Bull Radar

Style Outperformer:

• Mid-Cap Value -.53%

Sector Outperformers:

• 1) Gold & Silver +1.13% 2) Utilities +1.13% 3) REITs +.07%
  

Stocks Rising on Unusual Volume:

• CVEO, TKMR, PTLA, PRAA, RCAP, AYI, NLNK, NYT, SRPT, BWC and TRUE

Stocks With Unusual Call Option Activity:

• 1) COG 2) OXY 3) TRN 4) DG 5) ANV

Stocks With Most Positive News Mentions:

• 1) ANGI 2) PNRA 3) TSN 4) NRG 5) EXC
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Hong Kong Leader Leung Jeered by Democracy Protesters. Hong Kong’s Chief Executive Leung Chun-ying was jeered by pro-democracy demonstrators at a ceremony to hoist the Chinese flag as the city entered the sixth day of protests seeking free elections. Leung arrived by boat at Golden Bauhinia Square to mark the 65th anniversary of the founding of the People’s Republic of China. The site is near the main protests in Admiralty, where organizers estimated more than 100,000 people gathered last night to demand Leung step aside and China drop plans to vet candidates in a leadership election planned for 2017.
• Yahoo(YHOO) Restricted in China as Hong Kong Protests Spur New Control. Users trying to access Yahoo! Inc.’s (YHOO) main website from mainland China faced disrupted service yesterday as the government sought to restrict the flow of information amid student-led protests in Hong Kong. The www.yahoo.com site was inaccessible in some parts of the country, according to Greatfire.org, a group that monitors Internet censorship. The pattern suggested a “man-in-the-middle attack,” in which an attacker intercepts data that Internet users exchange with Yahoo’s servers, the group said.
• Putin Reserve Rubles Vanish in Crimea Grab. After proclaiming in 2007 that the ruble was poised to become a haven for global investors, the Russian leader has watched it fade, a victim of his nation’s stagnating economy since the land grab in Ukraine. Now so much money is leaving Russia that its central bank is considering temporary capital controls, according to two officials with direct knowledge of the discussions. 
• French Policy Stupor Sends Bearish Equity Bets Soaring. French stocks have beaten euro-area stocks for six years. Options traders are betting 2014 will be different. With a budget deficit poised to rise and economic growth running at half the region’s rate, investor sentiment on the CAC 40 Index (CAC) is deteriorating. Options protecting against swings in the equity gauge cost the most since April 2013 relative to the Euro Stoxx 50 Index, data compiled by Bloomberg show. 
• China Factory Gauge Unchanged as Manufacturing Subdued. China’s manufacturing stayed subdued last month as an official gauge was unchanged, with the world’s second-largest economy weighed down by a property slump. The government’s Purchasing Managers’ Index (CPMINDX) was at 51.1 in September, the same as August’s reading and compared with the 51.0 median estimate in a Bloomberg News survey of economists. Readings above 50 signal expansion.
• Sydney Homes Costing More Than New York Spurs RBA Review. To see why Australia’s central bank has shifted its stance on home-lending curbs, look no further than Sydney’s inner city where a one-bedroom apartment sold at the weekend for 35 percent more than its last price in 2012. The 54-square-meter (581-square-foot) property in Surry Hills was purchased by an investor for A$647,000 ($565,931), said Con Fotaras, a sales consultant at Belle Property Surry Hills who brokered the transaction. “It’s really hard to put a price on a property at the moment,” he said of a Sydney market where the median home price is higher than in New York.
• Rajan Warns Ultra-Low Rates May Distort With No Benefits. Indian central bank Governor Raghuram Rajan warned that near-zero interest rates in developed markets may be distorting asset prices without creating any real gain in economic activity. “We have had ultra-low interest rates for close to six years, and at some point you have dug a hole so deep in terms of asset prices that any attempt to get out of this has an immediate effect on asset prices,” Rajan said in an interview with Bloomberg TV India. While that may be worth the price to spur the economy, if it doesn’t respond “then you may have incurred the cost of distorted asset prices without the gain of real activity.” The debate remains inconclusive, he said.
• Asian Stock Index Retreats on U.S. Confidence, Hong Kong. Asian stocks fell, with the benchmark index heading for a fourth day of losses, after consumer confidence in the U.S. unexpectedly declined and Hong Kong braced for bigger protests as Chinese holidays started. The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 140.20 as of 9:02 a.m. in Japan after retreating to a four-month low yesterday.
• Platinum Slides to 5-Year Low as Demand Wanes After Strike Ends. Platinum sank to the lowest level since 2009 as a surge in the dollar curbed investor interest, extending the first quarterly loss this year spurred by the resumption of output in South Africa after a strike. Gold held losses near a nine-month low. The metal for immediate delivery fell as much as 1.2 percent to $1,285.50 an ounce, the lowest price since Oct. 5, 2009, extending a retreat from a 10-month high of $1,519.68 in July. It traded at $1,287 by 8:34 a.m. in Singapore, according to Bloomberg generic pricing.
• Rising U.S. Crude Exports Move Closer to 1957 Record. U.S. oil exports, which in July reached the highest level since 1957, are set to climb to a record by the end of 2014 as producers find ways around a four-decade restriction on crude leaving the country. The U.S. sent 401,000 barrels a day abroad in July, 54,000 shy of the record set in March 1957, according to data compiled by the Energy Information Administration, the Energy Department’s statistical unit. While Canada accounted for 93 percent of the shipments, Italy, Singapore and Switzerland also took U.S. oil. Coupled with Alaskan oil bound for Asia, total U.S. exports will reach 1 million barrels a day by the middle of 2015, according to Citigroup Inc. (C)
• Mosquito Virus That Walloped Caribbean Spreads in U.S. A mosquito-borne virus that can cause debilitating joint pain lasting for years has spread to the continental U.S. after infecting hundreds of thousands of people in the Caribbean and Central America. The virus is called Chikungunya, an African name meaning “to become contorted.” While the illness, first identified in Tanzania in 1952, has long bedeviled Africa and Asia, the only recorded cases in the U.S. before July involved patients who contracted the virus abroad.

Wall Street Journal: 

• Ukraine Forces Repel Two Fresh Assaults on Donetsk's Airport. Airport Has Become Center of Battles in Recent Days Despite Sept. 5 Truce. Ukrainian forces repelled two fresh assaults by pro-Russia rebels on the airport in the eastern city of Donetsk on Tuesday, a military spokesman said, as fighting for the strategic site showed no sign of ending despite a cease-fire signed nearly a month ago. European Union diplomats, meanwhile, decided to keep sanctions on Russia in place while the truce deal is still being implemented. The spokesman, Col....
• Italy's Economic Woes Highlight Dilemma for European Central Bank. Weak Eurozone Inflation, Falling Prices in Italy Put Pressure on ECB to Act.
• Brazil Leader Regains Edge in Election Polls. Two new electoral polls show Brazilian President Dilma Rousseff widening her lead over her main challenger in a likely second-round runoff, surveys that disappointed many investors who hope for the incumbent's ouster. The leader would get 49% of the vote in a head-to-head showdown with Socialist Party candidate Marina Silva in late October, said a survey released Tuesday by polling firm Datafolha. Ms. Silva would capture...
• SEC Grants Citigroup Waivers, Easing Hedge-Fund Curbs. Restrictions Would Have Crimped Some Banking, Including Selling Hedge-Fund Investments to Individuals.

Fox News:

• CDC confirms first case of Ebola in US. The Centers for Disease Control and Prevention (CDC) confirmed on Tuesday that a patient being treated at a Dallas hospital has tested positive for Ebola, the first case diagnosed in the United States. The patient left Liberia on September 19 and arrived in the United States on September 20, CDC director, Dr. Tom Frieden told reporters at a press conference Tuesday. It’s the first patient to be diagnosed with this particular strain of Ebola outside of Africa.

MarketWatch.com:

• U.S. Ebola case boosts drug makers working on treatments.

Zero Hedge:

• CDC Confirms First Ebola Case Diagnosed In The US, In Dallas Hospital - Press Conference Live Feed. (video)
• What Just Happened In Today's "Crazy" And Biggest Ever "Window-Dressing" Reverse Repo? (graph)
• Investors Are Too Comfortable In The Fed's Win-Win Conditions For Taking Risk.
• "Russia Could Ditch Dollar In 2-3 Years"; Deputy PM Warns Nuclear Subs "Could Reach Any Country On Any Continent".
• Small Caps Suffer Worst Quarter In 3 Years; Bonds Leading Year-To-Date. (graph)
• Rick Santelli Slams Central Bank Intervention For "Taking The Voters Out Of The Game". (video)
• More Lies: Watchdog Finds Government "Greatly Exaggerated" Success In Funding Small Businesses Last Year.
• "If Something Rattles This Ponzi Scheme, Life In America Will Change Overnight".

Business Insider: 

• The FCC Might Ban Broadcasters From Saying The 'Redskins' Team Name.
• JP Morgan(JPM) Is About To Face An Enormous Class Action Lawsuit By Investors.

Reuters:

• Mario Draghi to push ECB to buy Greek, Cypriot 'junk' loans: FT.

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

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 99.0 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 71.5 -1.75 basis points.

• FTSE-100 futures -.36%.

• S&P 500 futures -.06%.

• NASDAQ 100 futures  -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (AYI)/1.22
• (ESI)/.72

Economic Releases
8:15 am EST

• The ADP Employment Change for September is estimated to rise to 205K versus 204K in August. 

9:45 am EST

• Final US Manufacturing PMI for September is estimated at 57.9 versus a prior estimate of 57.9.

10:00 am EST

• ISM Manufacturing for September is estimated to fall to 58.5 versus 59.0 in August.
• ISM Prices Paid for September is estimated to fall to 57.0 versus 58.0 in August.
• Construction Spending for August is estimated to rise +.5% versus a +1.8% gain in July.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +925,000 barrels versus a -4,273,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -661,110 barrels versus a -414,000 barrel decline the prior week. Distillate supplies are estimated to fall by -88,890 barrels versus a +823,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.73% versus a +.4% gain the prior week.

Afternoon:

• Total Vehicle Sales for September are estimated to fall to 16.8M versus 17.45M in August.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone PMI, weekly MBA Mortgage Applications report, (ADSK) investor day, (GM) business conference call and the (CP) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Slightly Lower into Final Hour on Rising Emerging Markets Debt Angst, Global Growth Fears, Technical Selling, Energy/Hospital Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 16.07 +.56%

• Euro/Yen Carry Return Index 144.59 -.30%

• Emerging Markets Currency Volatility(VXY) 8.16 -.49%

• S&P 500 Implied Correlation 56.91 +2.89%

• ISE Sentiment Index 72.0 -20.0%

• Total Put/Call 1.14 +29.55%

• NYSE Arms 1.22 -31.07% 

Credit Investor Angst:

• North American Investment Grade CDS Index 64.59 -3.56%

• European Financial Sector CDS Index 63.42 -6.13%

• Western Europe Sovereign Debt CDS Index 30.17 -.89%
• Asia Pacific Sovereign Debt CDS Index 71.42 -2.45%

• Emerging Market CDS Index 285.87 +1.92%

• China Blended Corporate Spread Index 318.07 +2.19%
• 2-Year Swap Spread 24.75 unch.

• TED Spread 22.75 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -10.50 -.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .02% +2.0 basis points

• Yield Curve 192.0 unch.

• China Import Iron Ore Spot $77.50/Metric Tonne -.26%

• Citi US Economic Surprise Index 17.90 -7.0 basis points

• Citi Emerging Markets Economic Surprise Index -20.30 -6.0 points

• 10-Year TIPS Spread 1.97 +2.0 basis points

Overseas Futures:

• Nikkei Futures: Indicating +22 open in Japan

• DAX Futures: Indicating -30 open in Germany

Portfolio: 

• Slightly Lower: On losses in my biotech/medical/retail sector longs

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg:

• Russia Weighs Capital Controls in Case Net Outflows Intensify. Russia’s central bank is weighing the introduction of temporary capital controls if the flow of money out of the country intensifies, according to two officials with direct knowledge of the discussions. Such measures would be preventative and used only if net outflows rise significantly, the people said, who asked not to be identified because no decision has been made. They didn’t give a timeline or a level that may force such a move, saying they are looking at all possible scenarios. The ruble weakened to a record low today, breaching the level where the regulator steps in to support the currency.

• Russia Loan Market Shut Down by Sanctions Squeeze Funding. Russian companies are facing a squeeze in funding as sanctions targeting industries smother lending to all borrowers, including those that aren’t blacklisted. “As long as those sanctions measures remain in force, one anticipates there will be very little international lending,” Philip Hanson, an associate fellow at the Chatham House research group in London, said yesterday by telephone. “They’d rather just play safe and avoid the risk.” Syndicated loans plunged 53 percent this quarter from a year earlier to $2.68 billion, the lowest level in at least five years, according to data compiled by Bloomberg. Coal miner Siberian Anthracite’s $250 million deal was the only international one signed this month, the smallest number for any September since at least 2008.

• Oops Japan Did It Again? Sales-Tax Spurs Recession Debate. Weak industrial production data from Japan today raises concern that the world’s third-largest economy may be back in recession, challenging Prime Minister Shinzo Abe’s growth strategy. Output -- a key component of the Coincident Index (JNCICCOI) that’s used by the Cabinet Office to determine peaks and troughs in the business cycle -- unexpectedly fell in August. It’s now dropped in three of the five months since an increase in the sales tax in April. 

• German Unemployment Unexpectedly Rises as Risks Increase. German unemployment unexpectedly rose for a second month as seasonal factors combined with economic risks from the Ukraine crisis to a faltering euro-area recovery. The number of people out of work climbed a seasonally adjusted 12,000 to 2.92 million in September, the Nuremberg-based Federal Labor Agency said today. Economists forecast a decline of 2,000, according to the median of 27 estimates in a Bloomberg News survey.

• Commodities Head for Biggest Quarterly Loss Since 2008. Corn futures tumbled to a five-year low, gold is the cheapest since January and copper extended this year’s decline as raw materials headed for their worst quarter since 2008. The Bloomberg Commodity Index fell as much as 1.4 percent today, the biggest intraday loss since June 2013. U.S. corn inventories before the start of this year’s harvest were bigger than analysts forecast, the government said today. Holdings in bullion-backed exchange-traded products are near the lowest in five years amid waning investor demand.

• Euro’s Worst Quarter Since 2010 Leaves It at Two-Year Low. The euro dropped to the lowest level in two years against the dollar as slowing inflation boosted the case for the European Central Bank to add further monetary stimulus to avert deflation. The 18-nation currency headed for its worst quarter since 2010 amid the ECB’s moves to swell its balance sheet and cut borrowing costs to spur growth. Russia’s ruble slumped after Bloomberg News reported the central bank is weighing capital controls, and the Canadian dollar weakened as the nation’s economy stalled. The U.S. dollar has climbed this quarter as the Federal Reserve considers raising interest rates.

ZeroHedge: 

• Russia Activates Air Defense Missile System "To Guard Its Southern Frontiers".

• Retail Investors Pile Into Stocks Amid "Malign, Unthinking Mental Slavery".

• Why Europe's Doomsayers Are Right, In One Chart. (graph)

• Is the Stock Market Top In?

• Hong Kong Protesters Give Wednesday Deadline For Reform As Chinese Army Watches From Above.

• Commodities Are Crashing Amid Stock-Bond Disconnect Deja Vu. (graph)

• Did The Winter War Just Begin? Russian Gas Supplies To Europe Plunge 15%, Ukraine Transit Slashed 54%.

• America's "All Important" Housing Market Flashing Red After Bad Data Double Whammy. (graph)

• Consumer Confidence Plunges, Biggest Miss Since Jan 2012. (graph)

• Chicago PMI Misses As New Orders & Production Slump. (graph)

Business Insider:

• OIL CRASHES.

• A Major Syrian Kurdish City Is About To Fall To ISIS — And A Massacre Could Follow.

• BREMMER: 'We’re Likely To See Violence' If Hong Kong Protests Continue.

• EBay(EBAY) Shares Explode Higher After PayPal Spinoff News.

@fxmacro:

• Households now own 29% of IG and HY up from 15% in 2006. (graph)

Reuters:

• Global stocks head for worst quarter since euro crisis, dollar soars. On a broader scale, MSCI's 45-country All World stock index, was on course for a drop of almost 3 percent on the month and its biggest quarterly fall since Q2 2012, when the euro zone's debt crisis was at its most intense.

Telegraph: 

• Europe's €500bn money funds risk AAA downgrade if they 'break the buck'. Negative interest rates in Europe are causing havoc for the money market industry, threatening its long-term survival. 

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.12%

Sector Underperformers:

• 1) Hospitals -2.24% 2) Gold & Silver -2.21% 3) Alt Energy -1.90%

Stocks Falling on Unusual Volume:

• PGP, WAC, PDFS, FDUS, WPPGY, CNW, DWA, THRM, ST, LANC, BWA, AMBA, TEL, USLV, AGIO, WTI, DLPH, HTWR, MGA, IRM, SGEN PNK, LPL, ALV, AAOI, ELGX, HAR, CAR and WAC

Stocks With Unusual Put Option Activity:

• 1) DHR 2) ZQK 3) FSL 4) LYB 5) F
  

Stocks With Most Negative News Mentions:

• 1) TEL 2) MOS 3) CHTR 4) THRM 5) ADBE
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value +.17%

Sector Outperformers:

• 1) Computer Hardware +1.04% 2) Utilities +.79% 3) Internet +.72%
  

Stocks Rising on Unusual Volume:

• MOVE, TK, AMAG, VIMC, EBAY, CTAS, CENX and INVN

Stocks With Unusual Call Option Activity:

• 1) MTH 2) CORN 3) OWW 4) EBAY 5) DHR

Stocks With Most Positive News Mentions:

• 1) JNJ 2) CNP 3) MOVE 4) AAPL 5) GOOG
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume