Style Outperformer:
Sector Outperformers:
- 1) Networking +3.21% 2) Computer Hardware +1.66% 3) Internet +1.42%
Stocks Rising on Unusual Volume:
- CSCO, CIEN, OCN, RBS, ANW, FANG, CUB, EAC, RKUS, KSS, TSRO, TSLA, DSX, AEGR, AV, SCTY, IMOS, EZCH, INXN, VIPS, BID, YPF, NTAP, YELP, FFIV, JDSU, RVBD, STZ, CAVM, EMC, WLT, BPI, DDS and JNPR
Stocks With Unusual Call Option Activity:
- 1) CSCO 2) TMO 3) KSS 4) CIEN 5) ALTR
Stocks With Most Positive News Mentions:
- 1) TAP 2) STZ 3) TIF 4) C 5) PAYX
Charts:
Evening Headlines
Bloomberg:
- Euro Near 6-Week Low as Inflation Set to Fall to Three-Year Low. The euro slid toward a six-week low
before a report that will probably confirm inflation in the 17-nation region was the slowest in three years.
The common currency completed a five-day drop yesterday, the longest losing stretch in six months, on speculation the European Central Bank will ease policy after data showed the
euro-area economy extended its recession to a record sixth
quarter.
- China Said to Prepare Anti-Dumping Duties on Polysilicon Imports. China, the world’s biggest maker of
solar panels, is preparing to set anti-dumping duties on imports
of the raw material used to make the equipment after determining
it was sold below cost, said two people with direct knowledge of
the matter. The Ministry of Commerce has completed probes that
determined the U.S. and European Union are subsidizing producers
of polysilicon and that imports of the commodity harmed domestic
companies, said the people, who asked not to be identified as
they weren’t authorized to discuss the matter publicly. The
ministry is holding off on setting duties until the EU issues
its ruling on anti-dumping tariffs against Chinese-made solar
equipment, which will be a factor in China’s decision, the
people said.
- Foreign Investment in China Misses Estimates Amid Growth Concern.
Foreign direct investment in China lagged behind analysts’ estimates in
April, highlighting concern at the growth outlook for the world’s
second-biggest economy after an unexpected slowdown last quarter. Investment rose 0.4 percent from a year earlier to $8.4
billion, the Ministry of Commerce said in a statement today in
Beijing. That was less than the 5.7 percent gain in March and
the 6.2 percent median estimate in a Bloomberg News survey of
eight analysts.
- Japan GDP Jumps Most in Year as Consumers Open Wallets: Economy.
Japan’s economy expanded the most in a year last quarter as consumer
spending and export gains outweighed the weakest business investment
since the wake of the March 2011 earthquake and tsunami. Gross
domestic product rose an annualized 3.5 percent, a Cabinet Office
release showed in Tokyo. Private consumption, making up 60 percent of
GDP, contributed 2.3 percentage points to the jump. Nominal GDP, which
is unadjusted for changes in prices, rose 1.5 percent, also the most in a
year. The so-called GDP deflator, a broad measure of prices across the
economy, tumbled 1.2 percent from a year before, the most since the
final three months of 2011,
underscoring Kuroda’s challenge as he seeks to end more than a decade of
entrenched deflation.
- Most Asian Stocks Drop as Japan’s Banks Fall on Earnings.
Most Asian stocks fell as a decline in Japanese banks after forecasting
lower earnings offset a report that Japan’s economy expanded faster
than analysts estimated in the first quarter. Mitsubishi UFJ Financial
Group Inc. sank 2.9 percent, leading Japanese lenders lower. Daewoo
Shipbuilding (042660) & Marine Engineering Co., South Korea’s
third-biggest shipbuilder, fell 10 percent as first-quarter profit
plunged. Dai-ichi Life Insurance Co. (8750), Japan’s second-largest life
insurer, jumped 7.3 percent after projecting improved earnings and a
stock split. The MSCI Asia Pacific Index slid 0.3 percent to 142.78 as
of 12:22 p.m. Tokyo time, erasing gains of as much as 0.5
percent.
- Copper Set to Decline 16% on Elliott Wave: Technical Analysis. “From a long-term perspective copper is now in a downtrend,
after its spectacular five-wave bull run in the decade between
2001 to 2011,” he said. “In the next wave down, during July to
September, it will drop to perhaps as low as $6,037.50.”
- Rubber Drops to One-Week Low as Declining Oil Reduces Appeal. Rubber fell to a one-week low on
speculation that decreasing oil prices would cut the cost of
synthetic products, decreasing the appeal of the natural variety. Rubber for delivery in October dropped as much as 2.3 percent to 276.3 yen a kilogram ($2,707 a metric ton)
on the Tokyo Commodity Exchange, the lowest price for the most-active
contract since May 9. Futures were at 279.9 yen at 11 a.m., set
for a third day of decline and a weekly loss of 4.7 percent.
- Rebar Trades Near Lowest in 5 Months on Output, Iron Ore Price. Steel reinforcement-bar futures
traded near the lowest level in more than five months amid
rising output in China and as iron ore fell into a bear market. Rebar
for delivery in October on the Shanghai Futures Exchange fell as much
as 0.8 percent to 3,526 yuan ($573) a metric ton, the lowest since Dec. 3, and was at 3,562 at 10:54
a.m. local time. The most-active contract has retreated 11
percent this year.
- Apple(AAPL) Said to Be Subject of U.S. Senate Offshore Tax Hearing. Apple Inc. will be the subject of a
May 21 Senate hearing on U.S. companies’ offshore tax practices,
said two people familiar with the inquiry. Apple Chief Executive Officer Tim Cook will testify at the
hearing of the Permanent Subcommittee on Investigations, one of
the people said. The committee has been examining companies that use
various maneuvers to reduce their tax bills, including Microsoft Corp.
(MSFT) and Hewlett-Packard Co. (HPQ).
- Bristol-Myers(BMY) Drug Cocktail Stymies Melanoma Tumors. Two
drugs from Bristol-Myers Squibb Co. (BMY) shrank tumors in as many as
half of patients with advanced melanoma, according to early research
that may pave the way for cocktails that trigger the immune system to
destroy cancer. In the study, 52 melanoma patients were
simultaneously treated with Bristol-Myers’s melanoma drug Yervoy and
nivolumab, its experimental therapy that targets the immune system in a
different way. Tumors shrank in 40 percent of patients, and in 53
percent of those who got the most effective dose combination, according
to data released today in advance of the American Society of Clinical
Oncology meeting scheduled to begin May 31.
- Obama’s Commerce Pick Got $54 Million from Bahamas Trust. U.S. Commerce Secretary nominee Penny Pritzker received $54 million last
year from an offshore trust in the Bahamas, according to a disclosure
report that describes an empire of casinos, hotels, energy companies and
family trusts that may be worth more than $2 billion. Pritzker,
whose family founded Hyatt Hotels Corp (H)., has assets valued in a
range of $400 million to $2.2 billion, not including holdings in the
hotel company, according to documents released yesterday by the U.S.
Office of Government Ethics.
Wall Street Journal:
- New Terms Weighed on Default Swaps. An industry group wants to add criteria to a form of debt-default
insurance that would lead to payouts for bondholders when banks are
rescued. Financial contracts called credit-default swaps act like insurance
for bonds and loans. When companies issuing debt experience what is
known as an "event of default," sellers of the swaps compensate buyers
of the protection. The contracts, also known as derivatives, already pay
out on a range of events, including if a company files for bankruptcy
protection, misses an interest payment or restructures its debts.
- Experiment Brings Human Cloning One Step Closer. Scientists have used cloning technology to transform human skin cells
into embryonic stem cells, an experiment that may revive the
controversy over human cloning.
The researchers stopped well short of
creating a human clone. But they showed, for the first time, that it is
possible to create cloned embryonic stem cells that are genetically
identical to the person from whom they are derived.
Fox News:
- Benghazi emails show State Department had heavy hand in watering down account of attack. State Department officials repeatedly objected to -- and tried to
water down -- references to Al Qaeda and prior security warnings in the
administration's initial internal story-line on the Benghazi attack,
according to dozens of emails and notes released by the White House late
Wednesday. The documents also showed the White House, along with several other
departments, played a role in editing the so-called "talking points,"
despite claims from the White House that it was barely involved. And
they showed then-CIA Director David Petraeus objected to the
watered-down version that would ultimately be used as the basis for U.N.
Ambassador Susan Rice's flawed comments on several TV shows the Sunday
after the attack. "Frankly, I'd just as soon not use this," Petraeus told his deputy in a Sept. 15 email.
- Acting IRS commissioner resigns in wake of agency scandal. President Obama announced Wednesday that acting IRS Commissioner
Steven Miller has resigned in the wake of the agency scandal in which
conservative groups were targeted. The president made the announcement in a brief statement at the White
House, following a meeting with Treasury Secretary Jacob Lew and other
top department officials in which they reviewed a highly critical
inspector general’s report on the practice. The report concluded poor
management allowed agents to improperly target Tea Party and other
groups for more than 18 months, starting in 2010.
CNBC:
- Cisco(CSCO) Stock Jumps on Surprise Earnings Beat.
Cisco on Wednesday reported a surprise beat in earnings and revenue in
fiscal third-quarter, suggesting the networking-gear maker's customers
are
spending more on technology. The company's shares jumped more than 8
percent in after-hours trading.
Zero Hedge:
Business Insider:
New York Times:
- Big Banks Get Break in Rules to Limit Risks. Under pressure from Wall Street lobbyists, federal regulators have
agreed to soften a rule intended to rein in the banking industry’s
domination of a risky market. The changes to the rule, which will be announced on Thursday, could
effectively empower a few big banks to continue controlling the
derivatives market, a main culprit in the financial crisis.
Fox19.com:
Mediabistro:
The Blaze:
- Another Headache for the Obamacare ‘Train Wreck’? Small Business Owners Sue IRS Over Employer Mandate. Small business owners in six states are
suing the federal government over an IRS regulation imposed under the
Affordable Care Act (i.e. “Obamacare”) which, they say, will force them
to pay hefty fines, cut their employees’ hours, or burden their
businesses. “Because of Obamacare I’ve already been
forced to cut my ‘hourly’ employees’ hours from 40 down to 28 so I can
keep running my business and keep my employees on the payroll,” J. Allen
Tharp, CEO of Olde England’s Lion and Rose and a plaintiff in the suit,
told TheBlaze.
Reuters:
- JPMorgan(JPM) presses Bloomberg on reporters' access to data. JPMorgan Chase & Co,
one of the biggest customers of Bloomberg LP, said on Wednesday
it has sent a formal legal request asking the financial data and
news company to provide details of what bank information
Bloomberg News reporters had been able to see.
Financial Times:
- Snags await favourite for Federal Reserve job.
Janet Yellen has emerged as the clear frontrunner to become the next
chair of the US Federal Reserve, but the choice belongs to one man –
Barack Obama – and the selection process can be hard on favourites.
- French Economy is 'Cumbersome,' Publicis CEO Says.
French people troubles by absence of "real reforms" to lead way out of
economic gloom, Publicis CEO Maurice Levy writes. Welfare system "costs
far too much", he said. Govts have made "bad" decisions including 35-hr
working week. Hard measures are still needed, he said.
Telegraph:
Apple Daily:
- Taiwan May Cut 2013 GDP Forecast to 3.17%. Taiwan's statistics
bureau may lower its GDP forecast after April exports fell, citing
statistics bureau head Shih Su-mei. Bureau in February forecast 3.59%
GDP growth for 2013.
Evening Recommendations
S&P Capital IQ:
- Downgraded (C) to Hold, target $52.
- Downgraded (FITB) to Hold, target $18.
Night Trading
- Asian equity indices are -.75% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.50 -.5 basis point.
- Asia Pacific Sovereign CDS Index 84.0 +1.75 basis points.
- NASDAQ 100 futures +.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Consumer Price Index for April is estimated to fall -.3% versus a -.2% decline in March.
- The CPI Ex Food & Energy for April is estimated to rise +.2% versus a +.1% gain in March.
- Initial Jobless Claims are estimated to rise to 330K versus 323K the prior week.
- Continuing Claims are estimated to fall to 3000K versus 3005K prior.
- Housing Starts for April are estimated to fall to 970K versus 1036K in March.
- Building Permits for April are estimated to rise to 941K versus 902K in March.
10:00 am EST
- Philly Fed for May is estimated to rise to 2.0 versus 1.3 in April.
Upcoming Splits
Other Potential Market Movers
- The Fed's Lacker speaking, Fed's Williams speaking,
Fed's Raskin speaking, Fed's Fisher speaking, Fed's Plosser speaking,
Fed's Rosengren speaking, Eurozone inflation data, Bloomberg Economic Expectations Index for May, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, RBC Aerospace/Defense Conference, Morgan Stanley Refining Conference and the (HAE) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer 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: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 108.0 +9.1%
- Total Put/Call .78 -2.50%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.63 -1.48%
- European Financial Sector CDS Index 136.52 -2.79%
- Western Europe Sovereign Debt CDS Index 88.67 +.76%
- Emerging Market CDS Index 241.69 +2.59%
- 2-Year Swap Spread 14.25 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -15.75 -.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- China Import Iron Ore Spot $126.40/Metric Tonne -1.33%
- Citi US Economic Surprise Index -10.60 -2.9 points
- 10-Year TIPS Spread 2.29 -3 bps
Overseas Futures:
- Nikkei Futures: Indicating +129 open in Japan
- DAX Futures: Indicating -1 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical/tech/retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 75% Net Long
Bloomberg:
- Euro-Area Recession Deepens as Slowdown Exceeds Estimates. The euro-area economy shrank more than economists forecast
in the three months through March, extending a recession to a record
sixth quarter and increasing pressure on the currency bloc’s leaders to
spur growth. Gross domestic product in the 17-nation euro zone
fell 0.2 percent after a 0.6 percent decline in the previous quarter,
the European Union’s statistics office in Luxembourg said today. The
median of 39 estimates in a Bloomberg News survey was for a 0.1 percent
contraction. From a year earlier, the economy shrank 1 percent. The
slowdown has spread to the euro core. The German economy, Europe’s
largest, expanded less than forecast in the first quarter.
- France Slips Into Recession, Adding Pressure on Hollande. The French economy fell back into
recession, increasing pressure on President Francois Hollande to adopt policies to revive growth. Gross
domestic product shrank 0.2 percent in the three months through March,
following a revised 0.2 percent contraction in the previous quarter,
national statistics office Insee said today. Economists expected a 0.1
percent drop, the median of 25 forecasts gathered by Bloomberg News showed.
- China Banks’ Bad Loans Rise for Sixth Quarter as Economy Slows. Non-performing
loans climbed by 33.6 billion yuan ($5.5 billion) in the three months
ended March 31, to 526.5 billion yuan, the China Banking Regulatory
Commission said in a statement on its website today. Soured debt rose
across all
lender categories, including state-owned and regional banks.
- Moody’s Focuses on Emerging Currency Risk Amid Record Bonds.
Moody’s Investors Service said it’s
assessing the risk of currency depreciation damaging the
creditworthiness of emerging-market companies after record foreign bond
sales. Companies from 15 emerging markets sold a record $130 billion
of bonds in dollars and euros last year, Moody’s said in an e-mailed
report. Total corporate and government international issuance may soar
to a peak of $600 billion this year from $430 billion last year, and
reach $1 trillion in three years, Hakan Wohlin, global head of debt origination at Deutsche Bank AG in London, said in an interview yesterday. “The amount of U.S. dollar and euro debt outstanding has increased considerably year-by-year, and with it the risk of
currency mismatch,” Moody’s analysts including Philip Robinson
in London said in the report.
- EU Oil Manipulation Probe Shines Light on Platts Pricing. Two weeks after Royal Dutch Shell Plc (RDSA)
and Platts changed the way more than half of the world’s crude
is valued, the companies along with BP Plc (BP/) and Statoil ASA (STL) are
being probed by European antitrust regulators about potential
manipulation of oil prices.
- Iron Ore Tumbles Into Bear Market on China Growth Concerns. Iron ore slumped into a bear market
on concern that slowing economic growth in China, the world’s
biggest buyer, will reduce demand as global supplies increase. Ore with 62 percent iron content delivered to the Chinese
port of Tianjin fell 1.3 percent to $126.40 a ton today,
according to The Steel Index Ltd. The benchmark price has lost
20 percent since Feb. 20, when it reached a 16-month high of
$158.90, meeting the common definition of a bear market.
- Copper Declines to One-Week Low on Slowing Growth, Ample Supply. Copper
fell to a one-week low in New York amid signs that economies are
weakening in countries that are the world’s biggest consumers of the
metal, contributing to a surge in stockpiles that are the highest since
2003. Germany expanded less than forecast in the first quarter,
government statistics showed today. Bank of America Merrill Lynch cut
its estimate for growth this year in China, following JPMorgan Chase
& Co. by a day. U.S. industrial production declined in April by
the most in eight months, the Federal Reserve said. The three nations
are the largest copper users. “Every bit of data lately seems to be
showing less industrial production, and less manufacturing is going to
be a problem for copper,” Frank Lesh, a trader at FuturePath Trading in
Chicago, said in a telephone interview. “The buyers just aren’t there, and we’re seeing a buildup in inventories.” Copper futures for delivery in July fell 1.4 percent to
$3.2415 a pound by 10:57 a.m. on the Comex in New York, after
touching $3.224, the lowest since May 3. Prices tumbled 2.1
percent yesterday and are down 11 percent this year.
- New York Area Manufacturing Unexpectedly Contracts. The
Federal Reserve Bank of New York’s general economic index declined to
minus 1.4 this month from 3.1 in April. Readings less than zero signal
contraction in New York, northern New Jersey and southern Connecticut. The median projection in a Bloomberg survey called for an increase to 4.
Wall Street Journal:
- Lawmakers Press Holder on AP, IRS. Attorney General Testifies Before House Committee; Chairman Calls for 'Answers and Accountability'. Members of Congress expressed concern Wednesday about the Justice
Department's subpoena of Associated Press phone records at a hearing
where Attorney General Eric Holder faced questions over his record.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
New York Times:
- Why Hedge Funds’ Criticism of the Fed May Be Right. This prebubble euphoria only undermines the Federal Reserve’s fragile
credibility. It reinforces the notion that it seems to know only two
things: how to inflate bubbles and how to studiously not recognize them.
Chicago Tribune:
- Deere(DE) cuts outlook for the year; shares fall. Deere & Co. on Wednesday said its second quarter profit inched
higher, beating analysts expectations, but warned that global financial
pressures and the cool, wet weather North America could affect sales the
rest of the year. The stock gave up almost 5 percent.
Moody's:
Hedge Fund Alert:
- Dow 15,000 Is Boon for Long-Only Strategies. As long/short equity funds continue to underperform the stock market,
increasing numbers of managers and investors alike are betting on
long-only vehicles.
“The long side of the portfolio is what clients are demanding,” said an
investment professional who researches hedge funds for a $1.6 billion
endowment. “They just want those longs.”
Gartner:
Financial Times:
- Spanish banks face fresh hit from bad loans. Spanish
banks are bracing themselves for a fresh financial hit, amid rising
pressure from the Bank of Spain on lenders to write down the value of
their €200bn portfolio of restructured loans to the country’s troubled
companies and struggling households.
The move is likely to trigger a further rise in bad loan ratios
across the system and reduce earnings at a time when most Spanish banks
are already suffering from low profitability. Analysts believe the
crackdown could also shine a harsh new light on the capital position of
some of the weaker banks, forcing them to sell assets to avoid the need
to raise fresh capital.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -3.0% 2) Steel -2.03% 3) Biotech -1.20%
Stocks Falling on Unusual Volume:
- ANV, SLW, AAPL, RDS/A, VALE, VIP, RCI, BNS, RKUS, XONE, WMC, EXLS, DE, NBL, CSC, FMS, PIKE, GLNG, GTU, COO, SIRO, ACAT, BNS, RCI, AG, THC, SOHU, CCXI, FLT, QCOR, FANG, TD and OAK
Stocks With Unusual Put Option Activity:
- 1) PXP 2) CSC 3) DE 4) ATVI 5) IBB
Stocks With Most Negative News Mentions:
- 1) GLNG 2) WYN 3) DPZ 4) SLV 5) MUR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +2.80% 2) Alt Energy +1.92% 3) Internet +.96%
Stocks Rising on Unusual Volume:
- EVC, NTT, YPF, INSM, YRCW, SPWR, SCTY, A, BMY, YOKU, ARO, TER, SLCA, MRIN, DAL, EXP, INVN and CHMT
Stocks With Unusual Call Option Activity:
- 1) A 2) SHLD 3) WM 4) RHT 5) BMY
Stocks With Most Positive News Mentions:
- 1) ASH 2) FLIR 3) NOC 4) TSS 5) LWAY
Charts:
