Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 17.78 +10.57%
- Euro/Yen Carry Return Index 141.55 -.37%
- Emerging Markets Currency Volatility(VXY) 8.14 -1.33%
- S&P 500 Implied Correlation 66.16 +11.49%
- ISE Sentiment Index 76.0 -17.39%
- Total Put/Call 1.10 +5.77%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.94 +1.34%
- European Financial Sector CDS Index 68.79 -2.65%
- Western Europe Sovereign Debt CDS Index 32.39 -2.45%
- Asia Pacific Sovereign Debt CDS Index 67.44 -1.35%
- Emerging Market CDS Index 261.35 +.18%
- China Blended Corporate Spread Index 336.32 -1.62%
- 2-Year Swap Spread 25.25 -.25 basis point
- TED Spread 21.75 -1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -8.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- China Import Iron Ore Spot $81.83/Metric Tonne unch.
- Citi US Economic Surprise Index 19.90 -.9 point
- Citi Eurozone Economic Surprise Index -53.5 +1.2 points
- Citi Emerging Markets Economic Surprise Index -19.60 +1.0 point
- 10-Year TIPS Spread 1.91 unch.
Overseas Futures:
- Nikkei Futures: Indicating -20 open in Japan
- DAX Futures: Indicating -61 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Ottawa Police Search for Suspects After Attack at Parliament. (video)
Police are searching for at least two people after a gunman and a
soldier were killed in Canada’s capital. The attack two days after the
murder of a soldier by a “radicalized” man near Montreal raised
terrorism concerns nationwide. Downtown
Ottawa remains in lockdown as police investigate “multiple suspects.”
A
member of the Canadian Forces shot at the nation’s war memorial has
died of his injuries, and security officials killed a gunman inside the
main parliament building, Ottawa police said in a statement. “We’re
looking at multiple suspects,” Constable Chuck Benoit, spokesman for the
Ottawa Police Service, said by phone. Police have been dispatched to
several locations around the city, including a nearby shopping mall, to
track two to three suspects, whose descriptions they have from
intelligence reports, Benoit said. “The situation is live and in
progress,” said Sherley Goodgie, spokeswoman for the Royal Canadian
Mounted Police, which is collaborating with local police.
- Russian Central Bank to Weigh Higher Rates on Inflation. Russia’s central bank, grappling with the fastest price growth in three years, may “seriously” weigh raising borrowing costs if inflation expectations remain
high, according to First Deputy Chairman Sergei Shvetsov. “With the scenario unfolding now, the Bank of Russia will
be forced to seriously consider raising interest rates
further,” Shvetsov said today at a conference in London.
- Deutsche Bank at Risk in ECB’s Stress Test, Analysts Say. Deutsche
Bank AG (DBK), Germany’s largest lender, is at risk of failing the
European Central Bank’s stress test based on its financial standing
before it sold shares to raise capital this year, analysts said. The
8.5 billion euro ($10.8 billion) share sale in the second quarter is
probably enough to cover any capital shortfall identified in the test,
based on the bank’s 2013 accounts, according to analysts at Bankhaus
Lampe and Bankhaus Metzler.
- Russia Stocks Retreat as Energy to Bank Shares Drop on Ukraine. The Micex Index (INDEXCF) fell as Ukraine said
Russia continues to supply arms to rebels in the east of the
country, rekindling tension between the two nations. A column of military equipment and personnel entered the
rebel-held area of Ukraine from Russia yesterday, a Ukrainian
military spokesman said in Kiev today.
- European Stocks Advance for a Second Day as ABB Gains.
European stocks advanced, posting their biggest two-day rally in almost
16 months, as speculation the European Central Bank will boost stimulus
outweighed some worse-than-estimated earnings reports. The Stoxx Europe 600 Index gained 0.7 percent to 326.11 at
the close, after earlier falling 0.5 percent.
- CDC Will Watch Ebola Country Travelers for 21 Days. Health
officials will monitor people arriving in the U.S. from Liberia, Sierra
Leone and Guinea for Ebola for 21 days, as the disease outbreak remains
“persistent and widespread” in the West African countries. The
Centers for Disease Control and Prevention will ask people whose travel
originates in the three countries to give their name and contact
information, and U.S. states will follow up with personal monitoring to
check for any symptoms of the virus, CDC Director Thomas Frieden said
today.
CNBC:
ZeroHedge:
Business Insider:
forexlive:
Reuters:
- ECB has no concrete proposal to buy corporate bonds - Coene. The European Central
Bank has no concrete plans to buy corporate bonds, but this could be a
way to prevent the bank from paying too much for just covered bonds and
asset backed securities, ECB governing council member Luc Coene told
Belgian media.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -2.34% 2) Alt Energy -2.01% 3) Road & Rail -1.43%
Stocks Falling on Unusual Volume:
- SUSP, LPLA, BTI, VMW, OCN, BIIB, LL, CREE, TUP, DDD, MDCO, R, ASPS, TMO, PII, BGS, HLSS, DFS, SLGN, BA, BNS, PPC, IBM, WRLD, ISRG, RESI, NTRS and MKTX
Stocks With Unusual Put Option Activity:
- 1) KRE 2) LL 3) BIIB 4) CBS 5) AKAM
Stocks With Most Negative News Mentions:
- 1) DDD 2) LL 3) TUP 4) CSCO 5) CREE
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Computer Hardware +.94% 2) Utilities +.85% 3) Defense +.84%
Stocks Rising on Unusual Volume:
- RGLS, IRBT, SIX, UIS, SMCI, RHI, BRCM, HA, YHOO, OC, GNTX, RMBS and GPK
Stocks With Unusual Call Option Activity:
- 1) FTNT 2) LL 3) EXPR 4) UUP 5) OCN
Stocks With Most Positive News Mentions:
- 1) YHOO 2) CLF 3) UIS 4) IRBT 5) DOW
Charts:
Evening Headlines
Bloomberg:
- Global Economic Recovery Remains Difficult. China Vice
Premier Zhang Gaoli warns downside risks of global recovery at a speech
at the finance minister meeting of APEC in Beijing. China's economic
growth is within a reasonable range in the first three quarters, Zhang
said.
- BHP(BHP) First-Quarter Iron Ore Output Rises 17% Amid Surplus. BHP Billiton Ltd. (BHP), the world’s
biggest mining company, said first-quarter iron ore output rose
17 percent as it continues to expand production in the face of
tumbling prices. Production of the steelmaking material was 57.1 million
metric tons in the three months ended Sept. 30, from 49 million
tons a year earlier, Melbourne-based BHP said today in a
statement. That was in line with the 56.5 million ton median
estimate of five analysts surveyed by Bloomberg.
- Asia Stocks Extend Global Rebound as Bond Risk Drops.
Asian stocks rose, extending a global equity rebound, and credit risk
fell to a three-week low amid speculation Europe will expand its
economic stimulus. Australian bonds pared a decline after inflation
slowed more than estimated. The MSCI Asia Pacific Index climbed 0.8
percent by 10:48 a.m. in Tokyo, as Japan’s Topix index added 1.6 percent
and the Hang Seng Index increased 0.5 percent.
- Fed Can Back Up Tough Talk on Bank Behavior With Action. The Federal Reserve has plenty of
power to follow through on regulatory threats made yesterday to
top bank executives aimed at curbing misbehavior on Wall Street,
even if it can’t order firms to break up. “The Fed has a powerful bully pulpit that should not be
underestimated,” Mike Mayo, an analyst at CLSA Ltd. in New
York, said. “It has the authority to approve or disapprove the
ability of banks to return capital to shareholders.”
- Loan Market Losing on All Fronts as CLO Rule Change Looms. The
$800 billion U.S. leveraged-loan market is losing mutual-fund investors
just as it’s about to need them more than ever. Regulators
are approving new rules this week making it more expensive to create
funds that are the biggest source of demand for the below
investment-grade debt: collateralized loan obligations. Managers of the
funds will be required to retain 5 percent of the debt they package or
sell, or banks underwriting CLOs will have to hang on to a piece.
Wall Street Journal:
- Global Growth Woes Threaten to Beset U.S. Economy. Five-Year Recovery Faces Latest Test of Resiliency as External Shocks Mount. The specter of deflation in Europe and a slowdown in China and other
emerging markets are threatening to hobble the U.S. economy at a time
when the world could use a reliable growth engine.
Fox News:
- Pakistani court upholds death sentence for Christian woman accused of insulting Islam.
Asia Bibi was harvesting berries in Pakistan five years ago when she
took the drink of water that could cost her her life. A Christian in the
Muslim-dominated and increasingly intolerant
nation, the mother of five was quickly assailed by the other women
working the field in a tiny village in the Punjab province. First they
said they would not drink from the same water bucket as a Christian.
Later, they told police Bibi had insulted the Muslim Prophet Mohammad.
The crime, blasphemy, is punishable by death.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- VMware(VMW) forecasts weak 4th-qtr revenue, shares fall. Software maker VMware Inc forecast current-quarter revenue largely below Wall Street's estimates due to a delay in the closing of a large U.S. government deal and lower bookings in Germany, Russia and Japan
in the third quarter. The company's shares fell as much as 6 percent in
after-market trade on Tuesday.
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
Financial Times:
- Russia slaps conditions on Ukraine gas deal. Russia has raised further conditions for resuming gas supplies to
Ukraine, dashing hopes that a deal to safeguard Europe’s energy supply
this winter would be agreed on Tuesday.
China Securities Journal:
- China Shouldn't Be Scared of Slowing Growth. China has taken
measures to prevent systemic risks including initiatives on the local
govt debt problem, according to a front-page commentary written by
reporter Gu Xin.
Evening Recommendations
Night Trading
- Asian equity indices are +.75% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 113.50 -4.5 basis points.
- Asia Pacific Sovereign CDS Index 68.25 -5.0 basis points.
- NASDAQ 100 futures -.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The CPI for September is estimated unch. versus a -.2% decline in August.
- The CPI Ex Food & Energy for September is estimated to rise +.1% versus unch. in August.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+2,800,000 barrels versus a +8,923,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -1,560,000 barrels versus a
-3,995,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -1,110,000 barrels versus a -1,518,000 barrel
decline the prior week. Finally, Refinery Utilization is estimated to
fall by -.01% versus a -1.2% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The BoE Minutes and the weekly MBA Mortgage Applications report could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
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
