Style Underperformer:
Sector Underperformers:
- 1) Airlines -1.45% 2) Papers -.82% 3) Homebuilders -.62%
Stocks Falling on Unusual Volume:
- CLW, IRBT, GMCR, IT, TDC, FEIC, FBHS, DFT, MDSO, UA, CDNS, KORS, RARE, CRRC, POWI, HI, SNCR, PMT, FOXA, ADS, PRU, GEOS, COST, RSTI, USG, MUSA, CMI, UBNT, FBHS, ACXM, DFT, GEOS and MTRX
Stocks With Unusual Put Option Activity:
- 1) EWG 2) YUM 3) WLT 4) GMCR 5) PRU
Stocks With Most Negative News Mentions:
- 1) FOXA 2) M 3) POWL 4) ANTM 5) X
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Oil Service +2.05% 2) Steel +1.75% 3) Coal +1.73%
Stocks Rising on Unusual Volume:
- HSP, SMRT, BPFH, GRA, DATA, GRUB, BLL, COTY, OPK, ICPT, PBH, ROSE, BLL, OAS, BGC, CONN, ORLY, GPRE, SPLK, CHTR, EL, LB, TW, EQT, FEYE, ATW and CCK
Stocks With Unusual Call Option Activity:
- 1) ATML 2) NUS 3) GLUU 4) MDLZ 5) MNKD
Stocks With Most Positive News Mentions:
- 1) LB 2) UHAL 3) SMRT 4) GRUB 5) HSP
Charts:
Evening Headlines
Bloomberg:
- Greece Loses ECB Funds, Raising Pressure to Yield to Austerity. Greece lost a critical funding artery as the
European Central Bank restricted loans to its financial system,
raising pressure on the 10-day-old government to yield to
German-led austerity demands to stay in the euro zone. The ECB’s decision, announced at 9:36 p.m. in Frankfurt,
will raise financing costs for Greek banks and stiffen oversight
by the central bank. The next move is up to Prime Minister Alexis Tsipras, who
swept to power promising to reverse five years of spending cuts
that accompanied 240 billion euros ($272 billion) of bailout
loans. The ECB move came hours before the Greek finance chief,
Yanis Varoufakis, was due to meet Germany’s Wolfgang Schaeuble
in Berlin and hours after he met ECB President Mario Draghi.
- The Rebel Leader Who Makes Putin Look Cautious. Vladimir Putin’s critics say he went too far
on Ukraine. The former Russian agent who helped trigger the
conflict says his biggest mistake was not going far enough. Putin has made himself a “hostage” to the war in Ukraine
by opting not to annex the Donetsk and Luhansk regions after
taking Crimea, according to Igor Girkin, the former rebel
commander who goes by the name Strelkov, or Shooter. If the president had sent troops into Donetsk and Luhansk
to support the insurgents like he did in Crimea, all of
Novorossiya, or New Russia, the term the rebels and their
supporters revived to identify a swathe of southeastern Ukraine
that was once part of the Russian empire, would now be reunited
with the motherland, Strelkov said in an interview in Moscow. But Putin, “not understanding that he’d already crossed
the West’s red line,” and influenced by “top bureaucrats and
oligarchs,” decided to stop at Crimea, said Strelkov. “Now we
have a war that will continue to grow, regardless of whether
Russia wants it to or not.”
- Asia Stocks Fall on Euro Concern; China Futures Jump Amid Easing. Asian stocks fell as investors weighed the
European Central Bank’s tightening of the terms of Greece’s
bailout. China stock index futures climbed after the government
cut banks’ reserve ratios for the first time since 2012.
The MSCI Asia Pacific Index fell 0.2 percent to 141.61 as
of 9:24 a.m. in Tokyo.
Wall Street Journal:
- Ukraine Anticipates Arms Supplies From West. U.S. Secretary of State John Kerry to Visit Kiev on Thursday. Ukraine’s president suggested the West is close to sending arms to Kiev
to help fight off pro-Russia rebels after previous appeals for weapons
were rebuffed, as the capital prepares for a visit by U.S. Secretary of
State John Kerry aimed at finding a solution to the conflict in the
east.
- Greeks Meet Skepticism in Frankfurt, Brussels. The European Central Bank No Longer Accepts Greek Bonds From Banks Seeking Funding. European officials put a damper on plans by the new Greek government
to ease conditions on its bailout, warning that without an extension of
the existing rescue program—and the austerity measures it contains—the
government will lose access to new money by the end of this month. On Wednesday evening the European Central Bank announced it would no longer accept
- UBS Faces a New Tax-Evasion Probe. Authorities Investigate Whether Swiss Bank’s Clients Used ‘Bearer Securities’ to Hide Cash. Federal prosecutors have launched a new probe into whether Swiss bank
UBS AG helped Americans evade taxes through investments largely banned
in the U.S., according to people familiar with the investigation.
- Health Insurer Anthem Hit by Hackers.
Breach Gets Away With Names, Social Security Numbers of Customers,
Employees. Anthem Inc., the country’s second-biggest health insurer,
said
hackers broke into a database containing personal information for about
80 million of its customers and employees in what is likely to be the
largest data breach disclosed by a health-care company.
Fox News:
- Brian Williams lied about his copter being shot down in Iraq. Brian Williams, the nation’s top-rated news anchor, has admitted
fabricating a tale of being shot down in a helicopter over Iraq a dozen
years ago. Williams apologized on the air Wednesday evening, saying: “I made a mistake in recalling the events of 12 years ago.”
MarketWatch.com:
- What you need to know about ECB’s Greek collateral decision. It’s not a welcome development. Greek banks have suffered significant
deposit withdrawals before and after the January election that brought
the antiausterity government, led by Syriza’s Alexis Tsipras, to power. “This
news will likely scare depositors and result in further bank runs,”
said Peter Boockvar, chief market analyst at the Lindsey Group in
Fairfax, Va.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
Spiegel online:
- McKinsey
Says China's Debt Development Not Sustainable. Debt accumulated by
private households, cos. and govt. quadrupled in China in past 7 years,
citing a McKinsey study it obtained. Structure of debt in China
worrisome as real estate industry's debt too high. Global indebtedness
more than doubled to $199t last year from $87t in 2000. Global debt now
represents 286% of global economic activity, up from 269% in 2007.
Sueddeutsche Zeitung:
- U.S. May Lift 'Price Russia Pays for Aggression,' Biden Says.
U.S. may loosen economic sanctions should Russia meet its obligations
under Minsk agreement, or increase the burden on Russia for its
"aggressive behavior" in Ukraine should country not follow suit, U.S.
Vice President Joe Biden said in an interview. The U.S. has no interest
in military escalation, he said.
People's Daily:
- China
Ratio Cut Unlikely to Reverse Property Correction. The reserve
requirement ratio cut is unlikely to reverse the overall correction in
China's property market and smaller cities will still face destocking
pressure, citing researchers.
Evening Recommendations
Night Trading
- Asian equity indices are -.5% to +.5% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 68.5 +.75 basis point.
- NASDAQ 100 futures -.21%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- Challenger Job Cuts for January.
- RBC Consumer Outlook Index for February.
8:30 am EST
- Preliminary 4Q Non-Farm Productivity is estimated to rise +.2% versus a +2.3% gain in 3Q.
- Preliminary 4Q Unit Labor Costs are estimated to rise +1.2% versus a -1.0% decline in 3Q.
- Initial Jobless Claims are estimated to rise to 290K versus 265K the prior week.
- Continuing Claims are estimated to rise to 2400K versus 2385K prior.
- The Trade Deficit for December is estimated at -$38.0B versus -$39.0B in November.
Upcoming Splits
Other Potential Market Movers
- The
Bank of England decision, weekly EIA natural gas inventory report,
weekly Bloomberg Consumer Comfort Index and the (SE) analyst meeting
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 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 17.47 +.81%
- Euro/Yen Carry Return Index 139.97 -.71%
- Emerging Markets Currency Volatility(VXY) 10.67 +.57%
- S&P 500 Implied Correlation 65.30 +1.89%
- ISE Sentiment Index 129.0 +31.63%
- Total Put/Call .93 -1.06%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.68 +1.09%
- America Energy Sector High-Yield CDS Index 750.0 -3.37%
- European Financial Sector CDS Index 62.40 -.55%
- Western Europe Sovereign Debt CDS Index 24.71 -2.77%
- Asia Pacific Sovereign Debt CDS Index 68.41 +.93%
- Emerging Market CDS Index 390.45 +1.78%
- iBoxx Offshore RMB China Corporates High Yield Index 113.60 +.09%
- 2-Year Swap Spread 24.75 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -16.5 -1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 128.0 +1.0 basis point
- China Import Iron Ore Spot $62.58/Metric Tonne -.95%
- Citi US Economic Surprise Index -13.0 unch.
- Citi Eurozone Economic Surprise Index 20.80 +8.2 points
- Citi Emerging Markets Economic Surprise Index -5.90 unch.
- 10-Year TIPS Spread 1.71 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -5 open in Japan
- DAX Futures: Indicating -25 open in Germany
Portfolio:
- Higher: On gains in my retail/tech/medical sector longs
- Market Exposure: 50% Net Long
Bloomberg:
- OSCE Seeks Truce for Debaltseve Exodus, Reports Cluster Bomb Use. The OSCE called for a truce to evacuate
civilians from the crossroad town of Debaltseve and said two
people were killed in a strike with cluster bombs last week in
the rebel-held city of Luhansk. “On humanitarian grounds” the group called on “all
actors in and around the Debaltseve area to establish a local
temporary truce for a minimum of three days, taking immediate
effect,” Ivica Dacic, the chairman of the Organization for
Security and Co-Operation in Europe, said in a statement on
Tuesday. Debaltseve, a strategic transport hub on a road connecting
the rebel-held areas of Donetsk and Luhansk, remained under
heavy fire from separatists, Ukrainian military spokesman Leonid
Matyukhin said Wednesday. Nearly 2,000 civilians were evacuated
from the area at the end of January, according to Ukrainian
military officials.
- Greece May Run Out of Cash as Early as March. (video) As Greece’s creditors line up to oppose the
country’s demand for a debt restructuring, Prime Minister Alexis
Tsipras’s refusal to accept more bailout loans may result in a
cash crunch as early as next month, two people familiar with the
country’s financial position said. Unless the 15 billion-euro ($17 billion) limit on short-term borrowing set by Greece’s troika of official creditors is
raised, the government may run out of cash on Feb. 25, said one
of the people, who asked not to be named because the figures are
confidential. Three weeks ago, international officials reckoned
Greece could hang on until mid-year.
- Merkel Says Greek Diplomatic Offensive Is Failing. German Chancellor Angela Merkel indicated
that a diplomatic offensive by newly elected Greek Prime
Minister Alexis Tsipras to ease his nation’s bailout-aid
requirements is failing to win over converts. “I don’t think that the positions of the member states
within the euro area with regard to Greece differ, at least in
terms of substance,” Merkel told reporters in Berlin on
Wednesday. Later in Paris, Tsipras was told by French President
Francois Hollande that “respecting the rules is necessary for
all, for France too, and it’s not always easy.” While Tsipras has retreated from demands for a writedown of
Greece’s debt, yielding to virtually unanimous opposition in the
19-member bloc, his pledge to increase spending threatens to
collide with conditions of aid commitments totaling 240 billion
euros ($275 billion).
- Greeks Spooked by Debt Clashes Put Cash Under Bathroom Tiles. Withdrawals from Greek banks may have exceeded 15 billion
euros ($17.2 billion) in the run-up to the elections that
catapulted Alexis Tsipras and his anti-austerity Syriza party to
power, including at least 11 billion euros in January, according
to four bankers citing preliminary data. Tensions between the
new government, which won on a platform of debt relief, and
Greece’s creditors, including Germany, may keep up the pressure. “Talks with the creditors is going to be a protracted
process so you can’t rule out more pressure on deposits,” said
Wolfango Piccoli, managing director at Teneo Intelligence in
London. “There is plenty of uncertainty and that can make
depositors nervous again.”
- North Korea Rules Out Any Talks With U.S. ‘Gangster’ State. North Korea said it won’t agree to talks
with the U.S. and is now focused on its ability to destroy the
country with conventional, nuclear and cyber-warfare attacks. Kim Jong Un’s regime accused the U.S. of “inching closer
to the stage of igniting a war of aggression” by stepping up
its sanctions, holding military drills with South Korea and
predicting the future collapse of the administration, the
official Korean Central News Agency said, citing a statement
from the National Defense Commission.
- Rajan Says U.S. Must Accept Strong Dollar as Fed Normalizes. India’s central bank chief said the U.S.
will have to accept a stronger exchange rate as the Federal
Reserve turns toward raising interest rates for the first time
since 2006. “The Fed will have to start at some point normalizing
interest rates,” Raghuram Rajan, 52, said in an interview with
Bloomberg TV India at the Reserve Bank of India headquarters in
Mumbai. “Unless the Fed starts doing it, others aren’t going to
follow suit. And the Fed, when it does that, will have to accept
some appreciation of the dollar simply because it’s the first
one out of the box.” He also warned Indian firms against borrowing in dollars,
likening it to “Russian roulette.”
- European Stocks Rise Third Day as Drugmakers, Greek Shares Gain. European stocks climbed for a third day, as
an increase in health-care shares and Greek companies outweighed
a drop in energy producers.
The Stoxx Europe 600 Index rose 0.5 percent to 372.1 at the
close of trading, reversing losses of as much as 0.3 percent.
- Oil’s Surge to Bull Market Viewed as Temporary Bounce. Oil is back! Or maybe not. After suffering its longest rout in history, crude
rebounded Tuesday, entering a bull market after soaring 24
percent from a six-year low reached in January. Behind the gain
was speculation that curbs in investment will cut production. For all the optimism among traders, firms from Barclays Plc
to Societe Generale SA and UBS Group AG say the rally is just
temporary because less spending won’t eliminate a glut overnight. Instead of heading back to $100 a barrel, oil could
fall as low as $30 because supply surpluses won’t disappear
overnight, said Miswin Mahesh, a commodities analyst at
Barclays. “We don’t think we’ve seen the bottom yet,” Giovanni
Staunovo, a commodities analyst at UBS in Zurich, said by e-mail
on Tuesday. “We expect U.S. commercial crude oil stocks to hit
a new 84-year high on Wednesday, while U.S. oil production is
likely to stay strong in the near term.”
- No Bust Seen as Dakota Oil Firms Keep Staff Amid Price Drop. A plunge in global energy prices that has
put some North Dakota oil rigs in a deep freeze has yet to chill
the state’s hiring climate. By almost any metric -- the jobless rate, payrolls, claims
for unemployment benefits -- there is scant evidence to indicate
the state at the epicenter of the U.S. shale-oil boom is about
to stumble.
- Fed’s Mester Says Rates Should Rise ‘Soon’ Amid Labor Gains. Federal Reserve Bank of Cleveland President
Loretta Mester said interest rates should be raised “soon”
amid mounting economic momentum, “significant improvement” in
labor markets, and the boost consumers will get from cheaper
fuel. The improvement in the world’s largest economy is likely to
be sustained as headwinds that held back the expansion abate,
she said today in a speech in Columbus, Ohio. Mester said she
would be “comfortable with liftoff in the first half of this
year” and she sees inflation gradually rising back to the Fed’s
2 percent target.
- Ralph Lauren(RL) Falls After Currency Woes Weigh on Its Forecast. Ralph Lauren Corp., the upscale apparel
company known for Polo and other brands, fell the most in more
than 16 years after third-quarter earnings trailed analysts’
estimates and the company cut its sales forecast. Net income dropped 9.3 percent to $215 million, or $2.41 a
share, from about $237 million, or $2.57, a year earlier, the
New York-based company said Wednesday in a statement. The
average of analysts’ estimates compiled by Bloomberg was $2.50.
The company said revenue may gain about 4 percent this year,
down from a previous projection of as much as 7 percent.
CNBC:
ZeroHedge:
Business Insider:
Washington Post:
- Defense nominee Carter ‘inclined’ to provide U.S. arms to Ukraine. Ashton B. Carter, President Obama’s choice to become his fourth
secretary of defense, said Wednesday that he was “very much inclined” to
provide arms to Ukraine to fend off Russian-backed rebels, something
the White House so far as resisted. “We need to support the Ukrainians in defending themselves,” Carter said at his Senate confirmation hearing.
Reuters:
- Greece seeks ECB funds, Germany rejects austerity roll-back. Greece's
new
leftist government appealed to the European Central Bank on Wednesday to
keep its banks afloat as it seeks to negotiate debt relief with its
euro zone partners, but Germany rejected any roll-back of agreed
austerity policies. Finance Minister Yanis
Varoufakis said after meeting ECB President Mario Draghi in Frankfurt
he believed Athens could count on central bank support during the short
period it would take to conclude talks with international lenders.
Die Welt:
- European Commission Worried About Possible Greek Bank Run.
European Commission is concerned that bank clients in Greece may start
withdrawing funds in large volumes in coming days, citing people close
to the commission.
Style Underperformer:
Sector Underperformers:
- 1) Gaming -3.03% 2) Oil Service -2.95% 3) Construction -2.52%
Stocks Falling on Unusual Volume:
- SNH, RL, PEGI, AL, CMG, CHRW, MYGN, IACI, FAST, TROX, SPLS, OHI, VCLT, SAGE, GILD, WRB, TTWO, GWW, LFUS, POWL, ACHN, PVH, VFC, ABBV, RDCM, HP, PEGI, NOV, OAS, VFC, ADM, PTEN, WYNN, ISIS, RARE, AI and ACHN
Stocks With Unusual Put Option Activity:
- 1) LRCX 2) APO 3) VFC 4) CNX 5) SMH
Stocks With Most Negative News Mentions:
- 1) RIG 2) CHRW 3) FCX 4) RCL 5) DF
Charts:
