Evening Headlines
Bloomberg:
- Greece Grabs Cash as More Than $2 Billion in Payouts Loom. Greece will begin debating measures to boost
liquidity as the cash-starved country braces for more than 2
billion euros ($2.12 billion) in debt payments Friday. Unable to access bailout funding and locked out of capital
markets, the government will outline emergency plans to
parliament Tuesday to increase funding. Payments due March 20
include interest on a swap originally arranged by Goldman Sachs
Group Inc., said a person familiar with the matter who asked not
to be identified publicly discussing the derivative.
- Hong Kong's Decade-Long Property Boom Could Be Ending: Chart.
- China’s Boom-Bust Brokers Under Threat as Banks Eye Turf. China’s securities firms, which have been
struggling to diversify beyond volatile revenues from margin
lending and brokerage commissions, face the unwelcome prospect
of competition from the nation’s biggest commercial banks. News last week that two Chinese banks may capitalize on a
plan by the China Securities Regulatory Commission to open up
the brokerage industry to other financial institutions sent
share prices of listed securities firms tumbling.
- Asia Stocks Rise as U.S. Factory Data Damp Rate-Rise Speculation. Asian stocks rose, after a rebound in U.S.
equities, as weak economic data eased speculation the Federal
Reserve will bring forward plans to raise interest rates.
The MSCI Asia Pacific Index gained 0.4 percent to 144.40 as
of 9:02 a.m. in Tokyo.
- Currency Volatility Damage to Earnings Seen Worsening in Quarter. After doubling in the fourth quarter, the
negative impact of swings in foreign-exchange rates on corporate
earnings is likely to worsen in the three months ending March
31. That’s the outlook of FiREapps, a Scottsdale, Arizona-based
company that advises businesses on reducing the impact of
currency volatility.
- Unprecedented Sugar Glut Expanding as World Output Soars. The world has never been so awash in sugar. Just as cane harvests expand in India and Thailand, farmers
in Brazil, the world’s largest producer, are ramping up exports
to take advantage of a tumble in the exchange rate that has
swelled their profit margins. And crops that were hurt by
drought last year have been revived by rain. Global output is
set to exceed demand for a fifth straight year, leaving the
biggest stockpiles on record, the International Sugar
Organization said.
Wall Street Journal:
- Apple(AAPL) Plans Web TV Service in Fall. In talks with programmers to offer a slimmed-down bundle of about 25 channels. Apple Inc.’s lofty plans to build an online television service are coming into sharper focus. The
technology giant is in talks with programmers to offer a slimmed-down
bundle of TV networks this fall, according to people familiar with the
matter. The service would have about 25 channels, anchored by
broadcasters such as ABC, CBS and Fox, and would be available on Apple
devices such as the Apple TV, they said.
- How Looming Recession Is Unsettling One of Russia’s Boom Cities. Ailing economy has rattled consumers and businesses, including in the once booming city of Kaluga.
- Hillary’s Emails and the Law. It is a crime—obstruction of justice—to destroy even one message to prevent it from being subpoenaed. The fact that Hillary Clinton exclusively used a private server in
her home, rather than a secure government server, to send emails during
her four years as secretary of state has raised many questions. She now
says that it was a mistake but also emphasizes that she broke no law.
News reports typically describe her offense as not following “policy.”
Fox News:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 66.25 -.5 basis point.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (DSW)/.28
- (FDS)/1.56
- (ZBRA)/1.02
- (ADBE)/.39
- (ORCL)/.68
Economic Releases
8:30 am EST
- Housing Starts for February are estimated to fall to 1040K versus 1065K in January.
- Building Permits for February are estimated to rise to 1065K versus 1053K in January.
Upcoming Splits
Other Potential Market Movers
- The
German ZEW Index, China House Price report, US weekly retails sales
reports, BofA Merrill Industrials conference, BofA Merrill Smid Cap
conference and the (NVDA) investor day could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by technology and industrial
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: Underperforming
Equity Investor Angst:
- Volatility(VIX) 15.63 -2.31%
- Euro/Yen Carry Return Index 134.24 +.87%
- Emerging Markets Currency Volatility(VXY) 10.86 -1.27%
- S&P 500 Implied Correlation 59.24 -1.68%
- ISE Sentiment Index 74.0 -5.13%
- Total Put/Call .97 -19.83%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.25 -.88%
- America Energy Sector High-Yield CDS Index 753.0 +1.77%
- European Financial Sector CDS Index 55.75 -.16%
- Western Europe Sovereign Debt CDS Index 20.82 -1.33%
- Asia Pacific Sovereign Debt CDS Index 66.20 -.65%
- Emerging Market CDS Index 421.41 +.45%
- iBoxx Offshore RMB China Corporates High Yield Index 114.01 +.15%
- 2-Year Swap Spread 27.0 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -20.25 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 145.0 -2.0 basis points
- China Import Iron Ore Spot $57.66/Metric Tonne +2.15%
- Citi US Economic Surprise Index -63.80 -3.7 points
- Citi Eurozone Economic Surprise Index 39.6 -4.5 points
- Citi Emerging Markets Economic Surprise Index 3.80 -1.8 points
- 10-Year TIPS Spread 1.66 -3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +189 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Higher: On gains in my medical/biotech/retail/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Putin Puts Troops on Full Alert in Western Russia Drills. Russian President Vladimir Putin ordered
troops placed on full combat readiness in snap drills in western
Russia, as Defense Minister Sergei Shoigu warned the country was
facing new threats to its security. Some 38,000 troops, 41 warships, 15 submarines and 110
aircraft are involved in the exercises, Shoigu said on Monday,
according to a Russian Defense Ministry statement. “New
challenges and threats to military security demand a further
increase in the military capabilities of the armed forces,”
Shoigu said, the Interfax news service reported.
Russia is “deeply concerned about the increase in
exercises of NATO countries close to our borders,” Russian
Deputy Foreign Minister Aleksey Meshkov said on Monday,
according to Tass news service.
- Merkel Says More EU Russia Sanctions If Truce Violated. German Chancellor Angela Merkel said the
European Union would consider imposing further sanctions on
Russia at a summit this week if there’s a major violation of the
cease-fire in eastern Ukraine. Merkel, speaking at a news conference with Ukrainian
President Petro Poroshenko in Berlin on Monday, said a truce
agreed Feb. 12 in Minsk between pro-Russian rebels and Ukrainian
government forces still isn’t being adhered to even if the
situation on the ground has become quieter.
- European Stocks Extend Seven-Year High as German DAX Tops 12,000. European stocks extended their gains, with
German equities reaching a fresh record.
The Stoxx Europe 600 Index advanced 0.9 percent to 400.18
at the close of trading in London, with automakers leading the
gain.
- Biggest Long-Term Treasury ETF Hit by Fastest Outflows on Record. The biggest exchange-traded fund investing
in long-term Treasuries is losing investors at the fastest rate
ever on concern the Federal Reserve is moving closer to
interest-rate increases. The iShares 20+ Year Treasury Bond ETF posted its biggest
three-week outflow since its inception in 2002, according to
Bloomberg data. The sales came even after Treasuries rallied
last week as weaker domestic growth damped the outlook for
inflation and combined with the start of additional monetary
stimulus in Europe to boost the allure of U.S. government debt.
- There’s Not Much Yellen Can Do to Stop Dollar Rally, SocGen Says. Kit Juckes, a global strategist at Societe
Generale SA in London, says there’s not much that can halt the
U.S. dollar’s ascent. The greenback is rallying because the rest of the world is
doing poorly in comparison. Yet any sign of U.S. weakness would
only prompt international investors to pour more money into the
nation -- not less -- since a slowdown in America would drag
down other, less-stable countries, too, according to Juckes.
- Funds Run by Robots Now Account for $400 Billion.
Wall Street Journal:
MarketWatch.com:
CNBC:
ZeroHedge:
Business Insider:
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.36% 2) Alt Energy -1.14% 3) Social Media -.32%
Stocks Falling on Unusual Volume:
- LL,
SINA, DD, MSG, CWCO, HIBB, SWK, WB, SGMS, MFLX, SIX, WYNN, DTYS, STRP,
NSTG, NMM, E, CYBR, CEVA, EGRX, NFLX, RRD, RTI, IGTE, SMP and CVTI
Stocks With Unusual Put Option Activity:
- 1) VNQ 2) KRE 3) DD 4) LEN 5) GES
Stocks With Most Negative News Mentions:
- 1) EMN 2) PBR 3) NFLX 4) SWK 5) BTU
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Utilities +2.32% 2) Biotech +1.95% 3) HMOs +1.85%
Stocks Rising on Unusual Volume:
- LTM, KNDI, EW, ADXS, FRAN, ICPT, UTHR and AKRX
Stocks With Unusual Call Option Activity:
- 1) XLNX 2) MDC 3) ASHR 4) SLXP 5) PG
Stocks With Most Positive News Mentions:
- 1) AVGO 2) QRVO 3) VRX 4) SLXP 5) BA
Charts:
Weekend Headlines
Bloomberg:
- Russia Was Ready for Crimea Nuclear Standoff, Putin Says. Russian President Vladimir Putin said he was
ready to put his country’s nuclear forces on alert when he
annexed Ukraine’s Crimean peninsula last year in case of
intervention by the U.S. and its allies. “We were ready to do that,” Putin said when asked in a
documentary film about Russia’s takeover of Crimea aired Sunday
on state television if the Kremlin had been prepared to place
its nuclear forces on alert. The Russian leader said he warned
the U.S. and Europe not to get involved, accusing them of
engineering the ouster of Russian-backed Ukrainian President
Viktor Yanukovych. “That’s why I think no one wanted to start a
world conflict.”
- Pro-Russian Rebels Hopeful on Peace as Ukraine Sees Threat. Pro-Russian rebels said they were hopeful
the peace process in east Ukraine will continue as the
government in Kiev accused them of breaching a cease-fire
agreement amid skirmishes. Ukraine said one of its soldiers was wounded as rebels
attacked government positions 32 times during the past 24 hours,
military spokesman Andriy Lysenko told reporters in Kiev on
Saturday. More than 6,000 people have been killed in the year-old conflict, according to the United Nations. The U.S., the
European Union and Ukraine say Russia is supplying the
separatists with troops and weapons. Russia denies the
accusations.
- Germans Tired of Greek Demands Want Country to Exit Euro. Berlin cabdriver Jens Mueller says he’s had
it with the Greek government and he doesn’t want Germany to send
any more of his tax money to be squandered in Athens. “They’ve got a lot of hubris and arrogance, being in the
situation they’re in and making all these demands,” said
Mueller, 49, waiting for fares near the Brandenburg Gate.
“Maybe it’s better for Greece to just leave the euro.” Mueller’s sentiment is shared by a majority of Germans. A
poll published March 13 by public broadcaster ZDF found 52
percent of his countrymen no longer want Greece to remain in
Europe’s common currency, up from 41 percent last month. The
shift is due to a view held by 80 percent of Germans that
Greece’s government “isn’t behaving seriously toward its
European partners.”
- Record China Debt Means Growth-Rally Mismatch: Chart of the Day. Concern is growing that China’s world-beating stock surge is out of kilter with the country’s economic
slowdown and record debt binge. The CHART OF THE DAY shows China’s total public and private
debt has increased to more than twice the nation’s economic
output, soaring 83 percentage points relative to gross domestic
product since 2007. No other developing country has amassed as
much debt as quickly, according to data compiled by McKinsey
Global Institute. While the economy is growing at the slowest
pace since 1990, the Shanghai Composite Index has jumped 64
percent in the past year, the best performance among major
equity gauges tracked by Bloomberg. The economic pace is destined to drop to an average 4-5
percent a year over the next five years, from the 7 percent
target for 2015, says Ruchir Sharma, who manages more than $25
billion as the head of emerging markets at Morgan Stanley
Investment Management. He’s kept about 12 percent of assets in
Chinese stocks since 2010, compared with 18 percent in the
indexes he uses for benchmarks. The index weighting is high
relative to the opportunities given more than half are state-owned companies, says Sharma. Chinese debt is “a ticking time-bomb,” Michael Every, the
head of Asia Pacific financial-market research at Rabobank
International in Hong Kong, which manages about $700 billion of
assets, said by phone March 4. “I fail to see how shares
maintain these levels if we continue to see slower growth.”
- Slowdown Concern Spurs Record Bearish Bets on A-Share ETF. Investors are rushing to buy protection
against declines in Chinese stocks amid concern an economic
slowdown will undermine their world-beating rally. Demand to hedge against future losses on the largest U.S.
exchange-traded fund tracking China’s mainland market climbed to
the highest since the ETF was created in November 2013,
according to data compiled by Bloomberg. The buying pushed the
ratio of bearish to bullish contracts to a five-month high on
March 11 as investors pulled $34 million from the fund in a
second week of outflows.
- Hundreds of Thousands March in Brazil to Protest Rousseff. Hundreds of thousands of Brazilians, some of
them calling for President Dilma Rousseff’s impeachment, took to
the nation’s streets Sunday to protest a government beset by
scandal and the rising cost of living. The largest protest occurred in Sao Paulo, with 240,000
people as of 2:40 p.m. local time, according to its military
police. Protests occurred in cites of 16 states and the federal
capital, according to O Globo website. Its TV network reported
45,000 protesters in Brasilia, 20,000 in Belo Horizonte, and
20,000 in Belem, citing the military police of those cities. No
violence or vandalism were reported.
- Aussie Shorts Reach Record as Bears Join BlackRock Seeing Slide. Investors are the most bearish on record
about the Australian dollar as BlackRock Inc., the world’s
largest money manager, expects the currency to plunge to levels
well below what the Reserve Bank prefers.
- Asian Stocks Retreat as Energy Shares Slide, Investors Await Fed. Asian stocks fell as investors awaited this
week’s Federal Reserve meeting for clues on the timeline for
higher U.S. interest rates. Energy companies led losses as oil
resumed last week’s decline.
The MSCI Asia Pacific Index dropped 0.3 percent to 143.50
as of 9:02 a.m. in Tokyo after sliding 1 percent last week as a
better-than-expected U.S. jobs report spurred speculation the
Fed would raise rates sooner than some investors expected.
- Speculators Least Bullish on Oil Since 2013 as Stockpiles Swell. Speculators cut bullish oil wagers to the
lowest level in more than two years amid warnings the U.S.
supply glut may soon strain storage capacity. Hedge funds and other money managers reduced their net-long
position in West Texas Intermediate crude by 2.5 percent in the
seven days ended March 10, U.S. Commodity Futures Trading
Commission data show. Short wagers rose to a record.
Wall Street Journal:
- Hedge Funds Win as Euro Falls. Bets against the common currency augment returns. The euro’s plunge has given a much-needed lift to hedge funds that have been repeatedly frustrated by the world’s central banks. A
bevy of multibillion-dollar funds have gained as much as 9% this year
as their managers bet against the euro, riding the European Central
Bank’s push to weaken the currency...
- For U.S. Banks, Headwinds Keep Blowing. Investors remain wary of big lenders as low rates and stricter regulation squeeze profits, limit payouts.
Bank stocks popped a bit last week after the largest U.S. lenders
passed the Federal Reserve “stress tests” with no major hassles. But it
was a brief moment of sunshine following several challenging years...
- Obama’s Iran Jam. The White House wants the U.N. to vote but not the U.S. Congress.
CNBC:
- A shadow banking sector has gotten 65 times larger.
Shadow banking in general has come back to life after getting hammered
during the financial crisis, but one segment has been especially
rampant. Peer-to-peer (P2P) lending, in which loans are made privately
through individuals who most often connect through a network of
relatively new websites, has exploded over the past five years. It is
now the fastest-growing sector of non-bank lending, according to an
exhaustive Goldman Sachs report on the shadow banking industry.
FAS:
- Germany Wants Russia Sanctions in Force Until Year-End. The
German government intends to argue at a summit of EU leaders next week
for sanctions against Russia to be linked to the full implementation of
the Minsk II cease-fire agreement, citing government sources. German
government expects opposition from Italy, Greece and Cyprus to such a
move.
Night Trading
- Asian indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.5 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 66.75 +1.75 basis points.
- NASDAQ 100 futures +.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for March is estimated to rise to 8.0 versus 7.78 in February.
9:15 am EST
- Industrial Production for February is estimated to rise +.2% versus a +.2% gain in January.
- Capacity Utilization for February is estimated to rise to 79.5% versus 79.4% in January.
- Manufacturing Production for February is estimated unch. versus a +.2% gain in January.
10:00 am EST
- The NAHB Housing Market Index for March is estimated to rise to 56.0 versus 55.0 in February.
4:00 pm EST
- Net Long-Term TIC Flows for January.
Upcoming Splits
Other Potential Market Movers
- The Bank of Japan statement 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 week.
