Indices
- Russell 2000 984.28 -1.20%
- S&P 500 High Beta 25.53 -1.77%
- Value Line Geometric(broad market) 426.16 -1.08%
- Russell 1000 Growth 753.90 -1.31%
- Russell 1000 Value 837.57 -1.02%
- Morgan Stanley Consumer 1,019.37 -1.27%
- Morgan Stanley Cyclical 1,220.95 -1.26%
- Morgan Stanley Technology 759.88 -1.79%
- Transports 6,395.70 -2.34%
- Bloomberg European Bank/Financial Services 96.74 -4.24%
- MSCI Emerging Markets 42.54 -1.76%
- HFRX Equity Hedge 1,124.43 -.24%
- HFRX Equity Market Neutral 938.97 +.07%
Sentiment/Internals
- NYSE Cumulative A/D Line 191,103 -.09%
- Bloomberg New Highs-Lows Index -76 -685
- Bloomberg Crude Oil % Bulls 21.88 +9.40%
- CFTC Oil Net Speculative Position 268,944 +15.63%
- CFTC Oil Total Open Interest 1,742,051 -.95%
- Total Put/Call 1.27 +58.75%
- ISE Sentiment 70.0 -22.22%
- Volatility(VIX) 13.99 +12.37%
- S&P 500 Implied Correlation 53.74 -5.29%
- G7 Currency Volatility (VXY) 9.98 +.40%
- Emerging Markets Currency Volatility (EM-VXY) 8.49 +6.5%
- Smart Money Flow Index 12,165.66 +.22%
- Money Mkt Mutual Fund Assets $2.601 Trillion +.80%
Futures Spot Prices
- Reformulated Gasoline 283.90 -2.1%
- Heating Oil 285.69 -2.81%
- Bloomberg Base Metals Index 191.44 -.71%
- US No. 1 Heavy Melt Scrap Steel 349.33 USD/Ton unch.
- China Iron Ore Spot 123.20 USD/Ton +.08%
- UBS-Bloomberg Agriculture 1,478.69 +.54%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 6.8% -20 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.3206 +9.61%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 115.72 +.14%
- Citi US Economic Surprise Index -15.30 +2.2 points
- Citi Emerging Markets Economic Surprise Index -51.0 -3.6 points
- Fed Fund Futures imply 46.0% chance of no change, 54.0% chance of 25 basis point cut on 6/19
- US Dollar Index 83.70 -.60%
- Euro/Yen Carry Return Index 136.61 -1.13%
- Yield Curve 176.0 +5 basis points
- 10-Year US Treasury Yield 2.01% +6 basis points
- Federal Reserve's Balance Sheet $3.356 Trillion +1.35%
- U.S. Sovereign Debt Credit Default Swap 30.26 +1.49%
- Illinois Municipal Debt Credit Default Swap 119.0 +1.71%
- Western Europe Sovereign Debt Credit Default Swap Index 81.59 -4.57%
- Emerging Markets Sovereign Debt CDS Index 188.09 +6.41%
- Israel Sovereign Debt Credit Default Swap 117.12 -4.0%
- China Blended Corporate Spread Index 408.0 +8 basis points
- 10-Year TIPS Spread 2.25% -1 basis point
- TED Spread 23.75 -.5 basis point
- 2-Year Swap Spread 16.0 +1.5 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -14.0 +3.25 basis points
- N. America Investment Grade Credit Default Swap Index 75.49 +7.54%
- European Financial Sector Credit Default Swap Index 142.35 +8.81%
- Emerging Markets Credit Default Swap Index 259.92 +5.44%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 106.0 +8 basis points
- M1 Money Supply $2.520 Trillion +.13%
- Commercial Paper Outstanding 1,033.40 +2.0%
- 4-Week Moving Average of Jobless Claims 339,500 +200
- Continuing Claims Unemployment Rate 2.3% unch.
- Average 30-Year Mortgage Rate 3.59% +8 basis points
- Weekly Mortgage Applications 791.0 -9.77%
- Bloomberg Consumer Comfort -29.4 +.8 point
- Weekly Retail Sales +2.60% -20 basis points
- Nationwide Gas $3.65/gallon +.03/gallon
- Baltic Dry Index 828.0 -2.59%
- China (Export) Containerized Freight Index 1,057.92 -1.13%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 30.0 +33.3%
- Rail Freight Carloads 250,156 +.76%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (12)
- SKS, WBSN, RUE, SSNI, BAH, CBST, LPS, DY, PNX, SGNT, SCTY and MNRO
Weekly High-Volume Stock Losers (14)
- CCL, ARRS, RPAI, MDCO, FPO, HGG, DXM, HR, IRWD, UNXL, OSIS, IGTE, TISI and GME
Weekly Charts
ETFs
Stocks
*5-Day Change
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 78.0 -10.34%
- Total Put/Call 1.23 +23.0%
Credit Investor Angst:
- North American Investment Grade CDS Index 75.64 +3.27%
- European Financial Sector CDS Index 142.35 +4.70%
- Western Europe Sovereign Debt CDS Index 78.66 -1.26%
- Emerging Market CDS Index 259.92 +1.24%
- 2-Year Swap Spread 16.0 +.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -14.0 +.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- China Import Iron Ore Spot $123.20/Metric Tonne n/a
- Citi US Economic Surprise Index -15.30 +2.5 points
- 10-Year TIPS Spread 2.25 unch.
Overseas Futures:
- Nikkei Futures: Indicating -342 open in Japan
- DAX Futures: Indicating +13 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my to (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- German First-Quarter Growth Damped by Construction, Investment. The German economy’s return to growth
in the first quarter was hampered by declines in construction
activity and investment as a severe winter and a recession in Europe damped demand. Construction
fell 2.1 percent from the fourth quarter and capital investment dropped
1.5 percent, the Federal Statistics Office in Wiesbaden said today.
Gross domestic product increased
0.1 percent, the office said, confirming a May 15 estimate. From
a year earlier, the economy shrank 0.2 percent when adjusted for
working days.
- Corporate Bond Sales Slow in Europe on Fed Stimulus Speculation. Sales of corporate bonds in Europe
fell to the lowest in nearly two months this week as concern the
Federal Reserve will taper asset purchases roiled markets. U.K. tour operator Thomas Cook Group Plc (TCG) and French real
estate investment company Gecina SA (GFC) were among companies that
sold 8.4 billion euros ($10.9 billion) of bonds, down from 19.5
billion euros last week and the least since the week ending
April 6, according to data compiled by Bloomberg. The cost of
insuring the debt rose, with the Markit iTraxx Europe Index of
credit-default swamps climbing 4.5 basis points to 96.
- European Stocks Post Weekly Drop Amid Fed Stimulus Signs.
European stocks posted their first weekly loss in more than a month as
investors debated when the Federal Reserve will scale back momentary
stimulus and Chinese manufacturing unexpectedly shrank.FirstGroup Plc
tumbled 43 percent after the U.K. bus and rail company halted its
dividend and announced a rights offer to avert a credit downgrade. SAP
AG, the largest maker of enterprise-management software, dropped the
most in 21 months after changing its board structure. Bankia SA (BKIA),
the nationalized Spanish bank, sank 85 percent before a debt swap next
week. The Stoxx Europe 600 Index fell 1.7 percent to 303.35 this week, including the worst drop in 10 months on May 23
after Fed Chairman Ben S. Bernanke said the central bank will consider
paring its stimulus measures if the U.S. economy improves.
- Dollar Bond Sales Slump in Asia as Costs Leap on Stimulus Doubts. Sales of U.S. dollar-denominated
bonds by Asian issuers slumped more than 70 percent this week as yields
rose the most in almost four months. Vedanta Resources Plc, the miner controlled by billionaire Anil
Agarwal, led $2.1 billion of new sales in the region outside Japan, the
least since the week ending April 5 in which companies halted issuance
through a holiday period in Hong Kong and China, data compiled by
Bloomberg show. Yields climbed 13 basis points to 4.4 percent as of
yesterday, on track for the biggest weekly rise since the start of
February, according to JPMorgan Chase & Co. indexes. The Markit
iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped
1 basis point to 106 basis points as of 8:21 a.m. in Hong Kong,
Australia & New Zealand Banking Group Ltd. prices show. The gauge is
set for its biggest weekly increase in nine weeks, and yesterday rose
to the highest since May 2, according to data provider CMA. The Markit iTraxx Japan index fell 3.5 basis points to 81.25 basis
points as of 9:20 a.m. in Tokyo, according to Citigroup Inc. prices. The
benchmark climbed 8.33 basis points yesterday to 82.33, the steepest
increase this year, according to CMA, which is owned by McGraw-Hill Cos.
and compiles prices quoted by dealers in the private market. The Markit iTraxx Australia index declined 0.5 basis point to 103.5
as of 11:07 a.m. in Sydney, according to Westpac Banking Corp. prices.
The measure also touched a three-week high yesterday, CMA data show.
- HSBC Says ‘Worrying’ Countries Act Unilaterally on Rules. HSBC Holdings Plc (HSBA) Chairman Douglas Flint said it’s “worrying” that more countries are acting
unilaterally on regulation as financial oversight undergoes its
biggest change since the Great Depression of the 1930s. “This puts at risk globally consistent regulation and also
risks ‘balkanizing’ firms’ capital and liquidity resources,”
Flint told shareholders at the bank’s annual meeting in London
today. “This risks a retreat from globalization and greater
financial exclusion -- neither consistent with the pursuit of
growth.” He didn’t mention specific countries.
- Copper Declines for Second Straight Day on China Outlook.
Copper futures declined for the
second straight day on signs of slowing economic growth in China, the
world’s biggest consumer of industrial metal. Yesterday, a Purchasing
Managers’ Index from HSBC Holdings Plc and Markit Economics showed a
preliminary reading of 49.6
for May, below the level of 50 separating growth and
contraction, driving copper down 2.3 percent, the most in three
weeks. “The weak Chinese numbers hung heavily over the metals
group and seemed to be dwarfing concern about the legitimate
supply bottlenecks that have cropped up in the copper complex
the last few weeks,” Edward Meir, an analyst at INTL FCStone in New
York, said in a report. “It remains to be seen if China
will invest more in urbanization projects.” Copper futures for July delivery declined 0.5 percent to
3.288 a pound at 10:29 a.m. on the Comex in New York. The price
headed for the second straight weekly drop.
- More Evidence Shows Teens Prefer Twitter, Reddit to Facebook(FB). Some
of Facebook’s (FB) core users have told researchers that their
enthusiasm is waning with each visit to the social network. They get
increasingly annoyed when their friends share inane details or broadcast
the trivial drama of their lives. Furthermore, keeping up with
the daily discourse on Facebook is becoming a chore for some and a
source of stress for others.
Wall Street Journal:
Fox News:
CNBC:
- Nikkei Goes for Wild Ride for Second Day. Japan's stock market witnessed a second-straight day of heightened
volatility on Friday, swinging from gains of 3 percent to deep losses
before bouncing back again, leaving traders puzzled as to what was going
on in Asia's biggest stock market. The Nikkei, which rose
about 3 percent in early trade, fell more than 3 percent in the final
hour of Tokyo trade before paring those losses. The Nikkei closed up
0.9 percent at14,612 points.
Zero Hedge:
Business Insider:
@RonnieSpence:
NBC News:
Reuters:
- Hedge funds bet on Aussie dollar slide. Hedge funds hungry for trade ideas after the success of their bets on Japan's recovery have been turning their attention to the Australian dollar, betting
the end of the commodities boom will drive down the currency.
- Brazil bank lending slows in April, sign of uneven economy. Growth in Brazil's
bank lending slowed in April, the latest sign that an expansion
in Latin America's largest economy remains uneven in the face of faster inflation and a robust job market. Outstanding
bank loans in Brazil totaled a record 2.45 trillion reais ($1.2
trillion) at the end of April, while growth in bank lending slightly
slowed to 16.4 percent in
the 12 months through March, ther central bank said in a report on
Friday.
Telegraph:
- Southern Europe slides back to 'analogue dark age'. A lack of digital investment and the shrinking number of local subsidiaries
owned by large firms is sending Southern European states on a "backwards
slide" to an analogue age, a new study has revealed.
Xinhua:
- China's
Xi Vows Not to Sacrifice Environment for Growth. China to promote
green, sustainable, low-carbon development pattern, citing President Xi
Jinping's remarks to a study session. China to set, "strictly observe"
environmental "red line" restricting industrial development to protect
nature. Nature needs more space to restore itself, he said. China to set
up evaluation system to cover waste of resources, environmental damage,
ecological benefits.
Style Underperformer:
Sector Underperformers:
- 1) Retail -1.75% 2) Construction -1.31% 3) Computer Hardware -1.21%
Stocks Falling on Unusual Volume:
- PGI, IOC, TI, PTR, HBHC, USNA, SHLD, TITN, NDSN, ANF, FL, DF, CRM, GME, HIBB, IFGL, ARO, WSM, CRUS, LUX, SAP, IEP, NBL, ATW, NOAH, TM, PTR, OAK and CEO
Stocks With Unusual Put Option Activity:
- 1) XHB 2) SHLD 3) ANF 4) NKE 5) CRM
Stocks With Most Negative News Mentions:
- 1) TITN 2) CREE 3) VNQ 4) CNC 5) CBST
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Tobacco +.25% 2) Gold & Silver -.22% 3) Drugs -.32%
Stocks Rising on Unusual Volume:
- PG, BLOX, P, SCTY, VVUS and ISRG
Stocks With Unusual Call Option Activity:
- 1) ZIOP 2) ZTS 3) ISRG 4) P 5) LAMR
Stocks With Most Positive News Mentions:
- 1) WEN 2) TSH 3) SHW 4) HPQ 5) EEM
Charts:
Evening Headlines
Bloomberg:
- Kuroda Struggles With Communication as Japan Rates Rise: Economy. Haruhiko
Kuroda may need to talk his
way out of a paradox he helped create. Installed as head of the Bank of
Japan in March, Kuroda aims to unlock borrowing and spending by lifting
inflation expectations and wages after 15 years of deflation. Market
volatility partly triggered by the BOJ’s record bond-buying now
threatens to sap business and consumer confidence and weaken the
campaign to reflate the world’s third-biggest economy. Kuroda
next speaks at 11:55 a.m. at a conference in Tokyo.
- Japan $314 Billion Rout Tests Topix Bulls Who Pushed Gain. The
biggest drop in Japanese shares since the 2011 earthquake erased $314
billion in market value, shaking bulls who pushed the Topix Index to
five-year
highs and highlighting their vulnerability to shocks at home and abroad.
This year’s best performing major equity gauge plunged 6.9
percent in record volume yesterday after government bond yields rose to
the highest levels in a year and Chinese manufacturing missed estimates.
- Aussie Dollar Is Villain as Ford Ends Mad-Max Land Output. Ford
Motor Co. (F) Falcons, driven by Mel Gibson in Australia’s 1979 movie
“Mad Max,” have rolled off a Melbourne production line for 53 years.
Now, like Max’s “last of the V-8s,” their days are numbered. Ford,
in Australia since 1925, said yesterday it will close its local
manufacturing plants in October 2016, resulting in 1,200 job losses.
General Motors Co. (GM)’s Holden unit, which traces its roots to 1856
when it started as a
saddler business, said on April 8 it will cut about 500 workers as
currency devaluations overseas make its operations among the world’s
costliest.
- Asia Stocks Rise as Japanese Shares Rebound From Slump. Asian
stocks rose as Japanese shares rebounded from the biggest drop since
2011 amid optimism growth in company earnings and the economy are
intact. Australian stocks headed for the largest weekly drop in a year.
Shinsei Bank Ltd., which tumbled 15 percent yesterday for the biggest
loss on the Nikkei 225 Stock Average, increased 6.1 percent today.
Japanese wireless carrier SoftBank Corp. (9984) rose 3.8 percent after
saying it will let the U.S. government have veto power over one nominee
to Sprint Nextel Corp.’s board to ease security concerns if its $20.1
billion takeover bid succeeds. Echo Entertainment Group Ltd. (EGP) fell
to a record low in Sydney after rival Crown Ltd. sold its 10 percent
stake in Echo. The MSCI Asia Pacific Index gained 0.5 percent to 139.41 as of 11:25 a.m. in Tokyo.
- Bonds Rigged as Stocks Expensive for Scots Manager Doubling Fund. From
his view of the world in Scotland, Bruce Stout says investors risk
getting burned because optimism is too high for stocks and bond yields
are too low. The markets might be proving him right. The MSCI World
Index, a gauge of developed stock markets, sank by the most yesterday
since April 15, while Japan’s Topix Index lost 6.9 percent. Stout, whose
1.5 billion-pound ($2.3 billion) Murray International Trust (MYI) at
Aberdeen Asset Management Plc (ADN) posted triple-digit returns during
the past four years, has been selling shares he reckons are now too
expensive, while his fixed-income holdings are the lowest in 25 years.
“The higher prices go the more short-term expectations can
distort things and then you can lose your money,” Stout said at
his office in Edinburgh. “That’s why we’re in a capital
preservation mode to try and not lose money.” With economies in Europe yo-yoing in and out of recession,
a slowdown in China and India, and central banks from the U.S.
to Japan still printing money to revive growth, Stout is more
pessimistic than some of the world’s biggest investors.
- Rebar Pares Weekly Drop as Rally in Stocks Counters Weak Demand. Steel
reinforcement-bar futures pared
a weekly loss as a rebound in China’s stock market from the biggest
slump in a month countered weaker demand prospects. Rebar for delivery
in October rose as much as 0.9 percent to 3,584 yuan ($585) a metric ton on the Shanghai Futures
Exchange and was at 3,565 at 10:55 a.m. Futures lost 1.6 percent
this week, a second weekly decline.
- Google(GOOG) Said to Consider Buying Waze Presaging Bidding War. Google
Inc. (GOOG), maker of the Android operating system, is considering
buying map-software provider Waze Inc., setting up a possible bidding
war with Facebook Inc.(FB), people familiar with the matter said.
Waze is fielding expressions of interest from multiple parties and is
seeking more than $1 billion, said one of the people, who asked not to
be identified because the talks are private. The Palo Alto,
California-based startup might also
remain independent, instead seeking to raise a round of venture
capital financing, the people said.
Wall Street Journal:
- Iran Hacks Energy Firms, U.S. Says. Oil-and-Gas, Power Companies' Control Systems Believed to Be Infiltrated; Fear of Sabotage Potential. Iranian-backed
hackers have escalated a campaign of cyberassaults against U.S.
corporations by launching infiltration and surveillance missions against
the computer networks running energy companies, according to current
and former U.S. officials.
- Asia Goes on a Debt Binge as Much of World Sobers Up. In the heart of Kuala Lumpur lies the abandoned foundation of Plaza
Rakyat, a never-built skyscraper and shopping mall. Rusty rebar jutting
from concrete pilings and fetid green pools of rainwater serve as an
unintended monument to the debt crisis that ravaged Asia in the late
1990s.
Today, less than a half mile from the
abandoned project, the next boom is under way in the Malaysian
metropolis. Construction has begun on a new subway line, and next to one
station plans call for a 118-story zigzagging skyscraper that would be
the third-tallest building in the world. Cheap credit is fueling the
building spree.
- New Signs of China Flailing Cast Global Pall. Report of Contracting Factory Activity Hits Markets; Beijing Signals Acceptance as Hopes Fade for a Quick Growth Pickup. New data suggesting contraction in Chinese manufacturing cast further
doubt about growth in the world's No. 2 economy, hitting markets as
investors worry about the implications for the global outlook.
- States' Rift on Taxes Widens. Minnesota, Others Move to Raise Revenue as Cuts Remain Popular Elsewhere. Minnesota's move to raise $2.1 billion in new taxes, largely from the
wealthy, to fund government programs puts it among a handful of states
controlled by Democrats that are adopting more liberal fiscal policies
at a time when many Republican-dominated statehouses are pushing to cut
taxes.
- Noonan: A Battering Ram Becomes a Stonewall. The
IRS's leaders refuse to account for the agency's corruption and abuse.
"I don't know." "I don't remember." "I'm not familiar with that
detail." "It's not my precise area." "I'm not familiar with that
letter."
These are quotes from the Internal Revenue Service officials who
testified this week before the House and Senate.
Fox News:
- IRS official on leave refused to resign, says GOP senator. First she refused to testify. Now Lois
Lerner, the IRS official at the center of the tax agency scandal, is
refusing to resign, according to a top Republican senator. Sources
confirmed to Fox News earlier Thursday that Lerner, the head
of the IRS division that oversaw the unit targeting conservative groups,
had been placed on administrative leave, with pay. But Sen. Charles
Grassley, R-Iowa, claimed she was only put in that status after refusing
to step down. He said the commissioner was in his right to demand her
resignation,
and said taxpayers should not continue to pay her salary indefinitely.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- BOJ Kuroda says will strive to ensure JGB market stability. Bank
of Japan Governor Haruhiko Kuroda said on Friday the central bank will
make efforts to avert volatility in bond markets through flexible market
operations and enhanced communication with market participants. "We don't have specific targets for stock prices or currency rates, and I won't comment on daily moves," Kuroda said at a
seminar in Tokyo. "As for the bond market, where the BOJ is directly involved
in through market operations, stability is extremely desirable,"
he said.
- Japan finmin: govt must always keeps fiscal discipline in mind. Japanese
Finance Minister Taro Aso
said on Friday that the government must always keep fiscal discipline in
mind. He said the government has used stimulus spending to help the
economy, but if it continues with big fiscal spending this
could hurt trust in Japan's public finances.
- U.S. Fed balance sheet expands in latest week. The U.S. Federal Reserve's
balance sheet expanded in the latest week on higher holdings of
Treasuries and U.S. 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 $3.356 trillion on May 22, up
from $3.312 trillion on May 15.
Telegraph:
South China Morning Post:
- MNI index adds to fears China recovery losing momentum. China’s economic recovery may be losing momentum, as indicators for
new orders and financial conditions worsened, according to the latest
MNI China business sentiment indicator. The flash overall conditions index fell to 57.1 from 58.5 in April
and 58.2 in March, MNI, a unit of Deutsche Boerse Group. It was the
eighth straight month of expansion for the overall index, however, MNI
said. The flash new orders indicator fell to 56.5, from 58.2 in April, and
the financial positions indicator worsened to 52.0, from 54.6. The flash
availability of credit index rose to 44.3 in May, from 42.9, MNI said. The flash production index fell to 54.3, from 57.3.
Evening Recommendations
Night Trading
- Asian equity indices are -1.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 91.75 +4.75 basis points.
- NASDAQ 100 futures -.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Durable Goods Orders for April are estimated to rise +1.5% versus a -5.7% decline in March.
- Durables Ex Transports for April are estimated to rise +.5% verssu a -1.4% decline in March.
- Cap Goods Orders Non-Defense Ex Air for April are estimated to rise +.5% versus a +.2% gain in March.
Upcoming Splits
Other Potential Market Movers
- The Eurozone GDP report and German IFO Index could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity shares in the region. I expect US stocks to open mixed and weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
