Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.13% 2) Networking +.19% 3) Utilities +.12%
Stocks Rising on Unusual Volume:
- STSA, NTWK, GALT, GOGO, P, SONC, SSH, D, YOKU, SEAS, THRX, BLOX, ECA, LNG, WAG, GRPN, KR and SHLD
Stocks With Unusual Call Option Activity:
- 1) VRA 2) MDY 3) FIO 4) S 5) GLD
Stocks With Most Positive News Mentions:
- 1) FCX 2) IBM 3) PII 4) AAPL 5) JCP
Charts:
Evening Headlines
Bloomberg:
- Thousands Flee in Philippines as Muslim Siege Risks Investments. Clashes between Muslim rebels and
Philippine troops forced about 13,000 people to flee their homes
in the nation’s south, complicating efforts to bring peace to
the region after four decades of insurgency. At least five people have been killed and 36 wounded during
three days of fighting between government forces and Moro
National Liberation Front rebels, who are holding about 100
hostages, GMA News reported, citing Local Government Secretary
Mar Roxas. More than 3,000 families are staying at shelters in
the city of Zamboanga, according to the local government’s
official Twitter page.
- Li Says China Rebound Not Yet on Solid Foundation. Chinese Premier Li Keqiang said the
foundations of a growth rebound aren’t solid while cautioning
that stimulus won’t help resolve deep-rooted issues in the
world’s second-largest economy. “The foundation of an economic
recovery is not solid yet with many uncertain factors,” Li said in a
speech yesterday at the World Economic Forum in Dalian, China.
- Rupiah Drops Most in Three Weeks as Indonesia Seen Holding Rate. Indonesia’s rupiah fell by the most
in three weeks, trading weaker than its one-month forwards, as
economists predict the central bank will keep borrowing costs
steady after inflation reached a four-year high. The currency plunged 1.5 percent in the biggest drop since
Aug. 20 to 11,513 per dollar as of 10:04 a.m. in Jakarta, prices
from local banks show. That is 0.6 percent weaker than its its
one-month non-deliverable forwards, which rose 0.6 percent to 11,440 in offshore trading, data compiled by Bloomberg show. “Bank Indonesia should raise the reference rate to manage inflation expectations arising from the weaker rupiah,” said Aldian Taloputra, a Jakarta-based economist at Mandiri
Sekuritas, a unit of the nation’s largest bank, who predicts the
rate will be increased to 7.25 percent.
- Asia Stocks Swing as Benchmark Trades Near 3-Month High.
Asia’s benchmark stock index swung between gains and losses after
Japanese machinery orders accelerated less than expected and as
investors await the outcome of the Federal Reserve’s meeting next week.
Toyota Motor Corp. dropped 1.1 percent, pacing losses among Japanese
exporters as the yen rose for a second day. Drugmaker Sino
Biopharmaceutical Ltd. tumbled 15 percent in Hong Kong after Credit
Suisse Group AG cut its rating on the stock. Qantas Airways Ltd. (QAN),
Australia’s largest carrier, climbed 2.5 percent
after the Australian Financial Review reported it may share its
Sydney terminal with unit Jetstar Airways. The MSCI Asia Pacific Index was little changed at 137.67 as
of 12:20 p.m. in Tokyo, trading near a three-month high.
- Rebar Declines in Shanghai as Property Curbs Damp Demand Outlook.
Steel reinforcement-bar futures
fell for a third day in Shanghai on concern that more efforts to rein in
excessive investment in Chinese property projects will weaken demand. Rebar
for delivery in January on the Shanghai Futures Exchange declined as
much as 0.3 percent to 3,717 yuan ($608) a metric ton and traded at
3,723 yuan at 10:34 a.m. local time. Chinese banks including large
state-owned lenders
temporarily halted mortgage loan in cities including Beijing,
Shanghai, Guangzhou and Shenzhen to avoid risks from property
“bubbles,” according to a commentary in the Securities Times.
- Fracking Moves U.S. Crude Output to Highest Level Since 1989. U.S.
oil production jumped last week to the highest level since May 1989,
cutting consumption of foreign fuel and putting the U.S. closer to
energy independence. Drilling techniques including hydraulic fracturing, or
fracking, pushed crude output up by 124,000 barrels, or 1.6
percent, to 7.745 million barrels a day in the seven days ended
Sept. 6, the Energy Information Administration said today.
- Call to Change Obama’s Health Law Opens Rift With Labor. The
AFL-CIO is asking for changes
to the Affordable Care Act, President Barack Obama’s landmark
health-care overhaul, potentially opening fissures between the White
House and one of its staunch political allies. The labor federation today approved a resolution by voice
vote on the final day of the group’s quadrennial convention in
Los Angeles. The measure urges amendments to the law.
The action by the AFL-CIO, which endorsed the law when it
passed in 2010, adds to the political challenges facing the
White House as it implements the law.
- Vera Bradley's(VRA) share tumble on weak outlook. Shares of Vera Bradley fell in after-hours trading
Wednesday, after the women's accessories company slashed its outlook
because of the uncertain economy. The guidance came after the company posted a 12 percent increase in profit in its fiscal second quarter.
Wall Street Journal:
- Geneva Talks Mark Big Test for U.S., Russia. Moscow Hopes to Reassert Itself as a Diplomatic Superpower, While Washington Hopes to Defuse a Showdown at Home.
The decisions of the U.S. Congress and the United Nations on how to
handle Syria's chemical weapons now hinge on two days of meetings
starting Thursday between Secretary of State John Kerry and Russian
Foreign Minister Sergei Lavrov. The meetings, to be held in Geneva, will
represent Moscow's effort to reclaim a superpower's role on the world
stage, while the Obama administration is looking for a way to defuse a
showdown without being
embarrassed either by losing a vote in Congress or the U.N. on action in
Syria.
- Lessons From Destruction of U.S. Chemical Weapons. Process Has Proven to Be Complicated, Lengthy. Even if the international community is able to take control of Syria's
chemical weapons, the U.S. experience in destroying its own stockpiles
suggests eliminating those from Damascus could be a complicated, lengthy
and even risky endeavor.
- Henninger: The Laurel and Hardy Presidency. After the Syrian slapstick, it's time to sober up U.S. foreign policy. After writing in the London Telegraph that Monday was "the worst day for
U.S. and wider Western diplomacy since records began," former British
ambassador Charles Crawford asked simply: "How has this happened?"
Fox News:
- House pulls spending bill amid backlash as government shutdown looms. House
Republican leaders pulled their plan Wednesday to temporarily
fund the federal government after rank-and-file party members said it
sidestepped “defunding” ObamaCare. The action further narrowed Congress’
time to strike a budget deal before an Oct. 1 government shutdown. House Speaker John Boehner and his team pulled the plan, which could
have gotten a full chamber vote as early as Thursday, after a
conservative backlash led by the Tea Party movement and Heritage Action
for America.
MarketWatch.com:
- Japan machinery-order data disappoint. Japanese core machinery orders stayed flat in July
from the previous month, the government said Thursday, following a 2.7%
decrease in June, suggesting businesses are still cautious about
increasing investment despite a weaker yen and economic stimulus
programs in place to support Japan's economic recovery. The result was worse than expected by economists surveyed by Dow Jones
Newswires and the Nikkei, whose median estimate came to an increase of
2.4%.
CNBC:
- Men's Wearhouse(MW) cuts outlook; shares skid.
The Men's Wearhouse said Wednesday that its net income fell 28 percent
during the fiscal second quarter, hurt by one-time charges and an early
Easter that pushed
prom tuxedos rentals earlier than usual.
Zero Hedge:
Business Insider:
New York Times:
- A Plea for Caution From Russia by Vladimir Putin. The CIA has begun delivering weapons to rebels in Syria, ending months
of delay in lethal aid that had been promised by the Obama
administration, according to U.S. officials and Syrian figures. The
shipments began streaming into the country over the past two weeks,
along with separate deliveries by the State Department of vehicles and
other gear — a flow of material that marks a major escalation of the
U.S. role in Syria’s civil war.
- Companies Embrace Low Interest Rates by Selling Bonds to Raise Billions. For companies looking to raise money through the debt markets, and the bankers egging them on, it seems no sum is too large. Verizon Communications shattered records and shook up the bond world
on Wednesday when it sold $49 billion of investment-grade corporate debt
at one time. It was the largest deal of its kind, exceeding Apple’s $17 billion
bond sale in April and illustrating the degree to which low interest
rates are enabling corporations to borrow money inexpensively.
- Cheaper iPhone Will Cost More in China. The cost of the phone — more than $700 in China — will still keep
Apple’s phones beyond the reach of most Chinese consumers. And that
predicament only underscores what has become increasingly clear in
recent months: that Apple’s fortunes in China largely depend not on any
phone, but on reaching a deal with China Mobile, the country’s largest
cellphone carrier.
Washington Post:
Reuters:
- FNB Capital shows banks way past Volcker Rule. American
banks, which have been shedding their private equity operations because
of the Volcker Rule, can use an exemption in the financial reform law
at least to get back into the lower end of the middle market. FNB
Corp, a regional banking company based in Hermitage, Pennsylvania, is
showing the way. The $12.6 billion-asset company, parent of First
National Bank of Pennsylvania, the No. 3 retail bank in Pittsburgh by
deposit market share, has spun off its merchant banking arm to form a
small business investment company.
- FTC to scrutinize new Facebook(FB) facial recognition feature. U.S. officials will examine changes to Facebook Inc's privacy policy to determine whether they violate a 2011 agreement with federal regulators, a Federal
Trade Commission spokesman confirmed Wednesday after certain
changes drew fire from privacy advocates.
Telegraph:
21st Century Business Herald:
- China Railway Corp. Reports 1H Loss of 6.5b Yuan. China Railway
Corp.'s total liabilities were 2.92t yuan at the end of June, citing an
earnings report. Debt-asset ratio was 62.58% at June-end, up from 62.23% at end-2012, the report says.
China Securities Journal:
- China Should Expand Property Tax Trial Soon. China should expand
its property tax trial "as soon as possible" as property markets in some
regions are at risk of overheating, says reporter Zhang Min in a
commentary.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.0 unch.
- Asia Pacific Sovereign CDS Index 113.75 -.25 basis point.
- NASDAQ 100 futures +.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 330K versus 323K the prior week.
- Continuing Claims are estimated to rise to 2960K versus 2951K prior.
- The Import Price Index for August is estimated to rise +.5% versus a +.2%.
2:00 pm EST
- The Monthly Budget Deficit for August is estimated at -$146.0B versus -$190.5B.
Upcoming Splits
Other Potential Market Movers
- The ECB monthly report, Eurozone Industrial Production report, 30Y T-Bond auction, USDA Crop report, Bloomberg Economic Survey for Sept., weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, BofA Mining Conference, Goldman Sachs Commodities Conference, (USB) investor day and the (COV) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by industrial and commodity 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: Modestly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.04 -3.37%
- Euro/Yen Carry Return Index 138.63 -.18%
- Emerging Markets Currency Volatility(VXY) 10.40 -.67%
- S&P 500 Implied Correlation 45.17 -1.89%
- ISE Sentiment Index 118.0 +31.11%
- Total Put/Call .91 +13.75%
Credit Investor Angst:
- North American Investment Grade CDS Index 76.55 -1.86%
- European Financial Sector CDS Index 139.14 -.03%
- Western Europe Sovereign Debt CDS Index 90.0 -.39%
- Emerging Market CDS Index 306.55 -4.09%
- 2-Year Swap Spread 15.25 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -8.5 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $135.10/Metric Tonne -.07%
- Citi US Economic Surprise Index 53.50 unch.
- Citi Emerging Markets Economic Surprise Index -5.90 +3.6 points
- 10-Year TIPS Spread 2.13 +2 bps
Overseas Futures:
- Nikkei Futures: Indicating +50 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my tech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
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:
