Style Underperformer:
Sector Underperformers:
- 1) Homebuilders -1.31% 2) Hospitals -1.0% 3) Retail -.70%
Stocks Falling on Unusual Volume:
- SDLP, DL, EXXI, JAH, MX, EXPR, RM, INFY, VHC, DRC, POL, ED, RAVN, MW, NLNK, SALE, DATA, MNK, GWPH, AEO, IPAR, URBN, OGXI, AFAM, FMC, LPSN, BPI, SYNA, CZR, VRNS, EXPR and VHC
Stocks With Unusual Put Option Activity:
- 1) GLW 2) XLP 3) DISH 4) PBI 5) UTX
Stocks With Most Negative News Mentions:
- 1) AIG 2) GS 3) GM 4) YHOO 5) AXP
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.49% 2) Steel +.93% 3) Hospitals +1.06%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) APD 2) AEGR 3) PAY 4) GERN 5) AMBC
Stocks With Most Positive News Mentions:
- 1) T 2) AAL 3) GOOG 4) BA 5) FM
Charts:
Evening Headlines
Bloomberg:
- Crimea’s Russian Militia Swells as Referendum Risks Call to Arms. Vladimir Tyunin used to be the director of a humanitarian
institute in the Ukrainian city of Sevastopol. He now commands 100
trained men at the heart of the standoff between Russia and the West. “I
have a group of people that can do any kind of task,” Tyunin, 57, said
last week in the port on the Crimean peninsula. “These are special
forces. They can assault buildings, they can block buildings. We are
ready to protect ourselves.” As diplomats around the world seek
to defuse the crisis, Crimea is preparing for a March 16 referendum on
splitting from Ukraine and joining Russia. Pro-Moscow supporters like
Tyunin’s unit, which he says participated in the siege of the Ukraine
Navy’s headquarters, are on the front line of a conflict that so far has
been fought more with words than weapons.
- Misery Index Rising to 33-Year High on Abenomics: Japan Credit. Japanese
Prime Minister Shinzo Abe
looks set to drive an indicator of economic hardship to a 33-year high
by increasing taxes and prices amid stagnant wages. The misery index,
which adds the jobless rate to the level of inflation, will climb to 7
percentage points in the three months starting April 1 when Japan raises
its sales levy to 8 percent from 5 percent, based on the median estimates of economists in Bloomberg News surveys of unemployment and
consumer prices. That would be the highest level for the measure
since June 1981 when Japan was emerging out of depression after
the oil shocks in the 1970s.
- China Export Prowess Wanes in U.S., Europe. The Made
in China label is losing traction with its two biggest customers. After
three decades of gains, China’s share of U.S. imports has plateaued and
in
Europe it’s in decline.
- ETF Outflows Biggest in World as Economy Slumps: China Overnight. Exchange-traded funds focused on
China are posting the world’s biggest outflows amid concern
economic growth is slowing. Withdrawals from U.S.-based Chinese ETFs totaled $87.5
million March 10, the most among 46 nations, bringing this
year’s redemption to $380.7 million, according to data compiled
by Bloomberg. The iShares China Large-Cap ETF, the largest
Chinese exchange-traded fund in the U.S., fell 1.6 percent to
$33.90. The Bloomberg China-US Equity Index of the most-traded
stocks in the U.S. dropped 2 percent to 99.60, led by Vipshop Holdings Ltd. (VIPS:US).
- Asian Stocks Slide With Crude as China Concern Spurs Yen.
Asian stocks fell, with the regional index headed for a three-week low,
oil dropped and emerging-market and commodity-linked currencies
weakened amid concern that China’s economy may be faltering. Gold
advanced and copper traded near its lowest since July 2010. The MSCI Asia Pacific Index dropped 1.4 percent by 10:57 a.m. in Tokyo, set for the lowest close since Feb. 20 as a gauge
of Chinese stocks in Hong Kong slid 1.8 percent.
- Gold Climbs for Second Day as Ukraine Tension Spurs Haven Demand.
“The Ukraine situation is lending support to gold,” Frank McGhee, the
head dealer at Integrated Brokerage Services LLC in Chicago, said in a
telephone interview. “The fear premium is
back because of the developments.” Gold futures for April delivery rose 0.4 percent to settle at $1,346.70 an ounce at 1:37 p.m. on the Comex in New York. Yesterday, the price gained 0.2 percent. On March 3, the metal
reached $1,355, the highest for a most-active contract since
Oct. 30.
- WTI Oil Falls as U.S. Crude Supplies Rise; Brent Drops.
“Oil is caught up in the general concern that is emanating from China,” said Ric Spooner, a chief analyst at CMC Markets
in Sydney. “Increasing inventories last night didn’t help. If
West Texas does develop downward momentum from here, the next
support is at about $95.”
- Pimco Cuts Government Debt on Outlook for Fed Buying.
Bill Gross, who runs the world’s biggest bond fund at Pacific
Investment Management Co., cut holdings of Treasuries and U.S.
government debt in February as turmoil in Ukraine fueled haven demand
and investors bet the Federal Reserve will conclude bond purchases this
year. The proportion of the securities in the $236 billion Total
Return Fund (PTTRX) was 43 percent, the company’s website showed. That
compared with 46 percent in January, which was the most since at
least July, when Pimco revised how it classifies assets.
Mortgage debt accounted for 29 percent in February, the least
since July 2011, compared with 36 percent the previous month.
Wall Street Journal:
- ObamaCare's Secret Mandate Exemption. HHS quietly repeals the individual purchase rule for two more years. ObamaCare's implementers continue to roam the battlefield and shoot
their own wounded, and the latest casualty is the core of the Affordable
Care Act—the individual mandate. To wit, last week the Administration
quietly excused millions of people from the requirement to purchase
health insurance or else pay a tax penalty.
Fox News:
- Republican David Jolly beats Alex Sink in Florida special election. Republican David Jolly narrowly defeated Democrat Alex Sink on
Tuesday in a Tampa-area House race largely seen as a critical test for
ObamaCare. With nearly 100 percent of the vote counted, Jolly had 48.5 percent
of the vote to Sink's 46.7 percent. Libertarian Lucas Overby had 4.8
percent.
CNBC:
- Markets watching to see why copper getting scorched. Wary
financial markets are watching the decline in copper, to see
if the red metal is acting as a fire alarm for the global economy. With a
quiet economic calendar Wednesday, the Treasury's 10-year auction could
also take on a higher profile than normal, especially ahead of next
week's Fed meeting.
Zero Hedge:
Business Insider:
NY Times:
Reuters:
- U.S. refiners form lobby against easing crude export limits. Four
U.S. oil refiners,
trying to counter growing calls to lift the nation's ban on most crude
oil exports, have launched the first major lobbying effort to keep
abundant U.S. oil supplies from being sold overseas. Rising U.S. shale
oil production has opened the door to a possible revision of the
decades-old policy restricting most
exports of unrefined petroleum.
Financial Times:
- Engine of Wall Street profits sputters in first quarter. Wall
Street’s once lucrative fixed income divisions are set for their worst
start to the year since before the financial crisis, with revenue
declines of up to 25 per cent prompting banks to plan more redundancies
on top of the tens of thousands of job cuts they have already made.
China Securities Journal:
- China Funding Cost to Face Pressure on Freed Rates. Interest rate
liberalization in China will likely increase pressure on funding costs,
according to a commentary written by reporter Ren Xiao. Some capital
outflow can't be ruled out as yuan two-way volatility may become the
norm, the commentary says.
Evening Recommendations
Night Trading
- Asian equity indices are -1.50% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 1287.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 98.25 +4.25 basis points.
- NASDAQ 100 futures -.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+2,090,000 barrels versus a +1,429,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -1,800,000 barrels versus a
-1,604,000 barrel decline the prior week. Distillate supplies are
estimated to fall by -259,000 barrels versus a +1,414,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to fall by
-.2% versus a -.6% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The
G7 Meetings, $21B 10Y T-Note auction, weekly MBA mortgage applications
report, Australia Unemployment, UBS Consumer Conference, RBC
Consumer/Retail Conference, JPMorgan Gaming/Lodging/Restaurant/Leisure
Forum, could also impact trading today.
BOTTOM LINE: Asian indices are lower, boosted 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: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.57 +2.61%
- Euro/Yen Carry Return Index 148.91 -.37%
- Emerging Markets Currency Volatility(VXY) 8.85 +.80%
- S&P 500 Implied Correlation 55.13 +1.58%
- ISE Sentiment Index 81.0 -25.69%
- Total Put/Call .84 +1.20%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.07 +1.04%
- European Financial Sector CDS Index 86.92 -.40%
- Western Europe Sovereign Debt CDS Index 47.75 -1.11%
- Asia Pacific Sovereign Debt CDS Index 97.37 -1.34%
- Emerging Market CDS Index 318.43 +2.06%
- China Blended Corporate Spread Index 363.62 +2.43%
- 2-Year Swap Spread 13.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -4.0 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 239.0 -2.0 basis points
- China Import Iron Ore Spot $104.90/Metric Tonne +.19%
- Citi US Economic Surprise Index -33.60 -2.0 points
- Citi Emerging Markets Economic Surprise Index 3.0 +2.1 points
- 10-Year TIPS Spread 2.21 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -214 open in Japan
- DAX Futures: Indicating -23 open in Germany
Portfolio:
- Slightly Higher: On gains in index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Russia Gets Crimea Deadline as Yanukovych Warns of Civil War. Germany
told Russia it must switch course in Crimea by
next week or risk more sanctions as Ukraine’s deposed president warned
of a possible civil war. The European Union will discuss harsher
penalties on March 17 barring “obvious changes in Russia’s actions,”
German Foreign Minister Frank-Walter Steinmeier said today in Estonia. A
planned March 16 referendum in Crimea on whether to join Russia should
be halted, he said. Toppled President Viktor Yanukovych told reporters
in Russia that lawlessness is spreading in Ukraine, fomented by the
“fascists and ultranationalists” who are in charge in Kiev. “We don’t want a confrontation, but the actions of the Russian side make the preparations necessary,” Steinmeier said in Tallinn. “We continue to urge Russia to use the last possibilities that are still there for a diplomatic solution against
such an escalation. Otherwise, relations between Europe and Russia
won’t improve.”
- Russia Scraps Fifth Bond Auction as Crimea Crisis Deepens Slump. Russian
bonds declined, pushing
yields to the highest in 21 months, and stocks dropped as the
government canceled its fifth local-currency debt auction this
year amid escalating tension in Crimea. The Micex Index (INDEXCF)
dropped 2.3 percent to 1,308.70 by closing in Moscow, the lowest in a
week. Ruble government bonds due February 2027 fell for a third day,
lifting the yield 10 basis
points to 8.96 percent, the highest since June 2012.
- China Ties Backfire on Australia in Job Slump: Chart of the Day. A
plunge in exports from Chinese factories is reverberating 3,500 miles
south in Australia, as joblessness rises and iron ore prices slump the
most since 1999. Australia's increased reliance on shipments to China
hasn't stemmed unemployment, which rose to a decade high of 6% in
January.
- Rio Tinto Sees Iron Ore Volatility on China Credit Squeeze.
Rio Tinto Group (RIO), the world’s second-biggest iron ore shipper,
said short-term price fluctuations will continue after a credit squeeze
in China and high stockpiles plunged the commodity into a bear market. Closely held steel mills in China are “struggling to get funding at the moment,” said Joel Crane, a Melbourne-based
commodity analyst with Morgan Stanley Australia Ltd. “So
they’ll be refusing both contracted and spot iron ore, and
that’s led to the panic selling.”
- Iron’s Bear Market Drives Up Aussie Bond Risk: Australia Credit. Australia’s sovereign bond risk
rose toward the highest in six months relative to the U.S. as
the price of iron ore, the nation’s biggest export earner,
dropped to a 1 1/2-year low. The cost of credit-default swaps on Australian government
widened to 21.8 basis points more than that for U.S. Treasuries
this week, near the 22.1-basis-point gap on Feb. 21 that was the
most since September, data compiled by Bloomberg show. Benchmark
iron ore prices lost 27 percent from a five-month high on Aug.
14 as demand slows in the world’s second-largest economy just as
output rises.
- European Stocks Are Little Changed; African Barrick Falls.
European stocks were little changed, after swinging between gains and
losses, as investors weighed economic data and the growing conflict in
Ukraine for their impact on company earnings. African Barrick Gold Plc
plunged the most in 14 months after its majority shareholder sold a 10
percent stake. Galenica AG (GALN) tumbled the most since July 2012 as
its forecast fell short of some analysts’ estimates. Hannover Re fell
1.3 percent after
reporting a 35 percent drop in quarterly operating profit.
Geberit AG rallied to a record after naming a new chief
executive officer and saying profitability increased. The Stoxx Europe 600 Index added less than 0.1 percent to 331.49 at the close in London.
- WTI Oil Falls Below $100 for First Time in Three Weeks. WTI for April delivery dropped $1, or 1 percent, to $100.12
a barrel at 2:06 p.m. on the New York Mercantile Exchange.
Earlier, it touched $99.96, the lowest level since Feb. 14.
Futures are up 1.7 percent this year. The volume of all futures
traded was 24 percent above the 100-day average.
- UniCredit Posts Record Loss, Plans 8,500 Job Cuts. UniCredit
SpA (UCG), Italy’s biggest bank, posted a record 15 billion-euro ($20.8
billion) fourth-quarter loss as it set aside money for bad loans and
wrote down goodwill from acquisitions. It plans to cut 8,500 jobs.
Provisions for doubtful loans soared to 9.3 billion euros in the
quarter, more than double the year-ago level, while impairments,
including those on the goodwill of units in Italy, central and eastern
Europe and Austria, amounted to more than 9 billion euros, the
Milan-based lender said today.
Wall Street Journal:
- Probe Is Profiling Passengers, Exploring Many Possibilities. Search Widens Over Waters, Expands to Land in Southern Vietnam. Malaysian police said they were investigating whether a hijacking or
sabotage caused an airliner to vanish midair, and were compiling
psychological and personal profiles of passengers and crew.
- China Expands Into a World of Peril. Beijing Faces Mounting Vulnerabilities on the Global Stage. The impression that China often projects to
the world is one of supreme confidence, a country convinced that its
moment has arrived. That's been
particularly true since the 2008 global financial crisis when the idea
took root in China that America was on the wane—its time had come and
gone. This bred a new assertiveness that gave rise to anxious questions
in the region about how China intends to exercise its growing power.
MarketWatch:
CNBC:
- Big hedge fund money warns about tech bubble. Prominent
money managers are warning of a bubble in some technology stocks and
recommending investors avoid emerging markets in favor of Europe.
"The high probability is when you look back on this period five years
from now, you'll say some of these companies grew into their (earnings)
multiples … but I think biotech and other areas in tech have seen
multiple expansions beyond what we can justify beyond any kind of
reasonable cash flow expectations," Doug Silverman, co-founder of $6.7
billion hedge fund firm Senator Investment Group, said Monday at the
Portfolios with Purpose Awards Night in New York. "You can only call
it a bubble. But I have not guessed when it will end," Silverman added.
Rich Pzena of $23.7 billion Pzena Investments agreed. "Yeah, I think we
are in a bubble. I don't know if I would say it's broadly in tech
stocks. I think it's in certain stocks. But the hype feels like we're in
another Internet-type bubble like 1999," Pzena said.
ZeroHedge:
Business Insider:
Reuters:
- ECB to take tough stance in health check on banks. The European Central Bank
(ECB) will press euro zone banks to revalue their assets and
take a more realistic view on likely losses when it probes their
balance sheets in the coming months, signalling a new, more
aggressive era of banking supervision.
Style Underperformer:
Sector Underperformers:
- 1) Alt Energy -1.50% 2) Networking -1.06% 3) Banks -.93%
Stocks Falling on Unusual Volume:
- PLUG, OXLC, ACMP, TESO, EJ, HYGS, URBN, FGP, JAH, AEO, RKUS, UIS, IMOS, PRO, NES, LINE, IPWR, BPI, VIPS, AGIO, AMBC, UTHR, EBS, HA, APAM, CQB, HA, NXTM, OHRP, POST, MYGN and BPI
Stocks With Unusual Put Option Activity:
- 1) AEO 2) OIH 3) PLUG 4) XLI 5) DHI
Stocks With Most Negative News Mentions:
- 1) GM 2) FCEL 3) URBN 4) STT 5) FXI
Charts:
