Style Underperformer:
Sector Underperformers:
- 1) Hospitals -1.91% 2) Gold & Silver -1.63% 3) Steel -.63%
Stocks Falling on Unusual Volume:
- PHK, PTY, PCN, PFL, FINL, PDI, CPA, ATU, CLF, GPRO, STWD, RAVN, CNL,
NORD, NSIT, ACOR, SHLD, KORS, NLNK, PBYI, RENT, GOLD and MAT
Stocks With Unusual Put Option Activity:
- 1) AVP 2) NLY 3) HYG 4) MMM 5) XLB
Stocks With Most Negative News Mentions:
- 1) FINL 2) MMM 3) QCOM 4) TECD 5) ATU
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +2.28% 2) Oil Service +.98% 3) Road & Rail +.77%
Stocks Rising on Unusual Volume:
- JNS, AGIO, DMND, BBRY, RPRX, NKE, LM, MU, DGLY, AMBA, KPTI and AZPN
Stocks With Unusual Call Option Activity:
- 1) CDNS 2) CVEO 3) NKE 4) ABBV 5) ACAS
Stocks With Most Positive News Mentions:
- 1) NKE 2) BBRY 3) NOC 4) MU 5) LNKD
Charts:
Evening Headlines
Bloomberg:
- Russia Risks Recession as Oil Drop Seen Squeezing Budget. The easing of tensions in Ukraine
will offer little respite to Russia as the lowest oil prices in more than two years threaten to tilt the $2 trillion economy
toward recession, according to a Bloomberg survey of analysts. Russia needs Urals, its main export crude blend, to trade
at $100 per barrel or higher to avoid a recession, according to
58 percent of respondents in a survey of 19 economists. Given
the level of U.S. and European sanctions over Ukraine, at least
19 percent of analysts said the current price is sufficiently
low to put Russia’s financial stability at risk.
- Inflation Slowing More Than Forecast Shows Risk for BOJ: Economy.
Japan’s inflation slowed more than expected in August, highlighting the
risks facing Bank of Japan Governor Haruhiko Kuroda in his push for
prices to rise 2 percent. Consumer prices excluding fresh food rose 3.1
percent from a year earlier, the statistics bureau said today in Tokyo,
undershooting the median projection for a 3.2 percent increase in a
Bloomberg News survey of 31 economists. Stripped of the effect of
April’s sales tax increase, inflation was 1.1 percent, according to the
BOJ’s estimates.
- Yen Drop Erodes Japan Banks’ Advantage on Overseas Risks. The
yen’s 20 percent depreciation since the end of 2012 has seen Japanese
banks’ balance-sheet superiority against overseas competitors vanish.
Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender, has
an adjusted core capital ratio of 9.4 percent, as the size of its
overseas risk assets swelled, below the 11.5 percent for Deutsche Bank
AG and 10.5 percent for Citigroup Inc., according to Bank of America
Merrill Lynch calculations. The prices of subordinated U.S. dollar bonds
sold by Sumitomo Mitsui Financial Group Inc. (8316) and Mizuho
Financial Group Inc. that
count as capital fell to three-month lows last week.
- China Raises Death Toll From Xinjiang Bombs, Riots to 50. The
death toll from violence that
erupted in China’s turbulent far western region of Xinjiang last weekend
was raised to 50 from two, state media reported, saying most of the
dead were either killed by suicide bombs or shot by police. Forty “rioters,” six civilians and four police personnel died when several bombs exploded at places including a farmers’
market, two police stations and a shop in Luntai county at 5
p.m. on Sept. 21, news website Tianshannet reported. Another 54
people were injured, with 32 belonging to the Uighur ethnic
minority and 22 Han Chinese, it said, citing the Xinjiang police
investigation. The jump in confirmed casualties comes after Radio Free
Asia yesterday reported that the original death toll of two
given by authorities was too low, citing interviews with local
officials and eyewitnesses.
- Alibaba(BABA) Bears Emerge to Short 8.9 Million Shares.
Short sellers are making their first bets on a retreat in Alibaba Group
Holding Ltd. (BABA) a week after the company priced the world’s
biggest-ever initial public offering. Bears who profit from price declines have sold short 8.9 million shares, or about 2.4 percent of Alibaba’s listed stock,
according to data compiled by Bloomberg and Markit, a London-based provider of financial information. The Hangzhou-based
company, China’s biggest e-commerce operator, sold 368.1 million
shares in the IPO. The stock fell 1.8 percent to $88.92 in New
York yesterday.
- China’s H Shares Drop to Lowest in Two Months as ICBC Retreats.
Chinese stocks slumped in Hong Kong, dragging the benchmark index down
to its lowest level since July 21, as banks and energy producers
declined. Industrial & Commercial Bank of China Ltd. (601398), the
nation’s largest lender, headed for a third straight weekly loss.
PetroChina Co.,the country’s largest oil and natural gas producer, slid
1.2 percent. Tencent Holdings Ltd. (700) led declines by Chinese
technology shares. The Hang Seng China Enterprises Index (HSCEI) fell
0.8 percent to 10,553.89 at 9:46 a.m. local time, taking its decline
for the week to 2 percent. The gauge has lost 7.4 percent from this
year’s Sept. 8 high on concern the government will refrain from
major stimulus to spur growth.
- Asian Stocks Drop After U.S. Tumble as Aussie Bonds Rally.
Asian stocks fell, with Japanese
shares retreating from a six-year high, after the Standard &
Poor’s 500 Index dropped the most in almost two months. Gold rallied
with sovereign bonds as the cost of insuring debt against default
climbed. The MSCI Asia Pacific Index (MXAP) lost 1 percent by 12:38
p.m. in Tokyo, as the Topix index dropped 1.1 percent from its highest
close since June 2008. Indonesian stocks plunged the most in
four months after the country scrapped direct regional
elections.
- Brent Crude Heads for Weekly Decline on Ample Supply; WTI Steady.
WTI for November delivery was 2 cents higher at $92.55 a barrel in
electronic trading on the New York Mercantile Exchange. It fell 27 cents
to $92.53 yesterday. The U.S. benchmark crude was at a discount of
$4.47 to Brent, compared
with $6.74 at the end of last week.
Wall Street Journal:
- U.S. Turns Up the Heat on Turkey Over Islamic State. Obama, Biden, Arab Officials Push Ankara to Join Campaign Against Extremists. Turkey is showing signs of shifting to a more active role in the
campaign against extremist group Islamic State as the government faces
pressure from impatient U.S. and Arab officials. President Barack
Obama called Turkish President Recep Tayyip Erdogan from Air Force One
on Thursday and the two leaders agreed to consult more closely on the
Islamic State threat. Vice President Joe Biden met Mr. Erdogan in New
York on...
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
NY Times:
- Military Path Opened for Young Immigrants. A small number of young immigrants who grew up in the United States
without legal status will be allowed to join the military and have a
fast-track pathway to citizenship, Pentagon officials announced
Thursday, the first time those young people have been able to enlist.
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 94.50 -.5 basis point.
- Asia Pacific Sovereign CDS Index 65.25 +1.5 basis points.
- NASDAQ 100 futures +.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- 2Q GDP is estimated to rise +4.6% versus a prior estimate of a +4.2% gain.
- 2Q Personal Consumption is estimated to rise +2.9% versus a prior estimate of a +2.5% gain.
- 2Q GDP Price Index is estimated to rise +2.1% versus a prior estimate of a +2.1% gain.
- 2Q Core PCE is estimated to rise +2.0% versus a prior estimate of a +2.0% gain.
9:55 am EST
- Final Univ. of Mich. Consumer Confidence for September is estimated to rise to 84.8 versus a prior estimate of 84.6.
Upcoming Splits
Other Potential Market Movers
- The German Consumer Climate Index could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial 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) 15.93 +20.05%
- Euro/Yen Carry Return Index 144.67 -.59%
- Emerging Markets Currency Volatility(VXY) 7.62 +4.53%
- S&P 500 Implied Correlation 54.93 +14.49%
- ISE Sentiment Index 70.0 -32.04%
- Total Put/Call 1.13 +29.89%
Credit Investor Angst:
- North American Investment Grade CDS Index 62.20 +4.37%
- European Financial Sector CDS Index 60.66 +3.38%
- Western Europe Sovereign Debt CDS Index 28.39 +2.05%
- Asia Pacific Sovereign Debt CDS Index 64.54 +1.33%
- Emerging Market CDS Index 257.84 +3.21%
- China Blended Corporate Spread Index 308.18 -.66%
- 2-Year Swap Spread 22.5 +.75 basis point
- TED Spread 22.50 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -8.5 unch.
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 195.0 -3.0 basis points
- China Import Iron Ore Spot $78.60/Metric Tonne -1.01%
- Citi US Economic Surprise Index 26.90 unch.
- Citi Emerging Markets Economic Surprise Index -17.20 -.1 point
- 10-Year TIPS Spread 2.01 -3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -240 open in Japan
- DAX Futures: Indicating -22 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech/biotech/medical/retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Islamic State Said to Plot Subway Attacks in U.S., France. Islamic
State militants captured in Iraq said the group has been planning
attacks on subways in Paris and in the U.S., Iraqi Prime Minister Haidar
al-Abadi said. The U.S. said it hasn’t confirmed the plot. Iraq has informed the French and U.S. governments about the newly obtained information, Abadi said during a meeting with a
small group of reporters in New York. Abadi, who is in New York for the meeting of the United
Nations General Assembly, said he considers the information
credible and that he’s awaiting further details. The information
comes from recent arrests, he said.
- Putin Party Lawmaker Drafts Bill on Foreign-Asset Freeze. A
United Russia lawmaker proposed a law that would allow the seizure of
foreign state assets in Russia after Italy froze luxury properties
belonging to a childhood friend of President Vladimir Putin. Vladimir
Ponevezhsky, a parliamentarian for Russia’s ruling party, submitted a
bill on compensating individuals who had property seized abroad,
according to the draft posted on the State Duma’s website. Italy this
week froze properties worth 28 million euros ($36 million) belonging to
billionaire Arkady Rotenberg, who is blacklisted by the European Union
and U.S. for his personal ties with Putin amid the conflict in Ukraine.
The bill proposes compensating a Russian citizen who is victim of an
“unlawful” judgment in a foreign court using federal budget funds. The
government would then be allowed to
seize foreign state assets in Russia, including property that is
covered by diplomatic immunity.
- China Watchdog Finds $10 Billion in Fake Currency Trade. China
uncovered almost $10 billion in fraudulent trade nationwide as part of
an investigation begun in April last year, including many irregularities
in the port of Qingdao, the country’s currency regulator said today.
Companies “faked, forged and illegally re-used” documents for exports
and imports, Wu Ruilin, a deputy head of the State Administration of
Foreign Exchange’s inspection department, said at a briefing in Beijing.
The trades have “increased pressure from hot money inflows and provided
an illegal channel for
criminals to move funds,” Wu said, adding that those involved
in such fraud would be severely punished.
- BOE’s Carney Says Rate-Increase Case Getting ‘More Balanced'. Bank
of England Governor Mark Carney said the judgment on when to increase
the benchmark rate from a record low has become “more balanced” in
recent months. Two policy makers pushed for a rate increase in
August and September, as the deepening recovery fractured unanimity for
keeping borrowing costs at 0.5 percent. While the U.K. is poised for the
fastest growth in the Group of Seven, Carney is among the majority who
say weak wages and anemic growth in Europe support keeping rates where
they’ve been since 2009.
- European Stocks Decline With FTSE 100 After BOE’s Carney.
European stocks fell to a four-week low, erasing earlier gains, as U.K.
shares dropped after Bank of England Governor Mark Carney said the time
to increase interest rates is getting closer. The Stoxx Europe 600
Index lost 0.9 percent to 341.44 at the close, after earlier gaining as
much as 0.5 percent. The U.K.’s FTSE 100 Index fell 1 percent
as Carney said the judgment on when to increase the benchmark rate from
a record low has become “more balanced” in recent months.
- Short Sellers Gather in Australia Amid Iron Ore Rout. Investors are using Australia’s stock market to bet that an iron-ore rout has further to run.
Two of the five most-shorted companies in the nation’s benchmark equity
index are producers of the commodity, according to data compiled by
Markit Group Ltd. and Bloomberg. Bearish bets on Atlas Iron Ltd. (AGO)
this month hit a record, the data show.
A gauge of iron-ore prices in China tumbled 41 percent this year
to the lowest since 2009, falling below $80 a dry ton this week.
- Copper Falls to 14-Week Low as Durable-Goods Orders Drop. Copper prices dropped to a 14-week
low after a report showed demand for durable goods in August
tumbled by a record in the U.S., the world’s second-biggest
consumer of the metal. The orders for items meant to last at least
three years
plunged more than 18 percent after surging almost 23 percent in
the prior month, government data showed today. Aluminum, tin, nickel,
lead and zinc dropped in London, while the dollar climbed to the highest
since June 2010 against a basket of 10 currencies, eroding the
investment appeal of commodities.
- Banks Face Stable Funding Rule After Basel Strikes Accord. Global regulators have reached a
deal on a rule requiring banks to use funding sources that won’t
dry up in a crisis. The Basel Committee on Banking Supervision found
an accord this week on the so-called net-stable funding rule that will
force lenders to reduce their reliance on short-term financing, Stefan
Ingves, the group’s chairman, said in a speech yesterday to a gathering
of global regulators in Tianjin, China.
- Consumer Comfort in U.S. Falls to Lowest Since Early June.
Consumer confidence fell last week to an almost four-month low as
Americans’ views of the economy and their finances deteriorated. The
Bloomberg Consumer Comfort Index declined to 35.5 in the period ended
Sept. 21, the worst reading since the first week of June, from 37.2. The
personal finances gauge dropped by the
most since mid-May, while attitudes about the world’s largest economy
were the dimmest in four months.
Fox News:
CNBC:
ZeroHedge:
Business Insider:
Reuters:
- Fed's Fisher says rates may rise 'sooner rather than later'. The U.S. Federal Reserve may start raising rates around the spring of
2015, at the earlier end of market expectations, Richard Fisher,
president of the Federal Reserve Bank of Dallas said on Thursday. "It's assumed in the market place that we'll start our
liftoff in raising interest rates some time between the spring and the
summer," Fisher, a member of the Federal open Market Committee, the
Fed's main policy making body said at a conference in Rome. "I won't say what we're saying internally, that would not
be appropriate, but maybe sooner rather than later," he said.
- Italy to cut 2014, 2015 GDP forecasts, hike deficit goals - source.
Italy is preparing to slash its economic outlook for this year and 2015
and raise its targets for the budget deficit, a government source told
Reuters on Thursday. A Treasury document to be published next week
will forecast that the economy will contract by 0.2 percent or 0.3
percent this year, compared with the current official forecast made in
April for it to expand 0.8 percent, the source said.
Handelsblatt:
- Russia
Threatens Gas Supply Throttling to Europe. Russian Energy Minister
Alexander Novak threatens gas supply disruptions if the EU continues to
re-export Russian gas to Ukraine, he said in an interview.
MNI:
- Russia Considers Seizing Foreign Assets After Sanctions. Russian
lawmakers are drafting legislation that would allow the government to
seize foreign assets in Russia in response to sanctions.
Style Underperformer:
Sector Underperformers:
- 1) Steel -2.60% 2) HMOs -2.51% 3) Computer Hardware -2.45%
Stocks Falling on Unusual Volume:
- FUL, WPC, CNL, KN, VOC, PCRX, NRP, ACOR, ARLP, SCHL, CHMT, KBH, BSFT, BP, GDOT, WOR, INVN, WBK, RRTS, PHG, CPA, NPO, BNS, XIV, CLW, WTI, NAV, KN, VDSI, ATI, GDOT, CNL and CLF
Stocks With Unusual Put Option Activity:
- 1) HYG 2) BWLD 3) VNQ 4) NKE 5) DXJ
Stocks With Most Negative News Mentions:
- 1) CLF 2) YHOO 3) AAPL 4) F 5) WHR
Charts:
