Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.53 -.37%
- Euro/Yen Carry Return Index 152.33 -1.63%
- Emerging Markets Currency Volatility(VXY) 7.77 -3.24%
- S&P 500 Implied Correlation 33.12 -.12%
- ISE Sentiment Index 75.0 -31.19%
- Total Put/Call .75 -21.87%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.85 -3.8%
- European Financial Sector CDS Index 64.33 -4.65%
- Western Europe Sovereign Debt CDS Index 30.70 -2.62%
- Asia Pacific Sovereign Debt CDS Index 63.89 -2.84%
- Emerging Market CDS Index 266.92 -3.21%
- China Blended Corporate Spread Index 327.17 +.96%
- 2-Year Swap Spread 21.75 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 181.0 -2.0 basis points
- China Import Iron Ore Spot $70.31/Metric Tonne -.93%
- Citi US Economic Surprise Index 19.90 -1.5 points
- Citi Eurozone Economic Surprise Index -36.0 +1.0 point
- Citi Emerging Markets Economic Surprise Index -1.0 unch.
- 10-Year TIPS Spread 1.88 +2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +76 open in Japan
- DAX Futures: Indicating -25 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my EEM short, added to my (IWM)/(QQQ) hedges
- Market Exposure: 50% Net Long
Bloomberg:
- Ukraine’s Poroshenko Jeered at Ceremony Missed by Biden. Ukrainian
President Petro Poroshenko
said he would sign a decree today naming people who died in
clashes with security forces in Kiev as heroes of Ukraine, after demands
made by an angry crowd at a memorial. Poroshenko made the announcement
after being met with shouted abuse and cries of “shame on you” at the
memorial to more than 100 people who died during clashes with security
services that led to the ousting of former President Viktor Yanukovych
in February. He was visiting the memorial on the first anniversary
of the start of the “Euromaidan” protests. U.S. Vice President Joe
Biden, who is in Kiev today, was
scheduled to attend the event with Poroshenko, though he was not
present during the protest.
- Russian Retail Sales Growth Stalls After Ruble Plunges.
Russian retail sales growth
stagnated after the ruble had its worst month in more than two
years and joblessness rose to the highest since April. The ruble’s
plunge to record lows and inflation at the
fastest since July 2011 are eating into consumers’ finances. That’s
plaguing domestic demand already burdened by higher interest rates,
capital flight and tit-for-tat sanctions over the conflict in
neighboring Ukraine.
- Draghi Ramps Up Stimulus Pledge on Weak Inflation Outlook.(video) Mario Draghi strengthened his stimulus pledge for the euro area by
saying the European Central Bank can’t hold back in its fight to revive
the economy. “We will do what we must to raise inflation and
inflation expectations as fast as possible, as our price-stability
mandate requires,” the ECB president said at a conference in Frankfurt
today. Some inflation expectations “have been declining to levels that I
would deem excessively low,” he said.
- Fed May Limit Wall Street Role in Commodities, Citing Risks. The
Federal Reserve may curtail Wall Street commodity businesses after
lawmakers said banks’ role in energy, power and metals markets spurred
unfair trading advantages and could threaten financial stability. At
a Senate hearing today, Fed Governor Daniel Tarullo said curbs under
consideration include ownership limits, restricting how much revenue can
be derived from commodities and requiring Wall Street firms to boost
capital. He said the new rules, to be proposed early next year, could
restrict banks from investing in oil tankers, coal mines and other
businesses involved in
physical commodities.
- Junk Bonds Whipsawed as Trading Drought Rattles Investors. Junk bond investors have a bad case of the jitters. Every bit of bad
news is whipsawing prices, with bonds tumbling as much as 50 percent in a
single day. “We’ve seen some flash crashes in the market,”
saidHenry Craik-White, a senior investment analyst at ECM Asset
Management in London, which oversees $8 billion. “If you get caught on
the wrong side of a name, you can get severely punished in this
market.”
- European Stocks Jump as Draghi Repeats Inflation Pledge.
Stocks in Europe climbed to a two-month high as European Central Bank
President Mario Draghi reiterated his commitment to raising inflation as
fast as possible, and China cut interest rates. The Stoxx Europe 600 Index added 2.1 percent to 345.24 at the close of trading, snapping a two-day losing streak.
- Iron Ore Completes Fifth Weekly Loss as ‘Worst Is Yet to Come'. Iron ore capped 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 6.8
percent this week, dropping to $70.20 on Nov. 19, the lowest
level since June 2009, data from Metal Bulletin Ltd. showed. The
price retreated 0.9 percent to $70.31 a dry ton today.
- Crude Pares Gain as China Rate Cut Not Seen Erasing Glut.
WTI for January delivery fell 6 cents to $75.79 a barrel at 12:04 p.m.
on the New York Mercantile Exchange. The December contract expired
yesterday after rising $1 to $75.58. The volume of all futures traded was 11 percent below the 100-day average
for the time of day.
CNBC:
ZeroHedge:
Business Insider:
- China Has The Market Fooled. In a note released after the announcement, Societe Generale's Wei
Yao admitted that she didn't see the interest-rate cut coming, but also
reiterated that it's not a "de facto rate cut."
Reuters:
Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -.37% 2) Utilities -.35% 3) Software -.31%
Stocks Falling on Unusual Volume:
- TCPC, GME, WAIR, ARUN, FL, GPS, LGF, MMI, CYBX, VLP, TASR, ZOES, TFM, DDS, GMCR, GEOS, MMP, JMEI, ATHN, FMI, RYAAY, TOO, AGN, ASML, TCBI, LQDT, CYBX and GEOS
Stocks With Unusual Put Option Activity:
- 1) TWX 2) COP 3) FL 4) XRT 5) GPS
Stocks With Most Negative News Mentions:
- 1) EBAY 2) MCD 3) F 4) ABC 5) MINI
Charts:
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
