Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -1.97% 2) Utilities -1.33% 3) Homebuilders -.67%
Stocks Falling on Unusual Volume:
- SKYW, KSS, REN, SALM, CIE, BANR, JMI, FIO, AXLL, VCLK, WBS, ESE, CIE, DCO, RLOC, JAZZ, WMB, THI, Z, PCRX, TRLA, MELI, INFI, ANDE, XPO, URS, PHMD, AOL, CHRW and CLMS
Stocks With Unusual Put Option Activity:
- 1) EA 2) CA 3) CHRW 4) ARUN 5) WFM
Stocks With Most Negative News Mentions:
- 1) VSI 2) ENDP 3) TWX 4) BAC 5) CA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.20% 2) Education +2.32% 3) Steel +2.02%
Stocks Rising on Unusual Volume:
- WTI, LMOS, OAS, JCP, CPA, PSE, LEDR, ICUI, AMAP, WBMD, LOPE, EA, WFM, OEH, YY, DVA, EZCH, MYGN, MCK, VVUS, WLT, WTI, CLF, TWO, ONXX, TFM and CTSH
Stocks With Unusual Call Option Activity:
- 1) WFM 2) LAMR 3) AFFY 4) CHRW 5) Z
Stocks With Most Positive News Mentions:
- 1) MYGN 2) MCK 3) APA 4) LOW 5) CTSH
Charts:
Evening Headlines
Bloomberg:
- Emerging Markets Growing at Slowest Pace Since 2011, HSBC Says. Emerging-market economic growth was
probably the weakest since September 2011 last month as global
demand for manufacturing and services declined, HSBC Holdings
Plc said, citing a survey of purchasing managers. The HSBC Emerging Markets Index, which is compiled by London-based Markit Economics and tracks conditions at more than
5,000 companies, fell to 51.3 in April from 52.5 in March, HSBC
said today in a report. A value above 50 indicates expansion and
below 50 signals contraction.
- PBOC Signals It May Resume Bill Sales as Capital Inflows Rise.
China’s central bank signaled it will resume sales of bills for the
first time in 17 months as global funds pour money into the country to
take advantage of the yuan’s rise. “The central bank’s gauging of demand
shows it will resume
bill sales soon,” said Shi Lei, Beijing-based head of fixed-
income research at Ping An Securities Co., a unit of the
nation’s second-biggest insurance company. “Foreign capital
inflows are too big. The central bank needs more tools to mop up
excess liquidity.”
- Asian Stocks Climb Third Day.
Komatsu Ltd. (6301), the world’s second-biggest maker of construction
and mining equipment, advanced 3.3 percent in Tokyo, leading industrial
companies higher. Wilmar International Ltd. (WIL), the world’s No. 1
palm-oil processor, climbed 3.9 percent in Singapore as first-quarter
profit surged 23 percent. Toshiba Corp. (6502) slumped 3.9 percent in
Tokyo after the Nikkei newspaper reported sales at the No. 2 maker of
flash-memory will miss the
company’s forecast. The MSCI Asia Pacific Index climbed 0.9 percent to 143.33
as of 11:01 a.m. in Tokyo, with all 10 industry groups on the
gauge rising.
- Bond-Loan Inversion Exposes Fed-Induced
Excesses: Credit Markets. Yields on junk-rated corporate bonds have
fallen below loans that rank higher in the capital structure by the most
ever, underscoring the anomalies being created by the Federal Reserve's
unprecedented monetary policies. At about 5.08%, yields on
speculative-grade bonds are 51 basis points less than rates on U.S.
leveraged loans, according to data from JPMorgan Chase(JPM). Before this
year, creditors had almost never accepted lower payments on junk bonds
over loans, which get repaid first in a bankruptcy. Concerns that credit
markets are overheating are rising as the Fed, which has pumped about
$2.5 trillion into the financial system since the financial crisis,
keeps its benchmark rate at about zero for a fifth year. Repressed
investors are seeking out almost anything that generates higher yields
regardless of the risk. "Junk-bond yileds are in freefall, and every
time that is pointed out, you look like an alarmist," Martin Fridson,
CEO of NY-based financial research firm FridsonVision LLC, said in an
interview. "People think it's okay as long as they are the first ones
out when things change direction. Of course, everybody is not going to
be the first one out."
- Hedge Funds Rush to $108 Billion Trading Where Wall Street Tread. Hedge funds using debt-trading
strategies honed on Wall Street are expanding at a record pace
as they profit from risks big banks are no longer taking. BlueCrest Capital Management LLP doubled its New York staff
in the two years through December, while Pine River Capital
Management LP increased its global workforce by one-third in
2012. Hedge-fund firms are hiring from companies such as
Deutsche Bank AG (DBK), Barclays Plc (BARC) and Bank of America Corp. as
their credit funds have attracted $108 billion since 2009, data
compiled by Chicago-based Hedge Fund Research Inc. show.
- Egypt Investment Is Collapsing as Citizens Turn Into Vigilantes.
In a dimly lit Cairo workshop, Hussein spins a metal pipe on a lathe,
sending sparks flying. In a few minutes, it’ll become the barrel of a
gun. Sometime after that it will join the growing arsenal of illegal
weapons on the streets of Egypt. Artisans who make machine parts by day
are turning into bootleg gunmakers at night, says Hussein, 54, who asked
not to be identified by his full name
for fear of prosecution.
- CIA’s Brennan Picks New Spy Chief Passing Over Woman Holding Job. John Brennan, director of the Central
Intelligence Agency, picked an undercover officer as the new
head of the agency’s national clandestine service, passing over
a woman who had been serving as the acting chief. The acting chief wasn’t chosen because she was associated
with the CIA’s interrogation program, which is said to have
resorted to torture to elicit information from al-Qaeda
suspects, said Reuel Marc Gerecht, a former CIA case officer
who’s now a fellow at the Foundation for Defense of Democracies.
Wall Street Journal:
- Pentagon Plans for the Worst in Syria. The Pentagon is stepping up plans to deal with a dangerous regional
spillover from Syria's possible collapse—a scenario it had recently seen
as remote—drawing up proposals including a Jordanian buffer zone for
refugees secured by Arab troops, said U.S. officials familiar with the
discussion. The plans seek to minimize direct U.S. involvement, but they reflect a
reassessment of the Pentagon's hands-off approach. The shift comes
after Defense Secretary Chuck Hagel's trip last month to the Middle
East, during which Arab leaders appealed for the U.S. to focus on the
danger of Syria's disintegration into warring sectarian fiefdoms. "The
Syria message was loud and strong," said a senior diplomat
briefed on Mr. Hagel's trip. "Everybody's scared. And nobody knows what
the hell we are going to do there."
- Boehner Says He 'Probably' Won't Support Online Sales-Tax Bill.
House Speaker John Boehner said he "probably" wouldn't support a bill
to give states the right to force out-of-state online retailers to
collect sales tax for them, sounding more negative than fellow
Republicans who have themselves been
lukewarm on the measure.
- Egypt's Brotherhood Gains More Power. Egyptian President Mohammed Morsi swore in new cabinet ministers
Tuesday in a reshuffle of his government that strengthened the position
of the Muslim Brotherhood in key ministries and provoked complaints from
the nation's disparate opposition. Members of the opposition had demanded that Mr. Morsi form a more
inclusive government—one including liberals, moderates, Coptic
Christians and women—ahead of parliamentary elections due to take place
later this year. They also sought the removal of Prime Minister Hisham
Qandil, who is viewed by his critics as lacking political experience and
charisma. But Mr. Qandil retained his post in the reshuffle, helping to form
the new cabinet that includes 10 officials belonging to the ruling
Freedom and Justice Party, the political arm of the Muslim Brotherhood.
- Battery-Driven Tesla(TSLA) May Run Out of Juice.
Without so much as a puff of smoke, Tesla Motors Inc.'s stock has
rallied an incredible 64% this year. One catalyst: an announcement last
month that it had reached "full profitability" for the quarter through
March. Analysts don't seem so sure, though, projecting
the company on Wednesday will report a loss of seven cents a share.
Fox News:
- Republicans look to show 'cover-up' as whistle-blowers give Benghazi testimony. Republican lawmakers hounding the Obama administration for months
over unanswered questions on the Benghazi attack will have their moment,
on Wednesday, to demonstrate whether the internal response amounted to a
cover-up -- as whistle-blowers give long-awaited testimony expected to
challenge the White House's version of events. Two of the whistle-blowers' opening statements were obtained by Fox
News, and in the statements they affirm their credentials and
credibility in testifying about what happened last Sept. 11 in Libya. "I
am a career public servant," Greg Hicks' statement reads. "Until
the aftermath of Benghazi, I loved every day of my job." He was deputy
chief of mission in Libya and became top U.S. diplomat in the country
after Ambassador Chris Stevens was killed in the terror attack. The
other statement, by Mark Thompson of the State Department
Counterterrorism Bureau, is mostly biographical. Testimony also is due
Wednesday from Eric Nordstrom, a diplomatic security officer who was
formerly the regional security officer in Libya.
MarketWatch.com:
CNBC:
Zero Hedge:
New York Times:
- U.S. Weighs Wider Wiretap Laws to Cover Online Activity. The
Obama administration, resolving years of internal debate, is on the
verge of backing a Federal Bureau of Investigation plan for a sweeping
overhaul of surveillance laws that would make it
easier to wiretap people who communicate using the Internet rather than
by traditional phone services, according to officials familiar with the
deliberations.
LA Times:
- Gun crime has plunged, but Americans think it's up, says study. Gun
crime has plunged in the United States since its peak in the
middle of the 1990s, including gun killings, assaults, robberies and
other crimes, two new studies of government data show. Yet few Americans
are aware of the dramatic drop, and more than half believe gun crime
has risen, according to a newly released survey by the Pew Research
Center. In less than two decades, the gun murder rate has been nearly cut in
half. Other gun crimes fell even more sharply, paralleling a broader
drop in violent crimes committed with or without guns. Violent crime
dropped steeply during the 1990s and has fallen less dramatically since
the turn of the millennium.
ABC News:
- Authorities: 42 Dead in Nigeria Islamic Extremist Attacks. Coordinated attacks by Islamic extremists armed with heavy machine guns
killed at least 42 people in northeast Nigeria, authorities said
Tuesday, the latest in a string of increasingly bloody attacks
threatening peace in Africa's most populous nation. The attack struck multiple locations in the hard-hit town of Bama in
Nigeria's Borno state, where shootings and bombings have continued
unstopped since an insurgency began there in 2010. Fighters raided a
federal prison during their assault as well, freeing 105 inmates in
another mass prison break to hit the country, officials said.
Mediaite:
Real Clear Politics:
Reuters:
- China April trade data beats expectations, scepticism remains. China's
exports and imports grew more than expected in April from a year
earlier, possibly easing some of the concerns about weakness in the
recovery of the world's second-largest economy, though doubts remained
over the
strength of real demand and the accuracy of the figures.
- U.S. consumer credit posts smallest gain in 8 months. U.S. consumer credit recorded
its smallest increase in eight months in March, a possible hint
that Americans are still trying to pare their debts.
Consumer installment credit rose by $7.97 billion to $2.81
trillion, the Federal Reserve said on Tuesday. It was the
smallest increase since July and well below economists'
expectations for a $16 billion rise.
Hong Kong Economic Times:
- Hong Kong Unattractive to Hot Money as Asset
Prices High. Hong Kong stocks have high valuations and the property
market has slowed since the govt's cooling measures, making the city
unattractive to hot money, citing Stuart Gulliver, CEO at HSBC Holdings.
People's Daily:
- U.S. Is Real 'Hackers Empire'. The U.S. is the "real hacker empire" and has been strengthening Internet tools in recent years to engage in political subversion in other countries, a commentary said today. Pentagon report accusing the Chinese military of a cyber espionage creates an "imaginary enemy," the commentary said.
Evening Recommendations
Bernstein:
- Rated (ETN) Outperform, target $76.
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 100.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 80.75 -1.5 basis points.
- NASDAQ 100 futures +.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory
build of +2,000,000 barrels versus a +6,696,000 barrel gain the prior
week. Gasoline supplies are estimated to fall by -475,000 barrels versus
a -1,818,000 barrel decline the prior week. Distillate supplies are
estimated to rise by +500,000 barrels versus a +474,000 barrel gain the
prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +.9% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The China Trade data, 10Y T-Note auction, China CPI data, weekly MBA mortgage applications report, Wells Fargo Industrial/Construction Conference and the (SNDK) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 104.0 -1.89%
- Total Put/Call .88 +12.82%
Credit Investor Angst:
- North American Investment Grade CDS Index 68.82 -2.49%
- European Financial Sector CDS Index 128.25 -2.0%
- Western Europe Sovereign Debt CDS Index 89.39 -1.29%
- Emerging Market CDS Index 231.02 +.01%
- 2-Year Swap Spread 14.25 -.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -15.50 +1.0 bp
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- China Import Iron Ore Spot $130.0/Metric Tonne+1.48%
- Citi US Economic Surprise Index -4.9 -1.8 points
- 10-Year TIPS Spread 2.31 unch.
Overseas Futures:
- Nikkei Futures: Indicating +90 open in Japan
- DAX Futures: Indicating +12 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Slovenia Plans Tax Increases as Debt Sale Eases Concern Over Aid. Slovenia plans to increase taxes to
make up for the swelling budget shortfall as the country works
to recapitalize its banks after its first international debt
sale this year. The government will increase the sales tax and introduce a
“crisis” tax on wages, Prime Minister Alenka Bratusek told
reporters yesterday in Brdo, Slovenia. The country’s largest
banks need 900 million euros ($1.2 billion) by the end of July,
according to the government. That capital boost will widen the
budget deficit to 7.8 percent this year from 4 percent at the
end of 2012, Bratusek said.
- Enel Profit Falls as Europe’s Economic Slump Cuts Power Demand.
Enel SpA (ENEL), Italy’s largest utility, said first-quarter profit
dropped 26 percent as Europe’s economic slump cut electricity sales. Net
income slid to 852 million euros ($1.12 billion) from 1.15 billion
euros a year earlier after 125 million euros of
writedowns, according to a stock-exchange statement. The Rome-
based company said revenue fell 1.5 percent to 21 billion euros. Economic stagnation in the company’s main markets in Italy
and Spain is hurting earnings as clients reduce energy
consumption. Enel said electricity sales in the quarter fell 7.1
percent to 76.7 terrawatt hours, while gas sales remained flat
at 3.4 billion cubic meters.
- Europe Stocks Rise as SocGen, Commerzbank Results Beat.
European stocks climbed, extending a near five-year high for the
region’s benchmark gauge, as financial companies from HSBC Holdings Plc
(HSBA) to Allianz SE reported results that topped analysts’ estimates.
- China Said to Tighten Approvals for Local Government Bond Sales. China has ordered greater scrutiny of
bond sales by local government finance vehicles with higher
levels of debt, three people with knowledge of the matter said. The
National Development and Reform Commission, which approves bond sales by
companies that local governments set up to finance projects, will more
strictly review applications for
debt with credit ratings below AA+ sold by issuers with debt-to-
asset ratios exceeding 65 percent, said the people, who asked
not to be identified as they weren’t authorized to speak
publicly about the order.
- North Korea Threatens Retaliation as South’s Leader Visits U.S. North
Korea threatened “immediate counteractions” if shells fired as part of
military drills hit its waters, as the U.S. an South Korea conducted
annual anti- submarine exercises in the region. U.S. and South Korean
forces are trying “to push the
present state of war to an actual war,” the official Korean
Central News Agency said today. The two allies on April 30
concluded the annual two-month Foal Eagle exercises, which
rehearse ground-based operations.
- Pentagon Report on Cyber Attack ’Irresponsible,’ Xinhua Says. A Pentagon report that accuses China
of a cyber espionage campaign is irresponsible and harmful to
the mutual trust, the official Xinhua News Agency said, citing a
military researcher. The Pentagon report said the Chinese military has targeted
U.S. government computers with intrusions that seek sensitive
data. It was irresponsible for the Pentagon to make such an
assertion as the Chinese government and armed forces have never
sanctioned hacking activities, Xinhua cited Wang Xinjun as
saying. Wang is a researcher at the Academy of Military Sciences
of the Chinese People’s Liberation Army. “It is an allegation based on presupposition,” Wang said,
according to Xinhua. “The groundless accusations reflect the
U.S. distrust of China.”
- Copper Falls From Three-Week High on Chinese Concerns. Copper
futures fell from a three-week high on concern that trade data this
week in China, the world’s top user of industrial metals, will add to
evidence that the
country’s economy is slowing.
- Gold Futures Decline as Haven Demand Ebbs.
Gold futures for June delivery fell 1.7 percent to $1,442.60 an ounce
at 10:17 a.m. on the Comex in New York. Bullion dropped 7.7 percent last
month, including the biggest two-day drop in 33 years, as some
investors lost faith in the precious metal as a
store of value.
- Einhorn Increases Apple Bet, Praises Plan to Return Capital. Hedge
fund manager David Einhorn said
he increased his bet on Apple Inc. (AAPL) and that the iPhone maker took
a “major step forward” by issuing debt (AAPL) so it could return cash
to investors. Einhorn anticipates more innovations from the Cupertino,
California-based technology company, he said on a conference call
today held by his Greenlight Capital Re Ltd. (GLRE) reinsurer. “Our
thesis remains that Apple has a terrific operating
platform,” he said. “Its loyal, sticky and growing customer
base will make repeated purchases of a growing portfolio of
Apple products.”
- Emerson(EMR) Trims 2013 Forecast as Sluggish Economy Curbs Demand. Emerson Electric
Co. (EMR), a maker of parts for refrigerators and air conditioners, cut
its 2013 earnings forecast after a sluggish worldwide economy curbed
demand in the first quarter. “Economies around the world are struggling for momentum,”
Chief Executive Officer David Farr said in the statement.
“Demand slowed in the second half of the quarter as overall
global business confidence deteriorated. We do not see a
catalyst to economic growth over the next six to nine months.”
Wall Street Journal:
- NY Fed Warns of Continued Risk to Financial System. The Federal Reserve Bank of New York said in a paper
released Tuesday that a key short-term funding market remains vulnerable to
destabilizing runs that can threaten the broader health of the financial
system. “Limited tools are available to mitigate the risk of pre-default fire sales,”
the paper’s authors warned. What’s more, “no established tools currently exist
to mitigate the risk of post-default sales.”
Fox News:
- Islamist militia linked to Sept. 11 Benghazi attack operates freely in city. The Ansar al Sharia Brigade, the Islamist terror group linked to the
Sept. 11, 2012, attack on the U.S. diplomatic compound in Benghazi,
continues to operate freely in that Libyan city, according to U.S.
military officials. The group remains active in the Mediterranean
port city, operating
patrols and checkpoints, and earlier this year reached an agreement with
other Islamist groups allowing it to operate openly, said military
officials familiar with intelligence reports from North Africa. The
group "continues to spread its ideology in the Benghazi area,
particularly targeting youth," said one official, who noted that the
lack of central government security was the key reason the militia has
not been suppressed.
MarketWatch:
Zero Hedge:
Business Insider:
The Truth About Cars:
- Sub-Prime: Fitch Sends Shot Across Bow Of Auto Lenders.
Seeing delinquencies and credit losses going up while used car sales
and lending standards deteriorate, rating agency Fitch warned today that
“U.S. auto lenders will likely report further weakening in asset
quality metrics this year.” Translated into English, lenders will become increasingly dependent on sub-prime loans and exposed to their perils.
Fitch saw average credit losses go up 16 basis points in the first
quarter, delinquencies rose 67 basis points. Double-digit increases in
auto leasing volumes may boost auto sales, but Fitch views this “with
caution, particularly since used car values will likely return to more
typical levels after recent rises.” Translated into English: Their residual value assumptions are based on fantasy, and there will be a rude awakening.
Reuters:
- Vale CEO sees trouble in Brazil's currency, fast-rising wages. Brazil
has enjoyed years of prosperity but its competitiveness is now hindered
by fast wage growth and a currency that looks "out of place," said
Murilo Ferreira, chief executive of giant mining company Vale SA , at an event on Tuesday. Those
two factors are the "cost, although very low," of the social and
economic progress that is bolstering Latin America's largest economy, Ferreira said.
- Long-term investors bet on commodity currencies falling. The Australian,
Canadian and New Zealand dollars may be set for a decline, dragged down
by a slowdown in China and a sharp fall in commodity prices.
The Week:
Style Outperformer:
Sector Outperformers:
- 1) Oil Tankers +2.92% 2) Steel +.89% 3) Networking +.79%
Stocks Rising on Unusual Volume:
- EOG, ROSE, DTV, IDT, SKM, CHTR, MKTG, HIMX, DWRE, MXWL, ININ, MELI, STE, SNTS, FOSL, NSM, PODD, EOG, VNTV, ALNY, ANF, SGY and DFT
Stocks With Unusual Call Option Activity:
- 1) DG 2) NRG 3) HOLX 4) NSM 5) FOSL
Stocks With Most Positive News Mentions:
- 1) DTV 2) FOSL 3) EOG 4) APC 5) TRN
Charts:
