Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.20 -1.64%
- Euro/Yen Carry Return Index 140.02 +.09%
- Emerging Markets Currency Volatility(VXY) 8.33 -.24%
- S&P 500 Implied Correlation 36.79 -.49%
- ISE Sentiment Index 65.0 -39.25%
- Total Put/Call .78 -9.30%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.95 -.02%
- European Financial Sector CDS Index 122.61 +1.99%
- Western Europe Sovereign Debt CDS Index 70.0 -1.03%
- Emerging Market CDS Index 261.08 +.79%
- 2-Year Swap Spread 13.25 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 221.0 +2 basis points
- China Import Iron Ore Spot $133.50/Metric Tonne +.23%
- Citi US Economic Surprise Index 17.10 -1.1 points
- Citi Emerging Markets Economic Surprise Index -6.40 +2.7 points
- 10-Year TIPS Spread 2.17 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating -31 open in Japan
- DAX Futures: Indicating -1 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg
- Euro-Area Services, Manufacturing Unexpectedly Slow. Euro-area services and manufacturing
output unexpectedly slowed in October as the recovery in the
currency bloc struggled to gain momentum. A composite index based on a
survey of purchasing managers in both industries declined to 51.5 this
month from 52.2 in September, London-based Markit Economics said today.
Economists had forecast the indicator would rise to 52.4, according to the median of 24 estimates in a Bloomberg News survey.
- European Stocks Advance as ABB, Daimler Gain on Earnings.
European stocks advanced as companies from ABB (ABBN) Ltd. to Daimler
AG posted earnings that beat estimates, while a report showed China’s
manufacturing strengthened this month more than forecast. ABB climbed 5
percent after saying profit rose 10 percent amid increasing orders in
China and Germany. Daimler added 3.3 percent after also saying sales of
its CLA compact coupe and
upgraded E-Class sedan rose. Celesio AG jumped 5.4 percent after
McKesson Corp. agreed to buy the German drug wholesaler for 3.9
billion euros ($5.4 billion). Credit Suisse Group AG lost 2.8
percent after posting profit that missed analysts’ estimates. The Stoxx Europe 600 Index increased 0.4 percent to 320.38 at the close of trading in London.
- Fed to Propose Banks Hold Ready Funds for 30-Day Credit Drought. Banks
would have to hold enough easy-to-sell assets to survive a 30-day
credit drought under a rule to be proposed today by the Federal Reserve
that may have the greatest effect on banks with big trading
operations such as JPMorgan Chase & Co. (JPM) and Goldman Sachs
Group Inc. (GS) The demand for 30 days of liquidity is intended to
satisfy global Basel III accords for strengthening the financial system.
Increasing the banks’ liquid assets is meant to make them less
vulnerable in a crisis like the one that struck in 2008.
- U.S. Mortgage Rates Fall to a Four-Month Low.
U.S. mortgage rates fell to a four-month low after a
weaker-than-expected jobs report drove investors to the safety of the
government bonds that guide borrowing costs. The average rate for a
30-year fixed mortgage dropped to 4.13 percent the week ended today from
4.28 percent, Freddie Mac said in a statement. The average 15-year rate
declined to 3.24
percent, from 3.33 percent.
- Consumer Confidence in U.S. Falls to Eight-Month Low: Economy.
Consumer confidence sank last week to the lowest level in eight months
as Americans grew more concerned the budget standoff in Washington hurt
the world’s
largest economy. The Bloomberg Consumer Comfort Index declined
to minus 36.1 in the period ended Oct. 20, the lowest since February,
from minus 34.1. The report also showed more households were pessimistic
about the economy than at any time in the past year even as lawmakers
approved a deal that ended the partial shutdown of federal agencies.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
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
