Bloomberg:
- Ruthenium Drops to 8-Year Low as Ipad Demand Hurts Hard-Disk Use. Ruthenium slid to an eight-year low
on reduced demand for the material used to coat hard disks as
consumers favor computer tablets including Apple Inc.’s iPad and
smartphones and as manufacturers used metal from inventories. The metal, also used in the electrochemical industry, slid
33 percent this year and is set for a third successive annual
decline.
- Druckenmiller Says Fed Exit Would Be Big Deal for Markets. Stanley
Druckenmiller, who boasts one of the hedge-fund industry’s best
long-term track records of the past three decades, said it would be a
“big deal” for financial markets if the Federal Reserve were to
completely end its asset purchases as outlined over the next 12 months.
“How in the world does anyone think when the actual exit happens that
prices are not going to respond?” Druckenmiller said today on Bloomberg
Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle,
given the selloff in bonds and
emerging markets in the past few months on the mere hint that
the Fed might taper its purchases.
- Facebook’s(FB) Zuckerberg to Meet With Republican House Leaders. Facebook
Inc. (FB:US) founder and CEO Mark Zuckerberg, who has been pushing for a
revision of U.S. immigration law, plans to meet with the top four
Republicans in the House next week in Washington. The meeting, scheduled for Sept. 19, will include House
Speaker John Boehner of Ohio, Majority Leader Eric Cantor of
Virginia, Whip Kevin McCarthy and Cathy McMorris Rodgers of
Washington, the head of the Republican conference, according to
two leadership aides who weren’t authorized to speak publicly.
Wall Street Journal:
- Italy Plans to Raise 2013 Debt Ceiling. Italy's Treasury has asked parliament to allow it to issue 98 billion
euros ($130 billion) in net debt this year, up from the planned and
approved level of EUR80 billion. The announcement comes as yields on Italy's government bonds tiptoe
above those issued by Spain, raising concerns about Rome's commitment to
rigor.
CNBC:
- Americans pause to remember day 'like none other'. At memorials and in their schools, homes, and places of work across the
country on Wednesday morning, Americans paused to remember those lost in
the Sept. 11 attacks that shook the nation 12 years ago.
- Uh oh. People buying houses fear rising prices. How should we define a housing bubble? There's no clear cut
answer. The term "bubble" means different things to different people.
The classic housing 2004 housing bubble paper by Karl Case and Robert
Schiller explains it this way (emphasis added):
Zero Hedge:
Business Insider:
Washington Post:
- Iraq officials say bombs explode near Shiite mosque in northern Baghdad, killing at least 35. Iraqi officials say a double bomb attack on a Shiite mosque in
northern Baghdad that struck as worshippers were leaving after prayers
has killed at least 35. Police say more than 50 people were wounded in the Wednesday
evening attack. They say it happened in a part of the Iraqi capital
known as Kasra, a predominantly Shiite enclave in a part of the city
that is otherwise largely Sunni.
Financial Times:
Telegraph:
- France and Portugal to miss deficit targets. France will post weaker growth in 2014 and miss its deficit target this year,
the country’s finance minister has said, as the government announced €15bn
(£12.6bn) of “unprecedented” spending cuts to get the economy back on track.
AFP:
- Syria Christian 'made to convert at gunpoint' By Rebels. Jihadists who overran Syria's ancient town of Maalula last week
disparaged Christians as "Crusaders" and forced at least one person to
convert to Islam at gunpoint, say residents who fled the town. Many
of Maalula's people left after a first rebel assault knocked out an
army checkpoint at the entrance to the strategic town on September 4.
Some went to a nearby village and others to Damascus, about 55
kilometres (34 miles) to the south. One of them, Marie, was still frightened as she spoke of that day.
Style Underperformer:
Sector Underperformers:
- 1) Utilities -1.11% 2) Airlines -.89% 3) Alt Energy -.75%
Stocks Falling on Unusual Volume:
- MKTG, SFUN, WBMD, TTWO, UMBF, AAPL, PZE, AMBC, RH, URI, MGAM, TTWO, GSVC, UNXL, IRWD, WLK, BMRN, CRUS, NPSP and MBI
Stocks With Unusual Put Option Activity:
- 1) X 2) IP 3) DELL 4) SIRI 5) ARNA
Stocks With Most Negative News Mentions:
- 1) GM 2) WHR 3) NFLX 4) CRUS 5)
Charts:
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:
