Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 12.69 +4.10%
- Euro/Yen Carry Return Index 141.07 +.04%
- Emerging Markets Currency Volatility(VXY) 8.39 -2.10%
- S&P 500 Implied Correlation 33.41 unch.
- ISE Sentiment Index 99.0 -35.29%
- Total Put/Call .76 +1.33%
Credit Investor Angst:
- North American Investment Grade CDS Index 70.73 +.54%
- European Financial Sector CDS Index 105.79 -1.17%
- Western Europe Sovereign Debt CDS Index 64.0 +1.0%
- Emerging Market CDS Index 279.12 -1.91%
- 2-Year Swap Spread 10.5 +.25 basis point
- TED Spread 17.25 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -2.75 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .07% unch.
- Yield Curve 239.0 -2 basis points
- China Import Iron Ore Spot $137.0/Metric Tonne +.15%
- Citi US Economic Surprise Index 5.00 -1.9 points
- Citi Emerging Markets Economic Surprise Index -12.10 +.5 point
- 10-Year TIPS Spread 2.20 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +126 open in Japan
- DAX Futures: Indicating +6 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech/retail sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- European Stocks Jump to Highest Since ’08.
European shares rose to their highest level in more than five years
before a publication of Federal Open Market Committee minutes later this
week. Aberdeen Asset Management Plc jumped 15 percent after Lloyds
Banking Group Plc (LLOY) agreed to sell its Scottish Widows Investment
Partnership division to the money manager. Sonova Holding AG rose 5.4
percent as the world’s largest hearing-aid maker raised its full-year
forecast and said first-half revenue beat analyst estimates. Petrofac
Ltd. (PFC) plunged 17 percent. The Stoxx Europe 600 Index increased 0.5 percent to 324.70 at the close of trading in London.
- Copper Falls After Funds Turn Bearish. Speculators
turned bearish on copper, with bets on price
declines outnumbering wagers on gains by 8,117 contracts in
futures and options in the week ended Nov. 12, U.S. Commodity Futures
Trading Commission data show. That’s the first time investors turned net
short since Sept. 17. “Money managers significantly cut their net
long positions in copper for the third week running,” Daniel Briesemann,
an analyst at Commerzbank AG, wrote in a report today. Price declines
since the Nov. 12 reporting date “point to a further
retreat on the part of speculative financial investors,” he
wrote.
The contract for delivery in three months fell 0.2 percent
to $6,995 a metric ton by 11 a.m. on the London Metal Exchange.
- WTI Declines After Reversing Earlier Advance of 0.5%. West Texas Intermediate crude declined in New York, giving up an earlier gain of 0.5 percent. WTI for December delivery fell 65 cents, or 0.7 percent, to $93.19 a barrel at 12:27 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 32 percent below the 100-day average.
- Gold Falls First Time in Three Days. Gold futures for December delivery lost 0.6 percent to
$1,279.20 an ounce at 10:54 a.m. on the Comex in New York.
Prices rose 0.2 percent last week. Trading was 39 percent below
average for the past 100 days for this time of day, data
compiled by Bloomberg showed.
Wall Street Journal:
CNBC:
Zero Hedge:
Business Insider:
Washington Examiner:
Financial Times:
- US hospitals look to provide insurance for poor patients. US hospitals look to provide insurance for poor patients.
US
hospitals are exploring ways to buy “Obamacare” insurance plans for
their sickest and poorest patients as they strain under the weight of
tens of billions of dollars in uncompensated costs from the uninsured.
But the move is opposed by the Obama administration and insurers, who
fear it could add to the turmoil surrounding the new healthcare
marketplace.
Style Underperformer:
Sector Underperformers:
- 1) Coal -3.90% 2) Gold & Silver -2.03% 3) Oil Service -1.63%
Stocks Falling on Unusual Volume:
- Q, IBKR, CHKR, MELI, STML, HOS, GOGO, FI, TRN, TRS, CRM, IGT, GBX, AGIO, CPA, GTLS, ANFI, TSLA, ARII, VNDA, XOOM, AWAY, ARUN, LNG, CRZO and REGI
Stocks With Unusual Put Option Activity:
- 1) DAR 2) TWTR 3) YRCW 4) USB 5) CRM
Stocks With Most Negative News Mentions:
- 1) TWTR 2) WMT 3) FB 4) MELI 5) TSLA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilding +1.29% 2) Steel +1.23% 3) Defense +.83%
Stocks Rising on Unusual Volume:
- ICLD, FONR, RDWR, JKS, EDU, TTS, DBD, DDD and AHT
Stocks With Unusual Call Option Activity:
- 1) TWTR 2) S 3) TSN 4) ANF 5) CLDX
Stocks With Most Positive News Mentions:
- 1) TSN 2) BA 3) MXIM 4) GOOG 5) IBM
Charts:
Weekend Headlines
Bloomberg:
- China Reform Plan Sets Scene for Local Clampdown: Economy. China’s Communist Party signaled a bigger focus on fiscal concerns during President Xi Jinping’s
tenure, setting the scene for a clampdown to control the
finances of indebted regional authorities. Local governments will be
able to sell bonds to fund
construction and officials will be rated on measures including borrowing
levels, the party said Nov. 15. An easing of the one-child policy and
extra land rights for farmers also featured in the biggest package of
reforms since at least the 1990s.
- China Homes Prices Jumped in October Led by Guangzhou, Shenzhen. New
home prices in China’s four major cities rose the most since January
2011, raising concerns of a bubble as homebuyers were emboldened by a
lack of new nationwide property curbs. New home prices in October jumped
21 percent from a year earlier in the southern city of Guangzhou and 20
percent in nearby Shenzhen, 18 percent in Shanghai and 16 percent in
Beijing, the National Bureau of Statistics said in a statement
today. Prices rose in 69 of the 70 cities tracked by the government.
Shenzhen and Shanghai this month raised minimum down payments for second
homes to 70 percent, following a similar move by Beijing in March, as
local authorities struggle to contain price gains. Housing sales
jumped 33 percent in the first 10 months of this year as Premier Li
Keqiang refrained from adding new nationwide restrictions that would hurt economic growth.
- Thailand Cuts Economic Growth Forecast as Exports Falter. Thailand
cut its growth forecast for the year after the economy expanded less
than analysts estimated last quarter and weakening exports damp the
outlook for consumption and investment. Gross domestic product rose 1.3 percent in the three months
through September from the previous quarter, the National
Economic & Social Development Board said in Bangkok today. It
revised a contraction in the second quarter to no growth
from the previous three months. GDP grew 2.7 percent from a year
earlier, compared to a median estimate of 2.9 percent in a
Bloomberg survey of 15 analysts.
- Asian Stocks Extends Two-Week High After China Reforms.
Asian stocks rose for a third day, with the benchmark index extending a
two-week high, after China vowed to carry out the broadest expansion of
economic freedoms since at least the 1990s. China Mengniu Dairy Co., a
maker of milk products, jumped 4.8 percent after policy makers pledged
to relax the nation’s one-child policy. China Galaxy Securities Co.
jumped 7.2 percent in Hong Kong as prospects for financial reform
boosted
brokerages. Dwango Co. soared by the daily limit in Tokyo for a
second day after saying Nintendo Co. bought a stake in the
company that provides content through mobile phones. The MSCI Asia Pacific Index added 0.8 percent to 142.64 as
of 12:33 p.m. in Tokyo after closing at the highest level since
Oct. 31 last week.
- WTI Drops as Saudi Arabia’s Oil Exports Surge to Eight-Year High. WTI for December delivery slid as much as 34 cents to
$93.50 a barrel in electronic trading on the New York Mercantile
Exchange and was at $93.60 at 2:34 p.m. Sydney time. The
contract climbed 8 cents to $93.84 on Nov. 15. The volume of all
futures traded was about 37 percent below the 100-day average.
- Rebar Swings as Investors Weigh China Reforms, Weak Demand.
Steel reinforcement-bar futures in Shanghai swung between gains and
losses as investors weighed China’s reform plans against weak demand in
winter. Rebar for May delivery, the most-active contract by volume on the Shanghai Futures Exchange, was little changed at 3,593
yuan ($590) a metric ton at 11:21 a.m. local time, after rising
and falling as much as 0.2 percent.
- Rubber Declines From Two-Week High as Stockpiles in China Expand.
Rubber fell from a two-week high
after data showed stockpiles in China swelled to a nine-year high,
boosting concern that demand from the largest user is waning. The contract for delivery in April on the Tokyo Commodity Exchange lost as much as 1.1 percent to 259.3 yen a kilogram
($2,586 a metric ton) and traded at 261.5 yen at 11:05 a.m.
local time.
- CME(CME) Hack Draws FBI Probe While Renewing Market Structure Anxiety. The
computer intrusion at CME Group Inc. has spurred a federal
investigation and renewed concerns about the trustworthiness of
electronic markets. The Chicago Mercantile Exchange’s owner said yesterday that
its systems were hacked in July and some customer information
was compromised. CME Group said there’s no evidence that
transactions on its electronic-trading system or its clearing
services were affected.
Wall Street Journal:
- Strains With Israel Over Iran Snarl U.S. Goals in Mideast. As Netanyahu Embraces Hollande, State Department Weighs Another Kerry Visit. The Obama administration's overtures to Iran are straining the U.S.
alliance with Israel in ways not seen in decades, compounding concerns
about the White House's ability to manage the Middle East's
proliferating security crises, said current and former American
diplomats. In a sign of Israel's growing disaffection with Washington, French
President
François Hollande
was given a hero's welcome when he arrived in Tel Aviv on Sunday
for a three-day visit that would showcase Paris's hard line against
Iran's nuclear program ahead of international talks in Geneva this week.
- High-Risk Patients Fuel More Health-Law Worry. High-Risk Health-Insurance Pools Gain Brief Second Life. So-called high-risk pools for people
rejected by commercial health-insurance companies were supposed to be
largely phased out when President Barack Obama's health law kicked in.
Instead, they are gaining a brief second life in some states due to the
problems with the federal health-insurance exchange created by the law. The
development may represent short-term good news for the law, because it
would keep some people with costly medical conditions out of the new
policies, at least temporarily. But it adds to the uncertainty for
insurers, analysts say, increasing concerns that could cause rates to
rise for everyone next year.
- UnitedHealth(UNH) Culls Doctors From Medicare Advantage Plans. Physicians in 10 States Notified; Insurer Cites 'Funding Pressure' From Federal Government.
UnitedHealth Group Inc., the nation's largest provider of privately
managed Medicare Advantage plans, has dropped thousands of doctors from
its networks in recent weeks—spurring protest from lawmakers and
physician groups and
leaving many elderly patients unsure about whether they need to switch
plans to keep seeing their doctors. Doctors
in at least 10 states have received termination letters, some citing
"significant changes and pressures in the health-care environment." The
notices also tell doctors they can appeal within 30 days. That means
many physicians and patients won't know for sure who is in or out of
UnitedHealth's Medicare Advantage networks before the open-enrollment
period to switch Medicare plans ends on Dec. 7.
- Geithner Heads to Private Equity.
Former Treasury Secretary Is Joining Warburg Pincus. Former U.S.
Treasury Secretary Timothy Geithner, one of the architects of the
federal government's rescue of the financial system, is joining
private-equity firm Warburg Pincus LLC. Mr. Geithner, who has spent
most of his career outside the private sector, said in an interview he
plans to start in March at the New York-based firm, known for its role
in buyouts of companies including eye-care firm Bausch & Lomb
Inc., luxury retailer Neiman Marcus Group Inc. and stadium
concessionaire Aramark Corp.
- On Wish List: Boost From Holiday Sales. Will American consumers give the economy a
boost in coming weeks with their holiday shopping sprees—or leave it
with a lump of coal? Many signs point
to the coal. Morgan Stanley is predicting the weakest holiday shopping
season since 2008, which was in the depth of the last recession.
Consumer sentiment dropped in November to its lowest point in nearly two
years, a preliminary reading of the Thomson-Reuters/University of
Michigan index showed.
- ObamaCare's Union Favor. The White House may let Big Labor dodge a reinsurance tax. The Affordable Care Act's greatest hits keep coming, and one that hasn't
received enough attention is a looming favor for President
Obama's
friends in Big Labor. Millions of Americans are losing their
plans and paying more for health care, and doctors are being forced out
of insurance networks, but a lucky few may soon get relief.
Marketwatch.com:
- Is Dr. Copper a liar? Dr. Copper looks sick — and needs a doctor — but according to the SPX, everything is wonderful. The world is blissful. Then again, which market is reflecting "the truth" about the underlying fundamentals? If it is the SPX, then we should expect a major upturn in
copper demand, and in copper prices. Conversely, if copper speaks the
truth — and prices continue to deteriorate, then the equity indices in
general, and the SPX in particular, are in for a rude awakening and a
forthcoming major downside reversal.
Fox News:
- Liz Cheney rips Obama on health care, says he 'lied'. (video) Republican Liz Cheney turned up the flames Sunday in her bid to win a
Senate seat in Wyoming -- suggesting President Obama lied about his
signature health care law while also taking shots at her incumbent
opponent and the liberal media.
CNBC:
- Caught in unemployment's revolving door. The long-term jobless, after all, tend to be in poorer health, and to
have higher rates of suicide and strained family relations. Even the
children of the long-term unemployed see lower earnings down the road. The consequences are grave for the country, too: lost production,
increased social spending, decreased tax revenue and slower growth.
Policy makers and academics are now asking whether an improving economy
might absorb those workers in time to prevent long-term economic damage.
Business Insider:
New York Times:
- Washington Insurance Official Is Ousted.
The insurance commissioner for the District of Columbia was dismissed
from his job just a day after he publicly questioned a decision by
President Obama to reverse a provision of the Affordable Care Act, a
person with knowledge of the events said on Sunday.
Washington Post:
- Capital gains: Spending on contracts and lobbying propels a wave of new wealth in D .C. So much money to be had if you know where to look. The avalanche of cash that made Washington rich in the last
decade has transformed the culture of a once staid capital and created a
new wave of well-heeled insiders.
The winners in the new Washington are not just the former
senators, party consiglieri and four-star generals who have always
profited from their connections. Now they are also the former
bureaucrats, accountants and staff officers for whom unimagined riches
are suddenly possible.
The Economist:
- Haunted housing.
Even big developers and state-owned newspapers are beginning to express
fears of a property bubble. IN CHINA, property prices can keep going up
forever. At least, that is
what optimists seem to think.
Financial Times:
- Yellen respite for EM may prove temporary.
Emerging markets suffered a bout of fevered selling in the summer, as
investors absorbed the import of the US Federal Reserve’s plans to start
scaling back its vast stimulus programme. Now, their malaise is
starting to look more like a persistent winter flu. Each time a run of
stronger US data prompts speculation that Fed “tapering” is imminent,
the pressure on emerging markets ratchets up – as it has this month,
sending the more fragile currencies tumbling against the dollar.
- Hedge funds get ‘too cosy’ with prime brokers.
Concerns are arising over the “cosy” relationships that tie hedge funds
to prime brokers, as claims surface that hedge funds inappropriately
reward brokers for sending new investors their way. Tens of billions of
dollars each year in indirect and direct
commissions are paid by hedge funds to brokers. And analysts, some of
whom declined to go on the record, warn that hedge funds are
incentivised to pay fat commissions and award larger trading volumes to
those that find investors for their funds.
- Federal Reserve considering a delay to Volcker rule. The
Federal Reserve is considering a delay in the compliance date for the
highly anticipated Volcker regulation, giving banks additional time to
conform
with its provisions, according to people familiar with the matter.
FAZ:
- EBA to Take Tough Stance on Europe Banks, Chief Enria Says. EBA
will take a tough stance in its bank stress tests as so far as "too few
banks in Europe have been unwound and disappeared from the market,"
Chairman Andrea Enria said. Govts "tend to keep their national banks in
the market," which has slowed the reparation process. Says EBA will test
banks "in much more detail" than previously. Says criteria for
assessing assets such as high-yield government bonds on banks' balance
sheets will be "unilateral and conservative".
The Economic Times:
Nikkei:
- Japan Considers Cutting Solar Incentive. Industry ministry may cut price that utilities pay for solar by 20% over two years.
Sydney Morning Herald:
- First-home crisis triggers call for action. (graph) A
record plunge in first-home buyer activity has sparked calls for a
national debate on housing affordability. While the housing market has
reached boom levels in a low interest-rate environment, first-home
buyers are being squeezed out of the property market, making up a
record low 6.8 per cent of new housing loan commitments in NSW in
September, a sharp fall from the peak of 34 per cent in May 2009.
Across Australia, the proportion of first-home buyers taking out loans
sank to 12.5 per cent for the month. Property prices in Sydney have
soared by 13.2 per cent over the year, according to RP Data.
Night Trading
- Asian indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 132.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 104.0 -3.5 basis points.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- Net Long-Term TIC Flows for September are estimated to rise to $20.0B versus -$8.9B in August.
10:00 am EST
- The NAHB Housing Market Index for November is estimated at 55 versus 55 in October.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Kocherlakota speaking, Fed's Plosser speaking, Fed's Dudley
speaking, Eurozone trade balance, Barclays Growth Conference, (ALTR)
investor meeting, (RAI) investor day and the (RVBD) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial industrial
shares in the region. I expect US stocks to open modestly lower and to
rally into the afternoon, finishing mixed. The Portfolio is 50%
net long heading into the week.
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising long-term rates, profit-taking,
technical selling, increasing emerging markets debt angst, more
shorting and earnings concerns. My intermediate-term trading indicators
are giving neutral signals and the Portfolio is 50% net long heading into the week.
