Style Underperformer:
Sector Underperformers:
- 1) Coal -2.75% 2) Road & Rail -2.44% 3) Oil Tankers -1.13%
Stocks Falling on Unusual Volume:
- EZCH, RMD, DD, DCO, ACAT, TSEM, VSLR, RICE, RAX, M, GNE, RL, FISH, ZAYO, DEPO, POST, MD, IMH, UNP, ELOS, IFF, PBYI, CNI, CSII and SFS
Stocks With Unusual Put Option Activity:
- 1) NVDA 2) KSS 3) DHR 4) RL 5) Z
Stocks With Most Negative News Mentions:
- 1) VALE 2) M 3) DUK 4) RL 5) DD
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.34% 2) Agriculture +.77% 3) Computer Hardware +.75%
Stocks Rising on Unusual Volume:
- PLL, WPZ, WMB, RENT, OI, OKS, ZBRA, USLV, FEYE, ACM, CALM and OPK
Stocks With Unusual Call Option Activity:
- 1) RAX 2) OPK 3) WMB 4) WPZ 5) OCN
Stocks With Most Positive News Mentions:
- 1) VRTX 2) LMT 3) KMB 4) GDDY 5) PLL
Charts:
Evening Headlines
Bloomberg:
- Political Will Is Keeping Greece From Bankruptcy: Vogt. (video)
- One Year In, Modi Euphoria Fades Along With Indian Stock Prices. Modi-mania is fading. Indian Prime Minister Narendra Modi, whose election last May fueled
hopes that he would unleash India’s economic potential, is finishing his
first year in office with few major legislative victories. Lawmakers on Tuesday delayed voting on a proposal to create a
national sales tax, one of the country’s biggest economic reforms in
decades. Another bill to make it easier to buy land also got sent to a
committee.
- U.S. Said Poised to Tear Up UBS Libor Accord, Seek Guilty Plea. The U.S. Justice Department is set to rip up its agreement not to
prosecute UBS Group AG for rigging benchmark interest rates, according
to a person familiar with the matter, taking a new step to hold banks
accountable for repeat offenses. The move by the U.S. would be a first for the industry, making good on a
March threat by a senior Justice Department official to revoke such
agreements and putting banks on notice that these accords can be unwound
if misconduct continues.
- Asian Junk-Bond Yield Nears Lowest as Investors Look Past. (graph) Asia’s riskiest bond issuers are getting the lowest borrowing costs
of the year as investors speculate central banks will help them overcome
default concerns flagged by Kaisa Group Holdings Ltd. Yields on dollar-denominated Asian sub-investment grade notes plunged
224 basis points to 7.54 percent as of May 11 from the January peak of
9.78 percent, according to a Bank of America Merrill Lynch index. That’s
near the year’s low of 7.52 percent marked on April 30.
- China’s Small-Company Stocks Slump After Hitting Record High. Chinese small-company stocks fell the most in a week, led by
technology companies, amid speculation the government is seeking to cool
the market after a benchmark gauge hit a record. East Money Information Co. slid 2.2 percent after rallying by the
daily limit of 10 percent in the past two days. Siasun Robot &
Automation Co. dropped 2.8 percent. PetroChina Co. led declines for
energy companies. sliding 1 percent. The government is looking at
stripping its biggest energy companies of their oil and gas pipelines as
part of sweeping industry reforms, according to people with knowledge
of the plans. Data scheduled for Wednesday include industrial production
and retail sales.The ChiNext index in Shenzhen dropped from an all-time high, losing
1.9 percent at 9:51 a.m. China’s securities regulator had an urgent
meeting with three fund management firms on Tuesday afternoon, requiring
them to control the pace of buying ChiNext stocks, the Securities Times
reported. The Shanghai Composite Index slid 0.5 percent to 4,378.98.
- Asian Stocks Retreat Second Day as Bond Rout Spreads to Equities. Asian stocks fell for a second day after a retreat in global
equities as concern mounts over the selloff in bonds. Consumer companies
led losses.
The MSCI Asia Pacific Index slid 0.1 percent to 151.43 as of 9:01 a.m. in Tokyo.
- Oil's Not Coming Back. Here's Why. Oil bulls who’ve cheered a rebound of 40 percent from a six-year low
should take heed: Unless demand accelerates, the rally is in danger.
The omens aren’t good. The U.S. government expects global consumption
to grow next year at less than half the rate of 2010, when the world was
emerging from a previous recession. The growth is insufficient to close
the gap with rising supply, according to Royal Dutch Shell Plc,
Europe’s biggest energy producer. The last time oil crashed, during
the 2008 financial crisis, China’s appetite for commodities seemed
insatiable, and powered prices higher. This time, Chinese fuel use is
growing at half the rate of the past decade, and sliding U.S. shale
output could reverse as prices rise, smothering the gains.
- Chinese iron ore mines face 'annihilation' as BHP(BHP), Rio Tinto, Vale boost output. Iron ore production in China is poised to shrink further as cheaper
imports and faltering demand threaten to close mines supplying mills in
the top steelmaker. Most private mines in China
have costs that are too high and produce ore of too low a quality to
survive, according to Sanford C Bernstein & Co. Output that fell 20
per cent to 311 million metric tons last year would drop to 271 million
tons this year and shrink further next year, Goldman Sachs said.
- Chicago Rating Cut to Junk by Moody’s on Pension Struggle. Chicago had its credit rating cut to junk by Moody’s Investors
Service after the Illinois Supreme Court’s rejection of a state
pension-overhaul plan reduced the city’s options for fixing its own
underfunded system. The two-level downgrade to Ba1 affects $8.1 billion of general
obligations, which were already the lowest-rated among the 90 biggest
U.S. cities, excluding Detroit. The outlook is still negative. Moody’s
has dropped the city seven levels since July 2013.
- Democrats Plot Revolt Behind Closed Door, Sink Trade Bill. (video) Signs of trouble for President Barack Obama’s trade bill surfaced
early Tuesday when 14 Democrats huddled behind closed doors in a room
one floor below the Senate chamber. Republicans needed just six Senate Democrats to prevail and were
counting on several in the room who had voted for the bill in committee.
- Stanford Sells Apple(AAPL) as Endowment Reduces U.S. Equity Holdings. Stanford University’s endowment liquidated its stake in Apple Inc.
in the first three months of 2015 as it trimmed holdings of U.S.
equities. The endowment sold Apple shares worth $174.5 million at the end of
last year, according to a regulatory filing. The fund’s publicly
disclosed U.S. stock holdings dropped by $250.4 million to $101.2
million at the end of March, as it also exited stakes in Cobalt
International Energy Inc. and Bank of America Corp.
Wall Street Journal:
Fox News:
- Amtrak train crashes in Philadelphia, multiple injuries reported. (video) Several people reportedly were injured after an Amtrak train crashed in Philadelphia Tuesday evening.
Northeast Regional Train 188 was traveling from Washington, D.C., to
New York City when it crashed just northeast of Philadelphia's Center
City at approximately 9:30 p.m. local time. The front of the train was
going into a corner when it shook.
- Clinton facing new ethics questions on role in Boeing deal. (video) When Hillary Clinton was America's top diplomat, she also appeared at
times like a top salesperson for America's biggest airplane maker,
Boeing. Traveling abroad on official business as secretary of state, Clinton
often visited Boeing facilities and made a pitch for the host country to
buy Boeing jets. During one visit to Shanghai in May 2010, she boasted
that "more than half the commercial jetliners operating in China are
made by Boeing."
MarketWatch.com:
CNBC:
- China outlook even worse than imagined: Morgan Stanley(MS). (video) The worst of the Chinese economic slowdown is likely still ahead
because of the nation's debt, according to a senior Morgan Stanley
investment strategist. "China, to try and sustain its growth rate in the
post-financial-crisis era, has engaged in the largest credit binge of
any emerging market in history," said Ruchir Sharma, head of emerging
markets and global macro at Morgan Stanley Investment Management,
Zero Hedge:
Business Insider:
c/net:
- Target(TGT) stores to introduce dedicated smart-home sections. Starting May 26, 1,800 Target stores will start stocking smart-home products in their all-new Connected Life sections.
Icontrol Networks first tipped us off that its $199 Piper Classic
all-in-one security system will be heading to Target shelves soon as
part of this initial launch. A Target spokesperson later confirmed the
roll-out via separate email.
Reuters:
Sina:
- China
Regulator Queries Funds' Risk Management. China's securities regulator
made queries to risk control directors at China Universal, E Fund
Management and Harvest Fund yday and found them to be in compliance.
Many mutual fund products have been investing in China's ChiNext board
recently, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.5 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 60.0 +1.0 basis point.
- NASDAQ 100 futures +.32%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (IGT)/.50
- (M)/.63
- (RL)/1.31
- (PCP)/2.92
- (CSCO)/.53
- (CTRP)/-.08
- (XONE)/-.32
- (JCP)/-.77
- (JACK)/.66
- (NTES)/1.50
- (SHAK)/-.03
Economic Releases
8:30 am EST
- Retail Sales Advance for April are estimated to rise +.2% versus a +.9% gain in March.
- Retail Sales Ex Autos for April are estimated to rise +.5% versus a +.4% gain in March.
- Retail Sales Ex Autos and Gas for April are estimated to rise +.6% versus a +.5% gain in March.
- The Import Price Index for April is estimated to rise +.3% versus a -.3% decline in March.
10:00 am EST
- Business Inventories for March are estimated to rise +.2% versus a +.3% gain in February..
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+25,000 barrels versus a -3,882,000 barrel decline the prior week.
Gasoline supplies are estimated to rise by +37,500 barrels versus a
+401,000 barrel gain the prior week. Distillate inventories are
estimated to rise by +812,500 barrels versus a +1,503,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to rise by
+.4% versus a +1.7% gain prior.
Upcoming Splits
Other Potential Market Movers
- The
China Retail Sales/Industrial Production reports, Eurozone GDP report,
$24B 10Y T-Note auction, weekly MBA mortgage applications report, BofA
Merrill Transport conference, JP Morgan Tech/Media/Telecom conference,
BofA Merrill Health Care conference, (AVP) investor day, (IR) investor
conference and the (WMB) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and energy shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.77 -.58%
- Euro/Yen Carry Return Index 140.52 +.52%
- Emerging Markets Currency Volatility(VXY) 10.01 -1.38%
- S&P 500 Implied Correlation 64.54 -1.16%
- ISE Sentiment Index 91.0 +.40%
- Total Put/Call 1.0 +81.82%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.98 +.01%
- America Energy Sector High-Yield CDS Index 1,072.0 -.39%
- European Financial Sector CDS Index 74.34 +2.0%
- Western Europe Sovereign Debt CDS Index 22.78 +.82%
- Asia Pacific Sovereign Debt CDS Index 59.82 +1.19%
- Emerging Market CDS Index 296.0 +.64%
- iBoxx Offshore RMB China Corporates High Yield Index 118.53 +.20%
- 2-Year Swap Spread 27.25 +.5 basis point
- TED Spread 27.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -20.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- China Import Iron Ore Spot $62.88/Metric Tonne -.22%
- Citi US Economic Surprise Index -59.50 +1.5 points
- Citi Eurozone Economic Surprise Index 9.1 -1.4 points
- Citi Emerging Markets Economic Surprise Index -16.7 -.9 point
- 10-Year TIPS Spread 1.89 +1.0 basis point
Overseas Futures:
- Nikkei 225 Futures: Indicating -75 open in Japan
- China A50 Futures: Indicating -225 open in China
- DAX Futures: Indicating +14 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging market shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Hospitals -2.36% 2) Defense -1.75% 3) I-Banks -1.31%
Stocks Falling on Unusual Volume:
- WAGE, RAX, BBSI, CBPX, NLNK, DEPO, APEI, MTZ, NNI, OME, EGL, ASH, VIPS, DPLO, IBP, LDOS, CVTI, GPS, IPXL, ATRO, WLKP, KNDI, JOBS, DTSI, SNI, HTZ, SUNE, IFF, ACM, ZEN, CAR, POST, PAH, FMC, LBIO, SCAI, TWOU, CVTI and FMI
Stocks With Unusual Put Option Activity:
- 1) SO 2) SE 3) HTZ 4) HUM 5) GPS
Stocks With Most Negative News Mentions:
- 1) LPSN 2) GPS 3) GM 4) DOW 5) UNP
Charts:
