Broad Equity Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.15 -.49%
- Euro/Yen Carry Return Index 138.37 -.11%
- Emerging Markets Currency Volatility(VXY) 10.27 +2.19%
- S&P 500 Implied Correlation 58.12 -1.37%
- ISE Sentiment Index 36.0 -68.14%
- Total Put/Call .93 +2.20%
Credit Investor Angst:
- North American Investment Grade CDS Index 60.59 -1.78%
- America Energy Sector High-Yield CDS Index 685.0 +2.91%
- European Financial Sector CDS Index 52.71 -6.25%
- Western Europe Sovereign Debt CDS Index 21.50 -5.37%
- Asia Pacific Sovereign Debt CDS Index 62.30 -.83%
- Emerging Market CDS Index 386.64 +1.04%
- iBoxx Offshore RMB China Corporates High Yield Index 114.03 -.23%
- 2-Year Swap Spread 25.75 +1.0 basis point
- TED Spread 26.0 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 147.0 +1.0 basis point
- China Import Iron Ore Spot $59.73/Metric Tonne -3.57%
- Citi US Economic Surprise Index -55.0 -5.4 points
- Citi Eurozone Economic Surprise Index 49.5 -6.1 points
- Citi Emerging Markets Economic Surprise Index -5.90 +.6 point
- 10-Year TIPS Spread 1.84 -4.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +125 open in Japan
- DAX Futures: Indicating +5 open in Germany
Portfolio:
- Higher: On gains in my biotech/medical/retail sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- Draghi Raises Pressure on Greece as He Keeps Liquidity Tight. Mario Draghi increased pressure on Greece’s
government to make progress on structural economic reforms,
insisting the ECB is providing the country with as much
liquidity as it can within the rules. The European Central Bank has already lent 100 billion
euros ($110 billion) to Greece’s banks, or 68 percent of the
country’s gross domestic product, Draghi said at a press
conference in Nicosia on Thursday. The ECB’s Governing Council
increased the available pool of Emergency Liquidity Assistance,
which comprises the bulk of that lending, by 500 million euros
to 68.8 billion euros, he added.
- Bundesbank’s Dombret Says Not Clear That ECB Stimulus Will Work. Bundesbank board member Andreas Dombret
signaled skepticism on whether the European Central Bank’s
asset-purchase plan will be successful as it takes the pressure
off governments to reform their economies. Speaking just hours after ECB President Mario Draghi
presented details of his unprecedented 1.1 trillion euro ($1.2
trillion) stimulus plan, Dombret said in a Bloomberg TV
interview that “it’s not easy to answer” whether large-scale
bond-buying will work in Europe.
- Brazilian Real Weakens to 3 Per Dollar for First Time Since 2004. Brazil’s real fell past 3 per dollar for the
first time in a decade as fiscal turmoil and signs of economic
contraction stoked speculation that the nation may lose its
investment-grade credit rating. The real slid 0.5 percent to 2.9957 per U.S. dollar at 1:23
p.m. in Sao Paulo after touching 3.0023, the weakest intraday
level since 2004. Net overseas holdings of futures contracts
betting against the real reached a record $38.1 billion March 2.
- Europe Stocks Rise as Draghi Says Bond-Buying to Begin Next Week. (video) European stocks advanced for a second day,
pushing the Stoxx Europe 600 Index to its highest level since
July 2007, as the European Central Bank committed to begin asset
purchases on March 9.
The Stoxx 600 rose 0.8 percent to 393.78 at the close of
trading.
- Oil Falls as Surging U.S. Crude Supply Seen Boosting Global Glut. Oil fell in New York after U.S. crude
supplies increased to the highest level in more than three
decades, adding to a global glut. West Texas Intermediate for April delivery dropped 63
cents, or 1.2 percent, to $50.90 a barrel at 9:09 a.m. on the
New York Mercantile Exchange. The volume of all futures traded
was 43 percent above the 100-day average for the time of day.
- Oil Driller Missing First Bond Payment Marks Junk’s Fast Decline. A Colorado oil producer is giving debt
investors a lesson in the risks of lending to companies that
staked their future on the U.S. shale boom. Less than seven months after raising $175 million in a
junk-bond offering, American Eagle Energy Corp. said Monday that
it wouldn’t make its first interest payment on the debt.
Instead, it hired two advisers -- Canaccord Genuity Group Inc.
and Seaport Global Holdings LLC -- to negotiate with bondholders
on a plan to restructure its debt, according to three people
with knowledge of the situation who asked not to be named
because the matter is private. The holders of the notes are left
to consider how to maximize recovery of their investment, either
by giving the company more time to try to become profitable or
by pushing the company into default.
- Oil Bust Threatens CMBS in Wall Street Funded Shale Towns. The oil glut is threatening to expose cracks
in the commercial-mortgage bond market. Nomura Holdings Inc. estimates that $16 billion in property
debt that has been sold to investors as securities is vulnerable
to default after crude prices plunged, posing risks for the
economies of U.S. cities and towns built around the boom.
- World Food Prices Extend Drop to 4-Year Low on Bigger Harvests. Food prices extended a drop to a four-year
low as better crop prospects cut grain and sugar costs, the
United Nations’ Food & Agriculture Organization said. An index of 73 food prices from around the world fell 1
percent in February to 179.4 points, staying at the lowest since
July 2010, the Rome-based agency said in a report Thursday. The
measure slipped 25 percent since reaching a record in 2011 and
has fallen in 10 of the past 11 months.
ZeroHedge:
Business Insider:
Style Underperformer:
Sector Underperformers:
- 1) Hopsitals -2.66% 2) Steel -2.21% 3) Education -1.90%
Stocks Falling on Unusual Volume:
- ARI,
DRII, SMTC, GEF, JOY, ERJ, DAR, ANF, LL, AR, ABBV, AMED, BRLI, OSIR,
COMM, MOMO, CCRN, OPWR, DV, HRB, VNDA, ARI, HRB, AMBA, , JOY and ACHN
Stocks With Unusual Put Option Activity:
- 1) HRB 2) FNF 3) CIEN 4) F 5) CAT
Stocks With Most Negative News Mentions:
- 1) CENX 2) LL 3) XOM 4) DAL 5) ANF
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Alt Energy +2.11% 2) Biotech +2.05% 3) Gold & Silver +.74%
Stocks Rising on Unusual Volume:
- PCYC, KYTH, MR, EYES, CLDN, PEIX, VSLR, MBLY, CSIQ, WBAI, KR, ATHM, TGTX, OHRP, BNFT, PBYI, GDOT, BLUE, RCPT, GTN, MEI, INCY, MAC, ACAD, MDVN, OLED, WETF and INSM
Stocks With Unusual Call Option Activity:
- 1) LLTC 2) ADT 3) PCYC 4) RCL 5) KR
Stocks With Most Positive News Mentions:
- 1) LB 2) EQR 3) AEO 4) PLAB 5) KR
Charts:
Evening Headlines
Bloomberg:
- Greece Struggles to Make Debt Math Work Amid Bailout Standoff. As talks over the disbursement of bailout
funds for Greece drag on into their seventh consecutive month,
the deadlock threatens to pull the country back into a recession
this quarter, or even a possible default within weeks. Greece needs to refinance or repay about 6.5 billion euros
($7.2 billion) in debt and interest in the next three weeks,
including Treasury bill redemptions, according to data compiled
by Bloomberg. To top that, its budget forecasts a 2.1 billion
cash deficit in March. A shortfall in tax revenue already opened
a cash hole of 217 million euros in January, derailing budget
targets.
- China Lowers Growth Target to About 7% as Headwinds Intensify. China set the lowest economic growth target
in more than 15 years as leaders tackle the side effects of a
generation-long expansion that has spurred corruption, fueled
debt risks and polluted skies and rivers. The goal of about 7 percent -- down from last year’s
aspiration of about 7.5 percent -- was given in a work report
that Premier Li Keqiang will deliver to the annual meeting of
the legislature today in Beijing. The inflation target was set
at about 3 percent.
- Brazil Raises Rate to Highest Since 2009 After Prices Surge. Brazil raised borrowing costs for a fourth
straight meeting to the highest level in almost six years after
monthly inflation jumped the most since 2003. The board, led by President Alexandre Tombini, in a
unanimous vote maintained the pace of monetary policy tightening
with a half-point increase to 12.75 percent, as expected by 59
of 63 economists surveyed by Bloomberg. Four analysts forecast a
quarter-point increase. Policy makers took into consideration
“the macroeconomic scenario and the inflation outlook,”
according to the central bank statement, which was virtually
unchanged from the prior meeting.
- Islamic Militancy Rises in Blood-Stained Bangladesh Orchards. The widening polarization in Bangladesh threatens to hobble
an economy that is now the world’s second-biggest exporter of
garments after China. It also may swell the ranks of Islamic
militant groups in the predominately Muslim country, where a
U.S. blogger who wrote about religious tolerance was hacked to
death with a machete last week in Dhaka, the capital.
- China’s Stocks Fall After Government Cuts Economic Growth Target. China’s stocks fell, led by financial and
industrial shares, after the government set the lowest economic
growth target in more than 15 years and concern grew that new
share offerings will divert funds from existing equities. China Railway Construction Corp. and China Eastern Airlines
Corp. dropped more than 2 percent to pace declines for
industrial companies. Bank of China Ltd. and China Life
Insurance Co. both slid 1.8 percent. PetroChina Co. dropped for
a fourth day. Drugmakers surged for a second day, with Jiangsu
Hengrui Medicine Co. jumping 2.7 percent.
The Shanghai Composite Index slid 0.6 percent to 3,259.27
at 9:45 a.m.
- Another Slushy Mess Due for New York From Late Winter Snowstorm. New York might get 4 to 7 inches of snow and
Washington as much as 6 from a large winter storm dumping ice,
sleet and snow from Texas to New England. Northern New Jersey could get 6 inches before the storm
ends Thursday, said David Roache, a National Weather Service
meteorologist in Upton, New York. Rain was forecast to turn to
ice and then snow overnight, threatening a messy morning
commute.
Wall Street Journal:
- Iran Flexes New Clout Beyond Its Borders. But influence comes with commitments that strain domestic economy, and risks fueling sectarian divide. Not long ago, Qasem Soleimani, head of Iran’s elite troops known as
the Quds Force, was one of the spy world’s most covert operators. Now, his smiling face is everywhere.
- Justices Divided at Health-Law Argument. Liberals grill
plaintiffs, conservatives tough on government in case concerning
Affordable Care Act subsidies; focus turns to Justice Anthony Kennedy,
Chief Justice John Roberts.
- Obama’s Iran Entitlement. What has Obama done to earn trust for this unilateral deal? As the Obama administration moves toward the March 24 deadline for a
nuclear-arms deal with Iran, what becomes ever more clear is that no
other American president has so confused personal entitlement with
political trust. In David Axelrod’s memoir of his time with
Barack Obama, he relates how the freshman senator from Illinois remarked
on his impending presidential run:
Fox News:
- US ambassador to South Korea injured in razor attack. (video) The U.S. ambassador to South Korea was injured by a man wielding a
razor Thursday morning in Seoul, and his assailant was immediately
detained. Mark W. Lippert was rushed to a nearby hospital with cuts to his face
and wrist, the South Korean news agency Yonhap reported, and appeared
to be splattered with blood but was on his feet, TV images show. He was
on his way to attend a morning lecture in central Seoul when the attack
took place shortly before 8 a.m.
- Defense secretary takes issue with 3-year timeline in Obama’s ISIS plan. (video) New Defense Secretary Ash Carter already is showing an independent
streak, speaking out against the three-year timeline included in
President Obama’s formal request for military force against the Islamic
State. Testifying before a House subcommittee on Wednesday, Carter called that timeline “political.”
MarketWatch.com:
Zero Hedge:
Business Insider:
Telegraph:
China Securities Journal:
- China Must Resolve Local Debt Problem. The global economic
situation is "complex and challenging" this year, citing Vice Finance
Minister Zhu Guangyao. China must resolve problems from past large-scale
stimulus, such as the local debt problem, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 102.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 62.75 +1.25 basis points.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- Challenger Job Cuts for February.
8:30 am EST
- Final 4Q Non-Farm Productivity is estimated to fall -2.3% versus a prior estimate of a -1.8% decline.
- Final 4Q Unit Labor Costs are estimated to rise +3.3% versus a prior estimate of a +2.7% gain.
- Initial Jobless Claims are estimated to fall to 295K versus 313K the prior week.
- Continuing Claims are estimated to fall to 2395K versus 2401K prior.
10:00 am EST
- Factor Orders for January are estimated to rise +.2% versus a -3.4% decline in December.
Upcoming Splits
Other Potential Market Movers
- The
ECB rate decision, BoE rate decision, Draghi press conference, weekly
EIA natural gas inventory report, weekly Bloomberg Consumer Comfort
Index, (P) investor day, (LB) business update and the BofA Merrill
Refining Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and financial 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 Lower
- Sector Performance: Mixed
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.49 +4.55%
- Euro/Yen Carry Return Index 138.47 -.93%
- Emerging Markets Currency Volatility(VXY) 10.03 +1.42%
- S&P 500 Implied Correlation 58.84 -1.08%
- ISE Sentiment Index 111.0 +21.98%
- Total Put/Call .94 -3.09%
Credit Investor Angst:
- North American Investment Grade CDS Index 61.81 +.09%
- America Energy Sector High-Yield CDS Index 666.0 +.31%
- European Financial Sector CDS Index 56.13 -1.66%
- Western Europe Sovereign Debt CDS Index 22.71 +.20%
- Asia Pacific Sovereign Debt CDS Index 62.72 +2.17%
- Emerging Market CDS Index 381.95 +1.55%
- iBoxx Offshore RMB China Corporates High Yield Index 114.30 -.14%
- 2-Year Swap Spread 24.75 unch.
- TED Spread 25.5 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.25 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 146.0 +2.0 basis points
- China Import Iron Ore Spot $61.94/Metric Tonne -.48%
- Citi US Economic Surprise Index -49.6 -.2 point
- Citi Eurozone Economic Surprise Index 55.6 -6.2 points
- Citi Emerging Markets Economic Surprise Index -6.5 -.3 points
- 10-Year TIPS Spread 1.88 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +2 open in Japan
- DAX Futures: Indicating +19 open in Germany
Portfolio:
- Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
