Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.09 +3.31%
- Euro/Yen Carry Return Index 150.31 +.91%
- Emerging Markets Currency Volatility(VXY) 8.14 -.37%
- S&P 500 Implied Correlation 42.38 +7.15%
- ISE Sentiment Index 67.0 -22.99%
- Total Put/Call .97 -9.35%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.14 -.56%
- European Financial Sector CDS Index 64.0 -.62%
- Western Europe Sovereign Debt CDS Index 30.62 -3.13%
- Asia Pacific Sovereign Debt CDS Index 64.24 -.16%
- Emerging Market CDS Index 271.88 +.09%
- China Blended Corporate Spread Index 323.55 n/a
- 2-Year Swap Spread 21.25 unch.
- TED Spread 21.75 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- China Import Iron Ore Spot $75.87/Metric Tonne +.09%
- Citi US Economic Surprise Index 15.80 +.2 point
- Citi Eurozone Economic Surprise Index -30.20 +.5 point
- Citi Emerging Markets Economic Surprise Index -11.50 -1.4 points
- 10-Year TIPS Spread 1.94 unch.
Overseas Futures:
- Nikkei Futures: Indicating +110 open in Japan
- DAX Futures: Indicating -15 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail/tech sector longs and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Ukraine Says Rebels Declare Draft Amid New Conflict Fears. Ukraine
said separatists in its rebel eastern regions have announced a full
mobilization, as Germany warned of renewed violence and the European
Union threatened further sanctions against Russia. The
draft was declared as “mercenaries” in the rebel regions of Donetsk and
Luhansk continued to amass weapons, Andriy Lysenko, Ukrainian National
Security and Defense Council spokesman, said at a briefing in Kiev
today. “Everything suggests that the parties are making renewed
preparations for violent conflict. We have to prevent that,” German
Foreign Minister Frank-Walter Steinmeier told reporters at a
foreign-policy conference in Berlin.
- Deaths of Russia Soldiers Said Killed in Ukraine ‘Secret’. Russian officials said 12 soldiers
based in the western Pskov region died under “secret”
circumstances that a lawmaker attributed to fighting in Ukraine. Lev Shlosberg, a deputy in Pskov’s parliament who also
publishes a local newspaper, said the men were killed while
fighting alongside rebels in a civil war that President Vladimir Putin says Russian forces have no role in.
- Ruble Weakens on Oil as Ukraine Sanctions Risks Grows. The
ruble ended two days of gains as an oil rout and threats of tougher
sanctions against Russia over Ukraine undermined central bank steps to
shore up the currency. The ruble weakened 1.8 percent to 46.6980 per dollar by 8:05 p.m. in Moscow. It rallied 1.7 percent yesterday following a central bank pledge to limit funding to ward off speculators.
While offering the least seven-day loans, or repos, in a month
today, the Bank of Russia also told lenders reeling from U.S.
and European sanctions it wasn’t planning a drastic squeeze on
cash. Interbank rates rose, and 10-year government yields
climbed to five-year highs.
- Hryvnia Sinks With Ukrainian Bonds as Violence Sparks Warnings. The hryvnia weakened the most in the
world as Ukrainian bonds and stocks sank on mounting concern
that an insurgency in the country’s east is worsening. The currency dropped 6.2 percent to an all-time-low 15.84
per dollar by 3:30 p.m. in Kiev, down 18 percent since the
central bank loosened its management of the exchange rate a week
ago. The Ukrainian Equities Index slid 6.4 percent, the most
among 93 global gauges tracked by Bloomberg. The yield on the
sovereign’s benchmark Eurobonds approached record highs.
- Russian Trade Surplus Narrows as Falling Oil Cuts Exports. Russia’s
trade surplus narrowed in September to the lowest in seven months as
falling oil prices cut export revenue during President Vladimir Putin’s
escalating standoff with the U.S. and the European Union over Ukraine.
The surplus fell 20 percent from a year earlier to $13 billion, the
central bank in Moscow said today on its website. The median estimate of
14 economists surveyed by Bloomberg was
$15.7 billion. Imports decreased 10 percent to $25.8 billion and
exports fell 13 percent to $38.8 billion.
- Japan Election Would Risk Clouding Economy Reform Outlook. A
potential snap election in Japan next month clouds the outlook for the
Abe administration’s economic program as the nation struggles to shake
off the impact of this year’s sales-tax increase. Lawmakers yesterday
said they were preparing for a possible early election by Prime Minister
Shinzo Abe, the clearest sign
yet that he’s contemplating such a move. The decision is linked
to a call on whether to go ahead with another bump in the levy
in 2015, one ruling party member said.
- Chinese Stocks Decline as Mid-Cap Plunge Overshadows Bank Rally.
China’s stocks declined from a three-year high as a rout in mid-cap
shares overshadowed a rally by banks. The value of shares traded on
Shanghai’s exchange surged to the most on record. The SSE 380 Index
slid 2.7 percent, the most in two months. Inner Mongolia North Hauler
Joint Stock Co. and Shanghai East-China Computer Co. tumbled by the
daily 10 percent limit after
both stocks closed at record highs last week. Small-company
shares and technology companies also slumped.
- Shanghai Stock Discounts Vanish as No Easy Money Left.
- European Stocks Extend Five-Week High as Vodafone Gains.
European stocks rose, extending their highest level in more than five
weeks, as companies from Vodafone (VOD) Group Plc to Henkel AG rallied
on better-than-estimated financial results and improving forecasts.
Vodafone advanced the most in 14 months after saying services revenue
fell slower than analysts’ estimated. That pushed a gauge of
telecommunications companies to the highest level since March 2008.
Henkel gained 4.6 percent after also raising its full-year margin
projection. The benchmark Stoxx Europe 600 Index climbed 0.4 percent to
338.93 at the close of trading, after briefly paring gains as
the U.S. equity markets opened.
CNBC:
ZeroHedge:
Business Insider:
The Interpreter:
Telegraph:
Handelsblatt:
- Fed's Fisher Says Rates May Reverse Before Summer. Dallas Fed
President Richard Fisher says while markets expect rates may reverse
next summer, this could happen "earlier," in an interview. "Most
important not to miss right moment" for rate policy change. Says
influence of banks has increased, U.S. will look for new ways to reduce
power of four biggest banks.
Style Underperformer:
Sector Underperformers:
- 1) Steel -1.90% 2) Alt Energy -.94% 3) Coal -.90%
Stocks Falling on Unusual Volume:
- CODI, MCEP, AAOI, ZEN, SFM, LGIH, NNN, RYN, TWC, AMSG, NGLS, WWD, PINC, BBSI, QTWO, ORA, MTSI, LPG, JNPR, ATW, JWN, CHTR, CMCSK, ICPT, EV, TRIP, GEOS, SFM, WWD, ACM, RYN and VSLR
Stocks With Unusual Put Option Activity:
- 1) GT 2) JWN 3) HTZ 4) FOSL 5) M
Stocks With Most Negative News Mentions:
- 1) VSLR 2) RYN 3) COF 4) JNPR 5) EV
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.67% 2) Gaming +1.34% 3) Homebuilders +1.14%
Stocks Rising on Unusual Volume:
- PAGP, PTX, RAX, VOD, ISIS, INSY, QIWI, OMER, SLXP and PENN
Stocks With Unusual Call Option Activity:
- 1) DRI 2) RLGY 3) RAX 4) ASH 5) ABT
Stocks With Most Positive News Mentions:
- 1) TDC 2) GOOG 3) GILD 4) AMZN 5) ICUI
Charts:
Evening Headlines
Bloomberg:
- No Sign of Thaw in Obama’s Brief Encountes With Putin. U.S.
President Barack Obama and Russian President Vladimir Putin had two
brief, informal encounters during a summit in Beijing, neither of which
amounted to any sign of a breakthrough in a frozen relationship. The
leaders “didn’t have any discussion,” Dmitry Peskov, Putin’s spokesman,
told reporters after the two leaders met before last
night’s welcoming banquet at the Asia-Pacific Economic Cooperation
summit. “They greeted each other. They spoke a few phrases to each
other” but “there were no talks,” Peskov said.
- Russia Cash Squeeze Gets First Test Today in Loan Auction. Russian policy makers’ latest bid to
shore up the nation’s currency sounds complex but is actually
simple: They will take rubles out of the hands of banks. Fewer rubles means bankers will have less cash to buy
dollars. That in turn will stem the selloff in the ruble. Or so
goes the argument. On day one, the plan -- or at least the
unveiling of the plan -- worked. The ruble surged 2.4 percent
yesterday to 45.6141 per dollar, rebounding from a record low
even as policy makers simultaneously took other steps to allow
it to trade freely.
- Sydney House-Sellers Demand Record A$1 Million Median Sale Price. Sydney’s median asking price for
detached houses topped A$1 million ($864,300) this week for the
first time as sellers raised expectations in a booming market. The asking price surged 11 percent over the past seven
days, according to Sydney-based data company SQM Research Pty. That’s the highest since the firm began reporting the data in
April 2009.
- Most Asian Stocks Climb as Topix Advances on U.S. Rally.
Most Asian stocks rose, with the regional benchmark index heading for
its third day of advance, as Japan’s Topix index climbed after the
Standard & Poor’s 500 Index extended a record rally on earnings
optimism. Three shares rose for each that fell on the MSCI Asia Pacific Index (MXAP), which added less than 0.1 percent to 140.96 as of
9:04 a.m. in Tokyo.
- Weak Oil Prices Yet to Slow U.S. Shale Output: EIA Report. Falling oil prices haven’t dimmed the U.S. Energy Department’s outlook for domestic crude output.
The country’s seven largest shale plays will produce 125,000 more
barrels a day in December than in November, the Energy Information
Administration said today in its monthly Drilling Productivity Report.
The agency is the Energy
Department’s statistical arm.
- Brokers Attack SEC’s Plan as Trojan Horse Designed to Hurt Them. Wall Street brokers are in rebellion
against a plan to test ways of encouraging more trading of the
smallest U.S. stocks, saying the effort was hijacked by
exchanges seeking an edge over their rivals. The Securities and
Exchange Commission’s pilot program is
meant to spur trades in about 30 percent of publicly traded U.S.
companies. One of its provisions -- called a trade-at rule -- is
really a stealth attempt to hurt brokers that run private trading
systems that compete with the likes of the New York Stock Exchange,
representatives from JPMorgan Chase & Co. (JPM) and Citigroup Inc.
(C) said today at an industry conference.
Wall Street Journal:
- Veterans Accuse Six Banks of Aiding U.S. Foes. Suit Alleges Institutions Helped Iran Move Millions of Dollars to Groups Targeting GIs in Iraq. More than 200 veterans and their families filed a lawsuit Monday
accusing six major banks of helping Iran move tens of millions of
dollars to groups targeting U.S. soldiers in Iraq during the war.
- If Iran Says ‘Yes’. Why should a regime that has paid no price for dishonesty suddenly discover the virtues of honesty?
Fox News:
- US troops arrive in Iraq's Anbar province amid ISIS fight. A team of about 50 military personnel are visiting a U.S. military
airbase in Iraq’s Anbar province after President Obama authorized the
deployment of up to 1,500 more American troops to bolster Iraqi forces
in the region in the fight against the Islamic State.
CNBC:
- Dinged credit? Card issuers are happy to lend. Consumers with dinged credit are back in a borrowing mood, and
lenders are more than happy to give them new credit cards, according to
new data. Since the Great Recession ended five years ago,
consumers have been gradually taking on more debt and lenders have been
accommodating them, easing up on tighter standards. Much of the growth has been in so-called
non-revolving credit, especially car loans, thanks to record low
interest rates. But revolving credit—mainly in the form of credit
cards—is picking up. And the biggest growth in new credit cards is coming from so-called subprime borrowers whose credit scores are less than 660, according to the latest Equifax data.
Zero Hedge:
Business Insider:
Reuters:
- Citigroup(C) slashes 2015 iron ore price forecast, sees drop below $60.
Citigroup has slashed its iron
ore price forecast for 2015, predicting the steelmaking
ingredient could drop below $60 per tonne in the most bearish estimate
yet from a financial institution on the glut-hit commodity. "We expect renewed supply growth to once again drive the market lower in 2015, combined with further demand weakness,"
the U.S. investment bank said in a report on Tuesday.
- Aluminum flat-rolled overcapacity in Asia will last years -Novelis.
Overcapacity in the Asian
flat-rolled aluminum market may last for several more years, hurting
prices and forcing producers to sell more material further afield,
Novelis Chief Executive Officer Phil Martens said on Monday. Without a
significant recovery in China's economy, demand will not be high enough
to absorb the surplus sheet, mainly used in beverage cans and
packaging, produced in China and washing
around Asia.
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 rateTripAdvisor profit sags as costs jump; shares
slid
Shanghai Securities News:
- China Economist Sees Slowing Investment Growth. Slowing growth in
investment will continue next year and drag down the economy, citing
Zhu Baoliang, leading economist at the State Information Center's
economic forecasting department.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 64.25 -.25 basis point.
- NASDAQ 100 futures +.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- The NFIB Small Business Optimism Index for October is estimated to rise to 96.0 versus 95.3 in September.
Upcoming Splits
Other Potential Market Movers
- The
German Wholesale Price Index, US weekly retail sales reports, Jefferies
Energy Conference, Cowen Metals/Mining/Materials Conference, Stephens
Investment Conference, Goldman Sachs Industrials Conference, (GRPN)
analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and real estate
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: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.60 -3.96%
- Euro/Yen Carry Return Index 149.04 -.03%
- Emerging Markets Currency Volatility(VXY) 8.17 -4.11%
- S&P 500 Implied Correlation 39.21 -5.79%
- ISE Sentiment Index 85.0 -24.11%
- Total Put/Call 1.08 +13.68%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.27 -1.98%
- European Financial Sector CDS Index 64.50 -4.51%
- Western Europe Sovereign Debt CDS Index 31.61 -.88%
- Asia Pacific Sovereign Debt CDS Index 64.96 +.77%
- Emerging Market CDS Index 271.52 +.80%
- China Blended Corporate Spread Index 323.55 +.04%
- 2-Year Swap Spread 21.25 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -10.50 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 182.0 +1.0 basis point
- China Import Iron Ore Spot $75.80/Metric Tonne +.05%
- Citi US Economic Surprise Index 15.60 +.6 point
- Citi Eurozone Economic Surprise Index -30.70 -1.7 points
- Citi Emerging Markets Economic Surprise Index -10.10 +3.2 points
- 10-Year TIPS Spread 1.94 unch.
Overseas Futures:
- Nikkei Futures: Indicating +190 open in Japan
- DAX Futures: Indicating -15 open in Germany
Portfolio:
- Higher: On gains in my biotech/medical/tech sector longs
- Market Exposure: 50% Net Long
