Wednesday, February 06, 2013

Bull Radar

Posted by Gary .....at 11:34 AM
Style Outperformer:
  • Small-Cap Value +.35%
Sector Outperformers:
  • 1) Coal +1.21% 2) Education +1.19% 3) Alt Energy +1.13%
Stocks Rising on Unusual Volume:
  • GDP, TWX, SFLY, TBI, RL, RS, TTWO, AGO, CMG, X, MUSA, WYN, ELLI, PANL and NFLX
Stocks With Unusual Call Option Activity:
  • 1) FNP 2) GDP 3) GNC 4) UAL 5) GME
Stocks With Most Positive News Mentions:
  • 1) CERN 2) MMM 3) AGN 4) RL 5) SFLY
Charts:
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Wednesday Watch

Posted by Gary .....at 12:27 AM
Evening Headlines 
Bloomberg:  
  • Europe Yield Backup Signaling Complacency Bringing a New Crisis. European leaders lulled into complacency by Mario Draghi’s pledge to buy their bonds may be stumbling toward the next euro-region emergency. Policy makers are squandering the decline in borrowing costs triggered by the European Central Bank president’s commitment to defend the single currency, leaving the 17-nation bloc’s economy and financial systems vulnerable, according to economists Charles Wyplosz and Paul De Grauwe. “I don’t see how we avoid having another acute crisis now that governments are so pleased with themselves,” Wyplosz, director of the International Center for Money and Banking Studies in Geneva, said in a telephone interview. “The wave of optimism we had was unjustified. Key elements of the crisis aren’t being dealt with.” Concern that political turbulence would deepen backsliding rattled markets. Ten-year bond yields in Spain and Italy rose to their highest this year as Spanish Premier Mariano Rajoy faced opposition calls to resign amid contested reports of corruption in his party and Italy’s Silvio Berlusconi narrowed the front- runner’s lead before elections in three weeks. “The crisis has never been over,” said de Grauwe, a professor at the London School of Economics and a two-time candidate for a seat on the ECB’s Executive Board. “If this reversal goes on we’ll get a new stage and the ECB will have to act or it will lose credibility.”
  • Eaton(ETN) CEO Says China GDP Report Overstates Growth Rate. Based on indicators such as consumer consumption and electric power usage, China’s gross domestic product probably grew 3 percent to 4 percent last year, Cutler said yesterday in a telephone interview. “That’s what we and so many multinational companies have been feeling there in China for the last year and a half, the economy really hasn’t been growing at 7 or 8 percent,” Cutler said.
  • China Private Equity Chilled by ’Old Days’ Asking Prices. They aren’t budging even as the number of private-equity deals in China fell an unprecedented 43 percent last year and domestic initial public offerings, which private-equity firms count on to exit the investments, tumbled 70 percent. There have been no domestic IPOs this year, and new deals are virtually halted. 
  • Australian Retail Sales Fall in Longest Decline for 13 Years. Australian retail sales unexpectedly fell for a third month in December, the longest stretch of declines in 13 years, as consumers spent less dining out amid a deteriorating employment outlook. The local currency dropped. Sales slipped 0.2 percent to A$21.4 billion ($22.2 billion) from a month earlier, when they declined a revised 0.2 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 24 economists for a 0.3 percent gain. Weakness “is fairly broad-based,” said David de Garis, a senior economist at National Australia Bank Ltd. in Melbourne, which predicted the result and expects the RBA to cut the cash rate to a record 2.25 percent in the third quarter. “For the time being, retail is making no contribution to growth in the economy.”  
  • Bulgaria Links Hezbollah to Bus Bomb That Killed Israelis. Bulgaria implicated Hezbollah in the bombing of a tourist bus last year that killed five Israelis and their Bulgarian bus driver, prompting Israel and the U.S. to renew calls for the European Union to designate the Lebanese militant group a terrorist organization.
  • Internet ‘Under Assault’ by Censoring UN, Regulator Says. International proposals to control the Internet will continue after a United Nations conference in Dubai and the U.S. should be ready to fight such efforts, lawmakers and a regulator said. “The Internet is quite simply under assault,” Robert McDowell, a member of the U.S. Federal Communications Commission, said yesterday at a joint hearing by three House subcommittees. McDowell, a Republican, warned of “patient and persistent incrementalists who will never relent until their ends are achieved.” The U.S. and other nations refused to sign a revised telecommunications treaty at the UN conference in December, saying new language could allow Internet regulation and censorship by governments. Technology companies including Google Inc. (GOOG), owner of the world’s largest Internet search engine, also opposed the changes. 
  • Brazil Losing Mantega's War  as Stagflation Threatens: Currencies. Brazil is finding that winning the global currency wars may mean it's actually losing. After taking steps to push the real down 16% the past two years as government officials said monetary policy in major economies were debasing currencies such as the dollar while driving up those in developing nations, Brazil is now backing off efforts to weaken its exchange rate. Rather than having the desired effect of boosting the economy, the lower real has down little more than spur inflation, which has exceeded the central bank's 4.5% target the last 29 months. 
  • Rice Jumps to 15-Month High on Signs U.S. Inventories Tightening. Rice futures surged to the highest in almost 15 months on mounting concern that inventories are dwindling in the U.S., the world’s fifth-biggest exporter. Stockpiles will drop to 960,000 metric tons in the year ending July 31, down 26 percent from a year earlier, the U.S. Department of Agriculture said Jan. 11.
Wall Street Journal:
  • AIG(AIG), Fortress(FIG) Unit Test ABS With Personal-Loan Securitization. The consumer-lending joint venture of private-equity firm Fortress Investment Group LLC and insurer American International Group Inc. is planning a rare securitization of subprime personal loans as early as this week, in the latest test of risk appetite for asset-backed bonds, where soaring demand has pushed yields to record lows. The $604 million issue from consumer lender Springleaf Financial, the former American General Finance, will bundle together about $662 million of loans secured by assets such as cars, boats, furniture and jewelry into ABS, according to a term sheet. Some loans have no collateral. 
  • Pension Funds Cut Back On Commodity Indexes. Pension funds and other institutions are retreating from popular investments linked to commodities after finding they did little to protect their portfolios against inflation risk and the unpredictable returns of stocks. Investors have yanked nearly $10 billion from tradable indexes tied to energy, food, metals and other commodities after two years of record outflows. That leaves about $133 billion, said Kevin Norrish, a managing director at Barclays PLC. The trend is accelerating this year, analysts and investors said, driven by lackluster returns and looming U.S. regulations that could make these investments more complicated and costly.
  • Tensions Flare as Japan Says China Threatened Its Forces. Japan accused China's navy of locking weapons-guiding radar onto Japanese naval forces twice in the past three weeks, an escalation of their territorial dispute that has heightened fears of a military conflict between the Asian giants—one that could entangle the U.S. While no shots were fired, the radar at issue often precedes an attack. The incidents Japan described followed nearly two months of increasing tussles between the two air forces, including the first-ever reported intrusion by China into airspace claimed by Japan and the scrambling of advanced fighter jets by both sides. The radar incidents "were cases that could have led to an extremely dangerous situation with just one wrong move," Japanese Defense Minister Itsunori Onodera said at a news conference in Tokyo Tuesday.
  • Ireland 'Bad Bank' Tries to Make Good With Sales. When Ireland set up a so-called bad bank to manage the country's mountain of distressed real-estate assets in 2009, critics blasted its plan to liquidate its properties and loans with a face value of €74 billion ($100 billion) over the long time frame of 10 years. Three years later, these detractors are saying that time has proved them right.
  • White House Weighs Emission Rules. State of the Union Could Signal Effort to Curb Greenhouse Gases From Existing Coal-Powered Facilities. President Barack Obama in next week's State of the Union speech will lay out a renewed effort to combat climate change that is expected to include using his authority to curb emissions from existing power plants, people who have talked to the administration about its plans said.
  • Payback for a Downgrade? The feds sue S&P but not Moody's for pre-crisis credit ratings. The feds sue S&P but not Moody's for pre-crisis credit ratings. To this day, more than two years after the Dodd-Frank law ordered their repeal, SEC rules still force institutions to follow the advice of these government-anointed credit raters. Therefore the more appropriate defendant for Monday's lawsuit would be the SEC. But as a modest first step before suing a company for $5 billion, shouldn't the government at least stop mandating its products?
Fox News:
CNBC: 
Zero Hedge: 
Business Insider: 
NY Post: 
  • Heads will roll. Penney’s(JCP) Johnson seen slashing jobs. JCPenney CEO Ron Johnson is getting ready to break more hearts at headquarters — a few hundred more. In what some Penney insiders are calling the “St. Valentine’s Day Massacre,” the former Apple exec plans this month to fire at least 10 percent of the remaining 3,000 employees at the retailer’s home offices in Plano, Texas, sources told The Post. 
Reuters: 
  • Chipotle(CMG) 4th quarter profit up, despite higher food costs. Chipotle Mexican Grill Inc reported higher quarterly profit on Tuesday, despite higher costs for beef and other ingredients that took a bite out of margins. The results from the popular burrito chain come as U.S. restaurant companies virtually across the board are bracing for higher food prices due to last summer's historic U.S. drought. The shares of Chipotle, long an investor darling due to its fast growth, rose 2.6 percent to $312.88 in after-hours trading.
Financial Times: 
  • US regulator demands stricter bank loan ratio. A top US financial regulator is demanding a stricter cap on bank leverage, joining a growing group of influential policy makers who are challenging the Basel III capital accords. Jeremiah Norton, a Republican director on the Federal Deposit Insurance Corporation, plans to argue during a speech on Wednesday that US regulators should propose a more robust leverage ratio that would force big banks to either significantly increase their equity capital or sell large chunks of assets.
The Times:
  • Door is about to slam shut on high-rolling holidays to Macau. Beijing is planning a crackdown on Triad-linked “junket” operators who bring high-rolling gamblers into Macau from across China and smooth a money-laundering route that processes billions of dollars every year. The move, which law enforcement sources say will begin after Chinese new year in late February and will involve police operations in more than six big Chinese cities, is part of an anti-corruption campaign led by Xi Jinping, the country's president-in-waiting. "The squeeze has already started on a small scale, but the operators themselves believe that something bigger is coming within the next few weeks," a Macau gaming industry source said.
Nikkei:
  • Toyota Suspends Plans for New Plants. The co. will halt plans for 3 years starting next fiscal year, citing comments yesterday from Director Takahiko Ijichi.
China Daily:
  • NY Times, WSJ Hacking Claims Are 'Puppet Show'. The U.S. media seems to be a puppet of the U.S. government when they make hacking allegations that "recklessly" smear China, the People's Daily says in a commentary. The report named claims by the New York Times, Wall Street Journal, Washington Post and Twitter. The commentary written by Wen Zian, a reporter at the newspaper, was posted on page 3 of the newspaper that is published by the Chinese Communist Party.
Shanghai Securities News:
  • Beijing to Release New Measures on Property Control. Some first-tier cities including Beijing will release new measures to curb demand because of overheating in property markets, citing a person close to Beijing housing commission. The threshold for home purchases will be raised, according to the report. Measures may come out before National People's Congress and Chinese People's Political Consultative Conference in March, the report said.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.25%  to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.5 -4.0 basis points.
  • Asia Pacific Sovereign CDS Index 90.0 -2.0 basis points.
  • FTSE-100 futures +.16%.
  • S&P 500 futures +.13%.
  • NASDAQ 100 futures +.15%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (WYN)/.60
  • (CVH)/.68
  • (CMI)/1.75
  • (CVS)/1.10
  • (MRO)/.67
  • (TWX)/1.10
  • (SMG)/-1.13 
  • (RL)/2.20
  • (NWSA)/.43
  • (ALL)/-.05
  • (ORLY)/1.08
  • (IACI)/.74
  • (DV)/.59
  • (V)/1.78
  • (TSO)/1.39
  • (PRU)/1.74
  • (GMCR)/.65
  • (VECO)/.10
  • (AKAM)/.50
  • (ICE)/1.74       
Economic Releases
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,650,000 barrels versus a +5,947,000 barrel gain the prior week. Gasoline supplies are estimated to rise by +900,000 barrels versus a -956,000 barrel decline the prior week. Distillate inventories are estimated to fall by -625,000 barrels versus a -2,315,000 barrel decline the prior week.
Upcoming Splits
  • None of ntoe
Other Potential Market Movers
  • The ECB Bank Lending Survey, Australia Unemployment Change, weekly MBA mortgage applications report and the Cowen Aerospace/Defense Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and commodity 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.
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Tuesday, February 05, 2013

Stocks Rising into Final Hour on Euro rebound, Diminished Sequestration Fears, Short-Covering, Tech/Retail Sector Strength

Posted by Gary .....at 3:28 PM
Broad Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 13.41 -8.59%
  • ISE Sentiment Index 116.0 +1.75%
  • Total Put/Call 1.01 -3.81%
  • NYSE Arms .77 -49.57%
Credit Investor Angst:
  • North American Investment Grade CDS Index 88.01 -2.5%
  • European Financial Sector CDS Index 154.87 -2.7%
  • Western Europe Sovereign Debt CDS Index 106.5 +1.5%
  • Emerging Market CDS Index 232.35 +.12%
  • 2-Year Swap Spread 16.75 unch.
  • TED Spread 23.0 -1.0 bp
  • 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +1.0 bp
Economic Gauges:
  • 3-Month T-Bill Yield .06% unch.
  • Yield Curve 174.0 +3 bps
  • China Import Iron Ore Spot $154.20/Metric Tonne unch.
  • Citi US Economic Surprise Index -29.9 -.6 point
  • 10-Year TIPS Spread 2.56 unch.
Overseas Futures:
  • Nikkei Futures: Indicating +79 open in Japan
  • DAX Futures: Indicating +6 open in Germany
Portfolio:
  • Slightly Higher: On gains in my tech/medical/retail/biotech sector longs and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long
1 comments

Today's Headlines

Posted by Gary .....at 3:10 PM
Bloomberg:
Wall Street Journal:
  • China Takes a Big Bat to Income Gap. China unveiled sweeping policy guidelines to close the growing gap between rich and poor, vowing to turn over more of the profits of state-owned companies to pay for ambitious welfare programs and to take other steps to root out corruption and provide for the needy. In a policy statement filled with populist rhetoric about the need for greater equality, China's State Council, or cabinet, pledged to boost the social safety net and then took aim at the nation's powerful state corporations, effectively warning them they would have to shoulder some of that extra cost. "Narrowing the income gap is essential for ensuring social justice and social harmony," the State Council said in a statement posted on the central government website on Tuesday. "We need to raise income levels of the poor and adjust taxes on the excessively wealthy," it said.
  • Dell(DELL) to Sell Itself for $24.4 Billion. Dell Inc. on Tuesday said it reached a deal to take itself private, in a $24.4 billion buyout that marks an unofficial end to the era when a handful of young entrepreneurs made PCs the dominant computing device.
CNBC: 
  • Sucker Alert? Insider Selling Surges After Dow 14,000. Insiders have been pulling out of stocks just as small investors are getting in. Selling by corporate executives has surged recently as the Dow Jones Industrial Average hit 14,000 and retail investors flooded into stocks. The amount of insider selling has usually preceded market selloffs. "In almost perfect coordination with an equity market that was rushing toward new all-time highs, insider sentiment has weakened sharply — falling to its lowest level since late March 2012," wrote David Coleman of the Vickers Weekly Insider report, one of the longest researchers of executive buying and selling on Wall Street. "Insiders are waving the cautionary flag in an increasingly aggressive manner." There have been more than nine insider sales for every one buy over the past week among NYSE stocks, according to Vickers. The last time executives sold their company's stock this aggressively was in early 2012, just before the S&P 500 went on to correct by 10 percent to its low for the year.
  • 'Severe' Danger Looming In Corporate Bonds: BofA(BAC). A jump in interest rates could spark an unruly exit from the $12 trillion corporate bond market, according to a new analysis. Investors have been flocking to the relative safety of corporate and government debt while interest rates have stayed low and stock market tensions have run high.
  • Housing Market Already Shows Signs of a New Bubble.  
  • CBO: Budget Deficit Estimate Drops Below $1 Trillion. The Congressional Budget Office analysis said the government will run a $845 billion deficit this year, a modest improvement compared with last year's $1.1 trillion shortfall but still enough red ink to require the government to borrow 24 cents of every dollar it spends.The agency projected that the economy will grow just 1.4 percent this year if $85 billion in across-the-board spending cuts take effect as scheduled March 1. Unemployment would average 8 percent.
  • Probe of S&P 'Intensified' After US Downgrade: Lawyer. Floyd Abrams, the lead attorney for Standard & Poor's, told CNBC Tuesday that "the intensity of the investigation" into the agency's bond ratings "significantly increased" after S&P downgraded the U.S. government's credit rating in 2011.
Washington Post:
RealClearPolitics: 
  • Health Care and the Debt Deal. When Obamacare was passed, its supporters insisted the law would “bend the cost curve down” and “reduce the deficit.” Today, reality has set in. The Congressional Budget Office estimates Obamacare will add almost $1.6 trillion in new spending over the next 10 years. It obligates an estimated $1 trillion for subsidies to individuals for purchasing coverage through the government exchanges and $644 billion for states agreeing to expand their Medicaid programs. To help pay for the new entitlements, it takes over $700 billion out of an “old” one—Medicare, a program already teetering on the brink of insolvency. It also relies on unsound and unreliable savings, shifty Washington budget gimmicks, and imposes over $800 billion in new penalties and taxes that affect all Americans.
Reuters:
Telegraph:
  • Hollande warns Cameron not to hijack EU Summit. French President Francois Hollande has warned David Cameron not to hijack this week's European Union summit with excessive demands on cuts in the EU budget while refusing to make concessions.
  • Where's your positive contagion now, Mr Draghi? Euroland remains confident that the positive contagion from improving market conditions will soon bear fruit in stronger economic data. And this despite the fact that unlike the US and Britain, Europe's banks are only just beginning their deleveraging cycle. Pigs might fly, I suppose.
Xinhua:
  • China TV Watchdog Cuts Ads Suggesting 'Gift Giving'. State Administration of Radio, Film and Television issues order to all radio, TV channels in line with government campaign for "frugal and low-key" living, citing SARFT circular, spokesman for the government agency. Some ads have encouraged giving of gifts such as luxury watches, rare stamps and gold coins. These ads have created "bad social ethos".
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Bear Radar

Posted by Gary .....at 1:19 PM
Style Underperformer:
  • Mid-Cap Growth +.69%
Sector Underperformers:
  • 1) Coal -1.25% 2) Steel -1.20% 3) Oil Service -.60%
Stocks Falling on Unusual Volume:
  • PBR, DO, NIHD, NOV, SSRI, STZ, GOLD, AMX, TE, LBTYA, MHP, MCO, EPD, YUM, KNL, EPAY, LBTYA, BIDU, BRE, SWI, BAP, IEX, CLH, CG, SYA, EW, MX, SNN, SN, PBYI, ICON, CLH and RTEC
Stocks With Unusual Put Option Activity:
  • 1) PBI 2) SD 3) CHRW 4) PNRA 5) XLF
Stocks With Most Negative News Mentions:
  • 1) STZ 2) NOV 3) PBR 4) YUM 5) BIDU
Charts:
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Bull Radar

Posted by Gary .....at 11:27 AM
Style Outperformer:
  • Large-Cap Value +.89%
Sector Outperformers:
  • 1) Retail +1.49% 2) HMOs +1.45% 3) Defense +1.36%
Stocks Rising on Unusual Volume:
  • VMED, EL, ARMH, VSH, CSC, BBRY  and ACM
Stocks With Unusual Call Option Activity:
  • 1) VMED 2) EA 3) SM 4) MRK 5) YUM
Stocks With Most Positive News Mentions:
  • 1) PRU 2) K 3) APKT 4) LCC 5) LMT
Charts:
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