Broad Equity Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 16.63 -10.45%
- Euro/Yen Carry Return Index 141.97 -.71%
- Emerging Markets Currency Volatility(VXY) 8.27 -4.50%
- S&P 500 Implied Correlation 61.13 -7.45%
- ISE Sentiment Index 94.0 -31.39%
- Total Put/Call 1.01 +16.09%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.88 -4.96%
- European Financial Sector CDS Index 70.17 -7.35%
- Western Europe Sovereign Debt CDS Index 33.30 -4.30%
- Asia Pacific Sovereign Debt CDS Index 68.36 -6.77%
- Emerging Market CDS Index 262.02 -.20%
- China Blended Corporate Spread Index 344.71 unch.
- 2-Year Swap Spread 25.5 -.75 basis point
- TED Spread 22.75 +2.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -8.25 +1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 186.0 +3.0 basis points
- China Import Iron Ore Spot $81.83/Metric Tonne +.28%
- Citi US Economic Surprise Index 20.80 -.4 point
- Citi Eurozone Economic Surprise Index -54.7 -.6 point
- Citi Emerging Markets Economic Surprise Index -20.60 +1.0 point
- 10-Year TIPS Spread 1.91 unch.
Overseas Futures:
- Nikkei Futures: Indicating +259 open in Japan
- DAX Futures: Indicating +13 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech/retail/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Rwanda Worries About Ebola From U.S., Spain. An Ebola-free nation seeking to prevent the spread of the virus said
today it would require arrivals from two countries with known cases to report to authorities every day for three weeks.
The country doing the requiring: Rwanda. The countries whose visitors
face the reporting requirement: Spain and the U.S., some of whose
embassy personnel are affected.
- Russia, Ukraine Seek Interim Gas Accord at Brussels Talks. Russia is optimistic about setting out a temporary agreement to help
resolve a natural gas pricing dispute with Ukraine at talks today,
according to Energy Minister Alexander Novak. “Expectations are positive,” Novak told reporters today in Brussels,
according to the Russian energy minister’s press service. Russia
expects to “formalize” issues agreed on in Italy last week, he said
before a meeting with Ukrainian Energy Minister Yuri Prodan, brokered by
European Union Energy Commissioner Guenther Oettinger.
- European Stocks Rise as Actelion, Swedbank Earnings Beat. European stocks advanced after companies including Actelion Ltd. and Swedbank AB posted better-than-estimated earnings, while the European Central Bank was said to have bought Italian covered bonds. Actelion added 3 percent after increasing its full-year prediction for a second time.
Swedbank rose 4.7 percent after announcing job cuts and posting net
income that beat estimates. Reckitt Benckiser Group Plc lost 2.1 percent
after saying full-year sales growth will be at the lower end of its
forecast. The Stoxx Europe 600 Index climbed 2.1 percent to 323.74 at the close of trading.
- Bears Target Tech Rebound Amid $8.3 Billion ETF Outlow. Traders are betting a recovery in
technology stocks will fizzle on concern global economic growth
fails to justify valuations. While the Nasdaq 100 Index climbed 2.8 percent in two days,
after reaching a four-month low, the rebound followed six weeks
in which investors pulled $8.26 billion from an exchange-traded fund tracking companies from Google Inc. to EBay Inc. Bearish options on the ETF cost the most in more than two years relative to bullish bets,
data compiled by Bloomberg show. Nasdaq 100 stocks traded at the
highest prices relative to earnings since March 2010 last month. That,
plus concern that a stronger dollar will lower revenue for U.S.
companies, makes technology shares more vulnerable to a selloff,
according to Notz, Stucki & Cie.’s Pierre Mouton, who is
reducing holdings of Microsoft Corp. and Intel Corp.
Wall Street Journal:
ZeroHedge:
Business Insider:
CNN:
Reuters:
- China may let local govts replace current debt with muni bonds - sources. A
draft document circulated by China's Ministry of Finance on local
government debt proposes letting them issue bonds to replace borrowings
taken through opaque financing vehicles, according to people who have seen the
draft. If such issuance were to be allowed, it could require a
massive expansion of the country's fledgling municipal bond
market.
Style Underperformer:
Sector Underperformers:
- 1) Computer Services -1.70% 2) Restaurants -1.01% 3) Utilities +.12%
Stocks Falling on Unusual Volume:
- TLLP, QEPM, SUSP, OCN, NSM, ASPS, RCII, IBM, CMG, ARMH, XRS, GPK, EAT, OMER, ESI, KALU, KO, RESI, GLF, CAKE, ENTA, HLSS, RMBS, AMAG, LMT, ABG and LL
Stocks With Unusual Put Option Activity:
- 1) IP 2) AMTD 3) OCN 4) IBM 5) CMG
Stocks With Most Negative News Mentions:
- 1) ESI 2) QEP 3) RCII 4) LL 5) RNO
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +2.81% 2) Hospitals +2.59% 3) HMOs +2.36%
Stocks Rising on Unusual Volume:
- LXK, WAT, HOG, PKG, ILMN, TRN, RCL, HLX, SAVE, AAL, MTZ, KS, CE, EWBC, CCL, LUV, SNV, UAL, HUN, MYGN and SNDK
Stocks With Unusual Call Option Activity:
- 1) CCI 2) TWC 3) CL 4) OREX 5) JBLU
Stocks With Most Positive News Mentions:
- 1) OMC 2) AAPL 3) WAT 4) A 5) YHOO
Charts:
Evening Headlines
Bloomberg:
- Ukraine Fighting Batters Truce Before Gas Talks Begin. Fighting shook the east of Ukraine a
day before its government begins three-way talks with Russian
and European Union officials in Brussels to negotiate the
resumption of natural-gas deliveries which were halted in June. The cease-fire in Ukraine’s easternmost regions, sealed
Sept. 5, was broken several times during the past 24 hours, with
two soldiers and 14 rebels killed, the military said yesterday.
Ukraine’s state energy company NAK Naftogaz Ukrainy said the
government in Kiev and the European Commission reached a
“consensus” before the talks today. German Chancellor Angela Merkel said
she wants the gas deal clinched and that a bridge loan for Ukraine may
be needed to end the spat.
- CDC Urges Stricter Ebola Protections for Health Workers. Health workers caring for Ebola patients shouldn’t have any skin
exposed, must undergo rigorous training and be supervised by a qualified
monitor, the Centers for Disease Control and Prevention said. Separately,
the agency also is revising its recommendations about how to track the
health of people who have been exposed to the Ebola virus and when they
should be allowed to travel to prevent the spread of the disease.
- RBA Says Aussie Still High as Period of Rate Stability Repeated. Australia’s
central bank repeated that the nation’s currency is still too strong to
help rebalance the economy and discussed the need for banks to maintain
high lending standards. The RBA noted that while the currency had
declined against the U.S. dollar, it remained around levels seen earlier
in the year. The bank said borrowing costs have fallen further as
competition increased and “members discussed the importance of
lenders maintaining strong lending standards.”
- Asia Stocks Fall as Investors Weigh Earning Before Data.
Asian stocks fell, paring gains after yesterday rising the most in two
years, as investors awaited a slew of Chinese economic data and weighed
U.S. corporate earnings. The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 136.49 as of 10:06 a.m. in Tokyo.
Wall Street Journal:
- Ebola Study Projects Spread of Virus. Up to 3 Infected People Could Fly Overseas Every Month From Most-Affected African Nations. Up to three Ebola-infected people could embark on overseas flights
every month from the three most-affected African countries, according to
a new study that projected travel patterns based on infection rates and
recent flight schedules. The findings, published Monday in the
journal Lancet, suggest that Ebola cases could be spread overseas by
unwitting travelers from the worst-hit countries—Guinea, Liberia and
Sierra Leone.
- SEC Is Steering More Trials to Judges It Appoints. Unpublished Figures Show ‘Win’ Rate for Cases Heard by Administrative Law Judges. The Securities and Exchange Commission is increasingly steering
cases to hearings in front of the agency’s appointed administrative
judges, who found in its favor in every verdict for the 12 months
through September, rather than taking them to federal court. The
winning streak comes amid a marked shift at the agency toward trying
cases that are more complex before its administrative law judges.
Historically, the SEC had more often turned to these judges for
relatively straightforward legal actions, such as barring...
- Fed to Banks: Shape Up or Risk Breakup. Closed-Door Event Included Executives, Law-Enforcement Officials. Federal Reserve officials sent a warning shot across Wall Street on
Monday, telling bank executives they must do more to curb excessive
risk-taking and improve employee behavior at their firms or face stiff
repercussions, including being broken into smaller pieces.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
China Business News:
- China May Set Lower GDP Growth Target for 2015. Improvement in
employment outlook provides room for China to set a lower GDP growth
target for next year, citing people close to authorities. China may set a
lower target to achieve long-term growth, the report says.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 118.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 73.25 -.5 basis point.
- NASDAQ 100 futures -.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Existing Home Sales for September are estimated to rise to 5.1M versus 5.05M in August.
Upcoming Splits
Other Potential Market Movers
- The Australian CPI, (UNFI) analyst day and weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly 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 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 19.03 -13.46%
- Euro/Yen Carry Return Index 142.96 +.41%
- Emerging Markets Currency Volatility(VXY) 8.58 +1.18%
- S&P 500 Implied Correlation 65.97 -3.48%
- ISE Sentiment Index 112.0 +12.74%
- Total Put/Call .86 -27.73%
Credit Investor Angst:
- North American Investment Grade CDS Index 70.20 -.27%
- European Financial Sector CDS Index 75.50 +2.97%
- Western Europe Sovereign Debt CDS Index 34.80 +3.40%
- Asia Pacific Sovereign Debt CDS Index 73.32 -.66%
- Emerging Market CDS Index 263.20 +.55%
- China Blended Corporate Spread Index 344.71 -2.58%
- 2-Year Swap Spread 26.25 unch.
- TED Spread 20.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% -1.0 basis point
- China Import Iron Ore Spot $81.60/Metric Tonne +.97%
- Citi US Economic Surprise Index 21.20 +.6 point
- Citi Eurozone Economic Surprise Index -54.1 unch.
- Citi Emerging Markets Economic Surprise Index -21.60 -.6 point
- 10-Year TIPS Spread 1.91 -2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +69 open in Japan
- DAX Futures: Indicating +25 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech/retail/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
