
accounting for 43.9 percent of the total, up from 42 percent in 2008,
according to Experian Plc. By contrast, hourly wages for non-managers
climbed 1.1 percent on average over the past 12 months, the least since
records began in 1965, Labor Department figures show.
- Commercial Property Faces Risk on Yields, Executives Say. Rising risks, including an eventual
increase in interest rates, are leading commercial-property
investors to borrow less and expect lower returns, said real
estate executives including Rob Speyer and Richard J. Mack. AREA Property Partners LP isn’t building U.S. offices
without signed tenants, even as commercial values increase,
Mack, chief executive officer for North America, said at the
Bloomberg Commercial Real Estate Conference today in New York.
Tishman Speyer Properties LP has used “average leverage” of
less than 50 percent in deals since 2010, said Speyer, the New
York-based office developer’s co-chief executive officer.
- Re-Elected Obama Has No Reason to Block Keystone Pipeline. Environmentalists
who are against
building the Keystone XL oil pipeline from Alberta, Canada, to the U.S.
Gulf Coast, have called a march on Washington this weekend to demand
that President Barack Obama again reject it. This time, it is the opponents the president should turn
down. He should move to get the 1,700-mile, $7 billion
underground pipeline approved within the next couple of months.
Wall Street Journal:
MarketWatch.com:
- Mosaic(MOS) cuts Q2 sales-volume view on slower demand. Mosaic Co. cut its fiscal second-quarter potash and phosphates sales volume
guidance, pointing to weakened demand in the international crop nutrient
market, although the fertilizer producer believes the demand is simply
delayed. Shares slipped 5.1% to $48.15 after hours. Through the close, the stock has fallen 12% over the past three months.
- China consensus is dead wrong, says Duncan. Bangkok-based economist and author Richard Duncan says a chorus of
economists pointing to a rebound in China may well be proven wrong, as
he believes the nation is headed into a serious crisis.
CNBC:
- Is $250,000 a Year Rich? Let's Break It Down. It’s no surprise that working couples in big cities are struggling to
raise children while paying off mortgages and student debt. What is
surprising is that they’re lumped in with the so-called “wealthy” if
they jointly earn $250,000 a year.
- US Heads for Fifth Straight Trillion-Dollar Deficit. The federal government started the 2013 budget year with a $120 billion
deficit in October, an indication that the nation is on a path to its
fifth straight $1 trillion-plus annual deficit.
Zero Hedge:
Business Insider:
The Blaze:
Reuters:
- Intel(INTC), Qualcomm(QCOM) may invest $378 mln in Sharp-sources. U.S.-based Intel Corp and
Qualcomm Inc are in talks to jointly i nvest about 30
billion yen ($378 million) in debt-stricken Japanese consumer
electronics maker Sharp Corp, two sources familiar with
the matter said on Wednesday. Details of the talks were not known, but Sharp, whose
displays are used in Apple Inc's iPads and iPhones, is
looking to small displays to spark a revival in its fortunes and
sees the new generation of high-end laptops as a fresh market.
- Fed no safety net if US goes over fiscal cliff -Fisher. The
Federal Reserve cannot do
much more to shelter the U.S. economy if the country goes over a
year-end fiscal cliff of tax hikes and government spending cuts, a
senior U.S. central bank official said on Tuesday. "It would be nice to have the fiscal authorities get their
act together so we wouldn't be dependent on monetary policy.
There is a limit to what we can do," Dallas Federal Reserve
President Richard Fisher told CNBC television. "I do not see us
as that safety net."
- Anti-austerity strikes sweep southern Europe. Spanish and Portuguese
workers will stage the first coordinated general strike across
the Iberian Peninsula on Wednesday, shutting transport,
grounding flights and closing schools to protest against
spending cuts and tax hikes. Unions in Greece and Italy also planned work stoppages and demonstrations on a "European Day of
Action and Solidarity" against austerity policies, which labour leaders
blame for prolonging and worsening the continent's economic crisis. The international coordination shows "we are looking at a
historic moment in the European Union movement," said Fernando
Toxo, head of Spain's biggest union, Comisiones Obreras.
- Cisco(CSCO) sees slower growth in second quarter. Cisco Systems Inc reported first quarter results that beat estimates but expects flat earnings and slower revenue growth for the current quarter.
Telegraph:
The National:
- Warning from OPEC Over US Oil Production.
The head of Opec warned yesterday that if predictions that the United
States will surpass Saudi Arabia as the world's biggest oil producer
continue, the result will be a reduction in investment by his members
that will hit oil consumers. "If this message keeps coming, there
will be no investment" from Opec members, said Abdalla El Badri, Opec's
secretary general, adding that "consumers will lose". Mr El Badri's
rebuke came less than 24 hours after a prediction by the International
Energy Agency (IEA), the industrialised nations' adviser on energy
policy, that US oil
production will exceed that of Saudi Arabia within five years.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 126.50 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 91.25 +2.0 basis points.
- FTSE-100 futures -.32%.
- S&P 500 futures +.31%.
- NASDAQ 100 futures +.61%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (PETM)/.63
- (SPLS)/.45
- (ANF)/.60
- (NTAP)/.48
- (WSM)/.45
Economic Releases
8:30 am EST
- The Producer Prices Index for October is estimated to rise +.2% versus a +1.1% gain in September.
- The PPI Ex Food & Energy for October is estimated to rise +.1% versus unch. in September.
- Advance Retail Sales for October are estimated to fall -.2% versus a +1.1% gain in September.
- Retail Sales Less Autos for October are estimated to rise +.2% versus a +1.1% gain in September.
- Retail Sales Ex Auto & Gas for October are estimated to rise +.4% versus a +.9% gain in September.
10:00 am EST
- Business Inventories for September are estimated to rise +.6% versus a +.6% gain in August.
2:00 pm EST
Upcoming Splits
Other Potential Market Movers
- The Fed's Williams speaking, Eurozone Industrial Production/Portugal GDP/UK unemployment reports, US Mortgage Delinquencies report, weekly MBA Mortgage
Applications Index, Morgan Stanley TMT Conference, Jefferies Healthcare
Conference, Morgan Stanley Chemicals Conference, UBS Tech/Services
Conference, JPMorgan Services Conference, UBS Growth Conference, (FB) lockup expiration and the (GWW) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
