Friday, June 13, 2014

Bear Radar

Posted by Gary .....at 1:32 PM
Style Underperformer:
  • Large-Cap Growth -.04%
Sector Underperformers:
  • 1) Steel -1.26% 2) Homebuiluders -.50% 3) Agriculture -.50%
Stocks Falling on Unusual Volume:
  • FNSR, COMM, OMED, ARWR, NTES, TCP, APAM, GGT, GNC, HEP, DAVE, JCOM, WX, SYY, ANIK, OHI, AFOP, RCL, CBI, IBN, C, PCLN, WWWW and MNST
Stocks With Unusual Put Option Activity:
  • 1) CMI 2) CZR 3) SLB 4) BID 5) C
Stocks With Most Negative News Mentions:
  • 1) C 2) LULU 3) CCL 4) GS 5) BEN
Charts:
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Bull Radar

Posted by Gary .....at 12:00 PM
Style Outperformer:
  • Large-Cap Value +.17%
Sector Outperformers:
  • 1) Computer Hardware +1.14% 2) Gaming +.84% 3) Semis +.84%
Stocks Rising on Unusual Volume:
  • OPEN, EXPR, TWTC, INTC, NKTR, YELP, PVA, KPTI, GRUB, EQM, AWAY and CREE
Stocks With Unusual Call Option Activity:
  • 1) DISH 2) CREE 3) EXPR 4) YELP 5) DVN
Stocks With Most Positive News Mentions:
  • 1) INTC 2) LMT 3) AIG 4) OPEN 5) LNKD
Charts:
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Thursday, June 12, 2014

Friday Watch

Posted by Gary .....at 11:53 PM
Evening Headlines 
Bloomberg:
  • Iraq Militants Finding Support in Seized Towns Raise Attack Risk. Grievances among Iraq’s majority Sunni population against the Shiite-led government have offered the militants, known as ISIL, the opportunity to secure a base inside Iraq as well as the territory they control in Syria. The group’s fighters took over Mosul and other Iraqi towns this week, as violence escalated 11 years after the U.S.-led invasion to depose Saddam Hussein. The step toward a mini-state will heighten the risk of terrorism in the region and elsewhere, said Evan Kohlmann, senior partner at Flashpoint Partners in New York. “Every acre of territory that ISIL seizes control of, particularly in its homeland, now gives it added leverage and power to recruit and train individuals to carry out attacks not just inside of Iraq but in foreign countries,” Kohlmann said.
  • Carney Sees Housing Debt Risk as Rate Increases Near. Mark Carney said rising U.K. mortgage debt may threaten Britain’s recovery as he signaled interest rates might start to rise earlier than anticipated. While investors don’t see the Bank of England’s benchmark rate increasing until next April, the central bank governor said it “could happen sooner than markets currently expect.” Higher borrowing costs could stretch over-leveraged households and undermine financial stability, he said. The warning came as Chancellor of the Exchequer George Osborne said the BOE’s Financial Policy Committee will get new powers to curb mortgage lending as a surging housing market raises concern about a potential bubble.
  • BOJ Sticks With Easing as Analysts Delay Calls for Extra Action. The Bank of Japan maintained record stimulus as Governor Haruhiko Kuroda strives to boost inflation that remains short of a 2 percent target. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($688 billion) per year, it said in a statement today in Tokyo, in line with estimates of all 33 economists in a Bloomberg News survey.
  • Asian Stocks Retreat as Oil Rises on Iraq; Yuan Advances. Asian stocks fell, with the benchmark regional index heading for the first back-to-back loss in three weeks, and oil advanced to the highest level since September as violence in Iraq threatens supplies. China’s yuan headed for its biggest weekly advance in 2 1/2 years. West Texas Intermediate oil rose 0.7 percent to $107.29 a barrel by 10:46 a.m. in Tokyo. The MSCI Asia Pacific Index (MXAP) slipped 0.6 percent after yesterday retreating from its highest close since 2008. The Topix index fell 0.7 percent and the yen dropped from the strongest this month before a Bank of Japan meeting ends today. The yuan extended the week’s advance to 0.6 percent and New Zealand’s dollar was within 2 U.S. cents of a record.
  • Oil Rallies as Extremist Advance in Iraq Threatens Crude Supply. Futures rose as much as 1.1 percent in New York, extending a 2 percent rally yesterday, the most in two months. Militants linked to al-Qaeda, who captured the northern city of Mosul this week, moved south toward Baghdad as Iraqi Oil Minister Abdul Kareem al-Luaibi speculated that U.S. planes may bomb the nation’s north. The member of the Organization of Petroleum Exporting Countries pumped 3.3 million barrels a day last month, data compiled by Bloomberg show. “There’s potential for disruption to spread around the Middle East and we’re talking about significant amounts of daily supply,” Michael McCarthy, a chief strategist at CMC Markets in Sydney who predicts Brent may climb to $125 a barrel if there’s an attack on Baghdad. “The market got concerned about potential disruption in Libya; Iraq is a much more serious situation.” WTI for July delivery gained as much as $1.15 to $107.68 a barrel in electronic trading on the New York Mercantile Exchange and was at $107.33 at 11:35 a.m. Sydney time.
  • Subprime Trading Like It's '07 in Car-Loan Bonds: Credit Markets. In response to rising default rates on subprime U.S. auto loans, bond investors are deciding the best thing to do is pile into securities backed by the debt. In the market where auto loans to people with spotty credit are bundled into bonds, the difference in yield between the lowest-rated securities and the safest has narrowed to the least since August 2007, according to Wells Fargo data. Demand for the bonds is translating into cheap funding for lenders, allowing them to make even more loans though payments more than 60 days late are on the increase. Investors are turning to riskier debt to boost returns as stimulus measures from central banks around the world suppress interest rates.
Wall Street Journal:
  • Iraq Scrambles to Defend Baghdad. Iran Says Forces Join Battle Against Advancing Sunni Insurgents Threatening Capital, Holy Cities. Iraq's government girded to protect the capital from advancing insurgents, as Iranian security officials said their forces had joined the battle on Baghdad's side and the U.S. weighed military assistance, including airstrikes. Iraq edged closer to all-out sectarian conflict as Kurdish forces took control of a provincial capital in the oil-rich north on Thursday and Sunni militants threatened to march on two cities revered by Shiite Muslims and the capital. 
  • Hedge Funds Get Stung by Slow Markets. Louis Bacon and Paul Tudor Jones Are Among Prominent Investors Losing Money on Bad Bets. Some of the biggest investors on Wall Street are losing money with wrong-way bets in markets around the globe, a surprising black eye amid a rise in stock and bond prices. Hedge-fund managers including Paul Tudor Jones, Louis Bacon and Alan Howard are among those who have misread broad economic and financial trends. Some have lost money as Japanese stocks fell, while others have been upended by the surprising resilience of U.S.... 
  • More Loans Come With Few Strings Attached. It's almost summertime, and the lending is easy. Companies with junk ratings, ranging from designer fashion house Kate Spade & Co. to nut specialist Diamond Foods Inc., have been borrowing cash with few strings attached. Lending to weaker companies on easy terms is becoming more and more common as investors' appetite for...
  • The Iraq Debacle. An extended civil war is likely. A terrorist caliphate is possible. The magnitude of the debacle now unfolding in Iraq is becoming clearer by the day, with the terrorist army of the Islamic State of Iraq and al-Sham, or ISIS, marching ever closer to Baghdad. On Tuesday the al Qaeda affiliate captured Mosul, a city with a population greater than Philadelphia's, a day later it took Tikrit in the Sunni heartland, and on Thursday ISIS commanders announced they plan to attack the Shiite holy cities of Najaf and Karbala.
    No one should underestimate the danger this presents to the stability of...
Fox News:
  • US left fragile government to rule Iraq, says ex-commander. The man who once led U.S. forces in Iraq and the mother of the first Navy SEAL to die in the war both fear the government the US put in place may not be able to withstand the jihadist insurgency bearing down on Baghdad. While Al Qaeda-inspired militants take control of key Iraqi cities in a fast-moving insurgency, threatening violence to all who oppose their vision of an Islamic state, retired Lt. Gen. Ricardo Sanchez called the deteriorating situation "depressing" and "unfortunate" -- but not surprising. "Because of the lack of focus on reconciliation and ensuring that a quality military was built with the capability to defend the nation, it’s not unexpected," said Sanchez, who served as the top commander of U.S. troops in Iraq from June 2003 to July 2004.
CNBC:
Zero Hedge:
Business Insider: 
  • The Unsettling Truth About Iraq That Obama Doesn't Want To Hear. The government in Baghdad has lost control of Iraq. Extremists from the al-Qaeda offshoot ISIS have blurred the border to Syria, captured Iraq's second largest city, and advanced toward the capital. Kurds have taken Kirkuk, an oil-rich city in the northeast that borders Iraqi Kurdistan. Iran is deploying Revolutionary Guard forces to fight ISIS. And, according to current and former U.S. officials, the administration of President Barack Obama indirectly facilitated the mayhem. "Top State Department officials long argued that the civil war in Syria was the root cause of ISIS's rise because it gave them a haven in which to operate and recruit," Adam Entous and Julian Barnes of The Wall Street Journal report. For the last two years, the main criticism on Obama's policy toward Syria has been that the "United States, rather than read the signals early on and arm the Syrian opposition when it was making substantial gains, allowed a vacuum to form and then fretted when that vacuum was filled by jihadists." Filkins notes the Obama and Maliki governments discussed keeping a residual force of American troops in Iraq as noncombat advisors to provide stability, but negotiations fell apart "in no small measure because of a lack of engagement by the White House." Obama then left Syria to fester, which eventually led to ISIS consolidating territory across Syria and Iraq while the militants gained experience, lured new recruits, captured weaponry, made territorial advances, indoctrinated Syrian children, and piled up cash. President Obama, for his part, said Wednesday that the world is "less violent than it has ever been."
Reuters:
  • Spooked by probes, pharma executives ask: should I leave China? China's crackdown on corruption in the pharmaceutical sector has frightened foreign executives so much that some fear they could be jailed and have asked their lawyers if they should leave the country for six months. Others are thinking of going for good.
  • Finisar(FNSR) forecasts lower-than-expected profit, shares fall. Finisar Corp, a maker of fiber optic components used in network communication equipment, forecast current-quarter profit well below expectations, citing higher capital expenditures in China. Finisar shares fell about 22 percent in extended trading on Thursday.
Telegraph:
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.75% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 105.0 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 77.25 +2.0 basis points.
  • FTSE-100 futures -.45%.
  • S&P 500 futures -.01%.
  • NASDAQ 100 futures  +.11%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • None of note
Economic Releases
8:30 am EST
  • PPI Final Demand for May is estimated to rise +.1% versus a +.6% gain in April.
  • PPI Ex Food & Energy for May is estimated to rise +.1% versus a +.5% gain in April.
9:55 am EST
  • Preliminary Univ. of Mich. Consumer Confidence for June is estimated to rise to 83.0 versus 81.9 in May.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China retails sales/industrial production reports could impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial 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.
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Stocks Falling into Final Hour on Escalating Iraq Tensions, Global Growth Fears, Yen Strength, Transport/Retail Sector Weakness

Posted by Gary .....at 3:27 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 12.50 +7.76%
  • Euro/Yen Carry Return Index 143.96 -.12%
  • Emerging Markets Currency Volatility(VXY) 6.54 -1.36%
  • S&P 500 Implied Correlation 53.93 +4.77%
  • ISE Sentiment Index 80.0 -21.57%
  • Total Put/Call .82 +10.81%
  • NYSE Arms 1.48 +45.74% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 59.64 +2.10%
  • European Financial Sector CDS Index 60.02 -.17%
  • Western Europe Sovereign Debt CDS Index 28.08 -.32%
  • Asia Pacific Sovereign Debt CDS Index 76.61 +1.62%
  • Emerging Market CDS Index 246.64 +1.99%
  • China Blended Corporate Spread Index 311.51 -.20%
  • 2-Year Swap Spread 14.75 +.25 basis point
  • TED Spread 19.5 -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -12.0 -2.5 basis points
Economic Gauges:
  • 3-Month T-Bill Yield .03% unch.
  • Yield Curve 217.0 -4.0 basis points
  • China Import Iron Ore Spot $91.50/Metric Tonne -2.14%
  • Citi US Economic Surprise Index -17.60 -4.6 points
  • Citi Emerging Markets Economic Surprise Index -6.60 +3.0 points
  • 10-Year TIPS Spread 2.19 -1.0 basis point
Overseas Futures:
  • Nikkei Futures: Indicating -143 open in Japan
  • DAX Futures: Indicating -38 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my index hedges and emerging markets shorts
  • Disclosed Trades: None
  • Market Exposure: 25% Net Long
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Today's Headlines

Posted by Gary .....at 3:05 PM
Bloomberg: 
  • Iraq Battles Islamists in Saddam’s Hometown, 80 Miles From Baghdad. Iraqi forces sought to check the rapid advance of Islamist militants who had seized major cities, as Prime Minister Nouri al-Maliki responded to the greatest threat to his government since taking power. The military attacked fighters of the Islamic State in Iraq and the Levant in Saddam Hussein’s former hometown of Tikrit, about 80 miles (130 kilometers) north of Baghdad, state-sponsored Iraqiya television reported. In Mosul, the air force struck ISIL positions after they seized the largest city in Iraq’s north earlier this week, Iraqiya said. Al-Sumaria television reported heavy clashes as the army fought for Tikrit backed by air support.
  • China’s No-Money-Down Housing Echoes U.S. Subprime Lending Risks. China’s home buyers are being offered no-money-down purchases in an echo of the subprime lending that triggered a U.S. economic meltdown and the global financial crisis. Deals skirting government requirements for minimum 30 percent down payments have emerged this year from Guangzhou and Shenzhen in the south to Beijing in the north as real-estate sales slump, according to state media and statements by government agencies and developers. 
  • European Stocks Little Changed as Bouygues, Iliad Gain. European stocks were little changed as the benchmark index pared gains after data showed U.S. retail sales grew slower than estimated and more Americans than forecast made jobless claims. Bouygues SA rose 5.2 percent after a report that Orange SA is studying a cash offer for its telecommunications unit and Iliad (ILD) SA advanced 6.3 percent after France said it’ll push for a merger among phone companies. Anglo American Plc dropped 3.2 percent, leading a gauge of commodity producers lower, after Morgan Stanley recommended selling the stock. The Stoxx Europe 600 Index added less than 0.1 percent to 347.83 at the close in London.
  • Delta Tumbles Most in S&P 500 as Oil Rises on Iraq Strife. Delta Air Lines Inc. (DAL) fell the most on the Standard & Poor’s 500 Index, extending a decline among U.S. carriers, as violence in Iraq pushed oil prices to an eight-month high. “It’s primarily crude, given the jump up and the uncertainty and tension,” Savanthi Syth, a Raymond James Financial Inc. analyst, said in an interview. “Crude jumping up has an impact on earnings in the shorter term. Longer term, hopefully they can push through fare increases to cover that.” Jet fuel, refined from crude, and labor are airlines’ largest expenses. Delta fell 5.5 percent to $38.48 at 11:18 a.m. in New York, while Southwest Airlines Co. (LUV)’s 4.5 percent tumble was the second-biggest on the S&P 500.
Wall Street Journal: 
  • Kurdish Forces Take Control in Northern Iraqi City of Kirkuk. Move Comes as Forces of the Shiite-Dominated Government of Prime Minister Nouri al-Maliki Abandon Posts and Flee, Provincial Official Says. Iraq edged closer to all-out sectarian conflict on Thursday as Kurdish forces took control of a provincial capital in the oil-rich north and Sunni militants threatened to march on the capital Baghdad and two cities revered by Shiite Muslims.
CNBC:
ZeroHedge:
Business Insider:
FINalternatives:
  • Hedge Fund Inflows Jump. Investors added more money to hedge funds this month than in any of the last four, according to SS&C Technologies. The SS&C GlobeOp Capital Movement Index rose 1.01% in June to hit “their highest levels in four months,” SS&C CEO Bill Stone said. The metric measures net subscriptions and redemptions received by hedge funds administered on SS&C’s GlobeOp platform.
Washington Post:
  • ISIS just stole $425 million and became the ‘world’s richest terrorist group’. Of the many stunning revelations to emerge out of the wreckage of Mosul on Wednesday — 500,000 fleeing residents, thousands of freed prisoners, unconfirmed reports of “mass beheadings” — the one that may have the most lasting impact as Iraq descends into a possible civil war is that the Islamic State of Iraq and Syria just got extremely rich. As insurgents rolled past Iraq’s second largest city, an oil hub at the vital intersection of Syria, Iraq and Turkey, and into Tikrit, several gunmen stopped at Mosul’s central bank. An incredible amount of cash was reportedly on hand, and the group made off with 500 billion Iraqi dinars — $425 million. The provincial governor of Nineveh, Atheel al-Nujaifi, confirmed that the ISIS Islamists had lifted additional millions from numerous banks across Mosul, as well as a “large quantity of gold bullion,” according to the International Business Times, which called it the “World’s Richest Terror Force.”
USAToday:
Reuters: 
  • Brazil's retail sales drop 0.4 pct in April from March. Retail sales in Brazil dropped for a second straight month in April, highlighting the weak state of Latin America's largest economy as one of its main growth engines rapidly loses steam. Retail sales volumes in Brazil fell 0.4 percent in April from March, twice as much as the 0.2 percent expected in a Reuters polls, the statistics agency IBGE said on Thursday. Higher interest rates, stubborn inflation and dwindling confidence have weighed on consumers, depriving the Brazilian economy of one of its few reliable sources of growth.
Telegraph:
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Bear Radar

Posted by Gary .....at 1:40 PM
Style Underperformer:
  • Large-Cap Growth -.72%
Sector Underperformers:
  • 1) Airlines -3.21% 2) Coal -2.24% 3) Road & Rail -1.43%
Stocks Falling on Unusual Volume:
  • APU, LULU, CLV, EXC, PBF, SC, CXDC, AL, RRC, AAL, DAL, INFY, RIO, SWC, UAL, CBI, SAVE, ALK, CEVA, HA, CLF, LUV, SYNA, CPSI, FII, JBLU and SLCA
Stocks With Unusual Put Option Activity:
  • 1) JBLU 2) XLE 3) IYT 4) XLK 5) XLP
Stocks With Most Negative News Mentions:
  • 1) LULU 2) DAL 3) SAVE 4) SFUN 5) SCCO
Charts:
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