Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.65 -1.45%
- Euro/Yen Carry Return Index 136.99 -.26%
- Emerging Markets Currency Volatility(VXY) 11.87 +.68%
- S&P 500 Implied Correlation 50.39 -2.38%
- ISE Sentiment Index 120.0 +4.35%
- Total Put/Call .83 +3.75%
Credit Investor Angst:
- North American Investment Grade CDS Index 83.20 +.59%
- European Financial Sector CDS Index 147.0 +1.73%
- Western Europe Sovereign Debt CDS Index 91.0 +1.11%
- Emerging Market CDS Index 340.94 -.99%
- 2-Year Swap Spread 15.25 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -10.50 unch.
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $137.10/Metric Tonne -.65%
- Citi US Economic Surprise Index 53.40 +17.4 points
- Citi Emerging Markets Economic Surprise Index -15.80 +.2 point
- 10-Year TIPS Spread 2.08 unch.
Overseas Futures:
- Nikkei Futures: Indicating +35 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/retail/medical sector longs
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- China Joins Europe in Syria Economic Risk Warning at G-20 Summit. China
and Europe at a Group of 20 summit hosted by Russia warned that
U.S.-led strikes on Syria would risk harming the global economy,
bolstering efforts to rally opposition to the proposed attack. “Such a
military action will definitely have a negative impact on the world
economy, especially on the oil price,” Chinese Vice Finance Minister Zhu Guangyao told reporters in St. Petersburg today. “We hope that this issue could be solved at
the United Nations and through diplomatic channels.”
- Turkey Reinforces Syria Border as Erdogan Backs U.S. Attack. Turkey deployed tanks and anti-aircraft guns to reinforce its military units on the Syrian
border, as the U.S. considers strikes against Syria. Convoys
carrying tanks and rocket-launchers headed to border areas in Hatay,
Gaziantep and Sanliurfa provinces today and yesterday, according to
Hurriyet newspaper and Anatolia news agency. Tanks, missile launchers
and anti-aircraft guns on
hilltops near the border town of Kilis were aimed Syria, state-run TRT
television said. F-16s, tanker and cargo planes as well
as at least one drone landed at southern Incirlik Air Base,
Anatolia said. Turkish Prime Minister Recep Tayyip Erdogan, who has
expressed a willingness to join any international coalition
against Syria, yesterday vowed to respond to any attack from its
southern neighbor.
- Draghi Says ECB Ready to Act as Market Rates Advance. Mario Draghi said the European Central Bank is “ready to act” as rising money-market rates threaten his drive to reassure investors that borrowing costs will stay low. Bond yields extended their gains. “We will remain particularly attentive to the implications that these developments may have to the stance of monetary policy,” the ECB president said at his monthly press conference in Frankfurt today after the bank left its benchmark rate at a record low of 0.5 percent. “I’m very, very cautious about the
recovery. I can’t share enthusiasm, it’s just the beginning. The
shoots are still very, very green.”
- Spain’s Deficit Struggle Shows Threat to ECB Rally: Euro Credit. Spain’s bid to meet its budget-deficit target for the first time in five years is running into
trouble, fueling concerns that increased financial stability is
masking deeper economic problems. The shortfall for the central government in the first seven
months of the year was 4.38 percent of Spanish output, compared
with a 3.8 percent goal for the year, government data show.
Economists at the savings banks’ foundation Funcas, Mizuho
International and Bank of America Merrill Lynch said Spain may
miss the European Union’s overall goal for this year of 6.5
percent as benefit spending climbs and tax income falters.
- German Factory Orders Drop as Boost From Air Show Fades: Economy. German factory orders (GRIORTMM) fell in July after demand was boosted by the Paris Air Show a month earlier. Orders,
adjusted for seasonal swings and inflation, dropped 2.7 percent from
June, when they rose a revised 5 percent that was larger than originally
estimated, the Economy Ministry in Berlin said today. Economists
forecast a July drop of 1 percent, according to the median of 39
estimates in a Bloomberg News survey.
- France Sells 10-Year Bonds With Highest Yield Since Election. The treasury sold 4.24 billion euros ($5.59 billion) of
2023 debt at an average yield of 2.57 percent, the highest at
any auction since May 2012. It also sold 2.49 billion euros in
2021 securities at an average yield of 2.17 percent -- more than
1.42 percent on May 2 -- and 1.66 billion euros 2045 debt at 3.6
percent.
- European Stocks Rise as ECB Holds Benchmark Rate at Low.
European stocks climbed as European Central Bank President Mario Draghi
reiterated that interest rates will stay low for an extended period,
while the Federal Reserve said it saw a modest to moderate U.S. economic
recovery. PSA Peugeot (UG) Citroen added 5.4 percent as its chief
executive officer predicted a market-share increase in an interview with
Le Parisien. Telecom Italia SpA rose 8.4 percent after a report that
Egyptian billionaire Naguib Sawiris may buy a stake in Italy’s biggest
phone company. TeliaSonera AB slid 1.9 percent as Finland cut its
holding in the network operator. The Stoxx Europe 600 Index added 0.7 percent to 304.55 at the close of trading.
- WTI Crude Rises as Cushing Supply Drops to 17-Month Low. “Inventory levels continue to come down, which is
supportive of the market,” said Adam Wise, who helps manage a
$6 billion oil and gas bond portfolio as a managing director at
Manulife Asset Management in Boston. “The market’s really holding its breath waiting for the full impact of the Syria situation to play itself out.”
WTI crude for October delivery increased 82 cents, or 0.8
percent, to $108.05 a barrel at 1:08 p.m. on the New York
Mercantile Exchange.
- Euro Slides to Six-Week Low on Draghi Comments; Krona Weakens. “Draghi is still not very confident about the economic
recovery, and that’s contributing to the weakness in the euro,”
Douglas Borthwick, head of foreign exchange at Chapdelaine & Co.
in New York, said in a telephone interview. “The market knows
very well that the ECB is going to be on hold with a bias
towards lower rates for the foreseeable future.”
- Gold Drops as U.S. Economic Data Stokes Concern About Tapering. Futures for December delivery fell 0.7 percent to $1,380.40
an ounce at 10:15 a.m. on the Comex in New York. Prices rose as
much as 0.7 percent earlier as the Senate Foreign Relations Committee
voted yesterday to authorize President Barack Obama to conduct a limited
military operation in Syria.
- Consumer Comfort in U.S. Declines for a Fourth Straight Week. (graph) Consumer confidence fell for a fourth consecutive week to its lowest level since early April as Americans’ views on the economy and buying climate deteriorated. The Bloomberg Consumer Comfort Index eased to minus 32.3
for the period ended Sept. 1, its weakest reading since April 7,
from minus 31.7. The gauge has dropped 8.8 points after reaching
a more than five-year high in the week ended Aug. 4. The series
of declines is the longest since January.
- Sluggish August Retail Sales Seen Boding Ill for Holiday Season. L Brands Inc. (LTD), which owns Victoria’s Secret and has powered through a choppy economy, reported August
same-store sales that narrowly missed estimates, the latest
evidence of weakness among U.S. apparel chains. Sales at L Brands stores open at least 12 months rose 2
percent, compared with a predicted gain of 2.1 percent.
- Money Fund Lehman Moment Lurks as New Protections Stall. A year ago, when opposition from the asset-management industry killed
her plan to make money-market mutual funds safer, U.S. Securities and
Exchange Commission Chairman Mary Schapiro looked to Timothy Geithner,
then the Treasury Secretary, to tackle “one of the pieces of unfinished
business from the financial crisis.” It remains unfinished.
Wall Street Journal:
Fox News:
- Putin warns Russia could come to Syria's aid over US strike.
As he touched down in St. Petersburg on Thursday morning, President
Obama greeted his host Vladimir Putin with a handshake and a smile. But
the cordial greeting belies the tinderbox the two leaders are
sitting on, as they posture and deliberate over a potential U.S. strike
on Syria -- one of Russia's closest Mideast allies.
Putin escalated concerns about the fallout from any strike when he
indicated in an interview published Wednesday that his country could
send Syria and its neighbors in the region the components of a missile
shield if the U.S. attacks.
MarketWatch:
CNBC:
- US planned layoffs jump in August: Challenger. Employers announced 50,462 layoffs last month, up 33.8 percent from
37,701 in July, according to the report from consultants Challenger,
Gray & Christmas. The August job cuts were up 57 percent from the same time a year ago.
For 2013 so far, employers have announced 347,095 job losses, close to
the 352,185 that were seen in the first eight months of last year.
Zero Hedge:
Business Insider:
MacRumors:
Reuters:
- India's inverted yield curve fails rupee and slams economy. Viewed in one light,
India's steeply inverted yield curve is the result of a deliberate and
classic policy strategy to defend a weak currency. From another
perspective, it is pointing at deep economic problems to come, possibly
even recession. The central bank measures though are also
taking a toll on the banking sector, which is heavily reliant on
short-term money markets for capital. Since longer-term yields are lower
- they have risen but not to the extent of short-term rates - bank
lending has suffered and the value of the bonds on their books has
fallen. "There is a concern here
that we have a recession in India, which could trigger further
outflows," said Claudio Piron, a strategist with BofA Merrill Lynch in
Singapore. The problem was that the Reserve Bank of India lacked
credibility, he said. "That's when
the market thinks that you are undermining growth. And if you undermine
growth, the fiscal numbers, be they corporate or government
balance-sheets, will look worse and you will get more currency weakness
and more outflow."
- Italy finances slipping as political crisis brews. Italy, which three months ago got off the European Union's blacklist of countries with excessive fiscal deficits, may be put straight back on it next year unless
it can reverse a worrying trend in its public finances.
BBC:
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true
Folha de S.Paulo:
- Brazil May Punish U.S. Firms if Obama Doesn't Apologize. Brazil's
govt may send law to Congress that would punish cos. involved in spying
if U.S. President Barack Obama doesn't make formal apology to President
Dilma Rousseff over spying allegations. Such a law could affect
Google(GOOG) and Microsoft(MSFT).
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.41% 2) REITs -1.02% 3) Homebuilders -.85%
Stocks Falling on Unusual Volume:
- CONN, MIND, UEPS, CHD, SMLP, ADES, TLK, NVO, SAP, PRA, GEF, UMBF, CPB, CVV, CEVA, SDRL, XONE, UHAL, MSG, LTD, FMS, HEP, NTG, FOSL and DLR
Stocks With Unusual Put Option Activity:
- 1) LPX 2) S 3) NFX 4) FXE 5) SHLD
Stocks With Most Negative News Mentions:
- 1) WPZ 2) KORS 3) MS 4) WMT 5) OPEN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Oil Service +1.47% 2) Airlines +.99% 3) HMOs +.97%
Stocks Rising on Unusual Volume:
- IBN, HDB, OAS, PBR, PZE, POZN, SPPI, ACHN, KDN, LPX, FAST, GRPN, CMC and NQ
Stocks With Unusual Call Option Activity:
- 1) ASTX 2) KSS 3) RSX 4) TSN 5) GIS
Stocks With Most Positive News Mentions:
- 1) YHOO 2) WCG 3) COST 4) UNG 5) STZ
Charts:
Evening Headlines
Bloomberg:
- Obama-Putin Rift Over Syria Strike Widens on Eve of G-20 Summit. The
diplomatic dialogue between Barack Obama and Vladimir Putin has
featured the U.S. president comparing Putin to a bored schoolboy and the
Russian leader forcing an irritated Obama to wait a half-hour for a
meeting. And that was before warships from the two nations drew near in
the Eastern Mediterranean amid a widening rift over Obama’s threat of a
military strike against Syria after what he says is the regime’s use
of chemical weapons in an area near Damascus. With Obama in St.
Petersburg today for a summit of global leaders, Putin yesterday
denounced a potential U.S. attack on Syria as a violation of
international law, while Obama told reporters the two countries’
relations have “hit a wall.” “This is basically as bad as it gets,” said
James Goldgeier, dean of the School of International Service at
American University and the Russia director for the National Security
Council under former President Bill Clinton. “You typically don’t have leaders who so openly criticize each other, who openly disdain each other.”
- IMF Sees Acute Market Pressure for Some Emerging Economies. Developed economies are turning into
global growth engines as some of their emerging-market
counterparts decelerate amid “acute” market pressures, the International Monetary Fund said. “Global
growth remains subdued but its underlying dynamics are changing,” the
IMF said today in a report for leaders of the Group of 20 nations
meeting this week in St. Petersburg, Russia. “Momentum is projected to
come mainly from advanced economies, where output is expected to
accelerate.” Emerging markets, which helped pull the world out of a
recession after the global financial crisis, now face an exodus of cash
and sliding currencies in anticipation of the Federal Reserve’s eventual
tapering of its $85 billion in monthly bond
purchases. Expansion in those countries is 2.5 percentage points
below 2010 levels, with Brazil, China and India accounting for
the slowdown, according to the IMF.
- China Must Give Market Bigger Role as Growth Slows, Chamber Says.
China’s government must reduce its role in the economy and allow
market-driven change to ensure sustainable growth, according to a report
by the European Union Chamber of Commerce in China. “China could previously make a choice between economic
restructuring and maintaining growth,” Davide Cucino, president
of the chamber, said at a briefing on its annual position paper
in Beijing yesterday. Now “the only way to get sustainable
growth is to carry out structural reform.”
- China Sells Residential Land at Record Price Amid Property Curbs. China
sold a residential land parcel in Beijing at a record price amid rising
competition among developers for land in major cities even as the
government maintains its property curbs. The 28,100 square-meter
(302,356 square-foot) National Agriculture Exhibition Center plot,
northeast of the city center, was sold for 2.1 billion yuan ($343
million) to Sunac China Holdings Ltd. (1918) yesterday. Sunac’s bid
included a commitment to build a 278,000 square-meter hospital at
another site, taking the total bid cost to 4.3 billion yuan, according
to a statement on the local land reserve center’s website. The price
paid
implies a cost per square meter of buildable space of 73,000
yuan, the most expensive in China, according to Centaline
Property Agency Ltd., China’s biggest real-estate brokerage.
“The high price happened even as property curbs were in
place,” said Qu Anxin, a Shanghai-based researcher at
Centaline, who estimated that homes built on the site will sell
for as much as 200,000 yuan per square meter.
- BOJ Leaves Policy Unchanged as Economy Makes Moderate Recovery. The
Bank of Japan maintained its unprecedented monetary easing, as signs of
strength in the economy and price gains point to progress in its effort
to end 15 years of deflation. The central bank will expand the monetary
base at an annual pace of 60 trillion yen ($602 billion) to 70 trillion
yen, it said in a statement in Tokyo today. All 32 economists in a
Bloomberg
News survey forecast the outcome. The BOJ raised its assessment of the
economy, saying a moderate recovery is underway.
- Samsung $299 Galaxy Gear Tests Demand for Smart Watches.
Samsung Electronics Co. (005930) set the price of its Galaxy Gear at
$299 as the biggest maker of smartphones beats Apple Inc. (AAPL) in
unveiling a wristwatch device that can make phone calls, surf the Web
and take photos.
- China Stocks Fall Most in 2 Weeks, Halts Longest Rally in Month.
China’s stocks fell the most in two
weeks, led by material producers and port operators. Shanghai
International Port (Group) Co. dropped 2.6 percent
after gaining 95 percent since the State Council approved the
city’s free-trade zone plan on Aug. 22. Aluminum Corp. of China
Ltd. slumped the most in a month. China Merchants Bank Co. advanced 2.3
percent after raising 27.5 billion yuan ($4.5 billion) in a rights
offer. The Shanghai Composite Index (SHCOMP) fell 0.5 percent to 2,117.21
at 10:04 a.m. local time, poised for the biggest loss since Aug.
20.
- Won to Kospi Jump as Metals Gain; Aussie Index, Kiwi Fall. Asian stocks rose for a sixth day
and emerging-market currencies strengthened as central banks
from Japan to Europe review monetary policy. Aluminum gained. The MSCI Asia Pacific Index of shares added 0.2 percent to
133.39 as of 11:55 a.m. in Tokyo, heading for its longest rally
since December.
- Rubber Extends Loss as Selling in Shanghai Spurs Demand Concern. Rubber futures declined for a second
day as a drop in the Chinese market increased concern demand may
weaken in the world’s largest consumer. The February contract fell as much as 0.8 percent to 279.3
yen a kilogram ($2,800 a metric ton) on the Tokyo Commodity
Exchange and traded at 280.9 yen at 11:53 a.m. local time.
- Rebar Futures Drop to Lowest in a Month as Premium Lures Sellers.
Steel reinforcement-bar futures in Shanghai fell for the third day to
the lowest level in almost a month as the premium to spot market prices
attracted selling. Rebar for January delivery on the Shanghai Futures Exchange lost as much as 0.4 percent to 3,723 yuan ($608) a metric ton,
the lowest since Aug. 9, before trading at 3,730 yuan at 10:31
a.m. local time.
- Draghi Seen Fighting Enthusiasm as Market Rates Increase. Draghi’s dilemma is that the strength of the rebound has
helped boost interest-rate expectations to levels he described
last month as “unwarranted.” That’s a signal some investors
are questioning his commitment made in July to keep rates low
for an extended period. Higher borrowing costs risk undermining
what has so far proved to be a jobless recovery. “At a time when
this recovery is in its early stages, it is important for the ECB
president to limit any abrupt upward reaction in yields,” said Alan
Clarke, an economist at Scotiabank in London.
- Shiller Warns
of Housing Bubble After 225% Surge: Brazil Credit. Robert Shiller, who
predicted the collapse of the U.S. housing market, is warning that a
bubble is emerging in Brazil at a time when a sluggish economy and
persistent inflation are eroding investor confidence. Since January
2008, home prices in Sao Paulo have soared 181% and jumped 225% in Rio
de Janeiro, according to the FIPE Zap index. That's as much as twice the
increase in rent prices, signaling that the housing market has become
overheated, according to Shiller.
- About 35,000 Global Bank Employees May Face EU’s Bonus Curbs. About 35,000 employees at banks
around the world may be caught by European Union bonus caps,
more than 20 times the current number of people affected by the
pay rules, the British Bankers’ Association said. The workers facing the EU rules, which would cap bonuses at
twice annual pay, include 23,450 bankers in the U.K., 2,835 in
other EU countries and 8,777 around the world, the industry
group said in a report posted on the European Banking
Authority’s website. The BBA asked the regulator to delay the
introduction of tougher bonus rules for one year.
Wall Street Journal:
- Senate Panel Backs Use of Force Against Syria. Measure Says Goal Should Be to 'Change the Momentum on the Battlefield'; Pentagon Plans More Firepower.
A key Senate panel on Wednesday backed President Barack Obama's request
to strike Syria, while the Pentagon prepared to employ greater
firepower to reach a shifting array of military targets. The revised
options under development, which reflect Pentagon
concerns that Syrian President Bashar al-Assad has dispersed his
military equipment, include the use of Air Force bombers to supplement
the four Navy destroyers armed with missiles that are deployed in the
eastern Mediterranean. Initially, Pentagon planners said they didn't
intend to use aircraft in the proposed strikes.
- Capital Unease Again Bites Deutsche Bank(DB). German Lender Maintains It Is Adequately Capitalized.
A mere four months after co-Chief Executive Anshu Jain declared the end
of Deutsche Bank AG's DB +0.77% "hunger march" following a €3 billion
($3.95 billion) capital increase, the bank is again on the defensive,
trying to persuade investors and regulators that it is sufficiently
capitalized. To its critics, the bank's claims—to be "one of the best
capitalized banks in the world"—appear to have fallen on deaf ears as
its earnings outlook has clouded. Deutsche Bank's shares have dropped
7.3% since late July, closing Wednesday in Frankfurt at €33.50.
Zero Hedge:
Washington Post:
- Obama seeks an accomplice for Syria action by George Will. Obama’s
sanctimony about his moral superiority to a Congress he
considers insignificant has matched his hypocrisy regarding his
diametrically opposed senatorial and presidential understandings of the
proper modalities regarding uses of military force. Now he asks from the
Congress he disdains an authorization he considers superfluous. By
asking, however reluctantly, he begins the urgent task of lancing the
boil of executive presumption. Surely he understands the perils of being
denied an authorization he has sought, and then treating the denial as
irrelevant.
New York Times:
- Falling Economic Tide in India Is Exposing Its Chronic Troubles. Its economy now stands in disarray, with the prospect of worse to come in the next few months. Vinod Vanigota, a Mumbai wholesaler of imported computer hard drives,
said sales dropped by a quarter in the last two weeks. The rupee,
India’s currency, has been so volatile in recent days that he began
revising his price lists every half-hour. Business activity at Chip Com Traders, where he is the managing director
and co-owner, has slowed so sharply that trucking companies plead for
business. “One of the companies called today and said, ‘Don’t you have a
parcel of any sort for us to deliver today?’ ” Mr. Vanigota said.
Reuters:
- EADS sees flat to lower defense revenue. EADS
is opting out
of bidding on some U.S. weapons programs as it adjusts to cuts in U.S.
defense spending, and it expects flat to lower revenue in defense
business in coming years as the cuts deepen, a senior executive said
on Wednesday. "There's no doubt that the government sector is flat to
declining and we're forecasting the same," Sean O'Keefe, chief executive
of EADS North America, told the Reuters Aerospace and Defense Summit.
Financial Times:
- Lloyd’s chairman warns on ‘systemic risk’ of capital rush. The
chairman of Lloyd’s of London has warned of the danger that a rush of
capital into the insurance industry will cause “systemic problems” akin
to those of the banking sector during the financial crisis. John Nelson,
head of the historic insurance market, spoke
out about the risks of adverse consequences from non-traditional funding
of insurance, which he said was occurring “on a scale not seen before”.
Telegraph:
Shanghai Securities News:
- China Economy 'Held Hostage' by Property Investment. China's
economy has been "largely taken hostage" by property investment, which
accounts for a high proportion of GDP, former People's Bank of China
adviser Yu Yongding writes in a commentary. Developing countries like
China should not make real estate a "pillar" industry for economic
development, Yu wrote. A "serious" property tax policy will "squeeze"
out many homes, according to Yu. Non-performing loan ratio may rise
substantially in futures periods, he said. Local government debt is the
biggest risk to China's financial system, Yu said.
Evening Recommendations
Wedbush:
- Rated (SBUX) Outperform, target $80.
Morgan Stanley:
- Rated (DE) Underweight, target $72.
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 155.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 128.75 +.5 basis point.
- NASDAQ 100 futures +.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:15 am EST
- The ADP Employment Change for August is estimated at 182K versus 200K in July.
8:30 am EST
- Initial Jobless Claims are estimated to fall to 330K versus 331K the prior week.
- Continuing Claims are estimated to fall to 2985K versus 2989K prior.
- Final 2Q Non-Farm Productivity is estimated to rise +1.6% versus a prior estimate of a +.9% gain.
- Final Unit Labor Costs are estimated to rise +.8% versus a prior estimate of a +1.4% gain.
10:00 am EST
- Factory Orders for July are estimated to fall -3.4% versus a +1.5% gain in June.
- ISM Non-Manufacturing for August is estimated to fall to 55.0 versus 56.0 in July.
11:00 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,000,000 barrels versus a +2,986,000 barrel increase the prior week. Gasoline supplies are estimated to fall by -700,000 barrels versus a -587,000 barrel decline the prior week. Distillate inventories are expected to rise by +600,000 barrels versus a -316,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.5% versus a +.2% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Kocherlakota speaking, BoE rate decision, ECB rate decision,
Draghi press conference, Spanish/French bond auctions, G-20 meetings,
Challenger Job Cuts report for August, RBC Consumer Outlook Index for
September, weekly EIA natural gas inventory report and the (SYK) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Sightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.01 -3.61%
- Euro/Yen Carry Return Index 137.26 +.35%
- Emerging Markets Currency Volatility(VXY) 11.79 -1.67%
- S&P 500 Implied Correlation 52.26 -1.73%
- ISE Sentiment Index 113.0 +13.86%
- Total Put/Call .81 +9.46%
Credit Investor Angst:
- North American Investment Grade CDS Index 82.99 -.62%
- European Financial Sector CDS Index 144.50 +.10%
- Western Europe Sovereign Debt CDS Index 90.0 +4.75%
- Emerging Market CDS Index 344.32 +1.12%
- 2-Year Swap Spread 15.25 -2.0 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -10.50 -.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $138.0/Metric Tonne -.5%
- Citi US Economic Surprise Index 36.0 -.8 point
- Citi Emerging Markets Economic Surprise Index -16.0 +.9 point
- 10-Year TIPS Spread 2.08 -3 bps
Overseas Futures:
- Nikkei Futures: Indicating +26 open in Japan
- DAX Futures: Indicating -5 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/retail/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
