Style Underperformer:
Sector Underperformers:
- 1) Hospitals -4.21% 2) Steel -2.35% 3) Coal -1.12%
Stocks Falling on Unusual Volume:
- RP, ALSN, PERY, JONE, TRNX, WMGI, SDRL, THC, GTLS, SINA, ROSE, ANFI, CCOI, EXPD, TNC, WNS, RST, CCIH, RMS, SGY, LLL, CHH, BAGL, LCI, DLR, PGTI, UPL, TREX and RP
Stocks With Unusual Put Option Activity:
- 1) ACAS 2) SPLS 3) OIH 4) MW 5) XLB
Stocks With Most Negative News Mentions:
- 1) LMT 2) THC 3) SLM 4) FXI 5) IPG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +1.23% 2) Internet +.75% 3) Biotech +.65%
Stocks Rising on Unusual Volume:
- ITMN, ZU, VSI, PPO, BLMN, XPO, RAX, TSLA, DDS, LNKD, LYV, BCRX, KNDI, INFI, SPNC, EGHT, TPC, RAX, AYR, VSI, ACTG, FEYE and FNP
Stocks With Unusual Call Option Activity:
- 1) ITMN 2) BSX 3) STSI 4) WLL 5) HBAN
Stocks With Most Positive News Mentions:
- 1) M 2) LOW 3) ITMN 4) BBRY 5) TSLA
Charts:
Evening Headlines
Bloomberg:
- Acting Ukraine President May Seek New Government Today. Ukraine’s
acting president, Oleksandr Turchynov, told parliament he expects
lawmakers to vote today on a national unity government led by a prime
minister people would trust. Turchynov, an opposition politician who
was elected parliament speaker Feb. 22, indicated yesterday that he
expects to move quickly to fill the government vacuum so officials can
seek the economic aid needed to fend off default, even as Russia
questioned the legitimacy of the political transition.
- Erdogan Resignation Demanded by Turkish Opposition Over Tape. Turkey’s main opposition party called on Prime Minister Recep Tayyip Erdogan to step down as his office dismissed alleged wiretapped conversations between the prime minister and his son as fake. Erdogan’s office said the alleged recording, published on
YouTube and centering on how to conceal money from the police,
was an “unethical” montage, and pledged legal action. Haluk Koc, deputy chairman of the Republican party, said in a
televised press conference that “it’s unacceptable for someone
who’s in the middle of these dirty relationships to govern
Turkey after this hour.”
- Yuan Drops Most Since 2012 on Speculation PBOC Wants Volatility. China’s
yuan tumbled the most in more than a year on speculation the central
bank wants an end to the currency’s steady appreciation to ward off
speculators before a possible widening of the trading band. The yuan
fell 0.2 percent to 6.1107 per dollar as of 1:04 p.m. in Shanghai,
sliding for a sixth day, according to China Foreign Exchange Trade
System prices. It dropped as much as 0.44 percent earlier. The spot rate
was within 0.13 percent of the central bank’s reference rate, which was
set at 6.1184 today.
The currency traded 0.77 percent stronger than the fixing on
average this year and the maximum allowed gap is 1 percent.
- Asian Stocks Rise to Highest in Month as Rupiah Rallies.
Asian stocks climbed, with the regional benchmark index rising to its
highest in a month, while the Indonesia’s rupiah led gains in
emerging-market currencies. Nickel and lead advanced. The MSCI Asia Pacific Index added 0.6 percent by 10:44 a.m. in Tokyo.
Wall Street Journal:
- Liberals vs. the IRS. Even the left doesn't want the tax man regulating speech. The media have remained quiet about the IRS targeting of conservative
nonprofit groups and even quieter about the proposed IRS rule to
restrict their political speech. Maybe our colleagues will snap out of
their slumber now that the objections are coming from liberals.
Barron's:
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Telegraph:
China Securities Journal:
- Small China Developers 'Capital Chain' May Break. Some small and
medium-sized Chinese property companies may be knocked out of the market
because their "capital chains" may break as banks tighten lending to
the property sector, according to a front-page commentary written by
reporter Wan Jing. The leverage ratio at property companies is high and
financing demand will like be "huge" this year, the commentary said.
Evening Recommendations
Susquehanna:
- Rated (ADBE) Positive, $83.
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 134.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 105.75 +1.0 basis point.
- NASDAQ 100 futures -.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- The House Price Index for December is estimated to rise +.3% versus a +.1% gain in November.
- The S&P/CaseShiller 20 City MoM SA for December is estimated to rise +.6% versus a +.88% gain in November.
10:00 am EST
- Consumer Confidence for February is estimated to fall to 80.0 versus 80.7 in January.
- Richmond Fed Manufacturing for February is estimated to fall to 5.0 versus 12.0 in January.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Tarullo speaking, G7 Meetings, German GDP report, $32B 2Y T-Note
auction, weekly retail sales reports, (VC) investor day, (JPM) investor
day and the (PWR) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. 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) 14.05 -4.29%
- Euro/Yen Carry Return Index 146.87 unch.
- Emerging Markets Currency Volatility(VXY) 8.68 -1.59%
- S&P 500 Implied Correlation 50.99 -2.10%
- ISE Sentiment Index 131.0 +24.76%
- Total Put/Call .77 +11.59%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.70 -2.29%
- European Financial Sector CDS Index 86.79 -3.83%
- Western Europe Sovereign Debt CDS Index 53.0 unch.
- Asia Pacific Sovereign Debt CDS Index 105.37 +.67%
- Emerging Market CDS Index 302.20 -5.06%
- China Blended Corporate Spread Index 358.29 +.77%
- 2-Year Swap Spread 13.25 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -6.0 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- China Import Iron Ore Spot $119.90/Metric Tonne -2.04%
- Citi US Economic Surprise Index -11.80 -4.1 points
- Citi Emerging Markets Economic Surprise Index 13.70 +.1 point
- 10-Year TIPS Spread 2.16 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +149 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Higher: On gains in my tech/biotech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Ukraine Replaces Central Bank Head.
Ukraine replaced its central bank chief as it scrambles to fend off
default, while Russia poured scorn on the legitimacy of the new interim
leadership. The temporary government in Kiev said it needs $35
billion of financial assistance as the U.S. and the European Union
pledged aid for a new administration. Russia’s Foreign Ministry said
deposed President Viktor Yanukovych’s opponents broke a Feb. 21 peace
agreement and set the country on a course for “dictatorial, terrorist
methods.”
- Ruble Cracks Seen Before Ukraine’s Deadly Descent: Russia Credit. Foreign investor holdings of Russian ruble government bonds slid to
the lowest level in 10 months in December as the ruble capped its worst
year since 2008 and political tensions in neighboring Ukraine were
growing. Non-residents’ share of ruble debt fell one percentage
point from the previous month to 23.9 percent as of Jan. 1, central bank
data data published Feb. 21 show. That represented outflows of 17
billion rubles ($477 million) to 894 billion rubles. Foreign holdings of
OFZ
securities peaked at 28.1 percent on May 1, according to the figures.
- Industrial Bank Temporarily Tightens Developer Financing. Industrial
Bank Co. (601166) temporarily tightened financing for real-estate
developers until it prepares a new set of credit policies, according to a
stock exchange statement. The bank requested all branches to take
stock of existing assets and market conditions after the Lunar New Year,
according to the statement to the Shanghai Stock Exchange yesterday. It
also suspended granting new credit to some developers and halted
mezzanine financing until new rules are released, by the end of
March, it said. The weeklong Lunar New Year break ran through
Feb. 6, with financial markets reopening on Feb. 7.
- China Stocks Drop as Property Shares Plunge Most in Eight Months.
China’s stocks fell, sending the benchmark index to its biggest loss in
seven weeks, amid speculation that reduced lending to the property
industry will curb growth in the world’s second-largest economy. China
Vanke Co. (000002) and Poly Real Estate Group Co., the nation’s biggest
developers, plunged more than 6 percent after the Shanghai Securities
News reported Industrial Bank Co. and other banks have tightened lending
to the property sector. Industrial Bank led declines for lenders with a
3.7 percent loss. China Petroleum & Chemical Corp. (386), the
refiner known as Sinopec, slid as much as 6.4 percent, erasing gains
since it announced plans to sell a stake to private investors. The
Shanghai Composite Index (SHCOMP) dropped 1.8 percent to
2,076.69 at the close. A gauge of property stocks in the Shanghai index
slid 5.4
percent, the most among five industry groups. Vanke, the
nation’s biggest listed developer, tumbled 6.6 percent to 6.69 yuan.
Poly Real Estate plunged 8.5 percent to 6.77 yuan. Gemdale Corp.
(600383) fell 7.7 percent to 5.91 yuan.
- European Stocks Rise to Six-Year High Amid Deal Talk.
European stocks advanced to a six-year high as companies from Scania AB
to Dixons Retail Plc
rallied amid heightened mergers-and-acquisitions activity,
outweighing a drop in HSBC (HSBA) Holdings Plc which posted
worse-than-estimated profit. Scania soared to its highest price since
July 2007 after Volkswagen AG offered to buy the remaining stake in the
Swedish truckmaker for 6.7 billion euros ($9.2 billion). Dixons jumped
6.7 percent as it confirmed talks with Carphone Warehouse Group Plc for a
possible merger. HSBC declined the most in six months. Vodafone Group
Plc (VOD)’s new shares traded after a consolidation and
cash distribution. The Stoxx Europe 600 Index rose 0.6 percent to 338.19 at
the close of trading, its highest level since Jan. 14, 2008. The
benchmark climbed 0.8 percent last week to its highest level
since January 2008 as companies from Meda AB to Valeo SA posted
better-than-forecast earnings.
- Copper Declines Most in a Month on China’s Slowing Demand.
“We are seeing broad-based weakness in the metals space, as concerns
about China are once again dragging values lower,” Edward Meir, an
analyst at INTL FCStone in New York, wrote in a note today. Slowing
home-price gains in China “may also explain
the rumored move by the banks,” he said. Copper futures for delivery in May fell 1.2 percent to
$3.222 a pound at 10:28 a.m. on the Comex in New York, heading
for the biggest loss for a most-active active contract since
Jan. 23. On the London Metal Exchange, copper for delivery in
three months fell 1.2 percent to $7,070 a metric ton ($3.21 a
pound).
- Gold Climbs to 16-Week High as U.S. Data Spurs Demand. “There is some safe-haven buying because of continued
signs of slowing growth in the U.S.,” Tom Power, a senior
commodity broker at R.J. O’Brien & Associates in Chicago, said
in a telephone interview. “Concerns about Ukraine remain.” Gold futures for April delivery climbed 1 percent to
$1,336.60 an ounce at 10:44 a.m. on the Comex in New York after
earlier today trading at $1,338.20, the highest for a most-active contract since Oct. 31.
- Greed Turning Losers to Leaders in Russell 1000 Index.
Two things explain why the biggest gains in the U.S. stock market this
year are coming from companies without profits, according to Jeff
Mortimer of BNY Mellon Wealth Management: Greed, and fear of missing out. Unprofitable
companies such as Zynga Inc. (ZNGA) and FireEye Inc. (FEYE) are leading
gains in the Russell 1000 (RIY) Index. The Nasdaq Biotechnology Index
is up 25 percent in the past 10 weeks, the most since February 2012,
data compiled by Bloomberg show. Less than a third of its 122 companies
earned any money in the last 12
months. Marijuana shares, which trade on venues with less stringent
reporting requirements, are among the most active.
Wall Street Journal:
Fox News:
- Hagel calls for shrinking Army to pre-WWII size. Defense Secretary Chuck Hagel called Monday for shrinking the U.S.
Army to its smallest size in decades, along with other cuts, drawing
criticism that the drastic changes will hurt U.S. security. Hagel announced his Pentagon budget priorities Monday afternoon. The
Army had already been preparing to shrink to 490,000 active-duty members
from a wartime peak of 570,000. Hagel is proposing to cut it further to
between 440,000 and 450,000. That would make it the smallest since just before the U.S. entered World War II.
CNBC:
- It's not the weather, stupid, it's the economy! "The mantra of late when it comes to assessing the high frequency
economic data has been to blame it on the weather," Tom Porcelli, chief
U.S. economist at RBC Capital Markets, said in a report. "But it seems
to us that folks are all too eager to dismiss what could potentially be
some real underlying weakness."
ZeroHedge:
Business Insider:
Reuters:
- Fed's Fisher says backs reducing stimulus in $10 bln steps. Dallas
Federal Reserve Bank
President Richard Fisher said on Monday that he would like the U.S.
central bank to continue to scale back its monthly bond-buying stimulus
by $10 billion at each of its upcoming policy meetings. "That's
certainly what I am in favor of," Fisher told Fox Business television
when asked if he wanted to reduce the asset purchases by $10 billion at
each meeting. "I am very happy with doing this in the measured steps of
which (Fed Chair) Janet Yellen has spoken about recently, and
I'm in full accord on that front," he said.
- U.S. services growth slows in Feb -Markit. Growth in the U.S. services
sector as well as the pace of hiring slowed in February, an
industry report showed on Monday, the latest data to suggest an
unusually cold winter is dragging on economic activity.
Financial data firm Markit said its "flash" or preliminary
services sector purchasing managers index slipped to 52.7 in
February from 56.7 in January.
Financial Times:
- Greece in banking sector stand-off with bailout lenders. The
Greek government and its bailout lenders are locked in a new stand-off
over the health of Greece’s banking sector, with Athens contending its
financial system requires less than €6bn of new capital, while
international monitors insist it needs at least three
times that amount.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Steel -1.24% 2) Networking -.10% 3) Homebuilders +.32%
Stocks Falling on Unusual Volume:
- CCOI, KMP, KMR, DDS, CTAS, LOCK, UNF, AWI, AAOI, BKS, AWAY, QUAD, CALL, EJ, SFUN, STRA, TCS, ABTL, FNSR, ENTA, POWR, CHTR, RTI, HSBC and XXIA
Stocks With Unusual Put Option Activity:
- 1) HFC 2) CVA 3) KMI 4) CMI 5) SHLD
Stocks With Most Negative News Mentions:
- 1) DDS 2) STLD 3) LOCK 4) X 5) SOHU
Charts:
