Style Underperformer:
Sector Underperformers:
- 1) Hospitals -2.64% 2) Homebuilders -2.35% 3) Biotech -2.15%
Stocks Falling on Unusual Volume:
- IEP, RSE, ALSN, LH, GMLP, POST, GNE, JOY, ENTA, LUX, HRB, AVP, PDCE, XRS, COST, BRE, DGX, IOC, DDC, PBYI, SNN, ZIV, ICFI, ENZY, ULTA, GILD, TOWR, THC, GDP and PCYC
Stocks With Unusual Put Option Activity:
- 1) FIO 2) JOY 3) SHLD 4) JNK 5) KRE
Stocks With Most Negative News Mentions:
- 1) MU 2) HRB 3) EA 4) LH 5) MOS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +.66% 2) Airlines +.03% 3) Retail -.20%
Stocks Rising on Unusual Volume:
- NRF, SNI, MA, KND and RKUS
Stocks With Unusual Call Option Activity:
- 1) AAL 2) SHLD 3) JOY 4) AFSI 5) CVS
Stocks With Most Positive News Mentions:
- 1) BA 2) CAT 3) CSCO 4) PSX 5) LMT
Charts:
Evening Headlines
Bloomberg:
- Riot Exposes Dark Side of Singapore's Boom.
From all appearances, Singapore seems to have dealt with the nation’s
first riot since 1969 with its usual efficiency. The streets of Little
India -- where an Indian migrant worker was killed by a bus on Sunday
night, sparking two hours of mayhem -- have been cleared of debris. The
government has called for a commission to investigate the
incident, and has charged 24 Indian nationals with rioting. Officials
have banned the sale of alcohol in the area this weekend. Citizens have
been instructed to remain calm.
- HSBC Sells 8% Stake in Bank of Shanghai to Spain’s Santander. (graph) HSBC
Holdings Plc (HSBA), Europe’s largest bank, agreed to sell its 8
percent stake in Bank of Shanghai Co. to Banco Santander SA (SAN) as it
exits minority investments to boost profitability. HSBC didn’t disclose a price for the shareholding valued at about $468 million on its balance sheet, according to a
statement from the London-based bank yesterday. The lender paid
about $63 million in 2001 for the stake.
- China’s Stocks Drop Most in Month as Coal Shares Pace Declines.
China’s stocks fell, sending the benchmark index towards its biggest
loss in a month, as investors assess the outcome of a high-level
government meeting that will decide economic policies for next year.
China Shenhua Energy Co. (601088) and China Coal Energy Co., the biggest
coal producers, dropped 1.5 percent after the nation’s economic planner
announced measures to curb consumption of the fuel next year because of
worsening air pollution. Citic Securities Co. (600030), China’s biggest
listed brokerage, slid 3.4 percent. Shanghai Waigaoqiao Free Trade Zone
Development Co. plunged 4.1 percent, paring this year’s rally to 273
percent. All 10 industry groups in the CSI 300 Index declined. The
Shanghai Composite Index (SHCOMP) dropped 1.1 percent to 2,211.88 at
11:30 a.m. local time, heading for the biggest loss
since Nov. 13.
- Asian Stocks Slide With Metals as Yen Extends Advance.
Asian stocks fell for the first time
in three days and precious metals declined as investors weighed the
outlook for a paring of Federal Reserve stimulus after American
lawmakers unveiled a budget deal. The yen gained versus major peers. The MSCI Asia Pacific Index slid 0.8 percent as of 12:55 p.m. in Tokyo, with Japan’s Topix (TPX) index retreating 1 percent as
the yen rose against the euro and the dollar.
- Rebar Falls for Second Day as Weaker China Data Spurs Selling. Steel reinforcement-bar futures
declined from the highest level in almost two months as weaker-than-estimated factory output in China spurred selling. Rebar
for May delivery, the most-active contract on the Shanghai Futures
Exchange, dropped as much as 0.7 percent to 3,691 yuan ($608) a metric
ton and traded at 3,697 yuan at 10:05 a.m. local time.
- EU Finance Chiefs Lay Down Red Line on Creditor-Writedown Rules. European Union finance ministers
said they won’t accept any weakening of planned rules for
creditor writedowns at failing banks, potentially hampering
compromise talks with the European Parliament. German Finance Minister Wolfgang Schaeuble and his Dutch
counterpart, Jeroen Dijsselbloem, were among those to urge a
tough line on a bill called the Bank Recovery and Resolution
Directive, or BRRD, ahead of negotiations tomorrow in
Strasbourg, France. Lithuania, which holds the rotating
presidency of the EU, is seeking to strike a deal with EU
lawmakers on the legislation as a foundation for further
measures to centralize decision taking for stricken banks.
- Volcker Rule Seen as Boon for $1,000-an-Hour Wall Street Lawyers.
For Wall Street law firms including Debevoise, whose senior partners
have billed clients more than $1,000 an hour in the past, as well as
Sullivan & Cromwell LLP and Davis Polk & Wardwell LLP, the final
Volcker rule offers an opportunity for
new business and additional fees. Hundreds of lawyers will be
needed to interpret the rule, establish models for compliance
and find new strategies for securities firms with $44 billion at
stake from market-making activities.
- Volcker Rule Shift Lets Banks Continue Muni Bond Speculation. U.S. financial regulations that curb banks’ ability to
speculate with their own money included an exemption for the $3.7
trillion municipal bond market after issuers complained the rules could increase borrowing costs.
The Volcker Rule, issued today by regulators, allows banks to invest in
securities issued by states, localities and government agencies. The change is a victory for borrowers and municipal securities dealers
that pressed regulators to broaden the exemption. Without it, agencies
that sell bonds for public works projects said they might have faced
higher borrowing costs by eliminating banks as investors.
- Keystone Foe Podesta Joins Obama Inner Circle as Top Aide. John Podesta’s return to the White
House, aimed at bolstering President Barack Obama, places an
opponent of the Keystone XL pipeline within his circle just as
the administration weighs whether to approve the project. The Democratic veteran, who previously served as President
Bill Clinton’s chief of staff, joins the administration as
Obama’s approval ratings have fallen to all-time lows after the
fumbled rollout of the Patient Protection and Affordable Care
Act. White House spokesman Jay Carney said Podesta, 64, will
advise on a range of issues, “with a particular focus on issues
of energy and climate change.”
- IBM(IBM) Says Economy Remains Discouraging.
International Business Machines Corp. (IBM), the world’s largest
provider of computing services, continues to face economic challenges as
it tries to reignite declining sales, Senior Vice President Erich
Clementi said. Demand for technology services, IBM’s biggest source
of revenue, “depends on what the economic climate is, and that has not
been very encouraging,” Clementi said at a Bank of Montreal conference in New York yesterday. “Europe has shown signs of recovery. North America has been a little more uncertain.”
Wall Street Journal:
- Deal Brings Stability to U.S. Budget. Congressional Negotiators Avert January Shutdown and Soften Sequester Cuts; Airline Fees to Climb. House
and Senate negotiators, in a rare
bipartisan act, announced a budget agreement Tuesday designed to avert
another economy-rattling government shutdown and to bring a dose of
stability to Congress's fiscal policy-making over the next two years.
Sen. Patty Murray (D., Wash.) and Rep. Paul Ryan (R., Wis.), who struck
the deal after weeks of private talks, said it would allow more spending
for domestic and defense programs in
the near term, while adopting deficit-reduction measures over a decade
to offset the costs.
- Crackdown in Kiev Follows Bid at Compromise. Security forces stormed an encampment of
protesters gathered in the Ukrainian capital's central square early
Wednesday, hours after top western diplomats had met President
Viktor Yanukovych
to call for a nonviolent resolution to the country's worst
political crisis in nearly a decade. Riot
police wearing black helmets and carrying shields took up positions
around the square about 1 a.m. local time and gradually began pushing
through makeshift barricades. The hundreds of protesters then on the
square, some wearing orange hard hats hastily gathered for their
defense, shouted "shame" as the sounds of police chain saws cutting
their wooden barriers rose in the freezing weather.
- FDIC Details Bailout Plans Without Taxpayer Funds. Regulator to Maximize Use of Funding From Private Debt Markets.
Federal regulators provided the strongest
indication yet about how they plan to dismantle large financial firms on
the verge of collapse without a taxpayer bailout. On
Tuesday, the Federal Deposit Insurance Corp.'s board unanimously
approved a draft plan of how it would keep parts of a failing
institution open, prioritize payments to creditors and recapitalize the
firm. The agency, which asked for public comment on the plan, is
authorized by the 2010 Dodd-Frank financial-overhaul law to take over a
failing firm and help prevent its collapse from rippling through the
financial system.
Fox News:
- Lawmakers unveil tentative budget deal, call for rolling back sequester. Congressional negotiators on Tuesday announced a tentative budget
deal that would avoid a partial government shutdown, but also begin to
unravel hard-fought spending cuts. The lead negotiators -- Senate
Budget Committee Chairwoman Patty
Murray, D-Wash., and House Budget Committee chairman Paul Ryan, R-Wis.
-- detailed the specifics of the proposal at an evening press
conference.
MarketWatch.com:
- Good luck buying big city real estate next year. The lower cap on FHA mortgages will hit city dwellers hardest. The Department of Housing and Urban Development announced on Friday that
it will lower the loan limits for its Federal Housing Administration
mortgage — a loan used by many first-time and lower-income home buyers —
from $729,750 to $625,500. The FHA insures mortgages that banks give to
borrowers who make small down payments. Congress raised FHA mortgage
caps six years ago in the wake of the downturn.
CNBC:
- MasterCard(MA) raises dividend by 83%; shares rise. MasterCard, the world's No.2 credit and debit card company, raised its quarterly dividend by 83 percent and announced a new $3.5 billion share buyback program, sending its shares up 3 percent in extended trading. The company, which also announced a 1-for-10 stock split, raised its
quarterly dividend by 50 cents to $1.10 per share.
Zero Hedge:
Business Insider:
Washington Examiner:
CNN:
Reuters:
- Odd-lot trades add 3 pct volume to consolidated tape. Transactions in trades of less
than 100 shares boosted reported volume by 3 percent on the
first day that "odd lots" were included in the public
dissemination of stock quotes and sale prices, trading data
showed on Tuesday. Almost one out of every six trades, or 17.5 percent, that
were reported on Monday to the "consolidated tape" were odd
lots, according to the Consolidated Tape Association, a group
that includes all the U.S. stock exchanges, among others.
Telegraph:
South China Morning Post:
- City commercial lenders 'in danger of bankruptcy'. Many urban commercial banks on the mainland are in "danger of
bankruptcy" as they become the biggest victims of a mounting local
government debt problem, with local authorities struggling to repay
debts estimated to total 20 trillion yuan (HK$25.5 trillion), Haitong
International Securities chief economist Hu Yifan said. Hu told a Foreign Correspondents' Club lunch yesterday that these
banks, controlled by governments, were "the most dangerous part" of the
mainland's banking system because they were most at risk in the event of
local government debt defaults. There were 144 such banks on the
mainland last year. "Those banks usually have a high incentive to lend to the property
market," she said. "On the management level, they are not as good as the
Big Five. In the coming two to three years, mergers and acquisitions of
such banks will be a big trend." Local government debt, borrowed from the banks and poured in large
part into thin-margin infrastructure projects, accounts for up to 40 per
cent of the mainland's gross domestic product, Hu estimates. "China now has about 50 cities constructing railways and 18 airports
under construction," Hu said, adding that the money borrowed to build
them was "highly unlikely to be collected". Meanwhile, a property tax would be a "golden bullet" to help the deleveraging process, Hu said. The central government could allow the Guangzhou, Shenzhen and
Hangzhou city governments to introduce trial property taxes early next
year and then expand the programme to more cities to boost local
government revenue, she said.
China Securities Journal:
- China
Should Drop Proactive Fiscal Policy. China should phase out its
proactive fiscal policy and stick to the principle of keeping fiscal
revenue and expenditures in basic equilibrium in long term to gradually
reduce the country's fiscal deficit, says a front-page commentary
written by reporter Zhang Chaohui.
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 132.0 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 104.25 -1.75 basis points.
- NASDAQ 100 futures -.04%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory decline of
-2,719,000 barrels versus a -5,585,000 barrel decline the prior week.
Gasoline supplies are expected to rise by +1,862,000 barrels versus a
+1,828,000 barrel gain the prior week. Distillate supplies are estimated
to rise by +986,000 barrels versus a +2,649,000 barrel gain the prior
week. Finally, Refinery Utilization is estimated to rise by +.48% versus
a +3.0% gain the prior week.
2:00 pm EST
- The Monthly Budget Deficit for November is estimated at -$140.0B.
Upcoming Splits
Other Potential Market Movers
- The
10Y $21B Treasury auction, Australian Unemployment, Jack Lew testimony
regarding IMF, weekly MBA mortgage applications report, Morgan Stanley
REIT summit, (MRO) analyst day, (HRB) investor day, (HD) investor
conference, (DAL) investor day and the (CBI) investor day could also
impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by real estate 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 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.14 +4.82%
- Euro/Yen Carry Return Index 147.62 -.23%
- Emerging Markets Currency Volatility(VXY) 8.86 -1.34%
- S&P 500 Implied Correlation 50.71 +.32%
- ISE Sentiment Index 87.0 -31.5%
- Total Put/Call .77 -18.09%
Credit Investor Angst:
- North American Investment Grade CDS Index 67.68 +.65%
- European Financial Sector CDS Index 94.98 -1.54%
- Western Europe Sovereign Debt CDS Index 61.18 -.24%
- Emerging Market CDS Index 282.42 -1.80%
- 2-Year Swap Spread 9.0 -.25 basis point
- TED Spread 17.5 -1.75 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap 2.5 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .07% +2.0 basis points
- Yield Curve 250.0 -5.0 basis points
- China Import Iron Ore Spot $139.40/Metric Tonne unch.
- Citi US Economic Surprise Index 33.0 unch.
- Citi Emerging Markets Economic Surprise Index -14.70 +.5 point
- 10-Year TIPS Spread 2.11 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -95 open in Japan
- DAX Futures: Indicating +4 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM), (QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Restaurants -1.38% 2) Oil Tankers -1.33% 3) Software -1.02%
Stocks Falling on Unusual Volume:
- ARCC, IEP, BURL, LL, VIPS, WNR, PBY, SYY, CASY, MORN, MCK, TPLM, NXPI, POST, GASS, MEI, MTN, SQI, SBUX, CUB, TCP, BIG, ABC, ABM, SRCL, TDS, DGX, GILD, DAR and CPB
Stocks With Unusual Put Option Activity:
- 1) FOXA 2) BZH 3) SPLS 4) BRCM 5) JOY
Stocks With Most Negative News Mentions:
- 1) ETR 2) LULU 3) BBRY 4) DGX 5) MORN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +4.18% 2) Coal +1.42% 3) Internet +.56%
Stocks Rising on Unusual Volume:
- RMBS, EVTC, ORBK, OSIS, CAH, ULTA, TRN, AAP, JKS, BIDU, HDS, TWTR, RGLD and NOG
Stocks With Unusual Call Option Activity:
- 1) RMBS 2) ADBE 3) ACAS 4) SPLS 5) LAMR
Stocks With Most Positive News Mentions:
- 1) AAL 2) INTC 3) BAC 4) BURL 5) DDD
Charts:
