Bloomberg:
- Ukraine’s Warring Factions Sign Pact to End Deadly Crisis.
Ukrainian opposition leaders joined President Viktor Yanukovych in
signing a peace accord to halt a deadly three-month political crisis.
The pact, brokered in all-night talks in Kiev with three European Union
foreign ministers, envisages early presidential elections by December
and a national unity government within 10 days. Lawmakers backed a
return to the 2004 constitution, a step that would curb Yanukovych’s
powers in favor of parliament, and voted to free jailed ex-Prime
Minister Yulia Tymoshenko.
- Ruble Wilts as Kiev Burns With Sochi Overshadowed. For
Russian President Vladimir Putin, the deadly clashes in neighboring
Ukraine couldn’t have come at a worse time. The violence that threatens
to topple a government propped up by his financial aid is taking
investors’ attention away from the Olympic games in Sochi that he sought
to use as a showcase for how far Russia has come since its 1998 default. The ruble sank 1.3 percent in the week, the third-worst rout in emerging
markets, while demand for local bonds dried up, pushing
benchmark yields to a record high and prompting the government
to cancel its third debt auction in four weeks.
- China’s Stocks Fall Most in Six Weeks as Yuan Weakens on Economy.
China’s stocks fell the most in six weeks, while the yuan headed for
its biggest weekly slide since 2011 as a manufacturing slowdown fueled
concerns the economic expansion is weakening. China Petroleum &
Chemical Corp. (600028) slid 3.1 percent after Jefferies Group LLC
downgraded the shares and said yesterday’s rally was unjustified.
PetroChina, the largest oil producer, retreated 3.9 percent. Sany Heavy
Industry Co., the biggest machinery maker, tumbled 2.1 percent. Citic
Securities Co. (600030) led declines for brokerages after the Standard
reported Sinolink Securities Co. and Tencent Holdings Ltd. cut
commission fees for their online stock-trading service. The Shanghai
Composite Index (SHCOMP) fell 1.2 percent to 2,113.69 at the close,
sending the measure to a loss of 0.1 percent for
the week after a preliminary manufacturing index by HSBC
Holdings Plc and Markit Economics dropped to a seven-month low.
- U.K. Retail Sales Decline Most Since April 2012 on Clothing.
U.K. retail sales fell more than economists forecast in January with the
biggest drop in almost two years, led by lower demand at food and
clothing stores. Sales including fuel plunged 1.5 percent from
December, when they surged 2.5 percent, the Office for National
Statistics said today in London. The decline was the biggest since April
2012 and
exceeded the 1 percent median forecast of 19 economists in a Bloomberg
News survey.
- Europe Stocks Rise as Stoxx 600 Extends Third Weekly Gain.
European stocks climbed, extending a
third consecutive weekly gain, as the Stoxx Europe 600 Index rose to its
highest level in six years. Vodafone (VOD) Group Plc rose 3 percent as
UBS AG said the mobile-phone operator may attract potential bidders
after the sale of its stake in Verizon Wireless. Valeo SA jumped 13
percent after the French auto-parts maker posted six-month
earnings that beat analyst estimates. Royal Bank of Scotland
Group Plc added 1.2 percent as the Financial Times said that the
lender will exit its riskier investment-banking businesses.
The Stoxx 600 rose 0.4 percent to 336.09 at the close of
trading, for a 0.8 percent weekly gain.
- WTI Crude Slips With Brent to Pare Sixth Weekly Advance.
WTI for April delivery fell 45 cents, or 0.4 percent, to $102.30 a
barrel at 1:20 p.m. on the New York Mercantile Exchange. The volume of
all futures traded was 22 percent below the 100-day average. Crude is up
2 percent this week and 10
percent in the past six weeks.
- Fed Failed to See Lehman’s Fallout for Economy, Transcripts Show. The day after Lehman Brothers
Holdings Inc. declared the largest bankruptcy in U.S. history in
2008, Federal Reserve officials remained unsure whether the
financial crisis would do lasting damage to the U.S. economy. “I don’t think we’ve seen a significant change in the
basic outlook,” Dave Stockton, the Fed’s top forecaster, said
on Sept. 16, 2008 according to transcripts released today in
Washington. “We’re still expecting a very gradual pickup in GDP
growth over the next year.” The records show Fed officials struggling to understand the
magnitude of the financial crisis that was underway, and the
potential fallout for the economy.
Wall Street Journal:
MarketWatch:
CNBC:
ZeroHedge:
Business Insider:
NY Times:
- Public Sector Cuts Part-Time Shifts to Bypass Obamacare. Cities, counties, public schools and community colleges around the
country have limited or reduced the work hours of part-time employees to
avoid having to provide them with health insurance under the Affordable
Care Act, state and local officials say.
Reuters:
- Mexican economic growth slows sharply at close of 2013. Mexican growth slowed more
than expected in the fourth quarter as industrial expansion
ground to a halt and the pace of services growth dropped, data
showed on Friday, pointing to a fragile economic recovery. The data highlights mounting concerns about Mexican growth,
which has disappointed investors who were excited by a reform
drive last year by President Enrique Pena Nieto. Wavering U.S. demand for Mexican-made exports such as cars
and televisions combined with a deep contraction in domestic
construction to drag on growth last year. The economy grew at a 1.1
percent rate in 2013, down sharply from a 3.9 percent expansion in 2012, the statistics agency said.
- Obama meets with Dalai Lama despite China warnings. President Barack
Obama met exiled Tibetan spiritual leader the Dalai Lama on Friday in a
show of concern about China's human rights practices, and in spite of
warnings from China the visit would "seriously damage" ties between the
two countries.
The private meeting
appeared to last about an hour, although the Dalai Lama, a Nobel Peace
Prize laureate, was not seen by White House photographers as he entered
or exited the complex.
- U.S. economy stronger, more QE cuts ahead: Fed's Bullard. Recent
"soft" economic data notwithstanding, the U.S. economy is headed for a
good year of growth, a top Fed official said on Friday, adding he
expects the central bank to continue to pare its massive bond-buying
stimulus.
USA Today:
Telegraph:
Le Monde:
- French Taxes Weigh on Finance Jobs, Axa CEO Says. France's 2012
tax increase on salaries, in addition to social charges, specifically
targeting the financial services industry "destroyed the creation of
sophisticated jobs," Henri de Castries says in an interview. The tax
increase also made neighboring countries more attractive as financial
centers, de Castries says.
Style Underperformer:
Sector Underperformers:
- 1) Computer Hardware -1.13% 2) Alt Energy -1.05% 3) Oil Service -.50%
Stocks Falling on Unusual Volume:
- NCMI, FLTX, CVT, FNGN, SATS, ACTG, DHRM, ICUI, MRC, BCOR, VCRA, VMI, CHTR, EIG, STNR, ABTL, COG, MDCA, RESI, ESRX, VZ, JWN, CENX, ACT, DTLK, PRAA, TAL, PPC, HSP, ESRX, EBIX, AXLL, NEM, SMCI, WAGE, RESI, TILE, RPTP and ACTG
Stocks With Unusual Put Option Activity:
- 1) MTW 2) JNPR 3) HPQ 4) LOW 5) ITB
Stocks With Most Negative News Mentions:
- 1) GRPN 2) NEM 3) FNGN 4) INTC 5) WMT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.86% 2) Biotech +1.71% 3) Utilities +.77%
Stocks Rising on Unusual Volume:
- ESC, SSTK CSU, MDRX, CONN, STRA, RUTH, COMM, ISIS, IPXL, TTS, PCYC, INTU, TTS, ACAD, NLNK, CLDX, HZNP, IMGN, AEE, ALNY, NPSP, EXAS and GDP
Stocks With Unusual Call Option Activity:
- 1) FTNT 2) NIHD 3) OPEN 4) APOL 5) NVDA
Stocks With Most Positive News Mentions:
- 1) UA 2) PCLN 3) DISH 4) AMZN 5) GOOG
Charts:
Evening Headlines
Bloomberg:
- Asia Currencies Set for Worst Week Since August on China Concern. Asian currencies headed for the
worst weekly loss in six months as signs of a deeper economic
slowdown in China and the Federal Reserve’s support for tapering
asset purchases weighed on emerging markets. South Korea’s won led the declines as a gauge of
manufacturing in China, the nation’s biggest export market, fell
to a seven-month low. Thailand’s baht was set for its steepest
five-day drop of 2014 as anti-government protests turned deadly,
while violence in Ukraine also damped sentiment. Fed policy
makers backed further stimulus cuts at their January review, the
minutes of the meeting showed, a program that drove capital into
developing countries.
- Offshore Yuan Set for Worst Week Since 2011 on Growth Concerns. The
yuan was set for its biggest weekly slide since September 2011 in
offshore trading after China manufacturing data added to signs of a
slowdown in the world’s second-largest economy. The yuan dropped 0.23 percent today to 6.0818 per dollar as of 12:41 p.m. in Hong Kong, extending this week’s loss to 0.77
percent, based on data compiled by Bloomberg. The currency fell
0.09 percent to 6.0886 in Shanghai, according to China Foreign
Exchange Trade System prices, after the People’s Bank of China
cut the daily reference rate by 0.05 percent to a two-month low
of 6.1176. The offshore yuan is the worst performer in February
among 12 Asian exchange rates tracked by Bloomberg.
- Vicious Cycle Seen as Ore Pile Evokes Steel Bust: China Credit. China’s
record imports of iron ore and copper, driven by traders who use them
as loan collateral, risk repeating the vicious cycle of repayment
difficulties and falling prices already seen in the steel-trading
market. Xiao Jiashou, known as the “steel-trading king” in Shanghai, had
his assets frozen as China Minsheng Banking Corp. sues for money owed. Lenders seeking repayment are finding irregularities, including the same pile of materials used as collateral for multiple borrowings, China International Capital Corp. said. Money-market costs have surged,
with the benchmark three-month Shanghai Interbank Borrowing rate jumping
to 5.6 percent yesterday from 3.89 percent in June 2013.
- Venezuelans Prepare for More Protests as Lopez Jailed. Venezuelan protesters prepared for
another night of confrontations with National Guard troops and
armed groups as opposition leader Leopoldo Lopez was ordered
held at a military prison outside Caracas. People were gathering in
public plazas and major
intersections of Caracas, dragging piles of trash into the
streets, which they burn to block roads. As government helicopters flew
overhead, President Nicolas Maduro addressed the nation in front of the
presidential palace, saying a sixth person was killed this week and
vowing to bring people attacking
transport workers to justice.
- China’s Stocks Fall Most in Six Weeks on Sinopec Drop, Economy. China’s stocks fell the most in six
weeks as China Petroleum & Chemical Corp. (600028) dropped after the biggest rally since 2009 and a manufacturing slowdown fueled concerns the economic expansion is weakening. China Petroleum, known as Sinopec, slid 1.4 percent after Jefferies Group LLC downgraded the Hong Kong-listed shares. PetroChina, the largest oil producer, retreated 3.9 percent. Citic Securities Co. (600030) led declines for brokerages after the Standard reported Sinolink Securities Co. and Tencent Holdings Ltd. cut commission fees for their online stock-trading service. The Shanghai Composite Index (SHCOMP) fell 1.2 percent to 2,113.88 as of 1:11 p.m., extending a 0.2 percent loss yesterday after a
preliminary manufacturing index by HSBC Holdings Plc and Markit
Economics fell to a seven-month low.
- Asian Stocks Rise After U.S. Manufacturing Gauge Climbs. Asian stocks rose, with the regional benchmark index rebounding from its biggest drop in two weeks, after a larger-than-forecast climb in a measure of U.S. manufacturing tempered concern about global growth. Samsung Electronics Co., which will unveil a high-end Galaxy phone next week, advanced 3 percent in Seoul. Toyota Motor Corp. (7203) climbed 1.5 percent amid a rally in Japanese shares as the yen weakened against the dollar. National Australia Bank
Ltd. lost 2 percent in Sydney after the country’s biggest lender
by assets flagged a possible increase in provisions at its
British operations.
The MSCI Asia Pacific Index gained 1 percent to 137.05 as
of 12:11 p.m. in Hong Kong, extending this week’s advance to 1.3
percent.
- China's Iron Ore Stockpiles to Stymie Aussie
Rally, Insight Says. The Australian dollar's rally this month will be
short-lived as demand for its chief export wanes with China stockpiling
record amounts of iron-ore, according to Insight Investment Management
Ltd.
Wall Street Journal:
- Dozens Dead in Ukraine as Fresh Violence Flares in Kiev. Ukrainian Capital Plummets into Renewed Bloodshed. Ukraine
slid deeper into turmoil Thursday as dozens of protesters were killed
amid pitched battles in the center of the capital. President
Viktor Yanukovych,
under heavy Western pressure to call early elections, reached out
to Russia as his grip on parts of the country appeared to weaken. As
sirens wailed through Kiev's narrow streets, top European diplomats
shuttled between Mr. Yanukovych and opposition leaders late into the
night, pushing for fresh elections to pull the country back from the
brink.
Fox News:
CNBC:
- Youth unemployment in China: A crisis in the making. Youth unemployment has created "a generation at risk" according to the
International Labor Organization, with worldwide youth unemployment
forecast to rise to 12.8 percent by 2018. But these headline figures do
not necessarily tell the real story given the discrepancies among
different parts of the world.
Zero Hedge:
Business Insider:
Reuters:
- RBS to retrench in investment banking, cut 30,000 jobs: FT. Royal
Bank of Scotland (RBS.L) is expected to announce its withdrawal from
many investment banking activities as well as much of its international
business in a move that is expected to reduce staff numbers by at least 30,000
over the next three to five years, the Financial Times reported on
Thursday.
Telegraph:
China Securities Journal:
- China's Investment Growth May Slow on Overcapacity. China's
investment growth may slow to about 18% because of overcapacity in
manufacturing industry, declining real estate and infrastructure
investment, citing Yu Bin, head of the macroeconomic department at the
State Council's Development Research Center. A "noticeable" increase in
China's export growth this year would be difficult to attain because the
market share of labor-intensive and industrial products is declining,
the report cites Yu as saying.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 136.0 +.75 basis point.
- Asia Pacific Sovereign CDS Index 105.0 +.25 basis point.
- NASDAQ 100 futures +.28%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Existing Home Sales for January are estimated to fall to 4.68M versus 4.87M in December.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bullard speaking, UK Retail Sales and the (ESRX) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.62 -5.68%
- Euro/Yen Carry Return Index 146.47 -.08%
- Emerging Markets Currency Volatility(VXY) 8.89 +1.72%
- S&P 500 Implied Correlation 52.63 -2.82%
- ISE Sentiment Index 129.0 +46.59%
- Total Put/Call .86 -3.37%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.76 -2.16%
- European Financial Sector CDS Index 91.98 +2.93%
- Western Europe Sovereign Debt CDS Index 53.0 +.65%
- Asia Pacific Sovereign Debt CDS Index 104.86 +.10%
- Emerging Market CDS Index 329.02 -4.2%
- China Blended Corporate Spread Index 356.92 +.16%
- 2-Year Swap Spread 14.0 +.5 basis point
- TED Spread 19.0 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.0 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 243.0 +1.0 basis point
- China Import Iron Ore Spot $122.90/Metric Tonne -.81%
- Citi US Economic Surprise Index -6.50 -2.5 points
- Citi Emerging Markets Economic Surprise Index 15.80 -3.2 points
- 10-Year TIPS Spread 2.14 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +118 open in Japan
- DAX Futures: Indicating +1 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/medical/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Ukraine Engulfed by Deadly Clashes as EU Seeks Peace Deal.
Deadly clashes engulfed Ukraine’s capital for the second time this
week as European Union negotiators held hours of talks with President
Viktor Yanukovych and his rivals to try to end the bloodshed. A
truce agreed on last night was shattered this morning as skirmishes
broke out at the protest camp on Independence Square. While the Health
Ministry reported seven killed, including two policemen, the opposition
Svoboda party said more than 60 were dead. EU foreign ministers were
locked in talks for most of the day as police were given the green light
to fire live rounds.
- Kiev Chaos Jumps Borders as Markets Teeter: East Europe Credit. Markets
from Hungary to Poland and Russia are suffering contagion from the
violence rocking Ukraine’s capital, sending bond yields higher and
currencies lower as the turbulence afflicting developing nations deepens.
Hungary’s forint weakened for a third day today, while Russia’s ruble
rebounded from an all-time low. The yield on Poland’s 10-year bond was
little changed after climbing the most in a week. Ukraine’s debt due in
June gained, sending the rate to 33 percent at 12:44 p.m. in Kiev after
it jumped 19 percentage points to a record 42 percent yesterday.
- Euro-Area Recovery Loses Pace as Manufacturing Weakens: Economy. The
euro-region recovery showed
signs of cooling this month, with weaker-than-forecast manufacturing and
services keeping pressure on the European Central Bank to loosen
policy. The factory gauge for the euro region unexpectedly slipped to
53 from 54 in January, while the services measure rose less than
estimated to 51.7 from 51.6, Markit Economics said today. A
composite gauge fell to 52.7 from 52.9.
- Europe Stocks Little Changed as Stoxx 600 Trims Loss.
European stocks closed little
changed, trimming losses in the final minutes of trading, after
data showed Chinese manufacturing shrank for a second month and
Federal Reserve minutes signaled stimulus cuts will continue. BAE (BA/)
Systems Plc plunged the most since October 2008 after predicting profit
will drop as much as 10 percent this year. Randstad (RAND) Holding NV
tumbled 11 percent after reporting quarterly results that missed
estimates. TUI AG dropped 5.4 percent after one of its largest
shareholders sold a 15.7 percent stake in the company. Technip SA
rallied the most since July 2009 after saying its profit margin will
increase next year. The Stoxx Europe 600 Index slid less than 0.1 percent to
334.78, paring a loss of as much as 1.1 percent.
- Nigeria’s Boko Haram Kill 47 in Attack on Northeastern Town. At least 47 people were killed by
suspected Boko Haram Islamists in the northeastern Nigerian town
of Bama yesterday, a police official said. Bama is 130 kilometers (81 miles) from Maiduguri in Borno
State. “The local government secretariat, the state low-cost
housing estate, schools and several other buildings” were
destroyed, Lawal Tanko, a police spokesman, said in an interview
yesterday. “We have had 47 dead recorded, while several persons
were confirmed injured, some already in the hospitals there.”
- Facebook(FB) Values WhatsApp Like Miracle Drug: Real M&A. Facebook Inc. (FB)’s
$19 billion purchase of WhatsApp Inc. is valuing the text-messaging
service at a multiple investors currently only bestow on companies
developing life-saving drugs. Based on a goal of reaching 1
billion WhatsApp subscribers, Facebook is buying the mobile application
for about 19 times estimated sales, according to data compiled by
Bloomberg. The only U.S. companies that fetch such lofty valuations are
drugmakers that are developing treatments for cancer, Crohn’s disease
and other ailments, the data show.
- Wal-Mart Forecast Trails Estimates as Economy Hurts Sales. Wal-Mart
Stores Inc., the world’s largest retailer, forecast profit this year
that trailed analysts’ estimates as the sluggish U.S. economy and
government benefit cuts threaten to restrain sales. Profit
per share in the year through January 2015 will be $5.10 to $5.45, the
Bentonville, Arkansas-based company said today in a statement. The
average of 28 analysts’ estimates compiled by Bloomberg was $5.55
a share.
Wall Street Journal:
ZeroHedge:
Telegraph:
