Monday, April 06, 2015

Monday Watch

Weekend Headlines 
Bloomberg: 
  • Netanyahu: More Sanctions Would Get Better Iran Nuke Deal. Israeli Prime Minister Benjamin Netanyahu said the U.S. and world powers should increase sanctions on Iran to negotiate a better deal on Tehran’s nuclear program, advice quickly rejected by the White House. Netanyahu used appearances on three U.S. Sunday television talk shows to drive home his opposition to what he called a bad deal with Iran that would leave the Persian Gulf nation able to produce “many nuclear bombs” within years. Unless the agreement is changed, he said, “This deal is a dream deal for Iran and a nightmare deal for the world.”
  • Ukrainian Truce Challenged as Car Blasts Kill Government Troops. Six Ukrainian soldiers were killed and two wounded in a pair of car explosions on Sunday after President Petro Poroshenko vowed to push for international peacekeepers to help secure a truce in the rebel-controlled east. “If peacekeepers help to come to a political resolution and reintegration of these occupied territories into Ukraine, we have to go this way,” Poroshenko said in an interview with Channel 5 TV on Saturday, according to a transcript from his office. Foreign ministers of Russia, Ukraine, Germany and France may meet soon to discuss details and timing of the proposed peacekeeping mission, he said.
  • Russia Said to Plan No Aid to Greece, May Ease Curbs on Food. Russia isn’t considering any financial assistance for Greece as Prime Minister Alexis Tsipras plans to visit Moscow next week, according to three Russian government officials with knowledge of the discussions. Even so, Russia is ready to discuss easing restrictions on Greek food products, which were imposed as as part of the retaliation for European Union sanctions levied over the conflict in Ukraine, said two of the three officials, who asked not to be identified because the information is confidential.
  • Saudis Raise Crude Oil Pricing to Asia on Signs of Demand Growth. Saudi Arabia, the world’s largest crude exporter, raised pricing for all May sales to Asia, after the country’s oil minister said global demand was improving. State-owned Saudi Arabian Oil Co. narrowed the discount for its Arab Light grade to Asia to the least since December, setting the crude at a discount of 60 cents a barrel to the regional benchmark, the company said in an e-mailed statement. The May pricing is 30 cents higher than in April. The company known as Saudi Aramco also increased the pricing of the other four grades it ships to Asia.
Wall Street Journal:
  • As Tensions With West Rise, Russia Increasingly Rattles Nuclear Saber. Bellicose rhetoric has soared since start of Ukraine conflict to rival Cold War levels. It wasn’t an ordinary Valentine’s Day for the students from across Russia arriving at a military institute outside Moscow. Their date was with a Topol, the intercontinental ballistic missile at the heart of the country’s nuclear arsenal....
  • Political Battle Ramps Up Over Iran. President Obama must overcome skeptical Republicans as well as some Democrats in Congress. President Barack Obama’s bet on a diplomatic agreement to deter Iran from acquiring a nuclear weapon faces an immediate test at home, where he must overcome the politics of skeptical Republicans as well as some Democrats in Congress. The political struggle—part of the most complex battle of Mr. Obama’s presidency...
Fox News:
  • Netanyahu urges US to seek better deal with Iran over its nuclear program. Israeli Prime Minister Benjamin Netanyahu urged the U.S. to seek a better deal with Iran Sunday over its nuclear program and said that he’s "not trying to kill any deal,” just a “bad deal.” “It could be a historic bad deal because it leaves the preeminent terrorist state of our time a vast nuclear infrastructure,” Netanyahu said on NBC’s “Meet the Press.” “Thousands of centrifuges will be left, not a singular facility, including underground facilities will be shut down.” Netanyahu added that the deal leaves Iran with “the capacity to produce material for many nuclear bombs.” Netanyahu also warned on ABC’s “This Week” that the deal could “spark a nuclear arms race among the Sunni countries in the middle east.”
CNBC:
Zero Hedge:
Business Insider:
  • China targets the dollar. Now even Israel – joined at the hip to the US though the relationship has run into rough waters – has applied to become a founding member of the China-led Asian Infrastructure Investment Bank. Despite US gyrations to keep them from it, over 40 countries, including bosom buddies Australia, Britain, and Germany, have signed up to join. Japan is still wavering politely.
Reuters:
Financial Times:
  • Frustrated officials want Greek premier to ditch Syriza far left. Eurozone authorities’ frustration with Greece has grown so intense that a change in the current Athens government’s make-up, however far-fetched, has become a frequent topic of conversation on the sidelines of bailout talks. Many officials — up to and including some eurozone finance ministers — have suggested privately that only a decision by Alexis Tsipras, Greek prime minister, to jettison the far left of his governing Syriza party can make a bailout agreement possible.
Night Trading
  • Asian indices are -,25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 110.0 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 58.50 -1.0 basis point.
  • S&P 500 futures -.68%.
  • NASDAQ 100 futures -.66%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (SHLM)/.39
Economic Releases
9:45 am EST
  • The Final Markit US Services PMI for March is estimated at 58.6 versus a prior estimate of 58.6.
10:00 am EST
  • The ISM Non-Manufacturing Composite for March is estimated to fall to 56.5 versus 56.9 in February.
Upcoming Splits
  • (SBUX) 2-for-1
Other Potential Market Movers
  • The RBA rate decision, Labor Market Conditions Index for March and Medicare Advantage rate announcements could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and technology shares in the region. I expect US stocks to open lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the week.

Sunday, April 05, 2015

Weekly Outlook

Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Fed rate hike worries, global growth fears, European/Emerging Markets/US High-Yield debt angst, technical selling, yen strength and earnings concerns. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Thursday, April 02, 2015

Market Week in Review

  • S&P 500 2,066.96 +.53%*
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The Weekly Wrap by Briefing.com.


*5-Day Change

Weekly Scoreboard*

Indices
  • S&P 500 2,066.96 +.53%
  • DJIA 17,763.24 +.48%
  • NASDAQ 4,886.94 +.49%
  • Russell 2000 1,255.66 +1.92%
  • S&P 500 High Beta 34.40 +.88% 
  • Goldman 50 Most Shorted 135.22 +1.71% 
  • Wilshire 5000 21,705.61 +.74%
  • Russell 1000 Growth 993.68 +.51%
  • Russell 1000 Value 1,014.86 +.77%
  • S&P 500 Consumer Staples 504.81 +1.32%
  • Solactive US Cyclical 136.91 +.53%
  • Morgan Stanley Technology 1,000.73 -.12%
  • Transports 8,605.31 -.84%
  • Utilities 589.87 +2.27%
  • Bloomberg European Bank/Financial Services 118.17 +1.68%
  • MSCI Emerging Markets 40.89 +3.39%
  • HFRX Equity Hedge 1,207.92 -.32%
  • HFRX Equity Market Neutral 1,003.0 +.22%
Sentiment/Internals
  • NYSE Cumulative A/D Line 238,752 +1.04%
  • Bloomberg New Highs-Lows Index -43 +169
  • Bloomberg Crude Oil % Bulls 51.43% +105.72%
  • CFTC Oil Net Speculative Position 206,887 n/a
  • CFTC Oil Total Open Interest 1,748,067 n/a
  • Total Put/Call 1.12 +15.46%
  • OEX Put/Call .27 -18.18%
  • ISE Sentiment 68.0 +3.03%
  • NYSE Arms .52 -58.40%
  • Volatility(VIX) 14.67 -7.15%
  • S&P 500 Implied Correlation 64.15 +.69%
  • G7 Currency Volatility (VXY) 10.85 +3.03%
  • Emerging Markets Currency Volatility (EM-VXY) 10.24 -3.13%
  • Smart Money Flow Index 17,682.13 +.42%
  • ICI Money Mkt Mutual Fund Assets $2.634 Trillion-1.76%
  • ICI US Equity Weekly Net New Cash Flow -$4.464 Billion
  • AAII % Bulls 35.4 -7.9%
  • AAII % Bears 32.0 +31.1%
Futures Spot Prices
  • CRB Index 216.09 -1.54%
  • Crude Oil 49.14 -3.65%
  • Reformulated Gasoline 176.13 -5.73%
  • Natural Gas 2.71 +1.61%
  • Heating Oil 168.80 -2.62%
  • Gold 1,200.90 -.22%
  • Bloomberg Base Metals Index 170.81 -2.43%
  • Copper 273.40 -2.69%
  • US No. 1 Heavy Melt Scrap Steel 226.67 USD/Ton unch.
  • China Iron Ore Spot 47.08 USD/Ton -11.4%
  • Lumber 276.60 -3.25%
  • UBS-Bloomberg Agriculture 1,138.38 +1.80%
Economy
  • ECRI Weekly Leading Economic Index Growth Rate -2.5% +70 basis points
  • Philly Fed ADS Real-Time Business Conditions Index .0693 n/a
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 123.0 +.08%
  • Citi US Economic Surprise Index -47.3 +15.6 points
  • Citi Eurozone Economic Surprise Index 63.10 +10.0 points
  • Citi Emerging Markets Economic Surprise Index 4.90 +6.3 points
  • Fed Fund Futures imply 50.0% chance of no change, 50.0% chance of 25 basis point cut on 4/29
  • US Dollar Index 97.57 +.21%
  • Euro/Yen Carry Return Index 135.91 +.27%
  • Yield Curve 137.0 unch.
  • 10-Year US Treasury Yield 1.91% -5.0 basis points
  • Federal Reserve's Balance Sheet $4.444 Trillion +.04%
  • U.S. Sovereign Debt Credit Default Swap 16.61 +1.69%
  • Illinois Municipal Debt Credit Default Swap 179.0 -.75%
  • Western Europe Sovereign Debt Credit Default Swap Index 22.57 -1.48%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 58.68 -4.30%
  • Emerging Markets Sovereign Debt CDS Index 337.39 -1.76%
  • Israel Sovereign Debt Credit Default Swap 75.26 -1.16%
  • Iraq Sovereign Debt Credit Default Swap 351.67 -1.56%
  • Russia Sovereign Debt Credit Default Swap 337.15 -8.46%
  • iBoxx Offshore RMB China Corporates High Yield Index 114.58 +.35%
  • 10-Year TIPS Spread 1.81% +3.0 basis points
  • TED Spread 26.0 +1.75 basis points
  • 2-Year Swap Spread 25.5 +1.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +.75 basis point
  • N. America Investment Grade Credit Default Swap Index 62.57 -2.96%
  • America Energy Sector High-Yield Credit Default Swap Index 1,092.0 +7.44%
  • European Financial Sector Credit Default Swap Index 68.55 +2.18%
  • Emerging Markets Credit Default Swap Index 311.21 -2.0%
  • CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 90.0 unch.
  • M1 Money Supply $2.979 Trillion +.16%
  • Commercial Paper Outstanding 1,010.60 -2.10%
  • 4-Week Moving Average of Jobless Claims 285,500 -11,500
  • Continuing Claims Unemployment Rate 1.7% -10 basis points
  • Average 30-Year Mortgage Rate 3.70% +1.0 basis point
  • Weekly Mortgage Applications 457.0 +4.55%
  • Bloomberg Consumer Comfort 46.2 +.7 point
  • Weekly Retail Sales +2.80% +10 basis points
  • Nationwide Gas $2.40/gallon -.03/gallon
  • Baltic Dry Index 596.0 -.33%
  • China (Export) Containerized Freight Index 994.83 -1.54%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 unch.
  • Rail Freight Carloads 278,345 +.18%
Best Performing Style
  • Small-Cap Growth +2.0%
Worst Performing Style
  • Large-Cap Growth +.5%
Leading Sectors
  • Homebuilders +5.6%
  • Foods +3.2%
  • Utilities +2.3%
  • Oil Tankers +2.2%
  • Tobacco +2.1%
Lagging Sectors
  • Restaurants -.6% 
  • Gold & Silver -.6%
  • Road & Rail -.7%
  • Steel -.8%
  • Airlines -2.1%
Weekly High-Volume Stock Gainers (21)
  • ICEL, DYAX, ASPX, MOV, OXM, ALTR, CTRX, ROLL, LEVY, HIFR, NCFT, OLN, FRPT, CAG, CONN, GTN, HRS, SCAI, ENVA, KRFT and HPTX
Weekly High-Volume Stock Losers (7)
  • MYL, SNX, CJES, WWE, NATH, BDSI and OVAS
Weekly Charts
ETFs
Stocks
*5-Day Change

Stocks Higher into Final Hour on Less Emerging Markets Debt Angst, Euro Bounce, Short-Covering, Gaming/Homebuilding Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 14.59 -3.44%
  • Euro/Yen Carry Return Index 136.22 +1.18%
  • Emerging Markets Currency Volatility(VXY) 10.22 -1.06%
  • S&P 500 Implied Correlation 64.36 -1.27%
  • ISE Sentiment Index 70.0 -32.04%
  • Total Put/Call 1.15 +3.60%
  • NYSE Arms .52 -46.73% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 62.33 -1.40%
  • America Energy Sector High-Yield CDS Index 1,093.0 +2.08%
  • European Financial Sector CDS Index 68.33 +1.54%
  • Western Europe Sovereign Debt CDS Index 22.56 +2.15%
  • Asia Pacific Sovereign Debt CDS Index 59.58 -.35%
  • Emerging Market CDS Index 311.33 -.92%
  • iBoxx Offshore RMB China Corporates High Yield Index 114.58 +.02%
  • 2-Year Swap Spread 26.25 +.75 basis point
  • TED Spread 25.0 -.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +1.0 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .01% unch.
  • Yield Curve 137.0 +4.0 basis points
  • China Import Iron Ore Spot $47.08/Metric Tonne -4.95%
  • Citi US Economic Surprise Index -47.3 +15.2 points
  • Citi Eurozone Economic Surprise Index 63.10 +.6 point
  • Citi Emerging Markets Economic Surprise Index 4.9 +1.6 points
  • 10-Year TIPS Spread 1.81 unch.
Overseas Futures:
  • Nikkei Futures: Indicating +72 open in Japan
  • DAX Futures: Indicating +12 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my medical/retail sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  • Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:
  • Iran Negotiators Reach Outline Nuclear Deal After Marathon Talks. Iran and world powers said they reached an outline accord that keeps them on track to end a decade-long nuclear dispute, allowing three more months to resolve differences that couldn’t be bridged in the past week’s diplomatic marathon. Iranian President Hassan Rouhani said on Twitter that solutions to the nuclear issue had been found and the process of drafting an accord can begin. Germany’s Foreign Ministry also said on Twitter that a framework solution has been reached. 
  • Dijsselbloem Says ‘Still Long Way’ to Go on Greek Proposals. Eurogroup Chairman Jeroen Dijsselbloem said there’s a “long way to go” to strike a deal on Greece’s aid proposals even after the Athens government responded to demands for more detail on its bid to end the deadlock. “It’s continuously improving,” Dijsselbloem told reporters today in the Hague. “They deliver more and more proposals that are more and more detailed. On some parts, we will definitely reach an agreement.”
  • Sanctions-Strapped Russia Outguns the U.S. in Information War. Moscow drowns out Voice of America, and facts are a casualty. The troubled U.S. agency responsible for delivering news around the world is being outgunned in Eastern Europe by Russian outlets unrestrained by notions of fact-based journalism. The unequal competition raises fears among U.S. officials that Moscow is winning the information war about events in Ukraine, even as the Russian economy staggers under economic sanctions imposed after the takeover of Crimea. “Russia has engaged in a rather remarkable period of the most overt and extensive propaganda exercise that I’ve seen since the very height of the Cold War,” Secretary of State John Kerry told a Senate subcommittee in late February. It’s “spending hugely on this vast propaganda machine,” he told another panel the same day, and it’s succeeding “because there’s nothing countering it.”
  • Japan bubble alert found in drug stock rally that won't quit. This year's Japanese stock rally has a surprise leader: pharmaceutical companies, which tend to lag behind the market when it gains. Drugmakers soared 22 percent, the most among the 33 industry groups on the benchmark Topix index, compared with a 10 percent gain for the Topix itself. The Topix Pharmaceutical Index climbed to its highest on record on March 24, and earnings multiples are about twice the market average. The Topix has beaten pharmaceutical shares in 12 of the past 17 years it rose. "Valuations are ridiculous, and foreign investors are scratching their heads," said Richard Whittall, a fund manager at Alltus Capital (U.K.) in Singapore who's watched Japanese stocks for 25 years. "You've seen these underowned areas of the market just go up, up and up. Japanese institutions like buying these stocks. They feel safe." 
  • European Stocks Retreat, Paring Weekly Advance as Miners Decline. European stocks slipped, paring a weekly gain, as miners and energy companies retreated. A gauge of commodity producers posted the biggest decline of the 19 industry groups on the Stoxx Europe 600 Index as Societe Generale SA said iron ore prices may extend losses. BHP Billiton Ltd. slid 2.6 percent. Royal Dutch Shell Plc and Total SA contributed the most to a drop in energy stocks, as oil prices fell. The Stoxx 600 declined 0.2 percent to 397.8 at the close of trading, paring its weekly gain to 0.6 percent.
  • Iron Ore Seen Extending Slump Below $50 as BHP, Rio Decline. (video) Iron ore, which fell below $50 a metric ton on Wednesday, may extend losses as weakening producer currencies cut mining costs, reducing incentives for the supply cuts needed to balance the market, according to Societe Generale SA. Lower energy prices have lessened freight expenses and the inability of many high-cost Chinese miners to cut output means that iron ore will stay weak, Mark Keenan, Singapore-based head of commodities research for Asia, said on Thursday. The steel-making raw material will probably drop into the low $40s a ton in the coming weeks, IG Markets Ltd. said in an e-mailed note.
  • Industrial Stocks Near Trend Break as Low U.S. Rates End Rallies. (graph) An exchange-traded fund of industrial stocks is nearing a technical support level as interest rates fall, signaling the ETF’s underperformance could continue. The Industrial Select Sector SPDR Fund has lagged behind the SPDR Standard & Poor’s 500 ETF by 3 percentage points since Nov. 25 as this stock price ratio has decreased each month this year. During the same time, the yield on 10-year Treasuries has fallen to 1.86 percent from 2.26 percent -- see chart.
  • KKR-Backed Energy Hedge Fund Said to Triple Loss Amid Audit. BlackGold Capital Management, the energy-focused hedge fund partly owned by KKR & Co., told investors that losses amid the oil slump in December were almost triple its initial report after an auditor examined how it valued debt holdings, according to two people with knowledge of the matter. The $2 billion investment firm revised the loss to 17 percent last month from the 6 percent decline it previously reported, according to the people, who asked not to be identified as the information is private. The Houston-based fund cited difficulty in valuing some energy bonds at the height of the market’s turmoil, they said.
  • Thanks to Obama, the New World of Campaign Finance Is Unlimited and Undisclosed. Potential presidential candidates this year–including Bush–are using outside groups to pay for traditional functions of an early campaign or political committee, including communications, policy development, and research.  Unlike a presidential campaign or the committees that politicians are supposed to use while they consider running for the White House, these groups have no legal limits on contributions, which worries watchdogs.
Wall Street Journal:
MarketWatch.com: 
Fox News: 
  • Two women arrested in alleged terrorist bomb plot targeting New York. (video) Two women suspected of being terrorist sympathizers were arrested Thursday for allegedly plotting to detonate pressure cooker bombs in New York, Fox News has learned. An FBI spokesperson confirmed the arrests, but circumstances surrounding the arrests or the alleged plot were not immediately clear. NYPD Deputy Commissioner John Miller said the arrests were part of a local and federal investigation.
ZeroHedge:
Business Insider:
Financial Times: 
Telegraph: