Evening Headlines
Bloomberg:
- Russia Defends Ruble With Biggest Rate Rise Since 1998. Russia took its biggest step yet to shore up the ruble and defuse the currency crisis threatening its stricken economy. In
a surprise announcement just before 1 a.m. in Moscow, the Russian
central bank said it would raise its key interest rate to 17 percent
from 10.5 percent, effective today. The move was the largest single
increase since 1998, when Russian rates soared past 100 percent and the
government defaulted on debt. The news prompted an immediate gain in the ruble, with one-month ruble forwards up 1.6 percent in Asian trading. Yet the announcement, as well as its timing, underscored the financial
straits in which Russia now finds itself. If sustained, the new higher
rates would squeeze an economy that is already being hurt by sanctions
led by the U.S. and European Union, and by a collapse in oil prices.
Some analysts said they doubted the economy could withstand such high
rates for long.
- Russia ADRs Fall Most in Five Years on Ruble’s Plunge.
Russian stocks slid the most in five years
in the U.S. as concern mounted that plunging oil prices and a weakening
currency will further harm an economy already forecast to fall into a
recession next year. The Bloomberg Russia-US Equity Index dropped 11
percent in New York yesterday, an eighth day of declines and its longest
losing streak since October 2008. Oil producer OAO Surgutneftegas
(SGTPY) sank the most on the gauge, losing 22 percent. Crude fell to a
five-year low as the United Arab Emirates said OPEC won’t rein in
production. Russia’s central bank raised its benchmark interest rate to
17 percent from 10.5 percent after the close of stock trading as the
ruble slid below 64 per dollar for the first time.
- Japanese Companies See Weaker Inflation in Kuroda Challenge. Japanese companies see a weaker inflation
outlook than three months ago, challenging central bank chief
Haruhiko Kuroda’s effort to stoke faster price gains in the
world’s third-biggest economy.
Firms forecast annual inflation of 1.4 percent in a year, slower than
1.5 percent seen three months earlier, the Bank of Japan said today.
They predict annual price gains of 1.6 percent
in three years and 1.7 percent in five years.
- China’s H Shares Decline After Flash Manufacturing Gauge Drops.
Chinese stocks declined in Hong Kong, led by energy companies and
banks, after a factory gauge fell to a seven-month low in December.
PetroChina Co. dropped 2.4 percent and China Shenhua Energy Co. slid 2.2
percent after crude oil retreated to a five-year low. Bank of China
Ltd. slumped 1.5 percent. The preliminary Purchasing Managers’ Index
from HSBC Holdings Plc and Markit Economics was at 49.5, missing the
median estimate of 49.8 in a Bloomberg survey and lower than last
month’s 50.0. Numbers below 50 indicate contraction. Citic Securities
Co. jumped 9.9 percent to lead gains in Shanghai. Hong Kong’s Hang Seng China Enterprises Index (HSCEI) fell 1.2 percent to 11,074.74 at 10:12 a.m. local time, heading for its
lowest close since Dec. 3.
- Asian Stocks Extend Drop on Oil, China While Ruble Climbs. Asian stocks fell, with the regional index
at a two-month low, as oil’s slump and weaker-than-estimated
Chinese manufacturing stoked concern that the global economy may
falter. Russia’s ruble jumped after interest rates were raised by the most since 1998, while Indonesia’s rupiah tumbled. The MSCI Asia Pacific Index (MXAP) slipped 0.7 percent by 11:04
a.m. in Tokyo, falling for a second day. A gauge of Chinese
shares in Hong Kong lost 1.1 percent.
- Oil Sands Output Rises as Canadian Crude Falls Below $40. Canadian heavy crude traded below $40 a
barrel for the first time in five years just as surge of new
projects are scheduled to start operation. A total of 14 new oil
sands projects are scheduled to start next year with a combined capacity
of 266,240 barrels a day, according to data published by Oilsands
Review. That’s 36
percent more than was started in 2014.
- Copper Declines as China Factory Data Falls to Seven-Month Low. Copper fell a second day after data today
showed industrial activity is contracting in China, the biggest consumer of base metals. Copper lost as much as 0.6 percent after dropping the most in two weeks yesterday.
The China preliminary manufacturing Purchasing Managers’ Index figure
from HSBC Holdings Plc and Markit Economics was 49.5, the lowest since
May and down from 50
in November. A number below 50 signals contraction.
Wall Street Journal:
- Australian Hostage Drama Ends in Deaths, Questions. Lone Gunman Identified as Man Haron Monis Pronounced Dead at Hospital, Along With Two Hostages. The 16-hour siege of a Sydney cafe ended with three people dead,
including the lone gunmen whose Islamist rhetoric raised fears in
Australia about the threat posed by radicalized individuals with no
clear links to organized terror groups. Police stormed the Lindt
Chocolate Café in the heart of this city’s business district behind a
barrage of gunfire after hours of fruitless negotiations, during which
most of the captor’s 17 hostages managed to escape. Two hostages—a
34-year-old man and a 38-year-old woman—were killed during the siege.
Police didn’t say whether the victims’ wounds came from the gunman or
from police.
Zero Hedge:
Business Insider:
- China's Lost It. HSBC's purchasing managers index (PMI) came in at 49.5, analysts expected a read of 49.8.
Reuters:
Telegraph:
China Business News:
- China Local Debt Actual Amount Larger Than Reported. Actual
amount of local govt debt is hugely different than amount reported to
central govt, citing Li Tie, director-general of NDRC's China Center for
Urban Development. Some cities reported 10%-30% of local debt to
central govt, Li said, citing a research trip to more than 10 cities.
Evening Recommendations
Night Trading
- Asian equity indices are -2.0% to .5% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 74.5 -.25 basis point.
- NASDAQ 100 futures +.14%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 pm EST
- Housing Starts for November are estimated to rise to 1040K versus 1009K in October.
- Building Permits for November are estimated to fall to 1065K versus 1080K in October.
9:45 am EST
- Preliminary Markit US Manufacturing PMI for December is estimated to rise to 55.2 versus 54.8 in November.
Upcoming Splits
Other Potential Market Movers
- The
Eurozone Manufacturing PMI, Germany ZEW Index, US weekly retail sales
reports, (BLMN) investor day, (MMM) outlook and the (GE) 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 modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 20.78 -1.42%
- Euro/Yen Carry Return Index 152.86 -1.12%
- Emerging Markets Currency Volatility(VXY) 10.82 +10.97%
- S&P 500 Implied Correlation 69.97 -1.58%
- ISE Sentiment Index 60.0 -10.45%
- Total Put/Call 1.05 -3.67%
Credit Investor Angst:
- North American Investment Grade CDS Index 74.23 +2.25%
- America Energy Sector High-Yield CDS Index 660.0 +1.10%
- European Financial Sector CDS Index 70.91 +9.59%
- Western Europe Sovereign Debt CDS Index 31.67 +1.10%
- Asia Pacific Sovereign Debt CDS Index 74.50 -.33%
- Emerging Market CDS Index 416.86 +7.61%
- China Blended Corporate Spread Index 345.18 +3.51%
- 2-Year Swap Spread 23.75 -.25 basis point
- TED Spread 22.75 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.0 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 153.0 -2.0 basis points
- China Import Iron Ore Spot $69.06/Metric Tonne +.10%
- Citi US Economic Surprise Index 34.40 +4.8 points
- Citi Eurozone Economic Surprise Index -19.60 +.7 point
- Citi Emerging Markets Economic Surprise Index -15.20 +.3 point
- 10-Year TIPS Spread 1.62 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -314 open in Japan
- DAX Futures: Indicating +21 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 25% Net Long
Bloomberg:
- Russia, Venezuela Rekindle Memories of 1998 Emerging-Market Rout.
Emerging markets are ending the year much like how they began it -- in
freefall. From Russia to Venezuela, Thailand to Brazil, stocks, bonds
and currencies across the developing world are plunging. The Russian
ruble tumbled past 60 for the first time on record today while
Venezuelan dollar bonds sank below 40 cents on the dollar and Thai
stocks fell the most in 11 months. Brazil’s corporate debt market is
reeling as a graft probe of state oil producer Petroleo Brasileiro SA
infects the market. All of this has something of a familiar feel to
it, dating back to 1998, when, just like now, oil was tumbling and
driving crude exporters Russia and Venezuela into financial crisis.
While lots has changed in emerging markets since then -- perhaps most
importantly, countries have higher foreign reserves
and more flexible exchange rates -- the signs of contagion are
mounting.
- Russian Industrial Output Unexpectedly Drops Amid Ruble Debacle. (video)
Russian industrial output unexpectedly shrank for the first time in 10
months as the country’s biggest currency crisis since 1998 spilled over
to manufacturing. Output at factories, mines and utilities fell 0.4
percent in November from a year earlier after a 2.9 percent increase in
October, the Federal Statistics Service in Moscow said today in an
e-mailed statement. The median estimate of 21 economists in a Bloomberg
survey was for a 1.2 percent gain. The contagion from the collapse of the ruble is spreading to manufacturing,
dealing another blow to an economy on the brink of its first recession
since 2009.
- Ruble Tumbles Most Since 1998 as Traders Pressure Central Bank.
The ruble tumbled the most since 1998, sliding past 60 for the first
time, as traders tested Russia’s willingness to defend the currency amid
an oil slump that’s pushing the economy toward recession. The
ruble weakened 9.1 percent to 64.0005 per dollar at 7:57 p.m. in
Moscow, the steepest slide on a closing basis since the year Russia
defaulted on local-currency debt. The 10-year government bond yield rose
23 basis points to 13.23 percent. Three-month implied volatility for
the ruble climbed to a six-year high as the rout triggered the Bank of
Russia to sell foreign exchange, according to BCS Financial Group and
MDM Bank.
- Indonesia Rupiah Sinks to 16-Year Low as Bonds Slide on Outflows.
Indonesia’s rupiah tumbled to the lowest level since the Asian
financial crisis as an uptick in dollar buying by local companies before
the year-end coincided with a rout in the sovereign bond market. The
currency slid 1.9 percent to 12,698 per dollar in Jakarta, the lowest
close since August 1998, prices from local banks show. That was the
biggest drop since Aug. 1. In the offshore market, one-month
non-deliverable forwards declined 1.4 percent to 12,919, according to
data compiled by Bloomberg. Overseas investors have pulled 10.09
trillion rupiah ($795 million) from local-currency sovereign bonds this
month through Dec. 11, finance ministry data show, as the prospect of
U.S.
interest-rate increases damped demand for emerging-market
assets.
- Forget the Toaster. Chinese Bank Offers Mercedes to Get Deposits. Chinese
banks, desperate to attract customers who are finding
alternatives for their savings, are turning to giveaways. On offer at
one branch in Beijing: an iPhone 6 Plus or a Mercedes-Benz. Cash
rebates, trips abroad, interest rates at the highest premium ever over
the official benchmark rate, even free vegetables are among other
goodies banks are dangling to get Chinese savers to deposit their yuan
in savings accounts. The competition is expensive. “Chinese banks are hemorrhaging their deposits,” said Rainy Yuan, a
Shanghai-based analyst at brokerage Masterlink Securities Corp. “There
is no fix for this. All the efforts they made to win savers back will
only push up the costs, so it’s a losing battle to fight.”
- Emerging-Market Stocks Fall to 10-Month Low as Currencies Plunge.
Emerging-market stocks declined, with the
benchmark index set for a 10-month low, as the ruble slid beyond
60 against the dollar for the first time ever and Indonesia’s
rupiah sank to the weakest level in 16 years. PTT Pcl, a Bangkok-based
oil company, slumped 4.9 percent, dragging Thailand’s stock gauge down
the most since January. China Mobile Ltd. fell to a seven-week low in
Hong Kong. The Ibovespa slid 3.1 percent as a report signaled that
Brazil’s economy unexpectedly contracted in October. The ruble plunged
to 63.5 per dollar before Russia’s central bank holds a long-term
auction to provide rubles to banks. Indonesia’s rupiah depreciated 2
percent. A Bloomberg gauge tracking 20 developing-economy currencies
declined 1.3 percent. The MSCI Emerging Markets Index lost 1.6 percent
to 923.58
at 11:24 a.m. in New York.
- European Stocks Erase 2014 Gain as Miners, Energy Shares Tumble. European
stocks reversed an earlier advance, posting their biggest six-day slump
since August 2011, after data showed a decline in manufacturing for the
New York area and oil prices resumed a decline. With today’s 2.2 percent slump to 323.29, the Stoxx Europe
600 Index has erased its annual increase, closing at its lowest
level since Oct. 20. The gauge reversed an advance of as much as
0.8 percent today as the Federal Reserve Bank of New York’s
Empire State Index unexpectedly dropped this month and oil
prices erased gains. Stoxx 600 energy and commodity producers
slid at least 2.9 percent.
- Oil Falls; UAE Says OPEC Won’t Cut Output to Boost Price. (video)
West Texas Intermediate for January delivery declined $1.32, or 2.3
percent, to $56.49 a barrel at 1:36 p.m. on the New York Mercantile
Exchange. Futures touched $55.87, the lowest since May 2009. Total
volume was 51 percent above the 100-day average for the time of
day. It’s dropped 43 percent this year.
- Oil-Bust Vets Brace for Storm Unseen by Shale-Boom Neophytes. The West
Texas wildcatter, 76, has weathered four such cycles in his 52 years
draining crude from the Permian basin, still the most prolific U.S.
oilfield. Though the collapse in prices since June doesn’t yet have him
in a panic, Stephens recognizes the signs of another downturn on the
horizon. And like many bust-hardened veterans in this region -- which has made
and broken the fortunes of thousands -- he’s talking about it like a
gathering storm. The ups and downs of oil are a way of life in Midland
and Odessa, Texas, dating all the way back to the Great Depression. It’s
as much a part of the culture as Gulf Coast hurricanes, and residents
often prepare accordingly.
- Copper Drops on ‘Mixed’ U.S. Reports on Homes, Industrial Output. Copper futures for March delivery fell 1.7 percent to
$2.8835 a pound at 11:49 a.m. on the Comex in New York. A close
at that price would mark the biggest drop for a most-active
contract since Nov. 28. Trading was 30 percent below the 100-day
average for this time, data compiled by Bloomberg show.
Wall Street Journal:
- Sydney Cafe Siege: Three Dead in Standoff. Lone Gunman Identified as Man Haron Monis Pronounced Dead at Hospital, Along With Two Unnamed Hostage. A siege that shut down a large part of central Sydney for more than
16 hours ended in bloodshed early Tuesday, after two hostages and their
armed captor were killed when police stormed the cafe behind volleys of
bullets.
New South Wales police said the lone gunman—identified
as 50-year-old self-proclaimed cleric
Man Haron Monis
—was pronounced dead in hospital following the shootout at the
Lindt Chocolate Café in Martin Place around 2:10 a.m. The two unnamed
hostages, a 34-year-old man and a 38-year-old woman, also died following
the confrontation between the gunman and police.
- Investors Fear Industry Is at ‘Top of the Cycle'. Investors are worried that the private equity market is at the “top
of the cycle” and there is too much money chasing deals, according to a
survey released this week. The survey of 90 global institutional investors by placement agent
Probitas Partners found that the top concern for investors was that “too
much money is pursuing too few attractive opportunities,” with 55% of
respondents saying this was something that kept them up at night.
- UAW Chief Aims to Eliminate Two-Tier Wage. Union President Says Battling Right-to-Work Not Among Top Priorities. United Auto Workers President Dennis Williams said on Monday the
lower wage scale for newer auto workers make is unacceptable, and the
roughly $19.50 hourly wage new hires earn should only be seen as a “good
starting point” or negotiations with Detroit auto makers next year.
MarketWatch.com:
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
Handelsblatt:
- German
Stability Council Sees Growth Goal Too High. The German stability
council says 4 German states need to cut spending further, citing a
paper due to be published today.
RIA Novosti:
- Russia to Send 10th Aid Convoy to Ukraine Soon. Russia's
Emergencies Ministry organizing convoy, which will deliver New Year's
presents to Donetsk, Luhansk regions, citing ministry spokesman.
meps:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.72% 2) Biotech -2.51% 3) Restaurants -1.63%
Stocks Falling on Unusual Volume:
- SWZ, CALA, EDF, ANFI, LINE, KYN, SNAK, CLMT, VIIX, PAH, WLL, GLP, BLUE, KITE, SNY, RDUS, LGCY, AMPH, FMX, FIZZ, KEP, OVAS, BDSI, BPT, VNR, FRGI, VDSI, ADBE, KYN, MEI, WLL, CVRR, BLUE, HCT, AGIO, MEMP, AMRI, ISIS, TGTX, CONN, VNR, LGCY, SGMO and INFI
Stocks With Unusual Put Option Activity:
- 1) EPI 2) CNX 3) XLK 4) XLB 5) KMX
Stocks With Most Negative News Mentions:
- 1) RMD 2) F 3) GM 4) PBR 5) F
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Oil Service +.36% 2) Software +.11% 3) Retail +.03%
Stocks Rising on Unusual Volume:
- RVBD, CRUS, RBC, RRC and PETM
Stocks With Unusual Call Option Activity:
- 1) CRUS 2) RVBD 3) PETM 4) DRI 5) AVP
Stocks With Most Positive News Mentions:
- 1) LMT 2) ROK 3) RVBD 4) NDAQ 5) APC
Charts:
Weekend Headlines
Bloomberg:
- Crimea Ignores Economic Pain to Embrace Putin in New Russia Era.
In the Crimean resort town of Alushta,
realtor Janna Voitenko is doing all she can to welcome the
region’s new overseers. A Russian flag hangs outside her office
and a portrait of President Vladimir Putin is in the entry. It hasn’t
offset an economy that’s dead in the water. She spends her days waiting
for customers to come in. With revenue at her real estate agency down 90
percent, Voitenko is turning to family and friends to help pay the
office rent. Even if anyone did want to buy a flat, she’d have a hard
time finding a listing for them: the property database was only just
reopened after being closed since March, when Ukraine cut access to the
records after Russia annexed Crimea.
- Congress Passes Tougher Russia Sanctions But Gives Obama Leeway. The U.S. Congress has voted for tougher
sanctions to punish Russia for its intervention in Ukraine,
moving beyond steps the White House and European Union have been
willing to take while giving President Barack Obama leeway in
applying most of the provisions.
- Japan’s Manufacturers’ Sentiment Sags in Challenge for Abe. Confidence of Japan’s large manufacturers
declined in the fourth quarter as a recession offset a boost
from a weaker yen, underlining the economic challenges facing
Prime Minister Shinzo Abe after his election win. The Tankan’s big manufacturer index slipped to 12 in December from 13 in September, the Bank of Japan said today, lower than the median estimate of 13 in a Bloomberg News survey of economists. The index is forecast to drop to 9 in March.
- How China’s Interest-Rate Cut Raised Borrowing Costs. What if a central bank cut interest rates and borrowing costs rose? Since
the People’s Bank of China surprised markets with the first benchmark
rate reduction in two years on Nov. 21, the five-year sovereign bond
yield climbed 15 basis points, that for similar AAA corporate notes
surged 37 and AA debt yields jumped 76. While finance companies did
start charging less for mortgages, their funding costs rose as the
one-week Shanghai interbank lending rate added 37 basis points.
- Australia’s Budget Deficit Widens to A$40.4 Billion on Iron Ore.
Australia’s government forecast a wider budget gap this year as falling
iron ore prices reduce revenue and spending cuts are held up by
parliament. The underlying cash deficit will deteriorate to A$40.4
billion ($33.2 billion) in the fiscal year ending June 30, 2015 from a
May estimate of A$29.8 billion, Treasurer Joe Hockey said in the
mid-year economic and fiscal outlook today. The
government forecast unemployment to climb to 6.5 percent in the
second quarter, higher than its May projection of 6.25 percent.
- Petrobras Said to Delay Results on Graft Writedowns.
Disagreement at Petroleo Brasileiro SA (PETR4)’s board led the state-run oil producer at the center of a
corruption scandal to delay releasing full financial results, a
person with direct knowledge of the issue said.
- Qatar Stocks Enter Bear Market as Dubai Erases 2014 Gains on Oil. Shares in Qatar plunged, becoming the fifth
gauge in the oil-rich Gulf Cooperation Council to enter a bear
market, as crude prices dropped to the lowest level since July 2009. Dubai’s
gauge wiped out this year’s advances. Qatar’s QE Index (DSM) lost 5.9
percent to 11,114.43 at the close in Doha, bringing its decline since
September’s record high to 23 percent. Dubai’s DFM General Index (DFMGI)
lost 7.6 percent, the most since October 2008. The shares have
retreated 34 percent this quarter, turning one of the world’s best gains
in 2014 into a
1.4 percent loss. The measure, along with indexes in Saudi
Arabia, Kuwait and Oman fell into a bear market in the past
three weeks.
- China Stocks Fall on Growth Concern as Financial Companies Slump. China’s stocks fell, led by financial
companies, amid concern the slowdown in the world’s second-largest economy is deepening.
China Construction Bank Corp., the second-biggest lender, dropped 2.2
percent after saying it plans to raise as much as 80 billion yuan ($12.9
billion) by selling preferred stock. China Vanke Co. and Poly Real
Estate Co., the largest developers, slumped more than 3 percent after an
economist for the central bank said a slowdown in real estate
investment in 2015 will drag down economic growth. Agile Property
Holdings Ltd. jumped 6.9 percent in Hong Kong after the developer said
its chairman was
released from house arrest in China.
The Shanghai Composite Index decreased 1 percent to
2,908.02 at 9:44 a.m.
- Oil Rout Drags Stocks Lower on Growth Concern; JGBs Gain.
Oil slumped with Asian stocks and commodity-producer currencies as
concern that the global economic outlook is worsening pushed credit risk
higher and drove Japanese bond yields to a 20-month low. West Texas
Intermediate oil sank 0.8 percent to $57.34 a barrel by 11:26 a.m. in
Tokyo, taking losses to more than 46 percent since a June 20 high. The
MSCI Asia Pacific Index retreated 1.2 percent as a gauge of
emerging-market stocks slid to a 10-month low. Australia’s dollar
weakened 0.3 percent, while Indonesia’s rupiah tumbled 1.1 percent.
- Oil Trades Near $60 a Barrel as OPEC Seen Resisting Cuts. Oil traded near $60 a barrel in London as
the United Arab Emirates said OPEC will refrain from cutting
output even if prices slumped to as low as $40. U.S. benchmark
crude extended its drop from a five-year low.
Brent futures were little changed after dropping 2.9
percent on Dec. 12.
- Oil Slump Blindsides Bulls That Wagered on Rout Ending: Energy. Speculators added to wagers that the slump
in oil futures, the worst since the global recession, is ending.
Prices kept falling anyway. Money managers raised their net-long position in U.S. crude to the highest in two months in the week ended Dec. 9, U.S. government data show. Most of the change came from short holdings contracting to the lowest level since August.
- Australia Sees Iron-Ore at $60 as Commodities Hit Budget.
Australia cut its iron-ore price forecast to about $60 a metric ton as a
commodity slump deepens the budget deficit more than previously
estimated. Prices for the material dropped from the government’s initial
estimate of $92 a ton for the budget, Treasurer Joe Hockey said in a
televised press conference from Sydney today. Australia’s terms of trade
have seen the biggest decline since records were first kept in 1959, he
said. “That more than 30 percent fall in iron ore prices has had
a big impact on the budget, as had a 15 percent fall in thermal
coal and 20 percent fall in wheat prices since the budget,”
Hockey said. The price of iron ore will “remain around $60 a
ton for the foreseeable future,” he said.
- Fossil-Fuel Limits Everywhere Closer After UN Climate Deal. After two
weeks of discussions in Peru organized by the United Nations, the
diplomats agreed on the detail of pledges from all nations on curbing
greenhouse gases. Richer countries gave an assurance they’re on track to
mobilize $100 billion a year in climate aid by 2020. The decision sets the framework for a landmark agreement the UN
intends to adopt in December 2015 in Paris that will rein in the
emissions damaging the atmosphere. It included last- minute concessions
to some of the poorest nations in the world, who are concerned the
system will impose costly and painful changes on their economies.
Wall Street Journal:
- Sydney Cafe Siege Sparks Terror Fears. TV Showing Cafe’s Customers With Hands Up; Islamic Flag Displayed. Armed police shut down central Sydney after a suspected gunman and
possibly accomplices took several people hostage in a cafe and placed an
Islamic flag in the window, sparking concerns a terrorist attack was
under way. Authorities sealed off surrounding streets, evacuated
people from buildings, and suspended rail services following the
incident at the Lindt Chocolate Café in Martin Place, in the heart of
the city’s business district.
- China Steps Up Scrutiny of Margin Trading. Move Comes After Volatility in Chinese Stocks. China’s securities watchdog said it would conduct spot checks on some
brokerages’ margin trading business, signaling regulators’ growing
concerns about the risky investment practice that has contributed to a
recent rally in the country’s stock market.
Night Trading
- Asian indices are -1.0% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 112.0 +6.0 basis points.
- Asia Pacific Sovereign CDS Index 74.75 +8.25 basis points.
- NASDAQ 100 futures +.44%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for December is estimated to rise to 12.0 versus 10.16 in November.
9:15 am EST
- Industrial Production for November is estimated to rise +.7% versus a -.1% decline in October.
- Capacity Utilization for November is estimated to rise to 79.4% versus 78.9% in October.
- Manufacturing Production for November is estimated to rise +.7% versus a +.2% gain in October.
10:00 am EST
- The NAHB Housing Market Index for December is estimated to rise to 59 versus a reading of 58 in November.
4:00 pm EST
- Net Long-Term TIC Flows for October.
Upcoming Splits
Other Potential Market Movers
- The China HSBC Manufacturing PMI, (HON) Outlook Conference Call, (HPQ) business update and the (AGCO) analyst meeting could
also impact trading today.
BOTTOM LINE: Asian
indices are lower, weighed down 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 25% net long heading into the week.
