Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -1.37% 2) Utilities -1.21% 3) Airlines -.73%
Stocks Falling on Unusual Volume:
- JCOM, WIN, IRE, MTDR, PXP, CLMT, MNST, SPRD, RLOC, WFR, EFC, OFIX, SSNC, RAX, DLR, RST, ISIS, NBL, XRAY, DFT, CWH, GNMK, CTB, THI, NTWK, ATVI, MYRG, PROV, ICUI, COR, DISH, ADBE, DFT, LBTYA, RWT and MED
Stocks With Unusual Put Option Activity:
- 1) RAX 2) STT 3) TSLA 4) DISH 5) CWH
Stocks With Most Negative News Mentions:
- 1) GES 2) CCL 3) MNST 4) DNDN 5) LPSN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.13% 2) Retail +.58% 3) Defense +.32%
Stocks Rising on Unusual Volume:
- PCP, NWSA, BKS, CTRP, TSLA, GMCR, ABFS, SODA, DOLE, LULU, SRPT and NPSP
Stocks With Unusual Call Option Activity:
- 1) AFFY 2) BKS 3) GMCR 4) RAX 5) CWH
Stocks With Most Positive News Mentions:
- 1) DOLE 2) WTR 3) LMT 4) COST 5) PH
Charts:
Evening Headlines
Bloomberg:
- Town With No Fowl Shows Consequences of China’s Bird Flu Threat. In the village on the outskirts of Beijing where a 7-year-old girl
became the Chinese capital’s first bird flu patient, poultry are
conspicuous by their absence. Authorities culled chickens and
shut live poultry stalls to limit human exposure to farmed birds, which
scientists believe are the most probable reservoir of the new H7N9
influenza strain. In the village of Gucheng, 20 kilometers (12 miles)
northeast of central Beijing, the only source of chicken readily
available to residents is in a supermarket that’s a 30-minute bus ride
away.
- China Refuses to Confirm Okinawa Island Belongs to Japanese. China refused to confirm that Okinawa belongs to Japan after two Chinese scholars suggested re-examining the ownership of the archipelago that includes the
island, adding to tensions over a separate territorial dispute. Agreements between allied forces during World War II mean
the ownership of the Ryukyu Islands may be in question, the
researchers said in a commentary in the People’s Daily, the
Communist Party’s main newspaper. Asked if China considers
Okinawa part of Japan, Foreign Ministry spokeswoman Hua Chunying
said scholars have long studied the history of the Ryukyus and
Okinawa.
- China’s Stocks Fall From on Drop in Producer Prices. China’s
stocks fell for the first time in five days, led by energy and
industrial companies, after producer-price declines deepened. Liquor
makers rose. Datong Coal Industry Co. (601001) and Anhui Conch Cement
Co. slid at least 1.8 percent after the statistics bureau said producer
prices dropped 2.6 percent in April from 1.9 percent a month earlier.
Kweichow Moutai Co. (600519), China’s biggest liquor maker,
jumped 3.8 percent after Shenyin & Wanguo Securities Co.
recommended buying the stock. The producer-price reading “indicates the economic
recovery is weaker than expected as demand for industrial
products looks pretty sluggish,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai.
- Druckenmiller Recommends Betting Against Australian Dollar.
Stanley Druckenmiller, who made $1 billion for George Soros as his
chief strategist by forcing a devaluation of the British pound in 1992,
said investors should bet against the Australian dollar. “We think the Australian dollar will come down and will come down hard,” Druckenmiller said today at the Sohn Investment Conference in New York. “It's expensive.”
- Asian Stocks Rise Fourth Day on Earnings; Toyota Gains. Asian
stocks climbed, with the regional benchmark index on course to extend a
five-year high, as the Bank of Korea cut interest rates and companies
from Toyota Motor Corp. (7203) to Mitsui & Co. forecast higher
profit. The MSCI Asia Pacific Index advanced 0.3 percent to 143.93 as of 10:55 a.m. in Tokyo, gaining for a fourth day.
- JPMorgan(JPM) Says Energy Watchdog May Seek to Punish Units, Workers. JPMorgan Chase & Co., the biggest U.S.
bank, was warned by federal energy-market regulators that its
personnel and two subsidiaries may face claims stemming from a
probe into bidding practices. Federal Energy Regulatory Commission staff told JPMorgan in
March they may recommend the agency bring an enforcement case,
the New York-based company said yesterday in a regulatory
filing. Claims may include “alleged violations of FERC rules
and the rules of certain independent system operators,” the
lender said, without elaborating on the allegations.
Wall Street Journal:
- Diplomat Airs Benghazi Attack Details. In Riveting Account of Libya Raid,
Official Knocks Administration Response. A high-ranking American diplomat delivered an emotional reconstruction
Wednesday of the Sept. 11, 2012, attacks on the U.S. consulate in
Benghazi, Libya, providing the first detailed public account from an
American official who was on the ground in Libya. The testimony from Gregory Hicks, the No. 2 U.S. official in Libya at
the time, before the House Oversight and Government Reform Committee
also drew new attention to key questions about the attacks, and how the
administration handled the aftermath.
The diplomat said he believes the U.S.
military could have done more to assist U.S. personnel on the ground.
He also said top officials in Washington overlooked information in their
early conclusion, since abandoned, that the attack began as a protest.
- Big Banks Push Back Against Tighter Rules. The nation's biggest banks are going on the offensive to fend off growing efforts in Washington to rein them in.
The banks have hired longtime,
influential Washington hands to deflect regulatory and political
pressure to strengthen their finances and to sell assets. Regulators and
some lawmakers have raised concern that large banks remain "too big to
fail" and could require another government bailout in the event of a new
financial meltdown.
- U.S. Is Warned Russia Plans Syria Arms Sale. Israel has warned the U.S. that a Russian deal is imminent to sell
advanced ground-to-air missile systems to Syria, weapons that would
significantly boost the regime's ability to stave off intervention in
its civil war.
- Asia Wrestles With a Flood of Cash. Asian Central Banks Struggle to Tamp Down Strong Currencies. Central banks in Asia, Australia and New Zealand are ratcheting up
moves to deal with an influx of capital that is keeping currencies
strong and complicating efforts to manage growth. New Zealand's central bank said Wednesday it intervened in
foreign-exchange markets to blunt the rise of its currency and would
continue to do so, a day after Australia's central bank cut interest
rates to a record low and noted the stubborn strength of the Australian
dollar. Elsewhere, China is moving to curb bets on the rising yuan,
while Thailand is considering efforts to curb the strongest baht since
the 1997 Asian financial crisis.
Fox News:
- Whistle-blower: Botched talking points hurt FBI probe of Benghazi attack. A key Benghazi whistle-blower, responding to Democratic claims that
the prolonged scrutiny over the administration's botched talking points
is unwarranted, testified Wednesday that the early mischaracterization
of the attack may have actually hurt the FBI's investigation. "I
definitely believe that it negatively affected our ability to get
the FBI team quickly to Benghazi," said Greg Hicks, the deputy chief of
mission in Libya who became the top U.S. diplomat in the country after
Ambassador Chris Stevens was killed. He claimed the Libyan president was
angered by the mischaracterization, in turn slowing the U.S. probe. The
claim was one of several new accounts given at Wednesday's high-profile
hearing where three whistle-blowers testified.
CNBC:
- Coffee Talk: Starbucks(SBUX) Exends Deal With Green Mountain Coffee(GMCR). Starbucks and Green Mountain Coffee Roasters announced a five-year agreement on Wednesday to to triple the number of
Starbucks-branded items made for Keurig single-serve coffee machines,
the companies said in a release. Separately, Green Mountain reported better-than-expected earnings for
the fiscal second quarter. Shares shot up 15 percent after-hours.
- Japan Bear Warns on Unfolding Debt Crisis. Japan will be consumed by a debt crisis surpassing the U.S.
subprime crash, a leading U.S.-based hedge fund manager has warned,
telling investors that "the beginning of the end has begun" for Japan's
finances. Over-indebted governments, and especially the
precarious state of Japan's finances, set the tone for the high-profile
Ira Sohn investment conference in New York on Wednesday. Kyle
Bass of Hayman Capital, a $1.8 billion Texas-based hedge fund and a
noted Japan bear, said signs of the crisis had started to emerge, as
banks and dealers become less willing to take the other side of negative
bets from funds such as his.
Zero Hedge:
Business Insider:
ValueWalk.com:
Reuters:
- Transocean(RIG) profit short of Wall Street estimates. Transocean Ltd, the world's
largest offshore drilling contractor, reported on Wednesday a
weaker-than-expected rise in quarterly profit as some of its
rigs could not work for a period of time due to a third-party
equipment problem.
- Rackspace(RAX) results miss estimates after price cuts.
Rackspace Hosting Inc, which leases online storage space to companies,
reported a lower-than-expected quarterly results after it cut prices of
some of its products in February. The company's shares fell 14 percent to $44.84 in
after-hours trading.
Telegraph:
Westdeutsche Allgemeine Zeitung:
- Bundesbank's Weidmann Criticizes France on Deficit. France as euro "heavyweight" should set example on deficit reduction, German central bank head Jens Weidmann says in an
interview. Says countries shouldn't undermine credibility of stricter
European deficit-cutting rules by "taking their flexibility to the limit." Says France deficit projected to rise in 2014 means country "isn't saving." Says pledging to respect rules in future isn't enough for euro area to regain confidence.
Shanghai Securities News:
- China Drafts
Plan to Curb Production Overcapacity. The plan will be submitted to the
central government decision makers for approval, citing people familiar
with the situation. China may strictly control new projects in industries with production overcapacity such as steel, cement and flat glass.
China Securities Journal:
- Chinabond
Limits Non-Financial Co. Accounts. China Central Depository &
Clearing to only allow accounts opened by non-financial institutions to
sell bonds they hold, transfer or settle existing bond contracts, citing
a statement from the clearing house. All other activities are suspended
for these accounts.
- China Doesn't Need Stimulus for
Growth. The tolerance of Chinese decision makers for slowing economic
growth will be higher than the market's expectation, China Securities
Journal says in an editorial on the front-page. Stimulus measures make
it difficult to control property prices and push up food and resource
prices, the editorial says.
Evening Recommendations
Deutsche Bank:
- Rated (MTZ) Buy, target $38.
- Rated (FLR) Buy, target $84.
- Rated (KBR) Buy, target $44.
- Rated (CBI) Buy, target $87.
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 99.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 80.5 -.25 basis point.
- NASDAQ 100 futures +.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 335K versus 324K the prior week.
- Continuing Claims are estimated to fall to 3018K versus 3019K prior.
10:00 am EST
- Wholesale Inventories for March are estimated to rise +.3% versus a -.3% decline in February.
- Wholesale Sales for March are estimated to rise +.1% versus a +1.7% gain in February.
Upcoming Splits
Other Potential Market Movers
- The Fed's Plosser speaking, Fed's Lacker speaking, Fed's Evans speaking, Spain 10Y bond auction, BoE rate decision, 30Y bond auction, 1Q Mortgage Delinquencies/Foreclosures, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (IRBT) analyst day, (MYGN) investor day and the (AES) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and financial 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.
Broad Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 141.0 +46.88%
- Total Put/Call .88 -1.12%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.24 +.47%
- European Financial Sector CDS Index 133.07 +4.89%
- Western Europe Sovereign Debt CDS Index 91.40 +2.25%
- Emerging Market CDS Index 231.23 +.20%
- 2-Year Swap Spread 13.75 -.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -15.25 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .04% +1 bp
- China Import Iron Ore Spot $130.20/Metric Tonne +.15%
- Citi US Economic Surprise Index -7.9 -3.0 points
- 10-Year TIPS Spread 2.28 -3 bps
Overseas Futures:
- Nikkei Futures: Indicating +115 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my retail/tech/medical sector longs
- Market Exposure: 75% Net Long
Bloomberg:
- EU Warns of ‘Huge Shocks’ Without Bank Depositor Preference Rule. European Union deposit-insurance funds
would be vulnerable to “huge shocks” unless depositors get
preferred treatment over other unsecured creditors, a study on
proposed rules for handling failing banks showed. The EU is weighing whether depositors should be paid back
ahead of other unsecured creditors in new rules on bank
resolution. If clear preference isn’t given to any depositors,
national funds would stand in line with uninsured depositors,
senior bondholders and other unsecured creditors to divide up a
failed bank’s assets and share in absorbing losses, according to
the confidential EU impact study.
- Euro Gains Most in Three Weeks as German Industrial Output Rises. The euro rallied the most in three
weeks against the dollar as German industrial production
unexpectedly rose for a second month in March, a sign that Europe’s largest economy may be returning to growth.
- European Stocks Advance as ING Earnings Exceed Estimates. European
stocks climbed, with the Stoxx Europe 600 Index extending its highest
level since June 2008, as companies from ING Groep NV (INGA) to Deutsche
Telekom AG (DTE) posted quarterly earnings that beat estimates.
- Issa Says Heads of Benghazi Review Panel Refused to Testify. Republican Representative Darrell Issa
said the Obama administration has failed to cooperate with his
probe of the attack on the U.S. mission in Benghazi, Libya. Issa of California, chairman of the House Oversight and
Government Reform Committee, also said today at a hearing of the
panel that leaders of the State Department’s review board
refused to testify before the panel. Today’s hearing revives efforts by Republicans to show the
Obama administration didn’t provide enough security to U.S.
diplomats in Libya before the attack last Sept. 11 that killed
U.S. Ambassador Christopher Stevens and three other Americans,
failed to respond militarily during it and engaged in what Issa
has called a “cover-up” afterward to hide the role of
terrorists linked to al-Qaeda.
- Iron Ore Seen Dropping by BHP as Supply Growth Tops Demand. Global
iron ore supplies will expand faster than demand over the long term,
lowering prices and reducing volatility of the raw material used to make
steel, according to BHP Billiton Ltd. (BHP), the largest mining
company. New seaborne cargoes will replace more expensive output, mainly
in China, Alan Chirgwin, general manager of iron ore marketing, told a
conference in Singapore today. He didn’t give
price forecasts or define long term. China is the world’s
largest buyer of the biggest seaborne cargo after crude oil. Iron ore
has lost 10 percent this year, nearing bear-market territory, amid
forecasts for an increase in global supplies just as demand growth in
China drops. As producers boost output, higher-cost Chinese supply
will drop and the price will extend declines, Deutsche Bank AG said in
report last month. Rio Tinto Group (RIO) is pressing ahead with its
expansion, Alan Smith, president of iron ore Asia, said at the
conference today.
- China April Copper Imports Drop to 22-Month Low on Demand. Copper imports by China declined to
the lowest level in 22 months in April, raising concern that
demand is waning from the biggest user. Inbound shipments of the refined metal, alloy and products
were 295,799 metric tons last month, the General Administration
of Customs said on its website today. That was the lowest since
June 2011, down 7.4 percent from March and 21 percent lower than
a year earlier, according to data compiled by Bloomberg.
- Gold Futures Gain Amid Signs of Physical Demand in India, China. Gold rose for the second time in three
days amid signs of increasing purchases in India and China, the world’s largest consumers of the metal.
- McDonald’s April Store Sales Drop 0.6% on Asia Slowdown. McDonald’s Corp. (MCD), the world’s biggest restaurant chain, said sales at stores open at least 13 months
fell 0.6 percent last month as growth slowed in its Asia-Pacific
region. Analysts estimated a 0.5 percent drop, the average of 11
estimates from Consensus Metrix. Sales at stores in the
company’s Asia-Pacific, Middle East and Africa unit fell 2.9
percent, the Oak Brook, Illinois-based company said today in a
statement. Analysts projected a 1.4 percent decline.
Wall Street Journal:
- Live-Blogging the Ira Sohn Conference.
- In Beijing, Mass Gathering Draws Police. Beijing on Wednesday saw an unusually large public demonstration, according
to eyewitnesses and images circulating on social media. The demonstration appeared to end without violence or conflict, the
eyewitnesses said, after police ushered the protesters off the streets. Still,
it underscored the tensions that can bubble over in China, even in tightly
monitored Beijing.
Fox News:
- Benghazi witness describes effort to lure more Americans into 'trap,' says knew attack was terrorism. (video) A key Benghazi whistle-blower testified Wednesday that his team knew the
Sept. 11 attack on the U.S. compound was terrorism, revealing that it
appeared some were trying to lure even more U.S. personnel into a
separate "ambush" while the attack was still being carried out. Greg Hicks, the deputy chief of mission in Libya who became the top
U.S. diplomat in the country after Ambassador Chris Stevens was killed,
revealed new details as he and other whistle-blowers delivered emotional
testimony on Capitol Hill. He described how, as diplomatic officials were trying to find out
what happened to Stevens, they were receiving phone calls from supposed
tipsters saying they knew where the ambassador was and urging Americans
to come get him.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- Seatbelt Sign. Aggressive
aircraft orders have an inverse relationship with expansion in global
GDP a year later. If that affiliation holds, big orders by Asian
airlines point to rising risks of economic turbulence next year.
- Weaker Europe, iron ore price weigh on ArcelorMittal - CEO. The
world's largest steelmaker ArcelorMittal suffered in the first quarter
from "very weak" demand in Europe and falling iron ore prices, its chief
executive said on Wednesday ahead of results due on Friday. The company, which makes some 6-7 percent of the world's steel, has said it sees global steel consumption up 3 percent
this year, but European demand falling by between 0.5 and 1.5
percent after a 9 percent drop in 2012. "We are seeing it could be more minus 1.5 than minus 0.5
because the first quarter has been very weak. It started well,
but as we entered it, it looks weak," Lakshmi Mittal told
Reuters on the sidelines of the company's annual shareholder
meeting. He said Chinese steel demand would probably grow by between
2.5 and 3 percent this year. In February, the company had forecast a 3
percent expansion. "It is strong in auto and construction, but recently
there has been some credit squeeze and we are seeing some softening of
the overall demand," Mittal said.
- U.S. can pursue case against Bank of America over mortgages. A federal
judge ruled on Wednesday that the United States can pursue parts of a
civil lawsuit against Bank of America Corp over its sale of toxic
mortgages to Fannie Mae and Freddie Mac, boosting a
largely untested legal theory the government used in the case.
- McKesson(MCK) forecasts strong profit growth in fiscal 2014. Drug wholesaler
McKesson Corp reported a smaller-than-expected fourth-quarter profit,
but forecast strong 2014 adjusted earnings as it expects its technology
solutions business and the acquisition of smaller peer PSS World Medical to significantly contribute to growth.
- European banking union? Don't hold your breath. In June last year, European
Union leaders made a great fanfare of committing to 'banking
union', a three-step plan to shore up the region's 8,000 banks
and prevent a repeat of the debt and financial crisis. Eleven
months on, deep cracks have emerged in the visions member states have
of the scheme, with Germany in particular raising doubts about its
overall feasibility although both it and France have promised progress
by the end of next month.
Telegraph:
Handelsblatt:
- Germany
Should Sue ECB, State Minister Hahn Says. Germany should sue ECB at
European Court of Justice in Luxembourg because announced bond-buying
program violates mandate, Joerg-Uwe Hahn, Free Democrat minister in
charge of Europe affairs in state of Hesse says in a guest commentary.
ECB bond-buying would constitute monetary state financing and increase inflation risks, Hahn said. ECB has chosen to become a "political actor," Hahn said.
FAZ:
-
EU to Impose Punitive Tariffs on Chinese Solar Panels. European Commission will implement tariffs averaging 456% today, citing people familiar with the matter.
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:
