- Mid-Cap Growth +1.28%
- 1) Biotech +3.97% 2) Homebuilders +2.45% 3) Gaming +1.75%
- UBS, EFII, OSTK, VRTX, IMOS, CMG, ALGN, CE, CPHD, RNF, COF, MAN, TSM, NPSP, EMN and IPG
- 1) CTL 2) VRTX 3) NLY 4) SWKS 5) ALGN
- 1) NRG 2) KBH 3) BX 4) HON 5) COF
Friday, April 19, 2013
Bull Radar
Style Outperformer:
Friday Watch
Evening Headlines
Bloomberg:
Business Insider:
Reuters:
Earnings of Note
Company/Estimate
Bloomberg:
- Italy Impasse Deepens as Bersani Bowed by Failed Berlusconi Deal. Italy’s political deadlock deepened over the selection of the next president, raising the threat of snap elections after Democratic Party lawmakers refused orders to back a compromise candidate. Party head Pier Luigi Bersani signaled he will abandon his nominee, Franco Marini, after his allies rebelled over the choice, leading to two failed ballots yesterday. Voting resumes today at 10 a.m. in Rome. “This challenge of keeping the party together is clearly growing more acute,” said Peter Ceretti, a Eurasia Group analyst in New York. “If a consensus candidate can’t be elected politically things become much more uncertain."
- Dutch Recession Woes Haunt Rutte as Deficit Breach Persists. Record unemployment in the Netherlands is compounding Dutch Prime Minister Mark Rutte’s dilemma on how far to push austerity measures needed to curb the country’s deficit. Consumer confidence due today and statistics on house prices, consumer spending and manufacturers’ confidence next week will confirm just how far the slump has damaged sentiment in the euro-area’s fifth largest economy. Data yesterday showed the jobless rate reached an 18-year high of 8.1 percent in March, with 643,000 people out of work.
- South Korea’s Hyun Says Yen Bigger Issue Than North Korea. South Korean Finance Minister Hyun Oh Seok said Japan’s weakening yen is hurting his country’s economy more than North Korean threats, an example of a “spillover” that merits discussion. “Japan’s economic policies are doing their part to help the world economy recover,” Hyun said yesterday in an interview in Washington before a meeting of Group of 20 finance chiefs. “But if this causes problems, and then the problems cause new responses from partnering nations, for example a currency war, the world economy will have a hard time.”
- China’s Anti-Carrier Missile Now Opposite Taiwan, Flynn Says. The Chinese military has deployed its new anti-ship ballistic missile along its southern coast facing Taiwan, the Pentagon’s top military intelligence officer said today. The missile, designated the DF-21D, is one of a “growing number of conventionally armed” new weapons China is deploying to the region, adding to more than 1,200 short-range missiles opposite the island democracy, U.S. Army Lieutenant General Michael Flynn, the Defense Intelligence Agency director, said in a statement to the Senate Armed Services Committee.
- Li Ka-Shing’s Striking Port Workers Lose Jobs as Protest Widens. Some port workers at Li Ka-shing’s Hong Kong terminals were told they will lose their jobs, as a three-week strike over wage demands at the world’s third-biggest container port escalates.
- Asian Stocks Rise as Commodity Companies Pare Weekly Drop. Asian stocks rose, erasing earlier losses, as commodity companies pared their worst weekly decline since August. Taiwan Semiconductor Manufacturing Co. and Lenovo Group Ltd. led technology shares higher. The MSCI Asia Pacific Index (MXAP) gained 0.3 percent to 136.29 as of 11:26 a.m. in Tokyo, reversing a decline of 0.3 percent. A gauge of material producers in the measure climbed 1.1 percent, paring its weekly loss to 4.3 percent, the most since August.
- Boston Bombing Victim in Iconic Photo Helped Identify Attackers. Minutes before the bombs blew up in Boston, Jeff Bauman looked into the eyes of the man who tried to kill him.
- Copper Set for Weekly Drop Amid High Stockpiles, Economic Woes. Copper declined in London, poised for the biggest weekly drop in 16 months as inventories swelled to the highest level since 2003 and the outlook for the global economy weighed down metals prices. Aluminum, zinc, nickel and lead also dropped. Copper for delivery in three months lost as much as 1.7 percent to $6,966.75 a metric ton on the London Metal Exchange, before trading at $6,970 by 9:41 a.m. Shanghai time, putting on course for a weekly decline of 6 percent.
- Rebar Rises to Pare Weekly Loss, Supported by Iron Ore, Demand. Steel reinforcement-bar futures rose for the first time in three days, paring a weekly loss, supported by iron ore prices and as rising demand helped draw down inventory. The contract for October delivery on the Shanghai Futures Exchange gained as much as 1 percent to 3,687 yuan ($597) a metric ton, before trading at 3,666 yuan at 10:23 a.m. local time. Futures have lost 4.5 percent this week.
- Blackstone(BX) Ends Pursuit of Dell(DELL). Blackstone Group LP has ended its pursuit of Dell Inc. less than a month after the private-equity firm said it would try to top a leveraged buyout by the computer maker's founder and a rival private-equity firm. Blackstone had been putting together a bid for Dell to top the offer from founder Michael Dell and private-equity firm Silver Lake Partners. Blackstone's offer would have kept part of the company in the hands of public shareholders. Blackstone, in a letter to the special board committee handling the deal negotiations for Dell, cited declining personal-computer sales industrywide as a factor in its decision, along with concerns about declines in Dell operating income, according to people familiar with the matter.
- FAA Expected to Clear 787. Agency Is Likely to End Three-Month Grounding of Boeing's Dreamliner Amid Rising Pressure.
- IRS Workers Get Caught With Their Hands in Cookie Jar. Twenty-four current and former Internal Revenue Service employees have been charged with stealing government benefits, federal prosecutors said Wednesday. The IRS employees were indicted on charges that they illegally received more than $250,000 in benefits, including unemployment insurance payments, food stamps, welfare, and housing vouchers, the U.S. attorney's office in Memphis said in a news release. Prosecutors say 13 of the IRS employees face federal charges of lying about being unemployed while applying for or recertifying their government benefits. They each face up to five years in prison if convicted of making false statements to receive the benefits. Eleven others face state charges of theft of property over $1,000, a felony that can carry a sentence of probation up to 12 years in prison if they are convicted.
Business Insider:
Reuters:
- Lenovo says in potential M&A talks; report of IBM server deal. Lenovo Group said on Friday it was in preliminary talks about a potential acquisition, following a media report that IBM Corp was negotiating the sale of its x86 server hardware business to the Chinese computer maker. IBM wants $5 billion to $6 billion for the business, which sells low-priced servers traditionally used to power large corporate data centers, said technology news site CRN, citing a high ranking industry executive. Lenovo did not identify the acquisition target.
- Google(GOOG) Internet business solid despite Motorola losses. Google Inc's core Internet business grew net revenue 23 percent in the first quarter, softening the effect of a sharp decline in its Motorola mobile phone division. Shares of Google, which reached an all-time high of $844 in March, were up 1.5 percent to $777.75 in after hours trading on Thursday.
- Intuitive Surgical(ISRG) narrows 2013 forecast, shares fall. Intuitive Surgical Inc on Thursday narrowed its 2013 forecasts for growth of revenue and procedures using its da Vinci surgical robots rather than raising them as it often does when reporting quarterly results, and its shares fell.
- Vertex(VRTX) shares up after successful cystic fibrosis trial. Vertex Pharmaceuticals Inc said its experimental drug improved lung function in adults with cystic fibrosis in a mid-stage trial, sending its shares 54 percent higher in after-hours trading.
- U.S. Fed balance sheet grows to record again in latest week. The U.S. Federal Reserve's balance sheet hit a new record in the latest week on increased holdings of U.S. government debt and mortgage-backed securities, Fed data released on Thursday showed. The Fed's balance sheet - a broad gauge of its lending to the financial system - stood at $3.252 trillion on April 17, up from $3.210 trillion on April 10. The Fed's holdings of Treasuries totaled $1.825 trillion as of Wednesday, April 17, versus $1.814 trillion the previous week.
- FAA warns of 3.5 hour flight delays this summer. Flight delays of up to 3-1/2 hours are expected at some busy U.S. airports this summer because of furloughs of air-traffic controllers, the top U.S. aviation regulator warned on Thursday. The estimate from the Federal Aviation Administration is the first to detail, in minutes and hours, the potential delays from the agency's decision to furlough 10 percent of its staff, starting Sunday, as it struggles to meet budget cuts required under so-called sequestration.
- Osborne girds for battle with IMF. Mr Osborne believes that the change of heart at the IMF on Britain reflects a power struggle within the fund between fiscal hawks and Keynesians, including Olivier Blanchard, chief economist, and David Lipton, first deputy managing director and a former adviser to Barack Obama, US president. The chancellor believes the UK has become a pawn in a bigger game: beating up Britain over its austerity programme makes it easier for the IMF to criticise Republicans insisting on a tough US fiscal tightening.
- Britain is a 'crisis economy', says Mark Carney. Mark Carney, the incoming Bank of England Governor, has described the UK as a “crisis economy” as he sought to play down hopes that he could ride to the country’s rescue.
- The IMF is flunking the financial crisis. By turning its fire on Britain, the IMF gives the impression it is out of ideas and solutions.
- The city of Shenzhen may start property tax trial in near term, citing people from the real estate industry in the city.
- Chinese first-tier city home price surges may be driven by "hot money," according to a commentary by Financial News, run by China's central bank, written by reporter Xu Shaofeng today. Home prices in 1st-tier cities didn't fall after China issued new curbing policies earlier this year, the commentary said.
- China's urbanization shouldn't be used as excuse for some local governments to accumulate excessive debt and pursue blind investment, according to a commentary today written by reporter Liu Xianyun. Governments should be aware of risks in the drop in the value of land used as collateral, slower fiscal revenue growth and shrinking investment returns, the commentary said.
- None of note
- Asian equity indices are unch. to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.50 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 91.75 -.25 basis point.
- FTSE-100 futures +.27%.
- S&P 500 futures +.44%.
- NASDAQ 100 futures +.46%.
Earnings of Note
Company/Estimate
- (BHI)/.63
- (BGG)/1.04
- (GE)/.35
- (GPC)/.98
- (HON)/1.14
- (KSU)/.88
- (KMB)/1.33
- (LH)/1.77
- (MAN)/.46
- (MCD)/1.26
- (COL)/1.17
- (SAP)/.58
- (SLB)/.99
- (STT)/.93
- (STI)/.62
- (UA)/.03
- None of note
- None of note
- The Fed's Stein speaking could also impact trading today.
Thursday, April 18, 2013
Stocks Falling into Final Hour on Rising Global Growth Fears, Terror Concerns, Technical Selling, Homebuilding/Tech Sector Weakness
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Below Average
- Market Leading Stocks: Underperforming
- VIX 18.15 +9.93%
- ISE Sentiment Index 89.0 -1.11%
- Total Put/Call 1.18 -.84%
- NYSE Arms 1.01 -65.34%
- North American Investment Grade CDS Index 84.98 +1.01%
- European Financial Sector CDS Index 175.54 +2.54%
- Western Europe Sovereign Debt CDS Index 98.84 -2.31%
- Emerging Market CDS Index 241.90 +3.24%
- 2-Year Swap Spread 14.0 -.25 bp
- TED Spread 22.5 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -17.25 +.75 bp
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 146.0 -1 basis point
- China Import Iron Ore Spot $138.60/Metric Tonne -.50%
- Citi US Economic Surprise Index -5.0 -1.3 points
- 10-Year TIPS Spread 2.26 -11 basis points
- Nikkei Futures: Indicating +90 open in Japan
- DAX Futures: Indicating -3 open in Germany
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 25% Net Long
Today's Headlines
Bloomberg:
CNBC:
- Italy Fails to Elect President as Bersani Coalition Fractures. Italy's Parliament failed to elect a president today as Democratic Party leader Pier Luigi Bersani faced a revolt from his allies after he sought to compromise with former Prime Minister Silvio Berlusconi. Bersani was deserted by allies on the first ballot as Franco Marini, the candidate he backed with Berlusconi forces received 521 of 1,007 possible votes, less than the necessary two-thirds majority. With no path to a Marini victory, both the Democratic Party and Berlusconi’s forces cast blank ballots on the second vote. The election continues at 10 a.m. tomorrow. “It’s another manifestation of how deeply divided Italy has become and how much resentment and mistrust there is among the leading politicians,” said Georg Grodzki, head of credit research at Legal & General Investment Management in London.
- Recession May Double Spain's Banking Bailout Needs: Euro Credit. A Spanish economic slump now in its sixth year is stocking concern the nation needs more than the 41 billion euros that it sought from European partners to bail out its banks. "The more the economy worsens, the more the capital base of the banks will get eroded and there is still a lot of cleaning up to be done," said Cesar Molinas, a partner at private equity firm CRB Inverbio in Madrid. Spanish lenders had 162 billion euros of bad loans in February, equivalent to 10.4% of the credit in the economy, according to Bank of Spain data published today. Losses make it harder for banks to bolster the economy by lending to businesses.
- Germany Backs Cyprus Aid as Schaeuble Cites Default Risk. German lawmakers approved a rescue for Cyprus as Finance Minister Wolfgang Schaeuble warned that refusing aid to a fifth crisis-ravaged state risked triggering a sovereign default and contagion to other euro nations. The lower house, or Bundestag, backed German participation in the 10 billion-euro ($13 billion) financial lifeline by 487 votes to 101 with 13 abstentions in Berlin today, almost three years after the euro-area debt crisis first required lawmakers to act in May 2010. Lawmakers also approved extending aid terms for Ireland and Portugal. “We must avoid turning the problems in Cyprus into new problems for other euro countries,” Schaeuble told lawmakers in a speech before the vote. “Cyprus is in a dramatic situation. If we don’t help Cyprus, then Cyprus inevitably faces sovereign default.”
- U.K. Retail Sales Drop More Than Forecast. Sales including fuel fell 0.7 percent from February, when they increased 2.1 percent, the Office for National Statistics said today in London. The median forecast of 23 economists in a Bloomberg News survey was for a 0.6 percent decline. From a year earlier, sales declined 0.5 percent. Weak wage growth and accelerating inflation are squeezing household budgets, hitting sales on Britain’s high streets and at shopping malls.
- Leading Index’s Decline Points to Slower U.S. Growth: Economy. The index of U.S. leading indicators unexpectedly declined in March, and manufacturing in the Philadelphia region slowed this month, adding to evidence the economy will cool. The Conference Board’s gauge of the outlook for the next three to six months fell 0.1 percent last month, the first drop since August, the New York-based group said today. The Federal Reserve Bank of Philadelphia’s factory index eased to 1.3 in April from 2 the prior month, another report showed.
- Copper Poised to Enter Bear Market as Industrial Metals Slide. Copper plunged through $7,000 a metric ton in London for the first time in almost 18 months and headed for a bear market on concern that demand from China to the U.S. and Europe may falter. Tin was also poised to enter a bear market. Copper for delivery in three months on the London Metal Exchange slumped as much as 4 percent to $6,800 a ton, the lowest level since October 2011, and was at $6,850.50 at 2:56 p.m. Seoul time. A close at the current level would be more than 20 percent below the metal’s last bull market peak in February 2012. Aluminum, nickel, zinc and lead also declined.
- Morgan Stanley(MS) Shares Fall as Trading Revenue Declines. Morgan Stanley (MS) fell to a three- month low in New York after the firm reported the biggest drop in trading revenue among the largest U.S. banks. Shares of the company slumped 4.5 percent to $20.51, the biggest decline on the 81-company Standard & Poor’s 500 Financials Index. (S5FINL) Bond-trading revenue fell 42 percent in the first quarter and stock-trading revenue declined 19 percent, New York-based Morgan Stanley said today in a statement.
- Gold Climbs in New York on Signs Physical Demand Is Rebounding. Gold prices climbed in New York on signs that demand is rebounding among consumers and investors.
- Texas Fertilizer Plant Explosion: Live Updates.
- Credit Crunch Broadens European Business Rifts. Central banks around the world are flooding the market with liquidity in order to spark growth in the global economy. But that hasn't helped Spaniard José Blasco. Banks have cut credit lines to Mr. Blasco's sofa-bed maker Confortec SL to €100,000 ($131,000), compared with €500,000 several years ago. And while the Spanish state now borrows at around 5%, the 22-employee company would need to pay as much as 14% to get a bank loan—an option Mr. Blasco rejected.
- U.S. Probes Suspicions Syria Used Chemical Weapons. American intelligence agencies are reviewing what some officials see as the first credible indications that Syrian forces used small amounts of chemical weapons in recent fighting, said senior U.S. and European officials.
- Dr. Copper Catches a Cold.
- Lower Euro-Zone Rates May Not Spur Growth, Kranjec Says. Failure of transmission mechanism in euro area reflects fragmentation of financial markets, ECB Governing Council member and Slovenian central bank Gov. Marko Kranjec said.
- Police say between 5 and 15 people killed in Texas fertilizer plant explosion, more than 160 hurt. A small Texas town where as many as 15 people were killed in an explosion at a fertilizer plant late Wednesday is reeling as rescuers comb the rubble house by house and one official laments: "part of that community is gone." Police say between 5 to 15 people were killed and more than 160 were injured during the massive blast at West Fertilizer in downtown West — a community of roughly 2,600 residents about 20 miles north of Waco.
- North Korea demands end of sanctions and drills as conditions for resuming talks.
CNBC:
- New Study Finds China Manufacturing Costs Rising to US Level. The cost of manufacturing in China is going up and rising quickly. "It's something that we anticipated when we went to China, we just didn't know how quick it would happen," said Mark Miller, CEO of Prince Industries.
- If I Were 'Dictator,' QE Would End Now, Fed's Lacker Says. Richmond Fed President Jeffrey Lacker told CNBC on Thursday that if you made him "dictator," the Federal Reserve would stop its massive bond purchases. He added that evidence is "sketchy" on whether the quantitative easing program has actually helped the nation's job picture. "I wouldn't have gone down this asset-purchase path. I'm in the camp that we should taper and stop right now," Lacker said in a "Squawk Box" interview from the 2013 Credit Markets Symposium in Charlotte, N.C. "You have to prepare markets, if it was up to me, if you made me dictator, that's what I would do."
- Rising Bank Profits Tempt a Push for Tougher Rules. Banks have been reporting steady growth
in earnings since soon after the financial crisis. With the latest
reports rolling in, analysts think the banks' first-quarter profits will
be their best ever. But as welcome as such profits are to the
banks, they may also become a source of discomfort. The ballooning
bottom lines could embolden the lawmakers and regulators who want to
introduce additional measures to overhaul the banking system.
After the financial crisis, many officials involved in the regulatory revamp feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced.
- Initial Claims Snoozer, Just Higher Than Expected. (graphs)
- Philly Fed Is Latest Economic Miss: Number of Employees Dumps, Inventories Plunge.
- CLSA Breaks The Wall Street Mold: Sells Japanese Equities To Buy Gold.
- Obama Sends More Troops To Jordan, Preparing For "Stability Operations" In Syria.
- Here's The Argument That The Entire World Economy Is Starting To Go Bad.
- Boston Marathon Explosion Investigators Focus On Man Seen In Video.
- The House Just Passed The CISPA Cybersecurity Bill — Here's Why The Internet Is Up In Arms About It.
- I Just Realized How Zealously Facebook Tracks Me And Sells That Info To Advertisers.
- Videos Show Destruction Near The West, Texas Explosion.
- A Troubling 'Head-And-Shoulders' Pattern Is Quickly Developing In The Stock Market.
- This Man Pulled 16 People From A Collapsed Nursing Home After The Texas Explosion.
- Diabetes, bone, pain drugs may face German price cuts. Drugs from Novo Nordisk , Amgen, Bayer and other companies could face price cuts in Germany as the country's medical cost-benefit agency widens a review into the value offered by medicines. The Federal Joint Committee, or G-BA, said on Thursday it would review the cost-effectiveness of a range of drugs in different treatment areas.
- Paulson fund hurt by sharp drop in gold -source. John Paulson's Advantage Fund, one of the hedge fund manager's biggest portfolios, is down 2.4 percent in April, largely due to the sharp selloff in gold, a source familiar with the numbers said on Thursday.
- U.S. jobs, factory data point to slowing economy.
- In Spain, Catalan stand-off risks budget backslide. A stand-off between Spanish Prime Minister Mariano Rajoy and Catalonia, one of the country's wealthiest regions, risks the central government losing control of regional finances as Madrid seeks a softening of deficit targets from Brussels. Catalonia, which accounts for around a fifth of Spain's economy, has yet to present a 2013 budget to parliament and wants more control over the collection of its taxes.
- Fed's Tarullo says focused on big bank reliance on wholesale funding. Federal Reserve Board Governor Daniel Tarullo said on Thursday that U.S. banks were in better shape now than prior to the financial crisis, but he remained worried by the vulnerability of the very big firms to reliance on fickle market liquidity. "My concern in particular is the intersection of 'too big to fail' with very large institutions, with very large wholesale funding markets that are subject to runs, and eventually then to liquidity freezes," he told Bloomberg Television in an interview.
- Is the IMF turning bearish on Spain? It’s been a busy week for the IMF, releasing their latest iterations of the World Economic Outlook, Global Financial Stability Report and the Fiscal Monitor. We’ve been poring over the reports and will continue to do so (see here for some initial thoughts on the WEO). One forecast in particular caught our eye – Spain's. The IMF seems to have turned significantly more pessimistic on the prospect of a Spanish recovery. The charts below provide a comparison with the previous WEO forecasts (highlighting how these forecasts tend to be overly optimistic) - which very much confirms what we have noted before about the real risks in Spain.
- South Korea to Discuss Weak Yen's Impact at G-20. Spillover impact from weak yen will be discussed at G-20 meeting in Washington, citing South Korean Finance Minister Hyun Oh Seok.
- China Detains 3 People for Spreading Bird Flu Rumors. Three people were detained in northern Chinese province of Shaanxi for spreading H7N9 bird flu rumors, citing the local government.
- China Orders Halt to Wild-Bird Sales Due to H7N9. State Forestry Administration also tells local authorities to step up epidemic surveillance, bank close contact between humans and animals in zoos, citing emergency notice from the govt agency.
Bear Radar
Style Underperformer:
- Large-Cap Growth -.77%
- 1) Homebuilders -2.34% 2) HMOs -2.01% 3) Internet -1.86%
- UTEK, SNDK, UNXL, EWBC, FCS, DHR, ALB, ROG, GLNG, GHL, UNH, EBAY, EOPN, ALKS, SI, CRM, KYAK, MS, THR, FDX, AIXG, HUM, CFNL, LH, DGX, EOPN, CFNL and THR
- 1) XOP 2) SWN 3) KMX 4) BTU 5) IBM
- 1) CAT 2) C 3) FDX 4) APA 5) EXPD
Bull Radar
Style Outperformer:
- Large-Cap Value -.10%
- 1) Gold & Silver +2.75% 2) Road & Rail +1.99% 3) Oil Service +.89%
- TSM, SPRD, PEP, UNP, PVTB, THRX, SCSS, BTU, GOLD, CLDX and VZ
- 1) THRX 2) WLL 3) PEP 4) ESRX 5) CPB
- 1) COG 2) AXP 3) AYI 4) VZ 5) AN
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