Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -4.08% 2) Steel -3.14% 3) Gaming -3.12%
Stocks Falling on Unusual Volume:
- WPC, ORMP, WWE, GLOG, QCLN, VNDA, CNQR, UFS, CSC, DEO, SOXX, AKAM, XIV, BCEI, MAT, BID, ADEP, WRB, LTM, EV, SZYM, ITMN, PCCC, AMZN, CCJ, OKE, FEYE, HMSY, SKYW, MNTA, MW, MDVN, EVR, CPHD, OZM, IRF, ITMN, SLCA, BLUE, CVLT, BCEI, WPC, SFG, MAN, WHR, URI, RGA, UBSI, MAT, AMG, PFPT, BCO, EV, BYD, WWD, LPLA, RJF, IM, KEX, ESI, SPW, JW/A, WETF, PII, RHI, FMER, GT, MTW, JAH, ASBC, ATW and LUK
Stocks With Unusual Put Option Activity:
- 1) FAST 2) EMR 3) AKAM 4) FITB 5) DXJ
Stocks With Most Negative News Mentions:
- 1) GPC 2) DAL 3) TGT 4) FOSL 5) CSCO
Charts:
Weekend Headlines
Bloomberg:
- China Manufacturing Gauge Falls to Six-Month Low. A
Chinese manufacturing gauge fell to
a six-month low in January as output and orders slowed, adding to signs
that government efforts to rein in excessive credit will cool growth in
the world’s second-largest economy. The Purchasing Managers’ Index (EC11CHPM) was at 50.5, the National
Bureau of Statistics and China Federation of Logistics and
Purchasing said Feb. 1 in Beijing. That matched the median
estimate of analysts surveyed by Bloomberg News and compared
with December’s 51 reading.
- Cost of Bearish Chinese ETF Bets Surges as Growth Slows.
Options traders are paying the most
in six months to protect against declines in the largest Chinese
exchange-traded fund on concern economic growth is slowing amid a
selloff in emerging-market equities. Puts hedging against a 10
percent decline on the iShares China Large-Cap ETF cost 5.8 points more
than calls betting on a 10 percent increase, according to
three-month implied volatility data compiled by Bloomberg. The Bloomberg
China-US Equity Index (EC11CHPM) of the most-traded Chinese stocks in
the U.S. fell 1 percent last week, led by Sina Corp. (SINA) The gauge
dropped 8.4 percent in
January, the worst monthly slide since 2012.
- China-Japan Relations Reach Low Point, Chinese Official Says. China’s relationship with Japan is
“probably at its worst” amid a territorial dispute and the
Communist government will take action to maintain stability in
the region, a senior Chinese official said. Fu Ying, chairwoman of the Foreign Affairs Committee of
China’s National People’s Congress, told a panel at the Munich
Security Conference today that the government in Beijing would
“respond effectively to any provocation” that risked upsetting
the “order of tranquility” in East Asia.
- S. Korea Crackdown on Underground Economy Stokes Angst: Economy.
Extra pressure on groups from bar owners to doctors to mom-and-pop retailers contrasts with Park’s 2012 election-campaign
focus on reducing the scope of industrial groups, known as
chaebol, to create space for small- and medium-sized businesses.
The clampdown may have the opposite effect, said Jean Lim, a
Seoul-based economist at Korea Institute of Finance, a non-profit research center.
- Dollar Rises Most Since May as Taper Fuels Emerging-Markets Rout.
The dollar had its biggest monthly
gain against a basket of peers since May as a global selloff of
emerging-market currencies prompted investors to seek the
relative safety of haven assets. “The dollar has benefited from the
broad-based flight out
of risk assets and into safer ones,” Omer Esiner, chief market analyst
in Washington at the currency brokerage Commonwealth Foreign Exchange
Inc., said yesterday in a phone interview. “That we didn’t really get even an acknowledgment of the selloff in emerging markets by the Fed shows that it sees little
risk of contagion at this point, which is also dollar-positive.”
- Asian Stocks Extend January Rout After China Factory Data.
Asian stocks fell, with the regional benchmark gauge extending its
steepest monthly slump since May, after a slowdown in Chinese
manufacturing growth added to concern a global economic recovery is
faltering. Hokkaido Electric Power Co. (9509) slumped 8.4 percent,
leading losses on the MSCI Asia Pacific Index, as the Japanese utility
forecast a full-year loss. Hyundai Merchant Marine Co., the biggest
shareholder in a company that ran tours to North Korea’s Mount Geumgang
resort, the site of reunions in 2010 between families separated by war,
fell 4.2 percent in Seoul after North Korea didn’t respond to South
Korea’s suggested dates for a new round of reunions. Fanuc Corp.
advanced 3.3 percent in Tokyo after orders at the factory-robotics maker
topped projections. The MSCI Asia Pacific Index lost 0.5 percent to 134.14 at
10:01 a.m. in Tokyo, heading for the lowest close since Sept. 6.
- Record Momentum Unwinding in S&P 500 as China Quashes Euphoria. After U.S. stocks gained 30 percent last year and almost everything
went up, measures of Standard & Poor’s 500 Index price momentum are
slipping just as concern mounts that emerging markets will snuff out the rally. Almost
160 companies in the benchmark gauge for American equities traded below
their average level over the past 200 days last week, more than any
time last year, when stocks posted the biggest rally since the
technology bubble, according to data compiled by Bloomberg. A total of 86 stocks set one-year highs as the
index hit a record Jan. 15. That’s down from an average of 112 when
peaks were reached in the third quarter.
- Hedge Funds Raising Gold Wagers Dump Copper: Commodities. Hedge funds raised bullish gold
wagers by the most since July and sold copper holdings as
emerging-market turmoil boosted concern the global economy will
slow and increased demand for precious metals as a haven. The
net-long position in gold jumped 40 percent to 60,672
futures and options in the week ended Jan. 28, U.S. Commodity
Futures Trading Commission data show. Long wagers rose 5.5 percent to
the highest since September, and short bets dropped 16 percent.
Net-bullish copper holdings tumbled 62 percent as shorts gained by the
most in 11 weeks.
- Copper Set for Longest Slump Since 1996 on China Manufacturing. Copper fell for a ninth day, the
longest losing streak since January 1996, after manufacturing
slowed in China, the world’s largest user of base metals. Aluminum traded near a four-year low. Copper for delivery in three months on the London Metal
Exchange slid as much as 0.4 percent to $7,035 a metric ton and
was at $7,045 at 10:31 a.m. in Tokyo. The industrial metal, used
in wires and pipes, lost 4 percent in January, the most since
June, extending a 7.2 percent drop in 2013.
- Rubber Reaches 16-Month Low as China Manufacturing Growth Slows. Rubber fell to the lowest level since
September 2012 after data showed Chinese manufacturing dropped
to a six-month low, adding to concerns that demand may weaken
from the largest consumer.
Futures for delivery in July lost as much as 1.9 percent to 223.1
yen a kilogram ($2,181 a metric ton) on the Tokyo Commodity Exchange,
the lowest price for a most-active contract in 16 months. Prices traded
at 223.7 yen by 10:14 a.m. local time. The commodity used in tires
entered a bear market last week and tumbled 17 percent in January.
- U.S. 10-Year Yield Falls Most Since 2011 on Emerging-Market Rout. Treasury 10-year yields dropped the
most since August 2011 as uneven economic data and an exodus
from emerging-market assets fueled demand for the safety of U.S. government securities. Benchmark
10-year yields reached the least in 12 weeks as growth slowed in China
and Russia and as central banks in India, Turkey and South Africa sought
to stem capital outflows, as the Federal Reserve cut bond purchases.
U.S. central bank policy makers expressed optimism about improved U.S.
economic growth
before a Labor Department report on Feb. 7 forecast to show an
increase of 180,000 in January nonfarm payrolls.
- German,
French Banks Broke Pact on Greek Debt. German, French, Dutch lenders
sold Greek debt in 2010, breaching govt promise, citing minutes of IMF
meeting from May that year.
Wall Street Journal:
- Michael Barone: How ObamaCare Misreads America. The Washington elites who designed the law must be bewildered: Why doesn't everyone behave as they do?
People learn from their mistakes. Or they can—and should. Which is the
reason we should try to learn from the revelations of mistakes about
health care and health insurance since the passage of ObamaCare. The
evidence is not all in. But it seems that Americans are not behaving as
ObamaCare's architects—and many critics—expected.
Fox News:
- ‘Not even a smidgen of corruption’: Obama downplays IRS, other scandals. President Obama, in an interview with Fox News’ Bill O’Reilly, tried to
put behind him the scandals that have hung over his second term,
suggesting his administration did not mislead the public on the Benghazi
attack and going so far as to say the IRS targeting scandal had “not
even a smidgen of corruption.”
CNBC:
- Japan in danger of missing 2020 budget target. Japan is on course to break a pledge to balance its budget by 2020,
according to a new government forecast that sets up a battle between
fiscal hawks at the ministry of finance and doves in the cabinet of
Shinzo Abe, prime minister.
Business Insider:
- LIVE: Thousands Of Companies Around The World Reveal The Truth About The Global Economy.
New York Times:
- Banks Could Still Face Tougher Capital Requirements to Prevent Crises.
Ever since the end of the 2008 financial crisis, the world’s leaders
have searched for ways to shore up the banking system. Earlier this
month, the committee that sets standards for the global financial system
proposed changes to a crucial indicator of bank risk in a way that
critics considered a sop to big European lenders like Deutsche Bank.
Washington Post:
- UN says more than 733 Iraqis killed in January. The United Nations said Saturday that at least 733 Iraqis were killed
during violence in January, even when leaving out casualties from an
embattled western province. The figures issued Saturday by the U.N.’s mission to Iraq show
618 civilians and 115 members of the security forces were killed in
January. But the UNAMI statement excluded deaths from ongoing fighting
in Anbar, due to problems in verifying the “status of those killed.” The
figures also leave out insurgent deaths.
Reuters:
- Jos. A. Bank(JOSB) says no benefit in commencing negotiations with Men's Wearhouse(MW). Jos. A. Bank Clothiers Inc
on Sunday rejected yet another offer by rival Men's
Wearhouse Inc, the latest in a prolonged acquisition
battle between the two men's clothing retailers. In response to Men's Wearhouse offer last week that it is
open to sweetening its spurned buyout offer under certain
conditions, Jos. A. Bank said the proposal was still
undervaluing the company.
Telegraph:
- Currency crisis at Chinese banks 'could trigger global meltdown’. A rise in foreign funding at China's banks poses a threat for international
lenders. The growing problems in the Chinese banking system could spill over into a
wider financial crisis, one of the most respected analysts of China’s
lenders has warned. Charlene Chu, a former senior analyst at Fitch in Beijing and now the head of
Asian research at Autonomous Research, said the rapid expansion of
foreign-currency borrowing meant a crisis in China’s financial system was
becoming a bigger risk for international banks.
Night Trading
- Asian indices are -1.0% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 151.0 +1.75 basis points.
- Asia Pacific Sovereign CDS Index 116.0 +1.0 basis point.
- NASDAQ 100 futures +.16%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:58 am EST
- Final Markit US PMI for January is estimated at 53.9 versus a prior estimate of 53.7.
10:00 am EST
- ISM Manufacturing for January is estimated to fall to 56.0 versus 57.0 in December.
- ISM Prices Paid for January is estimated to rise to 54.0 versus 53.5 in December.
- Construction Spending for December is estimated unch. versus a +1.0% gain in November.
Afternoon:
- Total Vehicle Sales for January are estimated to rise to 15.7M versus 15.3M in December.
Upcoming Splits
Other Potential Market Movers
- The Eurozone Manufacturing PMI and RBA rate decision could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial
and technology shares in the region. I expect US stocks to open
modestly higher and to weaken into the afternoon, finishing modestly
lower. 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 earnings
concerns, rising global growth fears, a stronger yen, increasing
emerging markets/European debt angst and technical selling. My
intermediate-term trading indicators are giving neutral signals and the
Portfolio is 50% net long heading into the week.
S&P 500 1,782.59 -.43%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 1,130.88 -1.16%
- S&P 500 High Beta 29.48 +.79%
- Wilshire 5000 18,787.80 -.40%
- Russell 1000 Growth 838.59 -.32%
- Russell 1000 Value 893.55 -.37%
- S&P 500 Consumer Staples 419.15 -1.66%
- Morgan Stanley Cyclical 1,416.05 +.31%
- Morgan Stanley Technology 890.81 -.95%
- Transports 7,289.18 +.42%
- Bloomberg European Bank/Financial Services 108.32 -.50%
- MSCI Emerging Markets 38.56 -1.47%
- HFRX Equity Hedge 1,154.20 -1.47%
- HFRX Equity Market Neutral 957.26 +.25%
Sentiment/Internals
- NYSE Cumulative A/D Line 198,396 -.41%
- Bloomberg New Highs-Lows Index 17 -134
- Bloomberg Crude Oil % Bulls 25.81 -44.86%
- CFTC Oil Net Speculative Position 351,146 +3.26%
- CFTC Oil Total Open Interest 1,591,971 -1.32%
- Total Put/Call .87 -3.33%
- ISE Sentiment 98.0 +24.05%
- Volatility(VIX) 18.41 +1.49%
- S&P 500 Implied Correlation 59.35 +3.45%
- G7 Currency Volatility (VXY) 8.44 +1.81%
- Emerging Markets Currency Volatility (EM-VXY) 10.21 +4.29%
- Smart Money Flow Index 11,559.36 -2.64%
- ICI Money Mkt Mutual Fund Assets $2.706 Trillion -.07%
- ICI US Equity Weekly Net New Cash Flow $2.45 Billion
- AAII % Bulls 32.2 -15.6%
- AAII % Bears 32.8 +37.9%
Futures Spot Prices
- Reformulated Gasoline 263.14 -1.57%
- Heating Oil 299.71 -5.30%
- Bloomberg Base Metals Index 186.59 -2.71%
- US No. 1 Heavy Melt Scrap Steel 399.0 USD/Ton +4.18%
- China Iron Ore Spot 122.60 USD/Ton -1.05%
- UBS-Bloomberg Agriculture 1,334.07 +.79%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 4.3% +10 basis points
- Philly Fed ADS Real-Time Business Conditions Index .1246 -5.82%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 120.28 -.11%
- Citi US Economic Surprise Index 49.0 -13.6 points
- Citi Emerging Markets Economic Surprise Index 12.50 +5.8 points
- Fed Fund Futures imply 36.0% chance of no change, 64.0% chance of 25 basis point cut on 3/19
- US Dollar Index 81.31 +1.03%
- Euro/Yen Carry Return Index 143.58 -1.66%
- Yield Curve 231.0 -7 basis points
- 10-Year US Treasury Yield 2.64% -8 basis points
- Federal Reserve's Balance Sheet $4.059 Trillion +.11%
- U.S. Sovereign Debt Credit Default Swap 30.50 +9.55%
- Illinois Municipal Debt Credit Default Swap 160.0 +3.61%
- Western Europe Sovereign Debt Credit Default Swap Index 55.0 +3.13%
- Asia Pacific Sovereign Debt Credit Default Swap Index 116.12 -2.39%
- Emerging Markets Sovereign Debt CDS Index 260.0 +5.05%
- Israel Sovereign Debt Credit Default Swap 94.50 +2.72%
- South Korea Sovereign Debt Credit Default Swap 71.24 -3.07%
- China Blended Corporate Spread Index 361.75 +9.0 basis points
- 10-Year TIPS Spread 2.13% unch.
- TED Spread 21.50 +2.5 basis points
- 2-Year Swap Spread 13.0 -2.0 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -7.75 -3.75 basis points
- N. America Investment Grade Credit Default Swap Index 71.75 -.38%
- European Financial Sector Credit Default Swap Index 101.03 -2.88%
- Emerging Markets Credit Default Swap Index 338.87 +.43%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 110.50 +.5 basis point
- M1 Money Supply $2.678 Trillion +.65%
- Commercial Paper Outstanding 1,014.0 -.40%
- 4-Week Moving Average of Jobless Claims 333,000 +1,500
- Continuing Claims Unemployment Rate 2.3% unch.
- Average 30-Year Mortgage Rate 4.32% -7 basis points
- Weekly Mortgage Applications 403.40 -.17%
- Bloomberg Consumer Comfort -31.8 -.8 point
- Weekly Retail Sales +3.10% +10 basis points
- Nationwide Gas $3.28/gallon -.01/gallon
- Baltic Dry Index 1,127 -9.55%
- China (Export) Containerized Freight Index 1,158.16 +2.61%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 30.0 -20.0%
- Rail Freight Carloads 245,883 -8.06%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (19)
- UA, ACCL, FSL, PETX, KRA, CNQR, CSFL, EZPW, FLDM, TXI, DSCI, HBCI, YDKN, JLL, MTOR, SANM, WLH, CLDT and CAT
Weekly High-Volume Stock Losers (36)
- NSTG, SGM PAH, CVLT, MKC, BKU, RXN, ISSI, EOPN, RES, LION, TUP, ENR, KSU, IIVI, TTS, KMT, YHOO, PLOW, WCC, MOG/A, RGS, TGI, CRUS, WHR, CHEF, MBII, FBFS, BDE, NGVC, WETF, ADT, RCII, NSR, OSTK and ESI
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 17.77 +2.78%
- Euro/Yen Carry Return Index 143.83 -.97%
- Emerging Markets Currency Volatility(VXY) 10.21 +.79%
- S&P 500 Implied Correlation 58.48 +1.32%
- ISE Sentiment Index 96.0 -25.0%
- Total Put/Call .81 -1.22%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.15 -.71%
- European Financial Sector CDS Index 101.03 +1.08%
- Western Europe Sovereign Debt CDS Index 55.0 -1.79%
- Asia Pacific Sovereign Debt CDS Index 116.52 +1.32%
- Emerging Market CDS Index 339.17 +.30%
- 2-Year Swap Spread 13.0 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -7.75 -2.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 232.0 -3.0 basis points
- China Import Iron Ore Spot $122.60/Metric Tonne unch.
- Citi US Economic Surprise Index 49.0 +.9 point
- Citi Emerging Markets Economic Surprise Index 12.50 +1.3 points
- 10-Year TIPS Spread 2.13 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -160 open in Japan
- DAX Futures: Indicating +2 open in Germany
Portfolio:
- Lower: On losses in my tech/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
