Style Outperformer:
Sector Outperformers:
- 1) Airlines +3.95% 2) Semis +3.53% 3) Homebuilders +3.31%
Stocks Rising on Unusual Volume:
- NLNK, DPZ, ETE, SWKS, JBHT, XIV, AVGO, WWW, AAL, NSM, UAL, DAL, LUV, PAGP, BCRX, PCRX, DIOD, FOSL, AR, SN, JBHT, DE, ALKS, MNTA, TRGP, SEMG, ENTA, CCI, CCL, SCTY, URI, CXO, AR and ROK
Stocks With Unusual Call Option Activity:
- 1) CCE 2) JNJ 3) EXPR 4) ED 5) UUP
Stocks With Most Positive News Mentions:
- 1) DPZ 2) CME 3) T 4) IBM 5) HLF
Charts:
Evening Headlines
Bloomberg:
- Islamic State Seizes Iraq Base Amid Concern for Baghdad. Islamic
State came closer to gaining full control of Iraq’s Anbar province
after it seized a military base to the west of Baghdad that had been one
of the government’s few remaining outposts there. Militants seized the
base, located near the town of Hit and a major highway from Baghdad to
the Syrian border, after heavy fighting with soldiers, according to
Ahmed al-Dulaimi, a Sunni tribal leader. Its capture increases the
threat to Ramadi, Anbar’s capital, and to Iraq’s second-largest dam at
Haditha. The insurgent group has declared a caliphate that stretches
across much of northern Syria and Iraq, prompting the U.S. to launch a
bombing campaign backed by European and Arab allies to halt the advance.
The group’s recent gains
to the west of Baghdad have sparked concern it’s preparing to attack the
capital.
- Hong Kong Police Use Chain Saws to Shrink Democracy Protest Site. Hong
Kong police used chain saws to clear more barricades erected by
pro-democracy demonstrators in the city’s business district, after Chief
Executive Leung Chun-ying signaled he’s losing patience with protesters.
Hundreds of police officers rushed the make-shift barriers blocking
Queensway, a key road heading into Central, removing tents and bamboo
obstacles. Tensions escalated yesterday when truck and cab drivers
sought to tear down barricades built by student protesters near the
city’s business district. Talks seeking to resolve Hong Kong’s worst
political crisis since China regained sovereignty 17 years ago have
broken down, leaving a polarized city facing a third week of
demonstrations.
- Dedicated Ebola Hospitals Sought After Nurse’s Infection. U.S.
and local health officials want to set up dedicated hospitals in each
state for Ebola patients, part of a new emphasis on safety for
health-care workers after a nurse caring for an infected patient in
Dallas tested positive for the virus. The U.S. Centers for Disease Control and Prevention is also reconsidering
its existing infection control protocols and will boost health-worker
training with a series of calls and online seminars, officials said
today.
- Ebola Alarms Spread With Crews, Fliers on Illness Alert. The Ebola virus’s arrival in the
U.S. is stirring anxiety across the airline industry as flight
crews and passengers fret that a fever or upset stomach on board
could be a sign of the deadly disease. False alarms are becoming routine at U.S. airports.
Crews surrounded an Emirates Airline jet in Boston today after fliers
showed flu-like symptoms, three days after a similar rush to isolate a
Delta Air Lines Inc. (DAL) plane in Las Vegas because of an Ebola scare.
“If there’s any vomiting, we’re getting calls about it,” said T.J.
Doyle, medical director of Pittsburgh-based STAT-MD, a
consultant that serves airlines. “It’s not that we weren’t
getting these calls before. It’s just that there’s a heightened
sense because of Ebola.”
- Draghi’s ‘Whatever It Takes’ Plan Faces Trial at EU Court. European
Central Bank President Mario Draghi’s pledge to do “whatever it takes”
with a bond-buying plan to save the euro-area goes on trial before the
European Union’s top judges today. The Court of Justice, the bloc’s highest court, will weigh
whether Draghi’s ECB overstepped its powers in 2012 with the
mechanism to buy the debt of stressed countries if needed. While
Germany’s own top court earlier this year expressed doubts about
the plan’s legality, the EU tribunal’s 15-judge panel is
unlikely to overturn it, according to legal scholars.
- Asian Stock Index Retreats Amid Rout in Global Equities.
Asian stocks fell, with the regional benchmark index heading for a
six-month low, extending a rout in global equities after the Standard
& Poor’s 500 Index capped its biggest three-day loss since 2011. The
MSCI Asia Pacific Index (MXAP) fell 0.6 percent to 135.60 as of 9:04
a.m. in Tokyo before markets in China and Hong Kong open. The gauge
dropped 8.8 percent from its year high in July
through yesterday.
- Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap. Too
big to fail is likely to prove a
costly epithet for the world’s biggest banks as regulators demand they
increase debt securities to cover losses should they collapse. The
shortfall facing lenders from JPMorgan Chase & Co. (JPM) to HSBC
Holdings Plc could be as much as $870 billion, according to estimates
from AllianceBernstein Ltd., or as little as $237
billion forecast by Barclays Plc.
Wall Street Journal:
- CDC Director Calls for Rethinking Approach to Ebola Infection Control. Obama Administration Shifts Emphasis Toward Focusing on Lapses in Texas Cases. The director of the U.S. Centers for Disease Control and Prevention said
Monday the agency is rethinking its approach to Ebola infection control
after a Dallas nurse became infected with the disease.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- France faces euro zone peer pressure to tighten spending plans. France
faced intensifying pressure from euro zone peers on Monday to tighten
spending next year amid a growing rift over its plans to flout European
budget rules. The dispute with France over its planned 2015 budget
is a test of new euro zone powers to police public finances and is
complicated by a wider debate about how to use government money to help
the stagnating European economy.
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 goaFed's Williams: Can't wait too long to raise rates
Telegraph:
- The great Lira revolt has begun in Italy. The biggest single party in the Italian parliament by votes has thrown down
the gauntlet, calling for a euro referendum to end depression and save
democracy, writes Ambrose Evans-Pritchard.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 120.75 +1.75 basis points.
- Asia Pacific Sovereign CDS Index 73.0 +1.75 basis points.
- NASDAQ 100 futures +.49%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- The NFIB Small Business Optimism Index for September is estimated to fall to 95.9 versus 96.1in August.
Upcoming Splits
Other Potential Market Movers
- The China CPI, UK inflation data, German ZEW Index and the US weekly retail sales reports could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by consumer 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 25% net
long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 21.11 -.61%
- Euro/Yen Carry Return Index 142.13 +.17%
- Emerging Markets Currency Volatility(VXY) 8.29 +.85%
- S&P 500 Implied Correlation 61.22 -4.31%
- ISE Sentiment Index 58.0 -15.94%
- Total Put/Call 1.47 +21.49%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.38 -.65%
- European Financial Sector CDS Index 68.79 -.89%
- Western Europe Sovereign Debt CDS Index 26.51 +1.65%
- Asia Pacific Sovereign Debt CDS Index 72.91 +2.42%
- Emerging Market CDS Index 267.05 +.56%
- China Blended Corporate Spread Index 328.69 unch.
- 2-Year Swap Spread 26.75 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.50 unch.
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 185.0 -1.0 basis point
- China Import Iron Ore Spot $84.17/Metric Tonne +4.9%
- Citi US Economic Surprise Index 19.10 unch.
- Citi Emerging Markets Economic Surprise Index -24.80 +2.2 points
- 10-Year TIPS Spread 1.96 -1 basis point
Overseas Futures:
- Nikkei Futures: Indicating -290 open in Japan
- DAX Futures: Indicating -3 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail/biotech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -3.05% 2) Alt Energy -1.81% 3) Disk Drives -1.15%
Stocks Falling on Unusual Volume:
- ABG, NTCT, LAD, CMRE, SFLY, PBFX, APC, ETE, LUX, TRGP, MCHP, CXO, MEOH, NGLS, KN, RCL, BBEP, HDS, LYB, PAG, HAL, PHX, SNHY, CUK, LINE, CODE, PANW, RES, DOW, CBM, OAS, DAL, EOG, TSLA, MWT, NOG, HAL, SPN, SAVE, PTEN, DRIV, AN, FANG, QEP, GBX, LNCO, EGN, CJES, SN, CRK, PAG, SAH, SFLY and BAS
Stocks With Unusual Put Option Activity:
- 1) AMTD 2) XLK 3) XLE 4) JNPR 5) HON
Stocks With Most Negative News Mentions:
- 1) DOW 2) LAD 3) YELP 4) JCI 5) DOV
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.98% 2) Steel +3.92% 3) Road & Rail +.92%
Stocks Rising on Unusual Volume:
- ATLS, CSX, APL, ALNY, LAKE and AEL
Stocks With Unusual Call Option Activity:
- 1) DAN 2) GPOR 3) ATVI 4) PVA 5) SO
Stocks With Most Positive News Mentions:
- 1) WFC 2) LMT 3) AAPL 4) AIG 5) MSFT
Charts:
Weekend Headlines
Bloomberg:
- Islamic State Seen Capturing Kobani Within Days. Islamic State militants may capture Kobani within days if the
U.S.-led coalition doesn’t step up airstrikes to help forces defending
the besieged Kurdish stronghold in Syria, a Kurdish lawmaker said.
The al-Qaeda breakaway group has seized water wells on the outskirts of
Kobani, Faysal Sariyildiz, a lawmaker in the Turkish parliament, said in
an interview at the border with Syria yesterday. Even if the wells were
under Kurdish control, the lack of diesel due to the siege renders them
useless, he said.
- Iraq Anbar Police Chief Killed Amid Clashes With Islamic State. A roadside bomb killed the police
chief of Iraq’s western Anbar province during clashes with
Islamic State fighters in the city of Ramadi as security forces
struggle to expel the militant group from the province. A guard and
photographer were also killed in the attack against Ahmed al-Dulaimi,
the governor’s office said in a statement yesterday. The Interior
Ministry named Sabah Mohammed as the acting police chief in the
province, while Anbar’s council nominated Kadhim al-Fahdawi.
- IMFC Sees Growing Risks in Weaker-Than Expected Recover. Risks to an “uneven and weaker-than-expected” global economic recovery have increased,
the
International Monetary Fund’s steering committee said. At the end of
meetings of finance ministers in Washington, the International Monetary
and Financial Committee also said in a statement today that “exchange rates should be allowed to respond to changing fundamentals.” The
IMFC said it is “deeply concerned about the human and socioeconomic
impact of Ebola.” The IMFC said it is “deeply disappointed with the
continued delay” in enacting a 2010 pact by all IMF member countries
that would increase emerging markets’ shares, or quotas, in the fund and
boost its permanent lending capacity. The committee urged the U.S.,
the largest IMF shareholder, to “ratify these reforms at the earliest
opportunity.” The U.S. Congress has stalled implementation of the
changes.
- China’s Li Says Economic Growth Quality Important as Pace.
The “quality” of economic
expansion, including job creation and fighting pollution, is as
important as its speed amid uncertainty over whether China will reach its growth target this year, Premier Li Keqiang said. In a speech to businessmen and politicians in the German port of Hamburg today, Li repeated that China still expects
economic growth of about 7.5 percent this year. Though China may
exceed or miss that target, the nation doesn’t “face a hard
landing as some say,” he said.
- Agile Property Shares Tumble After Chairman Under Watch in China. Agile Property Holdings Ltd. (3383) tumbled
as much as 31 percent in Hong Kong trading after its billionaire
founder and Chairman Chen Zhuolin was placed under the control
of Chinese prosecutors. The shares plunged to HK$3.30 after resuming trading
following a suspension since Oct. 3 and traded 24 percent lower
at HK$3.63 as of 9:31 a.m. local time. The stock was downgraded
to sell from hold at DBS Vickers Hong Kong Ltd.
- Draghi Says Growing ECB Balance Sheet Is Last Stimulus Tool Left. President Mario Draghi said
expanding the European Central Bank’s balance sheet is the last
monetary tool left to revive inflation although there is no
target for how much it might be increased. “It’s very difficult for
me to give you an exact figure at
this point in time,” Draghi told reporters in Washington today
during the annual meeting of the International Monetary Fund. “I gave
you a kind of ballpark figure, say about the size the balance sheet had
at the start of 2012.”
- Draghi Weidmann Fight Intensifies as ECB Debates Action. Mario
Draghi and Jens Weidmann are clashing anew over how much more stimulus
the ailing euro-area economy needs from the European Central Bank.
As Europe’s woes again proved the chief concern at weekend meetings of
the International Monetary Fund in Washington, President Draghi repeated
he’s ready to expand the ECB’s balance sheet by as much as 1 trillion
euros ($1.3 trillion) to beat
back the threat of deflation. Bundesbank head Weidmann responded
by saying that a target value isn’t set in stone.
- Europe Forsaken in ETFs as Record Money Pulled on Economy.
Investors have had enough of Europe. Amid a global selloff that has
sent the Standard & Poor’s 500 Index down 5.2 percent in three
weeks, losses have been almost twice as big in the Euro Stoxx 50 Index,
where last week’s 4.5 percent retreat was the largest since 2012. A record $1 billion was withdrawn from an exchange-traded fund tracking Europe in the period as Mario Draghi, the central-bank
president, warned of signs the recovery is losing momentum.
- Chinese Shares in Hong Kong Fall to Three-Month Low on Economy.
Chinese stocks in Hong Kong fell, sending the benchmark index to a
three-month low, on concern slowing global economic growth will reduce
demand for materials and dampen consumer spending. PetroChina Co., the
biggest oil producer, slid 2.9 percent in Hong Kong after Brent futures
extended their slump to the lowest in almost four years. Agile Property
Holdings Ltd. dropped the most on record after its chairman was placed
under the control of Chinese prosecutors. Inner Mongolia Yili Industrial
Group Co. and Kweichow Moutai Co. lost at least 2.8 percent in mainland
trading. Data showing Chinese exports rising more than estimated in
September failed to boost stocks, while in Hong Kong, police removed
barricades erected by pro-democracy demonstrators in the city’s business
district. The Hang Seng China Enterprises Index (HSCEI) fell 1.2
percent to 10,183.18 as of 10:23 a.m. local time, poised for the lowest
close since June 25. The Shanghai Composite Index (SHCOMP) slid 1.1
percent to 2,348.36.
- Asian Stocks Drop With S&P 500 Futures as Yen, Gold Gain.
Asian stocks fell with U.S. equity-index futures (DJA), extending a
rout that wiped $1.54 trillion from global shares last week, and
sovereign bonds rose amid concern that pledges to keep record-low
interest rates won’t be enough
to offset a global economic slowdown. The yen climbed with gold.
The MSCI Asia Pacific excluding Japan Index fell 0.8
percent by 10:15 a.m. in Hong Kong, heading for its lowest close
since March as information-technology companies followed their
U.S. peers lower.
- Gold Advances to Four-Week High on Haven Demand as Silver Rises. Gold climbed to the highest level in
almost four weeks as concern that global growth is slowing
stoked bets the U.S. Federal Reserve may push back interest-rate
increases, boosting demand for a store of wealth. Gold for immediate delivery advanced as much as 1 percent
to $1,235.01 an ounce, the highest price since Sept. 17, and was
at $1,233.98 at 10:31 a.m. in Singapore, according to Bloomberg
generic pricing. Silver, platinum and palladium all increased at
least 0.8 percent.
- Top Investors See More Pain as 10% Losses Spread; S&P 500 'Painting a False Picture'.
For most American stocks, the correction has arrived. While gauges such
as the Standard & Poor’s 500 Index cling to gains for the year,
declines that exceed 10 percent are spreading in the broader market. In
the Russell 3000 Index, for example, 79 percent of companies are down
that much from their highs, according to data compiled by Bloomberg.
That’s a bad sign to Doug Ramsey, the chief investment officer of
Leuthold Group LLC who correctly predicted in July 2013 that the U.S.
bull market had months more to go. He said that when losses multiply in
stocks away from benchmark indexes, it usually means the bigger
companies are next. “We’re not expecting a bear market, but we are expecting a significant additional
correction,” Ramsey, who helps oversee $1.7 billion at Minneapolis-based
Leuthold, said by phone. “We’re seeing very classic late-cycle action
where the Dow and S&P 500 are painting a very false picture of
what’s going on underneath.”
- U.S. and U.K. Plan Banking ‘War Game’ to Test Crisis Defenses. Regulators in the U.S. and U.K. will
carry out their first so-called war game to simulate the failure
of a major cross-border bank as they test their defenses against
the type of crisis that crippled the financial system in 2008. The
exercise, involving Federal Reserve Chair Janet Yellen and Bank of
England Governor Mark Carney, will take place on Oct. 13 in Washington
and is aimed at testing the global framework on bank resolution to
ensure that no lender is too big to fail, according to the U.K. finance
ministry. U.S. Treasury Secretary Jack Lew, Deputy Secretary Sarah Bloom
Raskin and British Chancellor of the Exchequer George Osborne will also
take part.
- Goldman Sachs's Broderick Sees Liquidity Risk in Market.
Goldman Sachs Group Inc. Chief Risk Officer Craig Broderick said
markets will encounter a shock that would expose liquidity and other
risks that aren't apparent today. “When you think about the market in its current form, it
does feel very benign,” Broderick said today at an event
sponsored by the Institute of International Finance in
Washington. “It does feel like investors across lots of
different classes, not just the shadow banks, do not actually
understand that in fact these crises do periodically occur, and
when they do, they’ve potentially significantly underpriced
risk.” The ability of the biggest banks to serve as market makers
in derivative and off-the-run bond markets has been hindered by
new capital rules, Broderick said. While market liquidity
appears adequate because non-banks are stepping in, those new
entrants may not remain involved when volatility picks up, he
said. “There’s no doubt in my mind that some idiosyncratic event
will occur, and that will result in a shock that will be very
surprising to a lot of market participants,” Broderick said.
- Tarullo Says Too Soon to Declare Too-Big-to-Fail Is Over. Federal
Reserve Governor Daniel Tarullo rejected the notion that regulators
have completed their work to ensure that no financial firm is too
essential to be allowed to collapse. “I don’t know that I personally
at least would declare too-big-to-fail ended,” Tarullo said at a
conference held by the Institute of International Finance in Washington
today. “In fact, I know I would not.”
Wall Street Journal:
- Global Signs of Slowdown Ripple Across Markets, Vex Policy Makers. Governments, Central Bankers Have Fewer Tools Left to Revive Economies After Years of Sluggish Growth. Gathering signs of a slowdown across many parts of the world are
roiling financial markets and confounding policy makers, who after years
of battling anemic economic growth have limited tools left to
jump-start a recovery. Slumping exports in Germany are adding
fuel to worries about a third recession in the eurozone in six years.
China is slowing in the wake of its credit boom, weighing on countries
throughout the region. Japan’s...
New York Times:
- Officials Admit a ‘Defeat’ by Ebola in Sierra Leone.
Acknowledging a major “defeat” in the fight against Ebola,
international health officials battling the epidemic in Sierra Leone
approved plans on Friday to help families tend to patients at home,
recognizing that they are overwhelmed and have little chance of getting
enough treatment beds in place quickly to meet the surging need.
- Leaning Forward, MSNBC Loses Ground to Rival CNN.
Rachel Maddow, the biggest star on the MSNBC cable network, just posted
her lowest quarterly ratings results ever. “Morning Joe,” MSNBC’s
signature morning program, scored its second-lowest quarterly ratings,
reaching an average of just 87,000 viewers in the key news demographic
group. And
“Ronan Farrow Daily,” the network’s heavily promoted new afternoon
show, which stars a 26-year-old Rhodes Scholar with a high-profile
Hollywood lineage, has been largely a dud.
Reuters:
- China sees no need for big stimulus for property, economy.
China is watching its property market closely but sees no need for any
big stimulus for the sector or the rest of the economy, its vice
minister of finance said on Friday. Zhu
Guangyao told a small group of reporters on the sidelines of the World
Bank/IMF meetings in Washington that the government considered that the
current economic situation in China, including the real-estate market,
was "still stable." While there had been some decline in property prices,
this was not seen as a problem, because previously they had been too
high and market forces should be allowed to prevail, Zhu said. He said
the government had tried in the past to control volatility in the
sector, "but not in a very effective way." "We watch closely but let the
market play the role. We have enough macro-economic tools, but are very cautious about taking any big stimulate programme this time," Zhu said.
- Exclusive - U.S. regulators press banks for more on auto loan exposure to assess risks. U.S.
regulators are asking banks for more detail on their autos financing
exposure, as rapid growth in the lending has prompted officials to seek
to better assess the risks, according to a person familiar with the
matter. Balances remaining on auto loans have risen by about a third
since April 2011, reaching an all-time high of $924.2 billion (575
billion pounds) in August, according to credit reporting bureau Equifax.
About a fifth of the loans are subprime.
Telegraph:
Europa Press:
- Madrid
Hospital Has 16 Ebola-Observation Patients. Hospital La Paz-Carlos III
hospital admitted 3 more people today, citing govt's special comte for
Ebola.
la Repubblica:
- EU
Asked Italy to Revise Budget to Avoid Rejection. European Commission
asked Italian, French govts to revise upcoming budgets to "avoid
rejection," citing European sources during IMF meeting in Washington.
Italy Fin Min Padoan quoted as saying Italy isn't negotiating with EU on
budget.
Bild:
- Euro Devaluation Won't Solve EU's Problems. Race by the U.S. and
EU to weaken their currencies won't solve problems, IW head Michael
Huether says. The situation is close to "currency war" that won't create
any winners, Huether said. Japan tried the same with Yen devaluation.
Euro's slide to continue vs dollar, as ECB's announcement to purchase
high-risk assets from banks will cause money to flow out of EU and into
U.S.
Night Trading
- Asian indices are -1.75% to -.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 119.0 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 71.25 +2.0 basis points.
- NASDAQ 100 futures -.69%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The Fed's Evans speaking and China FDI report 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 lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the week.
