Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Above Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 15.73 -8.55%
- Euro/Yen Carry Return Index 143.78 +.57%
- Emerging Markets Currency Volatility(VXY) 8.13 +2.65%
- S&P 500 Implied Correlation 50.52 -14.15%
- ISE Sentiment Index 87.0 +11.54%
- Total Put/Call 1.03 +4.04%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.75 -4.26%
- European Financial Sector CDS Index 66.08 -.28%
- Western Europe Sovereign Debt CDS Index 26.29 -2.88%
- Asia Pacific Sovereign Debt CDS Index 69.90 +3.07%
- Emerging Market CDS Index 254.28 -4.02%
- China Blended Corporate Spread Index 319.36 n/a
- 2-Year Swap Spread 26.0 -.75 basis point
- TED Spread 22.75 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.0 unch.
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 188.0 +4.0 basis points
- China Import Iron Ore Spot $77.50/Metric Tonne n/a
- Citi US Economic Surprise Index 17.80 -.1 point
- Citi Emerging Markets Economic Surprise Index -22.40 -.1 point
- 10-Year TIPS Spread 1.96 +4.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +110 open in Japan
- DAX Futures: Indicating +95 open in Germany
Portfolio:
- Higher: On gains in my biotech/retail/medical/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Ukraine Rebels Renew Call for Independence as Truce Ends. Ukrainian rebels in the eastern Donetsk region renewed their call for
independence, saying too many people have died in the past six months
to accept governance from the capital Kiev. “There is no truce,
buffer zones are non-existent,” the deputy premier of the
self-proclaimed Donetsk People’s Republic, Andrei Purgin, said via
Russian state news service RIA Novosti. Purgin said some
estimates put the number of deaths during fighting in the Donetsk region alone at 9,000,
though the real figure is probably closer to 4,000 or 5,000. That
compares with a United Nations estimate of 3,660 deaths and 8,756
injuries from fighting in all of eastern Ukraine. At least 331 of
those fatalities ocurred after the belligerents agreed to a cease-fire
in Minsk, Belarus, on Sept. 5, the UN said today. “Such casualties make
any political union with Ukraine impossible,” Purgin was cited as
telling RIA by phone.
- First Ebola Patient Diagnosed in U.S. Dies From Virus. (video) Thomas
Eric Duncan, the first person diagnosed with Ebola in the U.S., died
from the virus while in isolation at a Dallas hospital, ending a case
that helped bring into sharp focus the nation’s risk from the disease. The
incident showed that Ebola could quietly make its way into the country,
and that hospital protocols designed to control it may not always work.
At the same time, it rang an alarm for medical professionals and
federal officials to tighten the safety net.
- Brazil Inflation Quickens More Than Forecast by All Analysts.
Brazil’s inflation last month accelerated faster than forecast by all
economists, pushing annual inflation to the fastest in three years less
than three weeks before presidential elections. Monthly inflation as
measured by the benchmark IPCA index sped up to 0.57 percent from 0.25
percent in August, the national statistics agency said today in Rio de
Janeiro. That was higher than every estimate from 40 economists surveyed
by Bloomberg, whose median forecast was for a 0.48 percent rise. Annual
inflation accelerated to 6.75 percent from 6.51 percent
the month prior. Brazil targets inflation of 4.5 percent plus or
minus two percentage points.
- Sears(shld) Vendor Said to Halt Shipments as Insurers Back Away.
Three of the biggest insurance firms for Sears Holdings Corp.
(SHLD)’s suppliers are seeking to reduce coverage, prompting at least
one
medium-sized vendor to halt shipments to the department-store chain,
people with knowledge of the matter said.
CNBC:
ZeroHedge:
Business Insider:
ABC:
CNN:
- U.S. officials: ISIS will capture Kobani, but it's not a big concern to us. (video)
The key Syrian border city of Kobani will soon fall to the Islamist
terror group ISIS, several senior U.S. administration officials said.
They downplayed the importance of it, saying Kobani is not a major U.S.
concern. But a look at the city
shows why it would mark an important strategic victory for the Islamic
mlitant group. ISIS would control a complete swath of land between its
self-declared capital of Raqqa, Syria, and Turkey -- a stretch of more
than 100 kilometers (62 miles). As Time.com put it, "If the ISIS
militants take control of Kobani, they will have a huge strategic
corridor along the Turkish border, linking with the terrorist
group's positions in Aleppo to the west and Raqqa to the east." And Staffan de Mistura, U.N. special envoy for Syria, warned of the
horrors ISIS could carry out against the people of Kobani -- horrors it
has carried out elsewhere. "The international community needs to defend
them," he said. "The international community cannot sustain another city
falling under ISIS."
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -4.86% 2) Airlines -3.40% 3) Oil Service -2.11%
Stocks Falling on Unusual Volume:
- SHLD, CMRX, DYN, TILE, MG, SAVE, LGCY, EMES, BBEP, ALGT, TGP, GBX, LRE, LINE, MCEP, VNR, EC, LNCO, SAP, ORIG, QRE, SODA, CPG, ATLS, ADM, SHLD, CHK, SLH, HUN, OAS, WTI, CNW, CTB, LGCY, LNG, TCS, HCLP, TRN, MMLP, HAL, SN, REXX, SMCI, XOOM, CLD, PTEN, VNR, SEMG, MEMP, ARP, BCEI, SLCA, AEGN and CAMP
Stocks With Unusual Put Option Activity:
- 1) TXN 2) SMH 3) BEAV 4) LL 5) M
Stocks With Most Negative News Mentions:
- 1) JCP 2) FFIV 3) Z 4) GPRO 5) WLT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Utilities +1.28% 2) HMOs +.88% 3) REITs +.75%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) ARWR 2) MCP 3) COST 4) NPSP 5) RSX
Stocks With Most Positive News Mentions:
- 1) COST 2) SYMC 3) CB 4) WMT 5) GILD
Charts:
Evening Headlines
Bloomberg:
- Europe Sacrifices a Generation With 17-Year Unemployment Impasse.
Seventeen years after their first
jobs summit European Union leaders are divided on how to create
employment and a fifth of young people are still out of work. At a
meeting in Milan today Italian Prime Minister Matteo Renzi plans to tout
the new labor laws he’s pushing through. French President Francois
Hollande will argue for more spending, a proposal German Chancellor
Angela Merkel intends to reject. Britain’s prime minister David Cameron
isn’t coming. Their lack of progress may increase the frustration of
European Central Bank President Mario Draghi who has faced down
internal dissent to deploy unprecedented monetary easing. He’s
calling on the politicians to do their bit now and loosen the
continent’s rigid labor markets even if that means facing the
ire of protected workers.
- Russian Hardship on Display at Delis as Sausages Shrink. There are many ways to measure the
deepening financial crisis spreading across Russia. The ruble is
sinking more than any other currency in the world, policy makers
have burnt through some $55 billion of foreign reserves and the
economy is teetering toward recession. Galina Mityaeva measures it in centimeters.
- IMF Joining Fed in Stock Price Bubble-Spotting Contest. Everyone
has an opinion on the stock
market nowadays. Three months after the Federal Reserve said prices were
stretched in some stocks, the International Monetary Fund weighed in
with its own warning, saying the risk of equity losses in 2014 has risen
and stock valuations may be “frothy.”
- Asian Stocks Extend Selloff as Oil Sinks; Dollar Rebounds. Asian stocks dropped, extending a global selloff, and oil dropped amid concern that the global economic outlook is worsening. Treasuries fell and Standard & Poor’s 500 Index futures rose with the dollar before the Federal Reserve releases minutes of its last meeting. The MSCI Asia Pacific Index fell 1 percent by 10:59 a.m. in Tokyo, as Japan’s Topix (TPX) index dropped toward a seven-week low. The Shanghai Composite Index and Chinese yuan were little
changed after a weeklong holiday.
- Nickel Drops on China Growth Concern as IMF Lowers World Outlook. Nickel
fell for the first time in
four days, leading most industrial metals lower, after a gauge of
economic strength in China pointed to a slowdown and the International
Monetary Fund cut its global growth forecast. Nickel dropped as much as
0.7 percent and tin lost as much as 0.4 percent.
- Gold Extends Rebound From 2014 Low as Dollar to Stocks Retreat.
Gold for immediate delivery rose as much as 0.2 percent to $1,211.70 an ounce, and traded at $1,210.55 by 8:10 a.m. in Singapore, according to Bloomberg generic pricing. The metal dropped on Oct. 6 to $1,183.24, the lowest since Dec. 31, as
U.S. jobs data signaled the recovery is gaining traction.
Wall Street Journal:
- Bundesbank’s Weidmann Criticizes ECB’s Stimulus Measures. Weidmann Warns That ECB Policy Risks Being ‘Held Hostage’ by Politics. German Bundesbank President Jens Weidmann criticized the European
Central Bank’s decision to buy private-sector bonds and chastised France
for budgetary laxness, taking a hard line against new stimulus just
before high-level International Monetary Fund meetings. Mr.
Weidmann’s comments, in an interview with The Wall Street Journal,
expose some of the deep rifts that have plagued the 18-member eurozone
since its debt crisis erupted nearly five years ago. While France and
Italy, struggling with stagnant...
- Ping An Offers to Finance Down Payments in China. Program Could Aid Housing Market, but Raises Worry About Risks to Financial System. One of China’s biggest financial firms is offering to lend money to
home buyers for down payments, part of a trend that could help the
housing market but has prompted worry about risks to the financial
system.
Fox News:
- UN warns of pending 'massacres' as ISIS closes in on Syrian city. A UN official warned of pending "humanitarian tragedies" and pleaded
desperately with the world to intervene on behalf of Kurds trapped in a
Syrian city near the Turkish border, as Islamic State fighters stood on
the brink of taking it. Kurds from villages throughout northern Syria have fled to Kobani for
a final stand as the terrorist group has marauded across huge swaths of
land, leaving a trail of death and destruction. With the city under
siege for three weeks, the black-clad fighters have begun to raise their
flag over neighborhoods and UN Special Envoy for Syria Staffan de
Mistura said the city was about to fall.
CNBC:
- Yum(YUM) profits, sales miss Street; Outlook disappoints. Yum Brands reported disappointing full-year guidance and quarterly results on Tuesday, sending shares lower in after-hours trading. The company said it expects full 2014 earnings
growth of between 6 percent and 10 percent, versus Wall Street
expectations of 14 percent.
Zero Hedge:
Business Insider:
Reuters:
- Data breach at bond insurer MBIA may affect thousands of local U.S. governments. Bond insurer MBIA was
told two weeks ago about a server breach that compromised the
data of thousands of local U.S. government entities, but it did
not address the problem until earlier this week, according to
the cyber security expert who discovered the intrusion. MBIA said on Tuesday it had been notified that some client
information at its Cutwater Asset Management unit may have been
illegally accessed.
- Banks to change rules governing derivatives market -FT. The world's biggest
banks have agreed to change rules that govern the $700 trillion
derivatives market, the Financial Times reported on Tuesday. Eighteen banks, ranging from Credit Suisse Group AG to Goldman Sachs Group Inc, have agreed to give
up the right to "close out" deals on derivatives contracts if a
financial institution runs into trouble, the newspaper said,
citing people familiar with the matter.
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
Shanghai Securities News:
- Chinese Investor Confidence Rises to Over 6-Year High. Chinese
investor confidence rose to the highest level since April 2008 in Sept.,
citing a survey of 4,330 securities investors conducted in the month.
The confidence index compiled by China Securities Investor Protection
Funds rose 20.5% y/y to 70.5 in Sept., the highest since the index was
created. Almost 60% of investors are optimistic on the outlook of
China's A-shares market.
Evening Recommendations
Piper Jaffray:
- Cut (GPRO) to Neutral, target $90.
Night Trading
- Asian equity indices are -1.25% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 117.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 67.75 -1.25 basis points.
- NASDAQ 100 futures +.15%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+1,677,780 barrels versus a -1,363,000 barrel decline the prior week.
Gasoline supplies are estimated to fall by -660,000 barrels versus a
-1,836,000 barrel decline the prior week. Distillate supplies are
estimated to fall by -1,100,000 barrels versus a -2,894,000 barrel
decline the prior week. Finally, Refinery Utilization is estimated to
fall by -.72% versus a -3.6% decline the prior week.
2:00 pm EST
- Minutes from Sept. 16-17 FOMC Meeting.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Evans speaking, Former Fed Chair Bernanke speaking, Fed's Yellen
attending Financial Stability Oversight Council Meeting, Australia
unemployment rate, $21B 10Y T-Note auction, weekly MBA mortgage
applications report, (JCP) analyst meeting, (TFM) analyst day and the
(HPQ) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial
and commodity 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.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 16.88 +7.89%
- Euro/Yen Carry Return Index 142.96 -.56%
- Emerging Markets Currency Volatility(VXY) 7.84 +.26%
- S&P 500 Implied Correlation 58.04 +7.04%
- ISE Sentiment Index 79.0 -43.17%
- Total Put/Call .89 -8.25%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.07 +1.94%
- European Financial Sector CDS Index 66.43 +4.81%
- Western Europe Sovereign Debt CDS Index 27.07 -.48%
- Asia Pacific Sovereign Debt CDS Index 67.61 -1.94%
- Emerging Market CDS Index 262.60 +1.42%
- China Blended Corporate Spread Index 319.36 n/a
- 2-Year Swap Spread 26.75 -1.0 basis point
- TED Spread 22.25 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.0 +1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 184.0 -5.0 basis points
- China Import Iron Ore Spot $77.50/Metric Tonne n/a
- Citi US Economic Surprise Index 17.90 +.3 point
- Citi Emerging Markets Economic Surprise Index -22.30 -4.1 points
- 10-Year TIPS Spread 1.92 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -183 open in Japan
- DAX Futures: Indicating -30 open in Germany
Portfolio:
- Slightly Lower: On losses in my biotech/retail/medical/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
