Tuesday, May 26, 2015

Morning Market Internals

Posted by Gary .....at 10:41 AM
NYSE Composite Index:
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Monday, May 25, 2015

Tuesday Watch

Posted by Gary .....at 11:05 PM
Today's Headlines 
Bloomberg: 
  • Greece Returns to Talks With Varoufakis Blaming Creditors. Greek officials will use Tuesday to revive their bid to access financial aid with their finance minister, Yanis Varoufakis, blaming creditors’ insistence on more austerity for the impasse. While Greek Prime Minister Alexis Tsipras’s spokesman Gabriel Sakellaridis said Monday that a deal can be reached by the end of May, he admitted that disagreements remain in areas such as budget targets, sales-tax rates, pension and labor market rules.
  • ECB Slows Bond Purchases After Indicating Pace Would Accelerate. The European Central Bank slowed purchases of public-sector bonds, even after saying it would accelerate buying before liquidity dries up during Europe’s summer vacation period. Holdings of government and agency debt under its quantitative-easing program climbed by 11.8 billion euros ($13 billion) to 134.2 billion euros in the week ended May 22, data on the ECB website showed on Monday. That’s the smallest increase in three weeks.  
  • BOJ Debt Purchases Can’t Offset Tumbling Demand at Bond Auctions. Even as the Bank of Japan buys record amounts of debt, investor demand at government auctions is tumbling and bondholders have lost 0.8 percent this year. At the last 10-year sale, investors bid for 2.24 times the amount of debt available, the least since 2009. An index tracking auction demand for maturities ranging from two to 40-years fell to the lowest level since 2007, according to Barclays Plc. Japan is scheduled to sell 20-year bonds Tuesday.
  • Another Chinese Company Says It Will Miss Full Bond Payment. A bottle maker in China said it won’t be able to fully repay a bond due May 28 as a slowdown in the world’s second-biggest economy persists. Zhuhai Zhongfu Enterprise Co. can only repay 148 million yuan ($23.9 million) of the 590 million yuan principal, according to a company statement to the Shenzhen Stock Exchange Monday. It plans to pay all the 31.152 million yuan of interest. The manufacturer, which isn’t state-owned and supplies bottles for Coca-Cola Co. and PepsiCo Inc. in China, sold the 5.28 percent securities in 2012.
  • Euro Weakens on Greece as Emerging Stocks, Spanish Bonds Decline. The euro weakened after Greece told creditors to lower demands that are holding up bailout funds. Emerging-market stocks fell as speculation grew the U.S. was moving closer to raising interest rates, while Polish equities slid the most in four months and Spanish markets dropped. Europe’s currency slid 0.4 percent to $1.0974 at 12:46 p.m. in New York. The MSCI Emerging Markets Index of stocks fell 0.6 percent.
  • Spanish Shares Fall After Vote as Greek Stocks Drop Second Day. Equity markets in Spain and Greece fell, dragging European stocks lower as holidays across the region curbed trading volume. The IBEX 35 Index dropped 2.1 percent after local Spanish elections showed support for parties seeking to overturn the political establishment. The FTSE MIB Index of Italy, where anti-austerity sentiment is also on the rise, slid 1.7 percent. Greece’s ASE Index lost 3.1 percent as the government is priming investors for another cliffhanger on June 5. The broad Stoxx Europe 600 Index slipped 0.3 percent to 406.53 at 4:32 p.m. in London, with the volume of shares changing hands 80 percent lower than the 30-day average. Equity markets in the U.K., Germany and Switzerland are among those closed for a holiday.  
  • Asian Stock Gauge Heads for First Drop in Four Days; Kospi Slips. Asia’s regional benchmark stock gauge headed for the first decline in four days, with South Korean shares slipping as the market reopened from a holiday. Healthcare and consumer companies led declines. The MSCI Asia Pacific Index retreated 0.1 percent to 153.73 as of 9:06 a.m. in Tokyo.
  • Chinese Hedge Funds Bearish on Copper Ring Alarm Bells for Bulls. Nobody may be more bearish on China copper than Chinese hedge funds. That should be a warning to investors who’ve ridden the metal’s rebound from a five-year low into a bull market. Gains of as much as 20 percent since late January haven’t convinced the money managers that demand is improving in the world’s biggest copper-consuming country, where the economy is growing at the slowest pace in a generation.
  • Goldman(GS) Sticks to Commodity Bear Call as Copper Vulnerable. Commodities will reverse a rally that started in March as a stronger U.S. dollar, cheaper oil and cooling China again pressure raw materials, especially copper, according to Goldman Sachs Group Inc. Copper will lose at least 16 percent over the coming 12 months on China’s weakening demand growth and slowdown in construction completions, analysts including Jeffrey Currie said in a report e-mailed Monday. Oil in New York will fall to $45 a barrel by October while the dollar continues its rise, pushing commodities prices lower as production costs slide. “We see downside pressures on commodity prices re-emerging,” the analysts wrote in the report dated May 22. “The recent rise in commodity prices is clearly at odds with our lower-for-longer bearish view across the complex.”
  • Fed’s Fischer Says Rate Hike Debate Driven by Data, Not Date. Federal Reserve Vice Chairman Stanley Fischer said central bankers are weighing the risk of raising interest rates prematurely against the danger of having to play catch-up if they wait too long. “Which is better, early and gradual or late and steep? If we raise the rate from zero it will be harder to go back to zero if there is a problem,” Fischer said Monday in a speech at IDC Herzliya in Herzliya, Israel.
  • Fed’s Mester Says ‘Time Is Near’ for U.S. Interest-Rate Increase. Accelerating inflation and strong employment growth are pushing the U.S. economy close to the point where it can support higher interest rates, Federal Reserve Bank of Cleveland President Loretta Mester said. “If the data comes in according to my forecasts then the time is near where we’re going to be wanting to raise rates,” Mester said Monday in an interview in Reykjavik, Iceland. The Fed’s rate-setting committee will go into its June meeting with an “open mind” about whether to raise the central bank’s benchmark rate, Mester said after delivering a speech at a conference on the financial system.
Wall Street Journal:
  • Islamic State’s Gains Reveal New Prowess on Battlefield. Examination of Ramadi’s downfall reflects complex plans and new weapons. In late April, a commander for Islamic State said his forces were ready to launch an offensive to take Ramadi, and the group called for fighters to redeploy to Iraq from Syria. Three weeks later, the jihadist group seized the capital of Anbar province after relentless waves of suicide bombings. U.S. defense chief Ash Carter has blamed Ramadi’s fall mainly on Iraqi forces’ lack of will to fight. But Islamic State’s battlefield...
Zero Hedge:
Financial Times:
Weekend Recommendations
  • None of note
Night Trading
  • Asian indices are unch. to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 106.0 +1.75 basis points.
  • Asia Pacific Sovereign CDS Index 58.5 +.25 basis point.
  • S&P 500 futures -.22%.
  • NASDAQ 100 futures -.20%.

Earnings of Note
Company/Estimate
  • (AZO)/9.51
  • (TDW)/.55
  • (TIVO)/.07
  • (WDAY)/-.08
Economic Releases
8:30 am EST
  • Durable Goods Orders for April are estimated to fall -.5% versus a +4.0% gain in March.
  • Durables Ex Transports for April are estimated to rise +.3% versus a -.2% decline in March.
  • Cap Goods Orders Non-Defense Ex Air for April are estimated to rise +.3% versus a -.4% decline in March. 
9:00 am EST
  • FHFA House Price Index for March is estimated to rise +.7% versus a +.7% gain in February.
  • The S&P/CS 20 City MoM SA for March is estimated to rise +.9% versus a +.93% gain in February.
9:45 am EST
  • Preliminary Markit US Services PMI for May is estimated to fall to 56.5 versus 57.4 in April.
10:00 am EST
  • New Home Sales for April are estimated to rise to 505K versus 481K in March.
  • Consumer Confidence for May is estimated to fall to 95.0 versus 95.2 in April.
  • Richmond Fed Manufacturing Index for May is estimated at 0.0 versus -3.0 in April.
10:30 am EST
  • Dallas Fed Manufacturing Activity for May is estimated to rise to -11.5 versus -16.0 in April.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Lacker speaking, China Industrial Profits report, 2Y T-Note auction and the KeyBanc Industrial/Automotive/Transport conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.

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Weekly Outlook

Posted by Gary .....at 3:50 PM
Week Ahead by Bloomberg. 
Wall St. Week Ahead by Reuters.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on global growth fears, Fed rate hike worries, earnings concerns, rising Eurozone/Emerging Markets/US High-Yield debt angst, technical selling and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.
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Sunday, May 24, 2015

Today's Headlines

Posted by Gary .....at 7:19 PM
Bloomberg: 
  • Varoufakis: Grexit Would Be Beginning of End for Euro Project. "Once you infuse into investors mind that the euro is not indivisible, it will only be a matter of time before the whole thing begins to unravel," Greek Finance Minister Yannis Varoufakis says on Sunday in interview on BBC's "Andrew Marr Show." "Once you are in a monetary union, getting out of it is catastrophic," he said. 
  • Biggest Debt Collector in Europe Says Crisis Rates Not Helping. The head of Europe’s biggest debt collector says the historic wave of stimulus spilling out of central banks has failed to fuel investment growth. Lars Wollung, the chief executive officer of Intrum Justitia AB, warned that record-low interest rates “don’t seem to lead to investments that create jobs,” in an interview in Stockholm. “A rate that is too low, or a rate that many of us have never experienced, is so extraordinary that it doesn’t create any stability or faith in the future at all,” he said. “Rather the opposite: one feels insecure and waits with expansion plans and to hire more people.”
  • Putin Signs Law Allowing Clampdown on Foreign NGO Groups. President Vladimir Putin signed legislation allowing prosecutors to deem foreign or global non-government organizations as “undesirable” in Russia, drawing immediate criticism from the U.S. and European Union. The prosecutor-general may assign the label to international NGOs that “threaten Russia’s constitutional order, defense potential or security,” according to the law signed last night. Such organizations lose rights to publish media materials, organize rallies and use local bank accounts.
  • Saudi King Vows to Punish Perpetrators of Mosque Attack. Saudi King Salman vowed to punish those responsible for a suicide attack on Shiite-Muslim worshippers, describing it as “heinous crime” that killed innocent people in the kingdom’s oil-rich Eastern Province. “Every participant, planner, supporter, collaborator, or sympathizer with this heinous crime will be held accountable, tried and punished,” King Salman said in a statement on the official Saudi Press Agency. “Our efforts will never stop at any time from fighting the deviant thought.”
  • Dubai Stocks Lead Mideast Declines as Real Estate Shares Drop. Real estate and construction companies dragged Dubai’s stocks to the lowest in five weeks as gauges across the six-nation Gulf Cooperation Council retreated. Dubai’s DFM General Index lost 1.7 percent to close at 4,049.98, pulled lower by a 2 percent decrease in the Dubai Financial Market Real Estate Index. Emaar Properties PJSC, the developer with the biggest weighting on the gauge, dropped the most since May 4.
Wall Street Journal:
  • Defense Secretary Opens Possibility to Strategy Shift on Iraq. Ash Carter’s gives withering critique of Iraqi defense forces over Islamic State’s capture of Ramadi. Defense Secretary Ash Carter held open the possibility of a strategy shift by the White House on Iraq, a few days after recent setbacks in Iraq and Syria revived sharp criticism of the Obama administration’s approach in combating extremist groups there. Islamic State forces last week captured the key Iraqi city of Ramadi and also expanded...
Fox News: 
  • Congressional Dems, Republicans agree Obama's Islamic State strategy is now, at best, stuck in neutral. Top congressional Democrats and Republicans agreed Sunday that President Obama is not winning the fight against the Islamic State, with one of his top House supporters acknowledging a “stalemate” at best. The criticism from Hawaii Democratic Rep. Tulsi Gabbard was not unexpected following the Islamic State last week taking over the Iraq city of Ramadi, then pushing into the Syrian city of Palmyra. “Clearly ISIS has gained momentum … as we’ve seen the ground that they have gained both in Iraq and Syria,” Gabbard, an Army combat veteran who has criticized Obama for not calling Islamic State “Islamic extremists,” told CNN’s “State of the Union.”
ZeroHedge:
Business Insider:
Financial Times: 
  • China brokers’ capital rush fuels margin-fed rally. China’s brokers have raised more capital this year than in the past three combined — and more than half the $14bn proceeds are being ploughed straight back into financing the equity boom that enabled them to tap the markets in the first place. The frenzied rallies in Shanghai and Shenzhen this year have been largely fuelled by margin lending where loans to invest in the market are secured against the stocks purchased.
Telegraph: 
El Pais:
  • Summers Tells El Pais Spain to Be In Crisis Until End of Decade. Larry Summers, former chief economic adviser to President Obama, tells El Pais that Spain and the rest of the periphery of Europe will remain in crisis until the end of the decade. Summers says "flirting" with Greek exit involves taking on enormous risks.
0 comments

Saturday, May 23, 2015

Today's Headlines

Posted by Gary .....at 7:43 PM
Bloomberg: 
  • Greece Won't Accept Unreasonable Creditor Demands, Tsipras Says. Greek economy can't take more recessionary measures, govt won't agree on deal that doesn't solve country's problems, Prime Minister Alexis Tsipras says in speech in Athens on Saturday. Greek govt accepts that social security system needs overhaul, this can't be done through pension cuts. 
  • Tsipras Urges European Creditors to Compromise on Greek Deal. Greek society can’t absorb more austerity, and the country’s creditors must compromise to break the impasse over the release of funds for its cash-strapped economy, Prime Minister Alexis Tsipras said. Tsipras sought to placate critics within his Syriza party after returning from a European Union summit in Riga, Latvia, where talks with German Chancellor Angela Merkel and French President Francois Hollande failed to yield a breakthrough on measures to unlock bailout funding. Some members of his party advocate defaulting on loans rather than backing down from the anti-austerity policies that swept it to power in January even if that leads the country out of the euro. “We’ve shown willingness to compromise to get to a mutually beneficial solution,” Tsipras said in a speech at the start of a two-day meeting of Syriza’s central committee on Saturday. “But we ask from our partners the same respect and to also make concessions.”
  • Central Bank Less-Is-More Strategy Doubted as ECB Role Debated. The time has come for central bankers to think about widening their focus, economists told monetary-policy makers gathering on the western edge of the euro area. For more than two decades, the dominant reasoning has been that by concentrating mostly, or even exclusively, on keeping inflation in check, central banks can create the conditions for sustainable growth and lower unemployment. Since the financial crisis, the advantages of aiming just at price stability may be waning, and leading economists are calling for a rethink. “The pendulum has swung much too far. While monetary policies are surely not determinative of output outcomes, they can, and in some cases had, have major effects on average levels of output over periods of decades,” Larry Summers, former chief economic adviser to U.S. President Barack Obama, said on Friday. “The failure to well integrate monetary policy-making with other areas of policy has had substantial pernicious effects.”
  • Coal’s Worst Fear Affirmed in Analysis of Obama Climate Plan. A new government analysis of President Barack Obama’s signature effort to fight climate change affirms what critics suspected: the proposal could further weaken an already battered coal industry. Electricity generation from the carbon-intensive fossil fuel would fall by 90 gigawatts, more than twice the decline government analysts had predicted as recently as April, according to a report released Friday by the Energy Information Administration. There were about 292 gigawatts of coal-fired generation capacity in 2014, according to EIA. 
  • GM Ignition Probe Said Advancing as U.S. Mulls Criminal Charges. The U.S. government is determining whether charges will be brought against General Motors Co. or its employees over the handling of a faulty ignition switch, a person familiar with the investigation said. Manhattan U.S. Attorney Preet Bharara’s office, with assistance from the Federal Bureau of Investigation in New York, is reviewing evidence tied to the safety defect that was linked to more than 100 deaths, and attempting to determine whether anyone at the automaker broke the law, said the person, who asked not to be identified because the information isn’t public.
  • Square Joins Tech Firms Subleasing San Francisco Offices. San Francisco, where the technology industry has dominated office demand and sent rents soaring, leads the U.S. in sublease space as a percentage of total vacancies, according to Cushman & Wakefield Inc. The share jumped to 13.5 percent in the first quarter, the highest since the financial crisis, from 9 percent a year ago. While the city’s commercial real estate market is among the nation’s strongest, subletting can be an indicator of companies getting too ambitious about their growth prospects. An increase in subleases can be seen as an early warning sign for the real estate market that companies are retrenching. A bubble has formed in San Francisco that has made price gains unsustainable, said Glenn Kelman, chief executive officer of brokerage Redfin Corp. “There’s a bubble,” Kelman said in an interview Friday on Bloomberg Television. “There are prices that are too high on companies. There are prices that are too high on real estate. As interest rates go up, you’re going to see a contraction.” Prices for both commercial and residential real estate in San Francisco have climbed so far that companies are evaluating locations in other cities to lower costs, Kelman said.
Wall Street Journal:
ZeroHedge:
Business Insider:
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Friday, May 22, 2015

Market Week in Review

Posted by Gary .....at 7:32 PM
  • S&P 500 2,126.06 +.16%*
photo xxx_zpscbqhbdwf.png


The Weekly Wrap by Briefing.com.

*5-Day Change
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