Broad Equity Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 17.26 +.17%
- Euro/Yen Carry Return Index 141.92 +.55%
- Emerging Markets Currency Volatility(VXY) 11.24 +2.09%
- S&P 500 Implied Correlation 65.10 -2.75%
- ISE Sentiment Index 85.0 +18.06%
- Total Put/Call 1.05 +9.38%
Credit Investor Angst:
- North American Investment Grade CDS Index 67.09 +1.21%
- America Energy Sector High-Yield CDS Index 712.0 -.21%
- European Financial Sector CDS Index 68.31 +2.58%
- Western Europe Sovereign Debt CDS Index 26.78 +2.49%
- Asia Pacific Sovereign Debt CDS Index 70.32 +1.46%
- Emerging Market CDS Index 384.23 -.18%
- iBoxx Offshore RMB China Corporates High Yield Index 113.30 -.10%
- 2-Year Swap Spread 26.5 +.25 basis point
- TED Spread 25.25 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.0 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- China Import Iron Ore Spot $62.18/Metric Tonne -.32%
- Citi US Economic Surprise Index -29.60 -.8 point
- Citi Eurozone Economic Surprise Index 31.0 -.2 point
- Citi Emerging Markets Economic Surprise Index -9.60 +1.2 points
- 10-Year TIPS Spread 1.69 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +347 open in Japan
- DAX Futures: Indicating +1 open in Germany
Portfolio:
- Higher: On gains in my tech/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Stunning Rallies Are Happening in Greece Today. Now Greeks are protesting in favor of the government. Here's one thing that might make a compromise deal for Greece
difficult: The hardline negotiating stance taken by Alexis Tsipras is
looking very, very popular in Greece. In recent years, we've become used to seeing protesters in Greece (and elsewhere in Europe) rally against the government.
- Euro Area Takes Up Greek Rescue, Germany Says No Red Line. Euro-area finance ministers challenged
Greece to lay out ideas for a deal with its official creditors,
saying they’ll listen without anticipating an immediate accord. After Germany and Greece took clashing positions in the
run-up, ministers met in Brussels on Wednesday to kick off
negotiations that will continue next week. Dutch Finance
Minister Jeroen Dijsselbloem, who heads the meetings, said the
ministers want to hear Greece’s proposals and look for ways to
move forward.
- Guide to Possible EU Sanctions on Russia Over Ukraine. The European Union’s 28 leaders are due to
discuss Ukraine at a summit Thursday in Brussels to be attended
by Ukraine’s President Petro Poroshenko. The meeting follows
peace talks between Poroshenko and Russian President Vladimir
Putin in Minsk, Belarus, later on Wednesday. Following are ways for the EU to stiffen sanctions against
Russia over the Ukraine crisis:
- Getting Greeks to Pay Taxes Is Tsipras Biggest Test at Home. As Greek Prime Minister Alexis Tsipras goes
into a Battle of the Titans with German Chancellor Angela
Merkel, he may find he has as big a fight closer to home: taking
on rich tax-evaders. People like Angeliki Katsarolia, a waitress at the Julia
café lounge bar in the rundown neighborhood of Omonia in Athens,
want to see him cast his net wide. Gesturing to a receipt for
coffee curled up in a small glass on a recent afternoon, one of
the few signs of success in five years of attempts to get Greeks
to pay taxes, she said she’s doing her bit.
- Europe’s Banks Face Decade of Japan-Style Woes, Berenberg Says. Europe’s banks face a decade-long “balance-sheet recession” that closely mirrors Japan’s 1990s economic
and financial woes, Berenberg analysts said. Europe’s growth may remain squeezed and interest rates near
zero for at least 10 years, weighing on bank revenue and pushing
up bad-loan losses, Nick Anderson, James Chappell and Eoin
Mullany, Berenberg’s analysts in London, wrote in a study on
Tuesday.
- Brazil’s Currency Falls to a Decade Low as Retail Sales Tumble. Brazil’s real sank to a 10-year low as a
record drop in retail sales added to concern that Latin
America’s largest economy is slumping. The local currency slid 1.5 percent to 2.8756 per dollar at
3:14 p.m. in Sao Paulo, the weakest level on a closing basis
since October 2004. Swap rates on the contract maturing in
January 2016, a gauge of expectations for changes in Brazil’s
borrowing costs, increased 0.25 percentage point to a six-year
high of 13.25 percent.
- European Stocks Decline as Investors Await Greek Talks Outcome. European stocks declined amid investor
concern that Greek Finance Minister Yanis Varoufakis won’t reach
an agreement on new bailout terms at a meeting with his euro-area counterparts in Brussels. The Stoxx Europe 600 Index fell 0.2 percent to 372.04 at
the close of trading, after earlier losing as much as 0.5
percent. The yield on three-year Greek notes jumped 125 basis
points to 20.76 percent, while the ASE Index lost 4 percent, the
most among 18 western-European markets. Benchmark equity indexes
in Spain and Portugal slid at least 1.3 percent.
- Goldman: The Plunge in Rig Count Still Isn't Enough to Stop Oil From Tumbling. The slump in oil prices may not be over,
according to Goldman Sachs Group Inc. The decline in the number of U.S. drilling rigs that’s
helped crude futures in New York rebound 14 percent from this
year’s low isn’t enough to reduce an oversupply, the U.S. bank
said in a note dated Feb. 10. Lower prices are needed for
American output to slow sufficiently to rebalance global
markets, it said.
Goldman joins Citigroup Inc. and Vitol Group, the world’s
biggest independent oil trader, in signaling prices may resume a
decline amid unrelenting production growth.
- Oil Producers Outside OPEC Caught in Crossfire With Shale. Oil producers outside OPEC and U.S. shale
fields are getting caught in the confrontation over market
supremacy that has brought crude prices to near six-year lows. High-cost regions from aging North Sea fields to untapped
resources in East Siberia and deep-water projects off Latin
America will suffer the most from the clash, say Standard
Chartered Plc, Citigroup Inc. and BNP Paribas SA.
ZeroHedge:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Utilities -2.30% 2) Gold & Silver -1.95% 3) Oil Service -1.52%
Stocks Falling on Unusual Volume:
- PIR, MKTO, PAYC, AOL, CSTE, ORA, LBY, ANDE, LOCK, XOOM, WBAI, QLYS, SYY, RUSHA, CR, LPX, ARMK, CHL, WMGI, PXD, PAG, TRI, TUBE, SGEN, NCR, AMAG, WOOF, WMGI, ENT, LOCK, AOL, JONE, ANDE and PIR
Stocks With Unusual Put Option Activity:
- 1) NAV 2) NVDA 3) XLV 4) EWW 5) WFM
Stocks With Most Negative News Mentions:
- 1) HAL 2) CR 3) AXP 4) BAC 5) FCX
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Road & Rail +1.16% 2) Biotech +.92% 3) HMOs +.72%
Stocks Rising on Unusual Volume:
- INXN, THOR, LGF, TMH, CHS, STRZA, XON, SGMO, EEFT and KITE
Stocks With Unusual Call Option Activity:
- 1) NCR 2) RAD 3) AKAM 4) GNW 5) SYY
Stocks With Most Positive News Mentions:
- 1) MWW 2) YELP 3) PEP 4) NOC 5) RAD
Charts:
Evening Headlines
Bloomberg:
- Germany Toughens Tone With Greece Before EU Meetings. (graph) Germany and Greece drew battle lines ahead
of an emergency meeting of official creditors today, setting the
stage for a clash. German Finance Minister Wolfgang Schaeuble doused
expectations of a positive outcome for Greece at the meeting in
Brussels, saying there are no plans to discuss a new accord or
give the country more time. Greece’s new Prime Minister Alexis
Tsipras was defiant, saying there is “no way back” for his
government, and that he wants a new agreement that won’t subject
his people to more pain. Tsipras said in a speech before a vote of confidence in
parliament that he wants an accord “that is in the mutual
interest of Greece and its partners, one that will end punitive
terms and the destruction of the Greek economy.”
- Volatility Climbs With Dollar as Germany Douses Greek Optimism. Currency volatility surged along with the
U.S. dollar as Germany and Greece head for a showdown that is
spurring traders to take out insurance against euro declines. The premium to protect against a drop in the euro versus
the greenback rose to the highest since Jan. 23 -- the day after
the European Central Bank announced it would purchase sovereign
bonds -- before Greece’s official creditors hold an emergency
meeting. A gauge of the dollar closed at its highest level in
data going back to 2004 as comments from regional Federal
Reserve presidents suggested policy makers could raise interest
rates by mid year. “The outcome of the Greek bailout saga is highly
uncertain,” said Imre Speizer, a markets strategist at Westpac
Banking Corp. in Auckland. “You’ll get pre-positioning and
repositioning after the event, depending on whether it’s a
positive or negative surprise. It might cause some volatility,”
and that would support dollar buying, he said.
- Ukraine Cease-Fire Talks Continue With All Sides Face Conflicting Pressures. Officials from Ukraine, Russia, the
Organization for Security and Cooperation in Europe and pro-Russian separatists will continue negotiations in Belarus
Wednesday on a cease-fire to stem 10 months of bloodshed. Despite earlier reports from Itar-Tass, no agreement was
reached Tuesday, according to two officials representing members
of the so-called contact group, which includes all four parties.
The Russian news service, citing an unidentified person, said
the cease-fire includes the withdrawal of heavy weapons,
monitoring and implementation.
- Brazil Real Drops to Lowest Level in Decade as Commodities Sink. Brazil’s real declined to a 10-year low as
falling commodities prices damped the outlook for growth in
Latin America’s biggest economy. The real dropped 2.2 percent to 2.8324 per dollar at the
close of trade, the weakest level on a closing basis since
November 2004. The drop was the biggest among 31 currencies
tracked by Bloomberg. Swap rates, a gauge of expectations for
changes in Brazil’s borrowing costs, increased 0.12 percentage
point to 13 percent on the contract maturing in January 2016.
- Won Leads Declines in Asia as Fed’s Lacker Backs June Rate Rise. South Korea’s won led declines in Asian
currencies after a Federal Reserve policy maker said U.S. data
support the case for raising interest rates in June. Fed Bank of Richmond President Jeffrey Lacker, who has
sought tighter monetary policy in the past, said on Tuesday the
world’s largest economy is growing at a faster and “more
sustained pace” than a year ago. South Korea’s unemployment
rate fell to 3.4 percent in January, the statistics office said
Wednesday, lower than 3.5 percent in December and the median
forecast of economists surveyed by Bloomberg. The won declined 0.7 percent, the most since Feb. 2, to
1,097.19 a dollar as of 10:30 a.m. in Seoul, according to data
compiled by Bloomberg. Bloomberg-JP Morgan Asia Dollar Index,
which tracks the region’s 10 most-active currencies excluding
the yen, retreated for a second day.
- Asia Stocks Fall as Earnings Concern Offsets Greek Deal Optimism. Asian stocks fell as concern about corporate
earnings offset optimism that a compromise will be reached over
Greece’s debt obligations. CSL Ltd. tumbled 8.1 percent, dragging Australia’s S&P/ASX
200 Index lower, after the maker of blood-based drugs and
vaccines cut its profit forecast. Suncorp Group Ltd. declined
2.5 percent in Sydney after profit at the insurer missed
estimates. China Shenhua Energy Co. retreated 1.2 percent in
Hong Kong after sales declined.
The MSCI Asia Pacific Excluding Japan Index slipped 0.1
percent to 477.73 as of 9:36 a.m. in Hong Kong. Japan’s stock
market is closed for a holiday.
- Oil Is Going to Be Lower for Longer: Gordon. (video) UBS Wealth Management, CIO Office Executive Director and Commodities
Strategist Wayne Gordon discusses oil's volatility and where the market
is heading with Bloomberg's Rishaad Salamat on "On The Move."
- Record Iron Ore Glut Seen by ANZ as Price Forecasts Cut to 2018. The global iron ore surplus will more than
double to a record this year as low-cost producers keep on
expanding, according to Australia & New Zealand Banking Group
Ltd., which cut price forecasts as much as 30 percent. The raw material will average $58 a metric ton this year,
down from an earlier estimate of $77, and $60 next year, down
from $85, analysts including Head of Commodity Research Mark
Pervan wrote in a report on Wednesday. The surplus will expand
to 85 million tons this year from 39 million tons in 2014, the
bank forecast. Price forecasts for 2017 and 2018 were also cut.
Wall Street Journal:
- Death of Kayla Mueller, American Held by Islamic State, Is Confirmed. President Obama Vows to Find and Bring Justice to Those Responsible for Death. Kayla Jean Mueller,
the last American hostage known to be held by Islamic State
extremists, was confirmed dead by her relatives and the White House on
Tuesday. Ms. Mueller’s parents received what U.S. officials
described as private communications from Islamic State over the weekend,
including photographs. Based on the images, U.S. intelligence agencies
concluded they proved she had been killed, officials said.
- U.S. Firms in China See Rising Anti-foreign Sentiment. Survey by American Chamber of Commerce in China Found Companies Believe Foreign Firms Have Been Targeted in Investigations. U.S. businesses in China have voiced increased concerns over what
they see as rising anti-foreign sentiment and increasingly difficult
operating conditions as the economy posts slower growth. An
annual survey released on Wednesday of about 500 members of the American
Chamber of Commerce in China found that most companies believe that...
Fox News:
- NBC suspends Brian Williams for 6 months. Brian Williams, anchor and managing editor of "NBC Nightly News," has
been suspended without pay for six months following his continued
misrepresentation of events surrounding his coverage of the Iraq War,
NBC said Tuesday night.
"We have decided today to suspend Brian Williams as managing editor
and anchor of NBC Nightly News for six months," NBC News president
Deborah Turness said in a memo to staff sent to FoxNews.com. "The
suspension will be without pay and is effective immediately. We let
Brian know of our decision earlier today. Lester Holt will continue to
substitute anchor the NBC Nightly News."
CNBC:
- Top oil analyst: The worst is yet to come. Oil prices will get a heck of a lot worse before they get better, a top industry analyst said on Tuesday. Tom Kloza, chief oil analyst at Oil Price
Information Service, predicted that oil prices would bottom during the
second quarter of the year "simultaneously to one of the expirations of
the WTI contracts."
Zero Hedge:
Business Insider:
Reuters:
- Akamai(AKAM) revenue beats Street as security product sales swell. Akamai Technologies Inc's
quarterly profit and revenue beat market estimates as demand
jumped both for its security products and mainstay content
delivery businesses. Akamai shares shot up 5 percent in extended trading on
Tuesday before shedding some gains after it issued a cautious
forecast for the current quarter.
- Trick or treat? India's strong GDP figures mask economic reality. For Indian business, the
government and the central bank, data revisions that have
transformed the country's $2.1 trillion economy into one of the
world's fastest growing are too good to be true. Now, the search is on for reliable indicators of underlying
activity, vital for Finance Minister Arun Jaitley as he draws up
his annual budget and for Reserve Bank of India (RBI) Governor
Raghuram Rajan as he weighs whether to cut interest rates again.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 69.25 unch.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+3,612,500 barrels versus a +6,333,000 barrel gain the prior week.
Gasoline supplies are estimated to rise by +100,000 barrels versus a
+2,335,000 barrel gain the prior week. Distillate supplies are estimated
to fall by -987,500 barrels versus a +1,788,000 barrel gain the prior
week. Finally, Refinery Utilziation is estimated to fall by -.09% versus
a +1.9% gain the prior week.
2:00 pm EST
- The Monthly Budget Deficit for January is estimated at -$19.0B versus -$10.3B in December.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Fisher speaking, China New Loan/Money Supply data, Australia
Employment data, $24B 10Y T-Note auction, weekly MBA Mortgage
Applications report, BB&T Transport Conference and the Stern
Agee Financial Institutions Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and real estate shares in the region. I expect US stocks to open modestly lower and to rally 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: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 17.20 -7.28%
- Euro/Yen Carry Return Index 141.17 +.63%
- Emerging Markets Currency Volatility(VXY) 11.04 +1.56%
- S&P 500 Implied Correlation 67.53 -1.70%
- ISE Sentiment Index 84.0 -11.58%
- Total Put/Call .96 -11.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 66.34 -.48%
- America Energy Sector High-Yield CDS Index 713.0 +.4%
- European Financial Sector CDS Index 66.60 -1.84%
- Western Europe Sovereign Debt CDS Index 25.94 -2.02%
- Asia Pacific Sovereign Debt CDS Index 69.31 +.12%
- Emerging Market CDS Index 386.17 +1.64%
- iBoxx Offshore RMB China Corporates High Yield Index 113.42 -.01%
- 2-Year Swap Spread 26.25 unch.
- TED Spread 24.50 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -21.0 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 134.0 +3.0 basis points
- China Import Iron Ore Spot $62.38/Metric Tonne +1.93%
- Citi US Economic Surprise Index -28.80 -2.7 points
- Citi Eurozone Economic Surprise Index 31.20 +2.0 points
- Citi Emerging Markets Economic Surprise Index -10.80 +.8 point
- 10-Year TIPS Spread 1.70 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +208 open in Japan
- DAX Futures: Indicating +39 open in Germany
Portfolio:
- Higher: On gains in my tech/biotech/medical/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
