Bloomberg:
- EU Criticizes Spending Plans of Biggest Euro-Area Nations. The
European Union confronted the euro area’s biggest economies over
their spending plans for next year as austerity demands restrain the
bloc’s recovery from the longest recession in its history. The EU said
that Germany, Europe’s largest economy, has made “no progress” in
following recommendations to spur domestic demand, that Spain’s budget
risked
missing deficit targets and that Italy’s 2014 plan was in danger of
breaching debt-reduction rules. The budget plans of euro-area countries
“still do not pay sufficient
attention” to fiscal consolidation, EU Economic and Monetary Affairs
Commissioner Olli Rehn told reporters today in Brussels.
- Most European Stocks Rise as Stoxx 600 Climbs Sixth Week.
Most European stocks advanced, with the Stoxx Europe 600 Index rising
for a sixth consecutive week, as investors weighed U.S. industrial data
to gauge the strength of the world’s largest economy. Vivendi SA climbed
2.8 percent after posting better-than-estimated third-quarter profit
and saying it will spin off its French phone carrier SFR by July 2014.
Publicis Groupe SA rose 1.6 percent. Julius Baer Group Ltd. slipped 1.6
percent after reporting that its gross margin narrowed as it absorbed
wealth-management units acquired from Bank of America Corp. Safran SA
(SAF) lost 3.9 percent as the French state, its largest shareholder,
reduced its stake.
The Stoxx 600 added 0.2 percent to 323 at the close of
trading, with about three stocks rising for every two that fell.
- WTI Set for Longest Run of Weekly Losses Since 1998.
West Texas Intermediate crude headed for a sixth weekly decline, the
longest stretch of losses in 15 years, as rising U.S. supplies countered
speculation that the Federal Reserve will maintain stimulus of the
economy. WTI for December delivery advanced 19 cents to $93.95 a
barrel at 1:18 p.m. on the New York Mercantile Exchange. The volume of
all futures traded was 30 percent below the 100-day
average.
Wall Street Journal:
- EPA Shrinks Ethanol Mandate for First Time. The Environmental Protection Agency on
Friday proposed for the first time to ease an annual requirement for
ethanol in gasoline, acknowledging that mandated levels specified in a
2007 law are difficult, if not impossible, to meet. The
EPA is asking refiners in 2014 to blend 15.2 billion gallons of
renewable fuel—most of it ethanol—into U.S. gasoline supplies. That is
about 16% less than what Congress specified in a 2007 renewable fuels
law. The law gives EPA the ability to lower the requirement.
- The President's ObamaCare Backpedal. His proposal to allow people to keep their
health plans will not provide a political escape hatch for beleaguered
congressional Democrats.
Fox News:
- House approves ObamaCare insurance fix. The House on Friday approved a bill to let insurance companies sell
health plans that had previously been canceled due to ObamaCare
regulations, a day after President Obama moved unilaterally to fix the
problem. The bill passed 261-157. Thirty-nine Democrats crossed over to support the GOP-backed legislation.
MarketWatch:
- Fuji to end Toyota Camry production in U.S: report. Fuji
Heavy Industries Ltd. (7267.TO) is considering terminating its
production of Toyota Motor Corp.'s (7203.TO) Camry sedan at a U.S. plant
as requested by Toyota, Kyodo News reported Friday, citing Fuji
Heavy officials. Fuji, the maker of Subaru cars, started Camry
production in 2007 at the
Indiana plant which currently has an annual production capacity of
270,000 units including 100,000 units for the Camry.
CNBC:
Zero Hedge:
Business Insider:
Yahoo Finance:
Mediaite:
Reuters:
- Italy at risk of breaking EU rules, France squeezes through. Italy's draft budget plans for
2014 are at risk of breaking European Union rules, while French
draft plans barely make it, the European Commission said on
Friday. It is the first time that the
European Union's executive arm reviews the main assumptions of draft
budgets of euro zone countries before they are submitted to national
parliaments so as to assess if they are in line with EU laws.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Hospitals -1.65% 2) Disk Drives -1.76% 3) Gaming -.53%
Stocks Falling on Unusual Volume:
- LMOS, WU, GOGO, EJ, EPZM, WHZ, PNW, CHKR, GWPH, ADES, KMB, WGL, HHC, MMS, JWN, GWW, MIDD, CMGE, GSVC, WX, TYC, STML, PAMT, AMZN and HCA
Stocks With Unusual Put Option Activity:
- 1) CTL 2) IRM 3) YUM 4) SPF 5) DE
Stocks With Most Negative News Mentions:
- 1) EBAY 2) CSCO 3) PRU 4) HCA 5) BK
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Networking +1.05% 2) Biotech +.94% 3) Homebuilders +.74%
Stocks Rising on Unusual Volume:
- FRGI, VNDA, ONVO, A, FENG, YOKU, IRM, MJN, IOC, AWAY, EQIX, XON, LGND, MDRX, INFI, P, BMRN, IRM, RPTP and LNKD
Stocks With Unusual Call Option Activity:
- 1) NIHD 2) ONVO 3) IRM 4) WU 5) SPLS
Stocks With Most Positive News Mentions:
- 1) BA 2) XOM 3) T 4) WMT 5) AAPL
Charts:
Evening Headlines
Bloomberg:
- Japan’s Biggest Banks See Profit Declining in Second Half.
Mitsubishi UFJ Financial Group Inc. (8306), Sumitomo Mitsui Financial
Group Inc. (8316) and Mizuho Financial Group Inc. (8411) increased their
combined net income target by 23 percent to 2.26 trillion yen ($23
billion) for the year ending March, company statements showed. If they
achieve the goal, second-half profit will fall 46 percent to 794.3
billion yen from the first six months’ 1.47 trillion yen and drop 43
percent from a year earlier. The forecast for lower second-half
earnings reflects the banks’ uncertainty over whether Prime Minister
Shinzo Abe can sustain an economic recovery that’s been driven by
government spending and a weaker yen.
- Asian Stocks Advance as Yellen Supports U.S. Stimulus.
Asian stocks rose, with Japan’s Nikkei 225 Stock Average surging beyond
15,000 for the first time since May, after Federal Reserve chairman
nominee Janet Yellen signaled she will continue U.S. stimulus efforts.
Toyota Motor Co. (7201) climbed 1.3 percent, extending this week’s rally
to 2.9 percent, as the yen declined to a two-month low against the
dollar, boosting the earnings outlook for Japanese exporters. Dai-ichi
Life Insurance Co. surged 3.7 percent in Tokyo after the insurer raised
its profit forecast. Luk Fook Holdings (International) Ltd. climbed 7.1
percent in Hong Kong as the jewelry retailer said it expects profit will
rise. The MSCI AsiaPacific Index added 1.2 percent to 141.32 as
of 10:51 a.m. in Hong Kong, extending this week’s advance to 1.7
percent.
- Rebar Rises in Shanghai to Trim Weekly Loss as Iron Ore Rallies.
Steel reinforcement-bar futures in Shanghai advanced, narrowing a
weekly loss, as higher iron ore prices helped offset a weaker demand
outlook in winter. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, gained as much as 0.4 percent to
3,636 yuan ($597) a metric ton, before trading at 3,632 yuan at
10:28 a.m. local time. The contract lost 0.8 percent this week.
- Copper Pares Weekly Drop as Yellen Signals Continued Stimulus.
Copper rose for a second day, paring a weekly decline, after Federal
Reserve Chairman nominee Janet Yellen backed U.S. stimulus measures
until the economy improves. The contract for delivery in three months on
the London
Metal Exchange rose as much 0.6 percent to $7,035.25 a metric
ton and traded at $7,029.25 at 10:17 a.m. in Beijing. The two-day rebound helped trim this week’s loss to 1.9 percent.
- Germany Digs in Against Risk Sharing in EU Bank-Failure Debate. Germany
argued against a joint
backstop for struggling euro-area banks as European finance
ministers renewed their debate on how to handle the costs of managing
failed lenders. German Finance Minister Wolfgang Schaeuble called on his
colleagues to rein in their ambitions for the Single Resolution
Mechanism proposed by the European Commission, which includes a
common fund filled by levies on the financial industry. He said
an agreement among European Union member states is possible by
year-end as long as they don’t insist on a European fund now.
- Big Banks’ Use of Bailouts Show Need for New Rules, Senators Say. Big
banks’ disproportionate reliance
on U.S. aid after the credit crisis reinforces the need for additional
steps to ensure the end of too big to fail, Senators Sherrod Brown and
David Vitter said today. Brown and Vitter, co-sponsors of a bill that would impose a 15 percent capital requirement on the biggest U.S. lenders,
commented after the release of a Government Accountability
Office study that showed such firms made greater use of bailout
programs introduced after markets collapsed in 2008.
- Under Armour(UA) Buying MapMyFitness in $150 Million Deal. Under
Armour Inc. (UA) agreed to buy MapMyFitness Inc. for $150 million as
the maker of athletic apparel looks to compete with Nike Inc. (NKE) in
offering fitness buffs a way to measure their training and performance
online. MapMyFitness, founded in 2007, designs applications that
allow athletes to record and share their workouts using global-positioning technology, according to a statement from Under
Armour. Closely held MapMyFitness has about 20 million
registered users worldwide, who can measure their training on
more than 400 devices, sensors and wearables.
- Yellen Says Review of Bank Commodity Activity Could Bring Limits. The Federal Reserve may consider
limits on bank ownership and trading of physical commodities out
of concern that an event such as an oil spill could undermine
financial stability. “We are involved in a very comprehensive review” of
banks’ commodities activity, Fed Vice Chairman Janet Yellen said
today at a Senate hearing on her nomination to become chairman
of the central bank. “We want to make sure that these are
conducted in a safe and sound manner, and we may be involved in
additional rulemaking as we complete this review.”
- Japan Sets Emissions Target in Setback to UN Treaty Talks. Japan set a new target for greenhouse gas emissions that critics say will set back United
Nations talks for a treaty limiting fossil fuel emissions. The new target effectively reverses course from the goal
set four years ago by allowing a 3.1 percent increase in
emissions from 1990 levels rather than seeking a 25 percent cut.
Wall Street Journal:
- CIA's Financial Spying Bags Data on Americans. Information on International Money Transfers Includes Financial and Personal Data of Americans. The
Central Intelligence Agency is building a
vast database of international money transfers that includes millions
of Americans' financial and personal data, officials familiar with the
program say. The program, which collects information from U.S.
money-transfer companies including Western Union, WU -0.34% is carried
out under the same provision of the Patriot Act that enables the
National Security Agency to collect nearly all American phone records,
the officials said. Like the NSA program, the mass collection of
financial transactions is
authorized by a secret national-security court, the Foreign Intelligence
Surveillance Court.
- NSA Fallout: Tech Firms Feel a Chill Inside China. Big U.S. computer and software companies are
reporting a sudden chill in sales to China, and some blame increased
government hostility toward the U.S. In the latest sign,
computer-networking-gear maker Cisco Systems Inc. CSCO -10.96% said
Wednesday that orders from China in the latest quarter fell 18% from the
same period a year earlier. Cisco further projected revenue
world-wide would decline 8% to 10% in the current quarter, in part
because of continued weakness in China.
Barron's:
Fox News:
CNBC:
- Holiday outlook bleak for Wal-Mart(WMT), Kohl's(KSS). This holiday season may not be one of joy for some big retailers as the
aftermath of the recession—low job growth and higher payroll taxes—has
lower-income shoppers struggling to make ends meet and cautious about
splashing out.
Zero Hedge:
Business Insider:
NY Times:
- U.S. Investigates Currency Trades by Major Banks. From their desks at some of the world’s biggest banks, traders
exchanged a series of instant messages that earned them the nickname
“the cartel.” Much like companies that rigged the price of vitamins and animal
feed, the traders were competitors that hatched alliances for their own
profits, federal investigators suspect. The group of traders, the investigators say, shared a mission to
alter the price of foreign currencies, the largest and yet least
regulated market in the financial world. And ultimately, they flooded
the market with trades that potentially raised the cost of currency for
clients but aided the banks’ own investments.
IFR:
- Hunt for yield reaches fever pitch. Investors and bankers last week shrugged off concerns of a credit
bubble forming and insisted that bumper supply volumes were unlikely to
diminish before the end of the year, with issuers keen to pre-empt
macroeconomic risks and make use of welcoming market conditions. Since
the beginning of October, issuance in the euro and sterling markets by
high-yield, corporate and financial institutions has reached US$115bn,
according to Thomson Reuters data, just US$22bn short of the total
issued in both October and November last year.
Real Clear Politics:
Reuters:
- Nordstrom(JWN) tempers 2013 same-store sales view, stock down. Nordstrom Inc on Thursday reported a lower quarterly profit, due in part to the earlier timing of its Anniversary Sale, and took down the top end of its
full-year forecast for sales at established stores.
Nordstrom shares fell 1.7 percent to $62.36 in extended
trading.
Financial Times:
- Hopes for faster global growth dashed. Disappointing
growth figures in the eurozone and Japan driven by weak export numbers
have dashed hopes that a global economic recovery would gather pace in
the second half of the year.
Telegraph:
Evening Recommendations
Stifel:
- Rated (LNKD) Buy, target $300.
- Rated (YELP) Buy, target $85.
Night Trading
- Asian equity indices are +.25% to +1.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 134.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 107.50 -4.0 basis points.
- NASDAQ 100 futures +.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for November is estimated to rise to 5.0 versus 1.52 in October.
- The Import Price Index for October is estimated to fall -.5% versus a +.2% gain in September.
9:15 am EST
- Industrial Production for October is estimated to rise +.2% versus a +.6% gain in September.
- Capacity Utilization for October is estimated at 798.3% versus 78.3% in September.
- Manufacturing Production for October is estimated to rise +.2% versus a +.1% gain in September.
10:00 am EST
- Wholesale Inventories for September are estimated to rise +.4% versus a +.5% gain in August.
Upcoming Splits
Other Potential Market Movers
- The Eurozone GDP/Germany IFO, Eurozone CPI and the (GE) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.32 -1.60%
- Euro/Yen Carry Return Index 140.39 +.60%
- Emerging Markets Currency Volatility(VXY) 8.87 -2.21%
- S&P 500 Implied Correlation 33.70 -6.26%
- ISE Sentiment Index 144.0 +23.08%
- Total Put/Call .83 +2.47%
Credit Investor Angst:
- North American Investment Grade CDS Index 72.03 +.02%
- European Financial Sector CDS Index 109.13 -.34%
- Western Europe Sovereign Debt CDS Index 62.33 -2.61%
- Emerging Market CDS Index 291.85 -2.26%
- 2-Year Swap Spread 11.0 unch.
- TED Spread 16.75 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .07% unch.
- Yield Curve 241.0 -1 basis point
- China Import Iron Ore Spot $136.60/Metric Tonne +.37%
- Citi US Economic Surprise Index 11.50 -6.5 points
- Citi Emerging Markets Economic Surprise Index -12.10 +3.8 points
- 10-Year TIPS Spread 2.19 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +219 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and (EEM) short
- Market Exposure: Moved to 75% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Networking -2.81% 2) Coal -1.76% 3) Education -1.73%
Stocks Falling on Unusual Volume:
- CSCO, CRAY, XLNX, CTXS, CIEN, WGL, CAVM, TTS, EPZM, MGAM, GWR, KSS, PRCP, SEAS, AFCE, SDT, WGL, ALGN, SFUN, PEGA, RNR, NTES, FNSR, AVGO, VIAB, BWC, LMIA, PAMT, EZCH and LULU
Stocks With Unusual Put Option Activity:
- 1) MJN 2) LOW 3) XLF 4) XLV 5) ORCL
Stocks With Most Negative News Mentions:
- 1) KSS 2) TTS 3) NTES 4) FFIV 5) LULU
Charts: