Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 16.01 +6.31%
- Euro/Yen Carry Return Index 151.72 -.93%
- Emerging Markets Currency Volatility(VXY) 10.85 +.28%
- S&P 500 Implied Correlation 66.79 +2.61%
- ISE Sentiment Index 74.0 +25.42%
- Total Put/Call 1.0 +19.05%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.12 +.72%
- America Energy Sector High-Yield CDS Index 634.0 -.08%
- European Financial Sector CDS Index 66.46 +4.88%
- Western Europe Sovereign Debt CDS Index 27.86 +1.13%
- Asia Pacific Sovereign Debt CDS Index 66.41 +4.39%
- Emerging Market CDS Index 335.45 +1.46%
- China Blended Corporate Spread Index 341.76 +.32%
- 2-Year Swap Spread 20.25 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% +1.0 basis point
- China Import Iron Ore Spot $71.15/Metric Tonne +3.55%
- Citi US Economic Surprise Index 38.40 -1.6 points
- Citi Eurozone Economic Surprise Index 9.20 +4.1 points
- Citi Emerging Markets Economic Surprise Index -13.0 +.5 point
- 10-Year TIPS Spread 1.64 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -25 open in Japan
- DAX Futures: Indicating -15 open in Germany
Portfolio:
- Slightly Lower: On losses in my biotech/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Utilities -1.90% 2) Coal -1.50% 3) Biotech -1.03%
Stocks Falling on Unusual Volume:
- WGP, SWN, LFC, WBAI, ARDX, SSL, TEG, CLH, VNR, NVGS, CCLP, TOT, HCLP, BTI, CLMT, CSGP, EXP, VNCE, EMES, XONE, KNOP, PKX, GGAL, VET and TGH
Stocks With Unusual Put Option Activity:
- 1) XLP 2) EMR 3) WFM 4) MNST 5) XLY
Stocks With Most Negative News Mentions:
- 1) COP 2) CVEO 3) MGM 4) CAVM 5) GMCR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +4.10% 2) Steel +.97% 3) Airlines +.93%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) ARCP 2) MCP 3) GSAT 4) WEN 5) ACT
Stocks With Most Positive News Mentions:
- 1) LTM 2) GEO 3) QCOM 4) UPS 5) HTGC
Charts:
Evening Headlines
Bloomberg:
- Russian ADRs Drop on First GDP Contraction Since 2009.
Russian stocks traded in New York fell to the lowest level in a week as
the economy shrank for the first time in five years and a court
hastened the scheduled reading of a verdict in the case against
opposition leader Alexey Navalny. The Bloomberg Russia-US Equity
Index dropped 4.5 percent to 50.41 in New York. The Market Vectors
Russia ETF, the biggest exchange-traded fund tracking the country’s
stocks, sank percent
8.7 percent to $14.61. The ruble tumbled 7.4 percent against the
dollar.
- China, U.S. Join the Search for AirAsia QZ8501 in Waters Near Borneo. Chinese and U.S. military ships are heading to seas south and west of Borneo where a AirAsia Bhd. (AIRA) passenger jet is suspected of crashing as the search enters its third day. The USS Sampson will arrive today in the area where flight QZ8501 vanished Dec. 28 carrying 162 people, the U.S. Seventh Fleet said in an e-mailed statement. China will send a navy frigate and aircraft, the official Xinhua news agency said.
- ‘Cartel’ Chat Room Tied to BP Gave FX Tips From Banks to Client. Halfway down a muddy, secluded road on
marshland in suburban Essex sits Wharf Pool, a lake stocked with some of the biggest freshwater fish you will ever see. A white sign with red lettering reads: “Private Syndicate: Strictly Members Only.” A metal gate, a barbed-wire fence and
two CCTV cameras bar the way. Anglers hoping to spend time on
the lake’s carefully tended banks must join a waiting list.
Those who make it to the top pay a membership fee that buys them
the chance to catch a carp that weighs more than a Jack Russell.
There are hundreds of them swimming beneath the surface. It’s
close to shooting fish in a barrel.
- Asian Stocks Extend 2014 Drop as Yuan Weakens; Oil Gains.
Asian stocks fell amid shrinking volumes, with the regional index
heading for its first annual drop since 2011. The yuan slipped to the
weakest level since June, while oil climbed from a five-year low. The MSCI Asia Pacific Index lost 0.4 percent at 11:32 a.m. in Tokyo, extending this year’s retreat to 2.5 percent. Trading on Japanese, Chinese and Korean bourses was at least 16 percent lower than the 30-dayaverage.
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
Wen Wei Po:
- Microsoft(MSFT)
to Close 2 China Factories in 1Q. Microsoft will shut down factories in
Beijing and Dongguan and move manufacturing to Hanoi in Vietnam. More
than 3,000 workers may lose jobs.
China Securities Journal:
- Some Chinese Banks May See Drop in 2015 Results. Some banks may
see zero increase or even decline in 2015 performance, citing an
industry participant. Bank performance affected by accelerating interest
rate liberalization, regulatory scrutiny of interbank businesses and
deteriorating asset quality.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 103.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 63.75 -.75 basis point.
- NASDAQ 100 futures +.13%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- The S&P/CS Composite-20 YoY for October is estimated to rise +.4% versus a +.34% gain in September.
10:00 am EST
- Consumer Confidence for December is estimated to rise to 94.0 versus 88.7 in November.
Upcoming Splits
Other Potential Market Movers
- The UK Housing Price report, China Manufacturing PMI and US weekly retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.47 +6.69%
- Euro/Yen Carry Return Index 153.25 +.07%
- Emerging Markets Currency Volatility(VXY) 10.84 +.46%
- S&P 500 Implied Correlation 65.06 +.84%
- ISE Sentiment Index 63.0 -34.38%
- Total Put/Call .82 +13.89%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.49 +1.87%
- America Energy Sector High-Yield CDS Index 635.0 +.25%
- European Financial Sector CDS Index 63.60 +2.11%
- Western Europe Sovereign Debt CDS Index 27.55 +3.26%
- Asia Pacific Sovereign Debt CDS Index 63.62 -1.27%
- Emerging Market CDS Index 330.63 +1.56%
- China Blended Corporate Spread Index 340.67 +.64%
- 2-Year Swap Spread 19.25 +.75 basis point
- TED Spread 25.75 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .00% unch.
- Yield Curve 150.0 -1.0 basis point
- China Import Iron Ore Spot $68.71/Metric Tonne +2.03%
- Citi US Economic Surprise Index 40.0 +1.4 points
- Citi Eurozone Economic Surprise Index 5.10 +1.4 points
- Citi Emerging Markets Economic Surprise Index -13.50 +.4 point
- 10-Year TIPS Spread 1.65 -3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +85 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/retail sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- Greek Vote Puts ECB Funds at Risk as Crisis Memories Revived. Greece’s descent into political crisis is threatening the country’s financial system. The
European Central Bank, already battling the risk of euro-area
deflation, may soon have to decide whether to withdraw much of
itsfunding for Greek lenders. Special rules on Greek
assets accepted as collateral will become invalid if snap
elections prevent the country from agreeing to a replacement for
its bailout program by the end of February. The prospect of renewed Greek turmoil is reviving memories
of the euro-area debt crisis, which started in the southern
European nation in 2009 and spread until it threatened the
survival of the single currency in 2012.
- Snap Election Risks Greek Lifeline; Nation's Stocks and Bonds Plunge on Government Defeat. Greece faces snap elections next month that risk severing the international lifeline that has supported the country since it sparked Europe’s
sovereign debt crisis in 2010. Prime Minister Antonis Samaras
said in a live broadcast in Athens today that he will recommend
parliamentary elections are held on Jan. 25, almost 18 months before his
coalition’s term was due to end. Samaras spoke after he failed in his
third attempt to persuade lawmakers to back his candidate for head of
state, forcing the legislature’s dissolution.
- Ukraine’s Talks With Separatists Yield No Deal as Clashes Flare. Talks between separatist officials and
representatives of Ukraine’s military ended in Donetsk without an agreement as the authorities in Kiev accused rebels of
reinforcing their positions in the country’s east. The negotiations
will continue on Dec. 31 in Luhansk,
another rebel-held stronghold in eastern Ukraine, a news website
run by the self-proclaimed Donetsk People’s Republic, known by its
Russian abbreviation DAN, reported, citing a local official it didn’t
identify. The talks focused on a cease-fire, a prisoner swap, pulling
back heavy weapons and implementing peace
agreements, it said.
- Russian Economy Shrank in November for First Time Since 2009. Russia’s economy had its first decline since
October 2009 last month as manufacturing and investment shrank
when a currency rout pushed the ruble to a record low. Gross domestic product shrank 0.5 percent in November from
a year earlier after a 0.5 percent increase in October, the
Economy Ministry said in a report on its website today. GDP fell
0.2 percent from the previous month on a seasonally adjusted
basis after a 0.1 percent advance in October. The economy of the world’s biggest energy exporter is
facing its first recession since 2009 next year as oil, trading
near a five-year low, and sanctions imposed over Ukraine stoke
the country’s worst currency crisis since 1998. With oil prices
at $60 a barrel, the economy may contract about 4 percent next
year, according to Finance Minister Anton Siluanov.
- Emerging-Market Distressed Debt Loss Is Worst Since 2008. Emerging-market distressed debt losses are the worst this month since the global financial crisis. Bank
of America Merrill Lynch’s Distressed Emerging Markets Corporate Plus
Index fell 13.4 percent through Dec. 26, set for its worst performance
since October 2008, as a tumble in the price of oil sparked a currency
crisis in Russia. That brought this year’s decline to 19.7 percent, the
most in six years. High-yield distressed securities in the U.S. lost 8
percent, the indexes show. Emerging markets accounted for 14 of the 56
global defaults this year in Standard & Poor’s coverage.
- China Blocks Access to Google’s Gmail as Ban Escalates. China
blocked access to Google Inc. (GOOG)’s e-mail service through
third-party applications, adding Gmail to the list of services from the
search company banned in the world’s largest Internet market.
Traffic volume for Gmail dropped about 85 percent on Dec. 26 before
falling further the following day and remains near zero today, according
to data posted on Google’s Transparency
Report page.
- Europe Stocks Little Changed as Greece’s ASE Declines After Vote.
European stocks ended little changed, erasing an earlier decline, while
Greece’s ASE Index fell as the nation faces early elections after Prime
Minister Antonis Samaras failed a third time to get enough backing for
his presidential candidate. The Stoxx Europe 600 Index gained 0.1
percent to 344.27 at the close of trading in London, after falling as
much as 0.8 percent. The Greek gauge slid 3.9 percent and as much as 11
percent, the most among 18 western-European markets. The retreat
triggered a drop in Spain and Italy’s benchmark equity indexes.
“This is bad news for Greece and the euro zone,” said Raimund Saxinger,
who helps oversee $22 billion as a fund manager at Frankfurt-Trust
Investment GmbH. “The next thing to watch is how the
campaigning and the polls will evolve over the next few weeks.”
- Oil Falls to 5-Year Low as Supply Glut Seen Lingering. Oil
tumbled to the lowest level in more than five years amid speculation
that a global supply glut that’s driven crude into a bear market will
continue through the first half of 2015. West Texas Intermediate dropped as much as 3.3 percent, erasing an earlier gain spurred by an escalating conflict in Libya.
Fires have been extinguished at three of six tanks at Es Sider, Libya’s
largest oil port, which were set ablaze after an attack by militants,
said National Oil Corp. spokesman Mohamed Elharari. Crude also fell as
the dollar climbed to a two-year high against the euro, reducing the
appeal of raw materials as a store of value.
Wall Street Journal:
- Big Asian Debt Issuers Feel Pinch. Oil Price Drop, China Housing Slowdown Weigh on Energy and Property Companies. Asian companies issued record amounts of bonds this year, but some of
that debt is turning sour as falling oil prices and a shakeout in
China’s housing market hit energy companies and real-estate developers.
CNBC:
ZeroHedge:
Business Insider:
