Evening Headlines
Bloomberg:
- Greeks Lining Up for Social Services Feel Cash Crunch Biting. While Prime Minister Alexis Tsipras grapples with cash
reserves that risk running out this month, concern is growing
over how his seven-week-old government will find the money to
pay about 1.5 billion euros ($1.59 billion) in monthly wages and
pensions without a deal with European partners. Tsipras says
there’s no chance Greeks won’t be paid, and also told creditors
like the International Monetary Fund that they’ll be reimbursed.
- Russians See Most Nations Accepting Crimea Takeover, Poll Says. Most Russians believe that other countries
will accept Crimea as part of Russia within a few years, despite
international sanctions imposed in response to the takeover, a
poll showed. Seventy percent of Russians think a majority of countries
will recognize President Vladimir Putin’s annexation of the
Black Sea peninsula from Ukraine during the next few years,
while 8 percent say it will never happen, according to the
survey to be published on Wednesday by the state-run All-Russia
Center for the Study of Public Opinion, known as VTsIOM. Fifteen
percent think recognition will come after a decade or more.
- China Home Prices Fall in More Cities Amid Economic Slowdown. China’s home prices dropped in more cities
last month as an economic slowdown weighed on demand even after
the government removed property curbs and reduced borrowing
costs. New-home prices fell in 66 of the 70 cities tracked by the
government from a month earlier, the National Bureau of
Statistics said Wednesday, compared with 64 in January. Prices
rose in two cities and were unchanged in another two.
- Wall Street Traders Run for Cover as Brazilians Take the Streets. Finance Minister Joaquim Levy’s attempt to
restore investor confidence in Brazil is being undermined by
deepening political turmoil and public dissatisfaction. Traders pushed up the cost to insure the nation’s debt to
an almost six-year high on Monday, one day after more than a
million Brazilians took the streets to protest government
corruption, higher taxes and President Dilma Rousseff’s handling
of the economy. The credit-default swaps have risen faster this
year than those for Russia, India and China, the three others
that make up the BRIC group of nations.
- Asian Stocks Little Changed as Investors Await Fed Statement. Asia’s benchmark equities gauge was little
changed before a Federal Reserve meeting at which officials will
assess the economy and debate the timing of the first U.S.
interest-rate increase since 2006.
The MSCI Asia Pacific Index declined less than 0.1 percent
to 144.80 as of 9:00 a.m. in Tokyo, ahead of the Fed’s interest
rate decision and policy statement due Wednesday.
- Oil Bonds Lose Investors $7 Billion in 10 Days. Investors lured back into junk-rated energy
bonds by their juicy yields are getting burned. Oil prices have fallen more than 15 percent since March 4
to a six-year low of $43.5, wiping out $7 billion of market
value of high-yield debt issued by energy companies. Prices on
$1.45 billion of notes sold less than two weeks ago by Energy
XXI Ltd., an oil producer that was being squeezed by its
lenders, have fallen by as much as 10 percent. Comstock
Resources Inc.’s $700 million of securities have declined by
more than 7 percent since March 6.
- Iron Ore Price Outlook Cut by Australia as Global Supplies Surge. Australia, the world’s biggest iron ore
exporter, lowered its outlook for prices this year as rising
shipments expand a global glut. Rates will average $60 a metric ton this year, the
Department of Industry and Science said in a report. That
compares with $63 forecast in December and $88 in 2014, it said.
- Apple(AAPL) Is Out to Blow Up the Cable TV Model. After years of complaining about having to
pay for obscure TV channels they never watch, American consumers
might finally be getting their way. The industry buzzword is “skinny bundles,” or Web
services from providers such as Dish Network Corp. and Apple
Inc. that offer just a few popular channels at a lower price.
Wall Street Journal:
- Israeli Election Too Close to Call. Netanyahu has an edge in coalition building. The Israeli election was too close to call after exit polls showed
Prime Minister Benjamin Netanyahu and his top challenger in a virtual
tie, but smaller parties were expected to give the conservative leader
an edge in building a ruling coalition. Mr. Netanyahu declared
victory for his Likud party over Isaac Herzog’s Zionist Union before the
release of any official results in a race marked in its final hours by
the prime...
- Fed to Markets: No More Promises. Move away from explicit interest-rate guidance could unnerve investors used to some measure of clarity. The Federal Reserve is about to inject uncertainty back into
financial markets after spending years trying to calm investors’ nerves
with explicit assurances that interest rates would remain low. Ahead
of their policy meeting that ends Wednesday, Fed officials have
signaled they want to drop the latest iteration in a succession of
low-rate promises—a line in their policy statement pledging to be
“patient” before deciding to raise...
Fox News:
CNBC:
- A hidden bear market in Dow threatens all stocks. The Dow Jones Industrial Average has a hidden bear market going. A third of the members of the blue chip barometer have hit new 52-week lows this year. By no coincidence, the Dow briefly turned negative for 2015 Tuesday.
- Quicksilver Resources files for Chapter 11 protection.
Quicksilver Resources and its U.S. units filed for Chapter 11 bankruptcy
protection on Tuesday, adding to a list of oil and gas producers who
have folded amid low oil prices. The company listed assets of $1.21 billion and liabilities of $1.35 billion in its bankruptcy petition in a Delaware court.
Zero Hedge:
- The End Is Kind Of Nigh. (graph) You can’t solve a debt problem with more debt. That’s what the Fed is
offering. And that is what the European Central Bank and the Bank of
Japan are offering too. They are committed to this policy of providing
more and more credit to a world that is already drowning in it. For example, what is 1.1% yield on a Spanish 10-year government note if
not an invitation for trouble? Or how about a 10-year German government
note with a yield of 0.2%? It’s impossible to know what will happen
exactly. But someone is going to lose money. These yields are unnatural.
And downright dangerous.
Business Insider:
Financial Times:
- IMF fears emerging markets instability.
The
head of the International Monetary Fund warned on Tuesday that emerging
markets are set to face a renewed period of economic instability when
US interest rates rise this year, forecasting a repeat of 2013’s
damaging “taper tantrum” episode of capital flight and rapid currency
depreciation.
Welt:
- EU's
Moscovici Criticizes Greece for 'Misuse' of the Past. EU Economic
Commissioner Pierre Moscovici says serves no purpose to distort the past
for present political purposes by mixing demands for war reparations
with discussions over a new bailout, citing interview. Doesn't exclude a
Greek pullout from the euro, won't keep Greece in the euro zone "at any
price" or unless strict conditions acceptable to both sides are met.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 unch.
- Asia Pacific Sovereign CDS Index 65.75 -.5 basis point.
- NASDAQ 100 futures +.04%.
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
+4,111,110 barrels versus a +4,512,000 barrel increase the prior week.
Gasoline supplies are estimated to fall by -866,670 barrels versus a
-187,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -922,220 barrels versus a +2,527,000 barrel gain
the prior week.
2:00 pm EST
- The FOMC is expected to leave the benchmark Fed Funds rate at .25%.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Yellen speaking, Fed Policy Update and Econ. Projections, weekly
MBA Mortgage Applications report and the JPMorgan Insurance conference
could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and consumer
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: Most Sectors Declining
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 15.91 +1.92%
- Euro/Yen Carry Return Index 134.31 +.31%
- Emerging Markets Currency Volatility(VXY) 10.76 -1.37%
- S&P 500 Implied Correlation 60.04 +1.16%
- ISE Sentiment Index 78.0 +8.33%
- Total Put/Call 1.02 +2.0%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.44 +.36%
- America Energy Sector High-Yield CDS Index 781.0 +3.65%
- European Financial Sector CDS Index 56.86 +1.89%
- Western Europe Sovereign Debt CDS Index 21.75 +4.42%
- Asia Pacific Sovereign Debt CDS Index 66.10 -.14%
- Emerging Market CDS Index 421.38 +.28%
- iBoxx Offshore RMB China Corporates High Yield Index 113.93 -.07%
- 2-Year Swap Spread 27.0 unch.
- TED Spread 23.50 -1.5 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -20.25 unch.
Economic Gauges:
- 3-Month T-Bill Yield .05% +2.0 basis points
- Yield Curve 139.0 -6.0 basis points
- China Import Iron Ore Spot $56.95/Metric Tonne -3.31%
- Citi US Economic Surprise Index -72.0 -8.2 points
- Citi Eurozone Economic Surprise Index 40.80 +1.2 points
- Citi Emerging Markets Economic Surprise Index 2.30 -1.5 points
- 10-Year TIPS Spread 1.65 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -38 open in Japan
- DAX Futures: Indicating +22 open in Germany
Portfolio:
- Higher: On gains in my biotech/retail/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
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.
