Style Underperformer:
Sector Underperformers:
- 1) Steel -1.10% 2) Disk Drives -1.03% 3) Hospitals -.66%
Stocks Falling on Unusual Volume:
- DRNA, BRKR, NTAP, DL, RXN, BAH, SRPT, OTEX, MNRO, CYOU, PAA, VIPS, LL, MOMO, ACXM, HMC, BKE, NHTC, NOAH, SSB, HUBG, AFL, SPTN, LULU and EXAS
Stocks With Unusual Put Option Activity:
- 1) HPQ 2) ADBE 3) DTV 4) QCOM 5) KBH
Stocks With Most Negative News Mentions:
- 1) LL 2) NTAP 3) SRPT 4) BRKT 5) PAA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Oil Service +2.52% 2) Road & Rail +1.49% 3) Gaming +.96%
Stocks Rising on Unusual Volume:
- YOKU, TSL, BBY, CALA, BLUE, CRM, SHAK, SSYS and AAC
Stocks With Unusual Call Option Activity:
- 1) TYC 2) RAD 3) RMD 4) NTAP 5) OCR
Stocks With Most Positive News Mentions:
- 1) QCOM 2) LB 3) SSYS 4) CVS 5) BBY
Charts:
Evening Headlines
Bloomberg:
- Dividend Bets Trailing Europe Stocks Highlight Draghi Skepticism. Has the stock rally spurred by Mario Draghi’s quantitative easing
gone too far? Based on financial contracts betting on future dividend
rates, the answer is yes. While the Euro Stoxx 50 Index has climbed 17 percent since the start
of the year, expectations for dividend growth have risen about one-third
as fast, according to futures. Contracts allowing traders to speculate
on dividend levels in the benchmark gauge trade on the Eurex exchange. The gap, currently the widest of any time in the past six years,
reflects skepticism that European Central Bank stimulus will do as much
for corporate profits and the economy as it has for asset prices.
- China Failing to Spike the Global Monetary Punchbowl as Fed Did. When it comes to spiking the global punch bowl, Zhou Xiaochuan doesn’t come close to central bankers in the U.S. or Europe. After central bank stimulus from the Federal Reserve and European
Central Bank had a ripple effect in foreign financial markets,
economists from UBS Group AG are advising investors not to expect a
similar lift as Zhou’s People’s Bank of China cuts interest rates and
encourages banks to lend.
- ‘Shale-ionaires’ Suffering from Wave of Bankrupt Oil Drillers. A
rebound in oil prices that bottomed near $44 a barrel in March has
provided some relief to stronger companies that have been able to
compensate with cost cuts and more efficient operations. For many smaller, cash-strapped producers, current prices of almost $60 still aren’t
enough to make ends meet compared to the $100-plus prices seen during
the boom days. There have been at least a dozen bankruptcy filings in recent months,
and more than a dozen have defaulted on bond payments or warned
investors of challenging times ahead, according to data compiled by
Bloomberg.
- Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor ‘Meh’. Investors yawned at the news Wednesday that five of the world’s
biggest banks, including JPMorgan Chase & Co. and Citigroup Inc.,
agreed to plead guilty in a currency-rigging probe. They’re among six
banks that will pay $5.8 billion in fines. Barely more than a year ago, criminal charges against major U.S.
banks were considered unthinkable, with lawyers and analysts viewing
felony convictions as a death sentence and a threat to the financial
system. Now, by granting waivers allowing lenders to keep operating even
after a felony plea, the government has managed to punish firms while
protecting them from fatal consequences.
- Reclusive Chicago Multimillionaire Throwing Fundraiser for Hillary Clinton Tonight.
Over the years, Fred Eychaner has given millions to the Clintons and their causes. But he shuns the spotlight. In an era of political megadonors, Fred Eychaner is an outlier.
He never appears on television. He never hosts weekend summits for fellow donors. And he rarely talks to reporters. Even
so, there was no more natural spot for one of Hillary Clinton's biggest
Midwest fundraisers than Eychaner's upscale Chicago home.
Wall Street Journal:
- Fed Looks Past June for First Rate Hike. Federal Reserve officials at their April policy meeting said in the
most explicit terms yet that they are unlikely to start raising
short-term interest rates in June, as seemed possible when 2015 began. Officials
have been saying they won’t begin lifting their benchmark federal funds
rate from near zero until they see more improvement in the labor market
and are confident inflation will rise toward their 2% target. Several
of them...
Fox News:
- Ancient Syrian city reportedly in ISIS hands amid antiquities outcry. Islamic State militants reportedly captured the ancient Syrian town
of Palmyra Wednesday as Syrian officials evacuated citizens and
scrambled to keep priceless antiquities from falling into terrorist
hands. The Syrian Observatory for human rights told The Associated
Press that government forces collapsed in the face of ISIS attacks and
withdrew from the town late Wednesday. The Wall Street Journal reported
that before fleeing, the National Defense Forces evacuated civilians as
militants took control of residential areas and established themselves
in the city’s nearby ruins.
Barron's:
MarketWatch.com:
CNBC:
- Bank punishment 'won't change anything': Lawyer. (video) He contended that the punishment will come down more on shareholders than the traders themselves. The punishment marks "a good first step," attorney
Andrew Stoltmann said Wednesday. But he added that it had not gone far
enough. "The individuals who engaged in this activity have to be indicted," he said on "Closing Bell."
Zero Hedge:
Business Insider:
- China has a new priority #1. What we're going to get here is a bumpy ride where the Chinese
government moves from reform to growth, growth to reform, in order to
avoid a hard landing. It's going to be tough, though. During bumpy rides things can sometimes spin out of control.
- San Francisco’s housing boom has gotten over-the-top crazy. (graph) The median home price is now 37% above the prior-bubble completely
mind-boggling median price that afterwards everyone admitted had been
based on totally crazy valuations. This has a real impact on rents, with average asking rent in the first quarter hitting $3,458 a month, or $41,500 per year.
Reuters:
- CVS(CVS) nears deal to buy Omnicare(OMCR) for more than $12 bln -sources. CVS Health Corp, the
second-largest U.S. drugstore operator, is nearing a deal to buy
pharmacy service provider Omnicare Inc for more than $12
billion, according to two people familiar with the matter.
A deal between the two companies could be announced as early
as Thursday, one of the people said.
Telegraph:
WeChat:
- Chinese Fund Caps Holdings of SME, ChiNext Stocks. First Qianhai
Fund limited single fund's combined holding of stocks on SME and ChiNext
at no more than 10% of total net assets. Co. made the decision on
concern bubbles in SME and ChiNext board may break, according to the
report.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 59.50 +.5 basis point.
- NASDAQ 100 futures -.27%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Chicago Fed National Activity Index for April is estimated to rise to 0.0 versus -.42 in March.
- Initial Jobless Claims for last week are estimated to rise to 270K versus 264K the prior week.
- Continuing Claims are estimated to rise to 2231K versus 2229K prior.
9:45 am EST
- Preliminary Markit US Manufacturing PMI for May is estimated to rise to 54.5 versus 54.1 in April.
10:00 am EST
- Philly Fed Business Outlook for May is estimated to rise to 8.0 versus 7.5 in April.
- Existing Home Sales for April are estimated to rise to 5.23M versus 5.19M in March.
- The Leading Index for April is estimated to rise +.3% versus a +.2% gain in March.
11:00 am EST
- Kansas City Fed Manufacturing Activity for May is estimated to rise to -4.0 versus -7.0 in April.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Williams speaking, Mario Draghi press conference, ECB rate
decision, Eurozone PMI report, Bloomberg Economic Expectations for May,
weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas
inventory report, (AOS) analyst day, (AFL) analysts briefing and (FLIR)
investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to strengthen 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 -.93%
- Euro/Yen Carry Return Index 140.74 +.14%
- Emerging Markets Currency Volatility(VXY) 9.44 -.11%
- S&P 500 Implied Correlation 60.41 -3.84%
- ISE Sentiment Index 134.0 +5.51%
- Total Put/Call .81 -22.1%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.90 +.1%
- America Energy Sector High-Yield CDS Index 1,092.0 +1.41%
- European Financial Sector CDS Index 73.21 +.24%
- Western Europe Sovereign Debt CDS Index 21.87 +.51%
- Asia Pacific Sovereign Debt CDS Index 59.62 +.86%
- Emerging Market CDS Index 284.75 -1.73%
- iBoxx Offshore RMB China Corporates High Yield Index 119.46 +.20%
- 2-Year Swap Spread 26.0 +.25 basis point
- TED Spread 26.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -19.0 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- Yield Curve 167.0 +1.0 basis point
- China Import Iron Ore Spot $57.12/Metric Tonne -2.41%
- Citi US Economic Surprise Index -64.3 +.2 point
- Citi Eurozone Economic Surprise Index -6.20 -1.7 points
- Citi Emerging Markets Economic Surprise Index -13.3 -2.6 points
- 10-Year TIPS Spread 1.90 +2.0 basis points
Overseas Futures:
- Nikkei 225 Futures: Indicating +119 open in Japan
- China A50 Futures: Indicating -39 open in China
- DAX Futures: Indicating +16 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Iran Leader Says He Won’t Allow Nuclear Checks at Military Sites. Iran’s supreme leader said international inspectors won’t get access
to military complexes under any nuclear deal, nor be allowed to
interview Iranian scientists, a stance at odds with those taken by the
nation’s negotiators. “We have said that we will not allow foreigners to carry out
inspections of any military sites,” Ayatollah Ali Khamenei said at a ceremony
for army graduates. “I will not allow foreigners to interview, which is
tantamount to interrogation, the prominent beloved scientists and sons
of this nation.” Khamenei’s comments contradict both his own envoys to nuclear talks
with a group of world powers and a U.S. State Department “fact sheet”
published last month. That document stipulated that Iran would be
required to grant the United Nations nuclear agency access to any
“suspicious sites.”
- Greece, Creditors Delve Into Details as Deadline Looms. Greece delved into detailed proposals with creditors as some
European policy makers struck an increasingly optimistic tone that a
deal to unlock bailout aid can be reached. An agreement is possible in the coming weeks following progress this
month, European Union Economic and Monetary Commissioner Pierre
Moscovici told the French Senate Wednesday, the day after German
Chancellor Angela Merkel said Greece had until the end of the month to
reach a deal.
- Takeover-Fueled Junk Borrowing Hits Six-Year High in Europe. Europe’s junk-rated companies are raising funds for mergers at the fastest pace in at least six years. Buyout
deals accounted for 61 percent of the almost 24 billion euros ($26.6
billion) of leveraged loans issued this year, the biggest proportion
since the same period in 2009, according to S&P Capital IQ Leveraged
Commentary & Data. Companies are also funding deals in the bond
market, where sales are set for a record, according to Fitch Ratings.
- Portugal Sells Debt With a Negative Yield for the First Time. Portugal sold debt securities with a negative yield for the first
time as the European Central Bank’s bond-purchase program helps to drive
down borrowing costs. The country’s debt agency sold 300 million euros ($333 million) of
bills due in November 2015 at an average yield of minus 0.002 percent.
That compares with an average yield of 0.047 percent at a previous
auction on March 18. A negative yield means investors buying the
securities now will get less back when the debt matures than they paid.
- Euro’s Plunge Reignites Calls for Parity on ECB Bond-Buying Plan. The European Central Bank’s pledge to front-load its bond buying has
given hope to euro bears frustrated by the currency’s sharpest rally in
almost five years. In less than three days, the euro has tumbled 3 percent versus the
dollar, erasing a third of its gains since mid-March. The cost of
protecting against further declines using options jumped by the most in
four months after ECB Executive Board member Benoit Coeure said on
Monday that the central bank will bring forward some of its monthly bond
purchases before an anticipated summer lull.
- Burberry Lowers Outlook as China Shoppers Shun Hong Kong. (video) Burberry Group Plc, the British maker of $1,895 trenchcoats, lowered
its earnings forecast after the strong pound and decelerating sales in
Hong Kong weighed on last year’s profit, sending the shares down the
most in seven months. Earnings in the period through March 2016 will be about 40 million
pounds ($62 million) less than previously anticipated because of
currency swings, London-based Burberry said Wednesday. Adjusted pretax
profit fell 1 percent to 455.8 million pounds last fiscal year, the
first decline since 2009.
- European Stocks Extend Three-Week High as Altice, UBS Advance. A jump in telecommunication shares and banks pushed European stocks up for a third day. Altice SA climbed 12 percent on deals
activity, while Vodafone Group Plc rose 5.4 percent after Liberty
Global Plc Chairman John Malone said a tie-up with the U.K. phone
company would be a “great fit”
for his cable empire. UBS Group AG gained 3.2 percent and Barclays Plc
advanced 3.4 percent after agreeing to pay fines to settle probes into
interest-rate rigging.
The Stoxx Europe 600 Index rose 0.4 percent to 406.42 at the close of
trading in London, after falling as much as 0.3 percent earlier.
- Secret Data Collection on Innocent Americans Allowed Under Bill. A bill to limit widespread spying by the National Security Agency
would continue to allow the U.S. to secretly obtain large amounts of
data on innocent Americans. Senate leaders ended a standoff Tuesday by agreeing to vote on a
House-passed bill that would prohibit the NSA from collecting bulk
records while renewing three U.S. spy programs set to expire in two
weeks.
- Airline Rally Unwinding as American Air Spurs Price War Selloff. Turns out cheap oil isn’t always good for airlines. U.S. carriers sank the most in seven months amid signs that a year of
lower fuel costs has left them poised to ramp up competition for
customers with cut-rate fares and more routes. Southwest Airlines Co. dropped 7.5 percent to $37.84 at 1:20 p.m. in
its biggest drop in three years, while American Airlines Group Inc.
tumbled 6.4 percent to $44.80 in its worst day since emerging from
bankruptcy in 2013. Airline stocks have risen at twice the rate of the
Standard & Poor’s 500 Index in the past year.
Wall Street Journal:
- Germany’s Schäuble Doesn’t Rule Out Greek Default. Finance minister says election of left-wing party clouds outlook; also wants to ‘think together’ with U.K. on EU.
Germany’s finance minister said he couldn’t rule out a Greek default, a
stance that will add pressure on Athens as negotiations over
much-needed financing enter their final stretch. Asked whether he would
repeat an assurance he gave in late 2012 that Greece wouldn't default,
Wolfgang Schäuble told The Wall Street Journal and French daily Les
Echos that “I would have to think very hard before repeating this in the
current..
Fox News:
CNBC:
- Fed sees weakness as 'transitory,' all but rules out June hike: Minutes. Federal Reserve officials at their April meeting mostly brushed
aside the wobbly start the U.S. economy has had in 2015, attributing the
lack of growth to "transitory" factors that will abate soon. Meeting minutes show a Fed Open Market Committee
with little concern about growth, even though they detailed a laundry
list of weak spots that included industrial production, housing and
investment. Gross domestic product grew just 0.2 percent in the first
quarter—a number likely to be revised to a negative—while the Atlanta
Fed is tracking second-quarter growth at just 0.7 percent.
ZeroHedge:
Business Insider:
Reuters:
- Greece cannot make June 5 IMF payment without deal - lawmaker. Greece
will not be able to make a payment to the International Monetary Fund
that falls due on June 5 without a deal with its international lenders,
the government's parliamentary speaker said on Wednesday. Athens
faces several payments totalling about 1.5 billion euros (1 billion
pounds) to the IMF next month and is in talks with the European Union
and the International Monetary Fund to clinch a cash-for-reforms deal
before it runs out of money.
