Evening Headlines
Bloomberg:
- EU Pledges to Extend Russia Sanctions, Delays Confirming. European Union leaders made a pledge to
extend sanctions against Russia until the end of the year,
trying to pressure the Kremlin to uphold the cease-fire in
eastern Ukraine. Yet the political commitment stopped short of the ironclad
decision sought by hardliners in eastern Europe, leaving open
the possibility that the trade and investment curbs might not be
renewed when they expire in July.
- Russian Toilets Used as a Hedge Against Fallout From Ruble Rout. At a time when President Vladimir Putin’s standoff with the
West is slowing the economy and crimping sales at home, Kazakhs
-- the third biggest net buyers of Russian goods -- are boosting
orders to benefit from the 41 percent depreciation that’s made
the ruble the worst-performing currency of the past year.
Purchases of rubles quadrupled in Kazakhstan in January from a
year earlier to total 60 billion rubles ($1 billion) for the
four months from October, according to data from Kazakhstan’s
central bank in Almaty.
- EU Asks Greece for More Reforms to Speed Aid Negotiations. Greece must submit a more concrete reform
plan to euro-area authorities so that bailout talks can speed
up, European Union leaders said after nearly four hours of talks
with Greek Prime Minister Alexis Tsipras in Brussels. With EU chiefs warning that time is running out for Greece
to overcome a standoff over aid, German Chancellor Angela Merkel
and French President Francois Hollande said that the Greek
government needed to submit new measures rapidly.
- Bank Deposit Flight Has Accelerated in Greece: Humes. (video)
- China Starts 10-Year Bond Futures Trading as Rate Controls Ease. China will allow trading of 10-year
government bond futures, the latest step in a plan to build a
market-based yield curve and liberalize interest rates. The China Financial Futures Exchange will officially list
the 10-year contracts on Friday, after allowing trading of five-year sovereign debt futures in September 2013. That followed an
18-year hiatus after an investigation into alleged market
manipulation in the late 1990s.
- Most Asian Stocks Retreat as Materials, Tech Shares Lead Drop. Most Asian stocks dropped, following
declines in U.S. shares, as materials and technology companies
led losses.
About three shares fell for every two that rose on the MSCI
Asia Pacific Index, which added less than 0.1 percent to 146.79
as of 9:05 a.m. in Tokyo.
- Oil Slump Extends to a Fifth Week as Global Glut Seen Expanding. Oil trading near the lowest price in six
years is headed for a fifth weekly drop amid signs the global
supply glut is worsening. Futures were little changed in New York after falling for
the seventh time in eight days on Thursday. The Organization of
Petroleum Exporting Countries needs to keep its production
target unchanged to maintain market share, said Kuwait, the
group’s third-largest member. Iran may increase oil exports
within months of reaching a deal on its nuclear program,
according to U.S. and European officials.
- Tarullo Targets Commodity Risks at Goldman Sachs(GS), Morgan Stanley(MS). Federal Reserve Governor Daniel Tarullo
questioned whether Goldman Sachs Group Inc. and Morgan Stanley
should be allowed to own physical commodities because the
practice exposes them to risks outside traditional banking. The New York-based companies are allowed “to engage in the
extraction, transportation of potentially highly combustible
materials with substantial risks associated with them,” Tarullo
told the Senate Banking Committee on Thursday. Such activity
appears to “breach the wall between banking and commerce.”
Wall Street Journal:
- Iran Talks Stall Over Ending of Sanctions. As March 31 deadline nears for nuclear agreement, Tehran wants U.N. sanctions lifted right away; U.S., Europeans say ‘no way.’
When international sanctions on Iran would be lifted has emerged as
one of the largest remaining stumbling blocks to an agreement to
constrain Tehran’s nuclear program by a March 31 deadline, according to
U.S., European and Iranian officials.
- Crimea Is Still Ukraine. The Russian annexation has robbed Ukrainian citizens on the peninsula of the right to live in their own state.
One year ago, the Ukrainian territory of Crimea was illegally annexed
by our neighbor and partner at the time, the Russian Federation. One
year ago, as Russian special forces sacked the regional parliament and
silenced dissenting voices, a farce referendum was held to position
Moscow’s land grab behind a facade of legitimacy.
- Fed Is Pushing and Pulling on Rates Riddle. Policy makers face challenge in moving long-term yields up; ‘conundrum’ for new era.
- How Foreigners Became America’s Financial Regulators. The Fed and Treasury are answering to a board of the G-20 without admitting it to the American people.
Fox News:
- US to train 750 Ukraine troops as Russian aggression continues. (video) With Russian aggression in eastern Ukraine continuing, the White
House announced Wednesday the U.S. will begin training 750 Ukraine
troops. The news came after a phone call between Vice President Joe Biden and
Ukrainian President Petro Poroshenko and coincided with Russians
celebrating the first anniversary of their country’s annexation of
Crimea.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Financial Times:
- White House reconsiders supporting Israel at UN. The
White House said on Thursday that it was reconsidering the support it
has given Israel at the UN even as Israeli Prime Minister Benjamin
Netanyahu appeared to row back his election campaign comments rejecting a
Palestinian state.
Evening Recommendations
Piper Jaffray:
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.0 +14.0 basis points (new series).
- Asia Pacific Sovereign CDS Index 64.0 +.5 basis point.
- NASDAQ 100 futures +.12%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (DRI)/.84
- (KBH)/.02
- (TIF)/1.51
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The
Fed's Lockhart speaking, Fed's Evans speaking, German PPI, (ICPT)
investor meeting and the (BIIB) Alzheimer data could also impact trading
today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly higher 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: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.09 +.86%
- Euro/Yen Carry Return Index 134.15 -1.62%
- Emerging Markets Currency Volatility(VXY) 10.70 +1.04%
- S&P 500 Implied Correlation 59.46 +4.41%
- ISE Sentiment Index 68.0 -11.69%
- Total Put/Call .87 -10.31%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.30 +1.70%
- America Energy Sector High-Yield CDS Index 1,020.0 +40.1%%
- European Financial Sector CDS Index 61.80 +4.0%
- Western Europe Sovereign Debt CDS Index 23.65 +1.52%
- Asia Pacific Sovereign Debt CDS Index 63.20 -.60%
- Emerging Market CDS Index 410.92 +.10%
- iBoxx Offshore RMB China Corporates High Yield Index 114.09 +.08%
- 2-Year Swap Spread 26.0 +.5 basis point
- TED Spread 23.25 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -23.75 -3.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -2.0 basis points
- Yield Curve 136.0 -3.0 basis points
- China Import Iron Ore Spot $55.0/Metric Tonne -.87%
- Citi US Economic Surprise Index -72.10 -.2 point
- Citi Eurozone Economic Surprise Index 40.30 -.2 point
- Citi Emerging Markets Economic Surprise Index -1.5 -2.1 points
- 10-Year TIPS Spread 1.80 +7.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -21 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my medical/biotech/retail sector longs and emerging markets shorts
- Market Exposure: 75% Net Long
Bloomberg:
- Ukraine Calls for New Peace Talks as Tusk Advocates EU Sanctions. Ukraine and Germany called for fresh talks
about a cease-fire between government troops and rebels after
Russia accused its neighbor of putting the peace deal at risk. European Union President Donald Tusk also urged members to
extend sanctions against Russia until the end of the year.
Ukrainian President Petro Poroshenko and German Chancellor
Angela Merkel agreed in a phone call to initiate a meeting
between their foreign ministers and those of France and Russia,
following accusations from Russia that its neighbor was
undermining the truce signed in Belarus’s capital last month. “If everything will be on the brink of collapse because
the Minsk agreements aren’t being observed by one side of the
conflict, then of course vigorous efforts will be needed at all
levels,” Kremlin spokesman Dmitry Peskov told reporters in a
conference call on Thursday.
- EU Leaders Urge Tsipras to Compromise as Time Runs Out. European Union leaders urged Prime Minister
Alexis Tsipras to find a compromise with Greece’s euro-area
creditors, as France and Germany prepared for negotiations on
the sidelines of Thursday’s summit in Brussels. Tsipras will meet later this evening with Chancellor Angela
Merkel, President Francois Hollande and European Central Bank
President Mario Draghi. Also present will be Dutch Finance
Minister Jeroen Dijsselbloem, who leads the euro-area finance
ministers’ group that is the more usual forum for deliberating
Greece’s predicament.
- Merkel Vows to Keep Euro Intact as She Dives Into Greek Standoff. (video) German Chancellor Angela Merkel vowed to
keep the euro intact as the strain of keeping Greece afloat
opened divisions among European Central Bank policy makers. Merkel will meet Greek Prime Minister Alexis Tsipras at a
European Union summit in Brussels Thursday with work to prepare
for more financial aid stalled and the ECB Governing Council
fending off calls from its own banking supervisors to tighten
the screws on the government in Athens. “If the euro fails, Europe fails,” Merkel told German
lawmakers in Berlin before she traveled to Brussels, reprising
an expression she adopted during the height of the debt crisis
from 2010 to 2012.
- The Company Securing Your Internet Has Close Ties to Russian Spies. (video) Kaspersky Lab has published
reports on alleged electronic espionage by the U.S., Israel, and the
U.K.—but it’s yet to look at Russia. Kaspersky Lab sells security software, including antivirus programs
recommended by big-box stores and other U.S. PC retailers. The
Moscow-based company ranks sixth in revenue among security-software
makers, taking in $667 million in 2013, and is a favorite among Best
Buy’s Geek Squad technicians and reviewers on Amazon.com. Founder and
Chief Executive Officer Eugene Kaspersky used to work for the KGB, and
in 2007, one of the company’s Japanese ad campaigns used the slogan “A
Specialist in Cryptography from KGB.”
- European Stocks Rise to Highest Since 2000 After Fed Statement. European stocks climbed to their highest
level since 2000, as the Federal Reserve acknowledged a
moderation in economic growth, fueling speculation it won’t be
in a rush to raise interest rates. All but two of the 19 industry groups on the Stoxx Europe
600 Index advanced, with energy companies leading gains. Royal
Dutch Shell Plc rose 1 percent, while Premier Oil Plc added 8
percent, for the biggest increase on the equity benchmark.
The Stoxx 600 increased 0.6 percent to 400.83 at the close
of trading.
Wall Street Journal:
Fox News:
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Steel -5.06% 2) Oil Service -2.07% 3) Construction -1.55%
Stocks Falling on Unusual Volume:
- CNCE, VNCE, DRC, WSM, NPO, MTCN, SQM, NUE, YELP, ADTN, NKTR, PDCE, ROG, BTI, POT, PRSC, MTOR, PAH, VIV, ENL, CTRP, CHK, GEF, PRGO and NMBL
Stocks With Unusual Put Option Activity:
- 1) GES 2) YELP 3) LEN 4) GREK 5) TIF
Stocks With Most Negative News Mentions:
- 1) JPM 2) CAT 3) NUE 4) LEN 5) TGT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +1.23% 2) Biotech +.94% 3) Restaurants +.68%
Stocks Rising on Unusual Volume:
- RTRX, GOLD, ESPR, GES, JUNO, VSLR, FOLD, EYES, KITE, CLDN, TGTX and IRWD
Stocks With Unusual Call Option Activity:
- 1) GES 2) RAD 3) HZNP 4) FOLD 5) WSM
Stocks With Most Positive News Mentions:
- 1) CSC 2) AET 3) JBL 4) ICE 5) FB
Charts:
Evening Headlines
Bloomberg:
- ECB Said to Grant Greece Less Emergency Liquidity Than Requested. The European Central Bank raised the maximum
amount of emergency liquidity available to Greek lenders by 400
million euros ($435 million), less than the Greek central bank
requested, people familiar with the decision said. The increase was approved by the ECB’s Governing Council on
Wednesday, the people said, asking not to be identified as the
council meeting was private. Greece requested about 900 million
euros, one of the people said.
- Merkel-Tsipras Talks: What's at Stake for Greece? (video)
- Why the Yen’s Slide Isn’t Bringing Japan’s Factories, Jobs Back. Crows circle around the tract of cleared
land that was once Hoya Corp.’s Pentax camera plant in Mashiko.
All that’s left is a sign directing employees to a dormitory and
gymnasium, both pulled down years ago when a strong yen was
driving manufacturers abroad. This was once part of Japan’s industrial heartland, a place
that shows little sign of benefiting from Prime Minister Shinzo
Abe’s success in weakening the currency and battling deflation.
While a 36 percent tumble in the yen has stoked record profits
at big exporters like Toyota Motor Corp., the jobs lost here
have yet to return.
- Emerging Currency Rout Signals Stocks Are Next: Chart of the Day. (graph) The currency market has often served in the
recent past as an early-warning system for emerging-market stock
investors. Right now, it’s flashing red.
- Asia Bonds, Stocks, U.S. Futures Jump on Fed; Dollar Down. Asian bonds and stocks outside of Japan
climbed with U.S. index futures after the Federal Reserve
signaled interest rates will rise at a slower pace than
previously forecast. The dollar tumbled, while gold rose.
Yields on 10-year debt from Australia to Japan slipped at
least three basis points by 10:01 a.m. in Tokyo, with Treasury
rates at a six-week low. The MSCI Asia Pacific Index jumped 0.8
percent, set for a six-month high, even as Japan’s Topix index
dropped amid gains in the yen.
- Gold Extends Rally as Fed Signals Slower Pace of Rate Increases. Gold extended a rebound from the lowest
price in three months after the Federal Reserve indicated that
interest rates may rise at a slower pace than estimated. Gold for immediate delivery added as much as 0.9 percent to
$1,177.96 an ounce in Singapore and was at $1,171.29 by 9:31
a.m. in Singapore, according to Bloomberg generic pricing. The
metal climbed 1.6 percent on Wednesday, the most since January,
after slumping to $1,142.92 on March 17, the lowest since Dec.
1, amid speculation the Fed would soon boost borrowing costs.
- Fed Bid to Decouple From Global Easing Hampered by Dollar's Rise. Federal Reserve officials are finding it
harder than they first thought to decouple U.S. monetary policy
from the rest of the world. While policy makers opened the door to an interest-rate
increase later this year, Fed Chair Janet Yellen suggested they
were in no hurry and said the pace of tightening, once begun,
would be slower than previously anticipated.
Wall Street Journal:
- Low Inflation Argues for Fed Patience. If today’s low inflation persists, fighting the next recession will be hard.
The U.S. economy will be better-positioned for the next recession if
interest rates are higher when the downturn starts. Paradoxically, the
best way to achieve that may be to keep rates lower now. As the Federal
Reserve meets today, the case for lifting rates from zero looks solid.
- Banks Struggle to Unload Oil Loans. Citigroup(C), Goldman(GS), UBS and others face losses as investors balk at riskiness of energy sector. Citigroup Inc., Goldman Sachs Group Inc., UBS AG and other large
banks face tens of millions of dollars in losses on loans they made to
energy companies last year, a sign of investor jitters in a sector
battered by the oil slump.
- Investors Raise Alarm Over Liquidity Shortage. Regulators also worried falling trading volumes could disrupt markets. Central banks across the world have turned on the money-supply taps, but
investors and regulators are increasingly worried about a shortage of
liquidity that they say could lead to severe disruption in financial
markets.
- ObamaCare for Arms Control. The Iran nuclear deal has the same political weaknesses as the Affordable Care Act. The Iran nuclear deal is going to be the ObamaCare of arms-control
agreements—a substantive mess undermined by a failure to build adequate
political support. Next Tuesday is the deadline for completing
the “political” terms of an agreement with Iran. “Technical” details
arrive in June. From news reporting on the negotiations, it appears the
agreement is turning into a virtual Rube Goldberg machine, a patchwork
of fixes that its creators will claim somehow limits Iran’s nuclear
breakout period to “a year.”
Fox News:
- New rift opens between Obama, Netanyahu after election victory. (video) After staying mum on Israeli issues in the run-up to the election, the
White House on Wednesday broke its silence -- answering Prime Minister
Benjamin Netanyahu's victory with fresh criticism and making clear that a
new rift has opened between U.S. and Israeli leaders, this time over
Palestinian statehood.
MarketWatch.com:
Zero Hedge:
Business Insider:
Reuters:
- Target(TGT) to lift minimum wage to $9 an hour, matching rivals.
Target Corp next month will
raise the minimum wage for all of its workers to $9 an hour, matching
moves made by rivals including Wal-Mart Stores Inc and TJX Cos, a source
familiar with the matter said. The move comes in the face of pressure
from labor groups and allies calling for a "living wage" at retailers
and fast-food companies across the country, as well as the lowest
unemployment rate in more than six years. Target shares fell 1 percent in extended trade. The company
has said it does not disclose wage levels.
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 63.5 -2.25 basis points.
- NASDAQ 100 futures +.25%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (LEN)/.45
- (MIK)/.74
- (TECD)/2.03
- (VNCE)/.27
- (CTRP)/.09
- (MFRM)/.48
- (NKE)/.84
Economic Releases
8:30 am EST
- The Current Account Deficit for 4Q is estimated at -$104.1B versus -$100.3B in 3Q.
- Initial Jobless Claims are estimated to rise to 293K versus 289K the prior week.
- Continuing Claims are estimated to fall to 2400K versus 2418K prior.
10:00 am EST
- The Philly Fed Business Outlook Index for March is estimated to rise to 7.0 versus 5.2 in February.
- The Leading Index for February is estimated to rise +.2% versus a +.2% gain in January.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Tarullo speaking, Swiss trade balance data, weekly Bloomberg
Consumer Comfort Index, Bloomberg Economic Expectations Index for March
and the (TSLA) Range Press Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
