Bloomberg:
- Russia Hardens Military Doctrine Amid NATO Standoff Over Ukraine. Russia hardened its military doctrine,
identifying new threats after tensions with its Cold War foe
NATO increased over the conflict in Ukraine. The revised document posted today on the Kremlin website
names attempts to overthrow neighboring governments as a major
threat, as well as the North Atlantic Treaty Organization’s
buildup close to the country’s borders. The previous draft was
published in 2010. Russia also cited as threats information campaigns aimed at
corrupting the Russian population, sabotage by foreign
intelligence, the deployment of missile-defense components and
high-precision conventional weapons, and the use of information
technology for military purposes.
- Russia May Burn Wealth Funds in 3 Years Without Budget Revision.
Russia, poised to enter a recession, will burn through its rainy-day
funds in three years if the government doesn’t change the budget
structure, according to Finance Minister Anton Siluanov. With oil
prices at $60 a barrel, Russia’s economy may contract about 4 percent
next year and have a budget deficit of morethan 3 percent of output,
Siluanov told reporters in Moscow
today. The ministry will use these estimates and an exchange
rate of 51 rubles per dollar to review the 2015 budget.
- Oil Heads for Fifth Weekly Loss on Global Glut Concern. Brent for February settlement slipped 40 cents, or 0.7 percent, to
$59.84 a barrel at 12:03 p.m. New York time on the London-based ICE Futures Europe exchange. The volume of all futures was 89 percent below the 100-day average with much of Europe on holiday after Christmas.
- Copper Slumps to Three-Week Low on U.S. Interest-Rate Outlook.
Copper futures for March delivery fell 1.4 percent to
settle at $2.814 a pound at 1:16 p.m. on the Comex in New York.
Earlier, the price touched $2.804, the lowest for a most-active
contract since Dec. 1. The metal declined for a fourth straight
session, the longest slump since Nov. 28.
- Natural Gas Futures Drop Below $3 for First Time Since 2012. Natural gas futures slumped below $3 per million British thermal
units for the first time since 2012 on speculation that record
production will overwhelm demand for the heating fuel. Futures
have plunged 27 percent in December, heading for the biggest one-month
drop since July 2008, as mild weather and record production erased a
surplus to year-ago levels for the first time in two years. Temperatures will
be mostly above average in the eastern half of the U.S. through Dec. 30,
according to Commodity Weather Group LLC.
- Xbox, PlayStation Networks Attacked, Hackers Claim Credit. Microsoft Corp. (MSFT)’s Xbox Live and Sony Corp. (6758)’s PlayStation Network, Internet services that video gamers use to
play online, were hit by connection failures on Christmas Day,
with the hackers Lizard Squad claiming responsibility.
Wall Street Journal:
CNBC:
- Russian ruble slides 4 percent after official says it has stabilized. The
Russian currency on Friday ended its five-day rally and declined 4
percent as the markets remain jittery over the outlook of the Russian
economy. The ruble has been the worst performing
currency this year along with the Ukrainian hryvnia, having lost nearly
half of its value against the dollar.
ZeroHedge:
Business Insider:
Reuters:
- Mexican factory exports post biggest drop in nearly 2 years. Mexican factory exports
posted their biggest decline in nearly two years in November,
pushing the country into a trade deficit, official data showed
on Friday. Adjusted for seasonal swings, factory exports declined by
5.0 percent from October, the biggest monthly drop since January
2013, according to figures from the national statistics office. Total exports were down by 4.8 percent in adjusted terms
after a rise of 3.8 percent the previous month. By contrast,
total imports increased by 0.6 percent, the second consecutive
monthly advance, the office data showed.
Style Underperformer:
Sector Underperformers:
- 1) Steel -.45% 2) Hospitals -.32% 3) Oil Service -.30%
Stocks Falling on Unusual Volume:
- CUBA, KNOP, BIS, REMY, CALM, BDSI, GLP, OCN and VNOM
Stocks With Unusual Put Option Activity:
- 1) DD 2) IBB 3) XLU 4) DDD 5) GPRO
Stocks With Most Negative News Mentions:
- 1) PBR 2) JCP 3) RCP 4) VSLR 5) VOLC
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.73% 2) Biotech +1.66% 3) Alt Energy +1.15%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) RPTP 2) SO 3) VA 4) KKR 5) GRPN
Stocks With Most Positive News Mentions:
- 1) GPRO 2) IBM 3) NKE 4) GILD 5) H
Charts:
Evening Headlines
Bloomberg:
- Russia Raises Forecast Deficit for Next Year as Recession Looms. Russia is facing a “considerably higher” deficit next year than planned as the economy slides toward recession, according to Finance Minister Anton Siluanov. “If incomes are lower and the main spending is fully
financed, then we’ll have to use reserves and increase the
deficit,” Siluanov told reporters in Moscow. “One year with a
deficit isn’t so scary, the most important thing is to prepare
future budgets.”
- Russia's Defense of the Ruble Cuts Reserves by $15.7 Billion in Week.
Russia’s international reserves plunged the most in six years, losing
$15.7 billion last week as the government and central bank pledged
measures to support banks and defend the currency. The value of the
stockpile, which includes the central bank’s reserves and two sovereign
wealth funds, fell to $398.9 billion in the week through Dec. 19, the
Bank of Russia said today on its website. That is 22 percent drop from
January.
- Japan Struggles to Escape Recession as Production Drops: Economy.
Japan’s inflation slowed for a fourth month in November, and industrial
production and retail sales unexpectedly dropped, pointing to further
weakness in an economy Prime Minister Shinzo Abe is trying to revive
from recession. Output (JNIPMOM) fell 0.6 percent in November from a
month earlier, the trade ministry said today, against a median estimate
of a 0.8 percent increase in a Bloomberg News survey of economists.
Retail sales slid 0.3 percent, while consumer prices excluding fresh
food rose 2.7 percent from a year earlier. Real wages fell the most
since 2009.
- Saudi Rulers to Curb Wages as Kingdom Confronts Oil Slump. Saudi authorities pledged to curb wages and
push ahead with investments next year as the world’s largest oil
exporter seeks to counter the effect of tumbling crude prices on
the economy. The government said it expects the budget deficit in 2015
to widen to 145 billion riyals ($39 billion), from 54 billion
riyals this year, the Finance Ministry said today. That amounts
to about 5 percent of gross domestic product, according to
Arqaam Capital, a Dubai-based investment bank.
- Asian Shares Extend Weekly Gain as Gold Climbs, Yen Falls.
Asian shares extended a weekly advance while
the yen fell against the dollar as slowing inflation in Japan boosted
speculation the central bank will introduce more stimulus to revive the
economy. Gold and silver rose with oil. The MSCI Asia Pacific Index (MXAP) added 0.2 percent to 137.65 at
11:28 a.m. in Tokyo, heading for its first weekly gain since
November.
- U.S. Spy Agency Reports Improper Surveillance of Americans. The National Security Agency today released
reports on intelligence collection that may have violated the
law or U.S. policy over more than a decade, including
unauthorized surveillance of Americans’ overseas communications. The
NSA, responding to a Freedom of Information Act lawsuit from the
American Civil Liberties Union, released a series of required quarterly
and annual reports to the President’s Intelligence Oversight Board that
cover the period from the
fourth quarter of 2001 to the second quarter of 2013.
- Sony’s ‘The Interview’ Packs Theaters Without Violence. Sony Pictures’ “The Interview,” the Seth Rogen comedy that sparked a
cyber attack linked to North Korea and threats of violence in theaters,
filled cinemas in a limited Christmas Day release across the U.S.
without incident.
Wall Street Journal:
- U.S. Puts New Focus on Fortifying Cyber Defenses. Sony Hacking Case Gives White House, Business Interests Urgency to Address Internet Security. The Obama administration is increasingly concerned about a wave of
digital extortion copycats in the aftermath of the cyberattack on Sony
Pictures Entertainment, as the government and companies try to navigate
unfamiliar territory to fortify defenses against further breaches.
- Antigraft Campaign Ripples Through China’s Economy. Some Business Are Adjusting Priorities In a Climate of Stricter Government Scrutiny. China’s biggest oil company is eschewing everything from
multibillion-dollar deals to employee birthday cakes. A company that
supplies alcohol for high-end spirits makers has turned to making
industrial chemicals, while a restaurant chain that once served spicy
fish heads to well-fed officials is now investing in big data.
- S&P Nears Settlement on Real-Estate Bond Ratings. Pact Would Be With SEC, New York and Massachusetts. Standard & Poor’s Ratings Services is nearing a settlement with
regulators over their investigation of how the company graded
real-estate bonds, according to people familiar with the matter.
Fox News:
Zero Hedge:
Business Insider:
NY Times:
Reuters:
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.50 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 64.5 unch.
- NASDAQ 100 futures +.24%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The China industrial profits report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity 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) 14.10 -4.73%
- Euro/Yen Carry Return Index 153.31 -.06%
- Emerging Markets Currency Volatility(VXY) 10.85 -.28%
- S&P 500 Implied Correlation 64.97 -1.77%
- ISE Sentiment Index 51.0 -27.14%
- Total Put/Call .94 +10.59%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.25 -.35%
- America Energy Sector High-Yield CDS Index 636.0 +1.1%
- European Financial Sector CDS Index 61.86 -.86%
- Western Europe Sovereign Debt CDS Index 26.76 -3.51%
- Asia Pacific Sovereign Debt CDS Index 64.55 +.01%
- Emerging Market CDS Index 325.69 +.46%
- China Blended Corporate Spread Index 339.71 -1.04%
- 2-Year Swap Spread 18.75 +.25 basis point
- TED Spread 23.5 +1.75 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -14.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% -2.0 basis points
- Yield Curve 153.0 +1.0 basis points
- China Import Iron Ore Spot $66.94/Metric Tonne +.15%
- Citi US Economic Surprise Index 38.60 +1.6 points
- Citi Eurozone Economic Surprise Index 2.60 +.5 point
- Citi Emerging Markets Economic Surprise Index -13.70 +.3 point
- 10-Year TIPS Spread 1.68 -3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +80 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/medical sector longs
- Market Exposure: 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Energy -1.22% 2) Oil Service -1.20% 3) Social Media -.90%
Stocks Falling on Unusual Volume:
- CAMP, DLNG, CUBA, BIS, AFG, CAF, CALM, WMC, PKO, ARDX, OAS, PTY, SSL, VLP, AAVL, PDI, TGP, NOAH, BCPC, KOP, NE and CLR
Stocks With Unusual Put Option Activity:
- 1) SHLD 2) NVDA 3) XLU 4) OIH 5) BBY
Stocks With Most Negative News Mentions:
- 1) MON 2) CHK 3) JCP 4) NBL 5) CLR
Charts:
