Style Underperformer:
Sector Underperformers:
- 1) Oil Service -1.32% 2) Gaming -.62% 3) Retail -.47%
Stocks Falling on Unusual Volume:
- FGEN, PBYI, KSS, MMYT, VIPS, NHTC, KSU, JACK, HOG, GWRE, SGMO, DGLY, FMI, PNM, HYH, LXFT, DDS, TGT, LNKD, SSI, SSP, GWR, KPTI and VSTO
Stocks With Unusual Put Option Activity:
- 1) CAR 2) DHR 3) KSS 4) XRT 5) FSLR
Stocks With Most Negative News Mentions:
- 1) WPZ 2) KEX 3) JCP 4) KSU 5) WLL
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Computer Hardware +1.64% 2) Medical Equipment +1.59% 3) REITs +1.53%
Stocks Rising on Unusual Volume:
- ISSI, NTES, QIWI, CTRP, SHAK, CMCM, QUNR, CRTO, CLVS, CROX and OPK
Stocks With Unusual Call Option Activity:
- 1) AVP 2) THC 3) PLD 4) JACK 5) WMB
Stocks With Most Positive News Mentions:
- 1) CTRP 2) LLTC 3) SHAK 4) IR 5) QCOM
Charts:
Evening Headlines
Bloomberg:
- Russia Rejects Automatic Sanctions Return If Iran Cheats on Deal. The
Obama administration is trying to sell a nuclear deal with Iran to
skeptical Arabs, Israelis and U.S. lawmakers by saying that United
Nations sanctions will be restored automatically if the Iranians are
caught cheating. Not so, say the Russians, who have one of five vetoes in the 15-member UN Security Council. “There can be no automaticity, none whatsoever” in reimposing UN
sanctions if Iran violates the terms of an agreement to curb its nuclear
program, Russia’s UN Ambassador Vitaly Churkin told Bloomberg News on
Wednesday.
- Man Who Brought Down Barings Warns on China. Twenty
years after bringing down a major British bank, Nick Leeson is sounding
alarm bells about China. Unless the country reforms its stock
markets, he warns, it's only a matter of time until his earlier disaster
repeats itself on a larger scale.
- Japan Markets Most Disjointed in 23 Years Show Kuroda Heavy Hand. The weakest correlation between Japanese bond yields and stocks in
23 years is showing how dependent the nation’s markets have become on
central bank support. The 60-day measure tracking moves between Japan’s Topix stock index
and the 10-year benchmark government bond yield fell to negative 0.33 on
Wednesday, the lowest since 1992 and below the 1 level that would
represent lockstep moves. The last time the relationship broke down in
April 2013, the Topix fell for four straight months, the longest since
the rout triggered by Lehman Brothers Holdings Inc.’s collapse in 2008. A
similar pattern can also be seen in December 2010 and February 2007.
- Saudi Arabia Is Making Its First Real Attempt to Be a Military Power. In the more assertive Saudi Arabia that’s emerging after the Arab
Spring, war is no longer taboo as an instrument of policy and
Washington’s approval isn’t required. Once known for cautious
diplomacy, the oil-rich kingdom is turning
more frequently to hard power. The shift has been under way since unrest
swept across the Arab world in 2011. It accelerated after the
succession of King Salman in January, and the promotion of his son as
defense chief. Since then, the Saudis have started an air war in Yemen
against Shiite Muslim rebels they accuse of being tools of Iran.
- Asian Stocks Fall as Japan Drops on Yen After U.S. Retail Sales. Asian stocks declined after weaker-than-forecast U.S. retail sales
fueled concern about growth in the world’s largest economy,
strengthening the yen and sending Japanese shares lower.
The MSCI Asia Pacific Index fell 0.1 percent to 152.45 as of 9:06 a.m. in Tokyo.
- Stan Druckenmiller Sees ‘Massive’ Problem Caused by Aging. Billionaire investor Stan Druckenmiller said an aging population will present a “massive, massive problem” in 15 years. “The young people are not going to be talking about cutting back,”
Druckenmiller said at a New York event hosted by Addepar, a technology
company that provides software to financial advisers, fund managers and
family offices. “There will be nothing to cut back.”
Wall Street Journal:
Fox News:
- Amtrak engineer applied brakes while train hurtling at twice speed limit: NTSB. (video) The engineer of the Amtrak train that derailed near Philadelphia --
killing at least seven and sending more than 200 to area hospitals --
applied the emergency brakes just seconds before the train jumped the
tracks while hurtling along at almost twice the speed limit, a National
Transportation Safety Board spokesman said Wednesday.
Zero Hedge:
Business Insider:
Reuters:
- Higher prices help Shake Shack(SHAK) post unexpected profit. Hamburger chain Shake Shack Inc
reported a surprise quarterly profit, as they raised prices for
their hormone- and antibiotic-free burgers, popular with
increasingly health-conscious U.S. customers. The company, which also reported better-than-expected
revenue for the first quarter, raised its full-year revenue
forecast, sending its shares up nearly 10 percent in after-hours
trading on Wednesday.
- Wal-Mart(WMT) challenges Amazon(AMZN) with unlimited shipping service for $50 per year. Wal-Mart Stores Inc is
planning to test a new unlimited online shipping service this
summer for $50 per year, a move that may hurt Amazon's annual
$99 Prime shipping service. Wal-Mart's service, which will be by invitation only for
now, will offer selected products on the company's website to
customers within three days or less, company spokesman Ravi
Jariwala told Reuters. Wal-Mart offers more than 7 million
products on its website.
- Puma Biotech(PUMA) breast cancer trial detailed, shares fall 25 pct. Details from a late-stage trial of Puma
Biotechnology's experimental breast cancer pill
neratinib showed that it improved disease-free survival for
certain breast cancer patients, but only by 2.3 months.
Puma shares slid 25 percent after hours following release of
the findings on Wednesday by the American Society of Clinical
Oncology ahead of its annual meeting later this month.
Financial Times:
- Rubio vows ‘moral clarity’ abroad. Marco Rubio, the Cuban-American Republican running for president, on Wednesday vowed
to restore a “moral clarity” to US foreign policy in a speech that
outlined a tough stance on China, Russia and Iran.
Caixin:
- China
Everbright Bank Has Most Umbrella Trust Exposure. China Everbright Bank
has the highest exposure to umbrella trusts at 200b yuan, citing a
person familiar with the matter. China Merchants Bank and Industrial
Bank have 100b yuan each of umbrella trusts, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 107.25 -.25 basis point.
- Asia Pacific Sovereign CDS Index 60.25 +.25 basis point.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- PPI Final Demand for April is estimated to rise +.1% versus a +.2% gain in March.
- PPI Ex Food and Energy for April is estimated to rise +.1% versus a +.2% gain in March.
- Initial Jobless Claims are estimated to rise to 273K versus 265K the prior week.
- Continuing Claims are estimated to rise to 2232K versus 2228K prior.
Upcoming Splits
Other Potential Market Movers
- The
BoJ's Kuroda speaking, $16B 30Y T-Bond auction, Bloomberg US Economic
Survey for May, weekly Bloomberg Consumer Comfort Index, weekly EIA
natural gas inventory report, (CPLA) analyst day, (ADT) investor day and
the (KSS) annual meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.89 +.22%
- Euro/Yen Carry Return Index 141.27 +.63%
- Emerging Markets Currency Volatility(VXY) 9.79 -1.81%
- S&P 500 Implied Correlation 63.54 -.95%
- ISE Sentiment Index 94.0 -2.08%
- Total Put/Call .84 -20.0%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.40 +.36%
- America Energy Sector High-Yield CDS Index 1,056.0 -1.68%
- European Financial Sector CDS Index 74.12 -.39%
- Western Europe Sovereign Debt CDS Index 22.87 +.42%
- Asia Pacific Sovereign Debt CDS Index 60.41 +.65%
- Emerging Market CDS Index 293.50 -1.06%
- iBoxx Offshore RMB China Corporates High Yield Index 118.62 +.08%
- 2-Year Swap Spread 26.75 -.5 basis point
- TED Spread 26.75 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -18.5 +1.75 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- Yield Curve 170.0 +4.0 basis points
- China Import Iron Ore Spot $62.58/Metric Tonne -.48%
- Citi US Economic Surprise Index -63.80 -4.3 points
- Citi Eurozone Economic Surprise Index 2.50 -6.6 points
- Citi Emerging Markets Economic Surprise Index -18.6 -1.9 points
- 10-Year TIPS Spread 1.89 unch.
Overseas Futures:
- Nikkei 225 Futures: Indicating -102 open in Japan
- China A50 Futures: Indicating -307 open in China
- DAX Futures: Indicating -36 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Greece Back in Recession as Bailout Impasse Drains Economy. Greece’s economy fell back into recession in the first quarter,
raising pressure on the government to reach an agreement with creditors
over the next bailout payment. Gross domestic product contracted 0.2 percent in the three months
through March after shrinking 0.4 percent in the previous period, the
European Union’s statistics office in Luxembourg said Wednesday. The
median estimate in a Bloomberg survey was for a 0.5 percent drop.
- Greece’s Creditors Said to Seek 3 Billion-Euro Budget Cuts. (video) Greece’s anti-austerity government needs to raise at least three
billion euros ($3.4 billion) through additional fiscal measures by the
end of this year to meet the minimum budget targets acceptable by
creditors, an official with knowledge of the discussions said. The reductions would bring the primary budget surplus in 2015 to just
over 1 percent of gross domestic product, a target Greek Interior
Minister Nikos Voutsis said today is acceptable. Without any change in
fiscal policy, Greece would end 2015 with a budget deficit of about 0.5
percent of GDP, the official said. The so-called primary budget balance
doesn’t include interest payments.
- NATO Urges President Putin to Stop Aiding Ukraine Rebels. The North Atlantic Treaty Organization expressed fears about Russian
President Vladimir Putin’s nuclear-weapons plans and demanded an
immediate halt to his support for separatists in eastern Ukraine.
With Putin stepping up Cold War rhetoric, foreign ministers from NATO
nations meeting in Antalya, Turkey, urged him to help end the conflict
in the battle-scarred region amid signs that Russian-backed rebels are
using a cease-fire agreed in February to re-equip and prepare another
offensive.
- European Stocks Reverse Gains as German Equities Tumble on Euro. A drop in German equities sent European stocks lower, reversing earlier gains as the euro climbed. The Stoxx Europe 600 Index slipped 0.2 percent to 395.47 at the close
of trading. Euro Stoxx 50 Index futures expiring next month lost 0.6
percent at 5:03 p.m. in London.
The Stoxx 600 rose as much as 1.1 percent earlier as data showed the
euro area’s economy expanded at its fastest pace in almost two years.
- IEA Says OPEC Battle for Oil Market Share Only Just Started. OPEC’s
push to defend its share of the global oil market has just
begun and the International Energy Agency said the group may further
increase production, a strategy that caused prices to crash last year.
Gulf-based members of the Organization of Petroleum Exporting
Countries are boosting supplies as they escalate a battle to preserve
sales volumes, the IEA said in its monthly market report. While the U.S.
shale oil industry appears to have “blinked” in the face of OPEC’s
move, countries including Russia are coping better than expected with
low prices and the agency increased its overall 2015 estimate for
non-OPEC production.
- BHP(BHP) Chief Warns Lower Iron-Ore Prices Are Here to Stay. BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie warned that lower iron-ore prices are here to stay. “The growth in demand for iron ore is happening at a slower rate than
the addition of low-cost supply,” he said in a phone interview from
Barcelona Tuesday. “Which is why we’re bearish about iron-ore prices in
the medium-to-long term.”
- U.S., Russia, Japan, China, Korea Hit With EU Steel Duty. The European Union imposed tariffs as high as 35.9 percent on electrical
steel from the U.S., Russia, Japan, China and South Korea, seeking to
curb competition for EU producers such as ArcelorMittal and ThyssenKrupp
AG.
- There’s a Tourist Problem in $7.8 Trillion of U.S. Company Bonds. Wondering what the next shoe to drop in the $7.8 trillion U.S.
corporate-bond market might be? The answer could be a dollar rout that’d
prompt foreign buyers to bail. As the dollar has surged in the past year, overseas investors have
poured cash into the debt, seeking returns from both the strengthening
currency and corporate credit in the world’s biggest economy. Investors
from Europe to China now own about 35 percent of the market, up from
about 20 percent in 1999, according to data compiled by Wells Fargo
& Co. If the dollar weakened significantly at the same time that bond
yields rose -- meaning losses on both the currency and price sides of
the equation -- those investors might very well leave, Wells Fargo
analysts Nathaniel Rosenbaum and George Bory wrote in a May 11 report.
- Goldman(GS), BofA(BAC) Among Banks Said to Face Fresh Swaps Scrutiny. The European Union is re-evaluating its antitrust probe into whether
13 of the world’s biggest banks conspired to shut exchanges out of the
credit-default swaps market after a series of mishaps nearly derailed
the four-year-old case, according to people familiar with the matter.
EU officials are weighing whether to send a revised antitrust
complaint to smooth over cracks exposed at a May 2014 hearing, said one
of the people, who asked not to be named because the matter is
confidential. The review is nearly finished and regulators aim to decide
on the next steps within a couple of months, the person said.
- ETF Assets Set to Overtake Hedge Funds This Year. ETFs at $3 trillion means they’ll eclipse hedge funds.
ZeroHedge:
Business Insider:
