Style Outperformer:
Sector Outperformers:
- 1) Biotech +2.47% 2) Drugs +1.77% 3) Agriculture +1.69%
Stocks Rising on Unusual Volume:
- CALA, SYT, RBA, DATA, KIP, YELP, OUTR, SSNI, NUAN, TOUR, IMPV, AOL, TGI, RBS, EBIX, OLED, TGI, MOH, AOL, POST, SGEN, RPTP, OUTR, KOP, RMTI, YELP, NRG, WWAV, CROX, CCOI and BLUE
Stocks With Unusual Call Option Activity:
- 1) MON 2) AWAY 3) MNST 4) DATA 5) SGMS
Stocks With Most Positive News Mentions:
- 1) DATA 2) MCHP 3) NUAN 4) MAR 5) MCD
Charts:
Evening Headlines
Bloomberg:
- Varoufakis Says Greece Ready to Take EU Impasse Down to the Wire. Greek Finance Minister Yanis Varoufakis said his government is
prepared to go “down to the wire” in talks with its creditors as policy
makers signal they’re losing patience with the country after months of
brinkmanship. Varoufakis, who denies he’s been sidelined by Greek Prime Minister
Alexis Tsipras in the negotiations, said he expects an agreement in the
next two weeks, though one is unlikely to be announced when euro-area
finance chiefs meet on Monday.
- China's Very High Mountain of Debt. Total debt is at 282 percent of GDP, with the rapid pace of credit expansion worrying policy makers. China's debt mountain is casting a shadow over the world's second-largest economy.
Total debt has reached 282 percent of GDP, according to the McKinsey
Global Institute. While other big economies aren't far behind, it's the
pace of China's credit expansion that's worrying policy makers, spurring
targeted stimulus strikes while trying to avoid a debt sugar hit.
- China Exports Drop in April, Compounding Pressure on Economy. China’s exports unexpectedly declined in April and imports slumped,
adding downward pressure on an economy grappling with overcapacity and a
property downturn. Overseas shipments fell 6.2 percent from a year earlier in yuan
value, the customs administration said in Beijing on Friday. That
compared with the median estimate for a 0.9 percent rise in a Bloomberg
survey of analysts. Imports slid 16.1 percent -- the fourth straight
double-digit decline -- leaving a trade surplus of 210.21 billion yuan
($33.9 billion). Stronger demand from a recovering U.S. economy is being offset by
sluggishness in Europe and a slide in shipments to Japan, compounding
challenges for an economy that last quarter expanded at the slowest pace
since 2009.
- The Hot Money Cools on China. Some $300 billion has been moved out in the past six months. While the world marvels at the rise of Chinese stock prices, money is
quietly leaving the country at the fastest pace in at least a decade.
Louis Kuijs, Royal Bank of Scotland’s chief China economist, estimates
that China lost $300 billion in financial outflows in the six months
through March. Deltec International, a Bahamas investment firm, puts the
number even higher.
- Australian Banks May Just Be Getting Started on Raising Capital. Australia’s biggest banks this week announced the largest collective
fundraising since the global financial crisis. They may just be getting
started. National Australia Bank Ltd., Westpac Banking Corp. and Australian
& New Zealand Banking Group Ltd. revealed proposals to raise a
combined A$8 billion ($6.4 billion) in capital to bolster their reserves
against potential mortgage losses at home and to meet tougher global
standards.
- Putin Stirs War Euphoria as Ex-Allies Skip WWII Victory Parade. The banners of war have been hung, the streets peppered with
patriotic posters. State television is broadcasting hourly updates from
the front lines and there’s even a free app, so there’s no excuse to
miss out.
President Vladimir Putin is preparing Russia for a collective
military celebration that’ll be replete with state-of-the-art weaponry
and thousands of goose-stepping troops. But the victory being glorified
isn’t over Ukraine in the current conflict. It’s over Nazi Germany seven
decades ago.
- Asian Stocks Climb From One-Month Low Before U.S. Jobs Report. Asian stocks rose, after the regional benchmark index closed
Thursday at its lowest in a month, as investors awaited U.S. labor data. The MSCI Asia Pacific Index gained 0.1 percent to 150.49 as of 9:45
a.m. in Tokyo after ending yesterday at its lowest since April 7. The
measure is poised for a 1.6 percent slide this week, its second straight
weekly decline.
- Iron Imports by China Shrink in April Amid Property Slowdown. Iron ore imports by China dropped in April compared with the same
month a year earlier, adding to signs that demand in the world’s largest
user may be slowing as the property market cools. Imports totaled 80.2 million metric tons in April, in line with 80.5
million tons in March, and 3.8 percent lower than a year earlier,
according to customs data on Friday. Purchases from overseas in the
first four months were 307.3 million tons compared with 305 million tons
in the same period in 2014.
- Iron Ore Outlook Cut by ANZ as China Steel Downturn Will Persist. A prolonged downturn in steel consumption in China will hurt the
outlook for iron ore, according to Australia & New Zealand Banking
Group Ltd., which cut price forecasts through 2017. Iron ore will average $55 a metric ton next year, down from an
earlier forecast of $60, and $60 in 2017, down from $63, ANZ said in an
e-mailed report on Friday. The outlook for 2015 was pared by $1 to $56 a
ton, with prices seen holding in a range of between $50 and $60 over
the next 12 months.
- Tesla(TSLA) May Need to Raise Capital After Losses, Analysts Say. Analysts are voicing concerns about Tesla Motors Inc.’s cash, saying
the maker of electric cars and energy-storage products may need to
raise money. Tesla said it had $1.51 billion in cash and cash equivalents as of
March 31, down from $1.91 billion three months earlier. Adam Jonas, an
analyst with Morgan Stanley, called Tesla’s cash burn “eye watering” in a
note early Thursday.
Wall Street Journal:
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.75 -1.25 basis points.
- Asia Pacific Sovereign CDS Index 60.25 +.25 basis point.
- NASDAQ 100 futures +.18%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (AOL)/.32
- (NILE)/.08
- (EBIX)/.43
- (HCN)/1.04
- (JD)/.00
- (WLH)/.18
Economic Releases
8:30 am EST
- The Change in Non-Farm Payrolls for April is estimated at 230K versus 126K in March.
- The Unemployment Rate for April is estimated to fall to 5.4% versus 5.5% in March.
- Average Hourly Earnings for April are estimated to rise +.2% versus a +.3% gain in March.
10:00 am EST
- Wholesale Inventories for March are estimated to rise +.3% versus a +.3% gain in February.
- Wholesale Sales for March are estimated to rise +.5% versus a -.2% decline in February.
Upcoming Splits
Other Potential Market Movers
- The Canadian Unemployment report and the (CSX) annual meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and industrial 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: Modestly Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 15.01 -.92%
- Euro/Yen Carry Return Index 141.06 -.38%
- Emerging Markets Currency Volatility(VXY) 10.54 +.67%
- S&P 500 Implied Correlation 64.93 -2.78%
- ISE Sentiment Index 106.0 +47.22%
- Total Put/Call .91 -10.78%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.64 +.12%
- America Energy Sector High-Yield CDS Index 1,070.0 -.70%
- European Financial Sector CDS Index 74.94 -.44%
- Western Europe Sovereign Debt CDS Index 23.77 -4.80%
- Asia Pacific Sovereign Debt CDS Index 60.81 +1.53%
- Emerging Market CDS Index 298.34 +.48%
- iBoxx Offshore RMB China Corporates High Yield Index 118.03 -.10%
- 2-Year Swap Spread 26.75 +1.0 basis point
- TED Spread 26.50 -1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.0 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 156.0 -4.0 basis points
- China Import Iron Ore Spot $60.36/Metric Tonne -.87%
- Citi US Economic Surprise Index -64.70 +2.6 points
- Citi Eurozone Economic Surprise Index 17.1 -1.9 points
- Citi Emerging Markets Economic Surprise Index -13.9 +4.1 points
- 10-Year TIPS Spread 1.89 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +101 open in Japan
- DAX Futures: Indicating +10 open in Germany
Portfolio:
- Higher: On gains in my biotech/medical/tech/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- ECB Gives Greece Another Week to Make a Deal. (video) Greece needs to show it’s serious about reaching an agreement with
international creditors next week or risk tighter liquidity rules being
imposed on its banks. European Central Bank officials want progress at a meeting of
euro-region finance ministers on May 11 or they will consider tightening
Greek banks’ access to emergency liquidity they need to stay afloat,
said two officials who spoke on condition of anonymity as the talks are
private. One policy maker said they’re prepared to raise haircuts -- the
discounts imposed on collateral pledged by Greek banks in return for
funding -- to levels seen last year. The ECB declined to comment.
- Greece on the Brink, Again. (video)
- Bond Bears Risk Self-Destruction by Betting on Draghi’s Success. Too
much success for Mario Draghi risks ending up in defeat for investors.
The euro-area’s currency is climbing with bond yields, while equities
are sliding, as financial markets bet the monthly bond-buying of
President Draghi’s European Central Bank will successfully revive
inflation. There is even talk of the 1.1 trillion-euro ($1.2 trillion)
program being tapered. The problem for Draghi is that recent trading goes in the opposite
direction of what he needs to cement stronger inflation and economic
growth. Higher borrowing costs will curb the ability of consumers and
companies to spend, as well as making it costlier for governments to
borrow after falling yields reduced the need for austerity. The euro
will impede exporters which had welcomed the currency’s previous slide,
while lower stocks mean quantitative easing has less of a wealth effect.
- European Opportunities ‘More Hype Than Reality,’ Weingord Says. Money managers promising big returns from European credit
investments are probably overstating the opportunity, Seer Capital
Management Chief Executive Officer Philip Weingord said. “There are interesting opportunities in Europe but it’s more hype than reality,” Weingord
said in a Bloomberg Television interview Thursday with Stephanie Ruhle
and Erik Schatzker at the SkyBridge Alternatives Conference in Las
Vegas. While fund managers have been
touting for years the potential for European banks to unload large
swaths of assets as they face tougher regulations, “it’s not happening,”
he said.
- ArcelorMittal(MT) Cuts Forecast as Iron Ore Conquers Steel Gains. ArcelorMittal
cut its annual profit target as decade-low iron ore prices overwhelm a
recovery in steel. The world’s biggest steelmaker expects $6 billion to
$7 billion of
earnings before interest, taxes, depreciation and amortization this
year, down from the $6.5 billion to $7 billion it forecast earlier. It’s
the fifth-largest iron-ore producer. “We faced a number of headwinds in the first quarter, including a
declining iron-ore price, a stronger dollar and surge of imports in the
United States,” Chief Executive Officer Lakshmi Mittal said in a
statement on Thursday.
- Siemens Cuts Another 4,500 Jobs as Oil Slump Hits Profit. Siemens AG, Europe’s largest engineering company, will cut another
4,500 jobs after second-quarter profit fell more than analysts
estimated, burdened by the declining oil price. Profit from so-called industrial operations fell 4.9 percent to 1.66
billion euros ($1.9 billion), the Munich-based company said in a
statement. That missed the 1.71 billion-euro average estimate of
analysts surveyed by Bloomberg.
- Europe Stocks Halt Two-Day Drop as German Equities Reverse Loss. German equities swung to gains from losses, helping erase an intraday decline in European stocks. The Stoxx Europe 600 Index added less than 0.1 percent to 388.98 at
the close of trading, after plunging as much as 1.8 percent. A drop in
oil and metal prices sent commodity shares tumbling, while travel
companies gained. The Stoxx 600 has fallen 6.1 percent from a record in
April, when valuations were at the highest in at least a decade.
- Oil Producers Cast Aside Gloom as Rally Spurs Drilling Plans. Oil producers battered by the steepest market collapse in a
generation are signaling for the first time that they believe the worst
is behind them. Carrizo Oil & Gas Inc., Devon Energy Corp. and Chesapeake Energy
Corp. all lifted their full-year production outlooks this week. Shale
explorer EOG Resources Inc. said on Tuesday it plans to increase
drilling as soon as crude stabilizes around $65 a barrel, while Pioneer
Natural Resources Co. has said it is preparing to deploy more rigs as
soon as July.
- Consumer Comfort in U.S. Declines to Lowest Level in Eight Weeks. Consumer confidence declined to an eight-week low as attitudes about
the economy dimmed, particularly among those at the bottom of the
income ladder. The Bloomberg Consumer Comfort Index decreased to 43.7 in the week
ended May 3, the fourth straight decline, from 44.7 the prior period.
- Tesla(TSLA) Falls After Analyst Calls Its Cash Burn ‘Eye Watering’. Tesla Motors Inc. fell Thursday after Morgan Stanley said the
company’s “eye watering” use of cash puts more pressure on a good
production start for the Model X sport utility vehicle. Shares of the electric-car maker led by Chief Executive Officer Elon
Musk fell 2.1 percent to $225.68 at 9:37 a.m. New York time.
- Here's What to Look for in Friday's Jobs Report.
ZeroHedge:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Coal -2.74% 2) Oil Service -2.71% 3) Oil Tankers -2.30%
Stocks Falling on Unusual Volume:
- INCR, VRNS, VSAR, WFM, TUMI, CPA, PMT, THS, INXN, EPAM, FOX, TPVG, INOV, GMCR, CCOI, AAON, NUS, WLKP, TDC, TA, SHG, PRFT, LCI, ACAS, FOXA, HTWR, FANG, CXW, PCLN, UNT, CONE, TASR, MEMP, SLH, ALDW, CNSL, FRSH, WCG, ABMD, TROX, SHAK, KATE and CCRN
Stocks With Unusual Put Option Activity:
- 1) XRT 2) BX 3) HYG 4) WFM 5) DOW
Stocks With Most Negative News Mentions:
- 1) SCMP 2) VRNS 3) AAON 4) TASR 5) RYAM
Charts:
