Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 25.56 -2.53%
- Euro/Yen Carry Return Index 141.81 -.10%
- Emerging Markets Currency Volatility(VXY) 8.66 unch.
- S&P 500 Implied Correlation 67.11 -8.25%
- ISE Sentiment Index 79.0 -18.56%
- Total Put/Call .98 -25.19%
Credit Investor Angst:
- North American Investment Grade CDS Index 73.83 -.21%
- European Financial Sector CDS Index 78.14 +4.39%
- Western Europe Sovereign Debt CDS Index 34.89 +12.87%
- Asia Pacific Sovereign Debt CDS Index 76.94 +4.14%
- Emerging Market CDS Index 279.18 -3.21%
- China Blended Corporate Spread Index 348.92 +2.34%
- 2-Year Swap Spread 27.25 unch.
- TED Spread 21.25 -1.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -10.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% +2.0 basis points
- Yield Curve 182.0 +4.0 basis points
- China Import Iron Ore Spot $80.32/Metric Tonne -2.70%
- Citi US Economic Surprise Index 18.30 +6.0 points
- Citi Eurozone Economic Surprise Index -54.3 +2.8 points
- Citi Emerging Markets Economic Surprise Index -22.60 +1.3 points
- 10-Year TIPS Spread 1.90 +5 basis points
Overseas Futures:
- Nikkei Futures: Indicating -48 open in Japan
- DAX Futures: Indicating -23 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Advance of Islamist Terrorists Tests Obama’s Flat No on Ground Forces. President
Barack Obama is facing the slippery-slope problem in Iraq and Syria
that he’s sought to avoid, with some advisers concluding that limited
airstrikes are insufficient to break Islamic State’s momentum. As
airpower has failed to dislodge the extremists from the Syrian border
town of Kobani or halt their offensive in Iraq, Obama’s appeals for
strategic patience are being challenged by some U.S. military and
intelligence officers and diplomats who say more needs to be done.
- Greek Bond Rout Drags Down Markets From Ireland to France. Greece’s government debt is back in the spotlight and investors are looking for the exit. As the four-day rout in Greek bonds sent yields to the highest since
January, the selloff started to infect nations from Ireland to Portugal
and even larger countries such as France. In Spain, a debt auction fell
short of the government’s maximum target, and European stocks extended
their longest losing streak since 2003. German 10-year bunds fell for
the first time in three days, pushing the yield on the euro region’s
benchmark securities up from a record low.
- Russia’s $50 Billion Repo Pledge Fails to Halt Ruble Drop on Oil. The
ruble slid to a record as oil sank and a global market rout
overshadowed the Bank of Russia’s pledge of $50 billion to ease a
foreign-currency shortage. The currency slumped 1.3 percent to
46.1342 against the dollar-euro basket by 6 p.m. in Moscow, when the
central bank ends its daily market operations. The ruble temporarily
pared its drop after policy makers said they will offer as much as $1.5
billion of four-week repurchase agreements at its debut auction on Oct.
29.
- European Stocks Tumble to One-Year Low on Crisis Concern. (video) European stocks fell to this year’s low, with the benchmark index posting itslongest
slump in 11 years, as concern grew that a financial crisis is returning
to the region’s so-called peripheral nations. Even so, the Stoxx
Europe 600 Index pared a decline of as much as 2.9 percent after St.
Louis Federal Reserve Bank President James Bullard said the Fed should
consider delaying the end of its bond purchase program. The Stoxx 600 dropped 0.4 percent to 310.03 at the close, falling for an eighth day.
- Iron Ore Outlook Cut by UBS as Market Share Battle Picks Up. Global iron ore suppliers are locked
in a battle for market share as a surplus expands, according to
UBS AG, which cut price forecasts for 2015 and 2016 while
sticking with a call for an end-of-year rally this quarter. The steel-making raw material will average $85 a metric ton
in 2015 and $82 in 2016, analysts including Daniel Morgan said
in a report received today. Previously, the outlook for both
years was an average of about $103 a ton. Iron ore will rally
toward $100 this quarter as mills restock, the bank said.
- Volckerized Wall Street Dumping Bonds With Rest of Herd.
Corporate bond values are swinging the most in more than a year and
here’s one reason why: Wall Street’s biggest banks are following the
crowd and selling, too.Goldman Shares Fall on Bigger Trading Drop Than Rivals.
- Goldman(GS) Shares Fall on Bigger Trading Drop Than Rivals. (video) Goldman Sachs Group Inc. fell as much as 3.4 percent after posting a
bigger decline in trading revenue from the second quarter than
competitors including JPMorgan Chase & Co. The shares slid 1.8
percent to $174.03 at 11:45 a.m. in New York, the fourth-largest drop in
the 85-company Standard & Poor’s 500 Financials Index.
ZeroHedge:
Business Insider:
NBC:
- Obama May Send National Guard to Liberia to Fight Ebola: Sources. President
Barack Obama is expected to issue an executive order Thursday paving
the way for the deployment of National Guard forces to Liberia to help
contain the Ebola outbreak there, sources told NBC News. The sources
said that eight engineers and logistical specialists from the Guard,
both active-duty and reservists, would probably be included in the first
deployment. They are expected to help build 17 Ebola treatment centers,
with 100 beds apiece. Defense Department officials said that the
executive order was necessary to speed the deployments, and would allow
the president to send additional forces as needed.
Reuters:
- BOJ to stand pat even as inflation stalls, global markets tumble -sources.
Even as growth and deflation fears roil global markets and weak data
casts a shadow over Japan's economy, the Bank of Japan appears set to
resist pressure for more stimulus measures or to accept that its
inflation target is unrealistically high. People familiar with its
deliberations said the BOJ, which has failed for two decades to drag
Japan's economy from the grip of no or zero inflation, is preparing to
roughly halve its 1
percent economic growth forecast for this fiscal year, but stand
pat on policy and its prediction that inflation will hit its 2
percent target in the year from next April.
Financial Times:
Format:
- ECB Nowotny Says Expectations of ABS Volumes Exaggerated. "There
were exaggerated ideas about the purchasing volume," ECB Governing
Council member Ewald Nowotny said in an interview. ECB shouldn't
precommit on ABS purchase volumes, "quality is more important than
quantity," Nowotny said.
al-Hayat:
- Saudis Represent 60% of Islamic State Suicide Bombers. 12 out of
21 suicide bombers for Islamic State in Iraq were Saudi citizens, citing
announcements by Islamic State after each bombing since September.
Style Underperformer:
Sector Underperformers:
- 1) Internet -1.31% 2) Software -.72% 3) Steel -.64%
Stocks Falling on Unusual Volume:
- ESPR, NFLX, STO, LPL, BHI, SWN, SIX, XIV, TZOO, WGO, SAP, WAB, AKAM, BUD, TTPH, SYNT, UN, CMCSA, FITB, TWC, TX, SNY, NVS, QLYS, EBAY, SAFM, SIX, NTCT and PPC
Stocks With Unusual Put Option Activity:
- 1) QEP 2) CL 3) MS 4) FLEX 5) ITB
Stocks With Most Negative News Mentions:
- 1) EBAY 2) TSLA 3) STZ 4) BHI 5) FITB
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +2.72% 2) HMOs +2.08% 3) Alt Energy +1.89%
Stocks Rising on Unusual Volume:
- SHPG, CHK, NLNK, BBEP, ETE, LINE, CMRX, TSM, WTI, FCS, ENLK, ICPT, SYRG, LINE, FCS, PAGP, LNCO, VNR, CMRX, PES, ENLC, SXL, LGCY, OKE, QEP, TRGP, CLD, OKS, CQP, MMP, ATLS, ETE, NRP, RES, AREX and EEP
Stocks With Unusual Call Option Activity:
- 1) XLNX 2) APD 3) ESI 4) LLTC 5) CHK
Stocks With Most Positive News Mentions:
- 1) CBS 2) AL 3) VSR 4) SUNE 5) URI
Charts:
Evening Headlines
Bloomberg:
- Russia Can’t Be Blackmailed Over Ukraine, Putin Says. It’s
futile for the U.S. and its
allies to “blackmail” Russia over the Ukraine crisis, President Vladimir
Putin said in a newspaper interview. Russia’s partners should remember
the risks involved in disputes between nuclear powers, Putin said. He
accused Barack Obama of adopting a “hostile” approach in naming Russia
as a threat to the world in the U.S. president’s speech to the United
Nations General Assembly on Sept. 24. “We hope that our partners
will realize the futility of attempts to blackmail Russia and remember
what consequences discord between major nuclear powers could bring for
strategic stability,” Putin told Serbia’s Politika newspaper on the eve
of his visit to the Balkan nation today.
- Obama Confronts Slippery Slope as Islamic State Advances. President
Barack Obama is facing the slippery-slope problem in Iraq and Syria that
he’s sought to avoid, with some advisers concluding that limited
airstrikes are insufficient to break Islamic State’s momentum. As
airpower has failed to dislodge the extremists from the
Syrian border town of Kobani or halt their offensive in Iraq,
Obama’s appeals for strategic patience are being challenged by
some U.S. military and intelligence officers and diplomats who
say more needs to be done.
- Second Ebola Worker’s Flight Adds to Safety Questions. A
second Texas health worker who tested positive for Ebola after caring
for a man killed by the virus in Dallas flew to Cleveland and back
before reporting she had symptoms of the deadly disease. U.S. officials are now tracking 132 others who were on the the Frontier Airlines flight used by the woman.
The flight and the back-to-back caregiver infections, the second of
which was reported this morning, open new questions about oversight
lapses by the Centers for Disease Control and
Prevention and bring new emphasis to criticisms by a nurses’ group about
the safety precautions in use.
- Dallas County Considers Declaring State of Disaster From Ebola. Dallas County Commissioners will vote tomorrow to declare a local state of disaster caused by the
Ebola virus. The county “has the potential to suffer widespread or
severe damage, injury, loss or threat of life resulting from the
Ebola virus,” according to a proposed draft of the declaration.
- EU Starts Two-Week Austerity Scrutiny as Crisis Reawakens. The European Union started a two-week probe of euro-area governments’
draft budgets as a re-emergence of the bloc’s debt-crisis nightmare
risked undoing its
economic recovery. As yields on 10-year securities from Europe’s
most-indebted nations surged yesterday, led by Greece and sweeping up
Portugal, Ireland and Italy, the European Commission started a process
of picking apart nations’ 2015 spending plans, seeking
to defuse potential fiscal timebombs.
- Greek Bailout Exit Plan at Risk Amid Bond, Stock Selloff. Greece’s plan to escape the shackles
of the biggest bailout in history is at risk of falling apart. A monthlong market selloff in stocks and bonds has pushed
yields to a level that investors say threatens once again to cut
Greece off from markets.
- Putin Allies Said Angling to Wrest Paper From WSJ, FT. Businessmen close to President Vladimir Putin are preparing to
acquire Vedomosti, the largest newspaper outside the Kremlin’s control,
three people familiar with the matter said. Putin signed a law
yesterday capping foreign ownership in media at 20 percent, meaning the
Wall Street Journal and the Financial Times, co-founders of the
newspaper, must cut or sell their 33 percent stakes by the end of 2016.
The third owner, Sanoma Oyj (SAA1V), is already in talks to sell its
Russian holdings.
- Brazil Vote in Dead Heat as Neves, Rousseff Tie in Poll. Brazilian opposition candidate Aecio Neves is statistically tied with President Dilma Rousseff 11
days before a runoff election, a Datafolha poll showed today. Neves garnered 45 percent support, compared with 43 percent
for Rousseff in the Oct. 14-15 poll of 9,081 people that has a
margin of error of plus or minus two percentage points. Rousseff
of the Workers’ Party, known as the PT, won 42 percent in the
first round on Oct. 5, compared to 34 percent for Neves of the
Brazilian Social Democracy Party, or PSDB.
- Asian Stocks Head to Six-Month Low; Bonds Rise, Oil Drops. Asian stocks slid toward a six-month low and average bond yields for the biggest developed economies fell to a record on concerns that global growth is at risk. Crude oil extended declines as South Korea’s won led emerging-market currencies higher.
The MSCI Asia Pacific Index sank 1.1 percent by 10:47 a.m.
in Tokyo, as every major Asian benchmark gauge retreated.
- Commodities Sink to Five-Year Low Led by Metals Declines. Commodities dropped to a five-year
low on growing concern that slower economic growth will cool
demand in China, the world’s top consumer of metals, grains and energy. The
Bloomberg Commodity Index (BCOM) of 22 raw materials fell as much as
much as 1.3 percent yesterday to the lowest since July 2009. Copper
futures dropped by the most since March on the Comex, while hog prices
posted the biggest loss in 25 months. Raw materials slumped 7 percent
this year, headed for a fourth annual decline and the longest slump
since at least 1991, amid concern that economic growth is weakening as global equity markets lost $1.5 trillion last week. A stronger dollar has
curbed demand for commodities as alternative assets.
- Dark Pools Said to Rebuff Orders Amid U.S. Volume Surge.
Three of the largest dark pools told
customers to trade elsewhere during at least part of today’s
session as concern about Ebola and global economic growth spurred the busiest day for U.S. stocks in three years. Goldman
Sachs Group Inc. (GS), Credit Suisse Group AG (CSGN) and UBS AG (UBSN)
told some clients to temporarily stop sending orders as volume surged,
according to five people with knowledge of the matter who spoke on
condition of anonymity. The instructions came as the broader market processed 11.9 billion shares, the most since
Oct. 27, 2011, according to data compiled by Bloomberg.
Wall Street Journal:
- Risk of Deflation Feeds Global Fears. Falling Commodities Prices Pressures Central Banks. Behind the spate of market turmoil lurks a worry that top policy
makers thought they had beaten back a few years ago: the specter of
deflation. A general fall in consumer prices emerged as a big
concern after the 2008 financial crisis because it summoned memories of
deep and lingering downturns like the Great Depression and two decades
of lost growth in Japan. The world’s central banks in recent years have
used a variety of...
- New Push to Check Spread of Ebola. Infected Nurse’s Trip on Airplane Raises Concerns. Concerns grew about containing the spread of
Ebola in the U.S. after federal health officials disclosed Wednesday
that the second Texas nurse infected with the virus flew from Dallas to
Cleveland and back in the days before reporting her symptoms. Amber
Joy Vinson, a nurse at Texas Health Presbyterian Hospital Dallas who
provided extensive medical care to a Liberian man with Ebola who died,
shouldn’t have been allowed to travel on a commercial flight, said the
director of the Centers for Disease Control and Prevention,
Tom Frieden.
“She should not have been on that plane,” he told reporters.
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- EBay(EBAY), Wal-Mart(WMT) warnings stir holiday sales concerns. EBay
Inc on
Wednesday joined Wal-Mart Stores Inc in cutting its outlook for the
all-important holiday season, suggesting that the fourth quarter may
turn out to be weaker than some analysts predicted as recently as last
week. The warnings from two of the retail industry's most
influential players comes as investors re-assess the state of the global
economy after weak data this week from the two largest countries, the
United States and China.
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
Evening Recommendations
Night Trading
- Asian equity indices are -1.50% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 128.0 +7.25 basis points.
- Asia Pacific Sovereign CDS Index 73.75 +.5 basis point.
- NASDAQ 100 futures +.21%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 290K versus 287K the prior week.
- Continuing Claims are estimated to fall to 2380K versus 2381K prior.
9:15 am EST
- Industrial Production for September is estimated to rise +.4% versus a -.1% decline in August.
- Capacity Utilization for September is estimated to rise to 79.0% versus 78.8% in August.
- Manufacturing Production for September is estimated to rise +.3% versus a -.4% decline in August.
10:00 am EST
- Philly Fed Business Outlook Index for October is estimated to fall to 19.8 versus 22.5 in September.
- The NAHB Housing Market Index for October is estimated at 59.0 versus 59.0 in September.
4:00 pm EST
- Net Long-Term TIC Flows for August.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Plosser speaking, Fed's Lockhart speaking, Fed's Kocherlakota
speaking, Fed's Bullard speaking, Fed's George speaking, Eurozone Trade
Balance, weekly EIA natural gas inventory report, Bloomberg Economic
Expectations Index for October, weekly Bloomberg Consumer Comfort Index
and (AAPL) iPad event could also impact trading today.
BOTTOM LINE: Asian
indices are mostly 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 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: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 28.68 +26.15%
- Euro/Yen Carry Return Index 141.40 -.07%
- Emerging Markets Currency Volatility(VXY) 8.66 +3.84%
- S&P 500 Implied Correlation 71.57 +10.67%
- ISE Sentiment Index 99.0 +59.68%
- Total Put/Call 1.33 +26.67%
Credit Investor Angst:
- North American Investment Grade CDS Index 75.17 +3.29%
- European Financial Sector CDS Index 74.85 +9.79%
- Western Europe Sovereign Debt CDS Index 30.91 +14.58%
- Asia Pacific Sovereign Debt CDS Index 73.58 +.28%
- Emerging Market CDS Index 290.99 +7.72%
- China Blended Corporate Spread Index 340.95 +3.20%
- 2-Year Swap Spread 27.25 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -10.25 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 178.0 -5.0 basis points
- China Import Iron Ore Spot $82.55/Metric Tonne -1.52%
- Citi US Economic Surprise Index 12.30 -7.1 points
- Citi Eurozone Economic Surprise Index -57.1 +.2 point
- Citi Emerging Markets Economic Surprise Index -23.90 +1.4 points
- 10-Year TIPS Spread 1.85 -7 basis points
Overseas Futures:
- Nikkei Futures: Indicating -401 open in Japan
- DAX Futures: Indicating -21 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
