Style Underperformer:
Sector Underperformers:
- 1) Steel -2.62% 2) Biotech -1.92% 3) Computer Hardware -1.42%
Stocks Falling on Unusual Volume:
- REGN, ALOG, FEYE, FRM, FLML, CDW, SWY, VHC, TFM, BNFT, NLNK, HYGS,
LVNTA, BIB, IBB, PRGS, VNET, TV, EAT, UGLD, DFT, SGMO, IRE, OUTR, ACT,
CSTM, UVV, ENT, ILMN, HTGC, NTAP, OUTR, HMHC, ALNY, NXST, WMC, VEEV,
CRM, BTU, CDW, MTDR, FCX, SEAS, WLT, DFT, RCPT, AMBA, ACRX, ARWR, PTCT
and SSP
Stocks With Unusual Put Option Activity:
- 1) FNSR 2) VMW 3) DAL 4) FCX 5) SLM
Stocks With Most Negative News Mentions:
- 1) SWY 2) NFLX 3) AMGN 4) REGN 5) ANR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Banks +.68% 2) Insurance +.42% 3) Retail +.29%
Stocks Rising on Unusual Volume:
- BIG, KFY, FL, QTWW, EJ, HDB, SSI, HAWK and COO
Stocks With Unusual Call Option Activity:
- 1) KR 2) BIG 3) FL 4) AMD 5) ARCP
Stocks With Most Positive News Mentions:
- 1) BIG 2) FL 3) PEP 4) FNSR 5) FCEL
Charts:
Evening Headlines
Bloomberg:
- Russia Urged to Ease Crimea Crisis Under Sanctions Threat. The U.S. and European Union put
Russian President Vladimir Putin on notice that they will be
united on imposing sanctions if he’s unwilling to defuse the
Ukraine crisis and pursue a negotiated solution. As Crimean
separatists backed by Russian forces pushed to split from Ukraine, the
U.S. banned visas for Russian officials and others it said were
complicit in violating the sovereignty of the ex-Soviet state of 45
million. U.S. President Barack Obama signed an order authorizing
financial sanctions, while EU leaders halted trade and visa talks with
Russia and threatened
punitive economic measures in what’s become the worst rift
between Russia and the West since the Cold War era.
- Echoes of U.S. Subprime Seen in China Debt Ratings for Dagong.
Competition among China’s credit-rating agencies is intensifying,
leading to a slide in standards reminiscent of what happened in the U.S.
before the financial crisis, according to Dagong Global Credit Rating
Co. China’s onshore bond market faces the possibility of its first
default, with Shanghai Chaori Solar Energy Science & Technology Co.
(002506) having warned this week it may not be able to make an 89.8
million yuan ($14.7 million) interest payment due today. The solar cell
maker sold 1 billion yuan of five-year debt in March 2012 and the notes
were rated AA, the fourth-highest investment grade, by Pengyuan Credit
Rating Co. when
they were issued. The debt was subsequently downgraded twice,
most recently to BBB+ in April 2013.
- Zombies Spreading Shows Chaori Default Just Start: China Credit.
The number of Chinese companies with debt double equity has surged
since the global financial crisis, suggesting the first onshore bond
default won’t be the last. Publicly traded non-financial companies with
debt-to-equity ratios exceeding 200 percent have jumped 57 percent to
256 from 163 in 2007, according to data compiled by Bloomberg on 4,111 corporates. The yield on five-year AA- notes leapt 13 basis points in two days to 7.82 percent on March 6, the most in almost four months,
after Shanghai Chaori Solar Energy Science & Technology Co.
(002506) said it won’t be able to fully pay a coupon due today on its
March 2017 bonds.
- Emerging World Poses More Danger Than in 1990s: Cutting Research. Developed
economies are less
resilient to an emerging-market shock than they were in the 1990s, when
crises from Thailand to Russia rattled investors without triggering a
global recession. That’s according to an 81-page study released March 5
by Morgan Stanley economists and strategists. They estimate a
1990s-style slump in emerging-market demand would create an average drag
of 1.4 percent for four quarters on the growth of the U.S., while the
euro area and Japan probably would be tipped into recession. Reasons
for the greater vulnerability include the fact that developing markets,
and especially China, now have a stronger impact on the world’s
economy, supply chains and trade. Emerging economies account for about
half of global gross domestic product, up from 37 percent in 1997-1998.
Developed economies are also more exposed to their smaller
counterparts via exports, corporate revenue and banking, and the
financial crisis of 2008 means they are weaker now than two
decades ago, said the authors, including London-based Manoj Pradhan.
- China
Heralding $1.5 Trillion Emerging Debt Wall: Credit Markets. A surge in
interest rates and the worst currency rout since 2008 in developing
nations from Russia to Brazil are inflating corporate borrowing costs as
$1.5 trillion of obligations come due by the end of 2015. Companies in
the MSCI Emerging-Market Index are facing the highest debt loads since
2009 as profit margins narrow to the least in four years, according to
data compiled by Bloomberg. More than 36% of bonds and loans by Turkish
companies will mature by 2015, while Chinese firms need to pay of $630
billion, or 29%, of their borrowings just as the country faces its
first-ever onshore corporate-bond default.
- RBA’s Stevens Says He Doesn’t See Need to Reduce Rates Further. Australia’s central bank Governor
Glenn Stevens said he’s not sure how long a flagged period of
interest-rate stability will last and doesn’t see the need to
further loosen “very accommodative” policy at the moment. “I haven’t said how long a period because I don’t know,”
Stevens told a parliamentary panel in Sydney. “That’s a bit of
a shift on our part, where we had been saying that there might
be scope to go down a bit more if needed. I don’t think we do
need to at this point in time.”
- Asian Stocks Pare Gain as Risk Falls Before U.S. Payrolls.
Asian stocks pared gains, with the regional index heading for a fourth
weekly increase, as bond risk fell to the lowest in 11 weeks before U.S.
jobs data today. Indonesia’s rupiah jumped and nickel headed for its
longest winning streak since 2010. The MSCI Asia Pacific Index added 0.3 percent by 1:07 p.m. in Tokyo.
Wall Street Journal:
- Ukraine's Crimea Raises Tension by Setting Secession Vote. Western Diplomats Convene in Rome in Bid to Resolve Ukrainian Crisis. Crimea's Moscow-backed government voted to
secede from Ukraine and join Russia and accelerated a snap referendum to
ratify the move, a dramatic escalation of tension that pushed the West
closer to imposing sanctions if Russian troops don't withdraw. The
scheduling of the vote for March 16 means that Crimea could be absorbed
into Russia in a matter of weeks. It also means the referendum could be
held while the region is under de facto Russian occupation—with no
opportunity for a free and fair campaign.
MarketWatch.com:
CNBC:
- Regulator deletes problematic broker data: Study. A study
released Thursday showed that the Financial Industry Regulatory
Authority "routinely deletes" problematic information that should be
highlighted on stockbrokers in data released to investors, The Wall Street Journal said.
Zero Hedge:
Washington Post:
Reuters:
- China says no casinos for resort island Hainan. China's
balmy holiday island of Hainan, long touted as a place where the
country could liberalise gambling, will not permit casinos, senior
officials announced this week. The decision may dampen investment appetite from scores of
international and national developers betting on stellar profits
in the southern province.
- Fed's Bullard the biggest market-mover in 2013, research shows. Federal Reserve Bank of St
Louis President James Bullard had the biggest impact on bond markets of all Fed policymakers in 2013, according to a new
tally. Research by Macroeconomic Advisers showed Bullard, seen as a
policy centrist, beat former Fed Chairman Ben Bernanke for the
mantle of most market-moving U.S. central banker, although the
Fed chief had a bigger impact on a per-speech basis.
AFP:
- Turkey PM says YouTube, Facebook(FB) could be banned.
Turkey's embattled prime minister has warned that his government could
ban social media networks YouTube and Facebook after a raft of online
leaks added momentum to a spiralling corruption scandal.
The
Obama administration will press ahead Friday with tough requirements
for new coal-fired power plants, moving to impose for the first time
strict limits on the pollution blamed for global warming.
The proposal would help reshape where Americans get electricity, away
from a coal-dependent past into a future fired by cleaner sources of
energy. It's also a key step in President Barack Obama's global warming
plans, because it would help end what he called "the limitless dumping
of carbon pollution" from power plants.
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.99
Evening Recommendations
Goldman Sachs:
- Cut (ANR) to Sell, target $4.
JPMorgan:
- Cut Russian stocks to Underweight from Overweight.
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 125.0 -5.0 basis points.
- Asia Pacific Sovereign CDS Index 94.0 -3.0 basis points.
- NASDAQ 100 futures +.13%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Trade Deficit for January is estimated at -$38.5B versus -$38.7B in December.
- The Change in Non-Farm Payrolls for February is estimated at 149K versus 113K in January.
- The Unemployment Rate for February is estimated at 6.6% versus 6.6% in January.
- Average Hourly Earnings for February is estimated to rise +.2% versus a +.2% gain in January.
3:00 pm EST
- Consumer Credit for January is estimated at $14.0B versus $18.756B in December.
Upcoming Splits
Other Potential Market Movers
- The Fed's Dudley speaking and German Industrial Production could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer
and industrial 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 day.
Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.12 +1.66%
- Euro/Yen Carry Return Index 148.95 +1.60%
- Emerging Markets Currency Volatility(VXY) 8.72 +.81%
- S&P 500 Implied Correlation 54.22 +1.65%
- ISE Sentiment Index 182.0 +29.08%
- Total Put/Call .90 +18.42%
Credit Investor Angst:
- North American Investment Grade CDS Index 62.25 -.57%
- European Financial Sector CDS Index 85.75 -1.44%
- Western Europe Sovereign Debt CDS Index 49.68 -2.59%
- Asia Pacific Sovereign Debt CDS Index 94.05 -3.02%
- Emerging Market CDS Index 295.91 -1.96%
- China Blended Corporate Spread Index 359.15 -.53%
- 2-Year Swap Spread 13.5 +.25 basis point
- TED Spread 19.0 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -3.25 +3.0 basis points
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 239.0 +3.0 basis points
- China Import Iron Ore Spot $116.90/Metric Tonne +.17%
- Citi US Economic Surprise Index -28.0 -.1 point
- Citi Emerging Markets Economic Surprise Index 12.0 unch.
- 10-Year TIPS Spread 2.22 +3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +158 open in Japan
- DAX Futures: Indicating -18 open in Germany
Portfolio:
- Slightly Lower: On losses in my biotech/retail sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- Crimea Makes Move to Join Russia as EU Clashes on Sanctions. Crimean lawmakers called a March 16 referendum to
return Ukraine’s Black Sea peninsula to its former Soviet-era master as
European Union leaders quarreled over how to tame Russia for its
military actions there. As the region’s leaders
pushed for a split away from Ukraine, The U.S. banned visas for
officials it said were complicit in violating the sovereignty of the
ex-Soviet state of 45 million. A summit in Brussels started with eastern
EU states calling for a tough line on the Kremlin and their western
counterparts offering Russia more time to pull back its forces in Crimea
before imposing sanctions. “This so-called referendum has no legal grounds,” Ukrainian Prime
Minister Arseniy Yatsenyuk said in Brussels after meeting EU leaders.
“We urge the Russian government not to support those who claim
separatism in Ukraine. Crimea was, is, and will be an integral part
of Ukraine.”
- Republicans Seek Quick Congress Action on Russia Sanctions. Citing what they call a pattern of foreign policy failures
by Obama, Republicans yesterday said it was imperative for
Congress to respond quickly to persuade Russian President
Vladimir Putin to loosen his grip on the Crimea region. Putin is “counting on the United States to sit back and
watch him do and take whatever he wants,” House Speaker John Boehner, an Ohio Republican, said today.
- EU Halts Russian Trade, Visa Talks With Threat of More Curbs. European
Union governments halted
trade and visa negotiations with Russia and prepared sanctions against
selected Russian officials to protest the Kremlin’s assertion of control
over Ukraine’s southern Crimea region. EU leaders sent the diplomatic signals at a summit in
Brussels today that pitted western European countries keen to
offer Russia more time to pull back its forces before imposing
sanctions against eastern countries demanding retribution now.
- Draghi Says Deflation Danger Should Abate as Economy Revives. European
Central Bank President Mario Draghi signaled that deflation risks in
the euro region are easing for now after new forecasts showed that
inflation will approach their target by the end of 2016. “The news
that has come out since the last monetary policy meeting are by and
large on the positive side,” he told reporters in Frankfurt today after
the central bank kept its main interest rate at 0.25 percent. He also
indicated that money markets are under control
at the moment, lessening the need for emergency liquidity measures.
- China Bond Sales Axed as Looming Default Boosts Junk Yields. Four companies pulled domestic bond
sales and yields on speculative-grade debt jumped the most since
November after Shanghai Chaori Energy Science & Technology Co.
warned of what would be China’s first onshore default. The yield on five-year AA- notes rose eight basis points to 7.77 percent yesterday, the biggest increase since Nov. 15, ChinaBond data show. The
spread over similar-maturity government bonds widened seven basis
points to 356 basis points. Ratings of AA- or below are equivalent to
non-investment grades globally,
according to Haitong Securities Co., the nation’s second-biggest
brokerage.
- Brazil Signals Additional Tightening on Persistent Inflation. Brazil’s central bank signaled today
it will continue tightening monetary policy as above-target
inflation remains persistent. Swap rates rose. Policy makers led by bank President Alexandre Tombini voted
unanimously on Feb. 26 to slow the pace of rate increases,
raising the benchmark Selic rate to 10.75 percent from 10.5
percent after six straight half-point increases. The central
bank’s monetary policy will help offset inflationary pressure
from a currency depreciation, officials said in the minutes of
their Feb. 25-26 meeting published online today.
- Gold Futures Advance on Outlook for U.S. Rates, Europe Inflation.
Gold futures rose for the second
straight day amid forecasts that U.S. borrowing costs will hold
at a record low and European inflation will pick up gradually. Through yesterday, gold climbed 11 percent this year on
demand for a haven amid turmoil in Ukraine and concern that the
U.S. is faltering.
- World Food Prices Jump Most in 19 Months as Oils and Grains Rise. World food prices rose 2.6 percent
in February, the biggest jump in 19 months, as prices for
cooking oils, grains, dairy and sugar all rose, the United Nations’ Food & Agriculture Organization said. An index of 55 food items rose to 208.1 points from a
restated 202.9 in January, when it dropped to the lowest level
since June 2012, the Rome-based FAO wrote in an online report
today. The gauge is still down 2.1 percent from a year earlier.
- Banks Enriched by Junk Resist U.S. Regulator Standards. More than five months ago, the Federal Reserve and Office of the
Comptroller of the Currency told some of the biggest banks to improve
underwriting standards for non-investment-grade loans. The market is
showing few signs of tightening as lenders chase lucrative fees.
Banks are arranging junk-rated deals that leave companies with debt
levels exceeding guidelines set by regulators. Bank supervisors are
insisting on minimum standards as they seek to
avoid a repeat of the losses that occurred during the credit crisis,
which sent the global speculative-grade default rate to more than 13
percent in 2009, the highest since the Great Depression. The
persistence
of deals with questionable terms shows that, so far, regulators are
having trouble deterring excessive risk-taking simply by asking.
“Jawboning rarely works if there’s money to be made,” said Mark
Calabria, director of financial regulation studies at the
Washington-based Cato Institute, a research group that espouses limited
government. “History
doesn’t repeat itself but sometimes it rhymes -- I certainly have those
concerns.”
Wall Street Journal:
Fox News:
- Fox News poll: Obama's approval hits new low. For the first time in a Fox News poll, fewer than four voters in ten --
38 percent -- approve of President Obama’s job performance. Fifty-four
percent disapprove. Before now Obama’s worst job rating was 40-55
percent in November 2013. Last month 42 percent approved and 53 percent
disapproved (February 2014).
MarketWatch:
ZeroHedge:
ValueWalk:
Business Insider:
CNN:
Reuters:
- European stocks lose steam as ECB sits on its hands. European stock markets gave up their gains on Thursday after the European Central Bank chose not to take action to inject more liquidity into the region's
financial system, disappointing some investors.
- Patience wearing thin with French reform results.
France is facing pressure to deliver on long-promised, deep budget
savings in the next couple of weeks to keep the increasingly strained
faith of its EU partners, bond markets and ratings agencies.
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.60% 2) Biotech -1.65% 3) Disk Drives -1.41%
Stocks Falling on Unusual Volume:
- SUI, PLCE, SPLS, TCRD, CPA, RGEN, GEVA, VGR, MXWL, RNET, MYRG, COST, AVAV, CIEN, OSIR, WX, ABTL, SJI, ZU, UIL, HCI, BITA, SPTN, ARWR, VRX, P, ZU, AUXL and PRFT
Stocks With Unusual Put Option Activity:
- 1) BYD 2) SPLS 3) JOSB 4) JOY 5) SLB
Stocks With Most Negative News Mentions:
- 1) PLCE 2) MBI 3) CLR 4) AUXL 5) LOW
Charts:
