Tuesday, August 18, 2015

Morning Market Internals

Posted by Gary .....at 11:19 AM
NYSE Composite Index:
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Monday, August 17, 2015

Tuesday Watch

Posted by Gary .....at 11:57 PM
Evening Headlines 
Bloomberg:  
  • China Reserves Seen Dropping $40 Billion a Month on Yuan Support. China’s foreign-exchange reserves are expected to drop by some $40 billion a month as the central bank intervenes to support the yuan, a Bloomberg survey shows. The holdings, the world’s largest, will decline to $3.45 trillion by year-end from $3.65 trillion at the end of July, based on the median estimate of 28 strategists and traders surveyed following last week’s surprise devaluation of the currency. The forecasts ranged from $3 trillion to $3.71 trillion. The currency is seen weakening 1.6 percent to 6.50 a dollar in the remainder of 2015, the survey showed.
  • Weibo to Youku Drop as Sales Forecasts at China Peers Disappoint. Weibo Corp. and Youku Tudou Inc. fell in New York as disappointing revenue guidance at their larger Chinese peers raised concern the Internet firms may report quarterly results this week that will trail analysts’ estimates. American depositary receipts of Weibo, China’s Twitter-like social media platform, sank 3.8 percent on Monday to a four-month low of $13.09. Youku Tudou, owner of China’s largest video websites, fell 3.3 percent to the lowest since April. A Bloomberg gauge of the most-traded Chinese companies in the U.S. slid 0.3 percent in the first decline in three days.A total of 10 out of 13 Chinese companies, including Baidu Inc. and Vipshop Holdings Ltd., have provided quarterly sales projections to U.S. investors that were below analyst expectations this earnings season, according to data compiled by Bloomberg.
  • G-20 Growth Won’t Hit Pre-Crisis Pace Anytime Soon, Moody’s Says. Don’t expect global economic growth to reach the level it attained before the financial crisis anytime soon, Moody’s Investors Service said. Expansion in the Group of 20 economies won’t return to its pre-2008 rate within the next five years, the credit-rating company said Tuesday in an update to its global outlook. Combined output growth in the group, which includes 19 nations and the euro area, will average 3 percent per year from 2015 to 2019, about half a percentage point lower than in the decade through 2007. The world economy is being held back by the crisis’s lingering drag on productivity growth, China’s slowdown, unfavorable demographic trends and slowing gains from trade, Moody’s said. The company lowered its U.S. expansion forecast for this year to reflect a slower-than-projected rebound in the second quarter, while leaving the G-20 growth forecast for 2015 unchanged at 2.7 percent. The report cites a big, sustained drop in Chinese asset prices or a Greek exit from the euro as risks for the world economy.
  • Bangkok Blast Kills at Least 19 in Worst Attack Since Thai Coup. A powerful explosion killed at least 19 people in Bangkok’s central shopping district on Monday night, the first major attack in the Thai capital since the military seized power in May last year. The blast during rush hour left body parts scattered on Ratchaprasong intersection, which is surrounded by malls, hotels and the Erawan Hindu shrine frequented by tourists and locals. The military government blamed miscreants seeking to destroy the tourist-reliant economy. Nineteen people, including Chinese and Filipino tourists, were killed, the Ministry of Public Health said. Hospital officials are treating 117 people, many of whom are foreigners, according to the Emergency Medical Institute of Thailand.
  • Brazil's Political Crisis Puts the Entire Economy on Hold. In Brazil, General Motors Co. has been halting factories and laying off thousands. Latam Airlines, the region’s biggest, is cutting flights. And the world’s third-largest planemaker, Embraer SA, is delaying its biggest new aircraft. In the midst of its deepest economic and political crisis in a generation, Brazil is contending with a business climate so punishing that major projects across numerous sectors are being frozen or shrunk, while small businesses slash prices and shift focus.  
  • Korea’s Won Falls for Second Day as Data Show Pickup in Outflows. The won fell for a second day amid concern foreign investors will pull more money from South Korean assets as economic growth slows. Global funds reduced holdings of local bonds in July by the most since December 2011 and of equities by the most since June 2013, the Financial Supervisory Service reported Tuesday. The government will prepare detailed measures to stabilize financial markets if needed in response to risks such as volatility in Chinese stocks and the yuan’s devaluation, Finance Minister Choi Kyung Hwan said at a meeting with officials on Monday. The won fell 0.3 percent to 1,185.95 a dollar as of 10:01 a.m. in Seoul, according to data compiled by Bloomberg. The currency has lost 6 percent this quarter, the worst performance in Asia after Malaysia’s ringgit. 
  • Thai Stocks Drop Most in 8 Months on Bangkok Attack; Baht Falls. Thai stocks sank the most in eight months and the baht dropped after an explosion in Bangkok killed at least 20 people and put the nation’s tourism industry at risk. The benchmark SET Index fell as much as 2.8 percent, before paring losses to 1.7 percent at 10:23 a.m. in Bangkok. Gauges of tourism and transport-related companies declined more than 4 percent. The baht weakened 0.5 percent to 35.536 per dollar, approaching its lowest level since April 2009.
  • Most Asian Stocks Rise After U.S. Shares Gain on Housing Data. Most Asian stocks advanced, with the regional benchmark index holding near a seven-month low, following gains in U.S. equities as strong homebuilder data added to signs the world’s biggest economy is improving. The MSCI Asia-Pacific Index fell 0.1 percent to 137.73 as of 9:05 a.m. in Tokyo with about three stocks gaining for every two that fell.
  • It's Like 2009 for Some Asset-Backed Securities Rattled by the Fed. Asset-backed securities -- bundles of debt mainly tied to consumer borrowing -- are taking a hit as investors become increasingly rattled by broad financial issues, including the Federal Reserve possibly raising interest rates next month. While bonds ranging from corporate notes to mortgage-linked securities also have suffered recently, they aren’t losing as much ground as ABS, or at least when it comes to the yields compared to benchmark rates. In ABS, this spread shows that “many market segments are at or near the post-crisis wides established in 2010,” according to Wells Fargo & Co. analysts John McElravey and Ryan Brinkoetter. Bank of America Corp. described them as “at the wide end of three-year trading ranges and even five-year trading ranges.”
Wall Street Journal:
Zero Hedge:
Reuters:
  • Urban Outfitters says comparable sales may be slower in 3rd qtr. Urban Outfitters Inc on Monday said same-store sales growth so far in the third quarter was slower than in the previous three months, raising concerns about the apparel retailer's performance in the back-to-school shopping season. The Philadelphia-based retailer reported second-quarter comparable sales growth of 4 percent on Monday, lower than the 4.3 percent rise analysts on average had expected, according to research firm Consensus Metrix. Urban Outfitters' shares initially rose as much as 10 percent in extended trading after it reported a better-than-expected quarterly profit, but fell nearly 7 percent when Chief Financial Officer Frank Conforti said sales were slower so far in August.
  • BB&T to buy National Penn Bancshares for about $1.8 billion. BB&T Corp (BBT.N) said it would buy National Penn Bancshares Inc (NPBC.O) in a cash-and-stock deal for about $1.8 billion to expand in the U.S. Mid-Atlantic region. The deal would consist of 70 percent BB&T shares and 30 percent in cash. National Penn shareholders can opt to receive 0.3206 of a BB&T share or $13 in cash for each National Penn share.
Financial Times:
Telegraph:
Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true
Shanghai Securities News: 
  • China's Economic Growth May Remain Low, PBOC Adviser Says. China's economic growth may remain low for the next few years, citing Fan Gang, an adviser to the People's Bank of China, as saying at a financial industry seminar. China needs to deal with overcapacity and debt problems into 2018, Fan said. China's economy may face further difficulties next year and only stabilize in 2017, he said.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.50% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.25 -1.0 basis point.
  • Asia Pacific Sovereign CDS Index 71.25 +1.0 basis point.
  • S&P 500 futures +.09%.
  • NASDAQ 100 futures +.05%.

Earnings of Note
Company/Estimate
  • (DKS)/.75
  • (HAIN)/.55
  • (HD)/1.69
  • (TJX)/.76
  • (TSL)/.26
  • (WMT)/1.12
  • (ADI)/.74
  • (DV)/.61
  • (SINA)/.07
  • (WB)/.02
Economic Releases
8:30 am EST
  • Housing Starts for July are estimated to rise to 1180K versus 1174K in June. 
  • Building Permits for July are estimated to fall to 1228K versus 1343K in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The RBA minutes, UK CPI report and the weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology 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 day.
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Stocks Reversing Higher into Final Hour on Central Bank Hopes, Short-Covering, Less Eurozone Debt Angst, Biotech/Homebuilding Sector Strength

Posted by Gary .....at 3:30 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Light
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.15 +2.40%
  • Euro/Yen Carry Return Index 143.98 -.20%
  • Emerging Markets Currency Volatility(VXY) 10.74 -.09%
  • S&P 500 Implied Correlation 55.13 -.58%
  • ISE Sentiment Index 43.0 -50.57%
  • Total Put/Call .97 -3.96%
  • NYSE Arms .82 -28.87% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 76.59 +.28%
  • America Energy Sector High-Yield CDS Index 1,898.0 -.12%
  • European Financial Sector CDS Index 75.71 -.88%
  • Western Europe Sovereign Debt CDS Index 22.36 -.07%
  • Asia Pacific Sovereign Debt CDS Index 71.05 +1.25%
  • Emerging Market CDS Index 343.77 +.17%
  • iBoxx Offshore RMB China Corporates High Yield Index 119.47 +.08%
  • 2-Year Swap Spread 24.0 -.25 basis point
  • TED Spread 23.75 +.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -19.75 +.75 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .07% -2.0 basis points
  • Yield Curve 145.0 -1.0 basis point
  • China Import Iron Ore Spot $56.66/Metric Tonne -.14%
  • Citi US Economic Surprise Index -9.2 -4.8 points
  • Citi Eurozone Economic Surprise Index 10.2 +1.4 points
  • Citi Emerging Markets Economic Surprise Index -4.4 +1.9 points
  • 10-Year TIPS Spread 1.60 -3.0 basis points
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 3.57 -.11
Overseas Futures:
  • Nikkei 225 Futures: Indicating +35 open in Japan 
  • China A50 Futures: Indicating -229 open in China
  • DAX Futures: Indicating +19 open in Germany
Portfolio: 
  • Higher: On gains in my tech/retail/medical/biotech sector longs and emerging markets shorts
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long
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Today's Headlines

Posted by Gary .....at 2:59 PM
Bloomberg: 
  • Greek Senior Bank Bonds Fall on Dijsselbloem Bail-In Comment. (video) Senior bonds of Greek banks tumbled after Euro-area finance ministers protected depositors from any losses in the nation’s 86 billion-euro ($96 billion) bailout. While Greece’s third bailout will spare depositors in any restructuring of the nation’s financial system, senior bank bondholders may not be so lucky, according to comments from Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem. The bondholders will be in line for losses if Greek lenders tap into any of the financial stability funds set aside in the new bailout.
  • Russia Sales Outlook Worst in BRIC Markets on Oil, Recession. Russia is the standout these days among the biggest emerging markets, but for all the wrong reasons. Beset by the country’s first recession since 2009, oil selling at half its five-year average price and international sanctions linked to the Ukraine conflict, Russian companies are poised to post the biggest drop in sales among the four so-called BRIC nations, data compiled by Bloomberg show. Two of the others, Brazil and India, also are projected to slump, while China is seen growing modestly. The 50 companies listed in the benchmark Micex Index will post an average 17 percent ruble-denominated revenue decline in the next 12 months, according to analysts’ estimates. In dollar terms, the forecast is for a 25 percent slump.
  • Protests Keep Heat on Rousseff as Longest Slump Since 1931 Looms. Nationwide street protests Sunday against the government kept the pressure on embattled Brazilian President Dilma Rousseff as the country heads to its longest recession since 1931. More than half a million people took to the streets to denounce corruption and economic mismanagement amid calls for Rousseff’s impeachment or resignation. While the rally drew fewer people than similar demonstrations in March, rising unemployment and the fastest inflation in more than a decade will keep Rousseff under fire. 
  • Goldman Sachs(GS) Cuts Yuan Forecast on Risks From Economic Slowdown. Goldman Sachs Group Inc. lowered its forecast for the yuan, saying China’s deepening economic slowdown will weaken the currency and increase volatility. The yuan will decline to 6.60 per dollar in 12 months, and to 6.70 per dollar by the end of 2016, London-based strategist Kamakshya Trivedi wrote in a note Monday. The bank previously predicted the currency would trade at 6.15 per dollar and 6.20 by those dates, respectively. The yuan was little changed at 6.3947 Monday.
  • Chilean Peso Drops to 12-Year Low as Copper Declines on China. Chile’s peso fell to a 12-year low as copper plunged amid concern that China, the biggest buyer of the metal, is growing more slowly than official data suggest. The peso slid 0.9 percent to 690.26 per U.S. dollar at 11:58 a.m. New York time. It was on course for its lowest close since 2003, when it weakened in the aftermath of the Asian crisis and Argentina’s default. Copper, which accounts for half of Chile’s exports, fell 1.6 percent in New York to a six-year low of $2.314 a pound. Three-month inflation-linked swaps slid 0.15 percentage point to minus 3.12 percent.
  • Emerging Currencies Extend Longest Selloff Since Turn of Century. (video) Emerging-market currencies fell, extending the longest stretch of weekly declines since 2000, as Malaysian assets tumbled, Turkey’s lira touched a record low for a third day and the ruble and Russian stocks retreated amid a slump in oil. A gauge tracking 20 of the most-traded developing-nation currencies dropped 0.3 percent, with the ringgit weakening to the lowest level since 1998 and Thailand’s baht slumping as an explosion struck Bangkok’s central shopping district. The currency measure has fallen for eight straight weeks as the prospect of higher U.S. interest rates and the shock devaluation of the yuan magnified risks. The MSCI Emerging Markets Index of stocks retreated 1.1 percent to 854.41 at 11:30 a.m. in New York.  
  • European Stocks Close Higher, While Germany’s DAX Index Declines. (video) After fluctuating between gains and losses throughout the day, European stocks ended with advances. But not those in Germany. The Stoxx Europe 600 Index rose 0.3 percent to 387.26 at the close of trading in London, recovering from a decline of as much as 0.6 percent triggered by a report that showed manufacturing in the New York region unexpectedly shrank. Volume of Stoxx 600 shares changing hands was a third lower than the 30-day average, a factor that might have contributed to the volatility.
  • Commodities Slump Bolsters Treasuries as U.S. Stocks Advance. (video) A renewed slump in commodities damped inflation expectations and boosted demand for Treasuries, while China’s shock devaluation of its currency continued to roil emerging markets. The Bloomberg Commodity Index sank to a 13-year low as decline in assets from copper to aluminum boosted the value of fixed-income assets. Copper sank 1.7 percent, adding to six weeks of declines, on signs of slowing growth in China. Aluminum also slipped.
  • Goldman(GS) Sees Iron Ore Slumping 30% on Supply, Steel Outlook. Iron ore prices may tumble about 30 percent over the next 18 months as supply expands while steel output falters, according to Goldman Sachs Group Inc., which said the impact on the market from China’s devaluation was a sideshow. Prices retreated. “Supply is likely to diverge further from demand,” analysts Christian Lelong and Amber Cai wrote in a report. “Contrary to market consensus, we believe that peak-steel production will be followed by a contraction” in China, they wrote, sticking with price forecasts for the next four quarters.
  • Dallas Fed Names Harvard Professor Robert Kaplan as Next President. The Federal Reserve Bank of Dallas has named Robert Steven Kaplan, a former Goldman Sachs Group Inc. executive who left to teach at Harvard in 2006, as its new president. Kaplan, 58, will take his post Sept. 8, the Dallas Fed said Monday in a press release. He will replace Richard Fisher, who was president from April 2005 to March 2015. Helen Holcomb, the Dallas Fed’s first vice president, has served as interim head since Fisher retired.
  • Buzzkill Profs: Hedge Funds Do Half as Well as You Think. Their study shows that due to inherent biases in the way hedge-fund databases compile results, the industry's returns have been about half as strong as they appear. The average annualized return for the industry since 1996 goes from 12.6 percent to 6.3 percent when the biases are removed from the data, according to the paper.
  • After Curing Hepatitis C, Gilead Works to Vanquish More Viruses. Gilead Sciences Inc., basking in the success of its cure for hepatitis C, is setting ambitious goals to vanquish two other major viral scourges: HIV and hepatitis B. Even with some promising signs in early trials, the biggest biotechnology firm in the world faces long odds in finding a way to rid humanity of the diseases. And it’s unclear whether a cure for either virus would produce the kind of lucrative return that Gilead has earned from its treatments for hepatitis C.
Fox News: 
  • At least 27 dead in Bangkok bomb blast. (video) At least 27 people are dead and 78 injured in an explosion that rocked the area near the popular Erawan shrine in a busy intersection in Bangkok, Thailand, Reuters reported Monday morning. A spokesman for Thailand's ruling junta says at least two bombs were found at the scene. At least one planted on a motorcycle had detonated. Security video showed a powerful flash as the bomb exploded. "We are not sure if it is politically motivated, but they aim to harm our economy and we will hunt them down," Deputy Prime Minister Prawit Wongsuwon told reporters.
  • Ex-officials prosecuted for mishandling gov’t info see ‘double standard’ in Clinton case. (video) Ex-officials who were prosecuted and had their lives upended for allegedly mishandling sensitive records are accusing the Obama administration of a "double-standard" in its approach to the Hillary Clinton email scandal. This administration has charged more people under the Espionage Act, a World War I-era law once used to go after major breaches, than any other in history. While the FBI is looking into Clinton's server amid revelations of state secrets potentially passing through it, some critics -- including those charged under that act -- doubt the Democratic presidential candidate will get the same treatment.
CNBC:
  • IRS says thieves stole tax info from additional 220,000. A computer breach at the IRS in which thieves stole tax information from thousands of taxpayers is much bigger than the agency originally disclosed. An additional 220,000 potential victims had information stolen from an IRS website as part of a sophisticated scheme to use stolen identities to claim fraudulent tax refunds, the IRS said Monday. The revelation more than doubles the total number of potential victims, to 334,000.
Zero Hedge: 
Telegraph:
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Bear Radar

Posted by Gary .....at 12:53 PM
Style Underperformer:
  • Large-Cap Value +.05%
Sector Underperformers:
  • 1) Oil Service -1.01% 2) I-Banking -.65% 3) Construction -.59%
Stocks Falling on Unusual Volume:
  • EFOI, EL, ICLR, BIP, TFM, CSTE, ACM, BAP, LXFT, BUD, HOLI, BRS, TISI, PCTY, UEPS, AGII, RDY, ARG, KKR, INGN, CPA, BHP, TCBI, CVX and SWIR
Stocks With Unusual Put Option Activity:
  • 1) V 2) WMT 3) ADBE 4) MMM 5) XLY
Stocks With Most Negative News Mentions:
  • 1) TFM 2) NTAP 3) X 4) MU 5) PBR
Charts:
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Bull Radar

Posted by Gary .....at 12:39 PM
Style Outperformer:
  • Small-Cap Growth +.45%
Sector Outperformers:
  • 1) Gold & Silver +2.89% 2) HMOs +1.73% 3) Telecom +1.47%
Stocks Rising on Unusual Volume:
  • ZU, PRXL, PAYC, MBLY, IPHI, AAVL, WMB, KPTI and ITEK
Stocks With Unusual Call Option Activity:
  • 1) XLNX 2) ABBV 3) WMB 4) S 5) RDN
Stocks With Most Positive News Mentions:
  • 1) TSLA 2) JCP 3) ZU 4) JASO 5) DISH
Charts:
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