Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -2.03% 2) Medical Equipment -1.52% 3) HMOs -1.51%
Stocks Falling on Unusual Volume:
- GEL, ASNA, CRR, KMX, TSRO, DFRG, HCLP, CLX, ABBV, EMES, TNET, VPRT, COV, SNN, MDT, AZN, AN, AVY, TRP, DL, SFL, UVV, GSK, VNOM, ORCL, AVNR, THOR and EMES
Stocks With Unusual Put Option Activity:
- 1) KMX 2) XLK 3) BBBY 4) AMAT 5) CSCO
Stocks With Most Negative News Mentions:
- 1) MDT 2) UPS 3) KMX 4) WHR 5) BID
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.39% 2) Gaming +.73% 3) Coal +.61%
Stocks Rising on Unusual Volume:
- CF, SLXP, TKMR, AMBA, GDP and SGMO
Stocks With Unusual Call Option Activity:
- 1) JWN 2) NLY 3) CF 4) CODE 5) CCL
Stocks With Most Positive News Mentions:
- 1) CCL 2) NFLX 3) BTU 4) AAPL 5) DDD
Charts:
Evening Headlines
Bloomberg:
- U.S. Conducts First Airstrikes in Syria on Islamic State. The
U.S. conducted its first airstrikes in Syria, a barrage of attacks
joined by partner nations in a major expansion of President Barack
Obama’s effort to “degrade and ultimately destroy” Islamic State. “U.S. military and partner nation forces are undertaking military action
against ISIL terrorists in Syria using a mix of fighter, bomber and
Tomahawk Land Attack Missiles,” Rear Admiral John Kirby, the Pentagon
press secretary, said tonight in an e-mailed statement. While Kirby said he couldn’t provide any details because “these
operations are ongoing,” the partner nations joining in the attacks were Saudi Arabia, Jordan, the United Arab Emirates and Bahrain, the Washington Post said, citing two U.S. defense officials it didn’t identify.
- China Beige Book Shows Economy Stuck in Low Gear. China’s economy remained stuck in
“low gear” this quarter, with struggling retail and
residential real-estate industries countering improvements in
manufacturing and transportation, a private survey showed. Growth in investment slowed further, borrowing costs rose
and the share of firms applying for and getting bank loans
remained at “rock bottom levels,” according to the China Beige
Book, a report published quarterly by New York-based China Beige
Book International. In contrast, hiring picked up and corporate
profit margins improved, suggesting widespread government
efforts to reignite growth are unlikely, it said.
- China Police Equipment Aids Rights Violations: Amnesty. More
than 130 Chinese companies are
making and selling equipment that can be used for torture, fueling
human-rights violations across Africa and Asia, according to a report by
Amnesty International and the Omega Research Foundation. The number of companies involved in the production and
trade of potentially dangerous law enforcement equipment has
risen from 28 a decade ago, according to the report, entitled
“China’s Trade in Tools of Torture and Repression.”
- Asia Stocks Pare Drop as Copper Rises on China Flash PMI.
Asian stocks pared declines, with a regional index near a four-month
low, and copper climbed as a preliminary gauge of Chinese manufacturing
unexpectedly climbed. The price of insuring Asian bonds against
default increased. The MSCI Asia Pacific excluding Japan Index was
little changed by 10:19 a.m. in Hong Kong, trimming a drop of as much
as 0.3 percent.
- Commodities Drop Signals Global Growth Concern: Chart of the Day. The slump in commodity prices to a
five-year low signals investors are cautious about the strength
of the global economy even as U.S. equities rise to a record. The
CHART OF THE DAY shows the Bloomberg Commodity Index of 22 raw materials
slipped 5.6 percent this year. Brent crude is down 12 percent and
touched a two-year low last week, while iron ore at the Qingdao port in
China plunged 41 percent to the
lowest since 2009.
Wall Street Journal:
- Obama Resists Linkage of Mideast Goals. U.S., Some Allies See Signs Tehran Seeking to Link Nuclear Talks and Combating Islamic State. The Obama administration's primary objectives in the Middle
East—containing the Islamic State militant group and countering Iran's
nuclear program—are coming into conflict with each other, U.S., European
and Arab officials say. The White House has insisted that the
two issues are entirely separate. But while the U.S. is seeking a role
for Iran in the fight against the Islamic extremists, Tehran is chafing
at what it...
- New Level of Smartphone Encryption Alarms Law Enforcement. Moves by Apple(AAPL) and Google(GOOG) Are Latest Fallout From Snowden's Disclosures. Moves by Apple Inc. and Google Inc. to put some smartphone data out
of the reach of police and the courts are raising alarms inside U.S.
law-enforcement agencies, current and former officials say. Several
officials in Washington said they were bracing for a confrontation with
Silicon Valley on the issue, the latest fallout from the revelations by
former National Security Agency contractor Edward Snowden about
government...
- A Pro-Family, Pro-Growth Tax Reform by Mike Lee and Marco Rubio. Two simple income-tax brackets: 15% and 35%. End the marriage penalty and increase the child tax credit. Too many Americans believe the American dream is slipping away for them
and their children. They see their cost of living rise while their
paychecks remain stagnant. They see an economy that benefits
stockbrokers but not stock clerks.
Fox News:
- US launches first wave of bombing strikes over Syria. The United States launched its first wave of bombing attacks over
Syria early Tuesday against an expected 20 to 25 Islamic State targets,
U.S. officials said. The operation, expected to last several hours, involved planes
launched from U.S.destroyers in the Persian Gulf and Red Sea. Planes
from five Arab countries also participated in the strikes. The first explosions from Tomahawk missiles were heard in northern
Syria. Targets were expected to include command and control centers,
training camps and weapons depots.
MarketWatch.com:
- The iron ore industry is headed for a brutal shakeout as prices collapse. A bloodbath in iron-ore prices could get much uglier before things turn around. And it’s not all China’s fault, either.
While Chinese demand, a major force in the market, has slowed, big iron
ore producers, including Brazil’s Vale, BHP Billiton, Rio Tinto and
Fortescue plan to boost production and shipments despite the glut. Australian
producers BHP Billiton, Rio Tinto and Fortescue aim to
boost output by 170 million tons this year, equal to around 7% of 2013
global supply and 11% of global production outside China, notes Capital
Economics. Vale and Anglo-American are also looking to increase output,
too. Why are they boosting production in the face of falling demand?
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.9Brazil cuts 2014 GDP growth forecast, keeps fiscal goal
China Securities Journal:
- China Should Cut Reliance on Property Sector. The country should
accept GDP growth of about 7-7.5%, citing IMF Deputy Managing Director
Zhu Min. To maintain sustainable growth, China shouldn't overly rely on
monetary or fiscal policies to boost economy.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 95.0 +4.5 basis points.
- Asia Pacific Sovereign CDS Index 63.50 +1.0 basis point.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (KMX)/.67
- (BBBY)/1.14
- (CPRT)/.41
- (SCS)/.23
- (AIR)/.38
- (CCL)/1.44
Economic Releases
9:00 am EST
- FHFA House Price Index for July is estimated to rise +.5% versus a +.4% gain in June.
9:45 am EST
- Preliminary Markit US Manufacturing PMI for September is estimated to rise to 58.0 versus 57.9 in August.
10:00 am EST
- The Richmond Fed Manufacturing Index for September is estimated to fall to 10 versus 12 in August.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Bullard speaking, Fed's Powell speaking, Fed's George speaking,
Eurozone PMI, $29B 2Y T-Note auction, weekly US retail sales reports,
(URBN) investor day and the (NSC) analyst conference could also impact
trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by retail and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Every Sector Declining
- Volume: Slightly Above Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.82 +14.12%
- Euro/Yen Carry Return Index 145.81 -.20%
- Emerging Markets Currency Volatility(VXY) 7.40 +1.47%
- S&P 500 Implied Correlation 51.64 +15.35%
- ISE Sentiment Index 57.0 -29.63%
- Total Put/Call 1.07 +30.48%
Credit Investor Angst:
- North American Investment Grade CDS Index 58.23 +3.75%
- European Financial Sector CDS Index 57.94 +2.43%
- Western Europe Sovereign Debt CDS Index 26.52 -1.03%
- Asia Pacific Sovereign Debt CDS Index 63.23 +1.0%
- Emerging Market CDS Index 223.28 +.90%
- China Blended Corporate Spread Index 305.21 -.05%
- 2-Year Swap Spread 24.50 +.5 basis point
- TED Spread 22.25 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -10.25 +1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% -1.0 basis point
- China Import Iron Ore Spot $79.80/Metric Tonne -2.33%
- Citi US Economic Surprise Index 21.0 +1.0 point
- Citi Emerging Markets Economic Surprise Index -21.80 -.2 point
- 10-Year TIPS Spread 1.99 -4.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -95 open in Japan
- DAX Futures: Indicating -12 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail/biotech/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Obama’s Words on Islamic Militants Come Back to Haunt Him. For criticism of President Barack Obama’s offensive against Islamic State, look no farther than the president’s own words. In January, he dismissed the Islamic militants as “a jayvee team,” amateurs who posed little threat. In August, he derided the Syrian
rebels who now will be key allies as “former doctors, farmers,
pharmacists” with less capacity to fight than needed.
- World Bank Says Ebola’s Spread May Have Catastrophic Cost.
The World Bank warned that the economic costs of the Ebola outbreak
in West Africa will escalate to “catastrophic” proportions if the virus
spreads, while Ghanaian President John Dramani Mahama criticized the
international response to the disease.
- Weak Yen Puts Japan at Risk, Says Ex-BOJ Deputy Iwata.
Japan is in danger of falling into a recession as the yen’s decline
reduces the purchasing power of households and squeezes corporate
profits, said a former deputy governor of the Bank of Japan. “The
current yen weakness is slightly excessive,” Kazumasa Iwata, the deputy
from 2003-2008, said in an interview on Sept. 19 in Tokyo. “Abenomics
entails the risk of ‘beggar thyself’ consequences and signs are already
emerging.”
- Most Influential 50 Are the Bankers, Investors Who Move Markets.
- Tesco Starts Accounting Probe of Inflated Profit Forecast. (video)
Tesco Plc started a probe of accounting practices and suspended four
executives, including its U.K. chief, after overstating its first-half
profit estimate. The shares plunged as much as 12 percent to their lowest in more than a decade after the biggest British supermarket chain said that some income was
booked before being earned and costs were recognized later than
incurred.
- Brazil Growth Slowing as Lula China Policy Sows Doubts.
In 2004, Brazil’s then-President Luiz Inacio Lula da Silva and 400
executives went on a six-day trip to China. The mission was simple:
Encourage companies to strengthen ties with the Asian nation to bolster
growth at home. A decade later, ties between Brazil and China have never
been stronger. Growth at home is stagnant.
- Emerging Stocks Fall to 15-Week Low on China as Ibovespa Drops.
Emerging-market stocks fell to the
lowest in 15 weeks after China’s finance minister damped speculation
that the government will boost stimulus in the world’s second-largest
economy. The MSCI Emerging Markets Index dropped 1.3 percent to
1,040.01 at 11:04 a.m. in New York. PetroChina Co. (857) led a gauge of
Hong Kong-traded Chinese shares to a two-month low. OAO Alrosa,
Russia’s largest diamond producer, decreased 3 percent after its chief
executive officer stepped down. Iron-ore producer Vale SA, whose top
export market is China, fell to the lowest since December 2008 as
Brazil’s Ibovespa declined the
most among the world’s equity benchmarks.
- European Stocks Fall Amid China Concern as Tesco Slides.
European stocks fell the most in more than three weeks as China’s
finance minister damped speculation his government will boost economic
stimulus. Commodities producers dropped the most among 19 industry
groups. Tesco Plc slumped to its lowest price since 2003 as it started
an investigation into its accounting practices after overstating its
guidance for first-half earnings by about 250 million pounds ($408
million). Cermaq ASA jumped the most since May 2013 after Mitsubishi
Corp. offered to buy it. Merck KGaA rose 4.4 percent after agreeing to
purchase Sigma-Aldrich Corp. The Stoxx Europe 600 Index declined 0.5 percent to 346.69 at the close of trading in London after earlier paring losses to
0.2 percent.
- Brent Declines on Concern China Growth Slowing; WTI Drops.
Brent for November settlement slipped $1.83, or 1.9 percent, to $96.56 a
barrel on the London-based ICE Futures Europe exchange at 12:02 p.m.
New York time. The volume of all futures traded was about 26 percent
below the 100-day average
for the time of day.
- Subprime Lending. Not that many years ago, subprime loans almost brought down the global economy.
The financial world collectively vowed to never again go overboard
advancing money to people considered unlikely to pay it back. But in the
U.S., some forms of subprime are on the rise again, primarily in auto loans and also in small-business lending.
- Dudley Says Financial Stability Definitely on Fed’s Radar. The
Federal Reserve is on the lookout for signs of asset-price bubbles, and
financial stability is a necessary condition for effective monetary
policy, said William C. Dudley, president of the Federal Reserve
Bank of New York. “I think we do need to try to identify asset bubbles
in real time,” Dudley said today at the Bloomberg Markets Most
Influential Summit in New York. “You can’t have an effective
monetary policy if you have financial instability.”
- Tiger’s Robertson Says Bond Bubble to End in ’Very Bad Way’.
Julian Robertson, the billionaire founder of Tiger Management LLC, said
there’s a bubble in bonds that will end “in a very bad way.” “Bonds are at ridiculous levels,” Robertson said today at
the Bloomberg Markets Most Influential Summit in New York.
“It’s a worldwide phenomenon that governments are buying bonds
to keep their countries moving along economically.”
- Insider Buying Dries Up Defying $275 Billion of Buybacks.
American companies have seldom spent more money than they are now
buying back shares. The same can’t be said for their executives. A total
of 7,181 insiders bought their own stock this year through Sept. 12 and
23,323 sold shares, according to data
compiled by Bloomberg and Washington Service. The ratio of buys
to sells is near the lowest since 2000. At the same time,
corporate repurchases reached $275 billion in the first half of
the year, the second busiest since S&P Dow Jones Indices began
tracking the data in 1998.
- Small-Cap Selloff Leaves Fewer Stocks Shouldering Rally. The
biggest tumble for smaller companies in seven weeks underscored
weakening breadth in the American bull market two weeks after its 5
1/2-year birthday. Shares tracked by the Russell 2000 Index (RTY) slid
1.5 percent, bringing the decline since Sept. 18 to 2.6 percent, the
largest retreat since Aug. 1. While the Russell 3000 Index touched an
intraday record at the end of last week, fewer than 55 percent
of its components traded above their 200-day moving average, a
combination that hasn’t happened since the peak of the dot-com
bubble, according to MKM Partners LLC.
Wall Street Journal:
CNBC:
ZeroHedge:
Business Insider:
Style Underperformer:
Sector Underperformers:
- 1) Steel -3.11% 2) Gaming -3.01% 3) Homebuilders -2.33%
Stocks Falling on Unusual Volume:
- CRR, TRS, E, IGA, AZO, INVN, YHOO, WATT, UBNT, FINL, CAF, WTS, NMM, WBK, VALE, TRP, TARO, CFX, PBA, BHP, FNV, VNR, VNOM, CLF, TNXP, RLGY, PIR, TRIP, REXX, ZINC and SCCO
Stocks With Unusual Put Option Activity:
- 1) XLB 2) XRT 3) JOY 4) XLP 5) FCX
Stocks With Most Negative News Mentions:
- 1) CRR 2) AZO 3) GM 4) LVS 5) FINL
Charts:
