Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 16.19 +11.89%
- Euro/Yen Carry Return Index 146.92 -1.45%
- Emerging Markets Currency Volatility(VXY) 8.83 -.90%
- S&P 500 Implied Correlation 57.52 +4.96%
- ISE Sentiment Index 73.0 -23.16%
- Total Put/Call .95 -1.04%
Credit Investor Angst:
- North American Investment Grade CDS Index 67.45 +3.32%
- European Financial Sector CDS Index 94.84 +5.91%
- Western Europe Sovereign Debt CDS Index 49.01 unch.
- Asia Pacific Sovereign Debt CDS Index 101.02 +.81%
- Emerging Market CDS Index 327.78 +1.49%
- China Blended Corporate Spread Index 372.16 +1.76%
- 2-Year Swap Spread 14.13 +.89%
- 3-Month EUR/USD Cross-Currency Basis Swap -4.75 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 231.0 -5.0 basis points
- China Import Iron Ore Spot $111.50/Metric Tonne +3.82%
- Citi US Economic Surprise Index -30.10 +4.0 points
- Citi Emerging Markets Economic Surprise Index -2.20 -5.8 points
- 10-Year TIPS Spread 2.17 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -430 open in Japan
- DAX Futures: Indicating -85 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Night Trading
- Asian equity indices are unch. to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 129.50 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 100.25 +2.0 basis points.
- NASDAQ 100 futures +.40%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Retail Sales Advance for February are estimated to rise +.2% versus a -.4% decline in January.
- Retail Sales Ex Auto for February are estimated to rise +.1% versus unch. in January.
- Retail Sales Ex Auto and Gas for February are estimated to rise +.2% versus a -.2% decline in January.
- Initial Jobless Claims are estimated to rise to 330K versus 323K the prior week.
- Continuing Claims are estimated to fall to 2903K versus 2907K prior.
- The Import Price Index for February is estimated to rise +.5% versus a +.1% gain in January.
10:00 am EST
- Business Inventories for January are estimated to rise +.4% versus a +.5% gain in December.
2:00 pm EST
- The monthly budget deficit for February is estimated at -$195.0B versus -$203.5B in January.
Upcoming Splits
Other Potential Market Movers
- The Fed's Powell speaking, Stanley Fischer nomination hearing, China retail sales/industrial production, BoJ Minutes, 30Y $13B
auction, Bloomberg March US Economic Survey, weekly Bloomberg Consumer
Comfort Index, weekly EIA natural gas inventory report, (UTX) investor
meeting, (DYN) investor day, (OMG) investor day, (TXN) capital mgmt strategy update and the (PPG) investor day 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: Modestly Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 14.67 -.88%
- Euro/Yen Carry Return Index 148.98 unch.
- Emerging Markets Currency Volatility(VXY) 8.83 -.90%
- S&P 500 Implied Correlation 55.30 -.47%
- ISE Sentiment Index 89.0 +3.49%
- Total Put/Call .90 +9.76%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.89 +1.34%
- European Financial Sector CDS Index 89.34 +2.78%
- Western Europe Sovereign Debt CDS Index 49.01 +2.64%
- Asia Pacific Sovereign Debt CDS Index 100.41 +2.16%
- Emerging Market CDS Index 324.98 +2.16%
- China Blended Corporate Spread Index 365.73 +.58%
- 2-Year Swap Spread 13.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -4.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 236.0 -3.0 basis points
- China Import Iron Ore Spot $107.40/Metric Tonne +2.38%
- Citi US Economic Surprise Index -34.10 -.5 point
- Citi Emerging Markets Economic Surprise Index 3.60 +.6 point
- 10-Year TIPS Spread 2.19 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -50 open in Japan
- DAX Futures: Indicating -1 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
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.
