Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Almost Every Sector Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- ISE Sentiment Index 114.0 unch.
- Total Put/Call 1.13 -.88%
Credit Investor Angst:
- North American Investment Grade CDS Index 83.06 -1.90%
- European Financial Sector CDS Index 151.82 -4.55%
- Western Europe Sovereign Debt CDS Index 100.79 -.69%
- Emerging Market CDS Index 239.60 -.98%
- 2-Year Swap Spread 14.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -17.25 +2.75 bps
Economic Gauges:
- 3-Month T-Bill Yield .08% -1 bp
- China Import Iron Ore Spot $145.20/Metric Tonne -2.42%
- Citi US Economic Surprise Index 6.30 +1.1 points
- 10-Year TIPS Spread 2.56 +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +145 open in Japan
- DAX Futures: Indicating -20 open in Germany
Portfolio:
- Higher: On gains in my retail/biotech/tech/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Grillo Says Party to Vote Only for 5 Star Italian Government. Italy’s Five Star Movement will only provide voting
support for a new government that it leads, said the populist group’s
founder, Beppe Grillo. Five Star “won’t back a technocratic government” in a vote of confidence, Grillo said today in a post on his website,
commenting on possible support for an administration of non- elected
figures. “The only solution we propose is a government of the 5 Star,”
Vito Crimi, the head of the party’s senators, said in the same post.
- Euro-Area Services Output Contracts Less Than Estimated. Euro-area
services output shrank less than initially estimated in February,
adding to signs the currency bloc’s economy may be beginning to emerge
from a recession. An index based on a survey of purchasing managers in the euro-area services industry fell to 47.9 from 48.6 in January,
London-based Markit Economics said in a report today. That’s above an
initial estimate of 47.3 published on Feb. 21. A reading below 50
indicates contraction. Euro-area retail sales rose the most in three
years in January, separate data showed.
- Qualcomm(QCOM) Boosts Dividend by 40%, Sets $5 Billion Buyback. Qualcomm Inc. boosted its dividend by 40 percent and set up a $5 billion share
buyback plan, rewarding investors after rising demand for smartphones
that run on its technology spurred sales growth. The quarterly
cash dividend will increase to 35 cents from 25 cents, Qualcomm, the
largest seller of semiconductors for mobile phones, said in a statement
today. The new share repurchase plan replaces an older $4 billion plan
that had $2.5 billion remaining.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
iMore:
Reuters:
- Italy February Services PMI 43.6, MNI Says. France February Services PMI 43.7, MNI Says. Euro-Area February Composite PMI 47.9, MNI Says.
Style Underperformer:
Sector Underperformers:
- 1) Gaming +.29% 2) Gold & Silver +.31% 3) Telecom +.40%
Stocks Falling on Unusual Volume:
- WAG, CLMT, BBT, WPZ, IPXL, SDT, CWH, JCP, ABM, SHFL, SDR, MDVN, PBT, PFMT, MBI, ISRG and TNGO
Stocks With Unusual Put Option Activity:
- 1) BIG 2) CREE 3) THRX 4) ALXA 5) SWN
Stocks With Most Negative News Mentions:
- 1) MSO 2) TXRH 3) CWST 4) MBI 5) RIG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Alt Energy +2.95% 2) Semis +1.96% 3) Construction +1.80%
Stocks Rising on Unusual Volume:
- PZE, APC, CREE, ZOLT, RDN, SNTS, ASNA, CMRE, SA, SSYS, AYI, CAR, URI, SHLD, VECO, RTI, FOR, ACTG, BGS, PCRX, BMC, CVBF, TER and VNO
Stocks With Unusual Call Option Activity:
- 1) CAR 2) THRX 3) TER 4) CREE 5) JNPR
Stocks With Most Positive News Mentions:
- 1) APOL 2) QCOM 3) MSTR 4) AMAT 5) XLNX
Charts:
Evening Headlines
Bloomberg:
- EU Opens Way for Easier Budgets After Italian Austerity Backlash. European finance ministers opened
the way for looser budget policies after a backlash against
austerity thrust Italy into political limbo and shattered months of relative stability in European markets.
Italy’s deadlocked election, France’s refusal to make deeper budget
cuts and protests against the shrinking of the welfare state across
southern Europe escalated the rebellion against the German-led
prescription for fighting the debt crisis. Economic strains “may also
justify in a certain number of cases reviewing deadlines for the
correction of excessive deficits,” European Union Economic and Monetary
Commissioner Olli Rehn told reporters late yesterday after a meeting of euro-
area finance ministers in Brussels.
- Euro Chiefs Won’t Rule Out Cyprus Depositor Losses. European finance ministers left open
the possibility of saddling bank depositors and bondholders with
some of the costs of an aid package for Cyprus, potentially
unsettling markets as the bailout negotiations drag on. Dutch Finance Minister Jeroen Dijsselbloem declined to rule
out a “bail in” of Cypriot depositors, even after concern over
the treatment of bank account holders prompted the first signs
of capital flight from the island.
“All the questions on the elements” will be dealt with by
late March, Dijsselbloem told reporters after chairing a meeting of euro-area finance ministers in Brussels yesterday.
- Wegelin Must Pay $58 Million in U.S. Tax Prosecution. Wegelin & Co. was ordered to pay
U.S. authorities almost $58 million at the end of a criminal
case after the Swiss bank pleaded guilty to helping American taxpayers hide more than $1.2 billion from the Internal Revenue Service.
- China
Bull Market Ending as Financials Plunge: Chart of the Day. A slump by a
Chinese equity gauge of banks, property developers and insurers in the
past month is signaling the end to a bull-market rally by the nation's
stocks as the government takes steps to prevent asset bubbles. Peaks in
the relative performance of financial shares versus the broader market
have foreshadowed bear-market declines in the CSI 300 Index, according
to data compiled by Bloomberg. "The stock rally is over," Zhou Binglin, a
senior economist at Guosen Securities Co. in Shenzhen, said March 1.
Banks and developers are "leading indicators," with real estate
accounting for about 20% of the economy, he said.
- China Boosts Defense Spending as Military Modernizes Arsenal. China will boost defense spending
10.7 percent this year as the government modernizes its military
arsenal and adopts a more assertive stance in territorial
disputes with its neighbors. Military spending is set to rise this year to 740.6 billion
yuan ($119 billion) from 669.1 billion, the Ministry of Finance
said in a report.
- RBA Holds Key Rate at 3%, Reiterates Scope to Ease Further. Australia’s
central bank kept its benchmark interest rate unchanged at a
half-century low and reiterated it has room to cut further if needed to
boost demand. Governor Glenn Stevens and his board left the
overnight cash-rate target at 3 percent, the Reserve Bank of Australia
said in a statement today in Melbourne. The decision was
predicted by 27 of 29 economists surveyed by Bloomberg. Two
forecast a 0.25 percentage point cut.
- Netanyahu Warns Iran Stalling While Biden Presses Talks. Israeli Prime Minister Benjamin Netanyahu said that Iran is using negotiations over its nuclear
program to stall for time to develop an atomic weapon, even as
Vice President Joe Biden said the U.S. favors diplomacy to stop
Iran from getting one. “Diplomacy has not worked,” Netanyahu, speaking via
satellite, today told the largest gathering in Washington of a
pro-Israel U.S. lobbying group. Iran is “running out the
clock,” he said. “It has used negotiations, including the most
recent ones, in order to buy time to press ahead with its
nuclear program.”
Wall Street Journal:
- China Moves to Temper Growth. Property Bubble Is a Key Concern. China's ambitions for more moderate growth come after decades of
double-digit increases and are a centerpiece of new leaders' plans to be
detailed during the annual National People's Congress, which began
Tuesday.
"We should unswervingly take expanding
domestic demand as our long-term strategy for domestic development,"
said Premier Wen Jiabao, delivering his final report to the congress
after 10 years at the helm. The key to that change, he said, is to
"enhance people's ability to consume."
- Italy, Spain Close the Risk Divide. Italy's political uncertainty, coupled with relative stability in
Spain, brought the gap between the two countries' bond yields to the
narrowest point in almost a year on Monday, Financial markets shuddered when last
month's parliamentary election in Italy left Europe's third-largest
economy without any clear leadership. Since then, yields on 10-year
Italian bonds have risen by half a percentage point to 4.867% on Monday,
according to Tradeweb.
- Money-Laundering Suspicion Stalls Europe's Latest Bailout. Cyprus's newly elected government is bargaining for a €17 billion bailout from its euro-zone peers. But the little island won't get a cent until it wrestles with a
long-standing issue: money laundering. Cyprus's reputation as a transit
point for shady cash, and its unusual connections to Russia, are making
many of its would-be rescuers nervous.
- Gardner Denver(GDI) Expected to Fetch More than $75 Per Share From KKR.
- U.S., China Reach Deal on North Korea Sanctions. The U.S. and China have reached a deal on a new set of sanctions
against North Korea in response to its test of a nuclear weapon last
month, U.N. diplomats said. The resolution, which will enforce some existing sanctions and
include new ones, will be introduced at a U.N. Security Council meeting
on Tuesday, a diplomat said. China has already voted for three sets of
sanctions against its reclusive ally for its past nuclear tests and
ballistic missile launches, both banned by the Security Council.
- Young Adults Retreat From Piling Up Debt. Young people are racking up larger amounts of student debt than ever
before, but fresh data suggest they are becoming warier of borrowing in
general: Total debt among young adults dropped in the last decade to the
lowest level in 15 years.
A typical young U.S. household—defined
as one led by someone under age 35—had $15,000 in total debt in 2010,
down from $18,000 in 2001 and the lowest since 1995, according to a
recent Pew Research Center report and government data. Total debt
includes mortgage loans, credit cards, auto lending, student loans and
other consumer borrowing.
In addition, fewer young adults carried
credit-card balances and 22% didn't have any debt at all in 2010—the
most since government tracking began in 1983.
- Venezuela Says Chávez Has New Infection, Breathing Problems Worsen.
- Carbon Power Politics. The next EPA chief and next phase of the Obama green agenda. President Obama gave his second-term global warming agenda a lot more
definition Monday with a new Environmental Protection Agency chief to
replace Lisa Jackson. Picking Gina McCarthy, one of her top lieutenants
and the architect of some of the agency's most destructive carbon rules,
is a sign he intends to make good on his vow of "executive actions" if
Congress doesn't pass cap and tax.
MarketWatch.com:
CNBC:
- Tumbling Oil Prices May Have Further to Fall. Oil prices, at 2013 lows, could continue to feel pressure, if the
global economy turns out to be weaker than expected and production
continues to grow in places like the U.S., Brazil and Iraq, according to
James Burkhard, vice president and head of oil market research at IHS. "We're
going from three million barrels to four million barrels of spare OPEC
productive capacity this year," he said, shortly after participating in a
panel discussion at the annual IHS CERAWeek conference in Houston.
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
- Europe faces an impossible challenge - why can't Olli Rehn see it? "There is no alternative". That was again the message this weekend
from our old friend Olli Rehn in telling Der Spiegel that the eurozone's
miscreant periphery has no option but to stick to the assigned path of
budgetary consolidation.
With Italy in open political revolt and much of the rest of the Club Med deep
in the grips of an apparently inescapable depression, there is, he said, no
room for manoeuvre. Normally when something isn't working, you try a
different approach, but the luckless European economics chief finds himself
so locked into the task of defending the indefensible – the single currency
- that he is unable to offer alternatives.
Jiji:
- Ex-BOJ Deputy
Says More Money Supply Won't Beat Deflation. Jiji cities an interview
with former Bank of Japan Deputy Governor Yutaka Yamaguchi.
Evening Recommendations
RBC Capital:
- Rated (NFLX) Outperform, target $210.
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.50 +.5 basis point.
- Asia Pacific Sovereign CDS Index 85.0 -.25 basis point.
- NASDAQ 100 futures +.11%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (CKP)/.17
- (LNCR)/.61
- (SWHC)/.23
- (PAY)/.49
Economic Releases
10:00 am EST
- ISM Non-Manufacturing Composite for February is estimated to fall to 55.0 versus 55.2 in January.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Lacker speaking, Eurozone Services PMI/Retail Sales, Australia
gdp report/rate decision, Brazil rate decision, weekly retail sales
reports, IBD/TIPP Economic Optimism Index for March, (XLNX) investor
day, Deutsche Bank Gaming/Lodging Conference and the Citi Financial
Services Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial 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.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 102.0 +22.89%
- Total Put/Call 1.14 -3.39%
Credit Investor Angst:
- North American Investment Grade CDS Index 84.74 -1.89%
- European Financial Sector CDS Index 159.05 -2.79%
- Western Europe Sovereign Debt CDS Index 101.49 -1.30%
- Emerging Market CDS Index 242.12 -.74%
- 2-Year Swap Spread 14.0 +.25 bp
- TED Spread 19.75 +1.5 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -20.0 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .09% -1 bp
- China Import Iron Ore Spot $148.80/Metric Tonne -1.20%
- Citi US Economic Surprise Index 5.20 -1.5 points
- 10-Year TIPS Spread 2.55 +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +103 open in Japan
- DAX Futures: Indicating +40 open in Germany
Portfolio:
- Higher: On gains in my retail/biotech sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 50% Net Long
