Indices
- Russell 2000 1,131.38 -1.0%
- S&P 500 High Beta 29.27 -.44%
- Wilshire 5000 18,930.84 -.09%
- Russell 1000 Growth 840.34 -.07%
- Russell 1000 Value 906.95 +.05%
- S&P 500 Consumer Staples 441.96 +.09%
- Morgan Stanley Cyclical 1,409.51 -1.61%
- Morgan Stanley Technology 874.07 +.73%
- Transports 7,200.41 -.49%
- Bloomberg European Bank/Financial Services 102.83 -3.79%
- MSCI Emerging Markets 41.62 -1.43%
- HFRX Equity Hedge 1,141.52 -.64%
- HFRX Equity Market Neutral 947.03 -.37%
Sentiment/Internals
- NYSE Cumulative A/D Line 193,738 -1.21%
- Bloomberg New Highs-Lows Index -169 -784
- Bloomberg Crude Oil % Bulls 24.0 -8.01%
- CFTC Oil Net Speculative Position 307,539-1.79%
- CFTC Oil Total Open Interest 1,636,454 +.98%
- Total Put/Call .86 +6.17%
- OEX Put/Call 2.96 +294.67%
- ISE Sentiment 148.0 -9.76%
- Volatility(VIX) 13.79 +.66%
- S&P 500 Implied Correlation 50.08 -7.74%
- G7 Currency Volatility (VXY) 8.27 +.73%
- Emerging Markets Currency Volatility (EM-VXY) 9.16 +3.74%
- Smart Money Flow Index 11,922.53 -1.36%
- ICI Money Mkt Mutual Fund Assets $2.702 Trillion +.90%
- ICI US Equity Weekly Net New Cash Flow -$1.356 Billion -222.71%
Futures Spot Prices
- Reformulated Gasoline 272.69 +2.34%
- Bloomberg Base Metals Index 188.22 +1.30%
- US No. 1 Heavy Melt Scrap Steel 360.67 USD/Ton unch.
- China Iron Ore Spot 139.20 USD/Ton -.22%
- UBS-Bloomberg Agriculture 1,377.47 -.61%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 2.9% +20 basis points
- Philly Fed ADS Real-Time Business Conditions Index .1818 +1.56%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 120.19 +.35%
- Citi US Economic Surprise Index 32.50 +25.6 points
- Citi Emerging Markets Economic Surprise Index -13.70 +1.3 points
- Fed Fund Futures imply 36.0% chance of no change, 64.0% chance of 25 basis point cut on 12/18
- US Dollar Index 80.31 -.41%
- Euro/Yen Carry Return Index 147.08 +1.30%
- Yield Curve 255.0 +9 basis points
- 10-Year US Treasury Yield 2.86% +12 basis points
- Federal Reserve's Balance Sheet $3.889 Trillion +.17%
- U.S. Sovereign Debt Credit Default Swap 30.03 -1.24%
- Illinois Municipal Debt Credit Default Swap 169.0 -9.28%
- Western Europe Sovereign Debt Credit Default Swap Index 64.0 +6.67%
- Asia Pacific Sovereign Debt Credit Default Swap Index 106.19 -.29%
- Emerging Markets Sovereign Debt CDS Index 239.50 +2.12%
- Israel Sovereign Debt Credit Default Swap 103.0 -5.07%
- Egypt Sovereign Debt Credit Default Swap 622.41 -2.12%
- China Blended Corporate Spread Index 337.75 -12.75 basis points
- 10-Year TIPS Spread 2.12% -4.0 basis points
- TED Spread 18.5 +.25 basis point
- 2-Year Swap Spread 8.75 -1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap .5 +4.0 basis points
- N. America Investment Grade Credit Default Swap Index 69.97 +.60%
- European Financial Sector Credit Default Swap Index 100.94 +3.97%
- Emerging Markets Credit Default Swap Index 291.88 -.44%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 110.0 unch.
- M1 Money Supply $2.619 Trillion +.31%
- Commercial Paper Outstanding 1,049.80 -.90%
- 4-Week Moving Average of Jobless Claims 322,300 -9,500
- Continuing Claims Unemployment Rate 2.1% unch.
- Average 30-Year Mortgage Rate 4.46% +17 basis points
- Weekly Mortgage Applications 392.10 -12.8%
- Bloomberg Consumer Comfort -31.30 +2.4 points
- Weekly Retail Sales +3.90% +40 basis points
- Nationwide Gas $3.26/gallon -.02/gallon
- Baltic Dry Index 2,145 +24.78%
- China (Export) Containerized Freight Index 1,055.34 -1.02%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 +6.67%
- Rail Freight Carloads 207,888 -22.36%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (9)
- OMED, PBYI, MEI, CONN, BRE, GIII, PGI, FRX and VRNT
Weekly High-Volume Stock Losers (16)
- SP, DFRG, BOBE, TAHO, ECOL, IMKTA, TAXI, OSIR, MYGN, LDOS, BIG, TITN, EXPR, KKD, CIE and SHLD
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.89 -7.89%
- Euro/Yen Carry Return Index 146.91 +1.28%
- Emerging Markets Currency Volatility(VXY) 9.20 unch.
- S&P 500 Implied Correlation 50.68 -3.89%
- ISE Sentiment Index 210.0 +61.54%
- Total Put/Call .90 +16.88%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.30 -4.31%
- European Financial Sector CDS Index 100.84 -1.57%
- Western Europe Sovereign Debt CDS Index 64.0 +6.67%
- Emerging Market CDS Index 291.25 -2.68%
- 2-Year Swap Spread 8.75 -.25 basis point
- TED Spread 18.50 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap .75 +1.75 basis points
Economic Gauges:
- 3-Month T-Bill Yield .06% +1 basis point
- Yield Curve 256.0 -1 basis point
- China Import Iron Ore Spot $139.20/Metric Tonne -.22%
- Citi US Economic Surprise Index 32.50 +16.0 points
- Citi Emerging Markets Economic Surprise Index -13.70 +.1 point
- 10-Year TIPS Spread 2.12 -1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +290 open in Japan
- DAX Futures: Indicating +5 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/medical sector longs
- Disclosed Trades: Covered some of my (IWM), (QQQ) hedges and some of my (EEM) short
- Market Exposure: Moved to 75% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Retail -.91% 2) Oil Tankers -.78% 3) Coal -.45%
Stocks Falling on Unusual Volume:
- GMLP, ULTA, RALY, NDLS, BIG, FIVE, SEAC, COO, PFPT, BKS, OSIS, BITA, UBNT, CEQP, AEO, NOG, IDT, FLT, NGL, YOKU, GTLS, GPS, BCO, FDO, CUB and FSS
Stocks With Unusual Put Option Activity:
- 1) FOX 2) BKS 3) AEO 4) ISRG 5) CHRW
Stocks With Most Negative News Mentions:
- 1) BKS 2) GPS 3) BG 4) LULU 5) FANG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.16% 2) Computer Hardware +1.55% 3) Construction +1.23%
Stocks Rising on Unusual Volume:
- AGX, XXIA, ROC, CONN, LL, UIS, ANAC and EA
Stocks With Unusual Call Option Activity:
- 1) EPI 2) JDSU 3) DAN 4) KMX 5) SWHC
Stocks With Most Positive News Mentions:
- 1) SHLD 2) AAPL 3) NOC 4) INTC 5) LNKD
Charts:
Evening Headlines
Bloomberg:
- Kuroda $235,000 Salary Highlights Goldman Concern. The
central bank chief’s pay is about 24 million yen
($235,000) for the year ending March 31, down from an inflation-adjusted
39 million yen in fiscal 1998, based on a BOJ statement on Nov. 29.
Swaps signal an average inflation rate of 1.2 percent over the coming
five years, compared with 2.03 percent in the U.S. and 1.38 percent in the euro zone. Japan’s cost of living rose in October by the most in five years even as salaries extended declines from June 2012,
threatening to derail Prime Minister Shinzo Abe’s efforts to
sustain a recovery in the world’s third-largest economy.
- Japan Economy Chief Amari Faces Surgery With Reforms Undone. Japan’s economy chief will undergo surgery for cancer as soon as next week, casting a cloud over
the future of a politician charged with crafting plans to revamp
industrial regulation and liberalize trade rules. Akira Amari, 64, told reporters in Tokyo yesterday that he
has been diagnosed with an early stage of tongue cancer, and
submitted his resignation only to see Prime Minister Shinzo Abe
reject it. Amari has served as Abe’s point man for the growth-strategy pillar of the government’s campaign to end two decades
of economic stagnation.
- China Reforms Seen Adding Less Than Half Point to Growth. China’s broadest economic reforms
since the 1990s will add less than half a percentage point to
annual growth this decade, a survey showed, underscoring the
likelihood of a cut in the nation’s expansion target.
Fourteen of 19 economists see policies from a Communist
Party summit last month boosting gross domestic product either
by a negligible amount or less than 0.5 percent a year compared
with their previous outlook, according to the Bloomberg News
survey.
- China Swap Rate Rises Most This Week Since June as Cash Drained.
China’s interest-rate swaps rose the most since June this week as the
central bank drained funds from the banking system, and on speculation
the government will speed up the process of relaxing controls on
borrowing costs. The People’s Bank of China withdrew a net 47 billion
yuan ($7.7 billion) this week, after injecting 17 billion yuan last
week. It suspended sales of 14-day reverse-repurchase agreements
yesterday after conducting the operation for two weeks. The PBOC said in
a Dec. 2 statement that financial institutions in a free trade zone in
Shanghai will get priority in issuing large-denomination negotiable
certificates of deposit. The one-year interest-rate swap, the fixed
payment needed to receive the floating seven-day repo rate, climbed 26
basis points, or 0.26 percentage point, this week to 4.78 percent as of
10:36 a.m. in Shanghai, data compiled by Bloomberg show.
That’s the biggest increase since June 21. It advanced one basis
point today. The cost of the five-year swap rose to a record
4.94 percent.
- China’s Stocks Fall Most in Three Weeks as Coal Shares Decline.
China’s stocks fell the most in three weeks, led by coal and financial
shares, as money-market rates climbed before trade data.
Environmental-protection stocks rose as record-high levels of pollution
in Shanghai forced health warnings and cancelled flights. China Shenhua
Energy Co., the biggest coal producer, slid the most in six weeks. Citic
Securities Co. and Haitong Securities Co., the two largest brokerages,
sank more than 3 percent after rallying earlier this week on regulators’
plan to resume initial public offerings. Fujian Longking Co., which
makes pollution control equipment, rallied 2.1 percent. The Shanghai Composite Index (SHCOMP) slipped 0.6 percent to
2,233.30 at the 11:30 a.m. break, heading for the biggest loss
since Nov. 13 and paring this week’s gain to 0.6 percent.
- Asian Stock Swing From Gains to Losses on Fed Stimulus.
Asian stocks swung between gains and losses, with the regional
benchmark index set for its biggest weekly drop since August, as
improving U.S. economic data fueled speculation the Federal Reserve may
bring forward stimulus cuts. Qantas Airways Ltd. dropped 1.2 percent,
adding to yesterday’s 11 percent drop, after Standard & Poor’s cut
its credit rating on Australia’s largest carrier to junk status. Nufarm
Ltd. slid 1.1 percent in Sydney after Credit Suisse Group AG cut its
rating on the supplier of farm chemicals. Advantest Corp. jumped 6.3
percent on a newspaper report that cost cuts by the Japanese maker of
semiconductor equipment helped reduce its break-even point. The MSCI Asia Pacific Index added 0.1 percent to 139.69 as of 11 a.m. in Tokyo, after falling 0.1 percent.
- Rubber Pares Weekly Gain as Strong Yen, Tapering Bets Cut Appeal. Rubber pared a second weekly advance
on speculation that improving U.S. economic data may bring
forward stimulus cuts while a strengthening Japanese currency
reduced the appeal of yen-based contracts. Futures for delivery in May on the Tokyo Commodity Exchange
lost as much as 1.4 percent to 270.5 yen a kilogram ($2,656 a
metric ton) before trading at 273.4 yen at 11:20 a.m. local
time.
- China Rebar Heads for Third Weekly Gain as Iron Ore Cost Rises.
Steel reinforcement-bar futures in Shanghai headed for a third weekly
advance after iron ore prices rallied to the highest in almost four
months. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, traded little changed at 3,691 yuan
($606) a metric ton at 10:41 a.m. local time.
- German Wage Accord Seen Risking Job Cuts That Foil Aims. Germany’s
nationwide minimum wage to be introduced by Chancellor Angela Merkel’s
third-term coalition risks killing jobs while failing to narrow income
inequality, German economists say. The 8.50 euro ($11.55) per hour
wage floor set in her governing pact with the Social Democrats “would
not even out inequalities in the disposable incomes of private
households or significantly reduce poverty,” according to the
Berlin-based
DIW economic institute. A potential increase in unemployment
will depend on exceptions to the general rule, it said.
- Two Regional Fed Presidents Call for Timetable for Tapering QE. Two Federal Reserve regional bank
presidents who have disagreed on the need for additional easing
said any decision to taper bond buying should be accompanied by
a limit on the size of the program or a timetable for ending it. “If
and when the FOMC arrives at a decision to wind down
asset purchases, it’s my view that it will be helpful to the
transition process to provide as much certainty as possible
about how this will be done,” said Atlanta Fed President Dennis
Lockhart, referring to the Federal Open Market Committee, in a speech in
Fort Lauderdale, Florida. He has backed record stimulus and won’t vote
on policy until 2015.
- Citi(C), Wells Fargo(WFC) Sued by L.A. for Discriminatory Lending. Citigroup Inc. and Wells Fargo & Co.
were accused of discriminatory mortgage lending by the city of
Los Angeles, which seeks damages for reduced property tax
revenue and the costs of maintaining foreclosed properties. The city filed complaints against both banks today in
federal court in Los Angeles. Citigroup and Wells Fargo have
been engaged in discriminatory lending to minority borrowers
since at least 2004, which placed the borrowers in loans they
couldn’t afford and caused a high number of foreclosures in
minority neighborhoods, Los Angeles said.
Wall Street Journal:
- Nelson Mandela Dies at 95. Nelson Mandela,
who rose from militant antiapartheid activist to become the
unifying president of a democratic South Africa and a global symbol of
racial reconciliation, died at his Johannesburg home following a lengthy
stay at a Pretoria hospital, the government said Thursday. He was 95. In a state television address, President Jacob Zuma said Mr. Mandela had died that evening after a long illness. "Our nation has lost its greatest son. Our people have lost a father," said Mr. Zuma, dressed in a dark jacket and reading his statement in deep
somber tones. "Although we knew that this day would come, nothing can
diminish our sense of a profound and enduring loss."
- Volcker Rule to Require CEOs Guarantee Compliance. Decision Marks Latest Setback for Wall Street Firms. The Volcker rule will require bank
executives to guarantee their firms are in compliance with the
regulation, said people familiar with the rule, another setback for Wall
Street firms that lobbied against such a requirement. The
inclusion of so-called CEO attestation is intended to help increase
accountability at firms by ensuring that top executives know what types
of trades are occurring at their firms, these people said.
Barron's:
MarketWatch.com:
Zero Hedge:
Commentary:
Passauer Neue Presse:
- Schaeuble Says Interest Rates Too Low for Germany. Interest rates are too low for Germany over the long term, citing German Finance Minister Wolfgang Schaeuble as saying in an interview. Sees too much liquidity in global markets.
Yonhap News:
- N. Korea seen expanding activity in Yongbyon nuclear site. North Korea seems to be notably expanding activities at its main nuclear complex in Yongbyon, a U.S. think tank said Thursday, based on analysis of new satellite imagery.
The revelation adds to worries that the communist nation may be turning
back to a provocation cycle after months of unanswered peace overtures
towards Washington.
Kyodo:
- Japan DPJ Considers No-Confidence Motion Against Cabinet. The
opposition Democratic Party of Japan is considering submitting a
no-confidence motion against Prime Minister Shinzo Abe's Cabinet to the
lower house of parliament.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 137.0 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 110.0 -1.0 basis point.
- NASDAQ 100 futures +.14%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Change in Non-Farm Payrolls for November is estimated to drop to 185K versus 204K in October.
- The Unemployment Rate for November is estimated at 7.2% versus 7.3% in October.
- Average Hourly Earnings for November is estimated to rise +.2% versus a +.1% gain in October.
- Personal Income for October is estimated to rise +.3% versus a +.5% gain in September.
- Personal Spending for October is estimated to rise +.2% versus a +/2% gain in September.
- The PCE Core for October is estimated to rise +.1% versus a +.1% gain in September.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for December is estimated to rise to 76.0 versus 75.1 in November.
3:00 pm EST
- Consumer Credit for October is estimated at $14.55B versus $13.737B in September.
Upcoming Splits
Other Potential Market Movers
- The Fed's Evans speaking, Fed's Plosser speaking, German Factory Orders report, (ITW) annual meeting and the (ADT) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.30 +4.08%
- Euro/Yen Carry Return Index 145.07 unch.
- Emerging Markets Currency Volatility(VXY) 9.20 +.46%
- S&P 500 Implied Correlation 52.90 -2.74%
- ISE Sentiment Index 139.0 +15.83%
- Total Put/Call .77 -12.60%
Credit Investor Angst:
- North American Investment Grade CDS Index 72.10 +1.89%
- European Financial Sector CDS Index 102.62 +3.09%
- Western Europe Sovereign Debt CDS Index 60.0 -2.65%
- Emerging Market CDS Index 299.27 -1.98%
- 2-Year Swap Spread 9.0 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -1.0 +1.75 basis points
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 257.0 +2 basis points
- China Import Iron Ore Spot $139.50/Metric Tonne -.14%
- Citi US Economic Surprise Index 16.50 +11.2 points
- Citi Emerging Markets Economic Surprise Index -13.80 -1.6 points
- 10-Year TIPS Spread 2.13 unch.
Overseas Futures:
- Nikkei Futures: Indicating -57 open in Japan
- DAX Futures: Indicating -3 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech sector longs and emerging markets shorts
- Market Exposure: 25% Net Long
