Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Every Sector Declining
- Volume: Slightly Above Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.75 +17.1%
- Euro/Yen Carry Return Index 133.91 +.13%
- Emerging Markets Currency Volatility(VXY) 9.89 +.41%
- S&P 500 Implied Correlation 68.47 +2.39%
- ISE Sentiment Index 75.0 -52.83%
- Total Put/Call 1.12 +30.23%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.63 +3.35%
- America Energy Sector High-Yield CDS Index 1,064.0 -3.35%
- European Financial Sector CDS Index 75.68 +7.25%
- Western Europe Sovereign Debt CDS Index 26.35 +6.64%
- Asia Pacific Sovereign Debt CDS Index 61.0 +3.03%
- Emerging Market CDS Index 302.55 +1.54%
- iBoxx Offshore RMB China Corporates High Yield Index 116.52 +.25%
- 2-Year Swap Spread 26.25 -.25 basis point
- TED Spread 26.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -23.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- Yield Curve 135.0 -5.0 basis points
- China Import Iron Ore Spot $50.93/Metric Tonne +2.31%
- Citi US Economic Surprise Index -54.20 +2.5 points
- Citi Eurozone Economic Surprise Index 53.40 -1.0 point
- Citi Emerging Markets Economic Surprise Index -11.5 +2.1 points
- 10-Year TIPS Spread 1.89 +4.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -143 open in Japan
- DAX Futures: Indicating -3 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech/biotech/retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Greece's Main Creditors Said to Be Unwilling to Allow Euro Exit. Greece’s major creditors are not ready to let the country drop out
of the euro as long as Prime Minister Alexis Tsipras shows willingness
to meet at least some key demands, according to two people familiar with
the discussions. Chancellor Angela Merkel will go a long way to prevent a Greek exit
from the single currency, though only so far, one of the people said.
Every possibility is being considered in Berlin to pull Greece back from
the brink and keep it in the 19-nation euro, the person said.
- Greek Bonds Suffer Worst Week Since Aftermath of Syriza Victory. Greek government bonds were set for their worst week since the
aftermath of Syriza’s election victory as the nation remained locked in
negotiations to secure funding and avoid a default. The yield on 10-year securities climbed to the highest since December
2012 this week, and Spanish and Italian bonds also dropped, as
officials worked to reach an agreement before Greece faces payments of
almost 1 billion euros ($1.1 billion) next month. German 10-year yields
dropped below 0.1 percent for the first time as European Central Bank
President Mario Draghi said Wednesday that the institution’s 1.1
trillion-euro bond-buying program must be implemented in full to work.
- Junk-Bond Risk Rises in Europe as Greek Default Concern Mounts. The cost of insuring high-yield corporate debt in Europe is set for
the biggest weekly rise since December as Greece negotiates to avoid
default. The Markit iTraxx Crossover Index of credit-default swaps on
high-yield companies climbed 36 basis points this week to 279 basis
points, the highest since Feb. 20, according to data compiled by
Bloomberg. Contracts insuring $10 million of Greek debt for five years
signal an 79 percent probability of default, CMA data show.
- Euro Area’s Repo-Market Crunch Undercuts Draghi’s Insouciance. Mario Draghi’s soothing words on the perceived scarcity of euro-area
bonds have done little to dispel concern that the European Central
Bank’s quantitative easing is snarling up a key part of the debt
market’s plumbing. A glance at the German repurchase market suggests the availability of
bonds as collateral for loans is drying up, according to Subhrajit
Banerjee, a fixed-income strategist at HSBC Holdings Plc in London. The
risk is that this will start a chain-reaction that shrivels liquidity in
the cash-bond market, he wrote in a research report on Thursday.
- China Futures Tumble on Trust Curbs, Expansion of Short Selling. Chinese stock-index futures tumbled after regulators clamped down on
the use of shadow financing for equity purchases and increased the
supply of shares available for short sellers. FTSE China A50 Index futures for April delivery fell 6 percent as of
10:47 a.m. in New York, while contracts on the Hang Seng China
Enterprises Index lost 3.3 percent. Regulators banned the margin-trading
businesses of brokerages from using so-called umbrella trusts and
allowed fund managers to lend shares to short sellers, statements on
Friday showed. Investors have used umbrella trusts, which allow for more leverage
than brokerage financing, to ramp up wagers on Chinese stocks after
monetary stimulus sparked a world-beating rally in the nation’s
benchmark equity gauge. The Shanghai Composite, which more than doubled in the past 12 months,
trades for 21.1 times reported earnings, the highest since April 2010
and more than double last year’s low, according to data compiled by Bloomberg. The MSCI Emerging Markets Index is valued at 13.7 times.
- Russian Retail Sales Slump for Third Month as Wages Plummet. Russian retail sales slumped for a third month and real wages
plunged the most since 1999, highlighting the discrepancy between
improving markets and the plight of the consumer as the economy enters
its first recession in six years. Wages adjusted for inflation fell 9.3 percent in March from a year
earlier after an upwardly revised 7.4 percent drop a month earlier, the
Federal Statistics Service in Moscow said in a statement Friday. Retail
sales fell 8.7 percent, compared with a revised drop of 7.2 percent in
February. The median estimates of economists surveyed by Bloomberg were
for decreases of 10.3 percent and 8.6 percent.
- European Stocks Slide Most Since January Amid Greek Debt Concern. European stocks slid, posting the biggest retreat since they began
rallying in January, as concern over Greek debt was exacerbated by
declines in the U.S. and Asia. The Stoxx Europe 600 Index lost 1.8 percent to 403.69 at the close of
trading, completing the worst week of the year. The Greek ASE Index
slid 3 percent, with the National Bank of Greece SA and Alpha Bank AE
tumbling more than 7 percent, as the country struggles to win more aid
to avoid a default. Germany’s DAX Index plunged 5.5 percent this week,
the most since 2011.
European stocks fell for a second day after reaching a fresh peak Wednesday, taking weekly losses to 2.2 percent.
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gaming -2.11% 2) Steel -2.10% 3) Software -2.03%
Stocks Falling on Unusual Volume:
- PRO, NOW, WUBA, TZOO, GNMK, DXGE, NVDQ, MGRC, E, UVE, AXP, NVIV, INVE, LFC, TKR, HON, RCI, SOHU, DATA, BLX, MTW, AFAM, PVTB, LXFT, TDF, HTWR, ATW, CLVS, BLDR, KERX, ZUMZ, MTW and PRO
Stocks With Unusual Put Option Activity:
- 1) FEZ 2) XRT 3) EMB 4) XLF 5) EWY
Stocks With Most Negative News Mentions:
- 1) SNDK 2) W 3) ZUMZ 4) GM 5) ITW
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +.33% 2) Hospitals -.22% 3) Utilities -.32%
Stocks Rising on Unusual Volume:
- VIMC, CE, MAT, IGTE, TASR and SUM
Stocks With Unusual Call Option Activity:
- 1) JCI 2) WTW 3) EA 4) GSAT 5) HCP
Stocks With Most Positive News Mentions:
- 1) OCIR 2) XEL 3) NFLX 4) BMY 5) BX
Charts:
NYSE Composite Index:
- Volume 11.5% Above 100-day average
- 0 Sectors Rising, 10 Sectors Declining
- 14.4% of Issues Advancing, 82.8% Declining
- 17 New 52-Week Highs, 11 New Lows
Evening Headlines
Bloomberg:
- Greece Will Have to Exit the Euro Zone: Tchir. (video)
- Kaisa Keeps Creditors Guessing as China Dollar Default Looms. Kaisa Group Holdings Ltd. has until Monday to find $52 million for
missed payments on two of its dollar bonds as it seeks to avoid default.
- Nielsen: Why I'm Worried About Emerging Markets. (video)
- Most Asian Stocks Fall as Regional Gauge Poised for Weekly Gain. Most Asian stocks fell after the regional benchmark index closed
Thursday at a seven-year high. Japanese shares slid to pare a third
weekly advance. Two shares dropped for each that rose on the dollar-denominated MSCI
Asia Pacific Index, which was little changed at 154.44 as of 9:05 a.m.
in Tokyo. The measure closed at its highest level since January 2008 on
Thursday, and is poised to end the week 1.4 percent higher.
Japan’s Topix index lost 0.4 percent and Australia’s S&P/ASX 200 Index slid 0.1 percent.
- Schlumberger(SLB) Cuts More Jobs as Oil Industry Braces for Next Wave. Schlumberger Ltd., the world’s largest oilfield services provider,
will eliminate an additional 11,000 positions in a sign the industry
will undergo another round of job cuts as a result of tumbling crude
prices. The latest announced reductions bring the company’s total to 20,000,
making its workforce about 15 percent smaller than it was during the
third quarter of 2014. Schlumberger had announced plans in January to
eliminate 9,000 positions, in what was then the single largest cut in
the industry.
- Virtu’s Shareholders Said to Include Industry Critic T. Rowe. T. Rowe Price Group Inc., one of the biggest critics of
high-frequency trading, now finds itself in a seemingly surprising spot:
It acquired shares of HFT firm Virtu Financial Inc., a key player in
reshaping how everything from stocks to currencies are bought and sold.
The money manager purchased shares in Virtu’s initial public offering
Wednesday, according to people familiar with the matter who asked not
to be identified because the information is private.
Wall Street Journal:
- U.S. Says Ramadi at Risk of Falling to Islamic State. Anbar residents flee provincial capital as Islamist forces advance. U.S. defense officials said a provincial capital in Iraq could soon
fall to Islamic State, while America’s top military officer sought to
minimize the strategic importance of the city. At a Pentagon news
conference, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff,
suggested that maintaining control of Ramadi, the capital of Anbar
province, isn’t central to the U.S. and Iraqi aims of defeating Islamic
State forces.
- Fed Shies Away From June Rate Hike. Weak economic data causing some officials to rethink timing of first increase in more than 6 years. A patch of soft economic data has created uncertainty inside the
Federal Reserve about when to start raising short-term interest rates,
dimming the chances of a move as early as June. Recent reports
showed a slowdown in U.S. hiring in March, tepid growth in consumer
spending at retail stores, a big drop in industrial output and
softer-than-expected home.
- How Citadel and the Fed Crossed Paths Before the Hedge Fund Hired Ben Bernanke. The
news that former Federal Reserve Chairman Ben Bernanke will become a
senior adviser to Citadel, the Chicago-based hedge fund, has renewed
attention on the tendency of
former regulators and economic policy makers to move to financial
institutions once leaving office.
- The Nuclear Deal With Iran Needs Work—Lots of It by James A. Baker III. If Iran demands the removal of all sanctions once a final deal is signed, there shouldn’t be a final agreement. Within days of the April 2 announcement of the tentative agreement to
curb Iran’s nuclear-weapons program, it was apparent that there are
substantial misunderstandings about a deal the administration has hailed
as “an historic understanding.” Clearly, much work must be done if
there is to be a final agreement by the June 30 deadline.
Fox News:
- Nothing sacred: ISIS destroys Christian grave sites in Mosul. Even Iraq's dead Christians aren’t safe from ISIS. The Islamic State's campaign of terror across the war-torn nation,
which has already seen countless beheadings, destruction of priceless
art and religious artifacts and insistence that Christians submit or
die, now includes mass desecration of graves. Photos of the black-clad,
extremist ghouls smashing headstones in cemeteries in the key northern
city of Mosul were posted Thursday online under the title "Leveling
Graves and Erasing Pagan Symbols."
Zero Hedge:
Business Insider:
Reuters:
- AmEx revenue misses on strong dollar, loss of co-branded tie-ups. American Express Co, the
world's largest credit card issuer, reported quarterly revenue
that fell short of analysts' estimates, hurt by a stronger
dollar and the loss of several co-branded tie-ups. AmEx's shares fell 1.4 percent to $79.80 after the bell on
Thursday.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 104.0 -1.75 basis points.
- Asia Pacific Sovereign CDS Index 59.25 unch.
- NASDAQ 100 futures -.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (CMA)/.73
- (GE)/.30
- (HON)/1.39
- (RAI)/.80
- (STX)/1.04
Economic Releases
8:30 am EST
- The CPI for March is estimated to rise +.3% versus a +.2% gain in February.
- The CPI Ex Food & Energy for March is estimated to rise +.2% versus a +.2% gain in February.
10:00 am EST
- Preliminary Univ. of Mich. Consumer Sentiment for April is estimated to rise to 94.0 versus 93.0 in March.
- The Leading Index for March is estimated to rise +.3% versus a +.2% gain in February.
Upcoming Splits
Other Potential Market Movers
- The UK Jobless Claims report, (THOR) investor meeting and (SYMC) financial analyst day 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
