Style Underperformer:
Sector Underperformers:
- 1) Retail -1.25% 2) Gaming -1.01% 3) HMOs -1.0%
Stocks Falling on Unusual Volume:
- ADSK, JWN, DTK, DDS, WB, FONR, CHKR, OVTI, APH, XIV, ZIV, CAP, WHZ, XON, TEVA, PCLN, PWRD, ULTI, TNXP, WERN, ICE, EPZM, FL, GVA, TRUE and CHKR
Stocks With Unusual Put Option Activity:
- 1) XLU 2) HOT 3) HYG 4) JWN 5) BZH
Stocks With Most Negative News Mentions:
- 1) ERUS 2) FB 3) BA 4) CSCO 5) F
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Utilities +.12% 2) Oil Service +.10% 3) Telecom -.09%
Stocks Rising on Unusual Volume:
- MNST, A, TASR, UPL, AMAT and NLNK
Stocks With Unusual Call Option Activity:
- 1) WY 2) MNST 3) UPL 4) JCP 5) LNCO
Stocks With Most Positive News Mentions:
- 1) UNS 2) AMAT 3) GILD 4) MNST 5) TLT
Charts:
Evening Headlines
Bloomberg:
- Russia Truce Plan at Odds With Reports on APC Movements. Russia
proposed a cease-fire for humanitarian aid deliveries to war-torn parts
of southeastern Ukraine as a convoy of aid trucks from Moscow waited
near the border with rebel-held areas. Even as Russia struck a
conciliatory note, news outlets including Novoye Vremya and Hromadske TV
reported seeing armored personnel vehicles crossing into Ukraine. The government in Kiev
has been saying for months that the separatist rebels are
receiving reinforcements from Russian territory. The government
in Moscow has repeatedly denied any involvement in the unrest. The dispute over the Russian convoy, which the leadership
in Moscow says is carrying emergency supplies, has stoked
tensions between the two countries and has prompted the U.S. and
the European Union to warn Russia against using aid as a pretext
for a military intervention. Russia says the supplies are needed
to help citizens of Luhansk and Donetsk, where fighting has cut
off water and power connections.
- Islamic State Said to Challenge Al-Qaeda for Leadership. The
radical Islamic State’s advances in Iraq are strengthening its
challenge to al-Qaeda in a contest for the leadership of the global
jihadi movement, according to five U.S. intelligence officials. Its
territorial gains and declaration of a caliphate spanning parts of Syria
and Iraq, reinforced by its use of social media to broadcast its
accomplishments in many languages, are attracting recruits and even
drawing defections from the leadership of the core al-Qaeda group and
some affiliates, the officials told reporters at a briefing today.
They
spoke on the condition of anonymity to discuss intelligence assessments.
The U.S. intelligence community thinks the Islamic State has an
incentive to conduct a major terrorist strike against U.S. or European
targets, in part to further assert itself as the true leader of radical
Islam, the officials said. There’s evidence that the group is
establishing cells beyond Iraq and Syria, they said.
- Maliki Resigns as Prime Minister to Make Way for Abadi. Iraqi Prime Minister Nouri al-Maliki said he has agreed to leave
office and clear the way for his designated successor to take over. The
move ends a political impasse and may enable Prime Minister-designate
Haidar al-Abadi to pull together a more inclusive government better able
to counter Islamist militants advancing in the country’s north, and to
heal sectarian and ethnic rifts threatening to tear Iraq apart.
- Open-Ended Notes Skirt Effort to Curb $14 Trillion Chinese Corporate Debt. Chinese companies are selling a
record number of bonds that can be booked as equity this year,
sidestepping Premier Li Keqiang’s bid to reduce the world’s
biggest corporate debt load.
Ten firms have issued perpetual notes that pay higher
yields in exchange for having no set maturity date, up from
eight last year and two in 2010 when such securities debuted in
the nation, Bloomberg-compiled data show. China Railway
Construction Corp. led offerings with $800 million of 3.95
percent securities last month. The coupon exceeds the 3.5
percent on its 2023 debentures issued in 2013.
- Asian Stock Index Heads for Best Weekly Gain Since March.
Asian stocks were little changed, with the regional benchmark index
heading for the biggest weekly rally since March, as investors weighed
reports Ukraine tensions are easing and weak economic data that fueled
bets central banks will maintain stimulus. Health-care shares rose the
most among the 10 industry groups on the regional index while energy
stocks led declines. China Mobile Ltd., the world’s largest phone
company by users, climbed 2.6 percent as it said it will cut $2 billion
from its device subsidy budget. James Hardie Industries Plc., a
building-materials supplier, slumped 7 percent in Sydney after reporting
profit plunged. Parkson Retail Group Ltd., which operates department
stores in China, soared 9.1 percent in Hong Kong after first-half profit
beat estimates. The MSCI Asia Pacific Index (MXAP) traded at 147.78 as of 9:50
a.m. in Hong Kong, headed for a 2.5 percent rally this week, the
most since the period ended March 28.
- Wal-Mart’s(WMT) Sales Stagnation Reignites Concern About Economy. Wal-Mart Stores Inc. (WMT)’s latest struggles to revive U.S. sales, following a disappointing Commerce Department report earlier this week, add to evidence
that the economy isn’t recovering as quickly as expected. The company posted stagnant same-store sales today in its
second-quarter earnings report, marking the sixth straight
period of no growth. The world’s largest retailer also cut its
earnings forecast for the year, citing higher spending on health
care and e-commerce.
- WTI Heads for Fourth Weekly Drop Amid Rising Supply; Brent Gains. West Texas Intermediate headed for a
fourth weekly drop, the longest losing streak since November,
amid speculation that crude supplies are expanding as global
demand slows. Brent gained in London. Futures were little changed in New York after falling 2.1
percent yesterday, the most in two weeks. A supply glut is
shielding the market from disruptions, the International Energy
Agency said on Aug. 12. Oil production in the U.S., the world’s
biggest consumer, rose last month to the fastest pace since
April 1987, according to the Energy Information Administration.
Wall Street Journal:
- Euro-Zone Economy Stalls in Second Quarter as German GDP Slips. Weak Quarter Raises Fears Europe's Recovery Has Faltered as Tensions With Russia Add New Challenges. The euro-zone economy stalled in the second quarter, raising the ugly
prospect that the region's meager recovery has lost momentum just as it
faces fresh headwinds from Russia and Ukraine. Germany's
economy, long Europe's growth engine, shrank for the first time in more
than a year, a development economists largely attributed to a mild
winter that boosted activity in the first quarter at the expense of the
second. The...
- Iraq's Besieged Maliki Quits. Move Is Surprising Reversal. Prime Minister Nouri al-Maliki relinquished power on Thursday, ending
eight years of tumultuous rule and opening a new political chapter that
U.S. officials hope will move Iraq toward a more united front against
marauding jihadists. The surprise move deflates a potential
crisis after Mr. Maliki had disputed in court the naming of another
politician to the premiership and ominously deployed extra security
forces across...
- Banks, Financial Firms Load Up on Cheap Debt. Banks and other financial companies world-wide are issuing bonds in
the U.S. at a record pace, taking advantage of this year's surprising
slump in interest rates and a brightening outlook for the sector. These
firms' debt sales hit $391 billion this year through Thursday morning, a
32% jump from the same period last year and a 19% rise from the same
span of 2007, a year of record issuance, according to data provider
Dealogic. That is a higher year-over-year increase than in the broader
U.S. corporate-bond market. Sales by...
CNBC:
- Evidence suggests Ebola toll underestimated: WHO. Staff with the World Health Organization battling an Ebola outbreak in
West Africa see evidence the numbers of reported cases and deaths vastly
underestimates the scale of the outbreak, the U.N. agency said on its
website on Thursday.
- Pershing Square sues US over Fannie Mae, Freddie Mac. Pershing Square Capital Management LP,
the hedge fund firm run by William Ackman, on Thursday sued the U.S.
government, claiming that its stripping of profits from Fannie Mae and
Freddie Mac unconstitutionally short changes investors in the companies'
common stock.
Zero Hedge:
Business Insider:
NY Times:
NBCNewYork:
Reuters:
Telegraph:
Evening Recommendations
FBR Capital:
- Rated (ICPT) Underperform, target $172.
- Rated (ENTA) Outperform, target $52.
- Rated (NPSP) Outperform, target $34.
- Rated (ACHN) Outperform, target $12.
- Rated (GILD) Outperform, target $125.
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.50 -.5 basis point.
- Asia Pacific Sovereign CDS Index 72.5 +.25 basis point.
- NASDAQ 100 futures +.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for August is estimated to fall to 20.0 versus 25.6 in July.
- PPI Final Demand for July is estimated to rise +.1% versus a +.4% gain in June.
- PPI Ex Food & Energy for July is estimated to rise +.2% versus a +.2% gain in June.
9:00 am EST
- Net Long-Term TIC Flows for June.
9:15 am EST
- Industrial Production for July is estimated to rise +.3% versus a +.2% gain in June.
- Capacity Utilization for July is estimated to rise to 79.2% versus 79.1% in June.
- Manufacturing Production for July is estimated to rise +.4% versus a +.1% gain in June.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for August is estimated to rise to 82.5 versus 81.8 in July.
Upcoming Splits
Other Potential Market Movers
- The UK gdp report and Fed's Kocherlakota speaking could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate
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: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.79 -.85%
- Euro/Yen Carry Return Index 143.01 +.08%
- Emerging Markets Currency Volatility(VXY) 6.72 -1.61%
- S&P 500 Implied Correlation 51.31 +.10%
- ISE Sentiment Index 70.0 -12.50%
- Total Put/Call .97 +3.19%
Credit Investor Angst:
- North American Investment Grade CDS Index 59.49 -2.01%
- European Financial Sector CDS Index 65.96 -4.46%
- Western Europe Sovereign Debt CDS Index 33.43 -4.27%
- Asia Pacific Sovereign Debt CDS Index 72.81 +.90%
- Emerging Market CDS Index 272.61 -1.14%
- China Blended Corporate Spread Index 315.62 -.32%
- 2-Year Swap Spread 23.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -13.50 -1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 199.0 -1.0 basis point
- China Import Iron Ore Spot $93.20/Metric Tonne unch.
- Citi US Economic Surprise Index -2.60 -2.3 points
- Citi Emerging Markets Economic Surprise Index -7.70 -2.2 points
- 10-Year TIPS Spread 2.22 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -10 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Higher: On gains in my tech/biotech/biotech sector longs
- Market Exposure: 50% Net Long
Bloomberg:
- Ukraine Organizes Aid as Russian Convoy Nears Border. Ukraine sent its own aid to the country’s war-torn east as a
Russian convoy with emergency supplies neared the border in defiance of
conditions set by the government in Kiev. President Vladimir
Putin, visiting the Crimea peninsula he annexed from Ukraine in March,
said Russia shouldn’t isolate itself and pledged to work to halt the
conflict that’s flared for months between pro-Russian separatists and
government forces, killing more than 1,500 people, according to United
Nations estimates. The U.S and the European Union have slapped sanctions
on Russian businesses and individuals, and Ukraine’s parliament passed a
bill today allowing similar measures.
- Finland Sees World on Brink of Cold War Before Putin Meeting. Finnish President Sauli Niinistoe
said the world risks sinking into a political deadlock as
dangerous as the cold war that dominated relations between the U.S. and the Soviet Union decades ago.
As the Finnish head of state prepares to meet President Vladimir Putin
in the southern Russian town of Sochi tomorrow, he said talks between
the two will focus on finding a way to defuse tensions surrounding the
conflict in Ukraine. Russia today confirmed the meeting will take place.
- Euro-Area Pickup Stalls as Big Economies Fail to Grow. The euro area’s recovery unexpectedly stalled in the second quarter
as its three biggest economies failed to grow, underlining the
vulnerability of the region to weak inflation and the deepening crisis in Ukraine.
Gross domestic product in the three months through June was unchanged
from the first quarter, when it increased 0.2 percent, Eurostat, the
European Union’s statistics office in Luxembourg, said today. The median
of 37 forecasts in a Bloomberg News survey was for growth of 0.1
percent. In a separate report, the agency confirmed inflation at 0.4
percent in July.
- Germany 10-Year Bond Yield Drops Below 1% as GDP Shrinks. German
bonds rose, pushing 10-year yields below 1 percent, boosting
speculation that the European Central Bank will have to act to avert the
kind of slump that stymied economic growth in Japan for more than a
decade. Euro-area bonds from Ireland to Greece advanced as data
showed Europe’s largest economy shrank more in the second quarter than
analysts predicted and France’s stagnated.
- France Risks EU Deficit Clash After Scrapping Targets. The French government abandoned its 2014 deficit targets after the
economy unexpectedly failed to grow for a second straight quarter,
risking a clash with European partners striving to meet their own fiscal
goals. Finance Minister Michel Sapin said that European policy
is partly to blame for the lack of expansion in the region’s
second-biggest economy. French gross domestic product stagnated in the
three months through June, national statistics office Insee said today
in Paris. Economists forecast a 0.1 percent gain, a
Bloomberg survey showed.
- Commodities Fall to 6-Month Low as Gain for Year Paring. Commodities
erased gains for the
year as oil and grains declined on signs of ample supplies as economic
growth halted in Europe and factory output slowed in China, the biggest
consumer of industrial metals and energy. The Bloomberg Commodity Index
of 22 raw materials dropped 0.5 percent to 125.593 by 5:11 p.m. in
London, for a 0.1 percent decline this year. Lean hogs, Brent crude
and gasoline fell at
least 2 percent today. Lean hogs, Brent crude and aluminum fell
at least 1.6 percent today. Cotton, grains and oilseeds are the
worst-performing
commodities this year in the Bloomberg index. Soybeans dropped
20 percent and corn lost 12 percent on record U.S. harvests. Brent is
heading for a second monthly decline, the longest streak since May 2013,
as shale fracking allowed the U.S. to pump the most oil in 27 years even as fighting in the Middle East threatened to disrupt supplies.
- Europe Stocks Climb as GDP Data Fuel Stimulus Speculation. European stocks advanced, reversing earlier losses, as data showing the euro area’s recovery stalled in the second quarter fueled speculation of more
central bank stimulus. ThyssenKrupp AG climbed after posting
quarterly earnings that beat projections. Royal Boskalis Westminster NV
surged 8.2 percent after saying it will start a share buyback program.
RWE AG declined 2.1 percent after saying first-half profit fell 62
percent. Novozymes A/S slid 6.5 percent after the supplier of enzymes
reported second-quarter net income that trailed analyst estimates. The Stoxx Europe 600 Index rose 0.3 percent to 331.04 at the close of trading, after earlier dropping as much as 0.4 percent.
Wall Street Journal:
ZeroHedge:
Business Insider:
Stratfor:
- China's Credit Slowdown Raises Concerns About Overall Economic Health. The dramatic and widely unexpected drop in Chinese credit supply in July
has raised concerns that the economic "recovery" China seemed poised to
make starting in June -- when aggregate financing in China hit a
whopping $320 billion, which was more than seven times greater than
July's figure -- has been nipped in the bud. There are also concerns
that the coming months will bring even worse news from the world's
second-largest economy. These concerns are aggravated by anecdotal
reports repeated in mainstream news media saying July's decline is the
result of the policy-driven credit tightening by the government and also
reflects a drop in Chinese enterprises' demand for new loans. If the
latter is the case, it raises important questions about the underlying
health and trajectory of China's economy.
InterpreterMagazine:
Reuters:
- Rights group says Chinese police open fire on Tibetan protesters.
Chinese police have opened fire on Tibetan demonstrators in
southwestern China, wounding 10 people, after the Tibetans protested
against the detention of a respected village leader, a Tibetan rights
group said. The crackdown in the Ganzi prefecture of Sichuan province, a
flashpoint for Tibetan protests against Chinese rule, underscores
simmering tensions between Tibetans and the Chinese authorities. The
UK-based International Campaign for Tibet (ICT) group, citing several
Tibetan sources in exile, said late on Wednesday the area "is now under
tight control, with local Tibetans including the elderly and children
subject to interrogation". Photographs that circulated on social media
showed Tibetans with "serious wounds on the head and torso" after the
incident, the ICT said.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Oil Service -1.22% 2) Steel -.91% 3) Networking -.65%
Stocks Falling on Unusual Volume:
- RRGB, NDLS, EXXI, SEAS, AZPN, LRN, ADVS, VCYT, VIPS, DANG, FNV, XONE, VRNS, RMTI, ITMN, FPI, CSCO, NES, TKMR, BPL, EZCH, SCAI, ULTI, PAAS and QLYS
Stocks With Unusual Put Option Activity:
- 1) JCP 2) DE 3) XLY 4) BK 5) JWN
Stocks With Most Negative News Mentions:
- 1) MU 2) RRGB 3) SEAS 4) FCX 5) BLMN
Charts:
