Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.96 -2.16%
- Euro/Yen Carry Return Index 141.79 +.32%
- Emerging Markets Currency Volatility(VXY) 10.33 +.78%
- S&P 500 Implied Correlation 62.53 -2.18%
- ISE Sentiment Index 104.0 +9.47%
- Total Put/Call .79 -10.43%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.29 -1.49%
- America Energy Sector High-Yield CDS Index 689.0 -1.14%
- European Financial Sector CDS Index 61.46 -.92%
- Western Europe Sovereign Debt CDS Index 25.61 +.14%
- Asia Pacific Sovereign Debt CDS Index 65.0 -.46%
- Emerging Market CDS Index 378.42 +1.16%
- iBoxx Offshore RMB China Corporates High Yield Index 113.73 +.02%
- 2-Year Swap Spread 28.5 unch.
- TED Spread 24.5 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -24.75 -2.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 148.0 -1.0 basis point
- China Import Iron Ore Spot $63.44/Metric Tonne n/a
- Citi US Economic Surprise Index -47.40 +.9 point
- Citi Eurozone Economic Surprise Index 56.1 +10.1 points
- Citi Emerging Markets Economic Surprise Index -11.70 +.2 point
- 10-Year TIPS Spread 1.76 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +188 open in Japan
- DAX Futures: Indicating +73 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech/retail/medical sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -2.13% 2) Oil Service -1.67% 3) Gaming -.49%
Stocks Falling on Unusual Volume:
- NDLS, FUEL, EGRX, TRUE, DISCA, MPAA, FRGI, WBAI, UEIC, MRC, FNGN, BRCD, NORD, RESN, BLL, ATRO, BBW, AXDX, SIX, EROS, BCC, GTS, IPCM, DISCK, MHFI, MPAA and BBW
Stocks With Unusual Put Option Activity:
- 1) SLXP 2) CNX 3) JWN 4) OIH 5) WMT
Stocks With Most Negative News Mentions:
- 1) EOG 2) GRMN 3) DAVE 4) XOM 5) NDLS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Hospitals +.76% 2) HMOs +.61% 3) Gold & Silver +.60%
Stocks Rising on Unusual Volume:
- SAAS, SLXP, ANN, MHK, INTU, NVO, KN, AHS, CCRN, MDAS, RKUS, TSRO, Z, ANET and JWN
Stocks With Unusual Call Option Activity:
- 1) HOT 2) SLXP 3) AXL 4) HZNP 5) KN
Stocks With Most Positive News Mentions:
- 1) BA 2) DSW 3) PCLN 4) EQIX 5) COG
Charts:
Evening Headlines
Bloomberg:
- U.S. Anticipates Mosul Offensive With 20,000 Iraqi Troops. The U.S. and Iraq are planning a spring
offensive to retake the city of Mosul that will require 20,000
to 25,000 Iraqi troops to defeat 1,000 to 2,000 Islamic State
fighters, according to an official from U.S. Central Command. The main attack force of five Iraqi army brigades will need
to be trained first by U.S. advisers, said the official, who
spoke on condition of anonymity at a briefing Thursday to
discuss military operations. The U.S. hasn’t ruled out delaying
the offensive from a planned start in April or May if more time
is required for training, most of which has yet to begin, the
official said.
- Japan Stocks Climb as Oil Set for Weekly Loss With Gold. Japan’s Nikkei 225 Stock Average extended
gains from a 15-year high. Oil headed for its first weekly loss
in a month as record U.S. supplies reinforced concern over a
glut, and nickel slipped.
The Nikkei 225 added 0.3 percent by 12:25 p.m. in Tokyo,
while the broader Topix index headed for a fifth straight weekly
gain as the cost of insuring Japanese corporate debt held near a
three-month low.
- Nickel Extends Decline From 12-Month Low as Surplus Seen Wider. Nickel fell for a second day, extending
declines from the lowest close in a year, as data showed the
metal’s global oversupply widened. Nickel was in a surplus of 12,700 metric tons in December,
widening from 6,500 tons the previous month, according to
International Nickel Study Group data released Friday. Supply
outpaced demand last year by 94,300 tons, down 47 percent from a
surplus of 178,000 tons in 2013. Goldman Sachs Group Inc. and
Australia & New Zealand Banking Group Ltd. forecast prices will
rise later this year once the market falls into deficit as
global ore supplies tighten as a result of Indonesia’s ban last
year on unprocessed minerals.
Wall Street Journal:
- As Retreating Soldiers Pour In, Ukraine Town Fears Fighting Will Follow. Russia-backed rebels fled last summer, but now have Ukrainian troops on the run. Residents of this winemaking and salt-mining town thought they had
seen the last of Russia-backed separatists last summer when Ukrainian
forces drove them out with barely a shot fired. But after Ukrainian troops retreating from Debaltseve, some 25 miles southeast, flooded
- Diet Experts Push More Plants, Less Meat in Nod to Environment. Nutrition panel also makes recommendations on coffee, cholesterol consumption. U.S. dietary guidelines, the government’s benchmark for balanced
nutrition, have long advised Americans to eat dark, leafy greens. Now,
there is another way the standards could be going green. A panel of nutrition experts recruited by the Obama administration to help craft the next.
- YouTube to Release New App For Kids. Service will be introduced Monday at children’s entertainment industry conference. Already popular among teens, YouTube is releasing a new app for kids. The
new app from Google Inc.’s online video service will run on smartphones
and tablets and could feature original episodes of popular television
shows for preschoolers as well as content from the many kid-safe
channels already featured on YouTube.
- Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth. Aramco looks for cut costs, asking oil-services providers for deals; pushing for a phone-bill discount. Saudi Arabia’s refusal late last year to rein in oil production
helped trigger the price crash that has hurt oil-producing countries and
publicly listed energy companies alike. And now even the kingdom’s own
oil company is feeling the pain.
- An Administration Adrift on Denial. Why won’t the president think clearly about the nature of the Islamic State? Great essays tell big truths. A deeply reported piece in next month’s
Atlantic magazine does precisely that, and in a way devastating to the
Obama administration’s thinking on ISIS.
Fox News:
- Rebel takeover of eastern Ukraine city raises questions about cease-fire, Putin’s intentions. (video) The Ukrainian military’s withdrawal from a key eastern city – leaving
Russia-backed rebels to roam the streets in celebration – has raised
questions about a newly struck cease-fire and Vladimir Putin’s ultimate
intentions. The city of Debaltseve effectively fell to rebel fighters days after
the cease-fire was signed last week with the heavy involvement of
European leaders. That deal may have eased, for now, any consideration
by the Obama administration of arming the Ukrainian military.
Zero Hedge:
Business Insider:
Reuters:
- Nordstrom(JWN) profit falls due to higher investments, discounts. Upscale department store operator
Nordstrom Inc reported a lower-than-expected quarterly
profit as it spent more on technology upgrades and store
expansion, and increased discounts at its Rack brand stores in
the holiday shopping season. The company, which bought Chicago-based Trunk Club in August
to gain market share in men's' clothing and to boost its online
business, also forecast 2015 profit of $3.65 to $3.80 per share
and sales growth of 7 to 9 percent.
- Noodles & Co's(NDLS) 2015 adjusted profit forecast misses estimates. Fast-casual restaurant chain operator
Noodles & Co forecast 2015 adjusted profit that missed
analysts' estimates, sending its shares down 25 percent in
after-market trading.
The company said it expected 2015 adjusted profit to rise
about 20 percent, implying a profit of 46 cents per share.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.5 +.25 basis point.
- Asia Pacific Sovereign CDS Index 65.25 -.5 basis point.
- NASDAQ 100 futures +.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:45 am EST
- Preliminary February Markit US Manufacturing PMI is estimated to fall to 53.6 versus 53.9 in January.
Upcoming Splits
Other Potential Market Movers
- The Eurozone PMI report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer
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: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.25 -1.29%
- Euro/Yen Carry Return Index 141.21 -.12%
- Emerging Markets Currency Volatility(VXY) 10.22 -1.02%
- S&P 500 Implied Correlation 64.50 +2.02%
- ISE Sentiment Index 121.0 +40.70%
- Total Put/Call .90 -5.26%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.24 +.33%
- America Energy Sector High-Yield CDS Index 690.0 -1.80%
- European Financial Sector CDS Index 62.03 -1.66%
- Western Europe Sovereign Debt CDS Index 25.66 -3.73%
- Asia Pacific Sovereign Debt CDS Index 65.0 -1.06%
- Emerging Market CDS Index 374.54 +1.37%
- iBoxx Offshore RMB China Corporates High Yield Index 113.71 +.02%
- 2-Year Swap Spread 28.5 +.75 basis point
- TED Spread 24.25 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.5 unch.
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 149.0 +1.0 basis point
- China Import Iron Ore Spot $63.44/Metric Tonne n/a
- Citi US Economic Surprise Index -48.30 +.1 point
- Citi Eurozone Economic Surprise Index 46.0 -.6 point
- Citi Emerging Markets Economic Surprise Index -11.90 -.5 point
- 10-Year TIPS Spread 1.75 +3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +106 open in Japan
- DAX Futures: Indicating -9 open in Germany
Portfolio:
- Higher: On gains in my biotech/tech sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- Germany Rejects Loan Request Saying Greece Must Meet Conditions. (video)
Germany rebuffed Greece’s request for an
extension of its aid program as euro-area finance ministers
prepare to meet to avert a cash crunch for the region’s most-indebted nation. The Greek proposal “doesn’t meet the criteria agreed upon
in the Eurogroup on Monday,” German Finance Ministry spokesman
Martin Jaeger said in an e-mailed statement. “In truth, it aims
at bridge financing without meeting the requirements” of the
rescue program. European Commission Spokesman Margaritis Schinas
moments earlier had said the Greek letter could be the basis for
a “reasonable compromise.”
- Ukraine Rebels Thirst for Territory After Debaltseve. This is what a cease-fire looks like in
eastern Ukraine: Vuhlehirsk, a village seven kilometers from the
disputed town of Debaltseve, was redolent with acrid smoke
Wednesday, constantly shaken by the deep thunder of tanks and
artillery cannons as separatists fired on Ukrainian positions. Along much of the front line, both sides have largely
observed the truce agreed to last week in Minsk, Belarus. But
around the strategic rail hub of Debaltseve the rebels pushed
the advantage that they had gained from weeks of shelling
government forces. On Wednesday, thousands of battle-weary
Ukrainian troops withdrew from Debaltseve -- leaving rebels
thirsting for more territory, cease-fire or not. “We must kill them all now,” said Evgeny, a fighter from
Donetsk nicknamed Boroda, or Beard. “Just a perfect day!”
- Obama Realized Too Late Putin's Return Would Undermine the Reset. The fractured relationship between U.S. President Barack Obama and
Russian leader Vladimir Putin has reached a critical juncture in the
conflict over Ukraine, with ties between the two nations more strained
than at any time since the Cold War. Russia’s annexation of Crimea
last year and its support for
separatists in Ukraine’s east have soured Obama on Putin and prompted
U.S.-led sanctions that have helped push Russia’s economy toward
recession. The confrontation “will continue and could escalate pretty
easily,”
said Fiona Hill, a senior fellow at the Brookings Institution in
Washington and author of “Mr. Putin: Operative in the Kremlin.” The
standoff between Obama and Putin complicates efforts to defuse
the Ukrainian conflict, and German Chancellor Angela Merkel has taken
the lead. The U.S. also needs Russia’s help in the Iranian nuclear talks
and in trying to thwart Islamic State in the Middle East. It wasn’t long ago that Obama took a different view, beginning his
presidency by offering Russia a “reset” and new era of cooperation.
These days, he fulminates that Putin views the world through a “Cold War
lens” of the past.
- Greeks Backing Tsipras With Votes But Not Cash. Greek voters gave Alexis Tsipras’s Syriza
party a mandate to force a new deal from the rest of the euro
area. Without the backing of savers, he’ll struggle to deliver. As their prime minister went toe-to-toe with the German
government over the terms of a new aid package, Greeks yanked
their cash from the banking system, some delayed tax payments
and, by putting off spending and investing in the run-up to the
election, they tipped the economy back toward recession. The
financial squeeze leaves Tsipras little room to maneuver in the
face of German demands.
- ECB Said to Push Greek Banks to Shed State Debt If Talks Fail. The European Central Bank intends to tell
Greek banks to reduce their holdings of state debt if talks over
the country’s finances break down, three people familiar with
the discussions said. The ECB’s Supervisory Board, in charge of bank oversight
across the euro area since November, is concerned that Greek
lenders will be saddled with illiquid assets from a government
heading for default. The board’s actions are contingent on
progress at a meeting of euro-area finance ministers that starts
on Friday, the people said, asking not to be named as the matter
is private. An ECB spokesman declined to comment.
- Iran Wields Power From Syria to Gulf as Rise Alarms Sunni Rivals. The commander of the foreign wing of Iran’s
Revolutionary Guards was upbeat as he addressed a rally marking
the 36th anniversary of the uprising that ushered in theocratic
rule. “We are witnessing the export of the Islamic revolution
throughout the region,” Qassem Suleimani, the increasingly
public head of the elite Quds Force, said last week. “From
Bahrain and Iraq to Syria, Yemen and North Africa.”
- European Stocks Extend Seven-Year High Amid Greek Negotiations. European stocks extended a seven-year high
amid optimism Greece will reach a deal with euro-area creditors.
The Stoxx Europe 600 Index added 0.3 percent to 381.41 at
the close of trading. It climbed as much as 0.4 percent intraday
after the European Commission said Greece’s request for an
extension of loan facilities could pave the way for compromise.
It then traded little changed as Germany rejected the plan.
- Options Traders Shore Up Defenses Against Oil Rebound Ending. Options traders are betting that oil’s rebound from a six-year low won’t last. The 17 percent gain from late January has spurred investors to buy
options that protect against a drop in prices. Contracts that give the
owner the right to sell U.S. crude futures are the most expensive
relative to those offering the right to buy in data going back to 2010,
according to data compiled by Bloomberg. The rebound will reverse because rising U.S. production is
deepening the global supply glut, according to analysts at UBS Group AG,
Bank of America Corp. and Commerzbank AG, who are forecasting Brent
will drop to $45 or lower in the next three months.
- Tax on Sugary Foods Proposed by U.S. Panel to Fight Obesity. Americans should pay taxes on sugary sodas
and snacks as a way to cut down on sweets, though they no longer
need to worry about cholesterol, according to scientists helping
to revamp dietary guidelines as U.S. obesity levels surge. The recommendations Thursday from the Dietary Guidelines
Advisory Committee also call for Americans to reduce meat
consumption and to take sustainability into account when dining.
ZeroHedge:
Frankfurter Allgemeine Zeitung:
- ECB, Regulators Said to Prefer Greek Capital Controls. ECB
Governing Council and bank regulators would "feel better" if Greece
introduced capital controls to prevent banks hemorrhaging, citing
central bank sources.
Handelsblatt:
- El-Erian Says Push to Weaken FX Is Unsustainable. The trend for
central banks to actively weaken their currencies is not sustainable,
Allianz's Mohamed El-Erian said. Efforts may continue as long as the
U.S. accepts "drastically strengthening" of USD, and as long as markets
are willing to ignore fundamental economic data when pricing risks.
Kathimerini:
- ECB Rejected Greek Request for Additional T-Bills. Greek deposit
outflows reached EU21b since Oct., withdrawals on Feb. 17 were EU800m,
Kathimerini reports. Bank of Greece had asked for additional Emergency
Liquidity Assistance of EU10b, ECB only approved EU3.3b.
