Evening Headlines
Bloomberg:
- Kurdish Protests Roil Turkey as Jihadists Fight in Kobani. Armored vehicles took to the streets of towns in southeast Turkey, as
the government enforced a curfew to end deadly clashes with Kurds angry
at the country’s response to Islamic State’s militants in neighboring
Syria. Violence erupted late yesterday as Turkish Kurds
protested against what they say is Turkey’s failure to stop an Islamic
State advance on the mainly Kurdish town of Kobani just across the
Syrian border.
- Draghi Policies Blunted in Berlin as German Protests Grow. The
European Central Bank president has stopped short of
large-scale sovereign-bond purchases as efforts to mollify Germany’s
political elite do little to silence criticism of his ever-more
expansionary measures. Support for anti-euro groups such as
Alternative for Germany has risen and the ECB’s latest plan to buy
assets sparked an outcry within all major parties. “German public
opinion matters an awful lot,” said Anatoli Annenkov, senior economist
at Societe Generale SA in London. “Draghi wants the ECB to be a central
bank like any other, one that can go and buy government debt. But he’s
perfectly aware of Germany’s opposition, and the storm now is a
clear signal that it’ll be much more difficult.” The ECB is continuing “its pernicious policy” of
transferring risks from European banks to German taxpayers, said
Jan Bollinger, a member of Alternative for Germany. The party
emerged last year on a platform of opposing the single European
currency and bailouts to indebted euro-area member states, and
has won seats in three state parliaments in the past two months.
- Kim Jong Un’s Absence Fuels Rumors Over his Hold on Power. Kim
Jong Un’s prolonged absence from public view, including skipping a
session of parliament, has raised questions as to whether his
disappearance has less to do with his health and more to do with his
grip on power in nuclear-armed North Korea. Kim has not been seen in
public since Sept. 3, an unusual stretch in a country where media
provide a steady stream of propaganda images featuring the Supreme
Leader overseeing everything from missile launches to grain harvests.
While official media reports say Kim is suffering “discomfort,” his
seclusion has sparked discussion about who is in charge of a country
that boasts 1.2 million troops and has threatened to turn Seoul into a
sea of fire.
- Australian Employers Unexpectedly Cut Jobs in September. Australian employers unexpectedly cut
payrolls in September, indicating that interest rates will probably remain at a record low for an extended period. The number of people employed fell by 29,700 the statistics bureau said in Sydney today. That compares with a median estimate for a 15,500 increase
and follows the bureau’s statement yesterday that it would review
methodology used to calculate the jobs data. The jobless rate was 6.1
percent.
- Asian Stocks Climb After Fed Minutes Spur Rate Optimism.
Asian stocks rose for a third day this week as Federal Reserve concerns
over a global economic slowdown spurred bets that U.S. interest rates
will remain low. The MSCI Asia Pacific Index (MXAP) gained 0.5
percent to 138.81 as of 9:02 a.m. in Tokyo, before markets open in Hong
Kong and China.
- Brent Falls Into Bear Market as Supply Outpaces Demand. Brent closed 21 percent below its June peak, meeting the
common definition of a bear market. U.S. production is set to
increase to the most in more than three decades amid higher
output from shale formations. Supplies from OPEC rose last month
and Russian output neared a post-Soviet record. The International Energy Agency reduced demand projections for this
year and next.
Wall Street Journal:
MarketWatch.com:
- Global PC shipments fall in third quarter.
Personal computer sales fell in the third quarter as shipments declined
in emerging markets and equipment upgrades prompted by Microsoft Corp.'s
operating system phaseout slowed down, according to a pair of data
trackers.
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 goa
Financial Times:
- Investors warn on crisis plan for derivatives. Institutional
investors and pension funds have warned they may resist a plan by the
world’s biggest banks to rewrite their derivatives contracts as part of
reforms aimed at preventing a failing institution from destabilising
global markets.
Xinhua:
- China
Targets Local Govt Debt in New Budget Action Plan. China's State
Council will regulate local government debt more strictly under a new
budget action plan announced yesterday.
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 69.5 +1.75 basis points.
- NASDAQ 100 futures +.25%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 295K versus 287K the prior week.
- Continuing Claims are estimated to rise to 2410K versus 2398K prior.
10:00 am EST
- Wholesale Inventories for August are estimated to rise +.3% versus a +.1% gain in July.
- Wholesale Trade Sales for August are estimated to rise +.3% versus a +.7% gain in July.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Bullard speaking, Fed's Williams speaking, Fed's Lacker speaking,
BoE Rate Decision, ECB's Draghi speaking, $13B 30Y T-Bond auction,
Bloomberg Oct. US Economic Survey, weekly EIA natural gas inventory
data, weekly Bloomberg Consumer Comfort Index and the Tesla(TSLA) Model D
intro could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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.
