Style Underperformer:
Sector Underperformers:
- 1) Computer Services -2.22% 2) Gold & Silver -1.92% 3) Computer Hardware -1.15%
Stocks Falling on Unusual Volume:
- ALNY, SMCI, IGTE, ACTG, NVS, AFFX, IMKTA, IBM, ID, CA, EDU, TM, SAIA, ILMN, GPI, OTIC, ZINC, GRFS, AAVL, ADMS, BCPC, KITE, BMA, ISSI and RCI
Stocks With Unusual Put Option Activity:
- 1) CMA 2) EBAY 3) BSX 4) SMH 5) IBM
Stocks With Most Negative News Mentions:
- 1) VNO 2) DNB 3) FITB 4) MCD 5) MS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +2.71% 2) HMOs +1.84% 3) Energy +1.59%
Stocks Rising on Unusual Volume:
- NFLX, DAN, CREE, NTRS, SNE, FANG, AMZN, SGY, CLDX, TGTX, WWD and ICPT
Stocks With Unusual Call Option Activity:
- 1) FXCM 2) SYMC 3) QLIK 4) FITB 5) TWX
Stocks With Most Positive News Mentions:
- 1) WFM 2) CREE 3) NFLX 4) UNH 5) NTRS
Charts:
Evening Headlines
Bloomberg:
- Ukraine Violence Forces Rush of Diplomacy as Airport Fight Rages. The
escalation of fighting in Ukraine after a lull last month, which is
threatening to tip the country into full-blown war, is forcing diplomats
across Europe to seek ways to stem the violence. Foreign Ministers
from Ukraine, Russia and France have been invited by Germany to meet in
Berlin Wednesday to try to revive peace negotiations as some of the
fiercest clashes in months go on in the shattered remains of Donetsk
airport in eastern Ukraine between separatists and government troops. “The situation is very dangerous,” Anton Lavrov, an
independent defense analyst in Torzhok, Russia, said by phone.
“It’s not clear at all that they will be able to renew the
cease-fire. It could lead to full-scale clashes across the front
and big losses on both sides.”
- World’s Wildest Stocks Show Chinese Booms and Busts Getting Bigger on Debt. The
one thing China’s bulls and bears can agree on is that swings in the
world’s most-volatile major stock market are only going to get bigger
after equity traders took on record amounts of debt. Both Bank of
America Corp. strategist David Cui, who predicts Chinese shares will
fall, and JPMorgan Chase & Co.’s Adrian Mowat, who has an overweight
rating, say the surge in margin lending to
all-time highs is amplifying price fluctuations in the $4.9 trillion
market. Volatility in the benchmark Shanghai Composite Index reached the
highest level since 2009 this week after rising more than fourfold
since July.
- China Stock Euphoria Fading, 58% of Investors Say Rally Over: Bloomberg Poll. China’s
world-beating stock rally is over, according to the latest Bloomberg
Global Poll. Fifty-eight percent of the survey’s 481 respondents said
the Shanghai Composite Index (SHCOMP) will either decline or remain
little changed over the next six months after posting a 55 percent advance since June. Only 30 percent said the gauge will extend gains. The number of poll participants that picked
China as among the best opportunities for investing fell by almost half
from the fourth quarter to just 13 percent.
- Samaras Pledges No More Cuts for Greeks in Election Fight. The
following are the main pledges of Greek Prime Minister Antonis Samaras,
leader of governing New Democracy party, ahead of the national election
on Jan. 25. Samaras, 63, made the pledges in New Democracy’s election
prospectus and on the campaign trail. -- Victory for New Democracy “will keep Greece in the euro area,” Samaras says, while a Syriza win would set the country
on a collision course with its creditors, potentially forcing it
out of the currency bloc
- Abe Leaves Middle East Facing Islamic State Hostage Crisis. Japanese
Prime Minister Shinzo Abe shortened a Middle East trip to deal with a
hostage crisis after Islamic State militants threatened to kill two
Japanese hostages within 72 hours. Abe departed Israel an hour earlier than planned on Tuesday evening having earlier pledged
$200 million in non-military aid to nations confronted by the al-Qaeda
breakaway group, public broadcaster NHK reported. Islamic State demanded
a ransom equivalent to the promised financial support.
- Asian Stocks Retreat Before BOJ Decision as Consumer Shares Fall. Asian stocks fell, led by consumer-discretionary shares, ahead of a Bank of Japan statement on monetary policy. The MSCI Asia Pacific Index (MXAP) dropped 0.2 percent to 138.29 as of 9:03 a.m. in Tokyo. All 33 economists surveyed by Bloomberg forecast no change to BOJbond-buying after it
expanded the already unprecedented program in October. Japanese
shares slid in Tokyo.
- Druckenmiller Alums at PointState Make $1 Billion on Oil.
Hedge fund manager Zach Schreiber stood on
stage at Avery Fisher Hall in New York eight months ago and made a bold
prediction. “We believe crude oil is going lower -- much lower,”
Schreiber, 42, told the audience of roughly 3,000 investors,
including some of the biggest money managers in the industry.
“If you are long, I’m sorry for you.” Then he showed a slide
of a car stuffed with clowns.
- Junk Replaces Government Debt as Most-Disdained in Investor Poll. Junk bonds have supplanted sovereign debt as
the asset investors would most like to bet against amid concern
that a slowdown in global economic expansion will make it harder
for the world’s neediest borrowers to meet their obligations. With
both the International Monetary Fund and World Bank lowering their world
growth forecast this month, 18 percent of the respondents to a
quarterly Bloomberg Global Poll chose speculative-grade debt as the
favored asset class to short, or set up trades that would profit
from a decline in prices, given the chance. That exceeds the 13 percent
that would bet against government securities from the Group of Seven
nations.
Wall Street Journal:
- Uprising in Yemen Fans U.S. Concerns. Capture of Presidential Palace Raises Worries About Instability That Could Plague Fight Against Terrorism. A militia group demanding a greater say over Yemen’s new constitution
took over the presidential palace here Tuesday, sparking fresh concerns
about a country that has become a cornerstone of U.S. counterterrorism
strategy.
- The Gaslight Presidency. Obama’s policies have crushed middle-class incomes, and he proposes more of the same. In the 1944 film “Gaslight,” a con artist manipulates his new wife
psychologically to make her doubt her own sanity in a scheme to steal
her inheritance. That’s increasingly the way to understand President
Obama’s behavior toward Congress and especially the tax increase he
floated in Tuesday’s State of the Union. The only plausible rationale is
that he thinks he can gain politically by driving Republicans nuts.
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Politico:
AFP:
- Ukrainian President Cuts Short Visit to Davos. President cuts short visit as situation deteriorates in rebel-held east.
Financial Times:
Telegraph:
- Central bank prophet fears QE warfare pushing world financial system out of control. Former BIS chief economist warns that QE in Europe is doomed to failure and
may draw the region into deeper difficulties. The economic
prophet who foresaw the Lehman crisis with uncanny accuracy is
even more worried about the world's financial system going into 2015.
Beggar-thy-neighbour devaluations are spreading to every region. All the
major
central banks are stoking asset bubbles deliberately to put off the
day of reckoning.
This time emerging markets have been drawn into the quagmire as well,
corrupted by the leakage from quantitative easing (QE) in the West. "We are in a world that is dangerously unanchored," said William White, the
Swiss-based chairman of the OECD's Review Committee. "We're seeing true
currency wars and everybody is doing it, and I have no idea where this is
going to end."
The Guardian:
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 74.75 -1.75 basis points.
- NASDAQ 100 futures +.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Housing Starts for December are estimated to rise to 1040K versus 128K in November.
- Building Permits for December are estimated to rise to 1060K versus 1035K in November.
9:45 am EST
- Chicago Purchasing Managers Revise Seasonally Adjusted Data.
Upcoming Splits
Other Potential Market Movers
- The
UK unemployment rate, CIBC Institutional Investor Conference, weekly
MBA mortgage applications report and the (MSFT) Windows 10 Event could
also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and financial 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: Lower
- Sector Performance: Most Sectors Declining
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 20.11 -4.01%
- Euro/Yen Carry Return Index 143.26 +.49%
- Emerging Markets Currency Volatility(VXY) 11.05 unch.
- S&P 500 Implied Correlation 65.34 -3.03%
- ISE Sentiment Index 70.0 -46.15%
- Total Put/Call .74 -18.68%
Credit Investor Angst:
- North American Investment Grade CDS Index 72.44 +1.04%
- America Energy Sector High-Yield CDS Index 747.0 +.10%
- European Financial Sector CDS Index 64.16 -.52%
- Western Europe Sovereign Debt CDS Index 24.96 -.97%
- Asia Pacific Sovereign Debt CDS Index 74.8 -2.43%
- Emerging Market CDS Index 389.20 +.54%
- China Blended Corporate Spread Index n/a
- 2-Year Swap Spread 24.5 +.5 basis point
- TED Spread 23.5 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -16.25 +2.0 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 131.0 -3.0 basis points
- China Import Iron Ore Spot $68.16/Metric Tonne +.1%
- Citi US Economic Surprise Index 4.80 -2.4 points
- Citi Eurozone Economic Surprise Index -3.3 +.5 point
- Citi Emerging Markets Economic Surprise Index -13.80 +1.9 points
- 10-Year TIPS Spread 1.60 unch.
Overseas Futures:
- Nikkei Futures: Indicating +71 open in Japan
- DAX Futures: Indicating +11 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/tech sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) I-Banking -4.83% 2) Gaming -4.06% 3) Homebuilders -3.10%
Stocks Falling on Unusual Volume:
- EXPR, IGTE, OUTR, HMIN, KITE, BCPC, DECK, ADXS, ADPT, DEPO, CSL, SAP, STML, ASPS, SBSI, JNJ, OVAS, MS, OXM, RMD, XON, LFC, BMO, ELP, BAK, TWX, CYH, VNR, XON and EXPR
Stocks With Unusual Put Option Activity:
- 1) MGM 2) VWO 3) IYR 4) LVS 5) HON
Stocks With Most Negative News Mentions:
- 1) PHM 2) PNRA 3) SNDK 4) SPLS 5) JNJ
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.55% 2) Airlines +1.46% 3) Oil Tankers +.13%
Stocks Rising on Unusual Volume:
- SWHC, EHTH, ILMN, ABX, HFC, SBGL, NEM, MCRL, RGR, LQ and ASGN
Stocks With Unusual Call Option Activity:
- 1) ARUN 2) BWP 3) MPC 4) NUAN 5) GDX
Stocks With Most Positive News Mentions:
- 1) MU 2) BJRI 3) AAPL 4) DAL 5) PNC
Charts:
