Style Underperformer:
Sector Underperformers:
- 1) Utilities -1.16% 2) Homebuilders -.92% 3) REITs -.82%
Stocks Falling on Unusual Volume:
- AHT, ISRG, APOL, DO, STZ, AVIV, VISN, BIS, IDA, TM, HSY, PACW, DTE, VFC, EA, AEE, HVT, EXC, UFS, APA, JJSF, RIG, AVA and CBD
Stocks With Unusual Put Option Activity:
- 1) SPLS 2) CTSH 3) DXJ 4) XLU 5) VMW
Stocks With Most Negative News Mentions:
- 1) GM 2) ISRG 3) AMZN 4) EXC 5) APA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Biotech +2.10% 2) Gaming +.85% 3) Drugs +.69%
Stocks Rising on Unusual Volume:
- CTCT, PCRX, CZR, QCOR, SNMX, KT, ATHL, GTN, NXST, ROVI, SBGI, TECD and FB
Stocks With Unusual Call Option Activity:
- 1) MET 2) CZR 3) VRS 4) ARCP 5) NRG
Stocks With Most Positive News Mentions:
- 1) AA 2) AAPL 3) FEYE 4) LNKD 5) NKE
Charts:
Evening Headlines
Bloomberg:
- Ukrainians Crowd Kiev Soup Kitchens as More Flee Russian Control. Exiled during Soviet times and
repatriated to Ukraine 22 years ago, Susanna Yagyaeva is on the
move again as Russia’s military returns to her homeland. A week after abandoning Crimea as President Vladimir Putin’s forces overran the Black Sea peninsula, the Tatar mother
of one was scrubbing pots at a makeshift hostel in a Soviet-built sanatorium 800 kilometers (500 miles) away in Kiev. As
parts of eastern Ukraine now agitate for a split, the United
Nations said tens of thousands more Ukrainians may seek shelter,
jobs and aid because of fear of violence and discrimination. “We left everything behind,” said Yagyaeva, 47, tugging
at her silk headscarf as a lunch of borscht beetroot soup and
buckwheat was prepared in a cramped kitchen. “We don’t want a
Russian passport. We want to live in peace and friendship with
everyone. So we came here.”
- Snoozing Staff at Yiwu Show China Exports Sputtering. “I
don’t see a future for these places if they continue to make low-end
products,” said Ding Shuang, senior China economist at Citigroup Inc. in
Hong Kong. “They have to
restructure their products and move up the value chain, and that
applies to China more broadly.”
- Asian Stocks Outside Japan Rise; Topix Drops on Yen Gains.
Asian stocks outside Japan rose, with a gauge of regional shares
heading for the highest close in five months, as consumer companies
advanced. Japanese equities fell after the yen rose the most since
August. David Jones Ltd. (DJS), Australia’s biggest department store by
market value, surged 23 percent after agreeing to a takeover offer from
South African retail chain Woolworths Holdings Ltd. Nissan Motor Co.
(7201), a Japanese carmaker that gets about 79 percent of sales outside
Japan, slid 2.8 percent. Mitsui O.S.K. Lines Ltd. retreated 5.8 percent
in Tokyo as the world’s largest merchant-fleet operator sells
convertible bonds. The MSCI Asia Pacific excluding Japan Index gained 0.8 percent to 481.92 as of 9:43 a.m. in Hong Kong.
Japan’s Topix index slid 1.7 percent as the yen traded at
101.88 per dollar. The currency strengthened 1.3 percent
yesterday to touch a three-week high.
- Renzi Cuts Italy Growth Forecast With Call for Rich to Give More. Italian Prime Minister Matteo Renzi
cut the government’s forecast for economic growth and renewed
his promise to slash benefits for top civil servants, saying the working poor are shouldering too much of the pain. Gross
domestic product will expand 0.8 percent this year, Renzi said late
yesterday in a news conference in Rome after his cabinet approved his
multi-year budget plan. That compares with the 1 percent growth
projected in September by Renzi’s
predecessor, Enrico Letta. Italy’s GDP contracted 1.9 percent
last year, the second decline in a row.
- Global Growth Threatened in $623 Trillion Derivatives Overhaul. Global
regulators’ failure to align efforts to reform the $693 trillion
derivatives market threatens to undermine economic growth, according to
the International Swaps & Derivatives Association. Investors are struggling to adapt to regional differences to changes agreed by the Group of 20 nations as the industry
meets for its annual conference in Munich today. In the U.S.
traders have been reporting derivatives transactions to data
repositories and have been required to have central
clearinghouses back their contracts since last year, while
European regulators are still defining the requirements.
Wall Street Journal:
- Ukraine Moves to Assert Control in East. Russia Warns That Use of Force Could Plunge Country into Civil War. Ukrainian police took back a government
building from pro-Russian separatists in one volatile eastern city
Tuesday, but armed men dug in behind reinforced barricades in other
cities, warning against an assault even as some disarray began to show. Russia
warned Ukraine's new government that the use of force to dislodge
demonstrators who had taken over buildings in eastern Ukraine, where
many ethnic Russians live, could plunge the country into civil war.
- The Outlaw Vladimir Putin. Moscow's flouting of treaties, international law and the Geneva Conventions is raising world-wide dangers.
Fox News:
- Latest ObamaCare surprise: Most won't be able to buy health insurance until end of year. There is yet another ObamaCare surprise waiting for consumers: from
now until the next open enrollment at the end of this year, most people
will simply not be able to buy any health insurance at all, even outside
the exchanges. "It's all closed down. You cannot buy a policy that is a qualified
policy for the purpose of the ACA (the Affordable Care Act) until next
year on January 1," says John DiVito, president of Flexbenefit which has
2,500 brokers.
MarketWatch.com:
CNBC:
- Will Japan’s tax hike spur a fiscal crisis? (video) Japan's consumption tax hike is likely to dent economic growth this
quarter and some analysts believe it may shock the country into a
recession and possibly even a fiscal crisis. "It is definitely
a severe negative shock for Japan's economy," Takuji Okubo, chief
economist at Japan Macro Advisors, told CNBC Monday.
Zero Hedge:
Business Insider:
NY Times:
- Tech-Focused Hedge Fund to Return $2 Billion to Investors. As investors nurse steep losses from
technology stocks, one hedge fund has decided to return money to
investors and turn its focus to companies not listed on the stock
market. Coatue Management, the $7 billion
technology-focused hedge fund founded by Philippe Laffont, will return
more than $2 billion to investors in its flagship fund.
Reuters:
- NATO to triple Baltic air patrol from next month. NATO
will triple its usual number of fighter jets patrolling over the
Baltics next month to beef up its eastern European defenses due to
tension with Russia over Ukraine, a NATO military official said on
Tuesday.
- Fed should be more specific about rate-hike plans - Plosser. The Federal Reserve should
be even more specific about when it plans to tighten policies
after it took a step in the right direction last month, a top
U.S. central banker said on Tuesday. Philadelphia Federal Reserve Bank President Charles Plosser
said, however, that the central bank is "not even close to
withdrawing support prematurely," when asked by reporters about
longer-term plans. He said the timing of the first rate rise,
which will probably come next year, will be "all about the
data."
South China Morning Post:
Evening Recommendations
Jefferies:
- Rated (CVX) Buy, target $140.
- Rated (LMNS) Buy, target $16.
Sterne Agee:
- Rated (ISRG) Underweight, target $440.
- Rated (NMBL) Buy, target $43.
Piper:
- Cut (ARO) to Underweight, target $4.
- Raised (HIBB) to Overweight, target $63.
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.50 -3.5 basis points.
- Asia Pacific Sovereign CDS Index 87.75 -1.25 basis points.
- NASDAQ 100 futures +.04%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Wholesale Inventories for February are estimated to rise +.5% versus a +.6% gain in January.
- Wholesale Sales for February are estimated to rise +1.0% versus a -1.9% decline in January.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+970,000 barrels versus a -2,379,000 barrel decline the prior week.
Gasoline supplies are estimated to fall by -940,000 barrels versus a
-1,574,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -290,000 barrels versus a +554,000 barrel gain the
prior week. Finally, Refinery Utilization is estimated to rise +.09%
versus a +1.7% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Evans speaking, Fed's Taruillo speaking, China Trade Balance/New
Loans/Money Supply, Australia Unemployment Rate, Eurozone Trade Balance,
USDA's WASDE report, $21B 10Y T-Note auction and the weekly MBA
Mortgage Applications report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and financial 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: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.08 -3.15%
- Euro/Yen Carry Return Index 146.32 -1.04%
- Emerging Markets Currency Volatility(VXY) 8.16 -.24%
- S&P 500 Implied Correlation 56.46 +1.09%
- ISE Sentiment Index 82.0 +7.89%
- Total Put/Call .92 -6.12%
Credit Investor Angst:
- North American Investment Grade CDS Index 67.78 -.45%
- European Financial Sector CDS Index 83.97 +.02%
- Western Europe Sovereign Debt CDS Index 41.96 -.70%
- Asia Pacific Sovereign Debt CDS Index 87.67 -1.58%
- Emerging Market CDS Index 280.78 +.75%
- China Blended Corporate Spread Index 354.14 unch.
- 2-Year Swap Spread 13.0 unch.
- TED Spread 20.25 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03%+1 basis point
- Yield Curve 228.0 -2.0 basis points
- China Import Iron Ore Spot $118.20/Metric Tonne +.85%
- Citi US Economic Surprise Index -45.20 +.7 point
- Citi Emerging Markets Economic Surprise Index -4.10 +.8 point
- 10-Year TIPS Spread 2.12 -1.o basis point
Overseas Futures:
- Nikkei Futures: Indicating -237 open in Japan
- DAX Futures: Indicating -8 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Russia Warns Ukraine on Military Action in Eastern Region. Ukrainian
authorities sent security forces to Kharkiv to clear the country’s
second-biggest city of separatists as Russia traded accusations with the
U.S. and warned that its neighbor’s crackdown risks sparking civil war.
An “anti-terrorist operation” was under way in Kharkiv, with the subway
closed and the downtown area sealed off in Ukraine’s second-biggest
city, Interior Minister Arsen Avakov said on his Facebook page. Russia
said 150 specialists from a U.S. private security company were working
with Ukraine to put down protests, the Foreign Ministry said after the
U.S. accused Russia of instigating unrest in the country’s eastern
regions. “We call for the immediate halt of all military preparations, which risk
sparking a civil war,” the ministry in Moscow said in a website
statement.
- Ukraine Mounts Security Push as Russia Warns on Civil War.
Ukrainian authorities sent security forces to Kharkiv to clear the
country’s second-biggest city of separatists as U.S. Secretary of State
John Kerry accused Russia of using “special forces and agents” to spark
unrest. An “anti-terrorist operation” was under way in Kharkiv, 40
kilometers (25 miles) from the Russian border, with the subway closed
and the center sealed off, Interior Minister Arsen Avakov said today.
The Russian government said its neighbor’s crackdown risks sparking
civil war. “Provocateurs
have been sent there to create chaos,” Kerry told the Senate Foreign
Relations Committee in Washington. “These efforts are as ham-handed as
they are transparent,” Kerry said. He accused Russia of working to
“create a contrived crisis with paid operatives across an international
boundary.”
- European Stocks Drop for Second Day Amid Ukraine Tensions. European stocks
declined for a
second day as investors weighed escalating tensions between
America and Russia over the future of eastern Europe. Suedzucker AG
plunged the most since at least 1998 after saying revenue and profit in
the year through February 2015 will miss analysts’ estimates. Sports
Direct International Plc slid the most this year after founder Mike
Ashley sold a 4 percent stake. Nokia (NOK1V) Oyj climbed the most since
October after getting China’s approval for the sale of its handsets
business to
Microsoft Corp.
The Stoxx Europe 600 Index slipped 0.3 percent to 333.85 at the close
of trading in London, after earlier declining as much as 1 percent.
- WTI Oil Gains on Cushing Supply Outlook.
WTI for May delivery climbed $1.76, or 1.8 percent, to $102.20 a barrel
at 1:24 p.m. on the New York Mercantile Exchange. Prices are up 3.8
percent this year. The volume of all futures traded was 42 percent above
the 100-day average.
- U.S. Banks to Face Tougher Leverage Caps Than Competitors. The biggest U.S. banks will face greater restrictions on borrowing
power than their overseas competitors under supplemental leverage ratio
rules set to be adopted by regulators in Washington today. Eight
lenders, including JPMorgan Chase (JPM) & Co. and Bank of America
Corp., are going to be required to keep loss-absorbing capital at least 5
percent of total assets under the rules designed to curtail risk in the
financial system. The cap being approved by the Federal Reserve,
Federal Deposit Insurance Corp. and Office of the Comptroller of the
Currency surpasses the 3 percent minimum set in a global agreement by
the Basel Committee on Banking Supervision.
- VIX Jumps 19% as Losses Worsen Below Surface of S&P 500: Options. While two weeks of selling look like
a blip on a chart of the Standard & Poor’s 500 Index (SPX), for the average investor it’s been a lot more painful. Amazon.com
Inc. (AMZN), Whole Foods Market Inc. and Transocean Ltd. are among 43
companies that have lost more than 20 percent from their 52-week high,
data compiled by Bloomberg show. The average stock is down 9 percent
from its most recent peak, according to Bespoke Investment Group
LLC. Concern that the drop will worsen pushed the VIX (VIX) to its
biggest gain in three weeks.
- Biotech Suffers Record Exit at Largest ETF Signaling Turn. Investors pulled a record $372
million from the biggest biotechnology exchange traded fund in
its worst day of redemptions ever. The withdrawals from the iShares Nasdaq Biotechnology ETF on April 4 were the most since its 2001 inception, with 7.5
percent of the fund’s $4.98 billion in total assets leaving what
is the biggest biotech-focused ETF, according to data compiled
by Bloomberg. It follows a lengthy run-up in biotechnology
industry stocks.
- Goldman(GS) Strategist Sees High Chance of 10% Market Drop.
Goldman Sachs Group Inc.’s David Kostin has some good news, and some
bad news. First, the bad news. There’s a good chance the U.S. market
will see a 10 percent drop sometime during the next 12 months. Well, as
far as
precision goes, “good chance” is not good enough for a quant like
Kostin, so he gives an exact probability: 67 percent odds of a 10
percent retreat from a peak in the next 12 months. Now for the good
news, if you can call it that: He still expects the
market to end the year higher, though not by much. Kostin is sticking
with his year-end S&P 500 forecast of 1,900, according to a
note to clients dated yesterday. That implies a gain of less than 2.8
percent for the year and less than 3 percent from yesterday’s close.
Barron's:
Wall Street Journal:
CNBC:
ZeroHedge:
ValueWalk:
Business Insider:
Reuters:
- U.S. to trim air, sea and land nuke launchers under U.S.-Russia treaty -officials.
The United States will scale
back its land, sea and air nuclear missile launchers under a New
START treaty with Russia but not retire a ballistic missile squadron as
some lawmakers had expected, U.S. officials told Reuters. The U.S. military will disable four missile launch tubes on each of its 14 U.S. nuclear submarines, convert 30 B-52 nuclear
bombers to conventional use and empty 50 intercontinental
ballistic missile silos, senior administration officials said on
condition of anonymity.
TheStreet.com:
- JPMorgan(JPM) Sees Parallel to Subprime Bust at Regional Banks. A
boom in leveraged loans issued by large and regional banks, or
low-rated debt used to finance private-equity buyouts, is drawing
alarming comparisons to the subprime mortgage boom in 2006 and 2007.
According to one analyst, banks such as Regions Financial(RF), Fifth
Third Bancorp(FITB), and Citigroup(C) are most at risk of getting caught
up in the market froth.
@LOggOl:
Economic Times:
- China Economy Faces Downward Pressure. China's economy faces
certain downward pressure, citing Zhang Liqun, a researcher with State
Council's Development Research Center, as saying. Some cos. with
difficulties need to go bankrupt as part of solving the problem of
overcapacity, which may affect the stability of economic growth, Zhang
said. Currently China should mainly rely on fiscal policy and keep
monetary policy stable, citing Zhang. The report was posted on the
central government's website.
Style Underperformer:
Sector Underperformers:
- 1) Airlines -1.0% 2) Road & Rail -.44% 3) Biotech -.42%
Stocks Falling on Unusual Volume:
- GIMO, MAIN, STWD, CSOD, HMC, OHRP, MGNX, USTR, HQH, LPSN, ROVI, PBYI, ACT, ENDP, BX, DPS, SAVE, MYL, WWE, UFS, NSR, TEVA, DGI, PBYI and SPNC
Stocks With Unusual Put Option Activity:
- 1) HK 2) XLNX 3) CBS 4) FNSR 5) LOW
Stocks With Most Negative News Mentions:
- 1) GM 2) TST 3) AMZN 4) VZ 5) USB
Charts:
