Style Underperformer:
Sector Underperformers:
- 1) Education -2.36% 2) Gold & Silver -.95% 3) Biotech -.95%
Stocks Falling on Unusual Volume:
- SNTA, BTI, NRG, TKC, GEOY, PM, GPOR, CTCM, DISH, BMA, HLSS, TMH, PBF, NAV, YPF, ATU, AFFY, ISRG, LIFE, BPT, BTH, PRXL, IFN, YOKU, ASPS, GE, JLL, SA, FDS and RIO
Stocks With Unusual Put Option Activity:
- 1) ISRG 2) ADSK 3) GM 4) BBBY 5) LM
Stocks With Most Negative News Mentions:
- 1) AA 2) MSO 3) PCH 4) Z 5) BTH
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Disk Drives +.89% 2) Airlines +.84% 3) Alt Energy +.83%
Stocks Rising on Unusual Volume:
- ALTE, GM, RGR, WDC, MLNX, SYNA and FRAN
Stocks With Unusual Call Option Activity:
- 1) JCI 2) LVLT 3) SQNM 4) UUP 5) ONTY
Stocks With Most Positive News Mentions:
- 1) JCI 2) MS 3) PEP 4) ACN 5) TXN
Charts:
Evening Headlines
Bloomberg:
- Spain $185 Billion Refinancing Tests Rajoy’s Bank Cleanup Effort. A rush by recession-hit Spanish
businessmen and consumers to restructure their loans will
test Prime Minister Mariano Rajoy’s pledge of a “definitive” cleanup of the nation’s crisis-hit banks.
Spain’s banks have refinanced about 140 billion euros ($185 billion) of
loans outside the country’s crippled real estate industry, according to
Oliver Wyman, a consulting firm that did
a stress test of Spanish lenders. Bad loans surged to a record
11.2 percent of total lending, the Bank of Spain said yesterday.
- Less Profit in Sight as Maersk Overcapacity Hits Growth: Freight. European container-shipping
operators such as A.P. Moeller-Maersk A/S may benefit little
from higher volumes next year as carrier lines battle to remain
profitable amid overcapacity and weak demand. Global lines will ship
the equivalent of 168 million 20- foot containers, an increase of 6.6
percent from 2012, according to London-based shipping-services company
Clarkson Plc. (CKN) Traffic on mainline Asia-Europe routes will lag
global growth, rising 4 percent to 21 million 20-foot boxes as low
European consumer demand limits orders. Economic weakness caused by the
debt crisis in Europe,
which accounts for more than a third of global trade, is putting
pressure on earnings at shipping lines such as Copenhagen-based
Maersk Line, the world’s largest, and CMA CGM SA. Further
clouding the outlook, industry capacity will grow 7.5 percent
next year, Clarkson says, undermining efforts to boost profit on
Asia-Europe routes as earlier rate rises struggle to take hold.
- Axa Downgraded by S&P on Investments, European Economy. Axa SA (CS), France’s largest insurer, was downgraded by Standard & Poor’s as the economic slump in
Europe weighs on results. The insurer’s credit rating was cut to A- from A as
“unfavorable investment market conditions and weak economic
prospects are likely to dampen AXA group’s earnings growth,”
the ratings firm said yesterday in a statement on the Paris-
based company.
- Japan Exports Slide. Japan’s exports fell for a sixth month in November and the trade deficit swelled, underscoring the challenge that incoming Prime Minister Shinzo Abe faces in reviving growth. Shipments slid 4.1 percent from a year earlier,
the Finance Ministry said in Tokyo today. The median forecast of 23
economists was for a 5.5 percent decline. Imports rose 0.8 percent
leaving a deficit of 953.4 billion yen ($11.3 billion),
the third-largest on record. Exports to China fell 14.5 percent from the previous year
as shipments of construction equipment tumbled almost 75 percent
and cars dropped 68 percent by value, improving from an 84
percent decline in October. Exports to the European Union
dropped 19.9 percent, while those to the U.S. rose 5.3 percent.
- India Sees Children Dying as $2 Billion Program Proves Defective.
- How Global Headwinds Are Slowing Indian Growth.
India hasn’t been spared the effects of the recession and the recent
slowing of global growth. Weak Chinese imports in particular have had a
distinctly negative impact on suppliers such as South Korea, Taiwan,
Indonesia, Australia and Brazil. In the 2010-2011 fiscal year, India’s
trade gap with China jumped to $28 billion, its largest shortfall with a
trading partner.
- Alcoa(AA) May Be Cut to Junk by Moody’s on Lower Aluminum. Alcoa
Inc. (AA), the largest U.S. aluminum producer, may have its credit
rating cut to junk by Moody’s Investors Service Inc. after the price of
the metal
slumped. Moody’s placed Alcoa’s Baa3 senior unsecured rating, the
lowest investment-grade level, under review for downgrade, the
ratings company said today in a statement. The review applies to
all of Alcoa’s $8.3 billion of debt, according to the statement. The review “reflects the challenging headwinds” facing
the New York-based company, Moody’s said. The recovery in the
aluminum industry is “slow and uneven” and the price of the
metal will remain at 85 to 95 cents a pound for the next several
quarters, it said.
- Potash Seen Falling as Asia Wields Purchasing Power: Commodities. China and India are set to negotiate
the biggest price cut in three years to buy potash as they break
a deadlock in meetings with Russian and North American producers
that dominate the $24 billion market for the crop nutrient.
Wall Street Journal:
Fox News:
- Report on Libya cites State Dept. for security failures, confirms no protest before attack. Secretary of State Hillary Clinton has accepted 29 suggestions to
improve embassy security issued as part of a review board's report that
faults Clinton's department for security failures and confirms no
protest preceded the deadly attack on the U.S. Consulate in Benghazi,
Libya. The release of the report, posted Tuesday night on the State
Department's website, comes after more than three months of intense
debate in Washington over who was behind the attack, what motivated the
attacks and why U.S. authorities weren't able to stop the violence,
which took the lives of Ambassador Christopher Stevens and three other
Americans. Republicans have accused Obama administration officials of giving the
American people a series of misleading explanations for the attack from
the start. Much of the criticism focused on U.N. Ambassador Susan
Rice's comments five days after the Sept. 11 attack that the violence
was a "spontaneous" result of protests against an anti-Islam film. Although the motive for the attack remains unclear, the
report
confirms what quickly became evident -- that the attack was the
coordinated work of terrorists. But in many ways, the security failures
were of even greater concern, and Clinton vowed Tuesday to address them.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
Evening Recommendations
Oppenheimer:
- Rated (FLS) Outperform, target $175.
Maxim:
- Rated (BIDU) Sell, target $80.
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 84.5 +.5 basis point.
- NASDAQ 100 futures +.03%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (GIS)/.79
- (ATU)/.50
- (FDX)/1.41
- (PAYX)/.41
- (BBBY)/1.02
- (MLHR)/.39
- (SCS)/.22
- (JBL)/.56
- (NAV)/-1.08
Economic Releases
8:30 am EST
- Housing Starts for November are estimated to fall to 872K versus 894K in October.
- Building Permits for November are estimated to rise to 875K versus 866K in October.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,750,000 barrels versus a +843,000 barrel gain the prior week.
Gasoline supplies are estimated to rise by +2,000,000 barrels versus a
+5,000,000 barrel gain the prior week. Distillate inventories are
estimated to rise by +1,000,000 barrels versus a +2,986,000 barrel gain the prior week. Finally, Refinery Utilization is estimated unch. versus a -.2% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The weekly MBA mortgage applications report, 7Y T-Note auction and the (JCI) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Almost Every Sector Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- ISE Sentiment Index 115.0 -30.3%
Credit Investor Angst:
- North American Investment Grade CDS Index 89.20 -2.90%
- European Financial Sector CDS Index 139.15 -5.45%
- Western Europe Sovereign Debt CDS Index 109.91 -.45%
- Emerging Market CDS Index 206.55 -1.72%
- 2-Year Swap Spread 11.5 -1.0 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -22.75 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .04% +2 bps
- China Import Iron Ore Spot $132.20/Metric Tonne unch.
- Citi US Economic Surprise Index 47.0 -.4 point
- 10-Year TIPS Spread 2.50 +2 bps
Overseas Futures:
- Nikkei Futures: Indicating +132 open in Japan
- DAX Futures: Indicating +6 open in Germany
Portfolio:
- Higher: On gains in my retail, tech, medical and biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- French Health Care for Everyone Means Unwanted Generic Medicine. Anita Manfredi got 18 mud baths, nine massages and 12 spray showers at a
spring water spa last month. The French state footed two-thirds of the
$1,022 bill. Manfredi isn’t the only lucky recipient. Homeopathic remedies, support
tights, taxi rides to the hospital for country dwellers and
vaginal-muscle retraining for new moms are among benefits reimbursed by
the health-care branch of France’s social security, known as assurance maladie.
- Investors Are Most Bullish Ever on China Economic Growth. More
investors than ever say they
are bullish about China’s economic outlook, and more favor European
rather than U.S. stocks for the first time in two years, a Bank of
America Corp. monthly survey showed. A net 67 percent of money managers,
who together oversee $503 billion, predicted that China’s economy will
grow at a
faster rate next year, the highest reading since the survey data
started in 2003. Some 7 percent hold more European stocks than
appear in benchmarks, the poll showed.
- Middle East Oil-Tanker Glut Seen Unchanged in Shipbroker Survey. A surplus of the largest crude oil-
tankers available for loading in the Middle East will stay
unchanged over the next two weeks, according to a Bloomberg News
survey of shipbrokers. There are 20 percent more very large crude carriers for
hire over the next 30 days than there are cargoes, according to
the median estimate of seven shipbrokers and owners in a
Bloomberg News survey today. That’s the same as last week, the
data showed. The average surplus of the tankers this year is on
course for the lowest since at least 2009, survey data showed. VLCCs are earning $16,860 on the benchmark Middle East-to-
Asia voyage, according to the London-based Baltic Exchange.
That’s a 2 percent decline since the start of the month and down
40 percent from the November high.
- Highest-Paid California Trooper Is Chief Banking $484,000.
California Highway Patrol division chief Jeff Talbott retired last year
as the best-paid officer in the 12 most-populous U.S. states,
collecting $483,581 in salary, pension and other compensation. Talbott,
53, received $280,259 for accrued leave and vacation time and took a new
job running the public-safety department at a private university in
Southern California. He also began collecting an annual pension of
$174,888 from the state.
- Gee Takes Jets as $1.9 Million Payday Roils Ohio Students. The
Ohio State University President E. Gordon Gee lives in a
9,630-square-foot Tudor Revival mansion that was renovated for him,
featuring a great
hall, pool, elevator and tennis court. Gee made $1.9 million last year
as the highest-paid public university
president in the U.S. He also logged $1.7 million in expenses in fiscal
2011, including airfare for trips in private jets, country club dues and
fundraising parties at his residence. “He’s overpaid,” said CJ Jones, 19, a junior public affairs major at
Ohio State, whose tuition has risen 9.7 percent during her 2 1/2 years
at the university, based in Columbus, the state capital. “You should
want that job for a sense of Buckeye pride. Why do you have to suck so
many resources from our budget? I know kids graduating from OSU with
$90,000 in debt, and it’s a public university.”
- Wells Fargo(WFC) Buys 35% Stake in Hedge-Fund Firm Rock Creek Group. Wells Fargo & Co. (WFC), the biggest U.S. bank by market value, bought a stake in Rock Creek Group LP to
provide more hedge-fund offerings to clients amid a push to
double the asset-management unit within seven years.
CNBC:
- No 'Cliff' Deal by Week's End: GOP Sen. Corker. (video)
Senator Bob Corker told CNBC on Tuesday that he does not think a deal
to avoid the "fiscal cliff" will be reached by the end of this week. The
Tennessee Republican said in an interview on CNBC's "Squawk Box" that he's really surprised by the media's optimism over President
Barack Obama's new offer to House Speaker John Boehner, which features
concessions on revenue. "We are not close to a deal," Corker said. "I've been trying for three
weeks — standing on my head, doing cartwheels — to try to pivot to entitlement reform. This is not a deal here." (Read More: Boehner Proposing a "Plan B" Option)
- US Policy Gridlock Holding Back Economy? Maybe Not. Washington thinks a resolution of the tense debate over the national
debt will unlock a burst of economic growth by lifting uncertainty that
has stymied investment. It is a widely held view on Wall Street as
well, derived from the glaring signs of weak business confidence over
the last year as America struggles to get its fiscal house in order. However,
evidence for this belief is far from clear and is an issue of
considerable debate, and even some businesses wonder how big a factor
uncertainty is.
- Lindsey: Obama Moves Goal Posts ‘Out of the Ballpark’. President Barack Obama's latest "fiscal cliff" offer does not move
the goal posts closer in negotiations with House Speaker John Boehner,
it moves them "out of the ballpark," said former Bush administration
economic adviser Lawrence Lindsey. "The president campaigned on
tax increases for [households] over $250,000 for a total of $970 billion
[in new revenue]," Lindsey told CNBC's "Squawk Box" on Tuesday. "So now
we're at $1.2 trillion … From what he campaigned on, he's is still
moving the goal posts away from a compromise."
- Trading 'Kill Switch' Coming Soon: NYSE Exec. U.S. regulators and exchanges are getting closer to a framework for a
"kill switch" that could be used to shut down trading before software
glitches get out of control and wreak havoc on markets, a top exchange
official said Tuesday.
- Why China May Be Facing US-Style Credit Crunch. China, already struggling with a slowing economy, may now be facing
the type of credit crunch that helped derail the U.S. economy four years
ago. Among the all-too-familiar ingredients: supposedly
risk-free—yet high-yield—investments, off-balance-sheet transactions,
little if any disclosure and investors who don't ask a lot of questions. All
this has one Wall Street analyst warning that China is "a step closer
to a potential credit event in the shadow banking sector."
Reuters:
- Fed's Fisher says quantitative easing not very effective. Dallas Federal
Reserve President Richard Fisher said Tuesday he had opposed the
Fed's recent bond-buying programs because he did not think they
are very effective in bringing down the high jobless rate, a top
Fed official said on Tuesday. "I don't think it's as effective...as my colleagues do," he
told the Gainesville Area Chamber of Commerce.
- ECB'S Praet says France must cut spending, start reforms.
France must cut spending in order to meet its budget deficit target and
undertake structural reforms to boost competitiveness, European Central
Bank Executive Board Member Peter Praet said on Tuesday. "France has
too often resisted change," Praet said in an interview with French daily
Le Figaro. "There is a consensus now in France on the need to improve
public finances and competitiveness. To do that, structural reform is
needed." He also said euro zone countries should not back away from
meeting a 3 percent deficit target despite an economic downturn in the
bloc.
- World 2013 growth seen slow, political risks remain-bank group. Political
risks ranging from turmoil in Italy to potential impediments to euro
area reform could hamper the world economy next year, a global banking
group warned on Tuesday as it projected another year of sluggish growth.
In a somewhat gloomy forecast for 2013, the Institute of
International Finance said fiscal policy in the United States and
tensions between Japan and China could also weigh, although emerging economies should continue to improve. The
bank lobby group said it expected the global economy to grow just 2.7
percent next year, s carcely a pick-up from the modest 2.5 percent it
sees for 2012. A year ago, it had predicted world growth of 3.7 percent for 2013.
- Medicaid, other costs threaten NY state and local budgets-report. Costs for Medicaid, education
and employee retirement benefits are threatening to overwhelm
state and local government budgets in New York, a report by a
national task force issued on Tuesday found.
- French banks will know new liquidity ratios in Jan -Noyer.
Bank of France Governor Christian Noyer said on Tuesday that French
banks will find out in January how liquidity requirements will change
under the new banking rules set out in Basel III. "The liquidity ratios
were set a bit quickly, they hadn't
been calibrated very well and we're finalising the reforms to
the ratios," Noyer told BFM radio.
- US, Europe may take five years to recover from jobs crisis, UN says. Global economic growth is
expected to remain sluggish in the coming year and will be
insufficient to pull countries out the unemployment crisis many
are facing, the United Nations said in a report on Tuesday. It said
under policies now in place it may take at least
five years to recover from the job losses in Europe and the
United States in the 2008-2009 recession. "A worsening of the euro area
crisis, the 'fiscal cliff' in the United States and a hard landing in
China could cause a new global recession," said Rob Vos, head of the
U.N.
Development Policy and Analysis Division. "Each of these risks could
cause global output losses of between 1 and 3 percent."
Financial Times:
- Corporate credit and the lessons of CPDOs. With
such substantial leverage, investors should question the sustainability
of existing risk spreads if monetary policy fails to sustain current
economic growth rates. Commentators, including this one, have previously
noted the possible negative consequences of quantitative easing
policies and zero bound interest rates.
AFR:
- China puts foot down over Huawei.
The Chinese government has warned Australia risks jeopardising its role
in China’s economic transformation unless it stops discriminating
against Chinese companies, including telecommunications equipment
manufacturer Huawei. China’s ambassador to Australia, Chen Yuming,
said Chinese investment would continue to focus on Australia’s
substantial mineral resources. But as the Chinese economy became less
reliant on producing exports, there would be a greater emphasis on
investments in agriculture and consumer goods. Mr Chen said China did
not want to see a repeat of what he said was the “discriminatory’’
decision to ban Huawei from building part of the national broadband
network on security grounds.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.11% 2) Telecom -.12% 3) HMOs -.37%
Stocks Falling on Unusual Volume:
- CNH, SA, AUQ, USM, RAI, LO, NG, NRGY, DISH, TBBK, FDS, RGR, SLGN, NRGY, CAB, VCRA, VVI, USM, CNC, WWD, MDP, AXS, LO, BPT, CBD, WRB and AEM
Stocks With Unusual Put Option Activity:
- 1) HOV 2) BHI 3) XLB 4) JNPR 5) UPS
Stocks With Most Negative News Mentions:
- 1) KSU 2) TRMB 3) TST 4) AMGN 5) HL
Charts:
