Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 14.35 -10.31%
- Euro/Yen Carry Return Index 146.48 +.76%
- Emerging Markets Currency Volatility(VXY) 8.93 -2.19%
- S&P 500 Implied Correlation 53.60 -4.32%
- ISE Sentiment Index 132.0 +21.10%
- Total Put/Call .81 -10.0%
Credit Investor Angst:
- North American Investment Grade CDS Index 62.82 -3.77%
- European Financial Sector CDS Index 88.39 -4.46%
- Western Europe Sovereign Debt CDS Index 51.67 +1.29%
- Asia Pacific Sovereign Debt CDS Index 99.50 -3.81%
- Emerging Market CDS Index 303.93 -5.27%
- China Blended Corporate Spread Index 366.77 +1.89%
- 2-Year Swap Spread 13.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.75 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 236.0 +7.0 basis points
- China Import Iron Ore Spot $116.80/Metric Tonne -.76%
- Citi US Economic Surprise Index -18.70 -3.4 points
- Citi Emerging Markets Economic Surprise Index 12.40 -.3 point
- 10-Year TIPS Spread 2.19 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +244 open in Japan
- DAX Futures: Indicating -25 open in Germany
Portfolio:
- Slightly Lower: On losses in my index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added some back
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Putin Says No Immediate Need to Invade Eastern Ukraine, Leaves Threat Dangling.
Vladimir Putin said he sees no immediate need to invade eastern Ukraine as the Obama administration prepares $1 billion in loan guarantees for the cash-strapped nation and threatens sanctions against Russia. In his first public remarks since Ukraine said its Crimean peninsula had been taken over by Russian forces, President Putin said he reserved the right to use force to defend ethnic Russians while there’s “no such necessity” at present. U.S. Secretary of State John Kerry arrived in Kiev to offer an aid package to Ukraine’s interim government, as President Barack Obama challenged Putin’s rationale for intervening.
- Ukraine Crisis Threatens $8 Billion of Russian Company Loans.
Political and military tension in Ukraine is threatening to derail $8
billion of international loans sought by Russian companies. Billionaire
Mikhail Fridman’s VimpelCom Ltd. (VIP) is among at least 10 borrowers
negotiating loans with U.S., European and Japanese banks, according to data compiled by Bloomberg. Russia’s
currency, bond and stock markets rose after plunging when troops seized
control of the Black Sea region of Crimea. The cost of insuring the
country’s debt against losses is falling after the biggest increase
since June.
- U.S. Readying Russia Sanctions Within Days, Kerry Aides Say. The U.S. administration is preparing
sanctions to punish Russia for its military action in Crimea and
will announce an assistance package aimed at bolstering the
fledging Ukrainian government, officials said. As Secretary of State John Kerry arrived in the Ukrainian
capital, Kiev, today amid the worst standoff between Russia and
the West since the end of the Cold War, U.S. officials traveling
with him expressed concern over reports that Russian aircraft
had attempted incursions into airspace over mainland Ukraine
before being turned back by Ukrainian jets.
- European Stocks Rebound From Biggest Drop in Five Weeks.
European stocks rose, rallying the most in eight months, as investors
speculated that the military standoff in Ukraine will not lead to war.
Glencore Xstrata Plc advanced 1.7 percent after increasing its forecast
for cost savings following the acquisition of Xstrata Plc. Beiersdorf AG
added 2 percent as the maker of Nivea skin cream reported profit that
beat estimates and predicted sales will rise as much as 6 percent this
year. Ashtead Group Plc rallied the most since 2011 after saying
full-year earnings will exceed the company’s previous projections. The Stoxx Europe 600 Index rose 2.1 percent to 337.15 at
the close of trading.
- WTI Crude Falls From Five-Month High on Ukraine.
WTI for April delivery slid $1.85, or 1.8 percent, to $103.07 a barrel
at 1:21 p.m. on the New York Mercantile Exchange. The contract rose 2.3
percent to $104.92 yesterday, the highest settlement since Sept. 19. The
volume of all futures
traded was near the 100-day average.
- Insurers’ Obamacare Losses May Reach $5.5 Billion in 2015.
The money, outlined in President Barack Obama’s proposed budget for the fiscal year that begins in October, is
designated to help insurers who find the cost of the law higher than
expected, based on the percentage of older, sicker people who sign up
compared with younger enrollees.
Wall Street Journal:
MarketWatch:
CNBC:
ZeroHedge:
Business Insider:
Washington Post:
Libertyblitzkrieg:
- The Debt Bubble Expands as Auto Loan Amounts Hit a New Record. Is anyone surprised that the poorest and least credit worthy of
Americans are being saddled with piles of debt in order to buy new cars?
It’s not enough that a generation of our citizens will toil pointlessly
to pay off more than $1 trillion of student loans, we may as well add
some other form of debt burden on top of it.
It’s hard to even imagine this is happening so shortly after the last credit bubble train wreck, but happening it is.
Reuters:
- Global PC shipments to fall 6.1 percent in 2014: IDC. Global shipments of personal computers fell 9.8 percent last year, the worst contraction on record, and are likely to decline by 6.1 percent
in 2014 due to lackluster demand in developing countries,
according to market research firm IDC.
- Putin, China's Xi hold "close" views on Ukraine, Kremlin says. Russian President Vladimir Putin
and Chinese President Xi Jinping discussed the situation in
Ukraine by telephone on Tuesday and their positions on the issue
are "close", the Kremlin said.
It said the presidents of the veto-wielding U.N. Security
Council nation expressed hope that "the steps taken by the
Russian leadership will allow for the reduction of ... tension
and provide for the security of Russian-speaking citizens living
in Crimea and the eastern regions of Ukraine."
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -.81% 2) Homebuilders +.47% 3) Retail +.74%
Stocks Falling on Unusual Volume:
- IRE, STCK, BCC, CMGE, WBMD, ASNA, AZO, HPTX, CG, ANFI, CCIH, PKX, AAOI, MLM, CLF, CVI, OXFD, ISRG, MPAA, QUNR, ALXN, DRQ, ENR, TXI and LBTYA
Stocks With Unusual Put Option Activity:
- 1) LO 2) EWT 3) MW 4) EWA 5) CMG
Stocks With Most Negative News Mentions:
- 1) RSH 2) WBMD 3) CLF 4) ISRG 5) MDR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Tobacco +3.12% 2) I-Banking +2.98% 3) Disk Drives +2.65%
Stocks Rising on Unusual Volume:
- EPAM, VIPS, DANG, MXWL, YNDX, MBI, INSY, AMBC, VGR, JKS, SUNE, GWRE, ACRX, NKTR, GTAT, SPWR, CAMP, GTN, ISIS, WWE, FIO, ZU, ANF, AVY, AUXL, DGI and CY
Stocks With Unusual Call Option Activity:
- 1) ODP 2) VEEV 3) RSH 4) PLUG 5) WWE
Stocks With Most Positive News Mentions:
- 1) A 2) QCOM 3) DAL 4) JCP 5) MXWL
Charts:
Evening Headlines
Bloomberg:
- Russia Calls Ukraine Presence Legal Citing Yanukovych Letter. Russia justified its intervention in Crimea as a legitimate response to a request from Ukraine’s ousted president amid threats posed by extremists, while Western leaders sought to keep the standoff from spiraling into war. The U.S. condemned what it called a breach of Ukraine’s
sovereignty after Vitaly Churkin, Russia’s ambassador to the
United Nations, said today the crisis is creating serious risks
to Russian security and to the safety of millions of Russian-speaking compatriots in southeastern Ukraine. Former Ukrainian
President Viktor Yanukovych wrote to Russian President Vladimir Putin requesting a military deployment, Churkin said.
- Pro-Russia Mob Surrounds Main Ukraine Navy Base in Crimea.
Some 200 pro-Russian vigilantes
backed by several masked gunmen besieged Ukrainian navy
headquarters in Sevastopol, Crimea, and threatened to cut off
electricity and water if officers didn’t surrender the building. The
crowd blocked the exits from the base and used
loudspeakers to urge the officers inside the building to
surrender. Crimea, where ethnic Russians comprise the majority,
has become the focal point of Ukraine’s crisis after an uprising
centered on Kiev triggered last month’s ouster of President Viktor
Yanukovych.
- Nikkei 225 Futures Trading Fault May Be System Error: JPX. Futures
on the Nikkei 225 Stock
Average stopped trading in Osaka for more than 20 minutes today,
probably due to a system problem, bourse operator Japan Exchange Group
Inc. said. Nikkei 225 large and mini contracts stopped trading a little after 11 a.m. Tokyo time, Naoya Takahashi, a spokesman
for JPX, said by telephone. They resumed at about 11:30 a.m., he
said. The halt may have been due to a system problem and the
exchange is investigating the cause, Takahashi said.
- RBA Holds Rate at Record-Low 2.5% as Mining Slowdown Dents Jobs. Australia’s
central bank left its
benchmark interest rate unchanged at a record low to spur domestic
industries and offset a slump in mining investment. Governor Glenn
Stevens and his board kept the overnight cash-rate target at 2.5 percent,
the Reserve Bank of Australia said in a statement today in Sydney. The
decision was predicted by all 32 economists surveyed by Bloomberg News
and markets had priced in almost no chance of a move. After 2.25
percentage points of rate cuts from late 2011 through August, the RBA
has held the benchmark rate steady as home prices advanced, inflation
accelerated and a drop in the
currency eased pressure on exporters.
- Philippine Index to Monitor the Risk of Property Bubble. The Philippine central bank is set
to introduce a residential property-price index in the first
half of the year as it intensifies monitoring of asset-bubble
risks, Deputy Governor Diwa Guinigundo said. The index initially will cover Manila and nearby provinces
using data including building permits and wholesale prices of
construction materials of new housing units from 2006 to 2012,
Guinigundo, 59, said in an interview in his office in Manila
late yesterday.
- Asia Stocks Swing From Loss to Gain After Two-Day Slump. Asian stocks swung between gains and
losses, after the regional index yesterday capped its first
back-to-back declines in a month, as investors weighed the
crisis in Crimea and ahead of the National People’s Congress annual meeting in China starting tomorrow.
Mitsubishi Estate Co. (8802) gained 3.8 percent in Tokyo as Japanese
developers the Topix index higher. Tencent Holdings Ltd., Asia’s biggest
Internet company, gained 1.6 percent as Hong Kong shares rebounded from
their biggest drop in a month. AGL Energy Ltd. sank 2.9 percent in
Sydney after its A$1.51 billion ($1.35 billion) deal to buy power plants
in Australia’s most-populous state was blocked by an antitrust
regulator.
The MSCI Asia Pacific Index rose 0.2 percent to 137.10 as
of 10:09 a.m. in Hong Kong after falling as much as 0.4 percent.
- Oaktree’s Marks Urges Caution as Money Flows Into Junk Loans. The head of the world’s largest distressed debt fund is emphasizing
the need for making careful choices as loan funds inundated with
unprecedented cash enable junk-rated companies to borrow at cheaper
rates. “When things are rollicking and the market is permitting
low-quality issuers to issue debt, that’s when you need a lot of
caution,” Howard Marks, the founder and chairman of Oaktree Capital
Group LLC, said in a telephone interview. “You have to apply a lot of
discernment.”
- Citigroup(C) Joins JPMorgan(JPM) in Seeing Trading-Revenue Drop. Citigroup
Inc. (C) and JPMorgan Chase & Co. (JPM) are bracing investors for a
fourth straight drop in first-quarter trading, a period of the year
when the largest investment banks typically earn the most from that
business. Citigroup finance chief John Gerspach said yesterday his
firm expects trading revenue to drop by a “high mid-teens” percentage,
less than a week after JPMorgan Chief Executive Officer Jamie Dimon said
revenue from equities and fixed income was down about 15 percent. If trading at the nine largest firms
slumps that much, it would extend the slide from 2010’s first
quarter to 36 percent.
Wall Street Journal:
Fox News:
Zero Hedge:
Reuters:
- Computer-driven trade to grab market share in 2014 - study. Smaller asset managers and hedge
funds will drive an increase in the use of computer-driven
equity trading strategies in 2014 as brokerages cut back on the
services they offer to less profitable clients, a study shows. Margin pressure among brokers has forced them to focus on
servicing big-paying clients at the expense of the rest, many of
whom will now look to use so-called "low touch", computer-based
strategies to fill the gap, a study by consultants TABB showed
on Tuesday.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 137.0 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 103.50 +1.25 basis points.
- NASDAQ 100 futures +.31%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The
Fed's Lacker speaking, HSBC China Services PMI, Australia GDP, weekly
retail sales reports, ISM New York for February, IBD/TIPP Economic
Optimism for March, (BP) investor update, (CAT) analyst meeting and the
(APC) investor conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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: Almost Every Sector Declining
- Volume: Slightly Above Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.0 +14.29%
- Euro/Yen Carry Return Index 145.30 -.84%
- Emerging Markets Currency Volatility(VXY) 9.10 +4.0%
- S&P 500 Implied Correlation 56.20 +3.31%
- ISE Sentiment Index 109.0 -.91%
- Total Put/Call .90 +9.76%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.10 +2.59%
- European Financial Sector CDS Index 92.39 +6.82%
- Western Europe Sovereign Debt CDS Index 51.01 -2.52%
- Asia Pacific Sovereign Debt CDS Index 102.94 +1.91%
- Emerging Market CDS Index 320.52 +4.80%
- China Blended Corporate Spread Index 359.99 -1.36%
- 2-Year Swap Spread 13.75 +.75 basis point
- TED Spread 19.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -6.25 -1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .05% +1 basis point
- Yield Curve 229.0 -4.0 basis points
- China Import Iron Ore Spot $117.70/Metric Tonne -.34%
- Citi US Economic Surprise Index -15.30 -1.9 points
- Citi Emerging Markets Economic Surprise Index 12.70 +.2 point
- 10-Year TIPS Spread 2.18 unch.
Overseas Futures:
- Nikkei Futures: Indicating -155 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
