Style Underperformer:
Sector Underperformers:
- 1) Gaming -.22% 2) Retail -.14% 3) Papers -.11%
Stocks Falling on Unusual Volume:
- CHH, HART, XLRN, CHKR, DSW, SFLY, MTSI, BIS, WRLD, ICLD, NDAQ, KNDI,
STAA, GME, SFM, FPRX, HMC, IIVI, SPN, DLR, SINA, UBSH, FMC, NVGS, DSW and STAA
Stocks With Unusual Put Option Activity:
- 1) CWH 2) NKE 3) MSFT 4) XLK 5) OIH
Stocks With Most Negative News Mentions:
- 1) GM 2) TSLA 3) CVS 4) INTL 5) UTIW
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Hospitals +2.49% 2) Biotech +2.12% 3) Software +1.79%
Stocks Rising on Unusual Volume:
- FF, MXWL, VNET, PVA, YNDX, RMBS, FDS, GTAT, ZU, LOCK and AR
Stocks With Unusual Call Option Activity:
- 1) CDE 2) VIAB 3) WLP 4) RMBS 5) IDRA
Stocks With Most Positive News Mentions:
- 1) CME 2) HPQ 3) JCI 4) T 5) ORCL
Charts:
Evening Headlines
Bloomberg:
- Putin Moves Toward Claiming Crimea as U.S. Joins EU on Sanctions. Russian President Vladimir Putin
took another step toward annexing Crimea, defying sanctions
imposed by the U.S. and European Union in the worst standoff
with Russia since the end of the Cold War. Acting in concert, the U.S. and EU unveiled penalties
yesterday on Russian and Ukrainian officials linked to efforts
to wrest Crimea from Ukraine. Putin responded by recognizing the
breakaway Black Sea region as a sovereign state while Western
leaders warned that Russia would face added sanctions, including
possibly on energy assets, if it moved deeper into Ukraine.
- Evergrande Bonds Decline Amid China Housing Bankruptcy. Stocks and bonds issued by Chinese
real estate companies slumped after the collapse of a private
developer added to concern that defaults are starting to mount
as the economy slows and the government reins in lending. Prices on the dollar bonds sold by Evergrande Real Estate
Group Ltd., the nation’s fourth largest developer by market
value, fell 0.5 cent on the dollar yesterday, sending yields to the highest since August. Prices
on Kaisa Group Holdings Ltd. (1638)’s bonds maturing in 2018 dropped to
a seven-month low. Shares of E-House China Holdings Ltd. (EJ), the
online real estate services provider, slid 2.6 percent while SouFun
Holdings Ltd. (SFUN) retreated
for a seventh day.
- China Home-Price Growth Slows in Big Cities on Tight Credit. Chinese new-home price growth
slowed last month, led by the four cities the government defines
as first tier, amid tighter credit to rein in excessive
borrowing and individual city measures to curb property prices.
Prices in Beijing and the southern business hub of Shenzhen
each rose 0.2 percent in February from a month earlier, the National
Bureau of Statistics said today. That was the slowest pace since October
2012. They added 0.4 percent in Shanghai, the smallest increase since
November 2012, and gained 0.5 percent in Guangzhou. Prices climbed in 57
of the 70 cities tracked by the
government. That compares with 62 in January.
- Japan Analysts Split on Fiscal Crisis Time as Tax Looms: Economy. Economists
are split over how long Japan’s government has to rein in the world’s
biggest debt burden, a Bloomberg News survey shows, adding to a debate
on whether the government should keep ratcheting up a sales tax. Eleven of 34 analysts said the government has four years or less to put fiscal policy on a sustainable path and avoid a
crisis, while seven said it has over 10 years. BNP Paribas SA
and Credit Suisse Group AG were among five saying it’s too late
to avert one. UBS AG says chances of a fiscal crisis are remote.
- Russia Sounds Alarm on Economic Crisis as West Imposes Sanctions. “The situation in the economy bears clear signs of a
crisis,” Deputy Economy Minister Sergei Belyakov said in Moscow
yesterday. The cabinet needs to refrain from raising the fiscal
burden on companies, which would be the “wrong approach,” he
said. “Taking money from companies and asking them afterward to
modernize production is illogical and strange.”
- Asian Stocks Rise From Five-Week Low on U.S. Factory Data. Asian stocks rose, with the
regional gauge rebounding from a five-week low, as data showing
an improvement in U.S. factory output boosted optimism in the
world’s biggest economy. The MSCI Asia Pacific Index climbed 0.4 percent to 134.65 as of 9:02 a.m. in Tokyo. The gauge slumped 3.5 percent last week as data on Chinese industrial production and retail sales
disappointed investors.
- Milk Costs Most Ever on Surging Demand for U.S. Dairy Exports.
Milk futures in Chicago jumped to an all-time high as surging U.S.
dairy exports depleted supplies available for domestic consumers. Shippers
sold 162,999 metric tons of milk powder, cheese, butterfat and whey in
January, up 19 percent from a year earlier, according to the latest data
from the U.S. Dairy Export
Council. Almost 15 percent of milk production went to exported
goods, up from 12 percent a year earlier, the group said. Cheese
shipments climbed 46 percent.
- Sony Corp. Said Cutting Jobs at Entertainment Division.
Sony Corp. (6758) began a new round of job cuts at its entertainment
division, said a person with knowledge of the situation, part of Chief
Executive Officer Kazuo Hirai’s effort to improve profitability at the
unit. The reductions are taking place at the Culver City,
California-based film and television studio, as well as other
locations worldwide, said the person, who asked not to be named
because the details aren’t yet public.
Wall Street Journal:
- Chinese Companies Caught in Yuan Riptide. Bets by Firms and Individuals on a Rise in Currency Face Losses as Country Changes Tack. China's decision to squeeze speculators out of its currency is causing pain for local companies and individual investors. The
yuan fell on Monday to its lowest level in 10 months against the dollar
after the government over the weekend doubled the currency's daily
trading range. The decision, foreshadowed by months of hints by Chinese
officials, followed a weekslong campaign by the country's central bank
to weaken the yuan. China is attempting
to reduce the amount of money flowing into the country from foreign
investors looking to profit on a rise in the yuan. The government sees
this cash as inflating asset prices and making the economy more
vulnerable to financial shocks.
- Taper Talk Slammed Strong Emerging Nations Most. New research argues emerging-market nations hit hardest in the run up to the Federal Reserve’s
decision to cut back its bond buying were those whose financial houses
were in the best order, relatively speaking—a finding contrary to much
recent conventional wisdom.
- Obama's Unserious Sanctions. The U.S. and Europe help lift the Russian stock market.
President
Obama and the European Union announced their sanctions
response to Vladimir Putin's rolling conquest of Crimea on Monday, and
the most accurate assessment came from financial markets. Moscow's
stock exchange, which has been battered for two weeks in fear of Western
sanctions, rose 3.7%. Congratulations, Mr. President. You gave the
Kremlin a sanctions relief rally. Mr. Obama had promised
"consequences" if Mr. Putin followed through with the Crimean
referendum, so we doubt even the Russian President thought the West's
actions would be this weak. Russian opposition leader
Alexei Navalny
tweeted from Moscow that the sanctions list was "of course,
funny." He added that "Obama only delighted all our crooks and
encouraged them." That turned out to be literally true when one of the Russians on Mr. Obama's list, Deputy Prime Minister
Dmitry Rogozin,
tweeted, "It seems to me that some kind of joker wrote the U.S. president's order :)" LOL.
Fox News:
- Ukraine officials pleading with US to provide military aid, lawmaker says. Ukrainian officials pleaded with visiting U.S. lawmakers this past
weekend to provide military aid, claiming their ousted president
intentionally gutted the nation's defenses so it would be vulnerable to a
Russian takeover, one of those U.S. lawmakers told Fox News. "They wanted arms," the lawmaker said, "even recognizing that it
could be cited by Putin as an excuse, a provocation for further military
action by him. They said Putin's goal has never been Crimea; his goal
is Kiev."
CNBC:
Zero Hedge:
ValueWalk:
Business Insider:
Telegraph:
Evening Recommendations
Cowen:
- Rated (CBI) Outperform, target $98.
- Rated (FLR) Outperform, target $90.
Night Trading
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 128.0 -7.5 basis points.
- Asia Pacific Sovereign CDS Index 97.5 -4.25 basis points.
- NASDAQ 100 futures +.13%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Consumer Price Index for February is estimated to rise +.1% versus a +.1% gain in January.
- The CPI Ex Food & Energy for February is estimated to rise +.1% versus a +.1% gain in January.
- Housing Starts for February are estimated to rise to 910K versus 880K in January.
- Building Permits for February are estimated to rise to 960K versus 937K in January.
9:00 am EST
- Net Long-Term TIC Flows for January are estimated at $40.0B versus -$45.9B in December.
Upcoming Splits
Other Potential Market Movers
- The German ZEW Index, weekly retail sales reports and the (SNCR) investor meeting 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: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.69 -11.95%
- Euro/Yen Carry Return Index 147.73 +.42%
- Emerging Markets Currency Volatility(VXY) 8.96 -1.32%
- S&P 500 Implied Correlation 55.07 -6.69%
- ISE Sentiment Index 90.0 +12.50%
- Total Put/Call .83 +7.79%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.09 -3.79%
- European Financial Sector CDS Index 90.20 -4.26%
- Western Europe Sovereign Debt CDS Index 49.56 -.90%
- Asia Pacific Sovereign Debt CDS Index 98.69 -3.08%
- Emerging Market CDS Index 321.72 -2.09%
- China Blended Corporate Spread Index 379.16 unch.
- 2-Year Swap Spread 13.75 -.5 basis point
- TED Spread 18.75 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.0 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .05% +1.0 basis point
- Yield Curve 233.0 +3.0 basis points
- China Import Iron Ore Spot $109.60/Metric Tonne -.45%
- Citi US Economic Surprise Index -35.80 -3.1 points
- Citi Emerging Markets Economic Surprise Index -8.70 -.7 point
- 10-Year TIPS Spread 2.19 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +203 open in Japan
- DAX Futures: Indicating +11 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
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Obama Says Putin Must Pull Back on Crimea Annexation.
President Barack Obama today imposed sanctions on seven top Russian
government officials and four others from Ukraine and warned Russia will
face more penalties if it doesn’t pull back from Crimea. “Continued
Russian military intervention in Ukraine will only deepen Russia’s
diplomatic isolation and exact a greater toll on the Russian economy,”
Obama said at the White House. The U.S. can “calibrate our response”
based on whether Russia chooses “to escalate or to de-escalate the
situation.”
- Ukraine Bonds Decline as Investors Weigh Aid Outlook After Vote. Ukraine’s Eurobonds maturing in June fell for the first time
in three days as investors sought clarity on the progress of
International Monetary Fund aid after a referendum moved the Crimea
region closer to secession. The government’s dollar notes
declined to 91.86 cents on the dollar from 92.16 on March 14, sending
the yield up 2.24 percentage points to 50.5 percent by 3:30 p.m. in
Kiev. The hryvnia slid 0.5 percent to 9.75 per dollar, set for the
weakest close this month, according to data compiled by Bloomberg.
- China Developer With $567 Million Debt Said to Collapse. A closely held Chinese real estate
developer with 3.5 billion yuan ($566.6 million) of debt has
collapsed and its largest shareholder was detained, said government officials familiar with the matter.
Zhejiang Xingrun Real Estate Co. doesn’t have enough cash to repay
creditors that include more than 15 banks, with China Construction Bank
Corp. (939) holding more than 1 billion yuan of its debt, according to
the officials, who asked not to be named
because they weren’t authorized to discuss the matter. The
company’s majority shareholder and his son, its legal
representative, have been detained and face charges of illegal
fundraising, the officials said.
- Europe Stocks Gain as RWE, Vodafone Rise on M&A Activity.
European stocks advanced, following their biggest weekly drop since
January, as companies from RWE AG to Vodafone (VOD) Group Plc rose amid
renewed merger-and-acquisition activity. RWE increased 1.3 percent after
L1 Energy agreed to spend 5.1 billion euros ($7.1 billion) on the
utility’s Dea division. Vodafone climbed 1.7 percent as the
telecommunications company agreed to buy Spanish cable operator Grupo
Corporativo Ono SA. Allianz SE rose the most in two months after the
insurer agreed to buy assets from Italy’s Unipol Gruppo Finanziario SpA.
The Stoxx Europe 600 Index added 1.1 percent to 325.83 at
the close of trading.
- WTI, Brent Oils Slip to Five-Week Lows. West
Texas Intermediate for April delivery dropped $1.32
cents, or 1.3 percent, to $97.57 a barrel at 12:46 p.m. on the New York
Mercantile Exchange. Futures touched $97.37, the lowest level since Feb.
7. The volume of all futures traded was 13
percent above the 100-day average.
- Risks Mount for Retirees in Limited Energy Partnerships. MLPs are more popular than ever.
They’re tax-exempt, publicly traded companies that own pipelines,
storage tanks and other cash-generating energy infrastructure and give
practically all their income to investors. In 2013, there were a record
21 initial public offerings valued at $8.8 billion and an all-time high
of more
than $11.9 billion flowed into funds investing in MLPs, according to
Morningstar Inc. Today, critics are raising warnings about growing dangers even while
retirees like Johns are piling in. Almost unanimously bullish
commentaries, such as the reports Johns found online, have attracted
droves of individuals to a trade even some professionals have said they
don’t understand.
Wall Street Journal:
- Crisis in Ukraine. Streaming Coverage:
- Old Bull Shows Its Age. Although it doesn’t look like it on the surface, investors and analysts
think some basic things are changing. Many see 2013 as an exceptional
year, not a harbinger of things to come. Even if stocks finish 2014 with
gains, a growing number expect indexes to endure a pullback of more
than 10% at some point.
Fox News:
- Is it enough? Obama imposes sanctions on Russian officials over Crimea. Almost immediately, some criticized Obama's response as not being
enough to change Putin's course. With Crimea voting Sunday to break off
from Ukraine, Russia is poised to potentially annex the disputed
peninsula -- and freezing U.S. assets of Putin cronies and barring them
from traveling to the U.S. may have limited effect. Four Ukrainians were
also sanctioned. "It's unlikely that these will really get President Putin's
attention," said Michael Singh, with The Washington Institute for Near
East Policy. "Maybe the time for this sort of first step was several
weeks ago."
MarketWatch:
CNBC:
ZeroHedge:
ValueWalk:
Business Insider:
Washington Post:
@EM_Equity:
Reuters:
MNI:
- US Lumber Prices Await Signal from Housing Mkt. U.S. lumber prices showed little movement in early
2014 at levels below last year's highs as the construction industry stalled in
frigid conditions, and dealers wait for any signs of a sustained increase in the
annual rate of housing starts, lumber industry participants told MNI.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.62% 2) REITs -.05% 3) Energy +.27%
Stocks Falling on Unusual Volume:
- LMIA, VRSN, FSYS, MATX, SBGI, NATL, SWC, ICPT, LIN, ADNC, DEO, LGF, GNC, HYGS, TAHO, CNK, NXST, CMRX, HLF, WUBA, YNDX, BOFI, SSP and NOV
Stocks With Unusual Put Option Activity:
- 1) FAST 2) TXN 3) SLB 4) BK 5) EWY
Stocks With Most Negative News Mentions:
- 1) GM 2) FCEL 3) VRSN 4) HLF 5) GNC
Charts:
