Bull Radar

Style Outperformer:

• Small-Cap Value -.63%

Sector Outperformers:

• 1) Utilities -.26% 2) Foods -.33% 3) Restaurants -.34%
  

Stocks Rising on Unusual Volume:

• RLD, MYL, KITE, NYT, AN, VOLC, KNDI and LAD

Stocks With Unusual Call Option Activity:

• 1) SWN 2) MYL 3) MDLZ 4) ETE 5) GSAT

Stocks With Most Positive News Mentions:

• 1) T 2) DAL 3) RAD 4) AKS 5) DRI
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• China Backs Hong Kong’s Leung on Front Page of People’s Daily. China’s central government is “very satisfied” with Hong Kong Chief Executive Leung Chun-ying and will continue to support his leadership as protesters block streets in the city, the official People’s Daily said. China also backs the police handling of the “illegal activities,” the Communist Party’s premier newspaper said in a front-page commentary today. Occupy Central protests have violated Hong Kong’s rule of law, caused serious traffic congestion, disrupted social order and hurt peace and prosperity, the newspaper said. The People’s Daily is published by the Communist Party’s Central Committee and watched closely as an indicator of government intentions. In a similar unsigned commentary yesterday, the newspaper said: “Occupy Central hurts Hong Kong and its people; if we let it drag on the consequences will be unimaginable.”

• Islamic State Nears Kurdish Town as Turk Lawmakers Debate Troops. Islamic State forces are closing in on the Syrian town of Kobani, a key Kurdish stronghold near the border with Turkey, as Turkish lawmakers prepare to authorize the army to send troops to the neighboring country. Militants driving tanks and firing mortars captured the final village on the outskirts of Kobani and were one kilometer from the town’s entrance, according to Ibrahim Ayhan, a lawmaker from the pro-Kurdish People’s Democracy Party. Airstrikes yesterday failed to slow their advance, he said by phone. The U.S military said there were three strikes near Kobani, which destroyed an armed vehicle, artillery piece, and tank.

• War Severs Ukraine’s Industrial Arteries as Economy Sinks. The bloody conflict in Ukraine’s east is severing the arteries that connect the nation’s economy. The effects are being felt hundreds of miles from the unrest in industries as different as electricity and food processing. Power plants at the other end of the country are being starved of coal because of disruptions to mining, while in Kiev, one of Ukraine’s biggest poultry producers is looking abroad for incubatory eggs after output was halted at its facility near the war-ravaged city of Donetsk. 

• China to Impose Quota on Local Government Debt Amid Rising Risks. China announced plans to cap the amount of debt local governments can take on and ban them from additional borrowing through financing vehicles as authorities step up efforts to control risks to the financial system. All borrowing by provinces and cities will need to be within a quota set by the State Council, China’s cabinet, and approved by the National People’s Congress, according to a statement posted to the central government’s website today. No figures were given for the possible amounts of the quotas. The central government won’t bail out local authorities, who will be held responsible for repaying their debt, it said.

• RBA Says Talks on Home Lending Curbs May Go Beyond Investors. Australian central bank officials said possible steps to cool the nation’s housing market wouldn’t necessarily be limited to investor lending curbs. The Reserve Bank of Australia is discussing with the Australian Prudential Regulation Authority “steps that might be taken to reinforce sound lending practices, particularly for investor finance, though not necessarily limited to that,” Assistant Governor Malcolm Edey, who is responsible for the financial system, and Luci Ellis, the head of the central bank’s financial stability unit, said in a statement to a parliamentary panel in Canberra today. 

• Burgundy to Noodle Prices Rise as Weaker Yen Hurts Consumers. The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the country’s economy. The currency slid to 110 yen to the dollar yesterday, the lowest level in six years, making imported goods and materials more expensive. Though inflation is one of Abe’s monetary goals, the yen’s sharp slide undermines steps to boost consumer spending and endangers public backing for his economic program.

• Five Questions for Mario Draghi From ABS Program to Bank Review. Here are five things to watch for from Mario Draghi today. The European Central Bank president holds a press conference at 2:30 p.m. in Naples, Italy, 45 minutes after the Governing Council’s announcement on interest rates.

• Asia Stocks Heading for Five-Day Decline on Fed Concern. Asian stocks fell, with the benchmark index heading for a fifth day of losses, amid concern over the end of the Federal Reserve’s stimulatory bond-buying program and signs of weakness in the euro-area economy. The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 139.64 as of 9:02 a.m. in Tokyo after retreating to a four-month low yesterday. The measure capped its biggest monthly drop in more than two years in September amid concern Chinese growth is slowing and that the Federal Reserve may increase U.S. interest rates sooner as it ends asset purchases.

• Dollar Approaches Strongest in 2 Years Versus Euro. The dollar approached its strongest level in two years against the euro as diverging central-bank policies pushed U.S. Treasury yields to almost the highest versus their German counterparts since 1999. The greenback fell from a six-year high versus the yen amid bets it gained too much, too fast. Germany sold 10-year bonds to yield less than 1 percent for the first time, reflecting Europe’s economic quagmire and the additional steps the European Central Bank may take to spur a recovery. The Federal Reserve is considering when to raise interest rates. Stocks slid. 

• Dallas Parents Worried Over Ebola Exposure at Schools. Four days after Dallas Ebola patient Thomas Eric Duncan was hospitalized after earlier being sent away from the ER, some parents removed their children from school because of reports he was in contact with five students. Duncan was first seen at Texas Health Presbyterian Hospital Dallas on Sept. 26, according to information supplied by the hospital’s front desk. He was sent home from the emergency room with antibiotics even though he told a nurse he had recently been in Africa, hospital officials said yesterday.

• SEC’s Gallagher Sees Bond Bubble Hurting Retail Investors. The $10 trillion U.S. corporate bond market has been inflated by companies taking advantage of record low interest rates for the last five years, Securities and Exchange Commission member Daniel M. Gallagher said today. “It clearly looks like a bubble,” Gallagher said at a market structure conference sponsored by the Security Traders Association. “You have a buildup of assets and you have to think about the downside if the bubble gets pricked.”

Wall Street Journal: 

• U.S. Monitors Contacts of Ebola Patient in Texas. Officials Look for Symptoms in at Least a Dozen People Who May Have Come Into Contact With Liberian Man. Health authorities are monitoring for symptoms of Ebola in at least a dozen people who came into contact with a Liberian man before he was hospitalized in Dallas, moving to contain the deadly disease before it can spread further in the U.S. Among those who had contact with the sick man, Thomas Eric Duncan, are five children, ranging from elementary to high-school age, as well as a small group of adults, state and local officials said at a news conference on Wednesday.

• Secret Service Director Pierson Resigns. Former Chief of Presidential Protective Division Joseph Clancy to Take Over on Interim Basis. The head of the Secret Service resigned under pressure Wednesday after a series of embarrassing stumbles that outraged lawmakers, caught the White House by surprise and called into question the security of the president.

• ObamaCare's Anti-Innovation Effect. Socked by new taxes, U.S. health-care technology companies are moving R&D centers and jobs overseas.  

Fox News:

• 'Khorasan Group' is new name coined by Obama for old foe, critics claim. The Obama administration is being accused of coining a new name for an old nemesis by dubbing an Al Qaeda offshoot “The Khorasan Group.”

MarketWatch.com:

• Starting next week, a new indicator may roil the markets. The Federal Reserve will publish a new monthly gauge of the health of the labor market, called the labor market conditions index, beginning next Monday, the central bank announced Wednesday. The report is an attempt to dig deeper into labor market trends beyond the standard monthly unemployment rate measure.

Zero Hedge:

• Intelligence? President Obama Missed ~60% Of His Daily Briefings.

• Global PMI Summary: 60% Of Nations Weakening. (table)

• Gold, Global Growth, & The Schism In The High Church Of Bernanke.

• How New Jersey's Creeping Wage Hikes Are Crippling Mom-And-Pop Restaurants.

• Trannies Trounced, Credit Clobbered, Bonds Bid With Both Hands & Feet. (graph)

• VIX Options Halted As CBOE Breaks.

• Something's Broken. (graph) NYSE New Lows have surged to 14-month highs and the spread to New Highs is weakest since August 2013.

• Goldman Global Leading Indicator Drastically Revised, Collapses Into "Confirmed Slowdown". (graph)

Business Insider: 

• A $6 Billion Investment Firm Is Reportedly Shutting Down.

• Here's What To Expect From Thursday's Big ECB Meeting.

• One Horrifying Sentence Explains Why Ebola Has Spread So Quickly.

• PIMCO's Flagship Fund Sees Its 17th Straight Monthly Outflow, And It Was Massive. (graph)

• ELIZABETH WARREN: The Secret New York Fed Tapes Confirm The Game Is Rigged.

• China Editorial Warns of 'Unimaginable' Consequences If Hong Kong Protests Continue.

The Daily Rapid:

• United Airlines scrambles to alert HUNDREDS of passengers who came in contact with Ebola patient. United Airlines is scrambling to alert the hundreds of passengers who shared twi planes with the first Ebola patient on U.S. soil. Thomas Eric Duncan, a Liberian national, arrived in the U.S. at Washington Dulles International Airport on United Flight 951 on September 20, the airline revealed today. He then boarded United Flight 822 to Dallas/Fort Worth International Airport.

Reuters:

• REFILE-Risks to 'Abenomics' growing, whether Japan PM raises tax or not. If history is a guide, a string of disappointing economic reports in Japan would seem to argue against raising the country's sales tax again. But the risks for "Abenomics" are increasing whatever Prime Minister Shinzo Abe decides to do.

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

Telegraph:

• Hong Kong crisis exposes impossible contradiction of China's economic growth. Hong Kong's crisis comes at a treacherous moment, up to its neck in China's credit bubble.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.50% to -.50% on average.

• Asia Ex-Japan Investment Grade CDS Index 101.0 +2.0 basis points.

• Asia Pacific Sovereign CDS Index 71.75 +.25 basis point.

• FTSE-100 futures -.16%.

• S&P 500 futures +.10%.

• NASDAQ 100 futures  +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MKC)/.81

• (PKE)/.41

• (GPN)/1.14

• (STZ)/1.16

• (ATU)/.52

• (RECN)/.14

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 297K versus 293K the prior week.

• Continuing Claims are estimated to fall to 2425K versus 2439K prior. 

10:00 am EST

• Factory Orders for August are estimated to fall -9.5% versus a +10.5% gain in July.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Bullard speaking, Fed's Lockhart speaking, Fed's Dudley speaking, ECB rate decision, Draghi press conference, Challenger Job Cuts report for September, RBC Consumer Outlook Index for October, ISM New York for September, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (AN) sales update and the (ORCL) analyst meeting 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling Substantially into Final Hour on Global Growth Worries, Escalating Ebola Fears, Russia-Ukraine Tensions, Transport/Energy Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Almost Every Sector Declining
  

• Volume: Above Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 17.17 +5.27%

• Euro/Yen Carry Return Index 143.73 -.59%

• Emerging Markets Currency Volatility(VXY) 8.15 -.85%

• S&P 500 Implied Correlation 61.51 +3.07%

• ISE Sentiment Index 47.0 -34.72%

• Total Put/Call 1.32 +18.92%

• NYSE Arms 1.73 +20.94% 

Credit Investor Angst:

• North American Investment Grade CDS Index 65.52 +1.67%

• European Financial Sector CDS Index 62.55 -1.21%

• Western Europe Sovereign Debt CDS Index 26.82 -11.1%
• Asia Pacific Sovereign Debt CDS Index 71.04 -.68%

• Emerging Market CDS Index 286.27 +.90%

• China Blended Corporate Spread Index 316.06 -.63%
• 2-Year Swap Spread 26.75 +2.0 basis points

• TED Spread 22.0 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -.5 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% -1.0 basis point

• Yield Curve 188.0 -4.0 basis points

• China Import Iron Ore Spot $77.50/Metric Tonne n/a

• Citi US Economic Surprise Index 12.40 -5.5 basis points

• Citi Emerging Markets Economic Surprise Index -19.20 -1.1 points

• 10-Year TIPS Spread 1.96 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating -182 open in Japan

• DAX Futures: Indicating -36 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg: 

• Ukrainian Truce Frays as Rebels Step Up Airport Attacks. Ukrainian government forces repelled a separatist assault on the Donetsk airport and shelling killed 10 civilians in the eastern city, fraying a cease-fire that had curtailed violence and casualties for most of last month. Government forces still hold the airport of the biggest city in the combat zone after repelling a one-hour attack this morning, the army said on Facebook. The civilians were killed and at least nine more were wounded, including by a shell that exploded meters from a school where 70 children were in class, the Donetsk regional council said on its website. 

• Specter of Russian Capital Controls Puts Market on Edge. Holders of Russia’s ruble-denominated bonds, stung by the worst losses in emerging markets in the third quarter, are weighing the consequences of possible capital controls as the currency sinks. “It would be very negative for your investments in the local currency,” Peter Schottmueller, who helps manage $17 billion as head of emerging-market fixed income at Deka Investment GmbH in Frankfurt, said by e-mail yesterday. Foreign ownership of ruble bonds has dropped and any curbs on capital flows would further “increase the investment risk,” he said.

• Dallas Ebola Patient Let Go After Telling of Africa Trip. (video) The first man to be diagnosed in the U.S. with Ebola was sent home by a Dallas hospital after showing initial symptoms, even after he told a nurse he was recently in Africa, the center of the disease outbreak. The man would return by ambulance two days later, when he was placed in an isolation unit and confirmed as infected. The two-day gap, when the man was in the community and contagious, occurred because “regretfully, that information was not fully communicated” to other health professionals, said Mark Lester, a hospital system official.

• Hong Kong Students Threaten Escalation as Councilor Seeks Talks. Hong Kong’s pro-democracy student leaders threatened to besiege government offices if demands for free elections and the resignation of the city’s top official aren’t heeded, as the government sought to start talks. Demonstrations swelled for a sixth day, with one student leader estimating the crowd at 9 p.m. at close to 200,000 people. Regina Ip, a member of the city’s executive council, said today she tried to reach out to protest organizers.

• Prolonged Turmoil Seen as Hong Kong Kids Turn Radical.

• Emerging-Market Bond Sales Surge Over $900 Billion on Asia Deals. Emerging-market bond sales are headed for an unprecedented year after the busiest nine months on record as borrowers seek to issue debt before U.S. interest rates start to rise. Governments and companies in developing nations raised $942 billion in the first three quarters in overseas and local markets, up 11 percent from the year earlier, data compiled by Bloomberg show. While sanctions over the Ukraine crisis brought Russian issuance to a halt, Asian sales jumped by a fifth, led by China. Ghana sold its longest-maturity Eurobond, while Hong Kong and South Africa lured Muslim investors with debut sukuk. 

• Europe Stocks Drop as Italy’s Forecasts Cloud Euro-Area. European stocks fell to the lowest level in more than five weeks after Italy cut its economic-growth forecasts and U.S. manufacturing data missed estimates. J Sainsbury Plc slumped to the lowest price in more than 11 years after saying it won’t see a return to growth in same-store sales this year. Orange (ORA) SA fell 4.1 percent as Bpifrance sold a stake in the company for 580 million euros ($731 million). Adidas AG rose after announcing a plan to return as much as 1.5 billion euros to shareholders. The Stoxx 600 Europe Index slid 0.8 percent to 340.22 at the close of trading.

• Nickel Falls to Six-Month Low as Inventories Increase. Nickel prices fell to a six-month low as inventories monitored by the London Metal Exchange extended an increase to a record. Aluminum dropped to the cheapest since July. This year, nickel stockpiles have jumped 37 percent even as Indonesia, the world’s biggest producer of the mined metal, maintains an ore-export ban. China is the top user of the metal. Prices entered a bear market on Sept. 29, falling more than 20 percent from the 2014 closing high on May 13. 

• Commodity ETF Outflows Reach Highest This Year on Supply. Investors last month pulled more money out of U.S. exchange-traded products backed by commodities than they have all year, as signs of supply gluts drove the biggest price slump since the financial crisis. About $1.05 billion was removed from the ETFs in September, the biggest monthly withdrawal since December, data compiled by Bloomberg show. Outflows were led by redemptions from precious metals and energy. Money mangers have cut their combined bullish bets across 18 U.S. traded commodities for 13 straight weeks, the longest streak since the data begins in 2006, while open interest in raw materials fell last quarter by the most in two years.

CNBC:

• New debt crisis fear: Subprime auto loans. (video)

ZeroHedge: 

• How Bad Could It Get? US Government Order Of 160,000 HazMat Suits Gives A Clue. With the U.S. State Department alone putting out a bid for 160,000 suits, we encourage all protective apparel companies to increase their manufacturing capacity for sealed seam garments so that our industry can do its part in addressing this threat to global health.

• Russell 2000 Enters 10% "Correction" As S&P, Dow, Transports Break Crucial Technical Support. (graph)

• China Detains 'Activists', Adopts "Wait-'Em-Out" Tactic As Hong Kong Protest Swells To 300,000.

• "The Trend Is Your Friend... Until It Ends". (graph)

• High-Yield Credit Suffers Biggest Quarterly Loss Worldwide Since 2011. (graph)

• Japan Stunned After Biggest Ever, $617 Billion "Fat Finger" Trading Error Slams Stocks. (graph)

• ISM Biggest Miss Since January: Orders Tumble, Employment Slides, Backlogs Contract, Construction Spending Negative. (graph)

• Ackman, Berkowitz Slammed After Fannie Mae Plunges 60% On Court Ruling.

• ADP Private Payrolls Rise Modestly To 4-Year Average. (graph)

Business Insider: 

• There's Already A More Threatening Virus Than Ebola In The US, And Most Aren't Taking The Proper Precautions.

• There Is Little Room For Compromise Between Hong Kong Protesters And Beijing.

• Airlines Stocks Are Getting Crushed And Traders Are Blaming Ebola.

• Here's The Massive Disconnect Between Stocks And High-Yield Bonds That Has Some People Predicting More Pain Ahead. (graph)

• Hong Kong Protesters Threaten To Occupy Government Buildings — Meaning It Could Get Ugly.

IBD:

• Greenbrier(GBX), Trinity(TRN) Dive On Oil Tank Car Rule Fight.

@PZFeed:

• BREAKING NEWS: 5 students from 4 different schools in Dallas are being monitored after contact with Ebola patient.

• Ebola patient in Texas was first told to go home when he went to a hospital for treatment, returned days later.

Reuters:

• TREASURIES-Yields fall as U.S. manufacturing growth slows.

• EMERGING MARKETS-Brazilian markets drop as Rousseff's odds improve.

RT:

• Scuffles as Catalonia erupts in protests over Nov. 9 referendum ban (PHOTOS).

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.52%

Sector Underperformers:

• 1) Airlines -3.06% 2) Social Media -2.73% 3) Alt Energy -2.72%

Stocks Falling on Unusual Volume:

• OPWR, SYT, PSXP, WPPGY, NKA, B, GTLS, FLY, TRN, ZIV, TSL, CR, GBX, CSC, BBL, SWKS, TK, GEOS, BUD, CAMP, SNX, KEX, ADHD, CSTM, LQDT, PPG, RARE, ASH, AAL, HAWK, KEX, CLH, BGG, LUV, DAL, WMC, WLK, HMSY, DECK, ARCB, THRM, URI, HCLP, CVLT, CAR, GEOS, XON, AMBA, GTLS and ADP

Stocks With Unusual Put Option Activity:

• 1) COG 2) XLB 3) LUV 4) TRIP 5) MDY
  

Stocks With Most Negative News Mentions:

• 1) BABA 2) SKYW 3) EBAY 4) BZH 5) MOS
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

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