BETWEEN THE HEDGES

Tuesday, November 04, 2014

Bull Radar

Posted by Gary .....at 11:49 AM

Style Outperformer:

Large-Cap Value -.71%

Sector Outperformers:

1) Airlines +2.28% 2) HMOs +.98% 3) Restaurants +.61%

Stocks Rising on Unusual Volume:

NCMI, BLMN, TXRH, AFSI, RRGB, HNT and CLI

Stocks With Unusual Call Option Activity:

1) GERN 2) AFSI 3) DPS 4) SBUX 5) HLF

Stocks With Most Positive News Mentions:

1) DAL 2) YHOO 3) LB 4) TXRH 5) EMR

Charts:

ETFs Rising on Unusual Volume

Stocks Rising on Unusual Volume

Monday, November 03, 2014

Tuesday Watch

Posted by Gary .....at 11:39 PM

Evening Headlines
Bloomberg:

Ukraine Says Rebel Votes Undercut Truce as Tension Mount. Ukrainian President Petro Poroshenko said rebel-held elections in the country’s east violate a two-month-old cease-fire, as he threatened to scrap the law granting greater autonomy to the separatist regions. Calling the Nov. 2 ballots a “farce that jeopardizes the entire peace process,” Poroshenko said Ukraine will never recognize their results, according to a statement issued yesterday. Poroshenko is convening a meeting of Ukraine’s National Security and Defense Council today to consider revoking the “special status” law that was part of the truce accord struck Sept. 5 in the Belarus capital, Minsk.

Saudis Lower Crude Prices to U.S. in December Amid Shale Boom. Saudi Arabian Oil Co. lowered the cost of its crude to the U.S., where production is the highest in three decades, deepening a selloff that sent prices to the lowest in more two years. The state-owned producer, known as Saudi Aramco, lowered the premium for Arab Light relative to U.S. Gulf Coast benchmarks by 45 cents a barrel to the smallest since December. medium and heavy grades were also down 45 cents and extra light oil 50 cents. Aramco increased the cost to Asia and Europe.

Oil Extends Slide on Saudi Price Cut as U.S. Supply Seen Rising. “It’s now a game of chicken between OPEC members and the U.S. to fight for market share” in the world’s biggest oil-consuming nation, Will Yun, a commodities analyst at Hyundai Futures Inc. in Seoul, said by phone today. “Expanding crude stockpiles in the U.S. won’t be enough to make OPEC cut its output unless prices significantly drop to below $75.”

Japan Stocks Surge With JGBs on Stimulus; Won, Oil Slide. Japanese stocks climbed to a six-year high on optimism central-bank stimulus will boost earnings, while the country’s bonds surged. South Korea’s won led emerging-market currencies lower and crude oil extended declines. The Topix index jumped 3.3 percent by 11:06 a.m. in Tokyo, spurring a 1.5 percent jump in the MSCI Asia Pacific Index. An MSCI gauge that excludes Japanese shares dropped as Standard & Poor’s 500 Index futures lost 0.2 percent.

Senators Urge SEC to Fix Unequal Access to Market Data. The U.S. Securities and Exchange Commission must ensure its system for distributing companies’ financial information doesn’t give unfair advantages to private-feed subscribers, two lawmakers said in a letter today. The SEC should explain what it’s doing in response to findings that customers paying for direct feeds sometimes saw market-moving disclosures 10 seconds before they were posted to the agency’s website, Senators Tim Johnson and Mike Crapo wrote in the letter to SEC Chairman Mary Jo White.

Iron Ore Declining as APEC Curbs in China Seen Stunting Demand. Iron ore prices dropped to the lowest level since September amid a lack of demand in China, with some mills in the world’s largest buyer ordered to suspend production before a summit of world leaders in Beijing. “Demand remains weak as Chinese buyers sit on the sidelines, with many Beijing steel mills forced to halt production leading up to the APEC meeting,” Australia & New Zealand Banking Group Ltd. said in a daily report today. Prices dropped yesterday with a lack of bids, the bank said.

Wall Street Journal:

Sullen Voters Set to Deliver Another Demand for Change. If Republicans Win Control of Senate, It Would Be Fourth Such Control Switch in Less Than a Decade. Odds are good that the U.S. midterm elections will mark the fourth time in less than a decade that voters oust a party from control of Congress or the White House, a remarkable period of instability that has left neither party with a firm grip on power.

U.S.-Russia Relations Slide Over Ukraine Rebel Election. Despite Threats, Washington Finds Ability to Influence Moscow Foreign Policy Limited.

A Most Pivotal Election. Democratic candidates kept twisting away from Obama and changing the subject. Republicans didn’t cooperate. President Obama is famous for proclaiming a “pivot” to a new issue—to the economy, to jobs, to Asia. By my count he has announced more than 20 pivots during his presidency, invariably to matters that bring political benefits and away from those that don’t.

Fox News:

Was Foley rescue delayed? (video) Administration had strong intelligence on hostages, location weeks before raid sign-off.

CNBC:

Herbalife(HLF) shares tank 12% on disappointing outlook. Herbalife reported earnings that missed expectations and offered a sales outlook that was well below Wall Street forecasts, sending shares plunging 13 percent. The company reported operating earnings of $1.45 per share, against analysts' estimates of $1.51 per share. Revenue of $1.26 billion missed estimates of $1.32 billion, according to Thomson Reuters data.

JPM(JPM) estimates legal losses could total $5.9B. JPMorgan Chase & Co. confirmed in a regulatory filing that the Department of Justice is conducting a criminal investigation into its foreign-exchange trading. The company noted that its legal losses could total as much as $5.9 billion.

Zero Hedge:

Japan's Monetary Pearl Harbor.

Bubble Exit Rule: "You Only Get Out If You Panic Before Everyone Else Does".

An Open Letter To Janet Yellen.

How Much Does It Cost To Keep JPMorgan(JPM)FX-Riggers Out Of Jail?

Most Transparent Administration Ever? Ferguson No-Fly Zone Was "To Keep The Media Out".

Alan Greenspan To Marc Faber: "I Never Said The Fed Was Independent".

10 Examples Of The Extreme Incompetence That Now Pervades The Federal Government.

Business Insider:

More Crisis In Ukraine After Controversial Elections.

The White House Is Already Blaming Congress For The Midterms.

Financial Times:

Living wills raise liquidity fears. US and European banks fear they will be forced to boost their cash reserves by tens of billions of dollars to win regulatory approval of their “living wills”, which lay out how a failing institution could be wound down in a crisis, according to people familiar with the matter.

Evening Recommendations

None of note

Night Trading

Asian equity indices are -.50% to +.50% on average.

Asia Ex-Japan Investment Grade CDS Index 108.0 unch.

Asia Pacific Sovereign CDS Index 63.25 -.25 basis point.

FTSE-100 futures +.08%.

S&P 500 futures -.08%.

NASDAQ 100 futures -.08%.

Morning Preview Links

Earnings of Note
Company/Estimate

(EL)/.55

(ADM)/.73

(IP)/.88

(VLO)/1.57

(BDX)/1.66

(KBR)/.23

(BKW)/.27

(REGN)/2.57

(EMR)/1.23

(ZTS)/.37

(CVS)/1.13

(ODP)/.09

(MWW)/.03

(HCP)/.76

(VMC)/.52

(DISH)/.39

(RRGB)/.34

(BLMN)/.08

(DISCA)/.43

(PCLN)/21.07

(ICE)/2.01

(AKS)/.09

(DVN)/1.23

(PHH)/-.27

(JAZZ)/2.23

(ZOES)/.04

Economic Releases
8:30 am EST

The Trade Deficit for September is estimated at -$40.2B versus -$40.1B in August.

9:45 am EST

ISM New York for October is estimated to fall to 62.0 versus 63.7 in September.

10:00 am EST

Factory Orders for September are estimated to fall -.6% versus a -10.1% decline in August.

IDB/TIPP Economic Optimism for November is estimated to rise to 46.5 versus 45.2 in October.

Upcoming Splits

(SYNT) 2-for-1

Other Potential Market Movers

The Eurozone PPI, Eurozone Services PMI data, weekly US retail sales reports, (AA) investor day and the (LB) investor meeting 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 Slightly Lower into Final Hour on Global Growth Fears, Rising Emerging Markets Debt Angst, Technical Selling, Commodity/Road & Rail Sector Weakness

Posted by Gary .....at 3:15 PM

Broad Equity Market Tone:

Advance/Decline Line: Lower

Sector Performance: Mixed

Volume: Around Average

Market Leading Stocks: Performing In Line

Equity Investor Angst:

Volatility(VIX) 14.72 +4.92%

Euro/Yen Carry Return Index 148.29 +.91%

Emerging Markets Currency Volatility(VXY) 7.92 +2.46%

S&P 500 Implied Correlation 54.12 +.48%

ISE Sentiment Index 86.0 unch.

Total Put/Call .81 +6.58%

NYSE Arms 1.12 +57.33%

Credit Investor Angst:

North American Investment Grade CDS Index 64.11 +.20%

European Financial Sector CDS Index 66.88 -.30%

Western Europe Sovereign Debt CDS Index 31.87 +.22%
Asia Pacific Sovereign Debt CDS Index 63.30 -.46%

Emerging Market CDS Index 245.54 +3.30%

China Blended Corporate Spread Index 322.35 -1.39%
2-Year Swap Spread 20.75 -1.25 basis points

TED Spread 22.75 unch.

3-Month EUR/USD Cross-Currency Basis Swap -10.5 -.75 basis point

Economic Gauges:

3-Month T-Bill Yield .00% unch.

Yield Curve 183.0 -1.0 basis point

China Import Iron Ore Spot $78.63/Metric Tonne -1.21%

Citi US Economic Surprise Index 22.10 +4.1 points
Citi Eurozone Economic Surprise Index -28.80 +4.4 points

Citi Emerging Markets Economic Surprise Index -15.30 +2.0 points

10-Year TIPS Spread 1.93 unch.

Overseas Futures:

Nikkei Futures: Indicating +1,016 open in Japan

DAX Futures: Indicating +2 open in Germany

Portfolio:

Slightly Higher: On gains in my tech sector longs and emerging markets shorts

Disclosed Trades: Added to my (IWM)/(QQQ) hedges

Market Exposure: Moved to 25% Net Long

Today's Headlines

Posted by Gary .....at 2:54 PM

Bloomberg:

Russia Threatened With More Sanctions After Backing Vote. Russia backed yesterday’s rebel-held votes in eastern Ukraine, prompting officials from Germany to warn the government in Moscow of stronger sanctions. The Russian Foreign Ministry said today it “respected” the ballot, which provided a “mandate to the elected representatives to solve practical tasks and restore normal life in the regions.” Germany denounced the vote and the Ukrainian authorities in Kiev said it poses a threat to the peace process. Russia is on a collision course with the U.S. and its allies over the one-day ballot held by separatists in the regions of Donetsk and Luhansk a week after they boycotted national parliamentary elections.

Ruble Weakens as Ukraine Rebel Elections Spur Sanctions Concern. The ruble weakened in thin holiday trading as elections organized by pro-Russian rebels in eastern Ukraine threatened to undermine a fragile peace in the region. The currency slid 0.8 percent to 48.3501 versus the central bank’s dollar-euro basket by 6:00 p.m. in Moscow, when the central bank stops market operations, after dropping 7.7 percent last month. Volume in dollar-ruble trade via the Moscow Exchange dropped 96 percent from Oct. 31 as Russia has public holidays today and tomorrow.

U.S. Crude Oil Futures Decline to Lowest Since June 2012. U.S. crude oil futures dropped as much as 1.7 percent in New York trading, while Brent retreated 0.8 percent. West Texas Intermediate slid as much as $1.40 to $79.13, the lowest intraday price since June 2012, as of 2:26 p.m. in New York. Brent crude futures fell 71 cents to $85.15. Earlier, Saudi Arabian Oil Co., the world’s largest crude exporter, increased the cost of oil sales to Asia and Europe and reduced them for the U.S.

Italian Bonds Drop Before ECB Meet; Cannata Doubts QE Usefulness. Italian government bonds dropped for the first time in five days amid speculation the European Central Bank will refrain from adding to its stimulus program at a policy meeting this week. Spanish securities also declined, with the 10-year yield rising the most since Oct. 20. The ECB, which last month implemented a new round of stimulus to ward off deflation by buying covered bonds, is scheduled to meet on Nov. 6. The benefits of the central bank extending its purchases to sovereign bonds is unclear, Italian debt chief Maria Cannata said in Brussels today.

Vicious Circle of Bad Loans Ensnaring Italian Companies. Italian borrowers are becoming trapped in a vicious circle. As bank loans turn sour at the rate of about 2 billion euros ($2.5 billion) a month, corporate lending is dwindling to the least in more than a decade. Lenders are sitting on a total 174 billion euros of non-performing loans, an increase of 62 percent from three years ago, according to the latest data from Bank of Italy. New corporate lending dropped in August to 21 billion euros, the lowest since at least 2003, the data show.

Euro Manufacturing Remains Near Stagnation as Italy Contracts. European manufacturing barely grew last month as factory output in France and Italy shrank. A final reading of a Purchasing Managers’ Index for the industry stood at 50.6 in October, London-based Markit Economics said today. While that’s up from a 14-month low of 50.3 in September, it’s below a 50.7 estimate released on Oct. 23 and barely above the mark of 50 signaling expansion.

European Stocks Drop as Holcim, PostNL Fall on Earnings. European stocks fell, after this year’s biggest weekly rally, as investors weighed disappointing earnings from PostNL NV and Holcim Ltd. The Stoxx Europe 600 Index slid 0.8 percent to 334.25 at the close of trading as Italian utilities declined.

Record Short VIX Notes Is Sounding Alarm to Deutsche Bank. Securities that usually gain value as the U.S. stock market gets calmer have never been more popular with investors. That concerns strategists at Deutsche Bank AG. A combination of investor inflows and declining equity volatility has pushed the market value of the VelocityShares Daily Inverse VIX Short-Term ETN to about $1.2 billion and sent the ProShares Short VIX Short-Term Futures ETF (SVXY) to $564 million, data compiled by Bloomberg show. Both reached records last week.

Those V-Shaped Stock Charts Are Still Being Dissected. The jagged V-shaped chart of the Standard & Poor’s 500 Index and many individual stocks in the past six weeks caused Carter Worth to search for the right word to describe the whiplash. In Worth’s opinion, the initial selling “was the thoughtful, wise act,” and the rebound was the impetuous part. The recent volatility “is a harbinger of things to come,” he warned. “Sharp breaks in trend followed by sharp rebounds is not healthy,” he wrote. “Large and important institutional players were and continue to act impetuously. This is not the kind of behavior indicative of conviction and confidence and staying power. We are sellers of the market here on this rebound right back to the scene of the crime.”

New Junk-Bond Derivatives Are Hot as Traders Get Creative. When it gets tough to maneuver in the junk-bond market, traders can either give up or get creative. Plenty of them seem to be opting for creativity this time around. There’s been a surge in demand for a relatively new index of derivatives that aims to replicate the risk and return of high-yield bonds. As volatility soars to the most in more than a year, trading in a total-return swaps index reached a record $4 billion in September from almost nothing in May, according to data compiled by Morgan Stanley.

MarketWatch.com: