Broad Equity Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 11.74 -4.08%
- Euro/Yen Carry Return Index 142.70 +.06%
- Emerging Markets Currency Volatility(VXY) 5.78 -.86%
- S&P 500 Implied Correlation 52.98 +.74%
- ISE Sentiment Index 152.0 +3.4%
- Total Put/Call .72 -20.88%
Credit Investor Angst:
- North American Investment Grade CDS Index 58.43 -.64%
- European Financial Sector CDS Index 66.53 -1.16%
- Western Europe Sovereign Debt CDS Index 35.35 +1.38%
- Asia Pacific Sovereign Debt CDS Index 70.11 -2.01%
- Emerging Market CDS Index 239.15 -.84%
- China Blended Corporate Spread Index 303.80 -.87%
- 2-Year Swap Spread 19.50 -.5 basis point
- TED Spread 21.5 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -7.25 +1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $94.30/Metric Tonne -1.15%
- Citi US Economic Surprise Index -23.30 +.1 point
- Citi Emerging Markets Economic Surprise Index -4.0 +.3 point
- 10-Year TIPS Spread 2.21 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +48 open in Japan
- DAX Futures: Indicating +5 open in Germany
Portfolio:
- Higher: On gains in my retail/biotech/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Rebels Down Two Ukrainian Fighter Jets Near MH17 Site. Pro-Russian
separatists shot down two Ukrainian fighter jets in the same eastern
region where Malaysian Air Flight MH17 was destroyed, the government
said. Rebels downed two Su-25s today over the village of Dmytrivka in
the Donetsk region, a Defense Ministry spokesman, Oleksiy
Dmytrashkovsky, said by
phone. Another ministry spokesman, Andriy Lysenko, told reporters in
Kiev the planes were at an altitude of 5,200 meters (17,000 feet) when
they were brought down by a “powerful” anti-aircraft missile. The pilots
ejected and their whereabouts are unknown, the ministry said on
Facebook.
- Israel Says Offensive to Continue as Kerry Seeks Truce. Israel
doesn’t plan to stop its Gaza Strip offensive as long as the
Palestinian territory’s Hamas rulers continue to pose a threat, Justice
Minister Tzipi Livni said, as U.S. Secretary of State John Kerry flew to
Israel in pursuit of an elusive truce deal. “There is no reason to
stop here if Hamas continues to threaten, continues to fire,” Livni, her
country’s former chief negotiator with the Palestinians, told Israel
Radio. She said Israel may be headed toward an
ongoing offensive “whose objective is not to contain the threat, but to
disarm terror organizations, including Hamas.” Defense Minister Moshe
Ya’alon told soldiers to prepare for a broader ground war.
- Junk-Bond Indigestion Burns Buyers Gorged on Record Sales. Junk-bond buyers are showing signs
of indigestion after snapping up a record $361 billion of the
debt at the lowest yields on record. Speculative-grade bonds from
the U.S. to Europe and Asia are set to post losses this month for the
first time since last August after high-yield debt funds suffered the
biggest weekly withdrawal of 2014. Winoa SA, the French producer of
abrasives for metalworking, scrapped a bond offering in Europe yesterday
amid the turmoil. The pushback is stifling junk-bond issuance in July
after an unprecedented first half of sales. Investors who piled into the
debt amid extraordinary central bank stimulus and a sixth year of
near-zero interest rates in the U.S. are being jolted out of complacency
by intensifying risks from Ukraine to Gaza. “People who were
complacent before are going to have their finger on the sell button
pretty quickly if some of these situations escalate,” Marc Gross, a
money manager at RS Investments in New York, which oversees $5.8 billion
in fixed-income assets, said in a telephone interview.
ZeroHedge:
Macro Business:
meps:
Style Underperformer:
Sector Underperformers:
- 1) Semis -2.1% 2) Networking -2.02% 3) Oil Tankers -1.61%
Stocks Falling on Unusual Volume:
- XLNX, ROYT, UIS, CNMD, TUP, CBST, WHR, JNPR, ICE, GSK, XOOM, OII, DRC, BA, TEL, LAYN, EA, ALTR, IRBT, LLTC, HLF, HXL, ATI, BEAV, MCD, JDSU, HXL, FULT, ENPH, FSL, IDTI, THRX and XLNX
Stocks With Unusual Put Option Activity:
- 1) JNPR 2) TRIP 3) UTX 4) MDT 5) FFIV
Stocks With Most Negative News Mentions:
- 1) THC 2) GM 3) XLNX 4) UIS 5) HXL
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +2.17% 2) Biotech +1.78% 3) Homebuilding +1.08%
Stocks Rising on Unusual Volume:
- PBYI, TLM, INO, ISRG, LEJU, BIIB, HA, RHI, LAD and RES
Stocks With Unusual Call Option Activity:
- 1) END 2) XLNX 3) JNPR 4) BRCM 5) WMB
Stocks With Most Positive News Mentions:
- 1) BIIB 2) AAPL 3) PEP 4) LNKD 5) DOW
Charts:
Evening Headlines
Bloomberg:
- Rebel Stronghold Holds Breath as Shellfire Escalates in Donetsk. The grass is being trimmed, the flowers tended and the potholes on
roads filled. Jazz plays out from a café, and a few people are out
enjoying the sunshine. Yet puncturing the scene of a European summer is the distant boom, boom, boom of artillery fire and emptiness. This
is Donetsk, nicknamed the Ukrainian city of a million roses and now the
headquarters of a pro-Russia group wanting to break up the country.
With separatists blamed by the U.S. for shooting down a Malaysia
Airlines plane last week and killing almost 300 people, the semblance of
normality masks a foreboding among residents as to the fate of their
city with Ukrainian forces fighting militants in the suburbs.
- Pressure for Cease-Fire Builds on Hamas. Diplomats stepped up pressure on Hamas to accept a cease-fire in Gaza
and end a conflict that has killed more than 600 people, as global
airlines suspended flights to Tel Aviv because of rocket fire. U.S.
Secretary of State John Kerry, who’s in Cairo to promote the Egyptian
plan for a truce, said Hamas has “a fundamental choice to make.”
Palestinian President Mahmoud Abbas said late yesterday that Hamas
agreed to a proposed cease-fire to be followed by five days of talks,
even though it rejected the Egyptian initiative last week while Israel
accepted it. There was no immediate response from Hamas to the
Palestinian Authority leader’s remarks.
- Asian Stocks Gain as Rupiah Climbs With Zinc; Crude Drops.
Asian stocks rose, with the regional index extending gains from a
six-year high, after U.S. inflation data eased concern over the outlook
for Federal Reserve interest-rate increases. Indonesia’s rupiah climbed
and zinc rose a third day, while crude oil fell. The MSCI Asia Pacific Index added 0.2 percent by 10:08 a.m. in Tokyo, rising a third day and set to hold its highest close
since June 2008.
- Obamacare Subsidy Loss May Boost Premiums, Chase Insurers. A future court ruling that Americans in 36 states can no longer get
U.S. subsidies for Obamacare’s insurance plans would boost premiums by
76 percent, allowing many to flee the program and chasing away insurers.
It’s a worst-case scenario that could affect almost 5 million
people who use subsidies now, and millions more who haven’t yet
enrolled. Under the health law, anyone whose premiums exceed 8 percent
of their income is exempt from the law’s mandate that all Americans be
covered. That may leave only the sickest and most desperate on the
rolls, raising coverage costs
for insurers.
- Wall Street Cut From Guest List for Jackson Hole Fed Meeting. Wall Street (SPX) doesn’t lead to Jackson Hole this year.
As the Federal Reserve Bank of Kansas City prepares to host next month’s
annual gathering of central bankers in Wyoming, seasoned Fed watchers
from the financial markets, including the chief U.S. economists of the
biggest American banks, aren’t being invited, according to past
participants.
Wall Street Journal:
- Iraqi Leader Maliki Loses Backing of Shiite Figure and Iran for New Term. Iraqi Prime Minister Nouri al-Maliki is losing political support for his bid for
a third term from core backers, including the country's Shiite religious
establishment and ally Iran, say Iraqi officials. The shift,
officials said, is prompting members of the premier's own alliance
to reconsider their support and dimming the prospect of his stay in
power. In recent days, high-level delegations of Iranian military
officials and
diplomats held a flurry of meetings in Baghdad and the Shiite religious
capital
Najaf, where they were told that Mr. Maliki, a Shiite, has lost the
confidence
of all but his most loyal inner circle, Iraqi officials with knowledge
of the
meetings said.
- U.S. Officials Lay Out Case Against Russians. Washington Seeks to Counter Russian Claims About MH17 Crash. U.S. intelligence officials presented reporters with their most
detailed case yet Tuesday that Russian-backed Ukrainian separatists shot
down a Malaysia Airlines jetliner last week, in a bid to counter what
American officials see as Russian efforts to muddy the waters with
claims of Ukrainian culpability. The officials relied on
photographs, social media, and voiceprint analysis of Ukrainian
communications intercepts to make their...
CNBC:
Zero Hedge:
Business Insider:
Reuters:
China Securities Journal:
- China Should Allow Defaults to Re-Evaluate Risks. China should allow some companies to default, and encourage financial institutions and investors to re-evaluate the risks of investing in local government debt and the property market,
reporter Zhang Chaohui says in a front-page commentary. Funds will move
back to industries with low risks from sectors with overcapacity after
the market recognizes investment risks. Local governments may face
bigger payment pressure in 2H on slower economic growth and cooling of
land sales and property market, the commentary said.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 71.50 -1.0 basis point.
- NASDAQ 100 futures -.04%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory decline of
-2,422,220 barrels versus a -7,525,000 barrel decline the prior week.
Gasoline supplies are estimated to rise by +1,133,330 barrels versus a
+171,000 barrel gain the prior week. Distillate inventories are
estimated to rise by +1,844,440 barrels versus a +2,528,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to fall -.1%
versus a +2.2% gain the prior week.
Upcoming Splits
Other Potential Market Movers
- The HSBC China Manufacturing PMI and the weekly MBA mortgage applications report could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by industrial and real estate
shares in the region. I expect US stocks to open modestly lower and to rally 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) 12.04 -6.01%
- Euro/Yen Carry Return Index 142.65 -.35%
- Emerging Markets Currency Volatility(VXY) 5.86 -.51%
- S&P 500 Implied Correlation 51.75 -.71%
- ISE Sentiment Index 154.0 +63.8%
- Total Put/Call .91 +1.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 58.54 -1.60%
- European Financial Sector CDS Index 67.48 -4.69%
- Western Europe Sovereign Debt CDS Index 34.87 -1.66%
- Asia Pacific Sovereign Debt CDS Index 71.45 -1.41%
- Emerging Market CDS Index 241.0 -1.50%
- China Blended Corporate Spread Index 306.45 +.10%
- 2-Year Swap Spread 20.0 unch.
- TED Spread 21.25 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -8.75 +1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 199.0 +1.0 basis point
- China Import Iron Ore Spot $95.40/Metric Tonne -.62%
- Citi US Economic Surprise Index -23.40 -5.4 points
- Citi Emerging Markets Economic Surprise Index -4.30 +.5 point
- 10-Year TIPS Spread 2.22 unch.
Overseas Futures:
- Nikkei Futures: Indicating +43 open in Japan
- DAX Futures: Indicating -9 open in Germany
Portfolio:
- Higher: On gains in my tech/biotech/medical sector longs
- Market Exposure: 50% Net Long
