Style Underperformer:
Sector Underperformers:
- 1) Education -6.71% 2) Gaming -4.89% 3) Steel -4.20%
Stocks Falling on Unusual Volume:
- SZYM, EVC, EROC, NIHD, BOFI, CTCM, PBR, CIT, STO, LVLT, RLD, THO, DLX, AGN, ZTS, PHT, PMF, MEN, TREX, ACWI, PFE, HPI, HYGS, NGG, FAM, ELP, FLS, TPH, PBA, BUD, VCV, MSZ, LVS, BFZ, AFB, MYD, WLT, CYY, ETH, ETG, CHY, YHOO, WHR, CWH, WYNN, GNW, TCAP, ALDW, LAD, AI, NTI, AB, CNX, MITT, AMBA, URI, PSP, SSO, AWF, BOE, NFJ, SLRC, CHI, BFAM, BBEP, SPH, VWO, MAIN, ROVI, UTF, AHT, CVY, NRP and LL
Stocks With Unusual Put Option Activity:
- 1) IEF 2) RF 3) JNK 4) XOP 5) TGT
Stocks With Most Negative News Mentions:
- 1) DE 2) ITW 3) FCX 4) MGM 5) GS
Charts:
Style Outperformer:
Sector Outperformers:
- HMOs +.23% 2) Hospitals -.34% 3) Foods -1.05%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) CVC 2) AOL 3) SVNT 4) PFE 5) TBT
Stocks With Most Positive News Mentions:
- 1) PVH 2) LMT 3) CQB 4) SCHW 5) AMD
Charts:
Weekend Headlines
Bloomberg:
- China Central Bank Says Financial-System Liquidity ‘Reasonable’. China
said there’s a reasonable amount of liquidity in the financial system
and urged banks to control risks from credit expansion, signaling no
relief for a cash squeeze that risks exacerbating an economic slowdown.
“At present, the overall liquidity in China’s banking system is at a
reasonable level, but due to many changing factors in the financial
markets and also because of the mid-year point, the requirements for
commercial banks in liquidity management have become higher,” the
People’s Bank of China said in a statement dated June 17 and published
on its website today in Beijing. The government’s most explicit
comments on this month’s cash squeeze add to signs that Premier Li
Keqiang is committed to stamping out speculation funded by cheap money.
Slowing growth in the world’s second-largest economy, a crackdown on
illegal capital inflows and efforts to rein in shadow banking have
contributed to increased borrowing costs. Goldman Sachs Group Inc.
economists led by Cui Li in Hong Kong said in a report earlier today
that the liquidity tightening is another
indication that the government’s priority is to tackle “structural
problems” in the economy. Goldman Sachs cut its 2013 expansion forecast
to 7.4 percent from 7.8 percent.
- World’s Worst Real Estate Bonds Targeted in Crunch.
China’s builders have been the world’s worst-performing real-estate
bonds this quarter as Premier Li Keqiang allowed a record cash crunch to
rebalance the economy away from property investment. Dollar-denominated
notes sold by Chinese developers have lost 4.1 percent this quarter,
the most since the three months ended Sept. 30, 2011 and the worst among
peers in major economies in Bank of America Corp.’s Global Corporates
Real Estate Index. That marks a reversal after the debt topped 2012
rankings with a 22 percent return. Australian builders lost 0.8 percent
since March 31, while Japan’s shed 1.7 percent.
- Chinese Banks’ Bond Risk Rises Most in Asia Amid Moody’s Warning.
Bank of China Ltd. (3988), Export-Import Bank of China and China
Development Bank Corp. led gains in Asian bond risk last week as Moody’s
Investors Service warns credit curbs could threaten small and mid-sized
lenders. Prices of swaps tied to Bank of China, the nation’s fourth-largest lender, rose 70.4 basis points last week to 192.4, the
biggest increase among members of the Markit iTraxx Asia index
of 40 investment-grade borrowers outside Japan, according to
data provider CMA. The cost of insuring Asian corporate and
sovereign bonds from default surged 27.6 basis points last week,
the most since November 2011, CMA prices show.
- World’s Biggest Pension Fund Doubts 2% Inflation for Japan. Japan’s central bank probably
promised too much when it set a goal of lifting inflation to 2
percent within two years, according to Takahiro Mitani,
president of the country’s public pension fund. History is against
the Bank of Japan as it undertakes unprecedented asset purchases in
pursuit of a pledge to overcome 15 years of deflation, Mitani, the
64-year-old head of the 112
trillion yen ($1.14 trillion) Government Pension Investment
Fund, said in a Tokyo interview June 21. The world’s biggest
manager of retirement savings, which said on June 7 that it’s
cutting local bond holdings to buy more stocks and foreign
securities, plans to leave its asset allocations at the new
levels until at least March 2015, he said.
- S. Korea to Tighten Monitoring of Banks’ Liquidity: Choo.
South Korea’s government plans to tighten monitoring of banks’
liquidity and scale down its bond sales volumes in July as possible
reductions in Federal Reserve stimulus roil capital flows from
developing countries. South Korea’s fundamentals from budget to foreign reserves are sound, so speculation on a Fed move is unlikely to spur any
drastic capital outflows, Vice Finance Minister Choo Kyung Ho
said in Seoul.
- India Funding Strain Grows as Fed Outlook Hurts Rupee. India
faces growing strain to fund the widest current-account deficit in
major Asian nations after the rupee slid to an all-time low on concern
the U.S. will curb monetary stimulus as its economy improves. The deficit narrowed to $21 billion last quarter, from
$32.6 billion or a record 6.7 percent of gross domestic product
in October to December, the median of nine estimates shows in a
Bloomberg News survey before data due June 28. The Reserve Bank
of India estimates the sustainable level at 2.5 percent of GDP.
- China’s Stocks Extend Three-Week Slump as Financial Shares Fall.
China’s stocks fell, led by financial and consumer companies, as the
nation’s equities extended a three-week slump. China Minsheng Banking
Corp. sank 5 percent, leading a gauge of financial shares to the lowest
level since December. Gree Electric Appliances Inc. lost 3 percent,
pacing declines among consumer shares. Jiangxi Copper Co. declined 1.4
percent after copper inventories gained for a fourth week. The Shanghai Composite Index (SHCOMP) declined 1.3 percent to 2,045.59 as of 9:50 a.m. in Shanghai. It slumped 4.1 percent
last week, the most in four months, amid concerns about economic
growth and tighter liquidity after interbank lending rates
surged.
- Asian Stocks Drop on China Outlook, Extending Decline.
Asian stocks declined, with the benchmark regional index heading toward
the worst monthly loss in a year, as Goldman Sachs Group Inc. cut its
growth forecast for China amid concern a cash crunch at banks in the
world’s second-largest economy. Industrial & Commercial Bank of
China Ltd., the world’s largest lender, lost 1.7 percent in Hong Kong,
having risen just one day in June. BHP Billiton Ltd., the No. 1 mining
company, declined 3.1 percent, dragging Australia’s S&P/ASX 200
Index
lower. AMP Ltd. tumbled 10 percent, heading for its biggest
slide in 4 1/2 years, after Australia’s biggest life insurer and
pension manager said it expects profit will fall as much as 16
percent. The MSCI Asia Pacific Index slid 1 percent to 126.45 as of
10:35 a.m. in Hong Kong. About two shares fell for every one
that advanced.
- EU Leaders to Stave Off Market Turmoil After Bank Talks Fail. European Union leaders will this
week attempt to stave off a resurgence of market tremors after
talks on setting up unified banking rules broke down. Negotiations among the 27-member bloc’s finance ministers
stalled over the weekend in Luxembourg after they tried to reach
agreement on assigning losses at failing banks as part of
proposed rules on bank resolution and recovery. They will
regroup June 26, before EU leaders gather the next day for a
summit meeting in Brussels. “We shouldn’t be lulled by the current calm in the
markets,” German Finance Minister Wolfgang Schaeuble said in a
statement after the meeting. “Rather we should quickly ensure
that we’re prepared for every eventuality.”
- Hollande No Schroeder as Businesses Work Through Ambiguous Rules.
What French President Francois Hollande gives with one hand he takes
away with the other. That’s what some of the country’s business leaders
say about the Socialist president’s yearlong effort to try and make
France more competitive while also appeasing his labor union
supporters. Hollande pushed through a law in April making
firings easier and labor rules more flexible. Now, he’s
threatening to slap companies closing plants in France with
multimillion-euro fines.
- ‘Window-Dressing’ Undermines Bank Risk-Weight Trust: BIS. Global
banks have improved their capital ratios in part by understating the
riskiness of their assets, not by raising their ability to stem losses,
the Bank for International Settlements said. Regulators need to monitor
the use of internal risk models in determining the capital lenders hold
against losses and complement them with gauges that don’t use risk
weightings, the BIS said in its annual report released today. The
BIS, based in Basel, Switzerland and owned by 60 central banks, hosts
the Basel Committee on Banking Supervision, a group of regulators
and central bankers that sets global capital standards.
- Rubber Trades Near Lowest in Nine Months on China Demand Concern. Rubber declined, heading for a fifth
monthly loss, amid concern that demand may weaken from China, the world’s largest consumer of the commodity used in tires. The contract for delivery in November on the Tokyo
Commodity Exchange fell as much as 1.3 percent to 233.3 yen a
kilogram ($2,376 a metric ton), nearing a nine-month low of 228
yen reached on June 21. Futures traded at 234.1 yen at 11:17
a.m., extending losses for this month to 9 percent.
- Rebar Falls on Lower Iron Ore, Smaller Reduction in Inventory.
Steel reinforcement-bar futures in China fell after a decline in iron
ore prices and as inventory shrank at the slowest rate in 10 weeks. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 1.6 percent to 3,457 yuan ($563) a
metric ton, before trading at 3,458 yuan at 10:33 a.m. local
time.
- Treasury Yields Surge Most Since 2003. Treasury
10-year (USGG10YR) note yields climbed the most since the start of the
Iraq war as investors fled U.S. debt after the Federal Reserve predicted
economic growth will be strong enough to allow policy makers to stop
buying bonds.
- Obama Said to Announce Emission Curbs on Power Plants Next Week. The initiatives to curb climate
change that President Barack Obama plans to unveil will include
the first limits of carbon emissions from existing power plants,
according to a person familiar with the plans. “I’ll lay out my vision for where I believe we need to go:
a national plan to reduce carbon pollution, prepare our country
for the impacts of climate change, and lead global efforts to
fight it,” Obama said yesterday on the social media outlets
YouTube and Twitter. “This is a serious challenge, but it’s one
uniquely suited to America’s strengths.”
- Apple(AAPL) Awaits E-Book Decision With More Suits in Wings. Apple
Inc. (AAPL) will find out sometime in the coming weeks whether it’s
legally responsible for an alleged scheme to fix prices for electronic
books, after an unusual three-week civil antitrust trial in Manhattan.
U.S. District Judge Denise Cote, who heard the trial without a jury,
will rule on U.S. claims that Apple, the world’s biggest technology
company, led a conspiracy of five publishers to raise the retail price
of e-books and to force Amazon.com Inc. (AMZN), the No. 1 e-book seller,
to change its pricing model.
Wall Street Journal:
- Chinese Industrial Subsidies Grow 23%. Chinese companies are under growing financial pressure as the
country's economic growth slows. So industries ranging from airlines to
steel to consumer appliances increasingly are leaning on the Chinese
government. Companies listed on China's stock exchanges received 85.68 billion
yuan ($13.83 billion) in government subsidies last year, up 23% from a
year earlier, while corporate profits rose less than 1%, according to a
Chinese data provider. The subsidies were equivalent to more than 4% of
the companies' total profits last year, up from around 3% between 2009
and 2011.
- Australians Nervous Over China Investment.
Most Australians think the government is allowing too much Chinese
investment, a poll suggests, even as ownership of local assets by the
nation's biggest trading partner remains relatively small. In the Lowy Institute poll, 57% said they were concerned over Chinese
buying of assets from farmland to listed companies. The institute
surveyed 1,002 Australian voters in March.
- Brazil Finds Itself in a Bind over Spending. Demonstrators Have Been Promised Better Services, But Investors May Be Scared Off by Bigger Deficits, Higher Inflation. "The problem that they have is they need to calm down two very nervous
stakeholders, the market and the population, and they are demanding
different things," said Pedro Barbosa, a partner at Rio de Janeiro-based
hedge fund STK Capital.
Fox News:
CNBC:
- Hedge Funds Shift to Stocks, Just in Time for Pullback.
Hedge fund investors have begun to like stocks again—just in time for
what
appears to be a rough summer ahead for the equity markets. Reversing a
trend that began in March 2010, hedge funds in May saw inflows to
equity-based products and outflows from fixed income.
Business Insider:
New York Times:
- China Said to Have Made Call to Let Leaker Depart. The Chinese government made the final decision to allow Edward J.
Snowden, the former National Security Agency contractor, to leave Hong
Kong on Sunday, a move that Beijing believed resolved a tough diplomatic
problem even as it reaped a publicity windfall from Mr. Snowden’s
disclosures, according to people familiar with the situation.
LA Times:
Washington Post:
- Risky derivatives trading comes roaring back.
The exotic financial products that nearly crippled the economy in 2008
are roaring back at the nation’s biggest banks, according to data
released Friday that reform advocates worry come just as regulations to
rein in risky trading are being weakened in Washington. Demand for
derivatives — contracts whose value is derived from stocks, bonds, loans
and currencies — is growing as investors and corporations try to lock
in low interest rates. But critics worry that there are too few rules
to protect taxpayers from a market dominated by a handful of banks. On
Friday, the Office of the Comptroller of the Currency reported that
banks pulled in $7.5 billion in revenue from trading derivatives in the
first three months of 2013, a 7 percent increase from the corresponding
period a year ago, and a 72 percent jump from the fourth quarter of
2012. The face value of the derivatives held by banks rose 4 percent
over the prior year to $231.6 trillion, according to the report.
Market News International:
- China International Capital Corp. cuts China 2013 GDP growth forecast to 7.4% from 7.7% earlier.
Telegraph:
- BIS fears fresh bank crisis from global bond spike. Soaring bond yields across the world threaten trillion of dollars in losses
for investors and a fresh financial crisis unless banks are braced for the
shock, the Bank for International Settlements has warned.
Sueddeutsche Zeitung:
- Weidmann Sees No Need for Immediate Interest-Rate Increase. Bundesbank head Jens Weidmann comments in interview. The ECB's new bond-buying program OMT has 'noticeable restrictions,' which is a step in the right direction. Potential bond buys by ECB are still 'problematic'.
Real News:
- Greece Needs Another Debt Writedown, Merkel Aide Says. Greece
needs a further reduction in its sovereign debt level and participation
by government creditors shouldn't be considered a taboo, citing an
interview with Peter Bofinger, economic adviser to German Chancellor
Angela Merkel. Bofinger says will be "very difficult" for Greece to cut
debt to acceptable level over next years. Bofinger says he doesn't see
turn for the better in Greek economy based on current data. Bofinger
repeated view that tax should be imposed on wealthy in indebted
euro-area countries, austerity has mainly hit the poor.
Financial News:
- Reserve Ratio Cut Not Best for China Growth. Monetary easing policies such as cutting reserve requirement ratio are not the best options for China's growth, according to a front-page commentary written by reporter Xu Shaofeng. Reserve ratio cut will increase overcapacity and expand debt scale for local government financing vehicles. Financing environment for smaller companies which need funds will not be improved with a reserve ratio cut.
China Securities Journal:
- China Credit Market Liquidity Mismatch 'Serious'.
China's credit market has a "very serious" mismatch in liquidity as
reflected by the current tight money conditions, Liu Yuhui, a researcher
at the Chinese Academy of Social Sciences, writes in a commentary. Some
institutions match short-term interbank funds with long-term assets for
profit, Liu writes. Risks are exposed when cash flows from long-term
assets can't cover short-term debt obligations when the economy slows.
The sale of new debt to cover interest payments on old debt displays
"ponzi" characteristics, Liu said. A quick drop in asset prices
triggered by a sell-off of assets would cause a "hard landing," he said.
Crackdowns on shadow banking and expansion of leverages are "timely,"
Liu wrote.
Night Trading
- Asian indices are -2.0% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 160.0 -6.0 basis points.
- Asia Pacific Sovereign CDS Index 126.25 -8.0 basis points.
- NASDAQ 100 futures -.31%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Chicago Fed Nat Activity Index for May is estimated to rise to -.15 versus -.53 in April.
10:30 am EST
- The Dallas Fed Manufacturing Activity Index for June is estimated to rise to -1.0 versus -10.5 in May.
Upcoming Splits
Other Potential Market Movers
- The Fed's Fisher speaking, German IFO Business Climate and the JPMorgan Healthcare Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the week.
U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week mixed as quarter-end window dressing, short-covering and bargain-hunting offset rising global growth fears, more emerging markets unrest, increasing Eurozone/Asian
debt angst and technical selling. My intermediate-term trading
indicators are giving neutral signals and the Portfolio is 25% net long heading into the week.
S&P 500 1,592.43 -2.11%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 963.68 -1.80%
- S&P 500 High Beta 24.56 -2.0%
- Value Line Geometric(broad market) 413.20 -2.27%
- Russell 1000 Growth 723.04 -2.40%
- Russell 1000 Value 811.68 -2.07%
- Morgan Stanley Consumer 979.21 -2.57%
- Morgan Stanley Cyclical 1,172.66 -3.37%
- Morgan Stanley Technology 744.35 -1.41%
- Transports 6,110.43 -3.16%
- Bloomberg European Bank/Financial Services 88.17 -5.38%
- MSCI Emerging Markets 37.56 -5.37%
- HFRX Equity Hedge 1,091.96 -.48%
- HFRX Equity Market Neutral 939.19 -.71%
Sentiment/Internals
- NYSE Cumulative A/D Line 183,123 -.97%
- Bloomberg New Highs-Lows Index -986 -680
- Bloomberg Crude Oil % Bulls 17.65 -16.78%
- CFTC Oil Net Speculative Position 298,735 +10.71%
- CFTC Oil Total Open Interest 1,868,964 +2.92%
- Total Put/Call 1.16 -1.69%
- OEX Put/Call 1.16 +61.11%
- ISE Sentiment 78.0 -30.97%
- Volatility(VIX) 18.90 +10.20%
- S&P 500 Implied Correlation 57.62 +1.80%
- G7 Currency Volatility (VXY) 11.35 +6.57%
- Emerging Markets Currency Volatility (EM-VXY) 11.71 +17.93%
- Smart Money Flow Index 11,396.76 -3.86%
- Money Mkt Mutual Fund Assets $2.587 Trillion -.96%
Futures Spot Prices
- Reformulated Gasoline 276.17 -4.5%
- Heating Oil 284.41 -3.96%
- Bloomberg Base Metals Index 181.59 -3.48%
- US No. 1 Heavy Melt Scrap Steel 327.0 USD/Ton unch.
- China Iron Ore Spot 118.60 USD/Ton +4.40%
- UBS-Bloomberg Agriculture 1,482.47 -.36%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 6.2% -40 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.2493 +2.43%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 116.80 +.23%
- Citi US Economic Surprise Index -12.0 +17.7 points
- Citi Emerging Markets Economic Surprise Index -43.70 +4.7 points
- Fed Fund Futures imply 50.0% chance of no change, 50.0% chance of 25 basis point cut on 7/31
- US Dollar Index 82.32 +2.1%
- Euro/Yen Carry Return Index 133.91 +2.3%
- Yield Curve 216.0 +30 basis points
- 10-Year US Treasury Yield 2.53% +40 basis points
- Federal Reserve's Balance Sheet $3.427 Trillion +1.8%
- U.S. Sovereign Debt Credit Default Swap 29.55 +8.8%
- Illinois Municipal Debt Credit Default Swap 179.0 +13.0%
- Western Europe Sovereign Debt Credit Default Swap Index 95.0 +6.8%
- Emerging Markets Sovereign Debt CDS Index 246.07 +18.3%
- Israel Sovereign Debt Credit Default Swap 127.74 +11.1%
- China Blended Corporate Spread Index 411.0 +10 basis points
- 10-Year TIPS Spread 1.94% -12 basis points
- 2-Year Swap Spread 20.0 +4.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -13.25 -1.25 basis points
- N. America Investment Grade Credit Default Swap Index 92.26 +11.8%
- European Financial Sector Credit Default Swap Index 180.46 +13.0%
- Emerging Markets Credit Default Swap Index 377.07 +26.6%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 120.0 -17.0 basis points
- M1 Money Supply $2.508 Trillion -4.17%
- Commercial Paper Outstanding 1,037.80 +.30%
- 4-Week Moving Average of Jobless Claims 348,300 +3,000
- Continuing Claims Unemployment Rate 2.3% unch.
- Average 30-Year Mortgage Rate 3.93% -5 basis points
- Weekly Mortgage Applications 648.90 -3.25%
- Bloomberg Consumer Comfort -29.4 +1.9 points
- Weekly Retail Sales +2.90% +10 basis points
- Nationwide Gas $3.59/gallon -.03/gallon
- Baltic Dry Index 1,027 +14.11%
- China (Export) Containerized Freight Index 1,017.08 -1.73%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 unch.
- Rail Freight Carloads 254,266 +.64%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (9)
- STML, ICPT, VSTM, STAA, FNSR, MGI, UFPI, NTRI and TRBAA
Weekly High-Volume Stock Losers (6)
- WSTC, JW/A, MYGN, ECPG, TTEK and ACRE
Weekly Charts
ETFs
Stocks
*5-Day Change
