Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -3.70% 2) Homebuilders -.91% 3) Restaurants -.31%
Stocks Falling on Unusual Volume:
- AMBR, RM, AEGR, CCI, OFC, EPAY, TPX, ELLI, TRMB, COMM, MEP, DGI, COHU, FLML, SBUX, HPY, FNV, USLV, NEM, MJN, GOLD, BMY, SQI, AEM, UGLD, HPY, NWL and RSG
Stocks With Unusual Put Option Activity:
- 1) EWJ 2) SBUX 3) XME 4) LNKD 5) XRT
Stocks With Most Negative News Mentions:
- 1) CCI 2) COMM 3) OHI 4) MDC 5) EPAY
Charts:
Evening Headlines
Bloomberg:
- Merkel Downplays Incursions as Russia Probes NATO Defense. German
Chancellor Angela Merkel played down the significance of incursions by
Russian jets as Vladimir Putin probed Europe’s air defenses for a third
day. “In the last few months I’ve seen very robust exercises
with the Russian army, but I’m not acutely concerned about grave
airspace violations,” Merkel said at a press conference in
Berlin yesterday. Allied jets tracked Russian fighter aircraft
along Europe’s fringes, bringing the number of interceptions so
far in 2014 to 100, three times last year’s total, the North
Atlantic Treaty Organization said in a statement.
- Russia Agrees to Terms With Ukraine Over Gas Supply. Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent
residents going without heat as temperatures drop. The gas negotiations, brokered by the European Union, came
as pro-Russian rebels stepped up attacks on Kiev government
forces. European leaders said they hoped the deal would help
improve ties between the two countries.
- Russia Seen Raising Rates as Ruble Plunge Feeds Inflation.
Russia’s central bank will probably increase its benchmark interest
rate for the fourth time this year, bringing it to the highest level
since it was introduced 13 months ago, to halt a currency run that’s
stoking inflation. The Bank of Russia will raise its key rate to 8.5 percent from 8 percent, according to 22 of 31 economists surveyed by Bloomberg. Two predict a move to 9 percent, with increases of a
quarter-point and 75 basis points forecast by one analyst each.
Five economists see no change. The central bank will announce
its decision at about 1:30 p.m. in Moscow today.
- Asia Stocks Rise, Extend Weekly Gain, as U.S. Growth Improves. Asian
stocks rose after the U.S. economy grew faster than forecast and amid a
report that Japan’s $1.2 trillion Government Pension Investment Fund
will increase holdings of equities. The MSCI Asia Pacific Index (MXAP) climbed 0.4 percent to 140.82
as of 9:01 a.m. in Tokyo, before markets opened in China and
Hong Kong.
- OPEC Boosts Oil Output as Prices Slide to Four-Year Low.
OPEC countries boosted oil output to a 14-month high in October as
crude futures sank into a bear market, a Bloomberg survey showed
yesterday. Production by the 12-member Organization of Petroleum
Exporting Countries climbed by 53,000 barrels a day to 30.974 million,
led by gains in Iraq, Saudi Arabia and Libya, according to the
survey of oil companies, producers and analysts. Last month’s total was
revised 14,000 barrels a day lower to 30.921
million because of changes to the Iraqi, Kuwaiti, Nigerian and
Qatari estimates.
- Obamacare Faces New Threat as Supreme Court Weighs Appeal. The fate of President Barack Obama’s health-care law is again in the hands of the U.S. Supreme Court.
Two years after upholding the law by a single vote, the justices are
weighing whether to hear a Republican-backed appeal that would block
people in 36 states from getting tax subsidies to buy insurance. The
justices are scheduled to discuss the matter tomorrow, with an
announcement coming as soon as Nov. 3.
- ConocoPhillips(COP) Becomes First to Cut Spending on Lower Oil. ConocoPhillips
became the first major oil company to announce plans to reduce spending
due to falling crude prices as drilling in some emerging North American
fields becomes less profitable. The third-largest U.S. energy
producer can meet its target to boost production by as much as 5 percent
a year even as it reduces annual spending to below $16 billion,
Chairman and Chief Executive Officer Ryan Lance told investors today.
U.S. oil prices have declined 24 percent from a high of $107.26 a barrel
in June
because of increased North American supplies and reduced global demand
forecasts.
Wall Street Journal:
- Big Banks Brace for Penalties in Probes. Citi Restates Earnings as It and Other Lenders Reserve Cash for Deal in Forex Investigation. Big banks in the U.S. and Europe are stockpiling billions to pay for a
potential trans-Atlantic settlement of allegations that they manipulated
foreign-exchange rates as talks heat up with regulators on both
continents.
- Japan’s Inflation, Job Creation Slowdown a Blow to Abenomics. Japan’s inflation rate fell to its lowest in nearly a year and a measure
of job creation worsened for the first time in more than three years,
highlighting the divergence between developments in the economy and
policy makers’ optimistic projections.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
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
Australian Financial Review:
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 65.5 +1.5 basis points.
- NASDAQ 100 futures +.32%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The 3Q Employment Cost Index is estimated to rise +.5% versus a +.7% gain in 2Q.
- Personal Income for September is estimated to rise +.3% versus a +.3% gain in August.
- Personal Spending for September is estimated to rise +.1% versus a +.5% gain in August.
- The PCE Core for September is estimated to rise +.1% versus a +.1% gain in August.
9:00 am EST
- ISM Milwaukee for October is estimated to fall to 60.0 versus a reading of 63.18 in September.
9:45 am EST
- Chicago Purchasing Manager for October is estimated to fall to 60.0 versus a reading of 60.5 in September.
9:55 am EST
- Final Univ. of Mich. Consumer Confidence for October is estimated at 86.4 versus a prior estimate of 86.4.
Upcoming Splits
Other Potential Market Movers
- The Fed's Williams speaking, Canadian gdp report and the (BMY) investor event 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 higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.38 -5.08%
- Euro/Yen Carry Return Index 143.95 +.19%
- Emerging Markets Currency Volatility(VXY) 7.48 +1.08%
- S&P 500 Implied Correlation 55.25 -5.15%
- ISE Sentiment Index 101.0 +24.69%
- Total Put/Call .93 -9.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.58 -.07%
- European Financial Sector CDS Index 69.51 +2.54%
- Western Europe Sovereign Debt CDS Index 33.27 +2.68%
- Asia Pacific Sovereign Debt CDS Index 65.57 +2.25%
- Emerging Market CDS Index 241.94 -1.98%
- China Blended Corporate Spread Index 327.97 -.85%
- 2-Year Swap Spread 21.25 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% -2.0 basis points
- China Import Iron Ore Spot $79.82/Metric Tonne +.92%
- Citi US Economic Surprise Index 18.80 +6.3 points
- Citi Eurozone Economic Surprise Index -29.70 +7.6 points
- Citi Emerging Markets Economic Surprise Index -16.0 +.8 point
- 10-Year TIPS Spread 1.91 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +185 open in Japan
- DAX Futures: Indicating +2 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/biotech/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -4.91% 2) Hospitals -1.36% 3) Hospitals -1.31%
Stocks Falling on Unusual Volume:
- WES, PRXL, PCRX, CRUS, AVP, AFOP, ISIL, ATK, THRM, VNTV, BWA, ASGN, WTW, TEX, GG, HTWR, RRTS, IPI, SLCA, BCO, SFLY, NEWP, RGR, WSBC, HVT, INVN, SCI, KEX, CVD, CHRW, HBI, PEIX, GTLS, CODE, DBD, BWA, BLL, WES, WWE, CNW, DWA, KMT, ARII, THRM, ISIL, TEX and LRN
Stocks With Unusual Put Option Activity:
- 1) JDSU 2) AKAM 3) CRUS 4) DO 5) V
Stocks With Most Negative News Mentions:
- 1) NYT 2) NOV 3) CHRW 4) DISCA 5) P
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Networking +1.73% 2) Utilities +1.54% 3) Biotech +1.53%
Stocks Rising on Unusual Volume:
- ABMD, BBSI, LOPE, VPRT, CALX, OMER, ACHC, V, FLTX, BMY, TASR, CTRX, MA, LAKE, TTWO, MBT, VECO, CEMP, LOPE, ACHC, INCY, LOCK, TCS, MD, GNC, EQIX, TTPH and DRII
Stocks With Unusual Call Option Activity:
- 1) DPS 2) NFX 3) TASR 4) WLT 5) V
Stocks With Most Positive News Mentions:
- 1) V 2) BMY 3) MA 4) IP 5) TASR
Charts:
Evening Headlines
Bloomberg:
- Russia Link Said Suspected in White House Computer Attack. U.S. cybersecurity specialists
suspect that Russian government or criminal hackers were
responsible for an attack on an unclassified White House
computer system, according to two American officials. It’s not clear whether the attack was carried out by
Russian government agents or criminals, the officials said
today, speaking on condition of anonymity because they aren’t
authorized to speak to the media. The line between agents and
criminal hackers is sometimes non-existent, they said.
- Mosul’s Children Lured to Islamic State to Swell Ranks. The al-Qaeda breakaway group has lured and coerced hundreds of the
city’s youth into joining its ranks, according to an official from the
Nineveh province’s education department, who asked to be identified as
Abu Marwan for security reasons.
- Brazil Unexpectedly Lifts Rate on Rousseff Vow to Tame CPI. Brazil
unexpectedly raised its key rate for the first time since April, after
President Dilma Rousseff said she would vigorously fight inflation
(BZPIIPCY) in her second term. Policy makers, led by central bank
President Alexandre Tombini, voted 5-to-3 to raise the benchmark Selic
by a quarter-point to 11.25 percent, saying the move would reduce
the cost of ensuring a better inflation outlook in 2015 and 2016. One of
54 economists surveyed by Bloomberg correctly forecast the increase
while the remaining expected the rate to be left unchanged for the
fourth straight meeting.
- China’s Property Prices May Decline Up to 10%, SouFun Says. China property prices may decline as much as 10 percent this year and the slump may extend into 2015,
according to SouFun Holdings Ltd. “Chinese property prices are seeing
an adjustment after the rapid increase in the past two years,” Vincent
Mo, founder
of China’s biggest real estate information website, said in a
Bloomberg Television interview with Haslinda Amin in Singapore
yesterday. “Prices should stabilize by the middle of next
year.”
- ICBC Posts Biggest Jump in Bad Loans Since ’06 on Economy. Industrial
& Commercial Bank of China Ltd., the world’s largest lender by
assets, reported its biggest jump in bad loans since at least 2006 as
the property market slumped and the economy cooled. Nonperforming
loans rose 9 percent in the third quarter from the previous three
months, the Beijing-based bank said in anexchange filing yesterday. Net
income gained 7.7 percent from
a year earlier to 72.4 billion yuan ($11.8 billion), matching
the median analyst estimate in a Bloomberg News survey.
- Dollar Jumps as Fed Ends Bond Buying While Nickel, Crude Retreat.
The dollar climbed to a three-week high after the Federal Reserve
judged the U.S. economy strong enough to end its asset-purchase program.
Industrial metals and oil fell with Hong Kong stocks. The Bloomberg
Dollar Spot Index gained 0.1 percent by 11:01 a.m. in Tokyo, with the
yen weakening 0.2 percent and Indonesia’s rupiah leading emerging-market
currencies lower. Nickel retreated 1 percent and West
Texas Intermediate crude oil slid 0.4 percent. Hong Kong’s Hang Seng
Index dropped 0.3 percent after its biggest two-day rally in seven
months.
Wall Street Journal:
- Democrats Crash-Land the Planet. Republicans are hammering Democrats with the wrecked world their priorities created. Want to know how to really scare a Democratic candidate for Congress on
Halloween? Forget the Sarah Palin mask. Don’t say “Boo!” Just slip up
behind them and whisper, “national security.” They’ll jump from here
into next week’s election.
Fox News:
Zero Hedge:
Business Insider:
Reuters:
- NASA explosion fuels concerns about Russian engines, oversight. The explosion of an Orbital
Science Corp supply rocket over Virginia could
accelerate U.S. efforts to replace aging Russian space
technology with a pricey homegrown rocket engine.
Even before the crash on Tuesday, Orbital had planned to
switch to another engine for future launches, given the age of
Soviet-era motors now in use as well as uncertainty about future
supplies.
- U.S. prosecutors reopen probes against several big banks -NYT. U.S. prosecutors are reopening
investigations into big banks on suspicion they may have violated
agreements under which the institutions settled prior cases against
them, The New York Times reported, citing lawyers briefed with the
matter. With the settlements, the banks avoided criminal prosecution and instead paid fines and implemented reforms. Among the banks
named in the report were Standard Chartered Plc and
Bank of Tokyo-Mitsubishi UFJ.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 unch.
- Asia Pacific Sovereign CDS Index 64.25 -.5 basis point.
- NASDAQ 100 futures +.07%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Initial Jobless Claims are estimated to rise to 285K versus 283K the prior week.
- Continuing Claims are estimated to rise to 2352K versus 2351K prior.
- 3Q GDP is estimated to rise 3.0% versus a +4.6% gain in 2Q.
- 3Q Personal Consumption is estimated to rise +1.9% versus a +2.5% gain in 2Q.
- 3Q GDP Price Index is estimated to rise +1.4% versus a +2.1% gain in 2Q.
- 3Q Core PCE QoQ is estimated to rise +1.4% versus a +2.0% gain in 2Q.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Yellen speaking, Japan CPI, German unemployment data, $35B 7Y
T-Note auction, (JNPR) investor day, weekly Bloomberg Consumer Comfort
Index and the weekly EIA natural gas inventory report could also impact
trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and consumer shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
