Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.66% 2) Homebuilders -1.01% 3) I-Banks -.85%
Stocks Falling on Unusual Volume:
- TNAV, DK, LFC, SNFCA, GOV, SHOS, EVER, HMIN, PWRD, AMED, AVG, AAXJ, SLCA, RP, BAM, BVSN, DK, DMND, ESC, AMBA, RHT, ABG, APEI, AKAM, YNDX, CDNS, BIP, GLPW, YY, GES, EXAS and SLCA
Stocks With Unusual Put Option Activity:
- 1) EFA 2) JNK 3) YUM 4) UAL 5) NKE
Stocks With Most Negative News Mentions:
- 1) GS 2) CVS 3) GM 4) AB 5) F
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.12% 2) Hospitals +.09% 3) Drugs +.09%
Stocks Rising on Unusual Volume:
- BIOS, DKS, MCRS, IRBT, CAB, PAY, MLNX and JCP
Stocks With Unusual Call Option Activity:
- 1) DF 2) YUM 3) TWX 4) HEK 5) SVNT
Stocks With Most Positive News Mentions:
- 1) JEC 2) ISIL 3) SHW 4) T 5) MOS
Charts:
Evening Headlines
Bloomberg:
- Hollande Hostility Fuels Charm Offensive to Show He’s No Sarkozy. President Francois Hollande, the
most-unpopular French leader in more than 30 years, is
struggling to show supporters he’s not dipping into predecessor
Nicolas Sarkozy’s playbook to reverse an economic slump. The European debt crisis, which is in its fourth year, and
France’s stagnating economy are preventing the Socialist
president from veering too far from efforts advocated by Sarkozy
and Germany’s Angela Merkel to cap the budget deficit, shrink
government spending and push through structural changes.
- Britain Loses to Germany as CDS Rise Most in World: U.K. Credit.
Confidence in U.K. credit is declining the most in the global
sovereign-debt market on concern the economy will fall into its third
recession in five years and force the government to increase borrowing.
Credit-default swaps insuring gilts rose 76% from a more than four-year
low of 26 basis points on Nov. 1, the most among 67 governments tracked
by Bloomberg.
- Donilon Says China Cyber Attacks Hurt Bid for Better Ties. China
is waging a campaign of cyber espionage against U.S. companies that is
threatening to derail President Barack Obama’s second-term effort to
improve ties, National Security Adviser Thomas Donilon said. The widespread theft of intellectual property and trade
secrets through “cyber intrusions emanating from China at a
very large scale” has become a point of contention with the
Chinese government, Donilon said yesterday in a speech at the
Asia Society in New York.
- India Inflation Fight Hampered as Debt Role Hinders RBI. The
biggest critic of India’s $100 billion budget deficit is also one of
the largest purchasers of the debt that finances it: the central bank.
The Reserve Bank of India faults government expenditure for stoking
inflation even as its sovereign-bond holdings have risen to $91 billion
from negligible amounts in 2008. While it has a mandate for price
stability -- like counterparts in the U.S., Europe and Japan -- the RBI
has another charge its peers lack: ensuring the government achieves its
borrowing program.
- U.S. Calls North Korean Threats Hyperbolic. North
Korea’s threats of preemptive nuclear strikes are “hyperbolic,” U.S.
National Security Adviser Thomas Donilon said, as the totalitarian
state’s leader Kim Jong Un told troops to prepare for war. Kim
yesterday told front line units that “every day is a state of war,”
official media reported. North Korea shut down a border hot line and
declared the 1953 armistice ending the Korean War nullified as the U.S.
and South Korea began annual military drills.
- Zinc Declines to 15-Week Low on Chinese Industrial Output. Zinc
prices fell to a 15-week low after industrial output posted the weakest
start to a year since 2009 in China, the world’s biggest user of
industrial metals. Production rose 9.9 percent in the two months ended Feb.
28, trailing estimates by economists, and retail sales fell
short of forecasts. Zinc dropped below its 200-day moving
average, and aluminum, lead, and tin also declined in London.
- Rebar in Shanghai Declines Amid High Inventories, Property Curbs. Steel reinforcement-bar futures in
Shanghai declined as high inventories and property curbs
increased concern that demand may wane. Rebar for delivery in October on the Shanghai Futures
Exchange fell as much as 0.5 percent to 3,890 yuan ($626) a
metric ton and traded at 3,901 yuan at 10:44 a.m. local time.
Wall Street Journal:
- CIA Ramps Up Role in Iraq. As al Qaeda Fighters Cross Over From Syria, Agency Fills Void Left by U.S. Military. The Central Intelligence Agency is ramping up support to elite Iraqi
antiterrorism units to better fight al Qaeda affiliates, amid alarm in
Washington about spillover from the civil war in neighboring Syria,
according to U.S. officials. The stepped-up mission expands a covert U.S. presence on the edges of
the two-year-old Syrian conflict, at a time of American concerns about
the growing power of extremists in the Syrian rebellion.
- Paul Ryan: The GOP Plan to Balance the Budget by 2023. The goal can be reached, with no new taxes, while increasing spending 3.4% annually instead of the current 5%. America's national debt is over $16 trillion. Yet Washington can't
figure out how to cut $85 billion—or just 2% of the federal
budget—without resorting to arbitrary, across-the-board cuts. Clearly,
the budget process is broken. In four of the past five years, the
president has missed his budget deadline. Senate Democrats haven't
passed a budget in over 1,400 days. By refusing to tackle the drivers of
the nation's debt—or simply to write a budget—Washington lurches from
crisis to crisis.
Fox News:
- Dozens of WH senior staffers making six-figure salaries amid sequester woes. After closing the doors to public tours in an effort to save money,
White House officials haven't yet said if sequester cuts will result in
furloughs or layoffs for its senior staffers -- as is happening with
rank-and-file in other executive branch agencies. But there are dozens of senior employees and other presidential
"assistants" to choose from if the administration were to look at
cutting the six-figure salaries from its payroll. In the field of energy and climate change alone, President Obama in
2012 employed three advisers making at least $100,000 -- though one has
since left. The president kept on staff a "deputy assistant" for energy and
climate change, Heather Zichal, making $140,000; a "special assistant"
for energy and environment, Nathaniel Keohane; and a "deputy director"
for energy and climate change, Dan Utech. Together, their salaries totaled over $370,000 last year, according to White House records. Climate blogger Steven Goddard said it's unlikely the administration
will scale back its circle of advisers, at least on this issue.
- Lawmaker looks to rein in program after free cell phones sent to dead people. That’s the message Rep. Tim Griffin of Arkansas wants to send Congress,
after he says a controversial government-backed program that helps
provide phones to low-income Americans ended up sending mobiles to the
dead relatives of his constituents. Griffin has introduced a bill that
targets the phone hand-out program, which has ballooned into a fiscal
headache for the government.
CNBC:
- This Could Spark China's Arab Spring. With half a billion and counting registered users on China's
Twitter-like micro blogging website Sina Weibo, the country's
increasingly vocal army of netizens could be among the biggest
challenges facing the world's second largest economy's new leadership,
which officially assumes power this month.
Zero Hedge:
Business Insider:
NY Times:
- On the Brink in Italy. Businesses of all sizes have been going belly up at the rate of 1,000 a
day over the last year; especially hard hit among Italy’s estimated six
million companies are the small and midsize companies that represent the
backbone of Italy’s $2 trillion economy.
Economists worry that the pace of business closings may accelerate as long as the country lacks a functioning government.
DealBreaker:
Reuters:
- China politics keep central bank hawks at bay, for now. Intense
lobbying by central government agencies and debt-laden local
governments is keeping People's Bank of China hawks in check after
inflation jumped to a 10-month high, forcing the central bank to keep
its monetary policy setting in neutral.
- U.S. Congress urged to pass vote changes for IMF. More than 130 academics and
global policy pundits urged the U.S. Congress on Monday to enact
delayed changes in voting powers in the International Monetary
Fund and warned that failure to do so would diminish U.S.
influence in the global financial lender.
Financial Times:
- Facebook(FB) reveals secrets you haven’t shared.
The increasing amount of personal information that can been gleaned by
computer programs that track how people use Facebook has been revealed
by an extensive academic study. Such programmes can discern undisclosed private information such as
Facebook users’ sexuality, drug-use habits and even whether their
parents separated when they were young, according to the study by
Cambridge university academics.
Telegraph:
Globe and Mail:
- Sales of subprime car-loan securities soar. Sales of risky pools of securities backed by car loans have jumped
this year as investors’ search for yield takes them to corners of the
market that boomed in the build-up to the financial crisis. Sales
of subprime auto asset-backed securities have increased year-to-date to
nearly $4-billion (U.S.), almost double the volume during the same
period of 2012, according to Deutsche Bank data. Subprime auto sales now
account for 34 per cent of all auto ABS issuance, surpassing levels
last seen in 2007.
Shanghai Securities News:
- China's Jiangsu Shagang Group Cuts Steel Prices. Co. cuts prices
for its threaded steel products by 250 yuan a ton to 3,800 yuan a ton as
construction-use steel product prices dropped substantially after the
State Council announced detailed property curbs. The newspaper also
cited rising inventories at steel companies.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 100.0 unch.
- Asia Pacific Sovereign CDS Index 79.75 +.5 basis point.
- NASDAQ 100 futures -.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- The NFIB Small Business Optimism Index for February is estimated to rise to 90.0 versus 88.9 in January.
10:00 am EST
- JOLTs Job Openings for January are estimated to rise to 3670 versus 3617 in December.
Upcoming Splits
Other Potential Market Movers
- The German CPI report, Greece Industrial Production report, weekly
retail sales reported, 3Y T-Note auction, Piper Jaffary
Tech/Media/Telecom Conference, Barclays Healthcare Conference, BofA
Consumer/Retail Conference and the (CVX) analyst meeting could also
impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 129.0 +14.16%
- Total Put/Call .91 +1.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 79.5 -1.32%
- European Financial Sector CDS Index 138.99 +.16%
- Western Europe Sovereign Debt CDS Index 97.63 +1.29%
- Emerging Market CDS Index 238.42 -.24%
- 2-Year Swap Spread 14.25 -.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -16.5 unch.
Economic Gauges:
- 3-Month T-Bill Yield .09% unch.
- China Import Iron Ore Spot $144.10/Metric Tonne -1.5%
- Citi US Economic Surprise Index 21.0 -.1 point
- 10-Year TIPS Spread 2.58 unch.
Overseas Futures:
- Nikkei Futures: Indicating +85 open in Japan
- DAX Futures: Indicating unch. open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/medical sector longs and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- French Industrial Output Tumbles as Recession Looms. French industrial production fell
more than expected in January as Europe’s second-largest economy
teetered on the brink of its third recession in four years. Output from factories, mines and utilities fell 1.2 percent
in the month from December, national statistics office Insee
said today. Economists had expected a 0.2 percent drop,
according the median 25 estimates in a Bloomberg survey. The decline
underlines difficulty President Francois Hollande faces in trying to
revive an economy that fell back
into recession early last year and shrank again in the fourth
quarter. Factory output fell 1.4 percent in January and 4.6
percent in the three months through January, led by a slump in
car production. “France remains stuck in a recessionary mode,” said
Philippe Gudin, an economist at Barclays in Paris. “The
unemployment rate is flirting with historical highs and
household income is hit by higher taxes. The stabilization we
had expected from the beginning of 2013 does not seem to have
taken place.”
- Italy’s Grillo Threatens to Quit Politics If Members Support PD. Beppe
Grillo, the comedian-turned politician whose Five-Star Movement won 25
percent of the vote in last month’s Italian elections, said he would
quit politics if his party members support a government led by Pier
Luigi Bersani’s Democratic Party. “If there were a confidence vote
by the parliamentary group of the Five-Star Movement in favor of the
ones that have destroyed Italy, I
would retire from politics,” Grillo said late yesterday in a post
on Twitter.
- China's Inflation Fight Starts to Squeeze Consumers.
While Japanese leaders have been making headlines by trying to end
years of deflation and achieve an inflation target of 2 percent, their
counterparts in China have a different fight on their hands. Far from
promoting inflation, the Chinese are fighting to contain it—and the
battle may get rougher in the months ahead. Consumer prices in China
rose 3.2 percent last month, up from 2 percent in January.
- Florida Lawmakers Reject Obama Medicaid Program Sought by Scott.
Florida legislative committees rejected an expansion of Medicaid for
the poor under President Barack Obama’s health-care law, a defeat for
Republican Governor Rick Scott from members of his own party. A Senate
panel voted today against expanding Medicaid, an option for states under
Obama’s Patient Protection and Affordable Care Act. A House
committee made the same decision on March 4.
Wall Street Journal:
- Pressure Rises on Korean Peninsula. North Korea cut off a phone hot line to the South and "declared
invalid" the Korean War armistice as the South Korean and U.S.
militaries began Monday a second phase of their annual joint winter
exercises. Later Monday, the U.S. Treasury put new sanctions on North Korea's
primary foreign-exchange bank to step up pressure on the country's
nuclear-weapons programs.
- SEC Charges Illinois Over Pension Funding. Brazil's Vale Shelves $5.9 Billion Potash Project.
MarketWatch:
CNBC:
- 'Major Political Storms' Holding Back US: GE's Immelt. The explosion of new regulations on business and the "unprecedented"
level of uncertainty about Washington's budget negotiations will keep
the the U.S. from achieving its "full growth potential," General Electric CEO Jeff Immelt said in a letter to shareholders Monday.
- Why Italy Could Be the Next 'Bad Boy of Europe'. Italy could see its borrowing costs rise above those of troubled
Spain this week, analysts told CNBC on Monday, with a credit rating
downgrade on Friday and continued political deadlock posing an ever
larger threat. "Italy is really going to blow it up this week,"
Joe Rundle, head of trading at ETX Capitol, told CNBC. "There is the
downgrade that happened on Friday but now there is the Italian yield and
the spread narrowing to the Spanish yield and there is the possibility
that Italy gets more expensive than Spain. The last time we saw that we
were in the middle of a euro zone crisis," Rundle told CNBC Europe's
"Squawk Box".
Zero Hedge:
Business Insider:
Reuters:
- Paper Trail Goes Cold in Case Against S&P. In early 2007, as signs of distress began
appearing in securities backed by residential mortgages, executives at
Standard & Poor's began advising analysts responsible for rating
mortgage bonds that they should put the phrase "privileged and
confidential" on emails to one another.
- Banks halt European share rally on Italian debt scare. Banking stocks held European
shares below 4-1/2 years highs on Monday, depressed by a
worsening outlook for Italy's public finances.
The STOXX euro zone banking index shed 0.8 percent, as a downgrade of Italy's sovereign
debt rating late on Friday triggered a selloff in the country's banks,
which own much of Rome's public debt.
Milan-listed Mediobanca, BP Emilia and
Banco Popolare led sector fallers, shedding between 3
percent and 5 percent, after Fitch warned that inconclusive
elections last month threatened to delay much-needed economic
reforms.
Style Underperformer:
Sector Underperformers:
- 1) Steel -1.10% 2) Alt Energy -.50% 3) Telecom -.41%
Stocks Falling on Unusual Volume:
- HAFC, BSBR, VLO, CVI, BCS, CNSL, SBGI, DKS, BCOR, BAM, AKAM, KORS, FRC, TUP, BRFS, HIBB, ETE, JOBS, INGR, MYGN, CVI, INTU, GORO, FANG, EW, DB, BAP, SLW, UA, HFC, CLDX and TUP
Stocks With Unusual Put Option Activity:
- 1) SCHW 2) JNK 3) CIM 4) EEM 5) PETM
Stocks With Most Negative News Mentions:
- 1) INTU 2) EXP 3) CTSH 4) BXP 5) GDI
Charts:
