Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -3.2% 2) Networking -1.2% 3) Medical Equipment -.84%
Stocks Falling on Unusual Volume:
- CVA, ACAT, KFN, CAM, SYMC, NVDQ, EME, AKAM, CRI, TKR, CSH, ORLY, VNTV, TRIP, MGLN, VCI, INFN, CDNS, UA, FNSR, SLAB, EME, SUSQ, VAR, ALDW, CIEN and CRI
Stocks With Unusual Put Option Activity:
- 1) CAM 2) CCL 3) MMM 4) SYMC 5) CIEN
Stocks With Most Negative News Mentions:
- 1) BAC 2) TKR 3) RMBS 4) SUSQ 5) FIO
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.20% 2) Homebuilding +2.10% 3) Gaming +1.65%
Stocks Rising on Unusual Volume:
- VOYA, BABY, RDWR, TCBI, LOGI, BCO, MMSI, MCK, NXPI, ESI, CAKE, TSCO, SHPG, GNRC, FOE, EQIX, AEM, CLGX, RRD, CLGX, MDSO, ACAD, NOW, PCP, PHM, RCL, EVR, ORI, TEX, FBHS, SIX, MCK, LAZ, RPRX, CTXS, FANG, TER, EXPD and MKSI
Stocks With Unusual Call Option Activity:
- 1) AKAM 2) ITB 3) MCK 4) SYMC 5) FFIV
Stocks With Most Positive News Mentions:
- 1) G 2) F 3) LUV 4) LNKD 5) SCTY
Charts:
Evening Headlines
Bloomberg:
- China Money Rate Jumps Most in Two Months as Cash Injections End. The
seven-day repurchase rate rose 65 basis points, the biggest increase
since July 29, to 4.67 percent, according to a daily fixing by the
National Interbank Funding Center. The overnight repo rate increased 27
basis points, or 0.27
percentage point, to 4.07 percent, after surging 70 basis points
yesterday. The yield on the 4.08 percent bonds due August 2023
increased five basis points to 4.2 percent.
- Asian Stocks Pare Drop as Aussie Rallies With Oil, Silver.
Asian stocks pared losses, while commodity currencies rallied with oil
and metals as China’s manufacturing beat estimates, signaling the
recovery may be accelerating in the world’s second-largest economy. The MSCI Asia Pacific Index lost 0.1 percent by 11:22 a.m. in Tokyo, trimming a 0.5 percent drop.
- Rebar Falls Amid Concern China to Introduce New Property Curbs.
Steel reinforcement-bar futures in Shanghai fell for a third day amid
concern that China will curb property prices, reducing demand for the
building material. Rebar for delivery in May, the most-actively
traded contract by volume on the Shanghai Futures Exchange, dropped as
much as 0.9 percent to 3,601 yuan ($592) a metric ton and was at
3,617 yuan at 10:15 a.m. local time.
- Volcker Rule Hedging Exemption Said Disputed by Gensler, Stein. Officials
at two of the agencies
charged with writing the Volcker rule banning U.S. banks from trading
for their own accounts are insisting on strengthening a key provision.
Gary Gensler, chairman of the Commodity Futures Trading Commission, and
Kara Stein, a Democrat on the Securities and Exchange Commission, want
to make it more difficult for banks to
classify such trading as legitimate hedging activity, according
to three people familiar with the negotiations. The dispute
could make it harder for the five agencies drafting the rule to
meet a White House-imposed year-end deadline for completing the
regulation.
- Cancer Radiation Rates Grow When Urologists Reap Profit.
A study published today in the New England Journal of Medicine suggests
that profits urologists make from referring patients to their own
radiation facilities play an outsized role in the treatment decisions.
One third of men whose doctors own
radiation equipment get the therapy at a cost of about $35,000
per treatment course. The same doctors prescribed the therapy
for just 13 percent of their patients before they had their own
equipment and could profit directly.
Wall Street Journal:
- Henninger: Obama's Credibility Is Melting. Here and abroad, Obama's partners are concluding they cannot trust him.
The collapse of ObamaCare is the tip of the iceberg for the magical
Obama presidency. From the moment he emerged in the public eye with his
2004 speech at the Democratic Convention and through his
astonishing defeat of the Clintons in 2008, Barack Obama's calling card
has been credibility. He speaks, and enough of the world believes to
keep his presidency afloat. Or used to. All of a sudden, from Washington
to Riyadh, Barack Obama's credibility is melting.
Fox News:
- Second-graders taught labor politics in Core Curriculum-aligned lesson plan. A textbook company contracted to produce materials under the Common
Core State Standards is trying to teach students as young as second
grade about economic fairness by praising unions, protests and labor
leader Cesar Chavez, according to an education watchdog group.
Zaner-Bloser, which is based in Columbus, Ohio, is distributing a
lesson plan aimed at teaching second-graders about “equality” by
highlighting labor issues, according to Education Action Group
Foundation, a non-partisan organization that looks to promote education
reform.
CNBC:
Zero Hedge:
Business Insider:
The Blaze:
- Blaze Sources: Obama Purging Military Commanders. Nine senior commanding generals have been fired by the Obama
administration this year, leading to speculation by active and retired
members of the military that a purge of its commanders is underway.
Reuters:
- Boston Scientific(BSX) says to cut up to 1,500 jobs. Medical
device maker Boston Scientific Corp plans to cut up to 1,500 jobs in
its latest restructuring effort that aims to save $150 million to $200
million in operating expenses by the end of 2015, the company announced
in a regulatory filing.
- DOJ probes nine banks on mortage-backed securities -FT. At least nine
banks face probes by the U.S. Department of Justice into their sales of
mortgage-backed securities as part of an effort by the task force that
reached the $13 billion agreement with JPMorgan Chase & Co, the
Financial Times reported.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 134.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 101.75 +1.0 basis point.
- NASDAQ 100 futures +.25%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Trade Deficit for August is estimated to widen to -$39.4B versus -$39.1B in July.
- Initial Jobless Claims are estimated to fall to 340K versus 358K the prior week.
- Continuing Claims are estimated to rise to 2870K versus 2859K prior.
8:58 am EST
- The Preliminary Markit US PMI for October is estimated at 52.5.
10:00 am EST
- JOLTs Job Openings for August are estimated to rise to 3765 versus 3689 in July.
11:00 am EST
- Kansas City Fed Manufacturing Activity for Oct. is estimated at 2.0 versus 2.0 in September.
Upcoming Splits
Other Potential Market Movers
- The Eurozone PMI data, Japan CPI, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly higher 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: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.59 +1.95%
- Euro/Yen Carry Return Index 139.83 -.85%
- Emerging Markets Currency Volatility(VXY) 8.34 +1.71%
- S&P 500 Implied Correlation 37.81 -3.58%
- ISE Sentiment Index 108.0 -8.47%
- Total Put/Call .85 +2.41%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.98 +2.62%
- European Financial Sector CDS Index 120.22 +.85%
- Western Europe Sovereign Debt CDS Index 70.73 -3.11%
- Emerging Market CDS Index 258.99 +.30%
- 2-Year Swap Spread 13.25 unch.
- TED Spread 20.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.5 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 219.0 -3 basis points
- China Import Iron Ore Spot $133.20/Metric Tonne -.08%
- Citi US Economic Surprise Index 18.20 -1.2 points
- Citi Emerging Markets Economic Surprise Index -9.10 +1.1 points
- 10-Year TIPS Spread 2.16 -2 basis points
Overseas Futures:
- Nikkei Futures: Indicating -81 open in Japan
- DAX Futures: Indicating +11 open in Germany
Portfolio:
- Higher: On gains in my medical/biotech/retail sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Draghi Says ECB Won’t Hesitate to Fail Banks in Stress Tests. European
Central Bank President Mario Draghi said officials won’t hesitate to
fail banks in its stress test next year as the ECB sets out to prove its
vigilance in its new role of banking supervisor. “Banks
do need to fail” to prove the credibility of the exercise, Draghi said
in a Bloomberg Television interview with Francine Lacqua in Frankfurt,
after the ECB published plans for its bank-asset check. “If they do have
to fail, they have to fail. There’s no question about that.”
- ECB's
AQR Prompts 'Buy Sub CDS' on Italian Banks at Threadneedle. Investors
should buy protection on subordinated debt of Italian and Portuguese
banks, as well as on Commerzbank, Paul Smillie, an analyst at
Threadneedle, says in an interview. An accurate assessment of European
bank balance sheets will find capital shortfalls in Italy, Germany,
Portugal and potentially Spain.
- European Stocks Retreat as Orange, STMicro Sales Decline. European stocks declined, following the longest rally for the region’s equities in 40 months, as companies from Orange SA to STMicroelectronics NV (STM) reported lower quarterly sales. Orange retreated the most in more than two years as France’s largest telecommunications company also posted earnings
that dropped in the third quarter. STMicroelectronics slid the
most in three months after Europe’s biggest semiconductor maker
also reported a $142 million quarterly net loss.
The Stoxx Europe 600 Index retreated 0.6 percent to 318.99
at the close of trading.
- Crude Falls to Three-Month Low After Supply Report.
WTI for December delivery slid $1.52, or 1.6 percent, to $96.78 a
barrel at 12:23 p.m. on the New York Mercantile Exchange after falling
to $96.16, the lowest level since July 1. The volume of all futures
traded was 38 percent more than the
100-day average for the time of day.
Wall Street Journal:
- China Moves to Help Local Governments Roll Over Debt. Change Will Allow More Short-Term Debt Issues. China took a significant step Wednesday to deal with an explosion of
borrowing among local governments by allowing more of them to issue
short-term debt to help pay off maturing bonds and loans, according to a
person with direct knowledge of the matter. Economists estimate
local governments may have borrowed as much as $5 trillion in recent
years to fund projects and keep the economy humming as Beijing scaled
back the stimulus efforts it had undertaken following the global
financial crisis. Concerns are rising that the buildup of debt has been
too rapid and that local governments will be unable to pay the money
back. Beijing has warned, too, about the potential risks, and is trying
to understand and contain any potential problem.
Fox News:
- Boeing(BA) Boosts Outlook Amid 12% Profit Growth. Boeing’s
profit jumped 12% in the third quarter, as the aerospace giant’s
commercial aircraft unit outweighed softness at its defense business. The company also said Wednesday it raised its per-share earnings
guidance to between $6.50 and $6.65, up from a previous estimate of
$6.20 to $6.40. Boeing reaffirmed its outlook for revenue.
Zero Hedge:
Business Insider:
Mish's Global Economic Trend Analysis:
CBS:
- HealthCare.gov pricing feature can be off the mark.
CBS News has uncovered a serious pricing problem with HealthCare.gov.
It stems from the Obama administration's efforts to improve its health
care website. A new online feature can dramatically underestimate the
cost of insurance. The administration announced it would provide a new "shop and browse"
feature Sunday, but it's not giving consumers the real picture. In some
cases, people could end up paying double of what they see on the
website, CBS News' Jan Crawford reported Wednesday on "CBS This
Morning."
NY Post:
- ObamaCare's Other Tech Disaster. Dr. Nicholas DiNubile, a Philadelphia orthopedic surgeon, has a timely
reminder for everyone encountering the federal health-care-exchange
meltdown: “If you think signing up for ObamaCare is a nightmare, ask
your doctor how the EMR [electronic medical records] mandate is going.”
Reuters:
- Caterpillar(CAT) posts lower results, cuts outlook again. Caterpillar Inc posted a lower-than-expected quarterly profit on Wednesday and cut its
full-year forecast for the third time as weak demand from mining
customers continued to bedevil the heavy equipment maker.
The Peoria,
Illinois-based company also provided its first forecast for 2014 sales,
saying it expects essentially flat results to up or down 5 percent
compared with 2013. Caterpillar
said it had eliminated 3,000 jobs during the third quarter and warned
that further workforce reductions were possible.
- U.S. chip stocks drop as widespread weak demand worries investors. Shares of semiconductor
companies slumped on Wednesday after a host of underwhelming
quarterly revenue forecasts left Wall Street concerned about
lackluster demand in markets from industrial to smartphones.
The
Philadelphia Semiconductor Index was down 3.3 percent, with PC
chipmaker Intel Corp falling 1.7 percent and mobile heavyweight Qualcomm
Inc down 2.1
percent.
- METALS-Copper falls on worries over China tightening. Copper
slid more than 2 percent on Wednesday as fears of tighter monetary
policy in top metals user China outweighed speculation that tepid U.S.
jobs data will deter the Federal Reserve from tapering its stimulus this year.
Style Underperformer:
Sector Underperformers:
- 1) Semis -3.16% 2) Oil Service -2.20% 3) Gaming -2.0%
Stocks Falling on Unusual Volume:
- GIMO, GWRE, DTLK, ABAX, LAD, RPRX, PNRA, IRBT, CREE, FTI, ALTR, BRCM, ABG, EAT, COH, CAT, UIS, OCR, FFIV, PDCE, CXO, DNR, ARG, TPLM, CRUS, CBST, ARW, XEC, TUP, BCEI, FANG, JNPR, BLOX, OAS, SWKS, REXX, CAVM, XOOM and ABG
Stocks With Unusual Put Option Activity:
- 1) VWO 2) HUN 3) JNPR 4) XLB 5) SIRI
Stocks With Most Negative News Mentions:
- 1) CREE 2) TEX 3) DDD 4) MCD 5) MCD
Charts:
