Bull Radar

Style Outperformer:

• Small-Cap Growth +2.38%

Sector Outperformers:

• 1) Networking +3.51% 2) Road & Rail +3.35% 3) Biotech +2.83%
  

Stocks Rising on Unusual Volume:

• BRP, RGLS, INFN, SCSS, TSCO, FTK, LOGI, CQB, DAN, LTM, NOW, CLGX, MKTO, AMAG, CVE, KMX, UFS, LCI, CRS, PLCM, AMAG, WTW, ORLY, PH, ALXN, MDP, MMM, CELG, LRCX, LEG, WCC, EPAM, CREE, CAT, ALK and RLGY

Stocks With Unusual Call Option Activity:

• 1) INFN 2) NEE 3) ALIM 4) YELP 5) DWA

Stocks With Most Positive News Mentions:

• 1) JAH  2) CAT 3) CVX 4) MMM 5) LMT
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg:

• Ottawa Attacks Shatter Canadian Innocence. The shooting spree that paralyzed Canada’s capital today may change the self-image of a country that’s long prided itself on avoiding the violence more commonly associated with its southern neighbor. The fatal attack on a soldier this morning prompted a frenzied evacuation of Prime Minister Stephen Harper and a lockdown of public buildings. Civil servants and tourists described chaotic scenes as police swarmed to locate the assailant, or assailants -- one of whom was shot and killed by police inside Parliament.

• Saudis at War With Islamic State Confront Echo of Kingdom’s Past. When Saudi rulers send warplanes on missions against Islamic State, they’re targeting a group whose theocratic ideology and roots in desert warfare overlap at least partly with the kingdom’s own present and past. The world’s largest oil exporter has evolved into a mostly urban society in its eight decades of statehood, yet nomadic fighters erupting from the desert in a blaze of religious zeal are still part of its foundation narrative. Today in Saudi Arabia, as in the territory controlled by Islamic State in Syria and Iraq, women must wear black abayas, shops all close during prayer times, religious police enforce Islamic laws and criminals face violent punishment. 

• Weak Yen’s Tap on Worker Wallets Fuels Debate: Chart of the Day. A 26 percent depreciation of the yen versus the dollar in the past two years has boosted Japanese companies’ profits while hurting workers’ purchasing power, intensifying debate among officials on policies to increase inflation.

• H.K. Protesters Draw Attacks From China and Local Support. China’s media is ratcheting up the rhetoric against Hong Kong’s pro-democracy movement, saying protesters risk becoming foreign puppets, at the same time a poll showed the demonstrations have gained support in the city. In an editorial yesterday in the English-language daily Global Times, the paper linked the protests to other movements that China deems hostile to the Chinese Communist Party’s authority.

• Asian Stocks Follow U.S. Retreat as Oil Drops; Kiwi Falls. Asian stocks dropped, with the regional index falling from a two-week high after U.S. equities halted their rally. Oil maintained declines while New Zealand’s dollar weakened after inflation slowed more than estimated. The MSCI Asia Pacific Index lost 0.5 percent by 9:58 a.m. in Tokyo, after climbing to the highest close since Oct. 9 yesterday.

• Corn and Soybeans Decline as U.S. Harvest Accelerates. Corn futures dropped from the highest price in seven weeks as dry weather aids farmers harvesting the biggest crop ever in the U.S., the world’s largest grower. Soybeans also fell, while wheat gained. Conditions in the southern and eastern Midwest are improving after rains caused delays in fieldwork, according to Gaithersburg, Maryland-based MDA Weather Services. Thirty-one percent of the corn crop was collected as of Oct. 19, trailing the five-year average of 53 percent, according to the U.S. Department of Agriculture.

• Late Subprime Auto-Loan Payments Cause for Vigilance, Citi Says. Late payments on auto loans to borrowers with spotty credit have increased at a "disproportionate" pace, rising to higher levels than before the financial crisis, according to Citigroup Inc. The delinquency rate for such debt that has been packaged into bonds rose about 15% from a year earlier to 3.8% in August, Citigroup analysts led by Mary Kane said yesterday in a report. Borrowers are falling behind with sales of asset-backed securities tied to subprime auto loans surging as six years of near-zero interest rates pushes investors toward riskier assets. Concern is mounting that looser underwriting standards may lead to higher losses for bondholders.
  
  Late payments on auto loans to borrowers with spotty credit have increased at a "disproportionate" pace, rising to higher levels than before the financial crisis, according to Citigroup Inc.
  
  The delinquency rate for such debt that has been packaged into bonds rose about 15 percent from a year earlier to 3.8 percent in August, Citigroup analysts led by Mary Kane said yesterday in a report. By contrast, 0.4 percent of borrowers with good credit are behind on payments.
  
  Payments more than 60 days overdue averaged 3.3 percent in the 12 months ended in August, Citigroup said. Borrowers are falling behind with sales of asset-backed securities tied to subprime auto loans surging as six years of near-zero interest rates pushes investors toward riskier assets. Concern is mounting that looser underwriting standards may lead to higher losses for bondholders.
  - See more at: http://www.northjersey.com/news/business/late-subprime-auto-loan-payments-cause-for-vigilance-citi-says-1.1114865#sthash.1GWqrX4o.dpuf

• Fed’s Loan Scrutiny Leaves Banks Passing on Buyout Deals. Heightened U.S. regulatory scrutiny of leveraged lending is leading the biggest banks to back away from funding some takeovers financed by debt, creating an opportunity for smaller competitors to step in. JPMorgan Chase & Co., Bank of America Corp., Credit Suisse Group AG, Deutsche Bank AG, Barclays Plc and Morgan Stanley are among banks that have passed on the opportunity to fund deals the past few months, according to people with knowledge of the matter who asked not to be identified because they weren’t authorized to speak publicly. 

• For $100,000, You Can Clone Your Dog.

Wall Street Journal:

• Clouds Darken for America’s Blue-Chip Stocks. Coke, IBM, Others Find Once-Reliable Formulas Leave Them Too Big to Change Direction Quickly. The approach was time-tested and hard to beat: Put your money in blue chips, decades-old companies that could be counted on to perform through thick and thin.

• Hedge Funds Add to Venture-Capital Bounty. Maverick Capital Plans to Start VC Fund on Jan. 1.

• ObamaCare Returns as an Election Albatross. Policy cancellations and price increases are occurring just in time for Election Day. Democrats assumed earlier this year that ObamaCare would be a political advantage by Election Day. North Carolina Sen. Kay Hagan, for example, said in February she wanted to show the Affordable Care Act “is something whose time is come.” A month later Colorado Sen. Mark Udall said “we did the right thing” in passing the law and told voters he “would do it again,” a response echoed by incumbents Mark Pryor (Arkansas) and Mary Landrieu (Louisiana).

Fox News:

• Canadian officials identify shooter in brazen attack on Parliament complex. Canadian authorities late Wednesday identified the shooter in a brazen attack on the Parliament complex in Ottawa that left a soldier dead as Michael Zehaf-Bibeau, 32, Fox News has confirmed. The shooting, which triggered a lockdown of the nation's capital, came just two days after a terror attack in Quebec.

CNBC:

• Ebola hits Texas hospital in the pocketbook. The Texas hospital that has been ground zero for a mini-outbreak of Ebola in the U.S. has seen steep drops in patients and revenue on the heels of the crisis.

Zero Hedge:

• Ottawa Shooter Idenfitied As Canadian National Michael Zehaf Bibeau, Whose Passport Was Recently Seized.

• Goldman(GS) Explains 'The Road To Recovery' In 1 Simple Chart.

• How The Federal Reserve Is Purposely Attacking Savers.

• Mapping China's Bursting Real Estate Bubble.

• The "China-And-Japan-PMI-Beat-So-Things-Must-Be-OK" Meme In 2 Simple Charts. (graph)

• It Will Take 398,879,561 Years To Pay Off The US Government's Debt.

• Central Banker Admits Central Bank Policy Leads To Wealth Inequality.

Business Insider: 

• YELP(YELP) SHARES CRASH.

• The US Economy Needs Some Improvement Soon To Avoid Rolling Over.

• Insurance Companies Have Started Writing 'Ebola Exclusions' Into Policies.

• AT&T(T) Shares Down 3% After Earnings Miss.

• ISIS Is Alarmingly Effective At Recruiting American Teen.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 118.0 +4.5 basis points.

• Asia Pacific Sovereign CDS Index 67.75 -.5 basis point.

• FTSE-100 futures -.64%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures  -.14%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PCP)/3.32

• (LUV)/./53

• (LLY)/.67

• (PTEN)/.47

• (DO)/.79

• (CRI)/1.24

• (ALXN)/1.16

• (PHM)/.36

• (DGX)/1.08

• (CELG)/.95

• (GM)/.95

• (AAL)/1.63

• (CAB)/.86

• (DPS)/.88

• (UNP)/1.51

• (RCL)/2.19

• (RYL)/.80

• (CMCSA)/.71

• (UA)/.40

• (RTN)/1.60

• (ZMH)/1.30

• (MMM)/1.96

• (CAT)/1.34

• (NUE)/.75

• (KLAC)/.46

• (ALTR)/.37

• (JNPR)/.36

• (MSFT)/.55

• (CERN)/.42

• (CB)/1.95

• (MXIM)/.37

• (AMZN)-.75

• (DECK)/1.03

Economic Releases
8:30 am EST

• The Chicago Fed National Activity Index for September is estimated to rise to .15 versus -.21 in August.

• Initial Jobless Claims are estimated to rise to 281K versus 264K the prior week.

• Continuing Claims are estimated to fall to 2380K versus 2389K prior.

9:00 am EST

• The FHFA House Price Index for August is estimated to rise +.3% versus a +.1% gain in July.

9:45 am EST

• Preliminary Markit US Manufacturing PMI for October is estimated to fall to 57.0 versus 57.5 in September.

10:00 am EST

• The Leading Index for September is estimated to rise +.7% versus a +.2% gain in August.

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for October is estimated at 6.0 versus 6.0 in September.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Eurozone Services PMI report, China home price report, weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index 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 25% net long heading into the day.

Stocks Reversing Lower into Final Hour on Terrorism Fears, Global Growth Worries, Technical Selling, Transport/Commodity Sector Weakness

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%

• NYSE Arms 1.52 +65.08% 

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

• Yield Curve 186.0 unch.

• 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

Today's Headlines

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. 

• China Swap Rate Rises Most in 10 Weeks as Loosening Bets Pared. China’s interest-rate swaps rose the most in 10 weeks on speculation economic data that beat estimates reduces the chance of a cut in borrowing costs.

• 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.

• Sorry, Obamacare Is Still Unfixable by Ramesh Ponnuru.

• BofA(BAC) Customers Double-Charged in Apple(AAPL) Pay Snafu. Hundreds of Bank of America Corp. credit- and debit-card customers were mistakenly charged twice for purchases made using Apple Inc.’s new mobile-payment system, according to a person familiar with the matter. 

CNBC:

• Kyle Bass warns QE end will shake up markets. (video)

• Looks like Tepper's not 'too frickin' long' again. (video)

ZeroHedge:

• Canadian Capital On Lock Down As A Result Of Ongoing "Terrorist" Shooting Incident - Live Webcast.

• Chain Store Sales Growth Worst Since 2010 (Or Why "The Fed Turned The Market Around"). (graph)

• Harley Bassman: "The Fed Is Trying To Land A Jumbo Jet On A Football Field".

• Someone Didn't Do The Math On The ECB's Corporate Bond Purchasing "Trial Balloon". (graph)

• The Recent Liquidation Avalanche As Explained By Dan Loeb, And Why He Is Back To Shorting Stocks Again.

• Real Hourly Wages Drop In September, Fail To Rise In 6 Of Past 7 Months. (graph)

• CPI Prints Smallest Possible Increase In September Even As Beef Prices Surge 17% In 2014. (graph)

Business Insider: 

• Oil Is Taking A Drubbing Again.

• Intense Video Shows Shots Being Fired Inside Canadian Parliament.

• REPORT: ISIS Is Using Chemical Weapons At Kobane.

forexlive:

• ECB’s Nowotny say there’s been no decision on ECB corporate bond buying. Corp bonds is one of the markets that are still an option to grow balance sheet. Open questions remain on program. There has been no discussion and no decision in the governing council. ECB shouldn’t be too activist on monetary policy.

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:

• The EU is already dying on its feet. Why help it along? The way things are going, Europe will fracture long before its vision of a 'United States' is ever realised.

• Eight charts showing where it all went wrong for France. From chronic unemployment, to the mess in its public finances, here are the numbers illustrating how France became the "sick man" of Europe.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.84%

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:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value +.17%

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:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume