Style Outperformer:
Sector Outperformers:
- 1) Computer Services +1.50% 2) Disk Drives +1.14% 3) HMOs +1.0%
Stocks Rising on Unusual Volume:
- HNR, LINE, FIO, NIHD, XOOM, GALT, SNX, UFS, FLT, PLCM, GOGO, FRAN, FIO, LNCO, LQDT, ZLC, KRA, TRLA, WMGI, THRX and MAR
Stocks With Unusual Call Option Activity:
- 1) MDVN 2) COG 3) IP 4) LINE 5) URI
Stocks With Most Positive News Mentions:
- 1) FDO 2) PM 3) MS 4) F 5) BIDU
Charts:
Evening Headlines
Bloomberg:
- Putin Sets New Condition on Syrian Chemical Weapons Plan.
Russian President Vladimir Putin set a condition that endangers the
diplomatic initiative to eliminate Syria’s chemical weapons, saying it
depends on the U.S. and other nations renouncing the use of force
against Bashar al-Assad’s regime. Putin’s remarks complicate the outlook
for the Russian proposal a day after it was presented by Russian
Foreign Minister Sergei Lavrov, who had seized on comments in London by
U.S. Secretary of State John Kerry about the possibility of Syria
turning over its chemical-weapons stockpile.
- Obama Calls for Pause in Authorizing U.S. Strikes on Syria. President
Barack Obama pulled the U.S. from the brink of a military strike on
Syria to pursue “encouraging signs” of a possible diplomatic solution to
the confrontation over the Assad regime’s use of chemical weapons. In a nationally televised speech from the White House that attempted to
navigate between international calls for action and a war-weary public
at home, Obama said he’s asked Congress to delay a vote authorizing the
use of military force while the administration pursues a proposal that
would have Syria surrender its chemical arms stockpiles.
- S&P Warns Defaults to Mount as Smokestacks Choked: China
Credit. Chinese companies will miss more debt payments in the coming
year as smokestack industry losses mount on Premier Li Keqiang's plan to
switch the economy's focus toward services, according to Standard
& Poor's. Metal producers were the worst hit as corporate
downgrades in China surged to 52 in the first seven months, more than in
the last six years combined, according to Chengxin. Mining and metal
companies face 259 billion yuan of bond payments by the end of 2014 just
as industrial-profit growth has cooled to the least since December.
That's more than the total due on all corporate notes in Thailand,
Malaysia and Singapore combined. "The number of defaults in the
corporate space will increase over the next six to 12 months,"
Christopher Lee, managing director of corporate ratings at S&P
in Hong Kong, said in reference to payments on all financial
obligations. That "would increase the risk premium for the bonds and it
could result in more selective lending and investments," he added.
- China’s Shadow Banking Surges as Growth Rebound Adds Risks. China’s broadest measure of new
credit almost doubled in August from the previous month in a
sign leaders are committed to meeting economic goals even at the
cost of adding financial risks. Aggregate financing was 1.57 trillion yuan ($257 billion),
the People’s Bank of China said in Beijing yesterday, topping
the 950 billion yuan median estimate of 10 analysts surveyed by
Bloomberg News. New yuan loans from banks accounted for about 45
percent of the total, down from July’s 87 percent, as non-traditional credit played a bigger role. The first pickup in credit growth after an unprecedented
four straight declines, the fastest gain in industrial output in
17 months and above-forecast exports signal better odds that
Premier Li Keqiang will achieve his 7.5 percent expansion target
this year. The data also mark a resurgence in shadow banking
that poses risks for the financial system after a record credit
boom in the first quarter. “If credit growth picks up persistently from here, China’s
current growth recovery may well last a bit longer and go a bit
further,” said Yao Wei, China economist at Societe Generale in
Hong Kong. “However, that only adds to the downside risk
afterwards, as the leverage of Chinese corporates and local
governments keeps rising from the already alarmingly high
level.”
- China’s Ships Near Islands Before Japan Purchase Anniversary.
Eight Chinese ships entered Japan-controlled waters near an island
chain claimed by both nations, a day before the first anniversary of
Japan’s purchase of the territory that sparked protests across China.
The Chinese Coast Guard vessels left the area yesterday
after spending several hours in what Japan sees as its
territorial waters, the Japanese Coast Guard said in e-mailed
statements. The move prompted Japanese Vice Foreign Minister
Akitaka Saiki to summon China’s ambassador, Cheng Yonghua, to
lodge a diplomatic protest, the Foreign Ministry said on its
website. “We will do everything in our power to protect the lives
of the people as well as our territory, water and airspace,”
Japan’s Chief Cabinet Secretary Yoshihide Suga said yesterday.
Asked if that could include stationing public officials on the
islands, he said that was “one option to be considered.”
- Most Asia Stocks Rise; U.S. Backs Away From Syria Strike.
Most Asian stocks rose as the President Barack Obama pulled the U.S.
from the brink of a military strike against Syria. Energy producers led
declines. Rio Tinto Group, (RIO) the world’s second-biggest mining
company, gained 1.4 percent after copper futures climbed in Sydney.
Yakult Honsha Co., a maker of fermented milk products, climbed 2.2
percent in Tokyo after JPMorgan Chase & Co. raised its rating to
overweight. Inpex Corp., Japan’s biggest energy
explorer, sank 2.4 percent after crude oil fell as prospects for
a diplomatic solution over Syria eased concern shipments from
the Middle East will be disrupted. The MSCI Asia Pacific Index was little changed at 137.11 as
of 12:02 p.m. in Tokyo, paring gains of as much as 0.4 percent.
- Rubber Gains as Yen Declines to Seven-Week Low on Syria Reprieve. Rubber climbed as the yen weakened
to the lowest level in seven weeks after the U.S. called for a
pause in authorizing military strikes on Syria, boosting demand
for the commodities priced in the Japanese currency. The contract for
February delivery gained as much as 1.1 percent to 285.5 yen a kilogram
($2,844 a metric ton) on the Tokyo Commodity Exchange, before trading
at 285 yen at 11:55
a.m. local time. The gain pared losses to 5.9 percent this year.
- Gundlach Says How Fed Is Ending Easing Is ‘Big Mistake’.
DoubleLine Capital LP’s Jeffrey Gundlach said the U.S. Federal Reserve
is making a “big mistake” in the way it ends its unprecedented
asset-purchase program. “We thought the Fed wouldn’t walk away from QE,”
or quantitative easing, and would buy securities until targeted
yields were reached like in Japan and Europe, Gundlach said
today during a webcast for investors. Instead, the central bank
is opting for a “seat of the pants” way of handling policy,
said the manager, whose firm is based in Los Angeles.
- NSA Phone-Records Spying Said to Violate Rules for Years. The U.S. National Security Agency
violated rules on surveillance of telephone records for almost
three years and misled a secret court, raising fresh concerns
that spy programs lack adequate controls to protect Americans’
privacy. The latest revelations show NSA spying was broader,
violated restrictions on domestic surveillance more often, and
may have targeted innocent Americans to a greater degree than
previously known. They are contained in documents released today
by Director of National Intelligence James Clapper in response
to privacy groups’ lawsuits. The agency ran a select list of phone
numbers against databases of millions of call records between May 2006
and January 2009 without having reason to suspect some of the numbers’
owners of terrorist ties, according to the records.
Wall Street Journal:
- Sheila Bair: U.S. Banking System Still Fragile. In this special Crisis Plus 5 series of The Big Interview, former FDIC Chair Sheila
Bair reflects on the five-year anniversary of the 2008 financial
collapse, telling WSJ’s David Wessel the banking system in the U.S.
remains fragile but that regulators succeeded in enforcing higher capital requirements for big banks. Transcript of the interview:
- Banks Face Physical Commodity Curbs. Fed Is Expected to Issue Rules Soon.
Wall Street is bracing for a ruling that may hasten the exit of J.P.
Morgan Chase JPM +1.53% & Co., Goldman Sachs Group Inc. GS +3.54%
and Morgan Stanley MS +2.19% from businesses such as metals warehousing,
oil shipping and power generation. Financial-industry
executives expect the Federal Reserve to issue guidelines as soon as
this month limiting bank participation in so-called physical-commodities
businesses.
Fox News:
- Syria plan in limbo, Obama asks Congress to postpone strike vote. President
Obama, in a national address originally intended to rally
the country behind a strike on Syria, instead used the moment to
announce he was hitting pause on military action in order to let
negotiations over a Russia-backed plan run their course. “This
initiative has the potential to remove the threat of chemical weapons
without the use of force,” Obama said Tuesday night.
- House leadership pushes new legislative strategy to defund ObamaCare. House Republican leaders on Tuesday defended their proposal for a
temporary spending bill that essentially puts the contentious issue of
“defunding” ObamaCare in the hands of the Democrat-controlled Senate. “The House has voted 40 times to defund, repeal and change
ObamaCare,” House Speaker John Boehner said. “This strategy is intended
not to really satisfy the House. We've already voted. It enforces the
fight in the United States Senate. … Let's get the issue over there and
force them to actually have a vote.”
CNBC:
- Apple(AAPL) supplier shares slump on iPhone 5C pricing.
Shares of Apple suppliers slumped on Wednesday, a day after the U.S.
consumer technology giant unveiled two highly anticipated smartphones
that failed
to wow investors – the iPhone 5S and its lower-cost version, the iPhone
5C.
Zero Hedge:
Business Insider:
Washington Post:
- Extremist groups took part in Benghazi attack, U.S. officials say. U.S. counterterrorism officials have determined that several
extremist groups, including Ansar al-Sharia, took part in last year’s
attack in Benghazi, Libya, that killed the U.S. ambassador there and
three other officials. They think the terrorist organizations selected
the U.S. diplomatic outpost there as a potential target ahead of time. The officials have identified numerous people involved — some
new to U.S. intelligence and others who are well-known — and have issued
several sealed indictments in recent months.
Detroit Free Press:
- Sen. Corker of Tennessee calls Volkswagen talks with UAW 'incomprehensible'. Volkswagen would become a “laughingstock” if it goes through with a deal to have the United Workers represent workers at its Tennessee plant, U.S. Sen. Bob Corker said Tuesday. The
Tennessee Republican told The Associated Press in a phone interview
that he was dismayed when VW last week sent a letter to employees
regarding its discussion with the UAW about creating a German-style
works council at the Chattanooga plant. “For management to invite
the UAW in is almost beyond belief,” Corker said. “They will become the
object of many business school studies — and I’m a little worried could
become a laughingstock in many ways — if they inflict this wound.”
Reuters:
- Analysis: Brazil may be spending its way towards a downgrade. Brazil's finances
are set to deteriorate substantially next year, leaving the government
with few options to revive a sputtering economy and raising the threat of a credit downgrade. The
government is likely to miss its key 2014 budget target, the primary
surplus, by as much as 50 billion reais ($22 billion), delivering only
about half its goal, estimates by Reuters and private economists show.
Unlike most other countries, Brazil's most-watched budget goal strips
out interest payments on its debt, meaning its overall deficit would
widen if the primary surplus dwindles. Such an event could deal a major
setback to Latin America's biggest economy, which won its
investment-grade credit rating in 2008 through a commitment to fiscal
responsibility and strong economic growth.
- Texas Instruments(TXN) narrows 3rd-quarter forecast. No. 3 U.S. chipmaker Texas Instruments
Inc narrowed its third-quarter forecast.
The company now estimates
earnings of 51 to 55 cents per share on revenue of $3.15 billion to
$3.29 billion for the quarter ending Sept. 30. It had previously
estimated earnings per share of 49 to 57 cents on revenue of $3.09
billion to $3.35 billion.
AP:
- Colo. Senate President Loses Recall Over Gun Laws. The leader of the Colorado state senate lost his job in the state's
first ever legislative recall Tuesday and a second Democratic lawmaker
challenged over her support for stricter gun laws after last year's mass
shootings also appeared in trouble in a race seen as a measure of
popular support for gun legislation.
Financial Times:
- Asian groups struggle with end of cheap money. Few companies have hedges against strengthening dollar.
Hong Kong-based hedge fund Senrigan Capital is suing Thailand’s Charoen
Pokphand Group over the compensation it says it is owed as a
shareholder in Siam Makro, a Thai retailer that CP is acquiring. The
dispute revolves around the appropriate exchange rate
between the baht and the dollar. If the investors prevail, it could
raise CP’s transaction costs by millions of dollars.
The Guardian:
The Financial Express:
- Banks slammed for ‘reckless’ lending to infra, power sectors. In a scathing letter addressed to the Indian Banks' Association,
Gajendra Haldea, principal adviser (infrastructure) at Planning
Commission, has slammed banks for their infrastructure lending
practices. The reckless lending to the infrastructure and power segment
will lead to asset quality issues, resulting in a lack of future lending
towards these sectors, Haldea noted. "Indiscriminate lending by commercial banks has led to gold
plating of infra projects that may either raise consumer tariffs or
cause defaults in debt service," said Haldea in strongly worded
discussion paper dated June 12. The paper was sent to the ninistry of
finance, which, then, forwarded it to the IBA.
Evening Recommendations
Susquehanna:
- Rated (CSC) Positive, target $62.
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.0 unch.
- Asia Pacific Sovereign CDS Index 114.0 -3.0 basis points.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Wholesale Inventories for July are estimated to rise +.3% versus a -.2% decline in June.
- Wholesale Trade Sales for July are estimated to rise +.5% versus a +.4% gain in June.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory decline of
-2,100,000 barrels versus a -1,836,000 barrel decline the prior week.
Gasoline supplies are estimated to fall by -1,000,000 barrels versus a
-1,827,000 barrel decline the prior week. Distillate inventories are
estimated to rise by +600,000 barrels versus a +549,000 barrel gain the
prior week. Finally, Refinery Utilization is estimated to fall -.9%
versus a +.5% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The
10Y Note auction, weekly MBA mortgage applications report, Australia
Unemployment report, German CPI report, (AAPL) iPhone China event, (MA)
Investment Community Meeting, Barclays Energy-Power Conference, BofA
Merrill Real Estate Conference, BofA Merrill Healthcare Conference, BofA
Merrill Media/Communications/Entertainment Conference and the Stifel
Nicolaus Healthcare Conference could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by industrial and automaker shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.82 -5.18%
- Euro/Yen Carry Return Index 138.79 +.84%
- Emerging Markets Currency Volatility(VXY) 10.47 -2.06%
- S&P 500 Implied Correlation 47.42 -3.81%
- ISE Sentiment Index 93.0 -30.08%
- Total Put/Call .80 +17.65%
Credit Investor Angst:
- North American Investment Grade CDS Index 77.72 -1.51%
- European Financial Sector CDS Index 135.83 -4.04%
- Western Europe Sovereign Debt CDS Index 89.94 -1.87%
- Emerging Market CDS Index 320.42 +.16%
- 2-Year Swap Spread 15.25 -.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +1.0 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% +1 bp
- China Import Iron Ore Spot $135.20/Metric Tonne +.30%
- Citi US Economic Surprise Index 53.80 -1.2 points
- Citi Emerging Markets Economic Surprise Index -9.50 +4.5 points
- 10-Year TIPS Spread 2.11 +4 bps
Overseas Futures:
- Nikkei Futures: Indicating +172 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my tech/medical sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -3.61% 2) Homebuilders -1.03% 3) Coal -1.0%
Stocks Falling on Unusual Volume:
- PVH, GG, EGO, GTN, KORS, CTCM, IRE, ALJ, EEQ, TNAV, VOD, CPL, NRGM, FMO, MODN, STWD, NBIX, URBN, HDS, XONE, NS, SBLK, ALJ, NSH, AMBC, RL, AEPI, USU, ASA, MFRM, CVV, INCY, TPX, CROX, SDR, NS, BMRN, CALX, STWD and CAG
Stocks With Unusual Put Option Activity:
- 1) DELL 2) MBI 3) GNW 4) XLB 5) FXI
Stocks With Most Negative News Mentions:
- 1) F 2) PVH 3) RL 4) CAG 5) P
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +2.31% 2) Gaming +1.76% 3) Semis +1.34%
Stocks Rising on Unusual Volume:
- PKT, TPLM, BFR, SBGI, FIVE, SHLD, IGT. TUES, CZR, BCC, SFUN, SCTY, ETFC, NFLX, MYL, PII, DAL and MU
Stocks With Unusual Call Option Activity:
- 1) IGT 2) XLI 3) AMTD 4) CLR 5) PANW
Stocks With Most Positive News Mentions:
- 1) AXP 2) WAG 3) WMT 4) FIVE 5) FRX
Charts:
Evening Headlines
Bloomberg:
- Russia Seizes on Kerry Comment on Syria Giving Up Weapons. Russia
seized on a casual comment by U.S. Secretary of State John Kerry to
urge that Syria turn over its arsenal of chemical weapons to
international control to avert an American military strike. “If the
establishment of international control of chemical weapons in
the country will help avoid military strikes, we will immediately start
working with Damascus,” Russian Foreign Minister Sergei Lavrov said
after meeting with his Syrian counterpart in Moscow. Syria’s government
said it welcomed the idea. Russia jumped on a hypothetical comment by
Kerry, who told reporters in London that Syrian President Bashar
al-Assad could avert a threatened U.S. attack by turning over “every
single bit of his chemical weapons to the
international community in the next week.” While Kerry added immediately
that Assad “isn’t about to do it, and it can’t be done, obviously,” the
idea took on a life of its own.
- Asian Stocks to Baht Climb Before China Data as Oil Slips.
Asian stocks rose, extending the longest rally in the benchmark equity
gauge this year, and the Thai baht and Malaysian ringgit climbed before
Chinese factory
output and retail sales data expected to show growth in August.
Crude oil slipped for a second day and credit risk fell. The MSCI Asia Pacific Index rose 0.9 percent at 12:20 p.m.
in Tokyo, advancing for a ninth day in its longest winning
streak since December.
- Rubber Drops Most in 3 Weeks With Oil on Easing Syria Concerns.
Rubber declined the most in three
weeks as oil prices dropped, cutting the appetite for the commodity used
in tires, amid speculation that the U.S. Congress won’t endorse a
strike against Syria. Rubber for delivery in February lost as much as 2.1 percent,
the biggest drop for a most-active contract since Aug. 20, to
280 yen a kilogram ($2,812 a metric ton) on the Tokyo Commodity
Exchange. Futures traded at 280.4 yen by 12:05 p.m. local time,
down 7.3 percent this year.
- Rebar Falls From One-Week High as Steel Mills Boost Production.
Steel reinforcement-bar futures in Shanghai retreated from a one-week
high as Chinese steel mills increased production of the building
material. Rebar for delivery in January on the Shanghai Futures Exchange declined as much as 0.5 percent to 3,735 yuan ($610) a
metric ton before trading at 3,736 yuan at 10:43 a.m. local
time. The contract closed at 3,752 yuan yesterday, the highest
level since Sept. 2.
- Banks Seen at Risk Five Years After Lehman Collapse. While the amount of capital at the six largest U.S. lenders has almost
doubled since 2008, policy makers and some Wall Street veterans say
that’s not enough. They see a system still too leveraged, complicated
and interconnected to withstand a panic, and regulators ill-equipped to
head one off -- the same conditions that led to the last crisis.
- Apple(AAPL) to Unveil IPhones Seeking End to Year of Struggles. Apple
Inc. (AAPL)’s introduction of new iPhones is a chance for the company
to turn the page on a dour year that included no big new gadgets, a
falling stock and stepped-up competition. Apple will update its
flagship product, adding more colors and a less-expensive model, at an
event at its Cupertino, California, headquarters today, a person with
knowledge of the plans said last month. Apple, which will hold a viewing
of the presentation in Beijing for the first time, is also close to
securing deals with China Mobile Ltd. (941) and Japan’s NTT DoCoMo Inc.
(9437) to sell iPhones in Asia’s biggest markets.
Wall Street Journal:
- Mortgage Lenders, Home Buyers Feel Rate Squeeze. Wells Fargo, J.P. Morgan Warn of Slowdown. A rise in interest rates is slamming homeowners' demand for
mortgages, prompting large and midsize banks to cut jobs and warn
investors of declining profitability in the home-loan business.
Wells Fargo & Co., the nation's largest mortgage company by loan
value, on Monday told investors at a conference that it expects
mortgage
originations to drop nearly 30% in the third quarter to roughly $80
billion, down from $112 billion in the second quarter. Businesses Aim to
Ride New Funding Wave. As Ban Is Set to End, Some Regulators Fret About
Possible Scams.
- China Tightens Grip on Social Media.
Chinese authorities said that social-media users who post comments
considered to be slanderous could face prison if the posts attract wide
attention—a ruling free-speech advocates criticized as an attempt to
give legal backing to the suppression of online dissent.
- John B. Taylor: The Weak Recovery Explains Rising Inequality, Not Vice Versa. Obama blames tax cuts that began under Reagan for today's slow growth. The data don't back him up.
Last year at this time a debate raged about whether economic growth
and job creation has been abnormally slow compared with previous
recoveries from recessions in the United States. Now that the growth
rate has declined to 1.6% over the past year from 2.8%, the debate is no
longer about whether. It's about why. The poor economic policies of the past few years is a reasonable explanation for today's weak economy.
Fox News:
- Obama backs off 'red line,' opens door to 'diplomatic track' on Syria. President Obama on Monday took a sharp turn away from his "red line"
threat to Syria on the eve of taking his case to the American people,
saying in an interview with Fox News that he's open to negotiations on
an alternative plan that could avert a military strike. The president was responding to a proposal, formally put forward by
the Russians, to have the Assad regime turn over its chemical weapons to
international control. "We will pursue this diplomatic track," Obama told Fox News. "I
fervently hope that this can be resolved in a non-military way."
- Fox News Poll: Voters say US less respected since Obama took office. Nearly half of American voters -- 48 percent -- think the United
States is less respected around the world today than it was five years
ago. That’s up from 37 percent who felt that way last year, according
to a Fox News poll. The new poll, released Monday, finds 14 percent of voters think the
U.S. is more respected today -- nearly five years into the Obama
presidency -- and 36 percent say it’s unchanged.
CNBC:
- Bank of America(BAC) to cut 2,100 jobs as loan demand weakens. Bank of America plans to eliminate nearly 2,100 jobs and close 16 mortgage offices due to weak loan demand, Bloomberg reported Monday. Sources with direct knowledge of the plans said 1,500 of the employees
process home loans and about 200 deal with overdue mortgages.
- India's crisis a 'wake-up call': Stephen Roach. (video) Long-term India bull Stephen Roach told CNBC on Tuesday that he was
turning bearish on Asia's third-largest economy, and warned that the
country's currency crisis should prove a "wake-up call" for investors.
Zero Hedge:
ValueWalk:
- Black Swan Risk Shifts to Emerging Markets: SocGen. SocGen
is out with a lengthy report titled Global Economic Outlook: Looking
under the hood of recovery. In the report there is an interesting tidbit
on black swan risks. Below is an excerpt on that segment.
Reuters:
The Economic Times:
- Banks expect no quick fix for NPA pain despite RBI warning. Despite the Reserve Bank of India's (RBI) hard talks against loan
defaulters, banks are expecting more pain in terms of asset quality as
the systemic gaps allow bad borrowers to divert funds and go scot-free
under the garb of economic slowdown.
China Securities Journal:
- China Should Implement Strict Property Controls. China should
maintain its "prudent" monetary policy and implement "relatively strict"
property controls to prevent a rebound in consumer and property prices,
a commentary by reporters Gu Xin says. Chinese consumer prices will
face "relatively heavy" pressure to rise next year, the commentary said.
- Beware: Wall St. debt re-packaging machine is back. Wall Street's re-packaging of debt into an alphabet soup of complex,
leveraged investments helped fell Lehman Brothers five years ago this
month and brought other financial institutions like AIG to the
government's door begging for bailouts. This slicing and dicing — known as securitization or structured finance —
is on the rebound, and not much has changed in the way it is done. If
it catches on in a big way again, the financial system could become
fragile once more, experts say. "It's basically the same people doing the same things all over again,
only more intensely," says Brian Reynolds, chief market strategist at
Rosenblatt Securities. "In the long term we should be worried."
Evening Recommendations
Wells Fargo:
Night Trading
- Asian equity indices are +.50% to +1.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.0 -8.0 basis points.
- Asia Pacific Sovereign CDS Index 117.0 -5.5 basis points.
- NASDAQ 100 futures +.16%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- The NFIB Small Business Optimism Index for August is estimated to rise to 95.0 versus 94.1 in July.
10:00 am EST
- JOLTs Job Openings for July are estimated to fall to 3900 versus 3936 in June.
Upcoming Splits
Other Potential Market Movers
- The
Italian GDP report, China Industrial Production/Fixed Asset/Retail
Sales reports, 3Y Note auction, weekly retail sales reports, Baird Healthcare Conference, RBC
Industrials Conference, Goldman Sachs Retail Conference, (STX) analyst
meeting, (TPX) investor day, (HAS) investor day and the (CGNX) analyst
day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
