Style Outperformer:
Sector Outperformers:
- 1) Computer Hardware +1.22% 2) I-Banks +1.19% 3) HMOs +1.08%
Stocks Rising on Unusual Volume:
- JASO, STAA, MOBI, KNDI, LPL, HTZ, SINA, IRBT, SC, ISIS, UCTT, CODE, EGHT and PTEN
Stocks With Unusual Call Option Activity:
- 1) ASH 2) RPTP 3) MEET 4) NCR 5) SWC
Stocks With Most Positive News Mentions:
- 1) AGU 2) T 3) REGN 4) GOOG 5) TWTR
Charts:
Weekend Headlines
Bloomberg:
- West Warns Russia Not to Annex Crimea After Referendum. The U.S. and the European Union
warned Russia not to annex Crimea after a referendum in Ukraine’s southern region, setting the stage for sanctions on
Russia in the worst diplomatic standoff since the Cold War. A total of 95.5 percent of voters in Black Sea peninsula
backed leaving Ukraine to join Russia in the referendum,
preliminary results show. The Ukrainian government, the EU and
the U.S. consider the vote illegal, while Russia said it “fully
met international norms.” Turnout was 82.7 percent, according
the election commission.
- Russia Facing Escalating Sanctions as EU Foreign Ministers Meet. European and U.S. officials will
probably hold their most punitive sanctions on Russia in reserve
as they wait for President Vladimir Putin to show his hand on
whether he plans to push his forces deeper into Ukraine. EU foreign ministers due to meet in Brussels tomorrow are
set to impose travel bans and asset freezes on some Russian
officials as Putin’s government prepares to annex Crimea after
today’s referendum on secession from Ukraine. The “additional
and far-reaching consequences” that were floated by the bloc on
March 6 will be held back until EU leaders meet later this week
in a bid to corral Putin’s ambitions in eastern Ukraine.
- Riots Fuel Fear of Russian Provocation in Ukraine’s Second City. Police
patroled Ukraine’s second-biggest city, near the Russian border, after
riots last night left two people dead and an officer critically wounded.
An attack late yesterday on a Ukrainian cultural organization’s office
was a “well planned provocation by pro-Russian activists,” Kharkiv’s
regional governor, Ihor Baluta, said today in statement on the
administration’s website. A fire still smoldered this morning by the
office of Prosvita, a group set up in 1868 to protect and promote
Ukraine’s language, as
forensics officers removed evidence. The blaze burned a smaller
building in a courtyard and the offices were ransacked.
- Micex Rout Seen Worsening as ETF Shorts Grow: Russia Overnight.
Russian stock traders are bracing
for more losses after the benchmark index entered a bear market last
week as concern mounted the country’s push to annex Ukraine’s Crimea
region will lead to international sanctions. Wagers that the Market
Vectors Russia (RSX:US) exchange-traded fund will decline in New York
trading reached a 22-month high after
the Micex Index (INDEXCF) fell 7.6 percent in Moscow last week,
extending
its rout this month to 14 percent. Open interest on put options
giving investors the right to sell the ETF reached about 283,000
on March 13, almost double the four-week average and up from a
2014 low of 54,000 in January, data compiled by Bloomberg show.
- Yuan Volatility Climbs to 18-Month High as Trading Band Doubles.
A gauge of expected price swings in China’s yuan climbed to an 18-month
high and the offshore exchange rate weakened as the central bank
doubled the currency’s trading limits versus the dollar. One-month
implied volatility, which is used to price options, rose 29 basis
points, or 0.29 percentage point, to 2.72 percent as of 8:22 a.m. in
Hong Kong, according to data compiled by Bloomberg. It touched 2.73
percent, the highest since September 2012. The offshore yuan
weakened 0.11 percent to 6.1623 per dollar and reached the lowest
intra-day level since May. The People’s Bank of China will announce the
daily reference rate at around 9:15 a.m, while the yuan in Shanghai will
start trading at 9:30 a.m.
- Twin-Deficit Risk Looms for MOF
as Yield Jump Seen: Japan Credit. Japan's Ministry of Finance is
flagging the risk of twin current-account and fiscal deficits for the
first time in at least three decades, just as faster inflation threatens
to drive up bond yields. The shortfall in the broadest measure of trade
widened almost fivefold in January from a year earlier and the ministry
said in a March 10 paper that export deficits could eventually
overwhelm income from overseas investments. While Bank of Japan stimulus
has weakened the yen by 6.9 percent in the past year against its peers,
it hasn't helped the nation's overseas sales enough to offset swelling
import costs. "If a current-account shortfall becomes the trend, Japan's
fiscal deficits will draw attention and threaten to spur a jump in
yields amid capital flight," said Hidenori Suezawa, an SMBC Nikko
Securities Inc. analyst who is a member of a MOF advisory panel on
government finances. "Such a risk will increase from 2015 onwards."
- ECB Data Demands Called Excessive by Banks Facing Asset Review. Euro-area
banks urged the European Central Bank to reduce the information they
have to provide as part of a review of their balance sheets because they
say the demands are excessive. European Banking Federation Chief
Executive Officer Guido Ravoet wrote to the ECB yesterday, asking it to
consider “substantially simplifying” the template for part of the Asset
Quality Review. In the letter, which was obtained by Bloomberg News, the
EBF also said that some of the data sought is not
useful. A spokeswoman for the ECB couldn’t immediately confirm
that the letter had been received.
- Nigerian Troops Battle Islamist Insurgents in Northeast City. Nigerian troops repelled an attack
by Boko Haram insurgents attempting to free fellow Islamists at
an army detention center in the northeastern city of Maiduguri. Soldiers fought with rebels remaining after an attack on
the Giwa Barracks in Maiduguri yesterday, killing and arresting
some of them, Major-General Chris Olukolade said today in an e-mailed statement. One soldier died, while a “massive armory”
used by Boko Haram around the Lake Chad region was captured,
Olukolade said.
- Asian Stocks Slip on Crimea Vote as Gold to Silver Climb.
Asian stocks fell, extending the regional index’s steepest weekly slump
since 2012, as western nations disputed Crimea’s vote to rejoin Russia
and China eased control over the yuan. Gold drove an advance in precious
metals while the yen maintained gains against the dollar. The MSCI
Asia Pacific Index lost 0.2 percent by 9:45 a.m. in Tokyo, extending
last week’s worst weekly decline since May 2012. Japan’s Topix Index
dropped 0.4 percent.
- Copper Trades Near 2010 Low as China Widens Yuan Trading Band. Copper in London traded near a 44-month low as China doubled the yuan’s trading limits versus the dollar. The metal for delivery in three months was little changed at $6,466.75 a metric ton at 10:39 a.m. in Hong Kong after
rising as much as 0.3 percent and falling as much as 0.4
percent. The contract closed at $6,415 on March 13, the lowest
since July 2010.
- Speculators See Gold Gaining With Wheat on Ukraine: Commodities.
After shunning gold and wheat for most of last year, hedge fund
managers are piling back in as the escalating crisis in Ukraine spurs a
rebound in the prices of both commodities. Speculators have the
biggest bet on a gold rally since December 2012 and turned bullish on
wheat for the first time since November, government data show.
Bullion last week reached a six-month high and wheat entered a bull
market as Crimea prepared for a referendum. A majority in the disputed
vote March 16 chose to leave Ukraine and join Russia, exit polls showed.
Wall Street Journal:
ValueWalk:
Yahoo Finance:
AFP:
- State TV says Russia could turn US to 'radioactive ash'. A leading anchor on Russian state television on Sunday described
Russia as the only country capable of turning the United States into
"radioactive ash", in an incendiary comment at the height of tensions
over the Crimea referendum. "Russia is the only country in the
world realistically capable of turning the United States into
radioactive ash," anchor Dmitry Kiselyov said on his weekly news show on
state-controlled Rossiya 1 television.
Telegraph:
- China to Control Population of 'Super Large' Cities. China will
strictly control population of large cities with population of more than
5m, according to the text of China's 2014-202 urbanization plan.
Weekend Recommendations
Barron's:
- Bullish commentary on (AEM), (CQB), (PX), (FEIC), (RHT) and (EMC).
- Bearish commentary on (MATX) and (MW).
Night Trading
- Asian indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 135.50 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 101.75 -.5 basis point.
- FTSE-100 futures -.04%.
- S&P 500 futures +.03%.
- NASDAQ 100 futures -.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for March is estimated to rise to 7.0 versus 4.48 in February.
9:00 am EST
- Net Long-Term TIC Flows for January are estimated at $30.0B versus -$45.9B in December.
9:15 am EST
- Industrial Production for February is estimated to rise +.2% versus a -.3% decline in January.
- Capacity Utilization for February is estimated to rise to 78.6% versus 78.5% in January.
- Manufacturing Production for February is estimated to rise +.3% versus a -.8% decline in January.
10:00 am EST
- The NAHB Housing Market Index for March is estimated to rise to 50 versus 46 in February.
Upcoming Splits
Other Potential Market Movers
- The Eurozone CPI, China property price report and the BofA Smid-Cap Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial
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 week.
U.S. Week Ahead by MarketWatch (audio).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week modestly lower on Russia/Ukraine
tensions, rising global growth fears, increasing emerging
markets/European debt angst, technical selling, a stronger yen and
profit-taking. My intermediate-term trading indicators are giving
neutral signals and the Portfolio is 25% net long heading into the week.
S&P 500 1,841.13 -1.97%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 1,181.41 -1.82%
- S&P 500 High Beta 30.67 -3.0%
- Wilshire 5000 19,454.20 -1.94%
- Russell 1000 Growth 867.23 -2.06%
- Russell 1000 Value 924.58 -1.81%
- S&P 500 Consumer Staples 434.89 -.38%
- Morgan Stanley Cyclical 1,466.39 -2.96%
- Morgan Stanley Technology 913.21 -2.72%
- Transports 7,475.79 -1.53%
- Bloomberg European Bank/Financial Services 105.72 -4.41%
- MSCI Emerging Markets 38.65 -2.84%
- HFRX Equity Hedge 1,183.64 -.30%
- HFRX Equity Market Neutral 963.10 -.28%
Sentiment/Internals
- NYSE Cumulative A/D Line 207,945 -1.31%
- Bloomberg New Highs-Lows Index 87 -970
- Bloomberg Crude Oil % Bulls 19.23 -15.88%
- CFTC Oil Net Speculative Position 406,832 -4.46%
- CFTC Oil Total Open Interest 1,697,240 +.56%
- Total Put/Call .77 -6.10%
- ISE Sentiment 80.0 -26.61%
- Volatility(VIX) 17.82 +26.29%
- S&P 500 Implied Correlation 59.02 +9.01%
- G7 Currency Volatility (VXY) 7.58 +3.13%
- Emerging Markets Currency Volatility (EM-VXY) 9.09 +4.84%
- Smart Money Flow Index 11,605.73 -2.15%
- ICI Money Mkt Mutual Fund Assets $2.678 Trillion -.08%
- ICI US Equity Weekly Net New Cash Flow $1.945 Billion
- AAII % Bulls 41.3 +2.0%
- AAII % Bears 26.8 +.7%
Futures Spot Prices
- Reformulated Gasoline 296.40 +.56%
- Heating Oil 294.31 -1.97%
- Bloomberg Base Metals Index 182.09 -3.83%
- US No. 1 Heavy Melt Scrap Steel 372.93 USD/Ton -.37%
- China Iron Ore Spot 110.10 USD/Ton -3.59%
- UBS-Bloomberg Agriculture 1,498.39 -1.21%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 2.3% +40 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.1865 +12.65%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 121.12 +.16%
- Citi US Economic Surprise Index -32.70 -1.5 points
- Citi Emerging Markets Economic Surprise Index -8.0 -22.3 points
- Fed Fund Futures imply 32.0% chance of no change, 68.0% chance of 25 basis point cut on 3/19
- US Dollar Index 79.41 -.36%
- Euro/Yen Carry Return Index 147.11 -1.59%
- Yield Curve 231.0 -11 basis points
- 10-Year US Treasury Yield 2.65% -14 basis points
- Federal Reserve's Balance Sheet $4.138 Trillion +.23%
- U.S. Sovereign Debt Credit Default Swap 26.18 -3.47%
- Illinois Municipal Debt Credit Default Swap 139.0 -2.11%
- Western Europe Sovereign Debt Credit Default Swap Index 48.0 +4.34%
- Asia Pacific Sovereign Debt Credit Default Swap Index 101.83 +6.0%
- Emerging Markets Sovereign Debt CDS Index 304.97 +7.26%
- Israel Sovereign Debt Credit Default Swap 89.69 -1.44%
- Russia Sovereign Debt Credit Default Swap 278.15 +28.51%
- China Blended Corporate Spread Index 379.16 +6.67%
- 10-Year TIPS Spread 2.18% -5 basis points
- 2-Year Swap Spread 14.25 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.25 -2.5 basis points
- N. America Investment Grade Credit Default Swap Index 66.90 +6.32%
- European Financial Sector Credit Default Swap Index 94.21 +9.71%
- Emerging Markets Credit Default Swap Index 328.60 +5.89%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 96.0 unch.
- M1 Money Supply $2.815 Trillion +3.82%
- Commercial Paper Outstanding 1,021.0 -.70%
- 4-Week Moving Average of Jobless Claims 330,500 -6,000
- Continuing Claims Unemployment Rate 2.2% unch.
- Average 30-Year Mortgage Rate 4.37% +9 basis points
- Weekly Mortgage Applications 373.30 -2.12%
- Bloomberg Consumer Comfort -27.6 +.9 point
- Weekly Retail Sales +2.5% -40 basis points
- Nationwide Gas $3.51/gallon +.03/gallon
- Baltic Dry Index 1,468 -4.86%
- China (Export) Containerized Freight Index 1,075.41 -1.05%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 30.0 unch.
- Rail Freight Carloads 244,015 -5.31%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (8)
- RGDO, RCAP, EPL, BYD, PAY, NMIH, CACQ and HRG
Weekly High-Volume Stock Losers (8)
- OUTR, ESPR, FEYE, BNFT, AEO, CSV, EXPR and CUDA
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 17.42 +7.46%
- Euro/Yen Carry Return Index 146.93 -.23%
- Emerging Markets Currency Volatility(VXY) 9.09 +9.68%
- S&P 500 Implied Correlation 59.17 +3.88%
- ISE Sentiment Index 92.0 +26.03%
- Total Put/Call .71 -31.73%
Credit Investor Angst:
- North American Investment Grade CDS Index 67.35 -.40%
- European Financial Sector CDS Index 94.84 -.66%
- Western Europe Sovereign Debt CDS Index 50.01 +2.04%
- Asia Pacific Sovereign Debt CDS Index 102.34 +.20%
- Emerging Market CDS Index 328.95 +.54%
- China Blended Corporate Spread Index 379.16 +1.88%
- 2-Year Swap Spread 14.25 unch.
- TED Spread 19.5 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 230.0 -1.0 basis point
- China Import Iron Ore Spot $110.10/Metric Tonne -1.26%
- Citi US Economic Surprise Index -32.70 -2.6 points
- Citi Emerging Markets Economic Surprise Index -8.0 -5.8 points
- 10-Year TIPS Spread 2.18 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -120 open in Japan
- DAX Futures: Indicating -23 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech sector longs and emerging markets shorts
- Market Exposure: 25% Net Long