Bloomberg:
- Ukraine Truce Wobbles as Poroshenko Visits Frontline City. Ukraine said pro-Russian rebels targeted Mariupol, a frontline city
in the east of the country, after President Petro Poroshenko announced
his visit, further straining a four-day cease-fire. Road blocks
near the port city on the Sea of Azov came under fire from militants
today, presidential spokesman Svyatoslav Tsegolko said on Twitter.
Shelling and small-arms fire continued during the past 24 hours across
the war-torn regions of Luhansk and Donetsk, said Andriy Lysenko, a
spokesman for Ukraine’s National Security and Defense Council.
- Toxic Stew of New Technology, Old Hatreds in World Crises.
The crises that dominate today’s news -- Ukraine, Islamic State, Libya,
Ebola, Gaza, cyber-attacks -- are symptoms of the most profound
revolution in world affairs in almost four centuries. A
toxic stew of new technologies, old hatreds, eroding boundaries,
tattered alliances, environmental dangers and independent groups are
making the world more interconnected and less stable at an accelerating
rate, forcing the U.S. and other nations to re-invent their approaches
to defending their borders, populations and economies.
- European Stocks Decline Amid Valuations, Scotland Poll.
European stocks slid for a second
day as investors weighed equity valuations and U.K. shares fell
on concerns that Scotland may vote for independence. Oil companies
slumped after Brent crude slipped below $100 a barrel. Lenders dragged
the FTSE 100 Index down 0.3 percent. Royal Bank of Scotland Group Plc
and Lloyds (LLOY) Banking Group Plc, the two banks that lend the most in
Scotland, lost more than 1 percent each. Oil and gas producers posted
the second-biggest loss of the 19 industry groups on the Stoxx Europe
600 Index. The Stoxx 600 retreated 0.4 percent to 346.09 at the close
of trading, after earlier losing as much as 1 percent.
- Brent Declines Below $100 for First Time Since June 2013.
Brent for October settlement decreased 88 cents, or 0.9 percent, to
$99.94 a barrel on the London-based ICE Futures Europe exchange at 1:12
p.m. in New York. Prices reached $99.36, the lowest intraday level since May 1, 2013. The volume of all
futures traded was 12 percent above the 100-day average for this
time of day.
- Fed Research Shows Investors Underestimate Path of Rate Rise. Low
volatility across financial
markets may signal investors are underestimating how quickly the Federal
Reserve will raise interest rates, according to researchers at the San
Francisco Fed. “Surveys, market expectations, and model estimates show that the public seems to expect a more accommodative policy than
Federal Open Market Committee participants,” Jens Christensen,
a senior economist, and Simon Kwan, a vice president of
financial research, said in a report today. Data also suggest
that the public is “less uncertain about their projections.”
- Oaktree Speaks for Mom and Pop in Rejecting Expensive Junk Bonds.
Oaktree Capital Group LLC (OAK)’s Howard Marks isn’t alone in being
more concerned about losing money in junk securities than missing out on
returns by avoiding them. Mutual
fund investors last week resumed their race to top-rated company bonds,
funneling $1.7 billion into the notes while pulling money from riskier,
higher-yielding debt.
ZeroHedge:
Business Insider:
- Iran Supreme Leader: Prepare For The ‘New World Order’. Iran’s Supreme Leader Ayatollah Ali Khamenei warns that the “new world
order is emerging” and that “Iran will have a strong role in creating” it, according to a Farsi-language transcript of Khamenei’s remarks late last week to the country’s Assembly of Experts. Iran will lead this “new world order” that will replace American influence as capitalism and Western influence collapse, according to Khamenei, who underwent surprise prostate surgery on Monday.
Reuters:
- Ebola spread is exponential in Liberia, thousands of cases expected soon: WHO. The Ebola virus
is spreading fast in Liberia, where many thousands of new cases are
expected over the coming three weeks, the World Health Organization said
on Monday.
"Transmission of the
Ebola virus in Liberia is already intense and the number of new cases is
increasing exponentially," WHO said in a statement.
Telegraph:
Handelsblatt:
- Stark Says ECB Risks 'Grave Crisis' With New Plan. "Markets will
be flooded more even though there is already abundant excess liquidity
globally," former ECB chief economist Juergen Stark writes. ECB monetary
policy leads to "fundamentally distorted market conditions, for example
for bonds of highly indebted euro-area countries, and exaggerations in
other financial-market segments". "The necessary correction, whenever it
will come, can lead to a new, grave crisis," he said. Interest rates
close to zero "won't produce a single euro in additional credit and this
inefficiency, among other things, will in the long run erode the ECB's
reputation even more." ABS purchases risk transforming ECB into European
'bad bank". "The ECB council isn't democratically legitimized to take
decisions with such far-reaching consequences."
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.82% 2) Oil Service -2.03% 3) Energy -1.91%
Stocks Falling on Unusual Volume:
- WRLD,
KERX, XCRA, HPTX, JOBS, TRUE, GSK, VNET, BTI, CPB, PBR, COUP, HMIN,
CENX, SLCA, PBR, BP, CWEI, DISCK, UGLD, TASR, HIBB, SDRL, CRZO and DRQ
Stocks With Unusual Put Option Activity:
- 1) XLV 2) JNK 3) XHB 4) DHI 5) BHI
Stocks With Most Negative News Mentions:
- 1) AMZN 2) KMR 3) GPS 4) FCS 5) YELP
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Alt Energy +1.59% 2) Hospitals +.98% 3) I-Banks +.56%
Stocks Rising on Unusual Volume:
- MGAM, CMGE, AMBA, RAX, INFN, CSIQ, CMCM, ACHN, BDSI, SGMS, INFI, VRA, ACAD and FEYE
Stocks With Unusual Call Option Activity:
- 1) DLTR 2) MYL 3) INFN 4) RSX 5) GNC
Stocks With Most Positive News Mentions:
- 1) TWTR 2) BAC 3) ADBE 4) GOOG 5) BA
Charts:
Weekend Headlines
Bloomberg:
- Ukrainian Deaths Test Truce as Both Sides Report Losses. A
cease-fire intended to stem months
of bloodshed in eastern Ukraine is being tested as both the government
and the pro-Russian separatists its army has been fighting report
violations and casualties. While Ukraine’s National Security Council said yesterday
that there’s no talk of ending the truce, now in its third day,
explosions continued in the evening in the combat zone’s biggest
city, Donetsk. Earlier, Mariupol’s city council said a woman
died and three people were hurt amid shelling in the Skhidny
district. The rebels said Ukrainian troops killed one militant
in the village of Makiyivka and several more in another town.
- Obama Plan for Islamic State Depends on Shaky Alliances. President
Barack Obama will try to convince a war-weary American public this week
that he can build a broad international coalition to defeat Islamic
State militants in Iraq and Syria. “We’re going to need Sunni states
to step up, not just Saudi Arabia, our partners like Jordan, the United
Arab Emirates, Turkey,” Obama said in an interview broadcast today on
NBC’s “Meet the Press,” previewing a plan he will present in a speech to
the nation on Sept. 10. “They need to be involved. This is their
neighborhood,” he said. The complex politics of that neighborhood mean
it won’t be an easy sell, said Ramzy Mardini, an analyst with the
Atlantic Council, a Washington policy group. “Obama doesn’t seem to get it,” Mardini said by e-mail.
“No Arab leader wants to publicly join hands with the ‘Great
Satan’ and ‘Crusaders’ in fighting a war in the Middle East.”
- China
Begins Crackdown on Spending at State-Owned Companies. Govt to crack
down on spending by executives of state-owned companies on golf outings
and memberships, receptions and excessive book purchase, according to a
report by the Communist Party's discipline commission. Campaign also
targets executives who fail to report overseas trips or holding of
private passports.
- Fed’s Plosser Says Keeping Rates Low Is ‘Risky Strategy'. Federal
Reserve Bank of Philadelphia
President Charles Plosser said the economy has “moved much
closer” to the Fed’s goals and keeping rates near zero until
achieving them is a “risky strategy.” The central bank can’t be certain
whether full employment
has been reached, and waiting for the labor market to fully heal before
raising the main rate risks a sharper increase in borrowing costs later,
Plosser said in a speech today in Amelia Island, Florida. “I would
prefer that we start to raise rates sooner rather than later,” Plosser
said. “This may allow us to increase rates more gradually as the data
improve rather than face the prospect of a more abrupt increase in rates
to catch up with market forces, which could be the outcome of a
prolonged delay
in our willingness to act.”
- Fed Economists: Low Rates Could Undermine Financial Stability. Monetary policy accommodation to help the economy may backfire by
creating conditions that could undermine financial stability and cause
sharp downturns, according to a report by two top Federal Reserve
researchers. Central banks “should consider effects on both financial conditions
and financial stability when setting monetary policy,” according to a
preliminary paper by Tobias Adrian, an economist at the Federal Reserve
Bank of New York, and Nellie Liang, director of the Fed’s Office of
Financial Stability Policy and Research in Washington. “Accommodative monetary policy eases financial conditions, but may
also contribute to the buildup of financial vulnerabilities and hence
increase risks to financial stability,” Adrian and Liang write in a
paper released Sept. 2.
- Hedge Funds Cut Bullish Gas Bets as Volatility Slides. Hedge fund bulls accelerated their
withdrawal from U.S. natural gas markets as volatility and
prices declined on abundant supply. Speculators cut their net-long position across four
benchmark contracts by 11 percent in the week ended Sept. 2, the
most in three weeks, U.S. Commodity Futures Trading Commission
data show. Bullish wagers have declined for six consecutive
months, the most in data compiled by Bloomberg since 2010. Short
positions rose to a nine-month high.
- Pound Sinks on Scotland as Japanese Stocks Rise Amid Data. The pound slid to its weakest level
since November after a poll showed the campaign for Scottish
independence in front for the first time. Treasuries climbed
with Tokyo stocks as investors weighed Japanese and U.S.
economic data before a report on Chinese trade, and wheat rose.
The British currency lost 0.6 percent to $1.6225 by 10:49
a.m. in Tokyo, extending last week’s 1.6 percent drop while FTSE 100 Index futures were little changed in early trade. The MSCI Asia Pacific Index (MXAP) swung between gains and losses as Japan’s Topix index added 0.4 percent.
- CFTC Weighing Broader Commodities Hedge Exemptions Pushed by BP(BP). The main U.S. derivatives regulator
is working to address energy and agricultural firms’ concerns
that rules meant to curb speculation in commodities could harm
their business, according to the agency’s chairman. The Commodity
Futures Trading Commission, preparing to
complete rules for so-called position limits, is debating the
scope of exemptions for firms that use swaps to hedge business
risks, Timothy Massad said yesterday in an interview with Bloomberg
Television’s Peter Cook. Representatives for companies including Cargill
Inc. and BP Plc (BP/) have pressed to broaden exemptions.
Wall Street Journal:
- Ukraine Fighting Threatens Peace Deal. Reports Come Two Days After Kiev Agrees to Cease-Fire With Separatists. Fighting in at least two cities in eastern Ukraine called into question a
cease-fire that Kiev and pro-Russia rebels agreed upon Friday, even as
the pact brought a respite from weeks of deadly violence to many towns
in the embattled Donetsk and Luhansk regions.
- Obama's Immigration Cynicism. He'll still write a lawless deportation rule—but not until after November. So President Obama says he still plans to unilaterally rewrite
immigration law—but not until after the election so he can spare
Democrats in Congress from the wrath of voters for doing so. And he
wonders why Americans are cynical about politics? White House
leakers are saying that Mr. Obama wants to fulfill his June pledge to
issue a lawless regulation limiting deportations for millions of illegal
immigrants. But he has decided to bow to incumbent Democrats who fear a
political backlash that could hand Republicans Senate...
Business Insider:
CNN:
- Respiratory Virus Hospitalizes Hundreds in Missouri. (video) A respiratory virus is sending hundreds of children to hospitals in
Missouri and possibly throughout the Midwest and beyond, officials say. The unusually high number
of hospitalizations reported now could be "just the tip of the iceberg
in terms of severe cases," said Mark Pallansch, a virologist and
director of the Centers for Disease Control and Prevention's Division of
Viral Diseases.
YouGov:
- ‘Yes’ campaign lead at 2 in Scottish Referendum. With 12 days to go until the Scottish independence referendum, the
‘Yes’ campaign has taken a 2 point lead - which means a statistical dead
heat at this late stage. The latest survey, conducted for The Sunday Times with
less than two weeks to go until voting day, has YES at 51% and NO at 49% – the first lead for the independence camp registered by YouGov, or any polling company, since regular polling on September 18th’s referendum began.
Night Trading
- Asian indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 89.50 -.5 basis point.
- Asia Pacific Sovereign CDS Index 62.0 -1.0 basis point.
- NASDAQ 100 futures -.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
3:00 pm EST
- Consumer Credit for July is estimated to fall to $17.0B versus $17.255B in June.
Upcoming Splits
Other Potential Market Movers
- The
Chinese Trade Data, German Export Data, Morgan Stanley Healthcare
Conference, KeyBanc Basic Materials Conference, Barclays Financial
Services Conference, Rodman and Renshaw Investment Conference, (SSYS)
analyst day and the (MAR) analyst meeting could also impact trading
today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial 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 week.
Week Ahead (audio) by Bloomberg.
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week mixed as
Russia-Ukraine/Mideast tensions, rising European/Emerging Markets debt
angst and global growth worries offset global central bank hopes,
short-covering and buyout speculation. My intermediate-term trading
indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.
