Sunday, November 29, 2015

Monday Watch

Today's Headlines
Bloomberg:
  • Islamic State Could ‘Easily’ Target a U.K. City, Fallon Says. British Defence Secretary Michael Fallon told the Sunday Telegraph that “what happened in Paris and Brussels could easily happen in London.” Speaking in an interview, Fallon said the threat from Islamic State “is as potent here as it was real in Paris and Brussels.” Fallon said the security services have prevented at least half a dozen viable terror plots in recent months. “I can’t go into detail of the individual plots that have been foiled,” he said. “The threat from ISIL is as potent here as it was real in Paris and Brussels. It could be London, it could be Manchester, it could be Glasgow.” He said Islamic State are not making demands and so can’t be negotiated with. “You can only deal with them by force.” 
  • Turkey's Prime Minister Criticizes Putin's Sanctions. Prime Minister Ahmet Davutoglu criticized Russian economic sanctions on Turkey after the downing of a Russian fighter jet over the Syrian border last week, saying his priority was to defuse the tension and prevent similar incidents. Russian President Vladimir Putin on Saturday announced measures against Turkey including the suspension of visa-free travel, halting tours to Turkey and a ban on the hiring of Turkish nationals. In Turkey, Deputy Prime Minister Mehmet Simsek chaired a meeting with other members of the nation’s economic administration to discuss the potential impact, according to a government official, who asked not to be named in line with official policy. 
  • The World's Largest Elevator Market Is Falling and May Never Recover. The world’s biggest elevator maker said China’s best days may be behind it. After peaking at 600,000 units last year, sales in China may drop to about 500,000 next year amid a surplus of apartments and slowdown of people moving to big cities, Otis Elevator Co. President Philippe Delpech, who heads the world’s largest maker of elevators, said in an interview in Tokyo this month.
  • Christie's Hong Kong Art Auction Feels China's Economic Chill. China’s economic slowdown, government anti-corruption measures and fleeing speculators are causing a chill in the Hong Kong art auction market, Christie’s Nov. 28 International Hong Kong evening sale showed. The London-based auction house sold HK$507.9 million ($65.5 million) worth of art at its Asian 20th Century and Contemporary auction, compared with HK$636 million at a similar event a year ago, and HK$935 million in November 2013. Saturday’s sale is the marquee event of Christie’s six-day Hong Kong autumn auction marathon."It’s softer this season for sure," said Hong Kong-based adviser Jehan Chu, who runs Vermillion Art Collections. "There is uncertainty, especially over the economic and political outlook in China, that has made people skittish."
  • Citic, Haitong, Guosen Probed on Alleged Margin-Trading Breaches. China’s securities regulator is investigating Citic Securities Co., Haitong Securities Co. and Guosen Securities Co. over alleged breaches of rules on margin and short-selling contracts. The China Securities Regulatory Commission probes involve contracts the three brokerages signed with clients on margin finances and short-selling, according to exchange filings by the companies Sunday. The firms said their operations will remain normal and they will cooperate with the regulator. 
  • Five China Bond Deadlines to Watch.
  • Won Drops With Korean Stocks as China Selloff Deters Risk-Taking. The won declined for a third day as a selloff in China’s stock market deterred risk taking and after growth in South Korea’s industrial production missed estimates. The Kospi index of shares fell the most in two weeks after a regulatory probe into some of China’s largest brokerages sparked the steepest slump in Shanghai shares in three months on Friday. South Korea’s factory output rose 1.5 percent in October from a year earlier, official figures showed on Monday, compared with the median estimate for a 2.2 percent increase in a Bloomberg survey. The report comes a day before data forecast to show exports likely fell 7.9 percent in November, shrinking for the 11th straight month. The won weakened 0.5 percent to 1,159 a dollar as of 9:53 a.m. in Seoul, according to data compiled by Bloomberg. The currency’s decline is the biggest in two weeks and it’s dropped 1.6 percent this month.
  • Asian Stocks Slide After Chinese Selloff as Material Shares Drop. Asian stocks fell after Chinese shares posted the biggest one-day selloff in three months. Material and consumer-staple shares led losses on the benchmark index at the start of a pivotal week for the region’s markets. The MSCI Asia Pacific Index lost 0.3 percent to 132.82 as of 9:02 a.m. in Tokyo, headed for a monthly loss of 1.2 percent, its sixth such decline in seven months.
  • Iron Ore Breaches $40 in Singapore as China Port Holdings Expand. Most-active iron ore futures in Singapore sank below $40 a metric ton for the first time on concern that the economic slowdown in China will cut demand as supplies from the largest miners climb.The SGX AsiaClear contract for January fell 3.1 percent to $39.51 a ton as of 10:33 a.m. in Singapore, heading for the lowest close since trading started in April 2013. On the Dalian Commodity Exchange, futures for May delivery sank as much as 3.1 percent to 293 yuan ($45.81) a ton, a record low.
  • The $30 Oil Cliff Threatening Russia's Economy. For Russia, $30 is the number to watch.Crude prices at that level will push the economy to depths that would threaten the nation’s financial system, according to 63 percent of respondents in a Bloomberg survey. Lower prices for the fuel are next year’s biggest risk for Russia, which is unprepared to ride out another shock on the oil market, most economists said. Other dangers for 2016 include geopolitics, strains in the banking industry and the ruble, according to the poll of 27 analysts. “If oil prices fall lower and stay at that low level for longer, risks of fiscal and financial destabilization increase significantly,” Sergey Narkevich, an analyst at PAO Promsvyazbank in Moscow, said by e-mail.
  • Kuwait Oil Minister Leaves Post Days Before OPEC Meeting. Kuwait named Deputy Prime Minister Anas Al-Saleh as acting oil minister to replace Ali al-Omair, who became minister of public affairs and retained his role as state minister for parliamentary affairs, according to an official decree. The change comes days before al-Omair was due to represent Kuwait at the meeting of the Organization of Petroleum Exporting Countries on Dec. 4 to discuss the group’s production level amid a slump in prices due to a global glut. Earlier this month, al-Omair swapped the chief executive officers of state companies Kuwait Oil Co. and Kuwait Foreign Petroleum Exploration Co. “The current Kuwait oil policy in OPEC will definitely not change as this new minister is only there temporarily until a new one is appointed,” said Abdulsamad al-Awadhi, who was Kuwait’s OPEC governor from 1980 to 2001.
Wall Street Journal: 
CNBC:
Zero Hedge:
Business Insider:
New York Post:
Washington Post:
  • White House eyes better pay for top civil servants. The Obama administration is preparing an executive order designed to bolster the government’s Senior Executive Service (SES) with increased compensation, a streamlined hiring process and greater diversity in assignments. Its 7,000-plus members are top level civil servants whose leadership is critical to federal agencies. But that status has not stopped problems stemming from sluggish pay raises and congressional attacks.
Reuters:
  • China's shadow banking risk shifts to booming bond market. A year after China's financial regulators squared up to the systemic perils of "shadow banking", the threat is shifting to a booming corporate bond market, and risky borrowers' debt is finding its way into products aimed at retail investors. An opaque network of trust companies and non-bank lenders had grown their annual market to a hefty 2.9 trillion yuan ($450 billion) in loans before regulators stepped in, spooked by rising defaults on wealth-management products (WMPs) backed by such high-interest shadow lending.
Telegraph:
Estado: 
  • S&P Visit to Brazil Heightens Downgrade Concern. S&P is visiting Brazil starting Dec. 1 to analyze country's political, economic situation. Trips increases speculation nation might be downgraded again, amid worsening of Brazil's political crisis after recent arrests.
Night Trading
  • Asian indices are -1.25% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 129.75 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 69.0 +.5 basis point.
  • Bloomberg Emerging Markets Currency Index 70.23 -.05%.  
  • S&P 500 futures -.18%.
  • NASDAQ 100 futures -.15%.
Morning Preview Links 

Earnings of Note
Company/Estimate 
  • (BLOX)/.06
  • (SCVL)/.48
  • (THO)/.83 
Economic Releases
9:00 am EST
  • The ISM Milwaukee for November is estimated to rise to 48.0 versus 46.66 in October.
9:45 am EST
  • The Chicago Purchasing Manager for November is estimated to fall to 54.0 versus 56.2 in October.
10:00 am EST
  • Pending Home Sales for October are estimated to rise +1.0% versus a -2.3% decline in September. 
10:30 am EST
  • The Dallas Fed Manufacturing Activity Index for November is estimated to rise to -10.0 versus -12.7 in October.
Upcoming Splits
  • (CTRP) 2-for-1
Other Potential Market Movers
  • The Reserve Bank of Australia decision, German CPI report, China Manufacturing PMI, CSFB Industrials conference and the CSFB Tech/Media/Telecom conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology 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.

Weekly Outlook

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 commodity weakness, terrorism fears, rising European/Emerging Markets/US High-Yield debt angst, China bubble-bursting concerns, Fed rate hike fears and earnings outlook worries. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Saturday, November 28, 2015

Today's Headlines

Bloomberg:
  • Putin Sets Turkish Travel Ban, Hiring Limits After Jet Crash. Russian President Vladimir Putin announced measures against Turkey, including the suspension of visa-free travel, halting tours to Turkey and a ban on the hiring of Turkish nationals, in retaliation for the downing of one of its military jets. Russia will also block some goods from Turkey, the list of which the government will determine at a later time, Putin’s administration said late Saturday in an e-mailed statement. Visa-free travel to Russia is suspended from Jan. 1, and Russia is also banning charter flights to Turkey, which has been the top destination for Russian tourists, with 3.3 million making the trip in the first nine months of this year. Russia earlier said it had been “backstabbed” by Turkey, whose F-16 fighter plane shot down a Russian Su-24 jet over the Turkish-Syrian border that had been conducting a bombing raid on targets in Syria. The downing of the warplane soured optimism that ties between Russia and the West would improve in the wake of the terrorist attacks Nov. 13 in Paris and the downing of a Russian passenger jet over the Sinai peninsula on Oct. 31. 
  • It's Open Season on China's Securities Firms as Probes Intensify. (video) China’s biggest clampdown on malpractices in its securities industry kicked into higher gear this week with news that three of the nation’s largest brokerages are being investigated for alleged rule violations. Citic Securities Co. and Guosen Securities Co. late Thursday announced probes by the securities regulator and Haitong Securities Co. confirmed Friday it was under investigation. Brokerage shares slumped and the Shanghai Composite Index fell 5.5 percent, the most since the depths of a summer stock rout. The crackdown since the sell-off has ensnared executives and regulators, with restrictions imposed on short selling and the regulator on Friday confirming a ban on brokerages offering derivatives financing for stock trading. Adding to signs of upheaval, a Hong Kong-listed unit of a Chinese brokerage said this week that it had lost contact with its chief executive officer.
  • Brazil Real Drops Most Among Major Tenders on Congress Paralysis. Brazil’s real dropped the most among major currencies as the arrest of a ruling-party senator this week threatened to sidetrack President Dilma Rousseff’s economic agenda. The arrest of the government’s leader in the Senate, Delcidio Amaral, has delayed voting on a new fiscal target that would allow the government to end 2015 with a deficit of 119 billion reais ($31.7 billion) before interest payments. If Congress doesn’t pass the measure, the government risks breaching budget rules. That could spark a new round of requests to impeach Rousseff. The real declined 2.7 percent to 3.8466 per dollar in Sao Paulo, extending its weekly drop to 3.7 percent, the biggest for a week since Oct. 16. 
  • Canadian Energy Companies Seen Disappearing in Oil's `New World'. Canada is poised to lose energy companies as the industry faces the “new normal” of lower and more volatile oil prices along with tougher climate and regulatory policies, billionaire investor Murray Edwards warned Friday. The chairman of the nation’s largest heavy-oil producer, Canadian Natural Resources Ltd., likened the oil industry to a horse race in which western Canadian producers are struggling to compete with developers of light crude from U.S. shale. While cost cuts and innovation are allowing some oil-sands developers to stay in the game, parts of the Canadian industry will go by the wayside, Edwards said at a conference hosted by Bennett Jones LLP in the mountain community of Lake Louise, Alberta. 
  • Holiday Weekend Shoppers Skip the Store and Buy Online. (video) Sales at retailers’ brick-and-mortar locations suffered during the weekend after Thanksgiving as more shoppers skipped the malls and bought online. About $1.73 billion was spent online on Thanksgiving Day, a 25 percent increase from last year, according to Adobe Systems Inc. On Black Friday, about $822 million was spent by 11 a.m., 15 percent more than in 2014, the company said. Brick-and-mortar sales fell from last year to $12.1 billion during the two days, according to retail analytics company ShopperTrak, which didn’t provide specific figures for 2014. Retail observers say many of those online purchases are coming at the expense of trips to physical stores, costing merchants more in shipping and depriving them of the impulse sales they often make to shoppers wandering their aisles. Smaller-than-expected crowds turned out at shopping centers in North Carolina, where Jeff Simpson, a director at Deloitte Consulting LLP’s retail practice, was monitoring the action on Black Friday. “Across the board, much less traffic than was anticipated,” Simpson said, without giving specific figures. “Much, much slower.”
  • Toys ‘R’ Us CEO sees signs of slower sales growth for toys. Toys “R” Us Chief Executive Officer Dave Brandon said the toy industry isn’t putting up the kind of growth numbers that some predicted this holiday season.
Wall Street Journal:
Barron's:
  • Had bullish commentary on (HOLX), (JNPR), (INFN), (ARRS) and (CLC).
  • Had bearish commentary on (CSCO).
Fox News:
  • Obama to Paris for climate summit amid global terror concerns, GOP vow to pull deal money. President Obama arrives Sunday in Paris to finalize a global climate-change pact that if completed would be a legacy-defining part of his presidency. But he awaits challenges at home and abroad, including questions about who will pay for the changes and whether terrorism is a more imminent concern. On Capitol Hill, Senate Republicans suggested last week that the GOP-led chamber must approve the Paris deal, or it will withhold billions that the U.S. has pledged, as part of the pact, to help poor countries reduces their carbon output. “Congress will not be forthcoming with these funds in the future without a vote in the Senate on any final agreement as required in the U.S. Constitution,” Oklahoma Sen. James Inhofe, chairman of the Senate Environment and Public Works Committee, and 36 other GOP senators said in a letter to Obama. They also made clear that any deal including taxpayer money and a binding timetable on emissions must have Senate approval. And they argue that Obama has already pledged $3 billion to the Green Climate Fund “without the consent of Congress.” The United Nations talks will take place on the outskirts of Paris, where 130 people were killed roughly two weeks ago in terror attacks, which has also sparked concerns about whether world leaders should now be more focused on stopping terror groups.
  • Officer killed in Colorado Planned Parenthood shooting was devoted to his job, family and faith. (video) The hero officer killed in the shooting Friday at a Colorado Planned Parenthood clinic had lived a life devoted to his job, his family and his Christian faith, according to his friends. The body of the fallen University of Colorado at Colorado Springs officer Garrett Swasey was transported from the crime scene to the El Paso County Coroner’s office early Saturday, accompanied on the snowy 10-mile trip by a long line of police vehicles.
CNBC:
  • Black Friday sales slip from year prior: ShopperTrak. ShopperTrak's preliminary figures estimated combined retail sales of $12.1 billion over Thanksgiving and Black Friday, a projected decrease from the comparable year-ago period. The firm added that Thanksgiving Day grossed just shy of $2 billion, while Black Friday pulled in more than $10 billion. The firm expects brick and mortar sales to rise by 2.4 percent during this year's holiday, it added.
  • France bows to Obama and backs down on climate ‘treaty’. France has offered a key concession to the US on the eve of historic climate talks in Paris, saying a new global climate accord will not be called a "treaty" and might not contain legally binding emissions reduction targets. In a significant climbdown, Laurent Fabius, French foreign minister, said signatories to the planned deal would still be legally required to meet many of its terms but most likely not the carbon-cutting goals underpinning the agreement.
Zero Hedge:
Business Insider:
Reuters:
  • Iran says revival of OPEC export quotas 'very difficult': IRNA. Iran said on Friday that the removal of OPEC's quotas system was a historic mistake and its revival will be very difficult, state news agency IRNA quoted Oil Minister Bijan Namdar Zanganeh as saying on Friday. "Removing OPEC's quotas system was a historic mistake ... which was accepted by Iran's then government ... Its revival in the upcoming Vienna meeting is very difficult," he said.

Friday, November 27, 2015

Market Week in Review

  • S&P 500 2,090.11 +.43%*
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The Weekly Wrap by Briefing.com.

*5-Day Change

Weekly Scoreboard*

Indices
  • S&P 500 2,090.11 +.43%
  • DJIA 17,798.49 +.37%
  • NASDAQ 5,127.52 +1.06%
  • Russell 2000 1,202.38 +3.05%
  • S&P 500 High Beta 31.44 +.49%
  • Goldman 50 Most Shorted 109.43 +4.17
  • Wilshire 5000 21,674.27 +.74%
  • Russell 1000 Growth 1,023.39 +.81%
  • Russell 1000 Value 990.43 +.24%
  • S&P 500 Consumer Staples 510.69 +.79%
  • Solactive US Cyclical 129.55 +.02%
  • Morgan Stanley Technology 1,112.13 +.26%
  • Transports 8,215.32 -.69%
  • Utilities 563.02 -1.07%
  • Bloomberg European Bank/Financial Services 104.36 +.4%
  • MSCI Emerging Markets 34.16 -1.52%
  • HFRX Equity Hedge 1,166.21 +.28%
  • HFRX Equity Market Neutral 1,037.79 -.10%
Sentiment/Internals
  • NYSE Cumulative A/D Line 234,905 +.88%
  • Bloomberg New Highs-Lows Index -130 +151
  • Bloomberg Crude Oil % Bulls 36.17 n/a
  • CFTC Oil Net Speculative Position 228,555 n/a
  • CFTC Oil Total Open Interest 1,662,829 n/a
  • Total Put/Call 1.12 +19.15%
  • OEX Put/Call 3.61 +86.08%
  • ISE Sentiment 134.0 +47.25%
  • NYSE Arms 1.89 +68.75%
  • Volatility(VIX) 15.12 -11.0%
  • S&P 500 Implied Correlation 56.83 -1.66%
  • G7 Currency Volatility (VXY) 10.0 +2.77%
  • Emerging Markets Currency Volatility (EM-VXY) 10.63 +4.52%
  • Smart Money Flow Index 18,078.28 -.19%
  • ICI Money Mkt Mutual Fund Assets $2.724 Trillion +.44%
  • ICI US Equity Weekly Net New Cash Flow -$4.470 Billion
  • AAII % Bulls 32.4 +5.2%
  • AAII % Bears 26.0 -14.8%
Futures Spot Prices
  • CRB Index 183.24 -.48%
  • Crude Oil 41.71 +3.01%
  • Reformulated Gasoline 139.05 +7.97%
  • Natural Gas 2.21 -2.30%
  • Heating Oil 135.24 -1.64%
  • Gold 1,056.20 -2.32%
  • Bloomberg Base Metals Index 134.95 -.68%
  • Copper 205.05 -1.18%
  • US No. 1 Heavy Melt Scrap Steel 139.0 USD/Ton unch.
  • China Iron Ore Spot 44.5 USD/Ton -.91%
  • Lumber 247.40 -.52%
  • UBS-Bloomberg Agriculture 1,046.72 +.18%
Economy
  • ECRI Weekly Leading Economic Index Growth Rate -2.0% +60.0 basis points
  • Philly Fed ADS Real-Time Business Conditions Index -.0247 +30.22%
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 125.83 unch.
  • Citi US Economic Surprise Index -15.50 -6.4 points
  • Citi Eurozone Economic Surprise Index 28.20 +4.2 points
  • Citi Emerging Markets Economic Surprise Index 5.40 +3.3 points
  • Fed Fund Futures imply 28.0% chance of no change, 72.0% chance of 25 basis point hike on 12/16
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 1.85 -31.48%
  • US Dollar Index 100.02 +.41%
  • Euro/Yen Carry Return Index 135.93 -.50%
  • Yield Curve 130.0 -5.0 basis points
  • 10-Year US Treasury Yield 2.22% -4.0 basis points
  • Federal Reserve's Balance Sheet $4.439 Trillion -.22%
  • U.S. Sovereign Debt Credit Default Swap 20.63 +2.65%
  • Illinois Municipal Debt Credit Default Swap 275.0 +1.92%
  • Western Europe Sovereign Debt Credit Default Swap Index 17.74 -6.58%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 69.04 +1.74%
  • Emerging Markets Sovereign Debt CDS Index 159.96 +5.93%
  • Israel Sovereign Debt Credit Default Swap 78.50 +1.29%
  • Iraq Sovereign Debt Credit Default Swap 823.98 +1.26%
  • Russia Sovereign Debt Credit Default Swap 267.95 +5.95%
  • iBoxx Offshore RMB China Corporates High Yield Index 124.14 -.01%
  • 10-Year TIPS Spread 1.64% unch.
  • TED Spread 24.25 -3.5 basis points
  • 2-Year Swap Spread 6.0 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -53.25 -5.5 basis points
  • N. America Investment Grade Credit Default Swap Index 84.48 +1.86%
  • America Energy Sector High-Yield Credit Default Swap Index 1,314.0 +1.17%
  • European Financial Sector Credit Default Swap Index 68.61 -2.33%
  • Emerging Markets Credit Default Swap Index 319.29 +2.43%
  • CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 130.0 +2.5 basis points
  • M1 Money Supply $3.092 Trillion n/a
  • Commercial Paper Outstanding 1,057.0 -.80%
  • 4-Week Moving Average of Jobless Claims 271,000 +250
  • Continuing Claims Unemployment Rate 1.6% unch.
  • Average 30-Year Mortgage Rate 3.95% -2.0 basis points
  • Weekly Mortgage Applications 419.90 -3.23%
  • Bloomberg Consumer Comfort 40.9 -.3 point
  • Weekly Retail Sales +1.30% +10.0 basis points
  • Nationwide Gas $2.05/gallon -.05/gallon
  • Baltic Dry Index 581.0 +16.67%
  • China (Export) Containerized Freight Index 750.54 -3.24%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 37.50 +7.14%
  • Rail Freight Carloads 264,702 -3.0%
Best Performing Style
  • Small-Cap Growth +3.7%
Worst Performing Style
  • Large-Cap Value +.2%
Leading Sectors
  • Hospitals +7.8%
  • Retail +5.3%
  • HMOs +4.1%
  • Alt Energy +3.6%
  • Homebuilders +2.7%
Lagging Sectors
  • Road & Rail -1.6% 
  • Steel -3.2%
  • Gold & Silver -3.4%
  • Disk Drives -3.8%
  • Coal -4.5%
Weekly High-Volume Stock Gainers (17)
  • AMWD, KIRK, TSN, BECN, GES, SRPT, BDBD, ANF, UVE, MENT, ADRO, CPRT, CMG, GMCR, PAHC, ESL and ETM
Weekly High-Volume Stock Losers (5)
  • BLOX, DBD, TECD, GME and PSTG
Weekly Charts
ETFs
Stocks
*5-Day Change