Bloomberg:
- G-7 Leaders Agree to Act Against Russia as Deal Falters. The Group of Seven nations are preparing new measures
against Russia, German Chancellor Angela Merkel said, after U.S.
Secretary of State John Kerry accused Russia of trying to impose its
will at “the barrel of a gun.” President Barack Obama discussed
deepening sanctions against Russia with Merkel and leaders from France,
the U.K. and Italy in a conference call today, a day after Kerry said
Russia is running out of time to ease tensions in Ukraine. They spoke
after Russia began new military exercises on its neighbor’s border and
explosions in two Ukrainian cities wounded eight people. U.S. and
European officials said Russia hasn’t fulfilled its part of an April 17
accord signed in Geneva aimed at calming the crisis.
- Russia Unexpectedly Raises Main Rate as S&P Lowers Rating. Russia’s central bank sprung a surprise by raising its
benchmark interest rate after Standard & Poor’s downgraded the
world’s biggest energy exporter for the first time in six years as
capital outflows threaten growth. The central bank, whose
scheduled decisions have been correctly predicted by the majority of
economists every month since September 2012, increased the one-week
auction rate to 7.5 percent from 7 percent today, according to a website
statement. Hours earlier, S&P cut the nation’s sovereign rating to
one level above junk, the lowest investment grade on par with Morocco
and Uruguay which Russia last had in 2005.
- Obama’s Vow to Aid a Drowning Putin Hints at Reserve of Goodwill. U.S. President Barack Obama said
that he’d save Vladimir Putin’s life given the chance, playing
down reports of personal animosity with the Russian leader. “I absolutely would save Mr. Putin if he were drowning,”
Obama told reporters at a news briefing in Seoul today. “I used
to be a pretty good swimmer. I grew up in Hawaii.”
- Yuan Weakens for Sixth Day on Signs China’s Slowdown Deepening. China’s
yuan fell for a sixth day, touching a 16-month low, on signs a slowdown
in the world’s second-largest economy is deepening. The country’s
growth will weaken further, Credit Suisse Group AG’s Chief Regional
Economist Dong Tao said at a conference in Hong Kong yesterday, adding
that he’s pessimistic on the short-and medium-term outlooks. The
current-account surplus was $7.2 billion in the first quarter, compared
with $47.6 billion in the first three months in 2013, according to a
statement on the State Administration of Foreign Exchange website today.
HSBC Holdings Plc cut its yuan estimate today. The yuan dropped 0.08
percent to close at 6.2536 per dollar in Shanghai, China Foreign
Exchange Trading System prices show.
It touched 6.2583 earlier today, the weakest level since Dec.
12, 2012, and has declined 0.47 percent since April 18. The yuan has fallen 3.2 percent this year, the worst performance among Asia’s 11 most-traded currencies.
- Emerging-Market Stocks Decline as S&P Cut Sinks Ruble. Emerging-market stocks retreated,
set for the longest weekly slide since January, after a surprise
interest-rate increase in Russia failed to prop up the ruble as Standard & Poor’s cut the nation’s credit rating. The
MSCI Emerging Markets Index dropped 1.2 percent to 992.78 at 12:04 p.m.
in New York, poised for a second week of losses. The ruble extended
this year’s plunge to 8.9 percent while the Micex Index slumped to a
six-week low on concern that higher rates will hamper growth.
Commodity producers including Vale SA (VALE5) and Petroleo Brasileiro SA
led declines in Brazil’s Ibovespa and the real fell the most among 31
major currencies.
- European Stocks Decline Amid Earnings Shortfalls.
European stocks fell, trimming their fifth weekly gain in six weeks, as
companies from Neste Oil (NES1V) Oyj to Sandvik AB posted quarterly
earnings that missed estimates and tensions escalated between the U.S.
and Russia over Ukraine. Neste Oil slid 5.1 percent after also lowering
its 2014 profit forecast. Sandvik lost 3 percent. Deutsche Bank AG
declined 2 percent after a report that it may announce a capital
increase. Electrolux AB rallied the most in five years after
posting earnings that beat estimates and increasing its forecast
for European demand growth. Meda AB jumped to a record after the
Financial Times said Mylan Inc. raised its offer for the Swedish
drugmaker. The Stoxx Europe 600 Index slipped 0.8 percent to 333.5 at
the close of trading.
- Gold Advances as Ukraine Tension Fuels Haven Demand.
Gold futures for June delivery rose 0.9 percent to
$1,301.70 an ounce at 11:27 a.m. on the Comex in New York,
heading for a third straight gain that would mark the longest
rally since March 14. Prices climbed 0.7 percent in the previous
two sessions.
- Investors Exit ETFs as Commodities Seen Fading.
Canadian investors are pulling
money out of exchange-traded funds for a second year as concern
grows that a rally in energy and mining that helped drive
equities to the best performance among the world’s largest
markets has run its course.
- Treasuries Rise With 30-Year Yield at 9-Month Low on Ukraine. Treasuries rose, with 30-year bond
yields reaching the lowest level in nine months, as the
simmering conflict between Russia and Ukraine led investors to
seek a haven in government securities. Thirty-year yields fell two basis points, or 0.02
percentage point, to 3.43 percent at 11:51 a.m. New York time,
based on Bloomberg Bond Trader prices. The yield reached the
lowest level since July 3 and has fallen from this year’s high
of 3.97 percent in January.
- Housing in U.S. Cools as Rate Rise Hits Sales. After a roller-coaster decade of boom-bust-boom, the U.S. housing market
is going downhill just when many economists thought annual sales would
be heading up. The housing market’s underlying fragility is emerging as outside
influences that fueled a two-year rebound are receding. Mortgage
interest rates are rising from record lows as the central bank withdraws
its stimulus, and investors, who had helped drive national prices up
more than 20 percent as they went on a buying spree, are now retreating.
- BofA(BAC) Risks Posting Loss on Mortgage Accord, Portales Says. Bank of America Corp. could post a
second-quarter loss because of costs tied to resolving federal
and state probes into the sale of mortgage bonds, according to
Portales Partners LLC. The lender may incur as much as $5 billion in litigation
expenses in the period ending June 30, wiping out a previous
earnings-per-share estimate of 25 cents, Charles Peabody, a
Portales analyst in New York, wrote today in a research note.
Peabody cited a Bloomberg News report that U.S. prosecutors are
seeking more than $13 billion from the company.
Wall Street Journal:
MarketWatch:
CNBC:
ZeroHedge:
Business Insider:
BGR:
Reuters:
Style Outperformer:
Sector Outperformers:
- 1) Hospitals +5.39% 2) Gold & Silver +.54% 3) Utilities +.51%
Stocks Rising on Unusual Volume:
- VDSI, ECHO, GIMO, WFT, DV, HWAY, CRUS, LPNT, SPWR, CLH, HBI, ITRI, DECK, PBH, NR, THC, UHS, PFG and FET
Stocks With Unusual Call Option Activity:
- 1) AVP 2) CYTK 3) SYNA 4) INFN 5) GALE
Stocks With Most Positive News Mentions:
- 1) WFT 2) SPWR 3) GE 4) AAPL 5) AOL
Charts:
Evening Headlines
Bloomberg:
- Kerry Warns Putin on Ukraine as Russian Troops Drill. U.S.
Secretary of State John Kerry warned that Russia was running out of
time to comply with an accord aimed at easing tensions in Ukraine, as
Russian forces began new military exercises on the two countries' border.
Speaking in Washington, Kerry accused Russia of using the “barrel of a
gun and the force of a mob” to force its will on Ukraine. Kerry said
Russia has failed to live up to commitments made a week ago in Geneva to
de-escalate the situation and said continued lack of cooperation would
bring consequences. “If Russia continues in this direction, it will
not just be a grave mistake, it will be an expensive mistake,” Kerry
said at the State Department. Earlier today, President Barack Obama said
the U.S. and its allies were ready to impose further sanctions on
Russia if it continues stirring trouble.
- BOJ Said to Be Concerned Japan Bond Market Ignores Inflation. Bank of Japan officials are increasingly concerned the
nation’s bond market is failing to reflect emerging inflation, raising
the risk of a sudden surge in yields, according to people familiar with
the matter. Japan’s benchmark 10-year government bonds yield
0.615 percent, little changed from March 2013, even after a jump in the
consumer-price inflation rate of almost 2.5 percentage points since
then. The yields have been held down by the BOJ’s own purchases, part of
its unprecedented monetary stimulus unleashed by Governor Haruhiko
Kuroda a year ago.
- China’s Stocks Head for Steepest Weekly Loss in Two Months.
China’s stocks fell, sending the benchmark index to its steepest weekly
loss in two months, as the nation’s biggest liquor maker reported
slowing profit growth and concern grew that new share sales will divert
funds. Kweichow Moutai Co., the largest maker of baijiu liquor, plunged 5
percent after profits climbed 3 percent in the first quarter, compared
with 21 percent growth in the same period last year. Huayi Brothers
Media Corp. dropped 1.1 percent as the ChiNext index of small companies
slid for a fifth day, its longest losing streak since June. The
Shanghai Composite Index (SHCOMP) slid for a third day, falling 0.2
percent to 2,052.14 at 9:50 a.m. local time. It has slumped 2.2 percent
this week, the biggest loss since the week ending
March 14.
- Japan Drives Asian Stock Gains as Wheat Climbs on Ukraine.
Asia stocks outside Japan fell, dragging the regional benchmark index
toward a weekly loss. The yen weakened after inflation data while wheat
climbed and nickel pared the biggest monthly advance since 2012 as the
U.S. warned Russia of an “expensive mistake” in Ukraine. Hong Kong’s
Hang Seng Index dropped 0.8 percent by 11:44 a.m. in Tokyo, with the MSCI Asia Pacific Index heading to a 0.4
percent loss for the week. Japan’s currency lost as much as 0.2
percent, spurring a 0.7 percent gain by the Topix index.
- U.S. Said to Ask BofA for More Than $13 Billion Over RMBS. U.S.
prosecutors are seeking more than $13 billion from Bank of America
Corp. to resolve federal and state probes into the lender’s sale of
bonds backed by home loans in the run-up to the 2008 financial crisis,
according to people familiar with the matter. The settlement
would come on top of the $9.5 billion the bank agreed last month to pay
to resolve Federal Housing Finance Agency claims, said two people who
asked not to be named because the negotiations are private. A deal could
come within the next two months, the people said.
Wall Street Journal:
- Ukraine Halts Military Push, Fearing Attack From Russia. Moscow's Saber-Rattling Leaves Kiev in Quandary; U.S. Unsure of Putin's Intent. Ukrainian forces moved in on a pro-Russian
stronghold Thursday, killing several militants in a firefight at a
roadside checkpoint, but quickly halted their advance after Russia
activated the thousands of troops it has massed just across the border. Moscow's
saber-rattling—launching new land and air military drills—left
Ukraine's new government in a quandary: whether to risk pressing ahead
with what it calls its antiterrorist operation in the restive east, or
risk more bloodshed and provoking an invasion.
- Demand for Home Loans Plunges. Interest-Rate Spike Puts Mortgages at 14-Year Low. Mortgage lending declined to the lowest level in 14 years in the
first quarter as homeowners pulled back sharply from refinancing and
house hunters showed little appetite for new loans, the latest sign of
how rising interest rates have dented the housing recovery. Lenders
originated $235 billion in mortgage loans during the January-March
quarter, down 58% from the same period a year ago and down 23% from the
fourth quarter of 2013,...
- Foreclosure Errors Top Reported Rate. Consulting Firm Scouring Bank Files Was Finding More Mistakes Than Regulators Reported When They Ended the Review.
A consulting firm that scoured major U.S. banks' foreclosure files for
mistakes was finding far higher rates of error than regulators reported
when they abruptly ended the review last year, a congressional inquiry
has found. The top Democrat on the House Oversight Committee, Rep.
Elijah Cummings (D., Md.), on Thursday disclosed excerpts of documents
from consulting firm Promontory Financial Group, which reviewed
thousands...
- In Japan, Obama Reassures Abe on Islands Disputed With China. President Treads Carefully, Still Provokes Anger in Beijing. President Barack Obama offered Japanese Prime Minister Shinzo Abe an
unequivocal affirmation that if islands at the center of Japan's
territorial dispute with China were ever attacked, the U.S. would come
to Japan's aid.
Mr. Obama walked a careful line, stopping short
of taking Japan's side on which country has sovereignty over the East
China Sea islands—claimed by both China and Japan and administered by
Tokyo—and emphasizing there had been no shift in the U.S. position. And
he nudged his counterpart to open up...
CNBC:
- Amazon(AMZN) shares higher after revenue tops expectations. Amazon.com
rallied in extended-hours trading after the e-commerce giant posted
revenue that topped estimates, while earnings were in line with
forecasts. The company posted earnings of 23 cents a share,
matching Wall Street expectations, while revenue was higher at $19.74
billion, versus expectations for $19.43 billion. Shares climbed in extended-hours trading.
Zero Hedge:
ValueWalk:
Business Insider:
Reuters:
- Visa(V) says revenue growth to slow, Russia sanctions hurting volumes. Visa Inc, the world's largest credit and debit card company, said U.S. sanctions on Russia were hurting its card transaction volumes and that revenue growth would slow further this quarter, sending its shares down
5 percent after the bell. Visa's quarterly revenue growth slid to a single digit in
percentage terms for the first time in more than four years, due
to a strong U.S. dollar.
- Cliffs Natural(CLF) posts Q1 loss on lower iron ore, coal prices. Cliffs
Natural Resources Inc, which is facing off against an activist investor
that wants to break up the company, posted a first-quarter loss on
Thursday on the back of lower market prices for iron ore and
metallurgical coal. The Cleveland, Ohio-based miner reported a net loss of $83 million, or 54 cents a share, in the three months to end-March
from a net profit of $97 million, or 66 cents a share, in the
same period a year earlier.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 126.0 +3.5 basis points.
- Asia Pacific Sovereign CDS Index 87.75 +.25 basis point.
- NASDAQ 100 futures -.03%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:45 am EST
- Preliminary US Markit Services PMI for April is estimated to rise to 55.5 versus 55.3 in March.
9:55 am EST
- Final Univ. of Mich. Consumer Confidence for April is estimated to rise to 83.0 versus a prior estimate of 82.6.
Upcoming Splits
Other Potential Market Movers
- The UK retail sales report could 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 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.66 +2.94%
- Euro/Yen Carry Return Index 147.55 -.17%
- Emerging Markets Currency Volatility(VXY) 8.39 -.94%
- S&P 500 Implied Correlation 57.70 +1.96%
- ISE Sentiment Index 117.0 -12.69%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.13 +.82%
- European Financial Sector CDS Index 79.79 +.98%
- Western Europe Sovereign Debt CDS Index 34.53 +.35%
- Asia Pacific Sovereign Debt CDS Index 87.98 +.58%
- Emerging Market CDS Index 285.61 +2.03%
- China Blended Corporate Spread Index 352.27 +1.02%
- 2-Year Swap Spread 10.5 +.75 basis point
- TED Spread 22.25 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% -2.0 basis points
- Yield Curve 225.0 +1.0 basis point
- China Import Iron Ore Spot $113.20/Metric Tonne +.89%
- Citi US Economic Surprise Index -27.10 +.3 point
- Citi Emerging Markets Economic Surprise Index -26.70 +.1 point
- 10-Year TIPS Spread 2.22 unch.
Overseas Futures:
- Nikkei Futures: Indicating -24 open in Japan
- DAX Futures: Indicating -17 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/medical sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Oil Service -1.62% 2) Social Media -1.50% 3) Disk Drives -1.50%
Stocks Falling on Unusual Volume:
- SILC, XLRN, TBBK, WB, TILE, QDEL, NOW, TCBI, IM, CLFD, AGIO, IPCM, UA, CLB, STC, TWI, CSGP, PLCM, USG, QIWI, LOGI, CFX, ALGN, UAL, PENN, USTR, DWRE, VLY, SPLK, QCOM, SUSQ, TER, LTM, AFOP, SPNC, WDAY, FLS, DATA, HP, NOW, BLUE, MDSO, AVT, PLCM, TWI, XLNX and ECOM
Stocks With Unusual Put Option Activity:
- 1) DO 2) EOG 3) ULTA 4) XLNX 5) FFIV
Stocks With Most Negative News Mentions:
- 1) GM 2) XLNX 3) SINA 4) UNP 5) IM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) HMOs +3.08% 2) Homebuilders +2.79% 3) Gaming +1.33%
Stocks Rising on Unusual Volume:
- ZMH, ANGI, LRCX, MNK, AAPL, CTXS, TKR, CYTK, MJN, VLCCF, DHI, ETFC, SYRG, MOD, NTCT, RDEN, GPI, ETFC, PAG, LTXC, BOBE, CIEN, AET and TXN
Stocks With Unusual Call Option Activity:
- 1) TMO 2) TER 3) CHK 4) DO 5) SD
Stocks With Most Positive News Mentions:
- 1) CAT 2) FB 3) AMZN 4) AAPL 5) CTRX
Charts:
