Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Every Sector Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.39 -16.33%
- Euro/Yen Carry Return Index 138.58 +.96%
- Emerging Markets Currency Volatility(VXY) 9.37 -2.40%
- S&P 500 Implied Correlation 46.78 -15.23%
- ISE Sentiment Index 88.0 -19.27%
- Total Put/Call .96 -26.72%
Credit Investor Angst:
- North American Investment Grade CDS Index 78.90 -5.26%
- European Financial Sector CDS Index 130.728 -5.83%
- Western Europe Sovereign Debt CDS Index 78.28 +.37%
- Emerging Market CDS Index 278.99 -3.67%
- 2-Year Swap Spread 13.25 +.25 basis point
- TED Spread 19.75 -1.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -8.50 +1.75 basis points
Economic Gauges:
- 3-Month T-Bill Yield .05% +1 basis point
- Yield Curve 234.0 +5 basis points
- China Import Iron Ore Spot $133.0/Metric Tonne +.91%
- Citi US Economic Surprise Index 35.90 -7.4 points
- Citi Emerging Markets Economic Surprise Index -.90 -2.1 points
- 10-Year TIPS Spread 2.21 unch.
Overseas Futures:
- Nikkei Futures: Indicating +230 open in Japan
- DAX Futures: Indicating +52 open in Germany
Portfolio:
- Higher: On gains in my medical /retail/tech/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- European Stocks Rise on Signs of Compromise on U.S. Debt. European stocks rose the most in more than five weeks amid signs U.S. lawmakers will agree on a compromise deal to avoid an unprecedented default. Ladbrokes Plc rallied to a two-week high after a report
that Playtech Plc founder Teddy Sagi may have acquired an almost
3 percent stake in the bookmaker. CGG gained 2.1 percent after
saying third-quarter vessel-production rate jumped to a record.
Rheinmetall AG declined after Moody’s Investors Service lowered
its debt rating. The Stoxx 600 added 1.7 percent to 310.29, its highest
level since Sept. 2.
- WTI Rebounds on Signs U.S. Will Increase Debt Ceiling. WTI
for November delivery advanced $1.40 to settle at $103.01 a barrel on
the New York Mercantile Exchange. Yesterday’s settlement of $101.61 was
the lowest since July 3. Volume was 28 percent above the 100-day moving
average at 2:38
p.m. WTI is up 12 percent this year.
- Obama Fundraiser Said to Seek $1 Billion for Private Fund.
Barack Obama’s top individual fundraiser, a former technology executive
who collected millions of dollars for the president, is seeking as much
as $1 billion for a private-equity fund that will invest in
infrastructure and renewable energy, according to a person with
knowledge of the matter. Frank White Jr. has teamed up with two other
Obama backers, Shomik Dutta and two-time Grammy Award-winning rapper
Prakazrel Michel, to establish a Washington-based money-management firm
called DuSable Capital Management LLC, according to a regulatory filing.
DuSable plans to raise $500 million to $1 billion, said
the person, who requested anonymity because the details are
private.
White’s new firm joins a small group of money managers
founded by former political figures and public officials, who
have sought to parlay their connections to invest in industries
that rely on direct or indirect government support.
Wall Street Journal:
- GOP to Propose Temporary Debt-Ceiling Increase. Plan Won't Include Additional Policy Conditions. The House Republican plan to extend the debt ceiling for six weeks
would permanently ban the Treasury Department from using extraordinary
measures to avoid default, congressional aides said. The provision would ban practices, used by Democratic and
Republican administrations for decades, which have effectively allowed
the Treasury to limit investments in pensions and other funds when the
government bumps up against its borrowing limit. These steps have
extended the time that Treasury can continue borrowing and paying the
nation's bills while Congress debates terms for raising the debt
ceiling.
CNBC:
Zero Hedge:
Business Insider:
IBD:
Reuters:
- Fed's Bullard: fiscal problems make Oct QE cut less likely. The Federal Reserve is less
likely to reduce its bond-buying program this month given the
U.S. government shutdown and resulting lack of economic data, as
well as the ongoing debate over the debt ceiling, a top central
bank policymaker said on Thursday.
- U.S. House debt limit plan to bar Treasury 'extraordinary' moves. A plan offered by U.S. House
of Representatives Republicans to temporarily raise government
borrowing authority would prohibit the Treasury Department from
using "extraordinary measures" to continue borrowing once it
hits up against the new limit, according to a senior House
Republican aide.
- U.S. retailers' September sales rise modestly, shoppers wary. A group of eight U.S. retailers, excluding drugstores,
reported a 2.2 percent rise in September same-store sales, lower
than the 3.1 percent growth analysts had expected, the Thomson Reuters same-store sales index showed. Gap Inc will report after markets close on Thursday.
Style Underperformer:
Sector Underperformers:
- 1) Hospitals +.30% 2) Utilities +.40% 3) Gold & Silver +.73%
Stocks Falling on Unusual Volume:
- CTXS, RGP, HUBG, BKE, DGX, ALGN, LNN, SSNI, LTD, GMCR, BPL, DECK, MW, MZOR, STJ, VMI, TDC, CYH, SHLD, LH, TRLA, BPT, NGVC and DGX
Stocks With Unusual Put Option Activity:
- 1) TWC 2) AKAM 3) AKS 4) BBY 5) PETM
Stocks With Most Negative News Mentions:
- 1) RGP 2) CTXS 3) LF 4) RT 5) HUBG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Biotech +2.79% 2) Oil Tankers +2.50% 3) Road & Rail +2.29%
Stocks Rising on Unusual Volume:
- PVR, IGTE, SYNA, LRN, ACAD, AFSI, RBA, ORAN, OMX, LINTA, CLDX, BBY, XOOM, XPO, DK, QCOR, PBF, CONN, NFLX, AFOP, LCI, TWC, ALKS and GILD
Stocks With Unusual Call Option Activity:
- 1) GCI 2) CTXS 3) AKAM 4) TSO 5) CL
Stocks With Most Positive News Mentions:
- 1) LMT 2) BA 3) AMZN 4) GOOG 5) IBM
Charts:
Evening Headlines
Bloomberg:
- Asian Stocks Swing From Gain, Loss on Health Care, Energy.
Asian stocks swung between gains and losses as health care shares rose
while energy companies and materials producers declined. Japanese
equities climbed as the yen weakened. BHP Billiton Ltd., the world’s
biggest mining company, fell 1.2 percent in Sydney as it headed for its
lowest close since July 22. Alfresa Holdings Corp., which makes drugs
and medical devices, gained 2.9 percent in Tokyo. Mazda Motor Corp., the
automaker that gets 30 percent of sales in North America, added 2.9
percent as the yen slid for a third day on optimism the U.S. government
will avoid default. Sa Sa International Holdings Ltd. dropped 4 percent
in Hong Kong after Credit Suisse Group AG said
the cosmetic retailer’s sales during China’s week-long holiday
missed estimates. The MSCI Asia Pacific Index dropped 0.2 percent to 138.75
as of 11:47 a.m. in Tokyo after rising as much as 0.2 percent.
- Brazil Extends Record Rate Lift as Inflation Outlook Worsens. Brazil’s central bank extended today the world’s biggest interest rate increase and raised the key
rate for a fifth straight time as a weaker currency hampers
efforts to slow inflation. The bank’s board, led by President Alexandre Tombini, voted
unanimously to raise the benchmark Selic to 9.5 percent from 9
percent, as forecast by all 49 economists surveyed by Bloomberg.
Policy makers, repeating language used in their August decision,
said the increase will ensure slower inflation next year. They
have raised borrowing costs by 225 basis points, or 2.25
percentage points, since April. “Inflation is elevated and well above target,” said Luciano Rostagno, chief strategist at Banco Mizuho do Brasil SA.
“There are still risks from a weaker real, which can pressure
inflation in the next few months.”
- German Greens Poised to Rebuff Merkel’s Coalition Overtures. Germany’s
Greens are approaching today’s meeting with Chancellor Angela Merkel
and her bloc looking for an excuse to abandon talks before they’ve
begun. With the party leadership in transition, a gulf in policy with
Merkel’s side, a membership skeptical of a coalition and open animosity
with Merkel’s Bavarian allies, the Greens may conclude there’s no chance
of finding common ground. The Greens
team is due to meet with Merkel and 13 members of her Christian
Democratic-led bloc at 4:30 p.m. in Berlin today.
- Debtors’ Prison Is No Place for Country Like U.S.
How is it government officials come to contradictory conclusions about
what the U.S. Treasury can do in the event it lacks the money to pay all
its bills? Can the Treasury prioritize and pay bondholders before everyone else? The Treasury says no. The Government Accountability Office says yes. Who’s right?
- Toyota Trims Plug-in Prius Price to Improve U.S. Sales. Toyota
Motor Corp. (7203) is reducing the price of its plug-in Prius models to
try to boost sales and meet a California mandate as automakers find
that cost is critical to U.S. consumers’ willingness to buy rechargeable
autos. The world’s largest seller of hybrid autos is trimming the
base price of the 2014 Prius Plug-in to $29,990, a $2,010
reduction from the current car, while the top-end Advanced grade
gets a 12 percent cut to $34,905, Toyota said in a statement
yesterday. The new versions, which also get a $2,500 U.S. tax
credit, go on sale next month.
Wall Street Journal:
- Shutdown Standoff Shows Signs of a Thaw. Near-Term Debt-Limit Increase Gains Support From Conservatives as White House Meeting Is Set. The
partisan logjam that has paralyzed the capital showed signs of
easing Wednesday, as conservative Republicans warmed to the idea of a
short-term increase in the country's borrowing limit and House GOP
leaders prepared for their first meeting with President Barack Obama
since the government shutdown began. Rep. Paul Ryan (R., Wis.), chairman
of the House Budget Committee, outlined a plan Wednesday to fellow
conservatives to extend the nation's borrowing
limit for four to six weeks, paired with a framework for broader
deficit-reduction talks, according to lawmakers briefed on the proposal.
The greater the spending reduction the talks produced, the longer the
next extension of the debt ceiling would be under Mr. Ryan's plan.
- Chinese Think Tank Puts Shadow Banking at 40% of GDP. As the fastest-growing part of China’s financial sector, shadow banking is no longer the sideshow it was five years ago. The sector grew from almost nothing a few years ago to the equivalent of
40% of gross domestic product at the end of 2012, the Chinese Academy
of Social Sciences said in a report published Tuesday.
- IMF Sees Greece Missing 2014 Bailout Budget Target. Greece is projected to miss a key bailout target for next year according to an International Monetary Fund
report published Wednesday, a factor likely complicating
already-fraught negotiations over the next tranche of financing for the
ailing economy. The IMF projects in its latest Fiscal Monitor report that Greece’s
budget surplus will only hit 1.1% of gross domestic product next year
instead of the 1.5% of GDP target outlined in its bailout terms with the
IMF and the euro zone.
- Let's Get Cynical. Why should we trust the government--especially now?
"An old friend who has been active in politics for more than 30 years
tells me he's giving up," claims Robert Reich in a Puffington Host post:
" 'I can't stomach what's going on in
Washington anymore,' he says. 'The hell with all of them. I have better
things to do with my life.' "
- David Malpass: The Bigger Battle Behind the Shutdown. A staggering $250 billion per month, 80% of spending, runs on autopilot without congressional control. At its core, the shutdown is part of a much bigger battle to restrain
the federal government. It is spending $3.6 trillion per year without a
budget, and its expenditures are expected to increase rapidly in the
years ahead.
Meanwhile, the government has piled up
$17 trillion in debt and $60 trillion more in unfunded spending
promises. The Federal Reserve will borrow $1.1 trillion in 2013 alone to
buy bonds—and it reserves the right to borrow unlimited amounts for
future bond purchases without congressional or presidential permission.
Fox News:
- House Republicans eye short-term debt ceiling fix, ahead of White House meeting.
Conservative lawmakers are exploring the possibility of a short-term
increase in the debt ceiling, perhaps trying to seize the opening after
President Obama said a day earlier he would consider the option. Members of the Republican Study Committee, the most conservative bloc
in the House, told Fox News they're looking at that possibility. Their
inclination is to consider a short-term increase only if there is an
agreement on a broader spending framework.
MarketWatch.com:
- Ruby Tuesday(RT) first-quarter swings to loss. Ruby Tuesday Inc. swung to a fiscal first-quarter loss as same-store sales fell sharply
and the casual-dining chain posted $7.5 million in write-downs and lease
reserves related to underperforming or closed stores.
Shares were down 13% at $6.58 in recent after-hours trading as the results missed expectations.
CNBC:
Zero Hedge:
ValueWalk:
CNN:
- Armed rebels escort Libyan PM to undisclosed location. Rebels have kidnapped Libyan Prime Minister Ali Zidan and taken him
to an undisclosed location, the prime minister's spokeswoman told CNN
early Thursday. Armed rebels escorted the
prime minister from the Corinthian Hotel in Tripol into a convoy of
waiting cars, said a hotel clerk who was not aut
horized to speak to the media.
Reuters:
- Citrix(CTRX) guides results below expectations; shares dive. Cloud
computing software maker Citrix Systems Inc estimated quarterly results
below analysts' expectations as businesses delayed contracts, sending
its shares down as much as 14 percent in extended trading.
Cloud computing companies such
as Citrix and VMware Inc have been facing delays in closing large deals
as customers review IT budgets to prune discretionary spending. Citrix's
warning could set the tone for other software companies as it comes
just ahead of the third-quarter reporting season. VMware shares fell 3.3
percent after the bell.
Telegraph:
Evening Recommendations
Cowen:
- Raised (CHKP) to Outperform, target $65.
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 149.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 116.25 -1.25 basis points.
- NASDAQ 100 futures +.30%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 311K versus 308K the prior week.
- Continuing Claims are estimated to fall to 2863K versus 2925K prior.
Upcoming Splits
Other Potential Market Movers
- The Fed's George speaking, Fed's Williams speaking, Fed's Taruillo speaking, Fed's Bullard speaking, BoE rate decision, Germany CPI, 30-Year T-Bond auction, BoJ's Kuroda speaking, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (LINTA) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and consumer 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: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 19.27 -5.21%
- Euro/Yen Carry Return Index 137.20 +.07%
- Emerging Markets Currency Volatility(VXY) 9.63 +.31%
- S&P 500 Implied Correlation 52.92 -10.11%
- ISE Sentiment Index 104.0 -6.31%
- Total Put/Call 1.34 +41.05%
Credit Investor Angst:
- North American Investment Grade CDS Index 83.02 -1.75%
- European Financial Sector CDS Index 138.58 +.27%
- Western Europe Sovereign Debt CDS Index 78.0 unch.
- Emerging Market CDS Index 289.54 -.45%
- 2-Year Swap Spread 13.0 +1.5 basis points
- TED Spread 21.0 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -10.25 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 229.0 +4 basis points
- China Import Iron Ore Spot $131.80/Metric Tonne +.08%
- Citi US Economic Surprise Index 43.30 -.4 point
- Citi Emerging Markets Economic Surprise Index 1.20 +.5 point
- 10-Year TIPS Spread 2.21 +3 basis points
Overseas Futures:
- Nikkei Futures: Indicating +137 open in Japan
- DAX Futures: Indicating +36 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical /retail/tech sector longs and index hedges
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
