Style Underperformer:
Sector Underperformers:
- 1) Alt Energy -2.13% 2) Networking -1.90% 3) Banks -1.32%
Stocks Falling on Unusual Volume:
- MVNR, WWWW, ATHL, IMMR, YRCW, OCN, OMG, RARE, ASH, AXL, EHTH, ARRS, VCYT, INSY, RMD, MT, CIR, NGVC, BBG, HF, DISCK, LRE, STAA, CTRX, NSP, VNR, WU, EPE, MDAS, TDS, GWR, SSP, WLL, CJES, PKI, RMD, DATA, RSPP, HCLP, GTLS, ATHL, EHTH, SPWR, LYV, CTRL, CTRL and AAWW
Stocks With Unusual Put Option Activity:
- 1) CMG 2) PCLN 3) AXL 4) XOP 5) BAC
Stocks With Most Negative News Mentions:
- 1) PKI 2) BBG 3) DDD 4) PBF 5) WWWW
Charts:
Style Outperformer:
Sector Outperformers:
- 1) HMOs +.63% 2) Defense +.54% 3) Gold & Silver +.45%
Stocks Rising on Unusual Volume:
- BYI, SPR, AWI, EXPE, GDOT, LNKD, IMPV, SWIR, DGI, SPR, SYNA, BZH, SGEN and CENX
Stocks With Unusual Call Option Activity:
- 1) AXL 2) RMD 3) RRC 4) CYH 5) ESRX
Stocks With Most Positive News Mentions:
- 1) PG 2) TSLA 3) EXPE 4) SYK 5) CHD
Charts:
Evening Headlines
Bloomberg:
- Why Putin Has 2006 Flash Before His Eyes After Sanctions. With
the world watching if U.S. and
European sanctions over Ukraine usher in a new Cold War, the showdown
first risks sparking a return to capital controls in Russia after they
were dismantled eight years ago. President Vladimir Putin’s
government scrapped capital controls in 2006, becoming the only one of
the biggest emerging economies to allow unrestricted flows of money
across borders. If the Ukrainian conflict worsens, tripwires may be set
off in case the ruble weakens 15 percent or the country’s international
reserves fall about $100 billion, according to Russian economic
institutes that advise the government.
- Abenomics Charm Fades as Yields Signal Headwinds: Japan Credit. Japan’s bond investors are mirroring voters in turning away from Prime Minister Shinzo Abe.
The nation’s implied forward yield, an indicator of traders’
expectations for the 10-year note rate in 2016, fell to 1.62 percent on
July 29. That’s the lowest since the Bank of Japan announced record
stimulus in April 2013, suggesting
reduced bets that an improving economy will depress demand for
the safety of sovereign debt.
- Argentina Debt Dilemma Spotlights Knotted World of Default Swaps. Whenever
the knotted world of credit-default swaps is pushed to the forefront in
a financial crisis, conspiracy theories abound. Argentina is no
exception. Argentine Economy Minister Axel Kicillof described a
group of so-called holdout creditors this week as “vulture funds” after
failing to reach a restructuring agreement with them. Kicillof
specifically directed his
ire at credit swaps, a market, he said, that clouds the motives of
creditors while leading to “the most wretched speculative capitalism
that exists.” “When they present a solution you don’t know if
it’s something you can believe at the negotiating table or if there’s
something else that you’ll never know about happening outside that gives
them greater benefits,” Kicillof told reporters at a July 30 news
conference.
- China Rongsheng Sees Wider Loss on Sluggish Ship Orders. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the country’s second-largest private shipbuilder, said it expects losses in the first half to widen after customers canceling orders forced it to cut production. The Shanghai-based company expects a “significant
increase” in the net loss for the six months that ended in June
compared with a year earlier, according to a filing to the Hong
Kong Exchange yesterday. The shipbuilder cited its
“conservative operation strategies” for the slump after
customers changed orders as global demand stayed sluggish.
- Asian Stocks Extend Global Rout Amid Earnings Concerns.
Asian stocks dropped, extending the biggest global rout in six months
that saw the Dow Jones Industrial Average wipe out this year’s gains in
one session amid weaker earnings and credit-market concerns. Skymark
Airlines Inc. sank 7.7 percent after Japan’s third-largest carrier said
it may go out of business should it have to pay Airbus Group NV a
penalty for canceling the planned purchase of six A380 superjumbos.
Samsung Electronics Co. fell 1.7 percent in Seoul after UBS AG cut its
rating on the stock. Sony Corp. rose 5.7 percent in Tokyo as the maker
of PlayStation game consoles posted a surprise first-quarter profit. The MSCI Asia Pacific Index (MXAP) fell 0.5 percent to 148.07 as of 10:17 a.m. in Tokyo, heading for its first weekly loss in
three weeks.
- Commodities Cap Biggest Monthly Decline Since May 2012. Commodities had the worst monthly
performance in more than two years, led by losses for crops
including soybeans and wheat on signs of bigger supplies. The Bloomberg Commodity Index of 22 raw materials fell 5
percent in July to 127.91, the biggest loss since May 2012. Corn
had the largest drop since 2011, and cotton posted for the
longest losing streak in three years.
- WTI Falls After Biggest Monthly Drop in Two Years; Brent Slides.
West Texas Intermediate dropped for a fifth day after capping the
biggest monthly decline in more than two years amid concern a prolonged
shutdown of a Kansas refinery will reduce crude demand. Brent slid in
London. Futures slid as much as 0.5 percent in New York, extending
a 6.8 percent loss in July.
Wall Street Journal:
- Israel, Hamas Agree to 3-Day Cease-Fire. Will Hold Talks in Egypt on More Lasting Solution. Israel
and Hamas agreed to a three-day cease-fire in the Gaza conflict with
the hope of forging a more lasting peace. U.S. Secretary of State John
Kerry and U.N. Secretary-General Ban Ki-moon announced the truce, set to
begin Friday morning, in a joint statement issued in New Delhi. A
spokesman for Hamas, the Islamist group that rules Gaza, confirmed that
all militant factions in the Palestinian territory had agreed to
suspend violence. Israeli Prime Minister
Benjamin Netanyahu's
office confirmed the agreement. Israel,
Hamas and other Palestinian factions would travel to Cairo immediately
for negotiations aimed at building the cease-fire into a more lasting
truce, the U.S. and U.N. said. During the pause, Israel won't pull back
its forces inside Gaza.
- Bears Who Won Big During Finance Crisis Are Growling Again. Singer and Lippmann Are Among Hedge-Fund Managers Wary of the Potential for Prices to Fall.
Many of the Wall Street money managers who made billions by
anticipating the U.S. housing bubble see more trouble on the horizon.
Unlike before the crisis, when those traders were mostly united against
subprime mortgages, the wagers vary this time. Some are against U.S. junk bonds, while others are targeting European sovereign debt. The...
- Leaving U.S. Allies Adrift as Chaos Rises by Joseph Lieberman. In Eastern Europe, Asia and the Middle East, America's friends are on the defensive and increasingly feeling alone. When I was getting into politics in Connecticut a long time ago, an
experienced politician counseled me: Be loyal to your friends and people
who have supported you. Take care of them whenever you can. You should
also try to convince people who opposed you in the last election to
support you in the next election, but never do that by being disloyal to
your friends or you will end up without anybody you can depend on when
you need help. I have been thinking of that wise counsel as numerous crises threaten the world's...
Zero Hedge:
Business Insider:
CNN:
Reuters:
- Tesla(TSLA) expects to boost 2015 output to more than 60,000. Tesla Motors Inc, the California-based maker of luxury electric cars, said it expects to build more than 60,000 cars in 2015, after spending heavily
this year to update and expand its Fremont assembly plant.
The initial response from investors was mixed, with shares
rising, falling, then climbing again after Musk's call with
analysts. They closed at $223.30, down 2.5 percent, in regular
trading.
- LinkedIn forecasts strong qtr, driven by hiring business.
Corporate networking site LinkedIn Corp forecast better-than-expected
adjusted profit and revenue in the current quarter, helped by a rapid
rise in its
hiring business. Shares of the company rose as much as 15 percent to $208 in
extended trading.
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.5 +5.0 basis points.
- Asia Pacific Sovereign CDS Index 75.0 +4.0 basis points.
- NASDAQ 100 futures +.37%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Change in Nonfarm Payrolls for July is estimated at 230K versus 288K in June.
- The Unemployment Rate for July is estimated at 6.1% versus 6.1% in June.
- Average Hourly Earnings for July are estimated to rise +.2% versus a +.2% gain in June.
- Personal Income for June is estimated to rise +.4% versus a +.4% gain in May.
- Personal Spending for June is estimated to rise +.4% versus a +2% gain in May.
- The PCE Core for June is estimated to rise +.1% versus a +.2% gain in May.
9:45 am EST
- The Final Markit US Manufacturing PMI for July is estimated to rise to 56.5 versus a prior estimate of 56.3.
9:55 am EST
- Final Univ. of Mich. Consumer Confidence for July is estimated to rise to 81.8 versus a prior estimate of 81.3.
10:00 am EST
- The ISM Manufacturing for July is estimated to rise to 56.0 versus 55.3 in June.
- ISM Prices Paid is estimated at 58.0 versus 58.0 in June.
- Construction Spending for June is estimated to rise +.5% versus a +.1% gain in May.
Afternoon:
- Total Vehicle Sales are estimated to fall to 16.7M versus 16.92M in June.
Upcoming Splits
Other Potential Market Movers
- The Fed's Fisher speaking and Eurozone PMI report could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity 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: Substantially Lower
- Sector Performance: Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 16.35 +22.73%
- Euro/Yen Carry Return Index 143.78 +.02%
- Emerging Markets Currency Volatility(VXY) 6.80 +6.75%
- S&P 500 Implied Correlation 60.50 +10.08%
- ISE Sentiment Index 61.0 -40.20%
- Total Put/Call .96 -1.03%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.96 +6.06%
- European Financial Sector CDS Index 73.23 +7.44%
- Western Europe Sovereign Debt CDS Index 35.19 +3.23%
- Asia Pacific Sovereign Debt CDS Index 74.33 +4.62%
- Emerging Market CDS Index 271.86 +3.57%
- China Blended Corporate Spread Index 305.91 +.72%
- 2-Year Swap Spread 20.25 +2.25 basis points
- TED Spread 21.75 +1.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -9.5 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% -1.0 basis point
- Yield Curve 203.0 +3.0 basis points
- China Import Iron Ore Spot $95.60/Metric Tonne -.31%
- Citi US Economic Surprise Index -12.50 -7.3 points
- Citi Emerging Markets Economic Surprise Index -2.40 -.2 point
- 10-Year TIPS Spread 2.28 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -95 open in Japan
- DAX Futures: Indicating -13 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail/biotech/medical/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and added to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Oligarchs Blacklisted by EU as U.S. Weighs More Measures. The U.S. is considering further punitive measures on Russian business
after Europe blacklisted tycoons close to the Kremlin to pressure
President Vladimir Putin to halt backing for separatists in east
Ukraine. Rising pressure comes as Ukraine laid the blame on
rebels for blocking investigators seeking to reach the crash site of
Malaysian Air Flight MH17 in past days. The Organization for Security
and Cooperation in Europe said an international team reached the area
today.
- U.S. Could Move to Sanction Russia Derivatives, Short-Term Funds. The U.S. might move to limit derivatives trading and short-term loans
with Russian companies if sanctions already imposed fail to sway
President Vladimir Putin to end support for rebels in eastern Ukraine. U.S. citizens and businesses are still permitted to trade in outstanding
debt of any maturity and new short-term debt and derivatives with
sanctioned Russian companies. Restrictions on money-market financing and
derivatives could be imposed if tougher penalties are necessary, said a
Treasury Department official who asked not to be named because further
options are still being discussed.
- Argentine Bonds Tumble After Default as Banks Seek Holdout Deal. Argentina’s
dollar bonds sank after the country missed a payment on $13 billion of
its debt as JPMorgan Chase & Co. (JPM) and other banks sought a deal
that would allow the country to resume servicing its securities. A group of international investment banks met with Elliott Management
Corp. and other so-called holdout creditors to buy the securities they
hold from the country’s 2001 default, according to a bank official
familiar with the matter, who asked not to be identified because the
information is private. The official said talks would continue. Buenos
Aires-based newspaper Ambito reported that a deal on the amount was
reached, while other issues had yet to be resolved.
- Netanyahu Says Israel Must Destroy Hamas Tunnels in Gaza. Israel
won’t sign up to a truce that curtails its ability to destroy tunnels
Hamas dug to launch attacks, Prime Minister Benjamin Netanyahu said
today, as the country called up an additional 16,000 reservists. “We are determined to complete this operation, with or without a
cease-fire,” Netanyahu said in remarks broadcast by radio before a
meeting of the cabinet. “We won’t agree to any proposal that doesn’t let
the Israeli army complete this important job.”
- Euro Flows Reveal Shift in Sentiment as Losses Mount: Currencies. The international appetite for euro-zone financial assets that underpinned the local currency the
past two years is beginning to erode. While broad data showing real-time flows into and out of
the region’s stocks and bonds are hard to find, strategists
point to items such as U.S. exchange-traded funds, which pulled $1.1
billion from European assets this month, the first outflow since April
2013. Bonds of Italy and Spain that yielded as much as 7.05
percentage points more than Treasuries two years ago now pay less than
their U.S. counterparts, diminishing their appeal. The result is the euro’s biggest monthly loss since
February 2013, and Morgan Stanley said this week selling the 18-nation currency remains the surest bet in the developed world.
- Why a French Bank Would Expand in U.S. High-Yield Bond Sales Now. The world’s biggest banks are pouncing on one of the only
bright spots in their fixed-income businesses: helping junk-rated
companies sell bonds. Case in point is Credit Agricole SA (ACA),
which is boosting its U.S. high-yield debt unit by hiring Michael
Stiuso, Cindy Cash and Justin Brody in the last several months. The
lender has risen to become 12th most-active manager of the debt sales
this year, its highest rank ever, up from 17th place in 2013, according
to data compiled by Bloomberg. “We have made a conscious decision
to develop further our New York sales presence across asset classes,
with a focus on U.S. high yield,” Tim Hall, Credit Agricole’s global
head of debt capital markets, said in an e-mail. The firm “has made it
clear that it is a debt-centric house.”
- Adidas Plunges After Reducing Forecast on Russia, Golf. Adidas AG(ADS) shares fell by a record after the world’s second-largest
sporting-goods maker slashed its full-year profit forecast, bursting
euphoria around the German company less than a month after its national
team’s victory in the World Cup. Adidas said profit this year
will miss its forecast by at least 180 million euros ($241 million). The
shoemaker and apparel maker scrapped a long-standing growth target for
next year, citing a slump in demand for golf supplies in North America
combined with turmoil in Russia. The shares tumbled as much as 16
percent in Frankfurt trading, the biggest intraday drop since the
company’s 1995 initial public offering.
- Large Banks Enjoy ‘Too-Big-To-Fail Subsidy’ in Crises, GAO Finds.
A study by the Government Accountability Office, to be released in full
later today, comes after two years of congressional and industry debate
over whether large banks continue to get what has come to be known as a
too-big-to-fail subsidy despite regulatory changes.
- Ebola Deaths Rise as Quarantines Seek to Limit Disease. The presidents of Sierra Leone and Liberia took drastic actions to
control citizen movements in their countries and global health officials
promised to send more help to West Africa as the Ebola death toll rose
to 729, or 57 more than a week earlier.
- Euro Inflation Slowed to 0.4% in July, Lowest Since 2009. Euro-area
inflation (ECCPEST) unexpectedly slowed in July to the weakest in
almost five years, underscoring the European Central Bank’s concerns
that the economy is too feeble to drive price growth. Inflation was 0.4
percent compared with 0.5 percent in June, the European Union’s statistics office in Luxembourg said today. That is the weakest since October 2009 and
below a median forecast of 0.5 percent in a Bloomberg News survey of 42
economists.
- European Stocks Drop Most in Three Weeks; Adidas Forecast.
European stocks declined the most in three weeks as Adidas AG lowered
its profit forecast and Banco Espirito Santo SA led a plunge in
Portuguese equities. Adidas slumped the most in 15 years as the
sporting-goods maker said the crisis in Ukraine will reduce its profit
from Russia. Banco Espirito Santo sank 42 percent after making
provisions of 4.3 billion euros ($5.7 billion). Afren Plc
tumbled 26 percent after suspending senior managers following an
investigation into unauthorized payments. Royal Dutch Shell Plc (RDSA)
added 2.5 percent after beating profit estimates. The Stoxx Europe
600 Index fell 1.3 percent to 335.99 at the close of trading, extending
its decline in July to 1.7 percent. The benchmark posted its first
back-to-back monthly losses in two years. Portugal’s PSI 20 Index
dropped 3.1 percent today as benchmark indexes retreated in every
western-European market except Iceland. Germany’s DAX Index slid 1.9
percent and France’s CAC 40 Index slipped 1.5 percent. The U.K.’s FTSE
100
Index decreased 0.6 percent.
- Mortgage-Bond Price Tumble Signals New Risks in Markets. Prices
of a new type of U.S. mortgage bonds are plunging this month, teaching
investors a lesson on the risks to markets wrought by the growing
constraints on Wall Street banks. The $8.2 billion of risk-sharing
securities sold in the last year by government-controlled Fannie Mae and
Freddie Mac can shift their losses from homeowner defaults to bond
buyers. One slice of a deal issued in May traded at 95.7 cents on the
dollar yesterday, down from 99.7 cents at the end of last month,
according to Trace, the bond-price reporting system of the
Financial Industry Regulatory Authority. With JPMorgan Chase & Co.
analysts failing to see “any
fundamental reason” for the tumble, investors from CQS U.K. LLP
to Calvert Investment Management Inc. are speculating that the
drop is mainly about the growing amount of the debt running into
limits created by new regulations on bond dealers’ ability to
smooth trading by building up their inventories. “It could be symbolic of what could happen more broadly in a real ‘risk-off’ environment,” Bill Murray, a New York-based
money manager at $14 billion hedge-fund firm CQS, said in an
interview.
- Orange Juice Falls to Six-Month Low Amid ‘Dismal’ U.S. Demand.
Orange-juice futures fell to the lowest since January as Americans are
shunning the breakfast drink, driving down prices even as disease
ravages groves in Florida, the world’s second-biggest citrus grower. In
the four weeks ended July 5, retail sales in U.S., the world’s biggest
consumer, fell 8.3 percent from a year earlier to the lowest for the
period since 2002, the Florida Department of Citrus said last week,
citing Nielsen Co. data. In 2013-2014, world consumption will drop 3.4
percent, the U.S. Department of Agriculture said July 24.
- Consumer Confidence Declines in U.S. to Lowest Since June. Confidence among U.S. consumers retreated last week to an
almost two-month low as limited wage growth chipped away at perceptions
about personal finances. The Bloomberg Consumer Comfort Index
fell to 36.3 in the period ended July 27, the lowest June 8, from 37.6
the week before. A gauge of households’ financial well-being dropped by
the most since mid-May.
- Colorado Overwhelmed by Immigrant License Requests. Undocumented immigrants in Colorado may face waits of a year or more
to obtain drivers licenses under a program starting tomorrow, as
thousands seeking to apply overwhelm an online scheduling system and
available staff. When the state’s Department of Motor Vehicles
started accepting appointments from foreign nationals online July 1, it
received as many as 107,500 page views an hour, crashing the system for
several days. The DMV expects to process 9,551 applicants through
September.
CNBC:
- US banks braced for large deposit outflows. US
banks are steeling themselves for the possibility of losing as much as
$1tn in deposits as the Federal Reserve reverses its emergency economic
policies and raises interest rates.
ZeroHedge:
Business Insider:
Reuters:
- BES senior bonds sink on bail-in fears. The massive 3.6bn loss at Banco
Espirito Santo has fuelled fears that senior bondholders may
also be at risk from the raft of problems at the troubled
Portuguese bank.
Style Underperformer:
Sector Underperformers:
- 1) HMOs -3.04% 2) Alt Energy -2.55% 3) Networking -2.54%
Stocks Falling on Unusual Volume:
- EHTH, ASGN, PHK, AVG, TTEK, ARCB, RRTS, TSN, ATEN, YUM, LLL, SOXX, GSJK, ALB, FEIC, MTW, ANIK, VCYT, CODE, GRFS, PNR, UAN, CRR, HTWR, RGR, GMT, UPL, EGN, PTEN, VNR, CNL, ABMD, CHTR, LGCY, TQNT, VNTV, SFY, KBR, KRFT, SHOO, GNW, MU, K, MOH, HP, ZLTQ, ULTI, RFMD, MUR, KS, MAA, RYL, GEVA, PNR, ALKS, CODE, CJES, CRR, TASR, SWC, PVA, BZH, MINI, PES, DDD, OCN, YELP and MDAS
Stocks With Unusual Put Option Activity:
- 1) XLE 2) KBH 3) CMI 4) EWT 5) OIH
Stocks With Most Negative News Mentions:
- 1) LLL 2) NKE 3) MET 4) DDD 5) YUM
Charts:
