Click Here for Today's Market Take.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 15.96 -2.85%
- Euro/Yen Carry Return Index 139.10 +.51%
- Emerging Markets Currency Volatility(VXY) 9.15 -1.82%
- S&P 500 Implied Correlation 45.93 -1.61%
- ISE Sentiment Index 84.0 +3.70%
- Total Put/Call .94 -1.05%
Credit Investor Angst:
- North American Investment Grade CDS Index 77.13 -1.83%
- European Financial Sector CDS Index 128.02 -1.97%
- Western Europe Sovereign Debt CDS Index 72.31 -7.6%
- Emerging Market CDS Index 275.78 -.90%
- 2-Year Swap Spread 13.25 unch.
- TED Spread 17.75 -2.0 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -7.50 +1.0 basis points
Economic Gauges:
- 3-Month T-Bill Yield .07% +2 basis points
- China Import Iron Ore Spot $133.10/Metric Tonne +.08%
- Citi US Economic Surprise Index 35.40 -.5 points
- Citi Emerging Markets Economic Surprise Index -4.60 -3.7 points
- 10-Year TIPS Spread 2.21 unch.
Overseas Futures:
- Nikkei Futures: Indicating +140 open in Japan
- DAX Futures: Indicating +16 open in Germany
Portfolio:
- Higher: On gains in my medical/tech 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:
- Senators Say Obama Open to Health Law Changes as Talks Continue. Senate Republicans after a meeting
at the White House said President Barack Obama is open to
changing a tax on medical devices in the future as talks
continue about ending a partial government shutdown and raising
the debt limit. Obama didn’t rule out repealing the tax, which was included
in the Patient Protection and Affordable Care Act, said Senator
Orrin Hatch of Utah, an advocate of the tax’s repeal. The president said he was encouraged by Senate Republicans’
efforts on a debt-limit plan, said Senator John McCain. Obama
has insisted that any health-law changes occur after the
shutdown ends and the debt limit is raised.
- India Factory Output Misses Estimates as Domestic Demand Falters.
India’s industrial output rose less than economists estimated in August
as consumer spending moderated, adding pressure on Prime Minister
Manmohan Singh’s government to intensify efforts to revive the economy. Output at factories, utilities and mines advanced 0.6 percent from a year earlier after a revised 2.75 percent climb
in the previous month, the Statistics Ministry said in a
statement in New Delhi today. The median of 33 estimates in a
Bloomberg News survey was for a 2 percent gain.
- Europe Stocks Post Weekly Gain Amid U.S. Debt-Deal Signs.
European stocks posted a weekly gain, snapping two weeks of losses, as
concern over a potential default by the U.S government faded and the
nomination of Janet Yellen as the next Federal Reserve chairman signaled
the continuation of stimulus. Celesio AG surged 19 percent as McKesson
Corp. was said to be in talks to buy a majority stake in the drug
wholesaler. Persimmon Plc and Taylor Wimpey Plc led house builders
higher as British property prices surged to an 11-year high and Goldman
Sachs Groups Inc. predicted further growth. TGS Nopec Geophysical Co.
slumped 16 percent after reducing its sales forecast because of delays
in getting permits for new surveys. The Stoxx Europe 600 Index added 0.6 percent to 311.61 this
week, after slipping 1.4 percent in the previous two weeks.
- Comex Suspended Gold Trading for 10 Seconds After Price Slump. CME Group Inc.’s Comex halted
trading in December gold futures for about 10 seconds today at
8:42 a.m. New York time, said Damon Leavell, a spokesman for the
exchange. The December contract fell about $20 within a minute before
trading was suspended, data compiled by Bloomberg show. Leavell
declined to comment on the size of the trade that led to the
halt. The “stop-logic” mechanism gives traders the opportunity
to provide additional liquidity and prevent excessive price
movements.
- IEA Sees Oil Supplies Outside OPEC Rising Most Since 1970s. The International Energy Agency
estimates that non-OPEC oil producers led by the U.S., Canada
and Kazakhstan will bolster supplies next year by the most since
the 1970s, undermining the need for OPEC’s crude. Producers outside the Organization of Petroleum Exporting
Countries will increase 2014 output by a near-record 1.7 million
barrels a day to 56.4 million, the IEA said, boosting its
forecasts from a month ago by 300,000 barrels a day. Supply
losses in OPEC members Libya and Iraq, which reduced the group’s
output to a two-year low, are preventing the new shipments from
calming oil prices, the Paris-based adviser to energy-consuming
nations said.
Wall Street Journal:
Fox News:
CNBC:
Zero Hedge:
Business Insider:
10News:
- Memo uncovered in 10 News Investigation causes concern from terrorism experts. There is heightened concern terrorists may be planning another 9/11 type of attack- even using airplanes again.
The 10 News Investigators recently obtained an internal memo that
security experts of the U.S. Airline Pilots Association and Federal
Air
Marshals believe details a terrorist "dry-run" that happened just six
weeks ago on a flight from Reagan National Airport to Orlando
International Airport.
The Street:
- Greenberg: Fleckenstein to Restart Short Fund.
From the looks of this market, you might think Bill Fleckenstein needs
to have his head examined for what he's about to do: Restart his
short-selling fund, which he shut four years ago. As it turns out, he's one of several ex-short-sellers I've talked to in recent weeks who have said they think the time is right to
return. So far, Fleckenstein, who made his name shorting mostly tech
companies, but who quit in 2009 to start an opportunistic long-only
fund, is the first to go public with his plans.
Reuters:
- Exclusive: U.S. CFTC finishing new, tougher commodity limits rule - sources. The U.S. derivatives market regulator is nearing completion of a new
rule for position limits in commodity markets that is in parts tougher
than the previous proposal, two sources with direct knowledge of the
plan said. Commodity Futures Trading Commission
Chairman Gary Gensler is rushing to get a revamped rule out before he
leaves office in December, said the sources, even while agency lawyers
are still preparing to defend the original position limits regulations
that were knocked back by a U.S. court last year.
- Stock funds worldwide have $6.5 bln outflow - BofA. Investors in funds worldwide
pulled $6.5 billion out of stock funds in the latest week, marking the largest such outflows in five weeks, data from a Bank of America Merrill Lynch Global Research report showed
Friday.
The Guardian:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -1.91% 2) Oil Tankers -.59% 3) Retail -.45%
Stocks Falling on Unusual Volume:
- EOPN, SGI, GPS, ECYT, NPSP, CRAY, ETH, MYGN, MU, DAR, SYNA, INSY, NSM, ACAD, LTD, CPHD, MMS, PLCE, FRAN, CLDX, NMFC, ACAD and ETH
Stocks With Unusual Put Option Activity:
- 1) LOW 2) ANF 3) URI 4) NFX 5) EA
Stocks With Most Negative News Mentions:
- 1) ESV 2) CF 3) POT 4) JPM 5) TSLA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +1.65% 2) Alt Energy +1.38% 3) Gaming +1.25%
Stocks Rising on Unusual Volume:
- ENV, BPL, SSW, SCTY, IGTE, FXCM, SAVE, SWY, VVUS, PCYC, INFY, DK, TSO, CTSH, CVRR, OSIR, IMPV, BLOX and ALJ
Stocks With Unusual Call Option Activity:
- 1) CNX 2) SCTY 3) EDC 4) VNDA 5) HUM
Stocks With Most Positive News Mentions:
- 1) AUXL 2) ISCA 3) SWY 4) JNJ 5) AMZN
Charts:
Evening Headlines
Bloomberg:
- China Export Gains Understated on Fake-Data Distortions: Economy. China is poised to post its first
slowdown in export growth in three months, a result that may understate the strength of demand after fake reports inflated figures in the year-earlier period.
Growth from last month through April 2014 will be “depressed” because
of a high basis for comparison, Credit Agricole CIB says. Overseas
shipments probably grew 5.5 percent in September from a year earlier,
according to a Bloomberg News survey ahead of tomorrow’s
customs-administration report in Beijing, down from August’s 7.2 percent
and 9.8 percent in September 2012. The comparisons will complicate investors’ ability to gauge the strength of any economic rebound after two manufacturing
gauges trailed projections in September, limiting a recovery
that began earlier in the quarter. Additional skepticism over
trade figures builds on broader questions about the quality of
Chinese data from gross domestic product to jobs.
- Asian Stocks Rise as Bond Risk Falls; Won to Copper Gain.
Asian stocks rose a fourth day and bond risk in the region fell as U.S.
lawmakers continued talks on raising the nation’s debt limit to avoid a
default. Industrial metals climbed with emerging-market currencies. The MSCI Asia Pacific Index added 1.3 percent by 11:17 a.m. in Tokyo, set for the longest rally in a month.
- Rubber Set for 1st Weekly Gain in 3 as Yen Weakens on Debt Talks. Rubber is heading for the first
weekly climb in three as optimism grew that U.S. lawmakers will
lift the debt ceiling to avert a default, weakening Japan’s currency and boosting the appeal of yen-based futures. The contract for March delivery rose as much as 2.7 percent
to 266.3 yen a kilogram ($2,709 a metric ton) on the Tokyo
Commodity Exchange, the highest level since Oct. 1. Futures
traded at 265.5 yen at 10:17 a.m. and gained 4.4 percent this
week, the first rally since five days through Sept. 20.
- Cameron’s Housing-Market Loan Fix Seen as Bad Policy for Britain. Prime Minister David Cameron’s Help
to Buy plan to aid home buyers is the wrong policy for Britain,
economists said, adding to criticism of an initiative that was
ramped up just this week.
Two thirds of 31 economists described the measure as
“bad,” according to a Bloomberg News survey published today.
The prime minister this month accelerated the second phase of
the program, which gives people the chance to buy a home with a
down payment of as little as 5 percent.
Wall Street Journal:
- Obama, GOP Open Talks Over Temporary Debt Fix. Republicans, President Still Disagree Over Details. President
Barack Obama and House Republicans began discussions Thursday on a GOP
proposal to extend the nation's borrowing authority for six weeks,
marking a new opening in the budget stalemate that risks a U.S. debt
crisis.
- U.S. Rethinks How to Release Sensitive Economic Data. Potential Changes Driven From Unease Over High-Speed Trading Firms. Federal officials are discussing changes to how the government
releases sensitive economic data, seeking to bring the system in line
with fast-moving financial markets. While the talks are
preliminary, officials are driven by their growing concern about leaks
and their unease that high-speed trading firms can trade on
market-moving numbers before other investors, say people familiar with
the discussions.
- Andrew Puzder: ObamaCare and the Part-Time Economy. The White House insists that the health-care law has not affected hiring. That's not what the numbers show. There are times when the Obama administration makes statements so
disconnected from economic reality that you wonder if any White House
official has talked with anyone in business. A case in point: the
administration's mantra that ObamaCare's definition of full-time
employment as 30 or more hours per week had no effect on employers'
hiring practices.
Fox News:
- Deal or no deal? GOP back to drawing board on debt plan after Obama meeting. Republican lawmakers scrambled back to the drawing board late
Thursday to modify their plan for a short-term increase in the debt
ceiling, after President Obama apparently pushed back on the proposal
during a high-stakes White House meeting. The meeting broke up with no deal announced, despite optimism earlier
in the day that the two sides might agree. Senate Democratic Leader
Harry Reid also cast doubt on House Speaker John Boehner's plan. The day
ended like it began, with Americans still unsure when the partial
government shutdown will end, and the financial markets still uncertain
as to whether the country might miss next week's deadline to raise the
debt ceiling.
- Report: Obama administration brings chilling effect on journalism. The U.S. government's aggressive prosecution of leaks and efforts to
control information are having a chilling effect on journalists and
government whistle-blowers, according to a report released Thursday on
U.S. press freedoms under the Obama administration.
The Committee to Protect Journalists conducted its first examination
of U.S. press freedoms amid the Obama administration's unprecedented
number of prosecutions of government sources and seizures of
journalists' records. Usually the group focuses on advocating for press
freedoms abroad.
Zero Hedge:
Business Insider:
Telegraph:
Evening Recommendations
Macquarie:
- Downgraded (NVDA) to Underperform, target $14.
Night Trading
- Asian equity indices are +.50% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 142.0 -7.0 basis points.
- Asia Pacific Sovereign CDS Index 110.75 -5.5 basis points.
- NASDAQ 100 futures +.24%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for October is estimated to fall to 75.6 versus 77.5 in September.
Upcoming Splits
Other Potential Market Movers
- The Fed's Powell speaking, ECB's Praet speaking, USDA Crop Report and the Canada Unemployment Rate could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology 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: 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
