Bloomberg:
- Merkel Says More EU Russia Sanctions If Truce Violated. Three Ukrainian soldiers were killed as pro-Russian rebels continue to defy a cease-fire and the Kremlin
ramps up military exercises along its western land and sea
borders with NATO and Nordic nations.
Separatists used mortars and grenade launchers against
Ukrainian government forces at Donetsk airport and near the
strategic Sea of Azov city of Mariupol, Andriy Lysenko,
spokesman for Ukraine’s military, told reporters on Tuesday in
Kiev. He said five soldiers were wounded in the attacks. “The separatists are preparing for a renewed offensive,
probably in Mariupol, that’s likely to begin within weeks,”
Joerg Forbrig, a senior program director at the German Marshall
Fund in Berlin, said by phone.
- Putin’s Reckless Without Any Provocation, U.S. Commander Says. The U.S. Army’s top officer in Europe called
Vladimir Putin “reckless” after the Russian president
disclosed that he considered placing Russian nuclear forces on
alert during the crisis in Crimea last year. “He obviously does not care what the world thinks of
him,” Lieutenant General Ben Hodges, who commands U.S. Army
forces in Europe, told reporters at a breakfast meeting Tuesday
in Washington.
- BOE’s Brazier Says Greek Shock Could Trigger Market Correction. A failure to find a political solution to
Greece’s sovereign debt problem could trigger a market
correction, Bank of England official Alex Brazier said. “A bad outcome in these negotiations could trigger a
broader reassessment of risk in financial markets,” Brazier,
executive director for financial stability at the BOE, told U.K.
lawmakers in London on Tuesday.
- Europe Stocks Fall as German Investor Confidence Misses Forecast. European stocks slipped the most in a week
as a measure of German investor confidence missed forecasts. Automakers led declines, with Peugeot SA sliding 5.9
percent. Holcim Ltd. and Lafarge SA dragged construction stocks
lower amid disagreements over the leadership and financial terms
of their proposed merger. A measure of energy stocks posted the
best performance of the 19 industry groups on the Stoxx Europe
600 Index.
The Stoxx 600 slid 0.7 percent to 397.33 at the close,
paring earlier losses of as much as 1.1 percent in the final
hour of trading.
- Citi Sees Slower Commodities Demand Growth as China Recedes. Global commodity markets will see slower and
less synchronized demand growth from across the world as China’s
dominance fades, according to Citigroup Inc. Global demand expansion, which centered on the rise of
China in the 2000s, will slow in the next decade and be driven
increasingly by India, Southeast Asia, the Middle East, Latin
America and Africa, the New York-based bank said in a report e-mailed Tuesday. While demand will increase from these regions,
dubbed the “Emerging 5”, it won’t be enough to offset the
impact of slower growth from China, Citigroup said.
- Disappointing Economic Data Probably Won't Faze the Fed. U.S. economic data have been more disappointing than at any time in six years. That hasn't shaken a plurality of economists
who still see the Federal Reserve cranking up their benchmark interest
rate in June, for the first time since 2006. Thirty economists project the central bankers, who start a two-day
meeting Tuesday, will pull the trigger at their June 16-17 gathering,
according to a Bloomberg survey completed March 12 that yielded 66
responses. Another 21 said the Fed will embark on rate rises in
September.
- The Fuzzy, Insane Math That's Creating So Many Billion-Dollar Tech Companies. Startups achieve astronomical valuations in exchange for protecting new
investors. Snapchat, the photo-messaging app raising cash at a $15
billion valuation, probably isn't actually worth more than Clorox or
Campbell Soup. So where did investors come up with that enormous
headline number? Here's the secret to how Silicon Valley calculates
the value of its
hottest companies: The numbers are sort of made-up. For the most mature
startups, investors agree to grant higher valuations, which help the
companies with recruitment and building credibility, in exchange for
guarantees that they'll get their money back first if the company goes
public or sells. They can also negotiate to
receive additional free shares if a subsequent round's valuation is less
favorable. Interviews with more than a dozen founders, venture
capitalists, and the attorneys who draw up investment
contracts reveal the most common financial provisions used in
private-market technology deals today.
ZeroHedge:
Business Insider:
Financial Times:
- Euro Area Could Survive a Greece Exit, Van Overtveldt Says. "What
we have now in place would certainly allow us to survive that," Belgian
Finance Minister Johan Van Overtveldt says in an interview, referring
to an exit by Greece from the euro area. Greece's negotiating tactics
have "annoyed" and "frustrated" its partners in the group of nations
using the euro, Van Overtveldt said.
Telegraph:
Interfax:
- Rebels Should Take Cities in Donbas That Held Referendum. Rebels
say they will work w/Ukraine as equal partners after they gain control
of all cities that held referendum, citing Donetsk rebel leader
Alexander Zakharchenko. Donetsk region is reading to start using Russian
rubles, he said.
Style Underperformer:
Sector Underperformers:
- 1) Semis -1.03% 2) Medical Equipment -.93% 3) Gold & Silver -.84%
Stocks Falling on Unusual Volume:
- AVID, NCMI, OAKS, MAC, BOOM, RATE, CRZO, ZBRA, TM, DD, VEC, WUBA, TESO, CKEC, OVAS, GEF, HTGC, JMBA, XONE, CLDN, ZMH, ROVI, CRH, ANAC, EPZM, BDSI, CLDX, EPZM and AXTA
Stocks With Unusual Put Option Activity:
- 1) OIL 2) WSM 3) EWW 4) EWY 5) JNK
Stocks With Most Negative News Mentions:
- 1) RAI 2) XONE 3) COP 4) MKC 5) BOOM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +2.17% 2) Steel +.86% 3) Airlines +.63%
Stocks Rising on Unusual Volume:
- ESPR, MGM, DSW, QUNR, AAL, VEEV and TKMR
Stocks With Unusual Call Option Activity:
- 1) ATML 2) FOLD 3) MGM 4) DISH 5) AAL
Stocks With Most Positive News Mentions:
- 1) MCO 2) DSW 3) UA 4) MTN 5) MGM
Charts:
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:
