Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 62.0 -34.74%
- Total Put/Call .98 +10.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 90.09 -.78%
- European Financial Sector CDS Index 194.48 +.07%
- Western Europe Sovereign Debt CDS Index 105.01 -.03%
- Emerging Market CDS Index 275.0 +3.59%
- 2-Year Swap Spread 17.0 -1.25 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -19.25 unch.
Economic Gauges:
- 3-Month T-Bill Yield .07% -1 bp
- China Import Iron Ore Spot $137.30/Metric Tonne unch.
- Citi US Economic Surprise Index 12.20 -6.7 points
- 10-Year TIPS Spread 2.52 unch.
Overseas Futures:
- Nikkei Futures: Indicating unch. open in Japan
- DAX Futures: Indicating +4 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech, biotech and medical sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Coal -3.13% 2) Oil Tankers -2.72% 3) Airlines -2.22%
Stocks Falling on Unusual Volume:
- DLLR, CJES, SBGI, COLB, ICLR, AMBA, GASS, TFX, NSR, BAS, GIII, SBY, LNN, MNRO, ARII, SNX, RHT, CSH, ADC, TCAP, SIMO, ADT, WLT, WDAY and SHOS
Stocks With Unusual Put Option Activity:
- 1) ADT 2) X 3) TSLA 4) HD 5) TXN
Stocks With Most Negative News Mentions:
- 1) DSX 2) CJES 3) VMW 4) ALGT 5) XOM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Hospitals +.08% 2) Retail -.03% 3) Biotech -.08%
Stocks Rising on Unusual Volume:
- AM, TSLA, EBAY, TAP and GME
Stocks With Unusual Call Option Activity:
- 1) OKE 2) KMI 3) GME 4) SE 5) VRNG
Stocks With Most Positive News Mentions:
- 1) AM 2) RTN 3) MON 4) IPG 5) POT
Charts:
Weekend Headlines
Bloomberg:
- Bank of Cyprus’s Customers May Lose as Much as 60% on Deposits.
Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc
accounts exceeding 100,000 euros ($128,000) as part of an aid deal to
stop the country from going bankrupt. Customers will have 37.5 percent
of their deposits above this amount converted into shares with full
voting rights and access to any future Bank of Cyprus dividend, the
Nicosia-based central bank said in an e-mailed statement. A further 22.5
percent will be temporarily withheld to ensure the
lender meets the terms of its recapitalization, as agreed under Cyprus’s
loan agreement with international creditors, the central bank said.
- Euro Drops After Monthly Drop on Weak Economic Recovery. The euro weakened following a
decline last month as economic data signal the 17-nation region
is struggling to recover, damping demand for the currency. The euro
fell versus most of its 16 major counterparts
ahead of a report tomorrow that may show unemployment in the
bloc climbed to a record in February, two days before European Central
Bank officials meet to set interest rates. The yen strengthened, after
last month capping its longest string of losses in 12 years, as a drop
in Asian stocks spurred demand for
safer assets. The Australian dollar slid after gains in Chinese
manufacturing missed estimates.
- China’s Home Prices Increase Most in 26 Months, SouFun Says. China’s
March new home prices posted the biggest gain in more than two years as
buyers rushed into the market ahead of property curbs by local
governments, driving real estate stocks higher. Prices climbed for
the 10th month, rising 1.1 percent to 9,998 yuan ($1,610) per square
meter (10.76 square feet) from February, SouFun Holdings Ltd. (SFUN),
the country’s biggest real estate website owner, said in a statement
today after a survey
of 100 cities. That’s the biggest increase since January 2011.
- Beijing, Shanghai Add to Home Curbs as China Acts to Cool Market.
China’s largest cities, including
Beijing and Shanghai, tightened rules on home purchases after the nation
asked local governments to step up efforts to cool the property market.
Beijing, the capital, banned single-person households from buying more
than one residence while Shanghai prohibited banks from giving credit to
third-home buyers, according to the local administration websites. The
two cities will also enforce a 20 percent tax on capital gains from
property sales. “This will help calm people’s panic about home
prices,” said Yi Xianrong, a Beijing-based researcher at the Chinese
Academy of Social Sciences, which advises the Cabinet.
- Kim Calls Nuclear Weapons Top Priority as Korea Tensions Climb. Kim
Jong Un called nuclear weapons development one of North Korea’s top
priorities as his country ratcheted up tensions by declaring a state of
war with South Korea and reiterating threats to attack the U.S. Nuclear
arms can “never be abandoned” nor “traded with billions of dollars,” Kim
said yesterday at meeting of the ruling Workers’ Party Central
Committee, the state-run Korean Central News Agency reported. North
Korea’s rubber stamp parliament meets today to ratify his remarks.
- Japan March Business Confidence Improves Less Than Estimated. Confidence among big Japanese manufacturers improved by less than
economists estimated, in a sign that the weaker yen is yet to boost
conditions for the nation’s exporters. The quarterly Tankan
(JNTSMFG) for large manufacturers rose to minus 8 in March from minus 12
in December, the Bank of Japan said in Tokyo today. The median estimate
of 24 economists surveyed by Bloomberg News was for minus 7. A negative
figure means pessimists outnumber optimists.
- Rebar Slumps to Lowest Since December on China PMI, Inventories. Steel
reinforcement-bar futures in Shanghai declined to the lowest level in
more than three months after a Chinese manufacturing indicator missed
analysts’
estimates and inventories of the building material swelled. The contract for delivery in October dropped as much as 2
percent to 3,733 yuan ($601) a metric ton on the Shanghai
Futures Exchange, the lowest level since Dec. 14, and traded at
3,736 yuan at 10:36 a.m. local time. Futures lost 4.5 percent in
the first quarter.
- Copper Drops to 8-Month Low in Shanghai on China Manufacturing. Copper
slumped for a fifth day in Shanghai to the lowest level since August as
a key gauge of Chinese manufacturing missed estimates, stoking concern
demand in the biggest consuming nation is slowing. Copper for delivery in July on the Shanghai Futures Exchange fell as much as 1.9 percent to 53,800 yuan ($8,666) a
metric ton, the lowest level since Aug. 3, before trading at
54,080 yuan by 10:14 a.m. local time. Futures for May delivery
lost 1.3 percent to $3.3590 a pound on the Comex. The London
Metal Exchange is closed today for a public holiday.
- Bullish Bets Rebound at Fastest Pace in Four Years: Commodities. Investors are boosting wagers on
higher commodity prices at the fastest pace in almost four years,
rebounding from the least bullish position since 2009, on signs
that the U.S. is accelerating and Europe’s debt crisis is easing. Hedge
funds and other large speculators increased net-long positions across
18 U.S. futures and options by 10 percent to 679,191 contracts in the
week ended March 26, data from the Commodity Futures Trading Commission
show. The bets surged 67 percent in three weeks, the biggest advance
since May 2009. Wagers on higher oil prices climbed the most this year,
while those for cattle are at a six-week high.
- SAC Siege by U.S. Seen Slowing in Steinberg’s Indictment.
SAC Capital Advisors LP may seem under siege by federal prosecutors,
with the steady drumbeat of indictments over the past few years and the
invariable 6 a.m. knock at the door as one employee after another meets
agents of the Federal Bureau of Investigation’s New York office.
Wall Street Journal:
- Era of Fed Stimulus Wanes.
Between U.S. stocks reaching highs and Treasury yields holding near
all-time lows, one of these two contrary markets will eventually have to
give. "We are getting closer to the end," John Brynjolfsson, managing director
of global macro hedge fund Armored Wolf LLC, said of the Fed's stimulus
efforts. "Discussion of tapering helps to make the exit less of a
digital on-off decision, and should allow the Fed to more gradually wean
the markets off its support."
Fox News:
- US sends F-22 jets to join South Korea drills. The
United States has sent F-22 stealth fighter jets to South Korea to join
Seoul forces in military drills as North Korea warns the Korean
Peninsula has entered "a state of war." A senior U.S. official
confirms to Fox News that the F-22 Raptors were deployed to Osan Air
Base in South Korea from Japan on Sunday to support ongoing U.S.-South
Korean military drills.
CNBC:
- Italian President at Center of Storm as Deadlock Continues. Italy's 87-year-old President Giorgio Napolitano will face the greatest
test of his career during his final weeks in office as he tries to end
the standoff preventing a new government being formed more than a month
after elections.
- Emerging Markets Dump Euro Reserves. The euro's challenge to the international status of the U.S. dollar has
been set back a generation as new data shows developing countries
dumping the European currency from their official reserves.
Business Insider:
Reuters:
El Pais:
- Spanish
Prime Minister Mariano Rajoy is preparing a new financing model for
autonomous region of Catalonia to stem wave of separatism. New offer for
Catalonia would alert leaders of other autonomous communities who would
require same treatment.
Le Journal du Dimanche:
- 70% of French people remain unconvinced that President Francois Hollande has a clear strategy to fight rising unemployment, according to an Ifop poll.
Yonhap News:
- South Korea to Strongly Respond to Any North Korea Provocation, South Korean President Park Geun Hye Says.
Sankei:
- Japan, U.S. to Hold Island-Recapturing Drill in June. Japan's
Ground, Maritime and Air Self-Defense Force to join drills in
California. First time for Maritime and Air SDFs to join similar
exercise. Japan, U.S. to draft plan to defend disputed islands, VOA said
China Securities Journal:
- China
Financial System Faces 'Large' Risks. Problems including high levels of
corporate debt, shadow banking and property bubbles are worth concern,
citing former People's Bank of China adviser Yu Yongding. Yu said local
government financing vehicles may "deteriorate" again. China economic
growth may be weaker than expected as a result of tightening monetary
policy and M2 growth target of 13%, Yu said.
- China will
manage property demand and supply and continue curbs on speculation,
citing Qin Hong, director of policy research at the Ministry of Housing
and Urban-Rural Development.
Weekend Recommendations
Barron's:
- Bullish commentary on (STM), (RT), (T), (WLP), (STX), (WU) and (ETN).
Night Trading
- Asian indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.50 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 97.5 +2.25 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Construction Spending for March is estimated to rise +1.0% versus a -2.1% decline in February.
- ISM Manufacturing for March is estimated to fall to 54.0 versus 54.2 in February.
- ISM Prices Paid for March is estimated to fall to 60.0 versus 61.5 in February.
Upcoming Splits
Other Potential Market Movers
- The RBA rate decision and Final Markit US PMI for March could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.
U.S. Week Ahead by Reuters (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week modestly lower on global growth fears, Mideast unrest, rising Asia tensions, more Eurozone
debt angst, profit-taking, technical selling and more shorting. My
intermediate-term trading indicators are giving neutral signals and the
Portfolio is 50% net long heading into the week.
