Evening Headlines
Bloomberg:
- Putin’s Feed-Russia-First Push Has Global Grain Markets on Edge. Vladimir Putin is determined to make sure that Russians don’t run
out of affordable bread, even if it means a few bankrupt farmers and a
disrupted grain market. The country that last year was the fourth-largest wheat exporter is
now taxing all overseas sales of the grain. Shipments dropped by more
than half, and the loss of income is squeezing already thin profits for
growers. While Putin’s move kept more wheat at home, farmers have cut
back spending to stay solvent, including using less fertilizer and
pesticide.
- We're Just Learning the True Cost of China's Debt. (video) The true cost of the debt that China's real estate developers
peddled to eager international investors during a five-year property
boom is now becoming clear. Having found themselves shut out of local bond and loan markets seven
years ago, a band of developers began looking elsewhere for funds.
First an initial public offering, and then a dollar bond sale. It became
a well-trodden path. By 2010, a core group of four -- Kaisa Group
Holdings Ltd., Fantasia Holdings Group Co., Renhe Commercial Holdings
Co., Glorious Property Holdings Ltd. -- raised a total of $5.6 billion.
On Monday, Kaisa buckled under $10.5 billion of debt and defaulted.
- Sands China Shares Drop as Macau Downturn Causes Forecasts Miss. Sands China Ltd. dropped to a month low in Hong Kong trading after
the Macau casino operator reported worse-than-expected earnings and its
billionaire chairman Sheldon Adelson said he’s uncertain about the
industry’s recovery.
The stock fell 3.5 percent to HK$31.45 as of 9:35 a.m., the lowest
intraday level since March 20. The other five casino companies in the
city also fell with SJM Holdings Ltd. and Wynn Macau Ltd. losing more
than 2.3 percent.
- Asian Stocks Follow U.S. Shares Higher Ahead of China PMI Report. Asian stocks rose for a third day, after U.S. equities climbed
toward records, as Japanese shares gained on a weaker yen and investors
awaited a private report on Chinese manufacturing.
The MSCI Asia Pacific Index added 0.2 percent to 154.99 as of 9:02 a.m. in Tokyo.
- Qualcomm(QCOM) Forecasts Fall Short After Samsung Business Loss. Qualcomm Inc., whose chips power most of the world’s smartphones,
forecast fiscal third-quarter sales and profit that may miss estimates
as customers turn to rivals for key components or make their own parts. Net income in the current period will be 67 cents to 82 cents a share
on revenue of $5.4 billion to $6.2 billion, the San Diego-based company
said Wednesday in a statement. On average, analysts had estimated
earnings of 99 cents on sales of $6.46 billion, according to data
compiled by Bloomberg.
Wall Street Journal:
MarketWatch.com:
Zero Hedge:
Business Insider:
Reuters:
- Chipmaker Texas Instruments(TXN) forecasts revenue below estimates. Texas Instruments Inc forecast
current-quarter revenue below analysts' expectations, citing
weak demand for its chips from communication equipment and
consumer electronics markets and a strong dollar.
Shares of the company, which also reported
lower-than-expected profit and revenue for the first quarter,
fell 7 percent in extended trading on Wednesday.
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 59.5 -.25 basis point.
- NASDAQ 100 futures -.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 AM EST
- Initial Jobless Claims are estimated to fall to 287K versus 294K the prior week.
- Continuing Claims are estimated to rise to 2290K versus 2268K prior.
9:45 am EST
- The Preliminary Markit US Manufacturing PMI for April is estimated at 55.7 versus 55.7 in March.
10:00 am EST
- New Home Sales for March are estimated to fall to 515K versus 539K in February.
11:00 am EST
- The Kansas City Fed Manufacturing Activity Index for April is estimated to rise to -2.0 versus -4.0 in March.
Upcoming Splits
Other Potential Market Movers
- The
Eurozone PMI report, weekly Bloomberg Consumer Comfort Index, weekly
EIA natural gas inventory report and the (SCHW) Business Update 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: Slightly Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.73 -3.92%
- Euro/Yen Carry Return Index 134.51 +.20%
- Emerging Markets Currency Volatility(VXY) 9.90 -.90%
- S&P 500 Implied Correlation 67.76 +.48%
- ISE Sentiment Index 161.0 +45.05%
- Total Put/Call .91 +1.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 61.54 -.97%
- America Energy Sector High-Yield CDS Index 1,062.0 -.21%
- European Financial Sector CDS Index 73.26 -2.77%
- Western Europe Sovereign Debt CDS Index 26.74 -.02%
- Asia Pacific Sovereign Debt CDS Index 60.09 +.69%
- Emerging Market CDS Index 297.39 -1.82%
- iBoxx Offshore RMB China Corporates High Yield Index 116.98 +.18%
- 2-Year Swap Spread 26.75 -.5 basis point
- TED Spread 25.50 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -20.75 +1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- Yield Curve 143.0 +4.0 basis points
- China Import Iron Ore Spot $54.04/Metric Tonne +5.88%
- Citi US Economic Surprise Index -51.80 +1.3 points
- Citi Eurozone Economic Surprise Index 46.60 -1.2 points
- Citi Emerging Markets Economic Surprise Index -13.1 -.3 point
- 10-Year TIPS Spread 1.88 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +128 open in Japan
- DAX Futures: Indicating +72 open in Germany
Portfolio:
- Higher: On gains in my retail/medical/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- China Has a Massive Debt Problem. China has a $28 trillion problem. That’s the country’s total
government, corporate and household debt load as of mid-2014, according
to McKinsey & Co. It’s equal to 282 percent of the country’s total
annual economic output. President Xi Jinping’s government aims to wind down that burden to
more manageable levels by recapitalizing banks, overhauling local
finances and removing implicit guarantees for corporate borrowing that
once helped struggling companies. Those like Baoding Tianwei Group Co., a
power-equipment maker that Tuesday became China’s first state-owned
enterprise to default on domestic debt. Now hold that thought, and consider this: China’s also trying to prop
up a $10.4 trillion economy that’s decelerating and probably will
continue to do so through 2016, or so says the International Monetary
Fund.
- Greek Banks Win More Emergency Cash as Talks Loom. The European Central Bank almost doubled an increase in emergency
funding to Greek banks from last week, suggesting deposit flight is
accelerating as bailout talks drag on. The European Central Bank’s Governing Council raised the cap on
Emergency Liquidity Assistance by about 1.5 billion euros ($1.6 billion)
to 75.5 billion euros on Wednesday, people familiar with the decision
said. ELA is funding provided by national central banks at their own
risk, and is extended against lower-quality collateral than the ECB
accepts. “The ceiling increase shows that deposit outflows from Greek lenders
continue,” said Andreas Koutras, an analyst at in Touch Capital Markets
Ltd. in London. “The question now is when will the collateral against
ELA be exhausted -- in other words how much time is left?”
- Greece Optimism Cuts Spain Yields Most in 11 Months Versus Bunds. All it took was a glimmer of optimism in Greece’s debt negotiations
to fuel a rally in Spanish bonds that cut their yield premium over
German bunds by the most in almost a year. Greek bonds also jumped, pushing the three- and 10-year yields down
from the highest levels since 2012, while a slump in German bunds sent
yields up by the most in three months.
- Gazprom Accused of Market-Power Abuse to Raise EU Gas Prices. European Union regulators attacked OAO Gazprom’s pricing structure
throughout the eastern part of the continent, further straining
political relations between the 28-nation bloc and Russia. Margrethe Vestager, the EU’s competition chief, said Gazprom may have
imposed unfair prices by preventing gas from flowing from certain
central and eastern European countries to others. The move comes days
after she signed off on a so-called statement of objections to Internet
search giant Google Inc. “All companies that operate in the European market –- no matter if
they are European or not –- have to play by our EU rules,” Vestager said
in a statement Wednesday.
- Saudi Jets End Bombing Lull as Houthis Take Base in Yemen. Saudi Arabia renewed its aerial assault on Shiite rebels in Yemen, a day after saying it would scale back military operations. Fighter aircraft from the Saudi-led coalition attacked Houthi
positions in the cities of Taiz and Aden, residents said by phone, and
were seen flying over the capital, Sana’a. The Shiite Houthis had
earlier seized a brigade base from forces of the Saudi-backed President
Abdurabuh Mansur Hadi, according to locals and the Houthi-controlled
al-Masirah television channel.
- European Shares Are Little Changed While Greek Lenders Rebound. European stocks halted a two-day gain amid disappointing earnings
releases, while Greek shares rallied after a report that the nation won
access to more emergency funding for its banks. Kering SA lost 3.9 percent as it posted a worse-than-expected drop in
revenue at its Gucci brand, and Tesco Plc slid 5.2 percent after
reporting its biggest annual loss ever. Greece’s benchmark ASE Index
climbed 2.1 percent, the most among western-European markets, with its
banks gaining the most in almost two months. The Stoxx Europe 600 Index slipped less than 0.1 percent to 408.99 at
the close of trading in London. It earlier rose as much as 0.6 percent
and fell 0.8 percent.
Wall Street Journal:
CNBC:
ZeroHedge:
Business Insider:
MNI:
- Greek Govt Moving Backward in Some Areas, Regling Says. There is
backward movement in some policy areas, contrary to understanding
reached on Feb. 20, ESM's Klaus Regling said in an interview. Creditors'
baseline scenario remains to keep Greece in the euro zone; ESM is
prepared for all possible outcomes.
Style Underperformer:
Sector Underperformers:
- 1) Homebuilders -2.65% 2) Gold & Silver -2.61% 3) Computer Hardware -.91%
Stocks Falling on Unusual Volume:
- CMG, SMCI, PFPT, CREE, ADTN, ILMN, TRIL, ALV, URI, TUP, MANH, DHI, UA, FLKS, IRBT, TEL, TRN, ISRG, FARO, HAS, SCHL, DFS, CMGE, PNR, TMO and HTLD
Stocks With Unusual Put Option Activity:
- 1) OIL 2) NOV 3) CMG 4) XLNX 5) CSX
Stocks With Most Negative News Mentions:
- 1) ALTR 2) TRN 3) BRO 4) SCHL 5) BTU
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Steel +2.78% 2) I-Banks +.98% 3) Gaming +.96%
Stocks Rising on Unusual Volume:
- PKT, AEC, CAMP, DLB, VLTC, CCIH, PKG, ASML, ECHO, IBKR, YUM, STJ, VMW, VIMC, MA, AEC, FTI, V, TSLA and ADXS
Stocks With Unusual Call Option Activity:
- 1) VMW 2) ASHR 3) HK 4) CMG 5) ILMN
Stocks With Most Positive News Mentions:
- 1) BRCM 2) DUK 3) YUM 4) V 5) MCD
Charts:
NYSE Composite Index:
- Volume Running 2.4% Above 100-day average
- 4 Sectors Rising, 6 Sectors Declining
- 44.5% of Issues Advancing, 50.9% Declining
- 59 New 52-Week Highs, 15 New Lows
