Style Outperformer:
Sector Outperformers:
- 1) Steel +4.74% 2) Gold & Silver +2.59% 3) Oil Service +1.97%
Stocks Rising on Unusual Volume:
- EIGI, HIBB, NGL, NOAH, ROST, BID, SPLK, MRVL, BERY, TCK, LEJU, AREX, ADSK, SN, HIBB, HTZ and ACAD
Stocks With Unusual Call Option Activity:
- 1) FL 2) AMAT 3) ARUN 4) ROST 5) ERX
Stocks With Most Positive News Mentions:
- 1) ROST 2) SPLK 3) ADSK 4) LMT 5) INTU
Charts:
Evening Headlines
Bloomberg:
- NATO Rejects Russia Demand for Unaligned Ukraine. Russia’s
demand that Ukraine guarantee it won’t join NATO violates the country’s
independence, the head of the alliance said, as the two sides traded
accusations over who is fueling the conflict in the ex-Soviet republic.
U.S. Vice President Joe Biden is scheduled to arrive in Kiev for talks
today with Ukrainian President Petro Poroshenko after North Atlantic
Treaty Organization Secretary General Jens Stoltenberg urged Vladimir
Putin’s government to pull back its troops from inside eastern Ukraine
and from the border area. Meanwhile, Russia’s State Security Council
said the U.S. was instigating the fighting. “We call on Russia to stop
fueling the conflict,” Stoltenberg said in Tallinn, Estonia. He also
urged Russia to “use all its influence” to make sure pro-Russian
separatists
in Ukraine are respecting a Sept. 5 cease-fire that has been
broken almost daily.
- Hedge Hunters Double Default-Swaps as Views Split: China Credit. Global investors have doubled
holdings of contracts insuring China’s sovereign debt as its companies raise funds abroad and views diverge on the economy.
The net notional amount of credit-default swaps protecting
against non-payment by the government reached a record $15.7
billion on Nov. 7, up from $8.1 billion a year earlier,
Depository Trust & Clearing Corp. data show.
- RBA’s Heath Says Mining Investment Decline a ‘Significant’ Drag. The
decline in mining investment
will be a “significant drag” on Australia’s economic growth, even as
exports of coal and iron ore provide a boost, according to the central
bank’s head of economic analysis. It’s uncertain how far and fast
investment will fall or how much the mines’ operations will add to
growth, the Reserve Bank of Australia’s Alexandra Heath said today
in the text of a speech in Sydney. While China will probably find it
more
difficult to maintain its current pace of economic growth, the
world’s second-largest economy should remain a large market for
Australian resource exports for some time, she said.
- Yen Climbs on Aso Comments as Oil Gains; Asia Stocks Drop.
Japan’s yen rose for the first time in seven days as Finance Minister
Taro Aso said its decline has been too fast. Most Asian stocks fell,
with the regional index headed to its biggest weekly retreat since
mid-October, while crude oil climbed for a second day. The yen added 0.4
percent to 117.77 per dollar by 12:16 p.m. in Tokyo, paring its biggest
five-week loss since 1995. About five stocks fell for every three that rose on the MSCI Asia Pacific Index (MXAP) as it headed for a 1.8 percent drop this
week.
- Iron Ore Heads for Fifth Weekly Loss on Glut as Miners Retreat. Iron ore is headed for a fifth straight weekly drop with prices trading near the lowest since 2009 on concern that slowing growth in China will hurt demand just as rising low-cost supplies spur a global surplus. Ore with 62 percent content delivered to Qingdao lost 6
percent this week, dropping to $70.20 on Nov. 19, the lowest
level since June 2009, data from Metal Bulletin Ltd. showed. The
price gained 1.1 percent to $70.97 a dry ton yesterday, rising
for the first time since Nov. 12.
Wall Street Journal:
- The Nihilist in the White House. This administration doesn’t build, it divides and tears down. Vindication is assumed. There is an odd, magical-thinking element in the psychology of recent
White Houses. It is now common for those within them to assume that
history will declare their greatness down the road. They proceed as if
this is automatic, guaranteed: They will leave someday, history will
ponder their accomplishments and announce their genius.
- I, Barack. The immigration order is an abuse of power that fails as a policy reform. President Obama’s decision to legalize millions of undocumented
immigrants by his own decree is a sorry day for America’s republic. We
say that even though we agree with the cause of immigration reform. But
process matters to self-government—sometimes it is the only barrier to
tyranny—and Mr. Obama’s policy by executive order is tearing at the fabric of national consent.
Fox News:
- Obama heads to Vegas to rally support for immigration overhaul. Determined to go it alone, President Obama will head to Nevada on Friday
to sign an executive order granting “deferred action” to two illegal
immigrant groups- parents of United States citizens or legal permanent
residents who have been in the country for five years, and young people
who who were brought into the country illegally as of 2010.
MarketWatch.com:
Zero Hedge:
Business Insider:
NY Times:
- In a Video, ISIS Fighters Call for Attacks in France. A new propaganda video from the militant group Islamic State shows three
French fighters calling on Muslims in France to carry out attacks there
or join the group’s fight in Iraq and Syria, according to a jihadist
monitoring organization.
Reuters:
- Gap(GPS) cuts profit forecast as demand slows for Old Navy brand.
Apparel retailer Gap Inc cut its full-year earnings forecast as sales at
the Gap brand continued to fall and demand for the cheaper Old Navy
clothing slowed. The company's shares fell 4.4 percent in extended trading. Comparable-store sales fell 5 percent at Gap in the third
quarter ended Nov. 1 while sales were flat at Banana Republic.
- Chipmaker Marvell's(MRVL) Q4 revenue forecast disappoints. Marvell Technology Group Ltd forecast lower-than-expected revenue for the current quarter as weak demand for its chips used in third-generation mobile
communication offset a rise in sales of its more profitable 4G
LTE chips. Shares of the company fell as much as 2.5 percent to $12.97
in after-market trading.
Telegraph:
Shanghai Securities News:
- China Growth Below 7% Acceptable for Restructuring. GDP growth
below 7% is acceptable as long as China is able to improve its economic
structure, according to a speech by Li Yining, an economist with Peking
University. Economic structure is more important than size, Li says.
China has paid a price for high growth in the past including
environmental pollution, resources depletion and overcapacity, Li said.
Evening Recommendations
Jefferies:
- Rated (MSFT) Underperform, target $40.
- Rated (SPLK) Buy, target $89.
- Rated (INTU) Buy, target $110.
- Rated (CRM) Underperform, target $48.
- Rated (CA) Buy, target $40.
- Rated (SYMC) Underperform, target $20.
- Rated (PAYC) Buy, target $32.
- Rated (ADBE) Buy, target $83.
- Rated (CHKP) Buy, target $88.
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.50 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 65.75 +1.25 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
11:00 am EST
- The Kansas City Fed Manufacturing Activity Index for November is estimated to rise to 6.0 versus 4.0 in October..
Upcoming Splits
Other Potential Market Movers
- The Fed's Tarullo speaking and the (TYC) investor day could also impact trading today.
BOTTOM LINE: Asian
indices are mostly lower, weighed down by commodity and industrial
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: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.75 -1.50%
- Euro/Yen Carry Return Index 154.60 -.02%
- Emerging Markets Currency Volatility(VXY) 8.11 +1.0%
- S&P 500 Implied Correlation 34.26 -9.30%
- ISE Sentiment Index 109.0 +19.78%
- Total Put/Call .92 -1.08%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.35 -.43%
- European Financial Sector CDS Index 67.47 -.17%
- Western Europe Sovereign Debt CDS Index 31.53 -2.0%
- Asia Pacific Sovereign Debt CDS Index 66.27 +2.65%
- Emerging Market CDS Index 276.63 -.54%
- China Blended Corporate Spread Index 324.06 -.44%
- 2-Year Swap Spread 21.75 +.5 basis point
- TED Spread 23.25 +1.5 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -10.0 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% -1.0 basis point
- China Import Iron Ore Spot $70.97/Metric Tonne +1.10%
- Citi US Economic Surprise Index 21.40 +10.8 points
- Citi Eurozone Economic Surprise Index -37.0 -22.0 points
- Citi Emerging Markets Economic Surprise Index -1.0 +.1 point
- 10-Year TIPS Spread 1.86 +2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -50 open in Japan
- DAX Futures: Indicating -5 open in Germany
Portfolio:
- Higher: On gains in my retail/tech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- UN Links Russian Fighters to Rights Violations in Ukraine. The
United Nations cited a “total breakdown of law and order” in eastern
Ukraine and linked Russian fighters to human-rights violations as it
raised its estimation of the death toll there to more than 4,300. NATO
Secretary General Jens Stoltenberg urged Russia to pull back its troops
from inside eastern Ukraine and from the border area, while Russia’s
State Security Council in Russia said the U.S. was
instigating the fighting. “The continuing presence of a large
amount of sophisticated weaponry, as well as foreign fighters that
include servicemen from the Russian Federation, directly affects the
human rights situation in the east of Ukraine,” the UN High Commissioner
for Human Rights said in a report. “Serious human-rights violations
persist in eastern Ukraine despite tenuous cease-fire.”
- Russia’s War Games Spill Secrets, Stiffen NATO Resolve. Russian
jets probing NATO airspace and supersized war drills are
spilling Kremlin military secrets and scaring European nations into
stiffening their armed forces. The alliance said by late October
it intercepted more than 100 Russian planes this year, more than three
times the number in 2013. A report by the European Leadership Network, a
London security research group, termed the incidents “a highly
disturbing picture of violations of national airspace, emergency
scrambles” and
“narrowly avoided mid-air collisions.”
- Euro-Area Growth at Risk as Factories, Services Weaken: Economy. The euro-area economy risks a
renewed slowdown. A Purchasing Managers Index for factories and services
activity unexpectedly fell to 51.4 in November, the lowest in 16
months, from 52.1 in October, London-based Markit Economics said
today. A reading above 50 indicates expansion. A German measure also
declined, and a separate report showed weakness in China, where a
factory gauge dropped to a six-month low.
- French Factories Slump Deepens as Economic Weakness Persists. French manufacturing shrank more
than analysts forecast in November and demand fell, signaling
that an economic rebound seen in the third quarter might be
short lived. A Purchasing Managers Index fell to 47.6, the lowest in
three months, from 48.5 in October, London-based Markit
Economics said today. That’s below the 50-point mark that
divides expansion from contraction and compares with the median
forecast of 48.8 in a Bloomberg News survey. A separate index
showed services also contracted, while new business across both
industries fell the most in 17 months.
- German Growth Outlook Dims as Manufacturing, Services Weaken.
German manufacturing and services expanded at the slowest pace in 16
months in November, signaling that growth in Europe’s largest economy
will remain sluggish. A Purchasing Managers Index for both industries
unexpectedly declined to 52.1 from 53.9 in October, London-based
Markit Economics said today. While the gauge has been above the
50-point mark that divides expansion from contraction since
early last year, the reading was below the median forecast of
economists for an increase to 54.
- European Stocks Drop as Manufacturing Slows. European stocks declined as miners
fell after manufacturing data missed economists’ estimates for
the region and China. The Stoxx Europe 600 Index dropped 0.3 percent
to 338.28 at the close of trading. A gauge of mining stocks fell to its
lowest level this year, with iron-ore producers BHP Billiton Ltd. and
Rio Tinto Group losing more than 2.5 percent. National equity indexes of
Spain and Italy dropped the most among 18
western-European markets.
- Copper Falls for Third Time in Four Days on China Data.
Copper futures for March delivery declined 0.7 percent to settle at
$3.0115 a pound at 1:11 p.m. on the Comex in New York. This year, the
price fell 11 percent.
- Brent Gains First Time in 4 Days as Investors Weigh OPEC.
Brent for January settlement gained 79 cents, or 1 percent,
to $78.89 a barrel at 11:55 p.m. New York time on the London-based ICE Futures Europe exchange. Total volume of all futures
was 14 percent below the 100-day average. Front-month prices
have decreased 29 percent this year.
- Default Forecasts Could Be Low as Fed Tries to Bust Loan Bubble. What’s
worse for the U.S. economy: More bankruptcies in the near term or an
overheated market that portends another credit crisis in the longer run?
That’s a conundrum facing Federal Reserve officials, who’ve been trying
to get banks to tighten their underwriting standards for
speculative-grade loans as the market shows signs of froth. So far,
the increased oversight hasn’t prevented companies including Caesars
Entertainment Corp. and Charter Communications Inc. (CHTR) from raising
money at a record pace through new high-yield, high-risk loans this
year, according to data compiled by Bloomberg. Almost one third of
the loans in the past year had features cited as weak by federal
examiners in an annual review. Now comes the question of whether the
most-indebted companies will be allowed to eventually refinance with
similarly loose terms or whether
they’ll be forced to abide by restrictions that make it difficult, or
even impossible, to comply with their loan terms.
- Obamacare’s Subscriber Rolls Include Unpublicized Dental Plans.
The Obama administration included as many as 400,000 dental plans in a
number it reported for enrollments under the Affordable Care Act, an
unpublicized detail that helped surpass a goal for 7 million sign-ups.
- Foreign Governments Have Hacked U.S. Power System, NSA Head Says. Several foreign governments have
hacked into U.S. energy, water and fuel distribution systems and
might damage essential services, the top national security
official said. Those intrusions could leave the U.S. vulnerable to a
cyber-attack that may cause significant loss of life or physical
damage, National Security Agency Director Admiral Michael Rogers
told the House intelligence committee at a hearing in Washington today. Rogers said such an attack will occur during his tenure. “This is not theoretical,” Rogers said. “This will be
truly destructive if someone decides this is what they want to
do.”
ZeroHedge:
Reuters:
- U.S. states get more, spend more on Medicaid under Obamacare: report.
One part of the Affordable Care Act is going according to plan, with
U.S. states receiving and spending more money on the Medicaid health
insurance program, a report released by the National Association of
State Budget Officers on Thursday showed.
States run Medicaid,
which serves families who have low incomes, and receive partial
reimbursements from the federal government. The healthcare overhaul
known as Obamacare allowed more people to enroll in Medicaid and also
gave states 90 percent to 100 percent reimbursements for new enrollees. "The
large increase in federal funds to states in fiscal 2014 was almost
solely due to additional Medicaid dollars, mainly resulting from the
expansion of Medicaid in a majority of states under the Affordable Care
Act," the association found.
- NATO scrambles jets 400 times in 2014 as Russian air activity jumps. NATO warplanes have had to scramble 400 times this year in response to
an increase in Russian air activity around Europe not seen since the
Cold War, the alliance's chief said on Thursday.
- Exclusive: U.S. increasing non-lethal military aid to Ukraine. The United States plans to increase non-lethal military assistance to
Ukraine, including deliveries of the first Humvee vehicles, having
decided for now not to provide weapons, U.S. officials said.
Style Underperformer:
Sector Underperformers:
- 1) Computer Services -.70% 2) Drugs -.76% 3) I-Banks -.43%
Stocks Falling on Unusual Volume:
- WD, GMCR, AGTC, JMEI, LQDT, CPA, DCI, ATHM, LDRH, SPB, PEO, CRM, OME, BTI, SNY, CSTM, GPRO, LXFT, JKS, TGT, ACT, DISH, NML, MBLY and GIB
Stocks With Unusual Put Option Activity:
- 1) HUN 2) CHRW 3) CRM 4) XHB 5) KLAC
Stocks With Most Negative News Mentions:
- 1) ETR 2) GM 3) GMCR 4) CECO 5) HGR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.09% 2) Retail +1.46% 3) Coal +1.45%
Stocks Rising on Unusual Volume:
- BBY, CYBX, WSM, DLTR, ATVI, CLDX, URBN, CZR, RH, BBG and WLH
Stocks With Unusual Call Option Activity:
- 1) DLTR 2) DG 3) TMUS 4) MRO 5) BBY
Stocks With Most Positive News Mentions:
- 1) BBY 2) DLTR 3) JACK 4) CF 5) THOR
Charts:
