Style Outperformer:
Sector Outperformers:
- 1) Airlines +2.47% 2) I-Banks +1.95% 3) Steel +1.54%
Stocks Rising on Unusual Volume:
- TRNX, MSG, RGC, RCPT, VDSI, MDCO, BWLD, AMGN, IDTI, CLF, SNCR, SANM, VNDA, ALSN, ALR, MSG, CLDX, CLDX, MTW, WHR, TSLA, ALSN, ALR, ICON, CMI, SAVE, AN and PCYC
Stocks With Unusual Call Option Activity:
- 1) BWLD 2) AMGN 3) MRK 4) COH 5) CNX
Stocks With Most Positive News Mentions:
- 1) SAVE 2) TMUS 3) GMCR 4) BBRY 5) AAPL
Charts:
Evening Headlines
Bloomberg:
- Putin Narrative of Abandoned Ukraine East Fueled by Vote. Vladimir
Putin may have more ammunition to extend his influence over the
Ukraine’s war-torn east after the country’s parliamentary election. A
surge in support for pro-European parties leaves the area, the bedrock
of ousted leader Viktor Yanukovych’s popularity, with less of a say in
the nation’s future. Parties backing President Petro Poroshenko’s bid to steer Ukraine away
from its Soviet past are set to form a coalition, a move that
may make reconciliation in the east more difficult and fuel
complaints from Putin that Russian speakers are being trampled.
- WHO Said to Track 111 People in Mali After Ebola Death. Health
officials in Mali have identified 111 people who came into contact with
the nation’s first Ebola patient last week, according to an internal
World
Health Organization document. Workers have been unable to find at least
40 of those
people who may have been exposed to the toddler, the Geneva-based WHO said in the document, seen by Bloomberg News. The
two-year-old girl contracted the disease in Guinea and died on
Oct. 25 in Mali.
- Asian Stocks Fall Before Fed as U.S. Data Disappoint Investors. Asian
stocks fell, following U.S. shares lower, after American data from home
sales to manufacturing fell short of estimates and investors awaited a
Federal Reserve decision on its stimulus program. The MSCI Asia
Pacific Index (MXAP) dropped 0.1 percent to 138.22 as of 9:02 a.m. in
Tokyo, before markets opened in Hong Kong and
China.
- Oil Drops as Asia Shares Fluctuate With Dollar Before Fed. Oil fell for a third day as U.S.
supplies were estimated to be near a four-month high. Asian
stocks fluctuated and the dollar held losses as investors await a Federal Reserve decision on its stimulus program. West Texas Intermediate oil slid 0.5 percent as of 10:54 a.m. in Tokyo, taking its decline since June to 25 percent.
Wall Street Journal:
- CDC Rejects Mandatory Ebola Quarantines. Federal Officials Push for Voluntary Isolation of Those at High Risk. The Obama administration laid out new guidelines Monday calling for
voluntary isolation and monitoring of travelers exposed to Ebola, to
counter a proliferation of divergent state rules over how to contain the
outbreak.
CNBC:
- Why OPEC's losing its ability to set oil prices. (video) U.S. shale oil will replace the Organization of the Petroleum Exporting
Countries as the first-mover "swing producer," according to a Goldman
Sachs report from the weekend—meaning OPEC is losing its power to set
global prices for crude.
Zero Hedge:
Business Insider:
Washington Times:
- Reinflating the housing bubble. The feds are pushing the same lax rules that triggered the crash.
The headline in newspapers one recent weekend read like an April Fool’s
joke, but it wasn’t April 1. The Obama administration announced it wants
to provide a little more juice to the now-lackluster housing market by
bending the home lending rules to make it easier for banks to make loans
and marginal buyers to take on a mortgage.
Reuters:
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 114.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 67.0 -.75 basis point.
- NASDAQ 100 futures +.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Durable Goods Orders for September are estimated to rise +.5% versus a -18.2% decline in August.
- Durables Ex Transports for September are estimated to rise +.5% versus a +.7% gain in August.
- Cap Goods Orders Non-Defense Ex Air for September are estimated to rise +.7% versus a +.6% gain in August.
9:00 am EST
- The S&P/CS 20 City MoM SA for August is estimated to rise +.18% versus a -.5% decline in July.
10:00 am EST
- Consumer Confidence for October is estimated to rise to 87.0 versus 86.0 in September.
- The Richmond Fed Manufacturing Index for October is estimated to fall to 11.0 versus 14.0 in September.
Upcoming Splits
Other Potential Market Movers
- The
China Industrial Profits report, $29B 2Y T-Note auction, weekly US
retail sales reports, (KR) investor conference and (AMGN) business
review could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and commodity 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: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.40 +1.74%
- Euro/Yen Carry Return Index 142.96 -.05%
- Emerging Markets Currency Volatility(VXY) 7.31 -6.32%
- S&P 500 Implied Correlation 65.17 +1.86%
- ISE Sentiment Index 126.0 unch.
- Total Put/Call .97 +10.23%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.45 +.85%
- European Financial Sector CDS Index 67.58 +.71%
- Western Europe Sovereign Debt CDS Index 32.70 +2.16%
- Asia Pacific Sovereign Debt CDS Index 67.24 -.90%
- Emerging Market CDS Index 259.94 +1.82%
- China Blended Corporate Spread Index 331.86 +.65%
- 2-Year Swap Spread 26.25 unch.
- TED Spread 22.75 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -7.0 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 188.0 -1.0 basis point
- China Import Iron Ore Spot $79.52/Metric Tonne -1.19%
- Citi US Economic Surprise Index 12.0 -5.2 points
- Citi Eurozone Economic Surprise Index -40.50 -3.7 points
- Citi Emerging Markets Economic Surprise Index -17.30 +.3 point
- 10-Year TIPS Spread 1.90 unch.
Overseas Futures:
- Nikkei Futures: Indicating -49 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my tech/retail/biotech sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Rousseff Rout Still Leaving Ibovespa Overvalued to UBS. For
all the stock declines investors
have seen in Brazil under President Dilma Rousseff, her re-election
means there’s more losses in store before equities look attractive to
UBS AG and USAA Investment Management Co. After Brazil entered a
recession this year and inflation soared past the top end of policy
makers’ target, the Ibovespa is trading at a seven-month low of 9.8
times forecast earnings. Stocks won’t be attractive until valuations
fall to about 8 times, according to UBS and USAA. The Ibovespa lost 5
percent today at 11 a.m. in Sao Paulo, poised for the biggest drop since
2011 and leaving the index set to enter a bear market.
- Petrobras Leads Emerging-Market Losses After Rousseff’s Win.
Petroleo Brasileiro SA (PETR4) fell the most in six years as President
Dilma Rousseff’s re-election dashed hopes of repealing price and project
restrictions that have made it the world’s most-indebted oil producer. The
shares tumbled 13 percent to 14.11 reais at 3:13 p.m. in Sao Paulo,
leading losses on the MSCI Emerging Markets Index, which retreated 0.7
percent. Petrobras, as Rio de Janeiro-based Petroleo Brasileiro is
known, now trades at 6.3 times its forecast earnings, the cheapest since
March. “Today’s losses may get worse in the next few days,”
Sandro Fernandes, a trader at brokerage firm Geraldo Correa, said in a
phone interview from Belo Horizonte, Brazil. “Shares may move closer to
12 reais soon.”
- China Fake Invoice Evidence Mounts as HK Figures Diverge. The
gap between China’s reported exports to Hong Kong and the territory’s
imports from the mainland widened in September to the most this year,
suggesting fake export-invoicing is again inflating China’s trade data. China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5
billion difference, based on government data compiled by
Bloomberg. Hong Kong’s imports from China climbed 5.5 percent
from a year earlier to $24.1 billion, figures showed yesterday;
China’s exports to Hong Kong surged 34 percent to $37.6 billion,
according to mainland data on Oct. 13.
- Europe Stocks Drop with Italian Lenders Amid ECB Stimulus.
A slide in Italy’s lenders sent European stocks lower, after their best
weekly jump of the year, as investors weighed stress-test results and
central-bank stimulus measures. The Stoxx Europe 600 Index fell 0.6
percent to 325.1 at the close of trading in London, paring a decline of
as much as 1.1 percent as the European Central Bank said it settled more
than 1.7 billion euros ($2.2 billion) of covered-bond purchases last
week. A gauge of lenders lost 1.7 percent, reversing a gain of 1.4
percent this morning, as Banca Monte dei Paschi di Siena SpA
sank the most since at least 1999.
- Commodities Drop to Five-Year Low Led by Gasoline, Sugar.
Commodities slumped to a five-year low led by gasoline and agriculture
products grown in Brazil on speculation a slump in the country’s
currency will fuel exports. The Bloomberg Commodity Index dropped 0.6 percent at 1:56
p.m. in London after falling to the lowest since July 2009. Raw
sugar futures fell 1.6 percent and soybeans dropped 0.4 percent.
Brazil is the biggest exporter of both commodities.
- Five-Year-Old Boy Being Tested for Ebola in New York; Has Fever, in Isolation. (video)
- IMF Sees Risk of Plunge in GCC Surplus Amid Oil Decline. Gulf Cooperation Council countries
may see their current-account surplus decline by $175 billion
next year if oil prices stay about $80 a barrel, according to
the International Monetary Fund. The projected surplus for the six GCC countries may plunge
from $275 billion to about $100 billion next year, Masood Ahmed,
director of the Middle East and Central Asia department at the
IMF, said in an interview in Dubai. The extended drop in prices
would also “translate into an 8 percent reduction in the fiscal
revenues of the GCC as a whole,” he said.
- Junk Market Stressed by Fed Stress Test as Banks Cut Debt. When the Federal Reserve examines the trading books of the world’s
largest banks, regulators may find surprisingly little exposure to one
risky market: junk bonds. Wall Street’s biggest debt dealers
have been dumping speculative-grade securities at the fastest pace on
record ahead of annual stress tests by the Fed. They reduced their
holdings by 68 percent in the week ended Oct. 15 as the market posted
losses of 1.5 percent that week alone, according to data released by the
Fed last week.
Wall Street Journal:
- Tesla(TSLA) Unveils Lower-Cost Lease Program.
Electric-Car Maker Looks to Lift Sagging U.S. Sales Through New
Incentives. Tesla Motors Inc. is offering sales incentives on its
$71,000 and up Model S electric sedan, promising to lower the lease
price of the sedan by 25% and to give buyers 90 days to return a vehicle
if they are unhappy with it. The move comes amid a sales decline in the U.S. for the Palo
Alto, Calif.-based Tesla. The auto maker sold 10,335 Model S sedans
through September, down 26% from the first nine months in 2014,
according to WardsAuto.com, an industry publication that closely tracks
sales and production.
- UBS Executive: Sanctions Pain on Russia Has Only Just Begun. There’s been little progress resolving the Ukraine crisis, and Russia’s
pain from sanctions could be just beginning. Russian President
Vladimir Putin and Western leaders are trading blame over continued
bloodshed in Eastern Ukraine. And German Chancellor Angela Merkel said
Friday that sanctions against Russia would stay in place.
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
Market Business News:
- German business sentiment plunges to 2 year low, says Ifo Institute.
Business sentiment in Germany hit a nearly two-year low after sliding
for six consecutive months. The prestigious Munich-based think tank, the
Ifo Institute, reported on Monday that its Ifo Business Climate Index for industry and trade in Germany slid in October to 103.2 points, compared to 104.7 in September.
The news put a dampener on the initial surge in European bank share
prices on Monday following Sunday’s publication of the ECB and EBA
stress test results. Not only did expectations of the current business situation in the
country fall, but predictions for the next six months turned more
negative too. “The outlook for the German economy deteriorated once
again,” Ifo wrote.
Channel News Asia:
Style Underperformer:
Sector Underperformers:
- 1) Steel -4.01% 2) Oil Service -3.70% 3) Oil Tankers -3.43%
Stocks Falling on Unusual Volume:
- TSLA, AKBA, SRPT, VNDA, TEN, PBR, HLSS, CVTI, LYB, ITUB, JONE, CVLT, BBD, SODA, BYI, ASPS, CPL, FTK, BLUE, WLK, SNY, B, FI, SLB, OXY, SN, OXY, WTW, FET, NOG and MXWL
Stocks With Unusual Put Option Activity:
- 1) TGT 2) COH 3) M 4) BWLD 5) TWTR
Stocks With Most Negative News Mentions:
- 1) TSLA 2) SRPT 3) BAC 4) HAL 5) PTEN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +.38% 2) Computer Hardware +.33% 3) Restaurants +.28%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) RMD 2) SRPT 3) SGMS 4) GME 5) MRK
Stocks With Most Positive News Mentions:
- 1) WMB 2) T 3) STX 4) GOOG 5) RGLS
Charts:
