Style Outperformer:
Sector Outperformers:
- 1) Restaurants +.62% 2) Utilities +.42 3) Networking +.28%
Stocks Rising on Unusual Volume:
- ENDP, ORIG, OTEX, VSI, GTAT, KERX, PMC, RBCN, AOL, KORS, CSOD, ECA, YRCW, HDS, FANG, DDD, RBA, VSI, AEL, DATA, REGN and XONE
Stocks With Unusual Call Option Activity:
- 1) TMUS 2) DNR 3) GTAT 4) HTZ 5) LF
Stocks With Most Positive News Mentions:
- 1) AOL 2) REGN 3) BA 4) KORS 5) DDD
Charts:
Evening Headlines
Bloomberg:
- BOJ Struggles to Convince on 2% as Abenomics Shine Fades. Half
a year after Bank of Japan Governor Haruhiko Kuroda unleashed record
monetary easing, economists see the bank failing to meet its inflation
target, underscoring the case for stronger steps to revive the economy.
While the median estimate of BOJ board members released last week
showed the bank expects consumer prices to rise 1.9 percent in the 2015
fiscal year -- in line with a 2-percent-in-two-years goal laid out in
April -- just two of 34 analysts surveyed by Bloomberg News seethe
target met in that timeframe.
- JGBs Declared Dead by Mizuho as Kuroda Hides Risks: Japan Credit.
Mizuho Securities Co. said Bank of Japan dominance has killed the
nation’s sovereign bond market, leaving it unable to reflect either the
success of stimulus policies or fiscal risks. Monthly trading of
Japanese government bonds among the biggest holders including banks and
insurers shrank to 37.9 trillion yen ($385 billion) last quarter, the
least on record going back to 2004, according to Japan Securities
Dealers Association data. Totan Research Co. and Spiro Sovereign
Strategy also said BOJ monetary stimulus is cutting the tie
between economic fundamentals and bonds, which yield 0.6 percent
for 10 years, the least in the world.
- Japan Watchdog Begins Probe of Megabanks Amid Crime Loan Scandal.
Japan’s financial regulator started inspecting the nation’s three
largest banks today after finding Mizuho Financial Group Inc. failed to
end loans to gangsters. The probe covers Mitsubishi UFJ Financial
Group Inc. and Sumitomo Mitsui Financial Group Inc., Japan’s biggest and
second-largest lenders, as well as Mizuho, which last week submitted a
plan to the Financial Services Agency outlining
measures to improve internal controls.
- Double Whammy
Widens Bank Spreads Most Since 2011: China Credit. Chinese banks'
borrowing costs are climbing at the fastest pace in two years as
competition for deposits hurts earnings at a time of increasing bad
loans. The extra yield investors demand to hold five-year AAA bonds
instead of similar-maturity sovereigns increased 31 basis points to 1.55
percentage points in September and October, the biggest two-month jump
since a 48 basis point urge in the period through September 2011. The
average yield on the lenders' debt advanced 34 basis points last month,
the most since August 2012, to a two-year high of 5.62%. That compares
with 4.1% for top-rated U.S. banks.
- Asia Stocks Drop as China Shares Fall; Copper Rebounds.
Asia’s benchmark stock index fell for a fourth day as Chinese shares
retreated and the yen gained. Copper snapped three days of losses while
Australia’s dollar weakened and precious metals advanced. The MSCI Asia Pacific Index slid 0.2 percent by 12:33 p.m. in Tokyo, after rising as much as 0.5 percent. Hong Kong’s Hang Seng Index dropped 0.8 percent and the Shanghai Composite Index
slid 0.7 percent.
- Rebar Falls on Concern China Property Controls May Reduce Demand.
Steel reinforcement-bar futures in China fell for the first time in
three days on concern that the government may step up property curbs,
reducing demand for the building material. Rebar for May delivery, the most-active contract by volume
on the Shanghai Futures Exchange, declined as much as 0.6
percent to 3,654 yuan ($599) a metric ton before trading at
3,667 yuan at 11:19 a.m. local time.
- Cotton Slumping as Glut Expands Record China Hoard: Commodities. China
is hoarding a record amount of cotton to aid farmers as global
production exceeds demand for a fourth consecutive year, increasing the
risk of a supply surge that would tip prices into a bear market. The biggest producer and user will have 12.7 million metric tons in inventory by July 31, 62 percent of the global total and
enough to make about 71 billion t-shirts, the U.S. Department of
Agriculture estimates. The government may end its stockpiling
program the following season, Macquarie Group Ltd. says. Prices
will drop 10 percent to 69.5 cents a pound in a year, according
to the median of 12 analyst estimates compiled by Bloomberg.
- Treasuries Recover From Bottom Rank as Surprise Index Declines. Treasuries rebounded over the past
two months from their rank as the world’s worst-performing bonds
as a measure of U.S. economic data showed figures are falling
short of expectations by the most since July.
Debt due in 10 years and more gained 4.1 percent in the
period, No. 34 of 144 indexes complied by the European
Federation of Financial Analysts Societies and Bloomberg. The
securities are the biggest losers for 2013 with a 9.2 percent
loss. The Citigroup Economic Surprise Index fell to negative 3.8
yesterday as economic data trailed analysts’ estimates by the
most since July 30.
Wall Street Journal:
- Young Avoid New Health Plans. Early Buyers of Coverage Are Older Than Expected, Raising Expense Concerns. Early Buyers of Coverage Are Older Than Expected, Raising Expense Concerns.
- Microloans Catch On in Europe, Too. Idea Spreads Beyond Developing World to Help Jobless Europeans, as Traditional Credit Dries Up. Microloans, a lifeline usually associated with the world's poorest
countries, are growing across Europe, giving tens of thousands of people
like
Fátima Fernández
a chance to start small businesses and avoid falling into
poverty.
Fox News:
- Gunman opens fire inside popular New Jersey mall.
A gunman reportedly dressed in black body armor opened fire inside the
Garden State Plaza Mall in Paramus, N.J. Monday night, New Jersey State
Police reported. Paramus Mayor Richard LaBarbiera said no injuries were reported and the mall was being swept for the gunman. Police and SWAT teams swarmed the scene.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- CF Industries(CF) profit falls 42 pct as nitrogen sales slip. U.S. fertilizer producer CF Industries
reported a 42 percent drop in quarterly profit on Monday
as nitrogen sales and prices slipped, due to weak global
fertilizer markets. Lower fertilizer prices, combined with buyer expectations that they will fall further, and competition from a high volume
of Chinese nitrogen exports, resulted in a weaker quarter
year-over-year, the company said.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 137.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 107.75 +4.25 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- The ISM Non-Manufacturing Composite for October is estimated to fall to 54.0 versus 54.4 in September.
- The IBD/TIPP Economic Optimism Index for Nov. is estimated to rise to 42.0 versus 38.4 in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Lacker speaking, Fed's Williams speaking, Australia trade report, BoJ minutes, weekly retail sales reports and the (UTEK) analyst day could also impact trading today.
BOTTOM LINE: Asian
indices are mostly lower, weighed down by technology and industrial
shares in the region. I expect US stocks to open mixed 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: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.03 -1.88%
- Euro/Yen Carry Return Index 138.94 +.05%
- Emerging Markets Currency Volatility(VXY) 8.53 -.61%
- S&P 500 Implied Correlation 38.81 -3.67%
- ISE Sentiment Index 112.0 unch.
- Total Put/Call .75 -18.48%
Credit Investor Angst:
- North American Investment Grade CDS Index 73.39 -.27%
- European Financial Sector CDS Index 114.36 -1.92%
- Western Europe Sovereign Debt CDS Index 68.0 -.56%
- Emerging Market CDS Index 274.48 -1.15%
- 2-Year Swap Spread 11.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -5.0 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 230.0 -1 basis point
- China Import Iron Ore Spot $135.80/Metric Tonne +.37%
- Citi US Economic Surprise Index -3.80 -9.1 points
- Citi Emerging Markets Economic Surprise Index -12.50 -3.7 points
- 10-Year TIPS Spread 2.14 unch.
Overseas Futures:
- Nikkei Futures: Indicating +124 open in Japan
- DAX Futures: Indicating +8 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical/retail sector longs
- Market Exposure: 50% Net Long
Bloomberg:
- Shiller’s Bubble Warning Dismissed in Loan Surge: Brazil Credit. Brazil’s President Dilma Rousseff is
disregarding warnings about a housing bubble and is stoking
demand instead by helping people buy more homes as prices surge. The government increased the price limit of houses people
can buy using the unemployment insurance fund on Sept. 30 after
public lending for homes increased more than four times as much
as private banks in the two years through June, to 202 billion
reais ($90 billion), according to central bank data. Rousseff’s homebuilding program has propelled demand as she
seeks to stimulate the economy before next year’s presidential
election. Robert Shiller, six weeks before winning the Nobel
Prize for economics, cautioned that such demand may be fueling a
bubble as home prices grow twice as fast as rent. Mortgage debt
as a percentage of disposable household income has climbed to a
record 15 percent, almost double the level at the start of
Rousseff’s term.
- Former Chinese Commander Warns of War If Japan Shoots Down Drone.
A retired Chinese military commander
warned Japan that attacking China’s drones would represent the “first
shot” of a war, adding to tensions over islands claimed by both sides in
the East China Sea. China should attack Japanese planes over the
islands as a “minimum response,” Wang Hongguang, former deputy commander
of the Nanjing military region, wrote in the Global Times today. Japan
Prime Minister Shinzo Abe should be “mentally prepared,” Wang wrote.
“China has many kinds of
countermeasures from low intensity to high intensity.” The
Global Times said in July that Wang had retired recently.
- Swiss Banks May Shrink on Higher Leverage, JPMorgan Says. UBS
AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest
banks, may have to shrink their fixed-income, currencies and commodities
activities if the nation’s regulator imposes higher leverage ratios
than currently planned, according to JPMorgan Chase & Co. (JPM) analysts.
- European Stocks Climb to Five-Year High as HSBC Rallies.
European stocks rose to a five-year high as HSBC Holdings Plc reported
increased profit and investors awaited this week’s interest-rate
decision from the European Central Bank. HSBC climbed the most in two
months as Europe’s biggest bank said pretax profit gained 30 percent.
PostNL NV rallied 7.8 percent after the Dutch postal operator raised its
income guidance. Ryanair Holdings Plc (RYA) tumbled the most in five
years
after cutting its earnings forecast amid higher competition and
a weaker economy. UBS AG and Credit Suisse Group AG fell.
The Stoxx Europe 600 Index gained 0.3 percent to 322.5 at
the close of trading, the highest since May 2008.
- Commodity Index Drops as Dollar Slips, Treasuries Advance. Industrial metals led a gauge of
commodities to a four-month low, while the dollar fell and
Treasuries rose, as investors assessed economic data for clues
to the next policy moves from central banks. U.S. shares
fluctuated while European stocks closed at a five-year high. The S&P GSCI Index of 24 commodities lost 0.2 percent to
611.07 at 12:57 p.m. in New York as copper slid 1.3 percent and natural gas sank 2.3 percent. The Bloomberg U.S. Dollar Index, a
gauge of the currency against 10 major peers, fell 0.2 percent
after climbing for six straight days in its longest rally since
May. Ten-year Treasury yields decreased three basis points to
2.60 percent.
- Seattle May Be First Big City Where Burger Flippers Get $31,200. In Seattle, supporting a $15-an-hour
minimum wage could be suicide for politicians. It’s too low. Ed Murray, who’s running for mayor, vows to phase in that
minimum for many jobs if he’s elected tomorrow. Incumbent Mike McGinn has declared he may not necessarily stop at $15. Much of the U.S. would scoff at mandating a full-time pay
equivalent of $31,200 a year, but in the biggest metropolitan
area in the Pacific Northwest it’s an idea taken very seriously.
- SAC Agrees to Plead Guilty to End Insider-Trading Case.
Billionaire Steven A. Cohen's SAC Capital Advisors LP, the hedge fund
accused of fostering a culture of rampant insider trading, has agreed to
plead guilty to securities fraud and wire fraud, pay a record $1.8
billion
and shutter its investment advisory business.
Wall Street Journal:
- Google’s(GOOG) Schmidt on NSA, China, North Korea. Google Inc. Executive
Chairman Eric Schmidt bristled at reports that the U.S. government
allegedly spied on the company’s data centers, saying such an act is
“outrageous” and could be a breach of the law if proven true. “It’s
really outrageous that the national security agency was looking between
the Google data centers if that’s true. The steps that the organization
was willing to do without good judgment to pursue its mission and
potentially violate people’s privacy, it’s not okay,” Mr. Schmidt told
The Wall Street Journal in an interview in Hong Kong. “The Snowden’s
revelations have assisted us in understanding that it’s perfectly
possible that there are more revelations to come.”
Fox News:
- Top hospitals opt out of ObamaCare. The Obama administration has been claiming that insurance companies will
be competing for your dollars under the Affordable Care Act, but
apparently they haven’t surveyed the nation’s top hospitals.
CNBC:
Zero Hedge:
Business Insider:
Washington Post:
- For consumers whose health premiums will go up under new law, sticker shock leads to anger. Americans who face higher insurance costs under President Obama’s
health-care law are angrily complaining about “sticker shock,”
threatening to become a new political force opposing the law even as the
White House struggles to convince other consumers that they will
benefit from it. The growing backlash involves people whose plans are being discontinued
because the policies don’t meet the law’s more-stringent standards.
They’re finding that many alternative policies come with higher premiums
and deductibles.
USA Today:
Reuters:
- Italy eyes 'Google(GOOG) Tax' to help fix public finances. Italy's largest
ruling party has proposed legislation to raise government revenues by
making it more expensive for multinational online companies like Google, Amazon and Yahoo to do business there.
A bill tabled by the center-left Democratic Party (PD) aims to raise at
least 1 billion euros through a law, dubbed the "Google Tax", obliging
companies that advertise and sell online in Italy to do so only through
agencies with a tax presence in the country.
- METALS-Copper falls on uncertain demand outlook for China. Copper fell for a third consecutive
session on Monday due to a drop in the euro, but remained firmly within a
range that has persisted for months on uncertainty about the outlook
for demand from top consumer China. Benchmark copper on the London Metal Exchange closed at $7,149 a tonne, down from a last bid of $7,240 on Friday.
- Saudi minister demands Iran leave Syria. Saudi Foreign Minister Prince Saud al-Faisal on Monday demanded that Iran leave Syria, saying Tehran was helping President Bashar al-Assad strike his own people.
Financial Times:
- Strong euro poses risk to recovery, Fabrizio Saccomanni warns. Italy’s
finance minister has warned of the risks of a strengthening euro to
Europe’s fragile recovery, urging the European Central Bank to ease
monetary policy to help the continent’s small and medium enterprises. The comments by Fabrizio Saccomanni come less than two weeks
after the euro hit a two-year high against the dollar. The single
currency has pared back some of its gains, but remains more than 2 per
cent higher than at the beginning of the year.
Telegraph:
ARD:
- ECB's Asmussen Says Interest Rates are Too Low in Germany.
Germany is being "seen as a safe haven, capital is flowing into
Germany," European Central Bank Executive Board member Joerg Asmussen
says in an interview.
Xinhua:
- Party Urges China to Curb Extravagant Official Spending. Chinese
Communist Party recently issued a notic on curbing problems related with
"formalism, bureaucracy, laxity and extravagance." The notice bans
using public funds to hold extravagant banquets. The notice calls for
curbs on excessive construction of government buildings. the notice
calls for strict controls on spending on government cars.
Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -2.23% 2) Semis -.37% 3) Biotech -.23%
Stocks Falling on Unusual Volume:
- WRLD, RYAAY, BPI, UBS, RNF, CS, GVA, NQ, FBRC, IDCC, EDMC, ELLI, FLDM, GTLS, EPAY, ICGE, DD, CVRR, MW, BSFT, NPO, VSI, KORS, CLMT, MSG and PENN
Stocks With Unusual Put Option Activity:
- 1) CVC 2) AOL 3) XME 4) FDX 5) NVDA
Stocks With Most Negative News Mentions:
- 1) AVP 2) AMZN 3) ICE 4) NTAP 5) AFL
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +2.41% 2) Steel +1.98% 3) Homebuilders +1.89%
Stocks Rising on Unusual Volume:
- TPH, BRY, VECO, CVA, SFY, GTI, LINE, VMC, RLGY, ZLTQ, CSIQ, SYY, SCTY, X, FSLR, NUAN, QLIK, SPWR, HWAY, WLT, AOL, GRPN and VOLC
Stocks With Unusual Call Option Activity:
- 1) DNR 2) AKS 3) STZ 4) TPX 5) MAT
Stocks With Most Positive News Mentions:
- 1) K 2) AAPL 3) LMT 4) T 5) MON
Charts:
