Wednesday, September 11, 2013

Wednesday Watch

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.
  • FTSE-100 futures -.11%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (MW)/1.14
  • (VRA)/.32
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
  • None of note
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.

Tuesday, September 10, 2013

Stocks Rising into Final Hour on Diminished Syria Intervention Worries, Global Growth Optimism, Lower Energy Prices, Financial/Transport Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • 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%
  • NYSE Arms .82 +52.92% 
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
  • TED Spread 23.50 -1.0 bp
  • 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +1.0 bp
Economic Gauges:
  • 3-Month T-Bill Yield .02% +1 bp
  • Yield Curve 249.0 +2 bps
  • 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

Bear Radar

Style Underperformer:
  • Large-Cap Group +.33%
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:

Bull Radar

Style Outperformer:
  • Small-Cap Value +.56%
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:

Tuesday Watch

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:
  • Rated (ILMN) Outperform. 
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.
  • FTSE-100 futures +.41%.
  • S&P 500 futures +.07%.
  • NASDAQ 100 futures +.16%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (CBK)/-.02
  • (OXM)/.98
  • (RH)/.43 
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
  • None of note
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.

Monday, September 09, 2013

Stocks Surging into Final Hour on Dimished Syria Intervention Worries, Global Growth Optimism, Lower Long-Term Rates, Homebuilding/Transport Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 15.47 -2.40%
  • Euro/Yen Carry Return Index 137.68 +1.08%
  • Emerging Markets Currency Volatility(VXY) 10.81 -5.09%
  • S&P 500 Implied Correlation 48.49 -3.98%
  • ISE Sentiment Index 129.0 +32.99%
  • Total Put/Call .66 -25.0%
  • NYSE Arms .62 -30.10% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 81.72 -2.98%
  • European Financial Sector CDS Index 139.38 -4.57%
  • Western Europe Sovereign Debt CDS Index 91.65 +.72%
  • Emerging Market CDS Index 319.70 -3.17%
  • 2-Year Swap Spread 15.5 -.25 bp
  • TED Spread 24.55 +.25 bp
  • 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.5 bp
Economic Gauges:
  • 3-Month T-Bill Yield .01% -1 bp
  • Yield Curve 247.0 unch.
  • China Import Iron Ore Spot $134.80/Metric Tonne +.52%
  • Citi US Economic Surprise Index 55.0 -1.5 points
  • Citi Emerging Markets Economic Surprise Index -14.0 +1.0 point
  • 10-Year TIPS Spread 2.07 -1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +125 open in Japan
  • DAX Futures: Indicating +23 open in Germany
Portfolio: 
  • Higher: On gains in my tech/medical/retail/biotech sector longs
  • Disclosed Trades: Covered some of my (IWM), (QQQ) hedges and some of my (EEM) short
  • Market Exposure: Moved to 75% Net Long