Style Outperformer:
Sector Outperformers:
- 1) Gaming +1.2% 2) Retail +.6% 3) Telecom +.4%
Stocks Rising on Unusual Volume:
- OUTR, EVER, GLNG, FN, NPTN, LITE and MU
Stocks With Unusual Call Option Activity:
- 1) S 2) AFL 3) CL 4) YHOO 5) MCD
Stocks With Most Positive News Mentions:
- 1) PETS 2) GILD 3) HPE 4) WFM 5) MDLZ
Charts:
Today's Headlines
Bloomberg:
- EU Considers Migration ‘Emergency Brake’ for U.K., Observer Says. The
European Union is considering giving the U.K. a seven-year exemption
from rules allowing free movement of people while permitting it to
maintain access to the single market, The Observer newspaper
reported. The plan is just one idea being discussed as part of Brexit
negotiations and the talks are still in early stages, the Observer said,
citing high-ranking U.K. officials it didn’t identify. Under the plan,
the U.K. would continue paying contributions to the EU budget, the paper
said.
- Deadliest Afghan Attack in 15 Years Shows Islamic State Potency. President
Ashraf Ghani’s claim four months ago to have wiped out Islamic State in
Afghanistan was shattered Saturday when the militant group struck the
capital, Kabul, the country’s deadliest attack in 15 years of war.
More than 80 people were killed and another 231 were wounded when
suicide bombers triggered two explosions at a rally by hundreds of
ethnic Hazaras on Saturday, according to an e-mailed statement via
the Afghanistan Interior Ministry. A third bomber was shot dead by
police before detonating an explosive vest. “The attacks by ISIS
reveal how far the group has gone beyond its bases in the eastern
region," Ahmad Saeedi, a former Afghan diplomat in Pakistan, said by
phone. “The U.S., Afghanistan and international community must go after
them to destroy these new wolves before they destroy us."
- G-20 Pledges to Use All Tools to Fight Weak Global Recovery. The
Group of 20 economies reiterated a pledge to use all policy tools to
help boost confidence and growth, while stepping up an emphasis on
fiscal and structural measures rather than pumping additional monetary
stimulus. "The global economic recovery continues but remains weaker
than desirable," finance ministers and central bank governors from the
world’s top developed and emerging nations said in a joint communique at
the close of a two-day gathering in Chengdu, China Sunday. "We will
carefully calibrate and clearly communicate our macroeconomic and
structural policy actions to reduce policy uncertainty, minimize
negative spillovers and promote transparency."
- World Bank’s Kim Sees Disappointing Growth on Brexit. World
Bank President Jim Yong Kim said continued uncertainty following the
U.K.’s vote to leave the European Union could hurt global growth.
- Asian Defaults Are Just Getting Started.
- Yuan Flunks Fed Haven Test as IMF Prepares It for Reserve Basket. Just
two months before it is to be included in the International Monetary
Fund’s influential basket of global reserve currencies, a new report
distributed by the Federal Reserve is casting doubt on the ability of
China’s yuan to achieve haven status for investors. While the yuan
performed better than some of its major peers from 2011 through late
2015, its relative value has fallen since then against the traditional
haven currencies as market volatility increased, according to a study
published last week. The report tested the relationship between a gauge
of stock-market price swings and the value of the yuan against the U.S.
dollar, yen, euro, the British pound and the Swiss franc, currencies
perceived as safe exchange rates because their value rises relative to
others during uncertainty.
- Japan Exports Down for 9th Month. Exports
to the U.S. fell 6.5 percent in June from a year earlier, while
shipments to the EU declined 0.4 percent and sales to China, Japan’s
largest trading partner, dropped 10 percent.
- Overwhelming Majority See More Stimulus From Kuroda This Week. Haruhiko
Kuroda hasn’t faced such intense expectations for more monetary
stimulus anytime since his debut meeting as Bank of Japan governor in
2013. Thirty-two of 41 analysts forecast that Kuroda and the BOJ board
will expand their record program at the two-day meeting ending on July
29, according to a Bloombergsurvey conducted July 15-22. That is the
highest percentage of respondents in any poll since his first decision
more than three years ago, when economists were unanimous in estimates
that Kuroda would add to easing.
- Gloss Comes Off Dubai as Oil Woes Spill Into Expat Promised Land.
- Deutsche Bank(DB) Set for Investor Scrutiny as Short Sellers Circle. The
quarterly update on Wednesday comes nine months after Cryan announced
plans to cut thousands of jobs and shrink risky assets to boost
profitability and capital levels. The chief executive officer has
since had to put the sale of German consumer lender Deutsche Postbank AG
on hold, scrap the development of a “digital bank” and contend with the
departure of several senior bankers.
- Apple’s(AAPL) China Problem Is That Local Phones are Good -- and Cheap. For
Beijing resident Nie Miao, spending 5,000 yuan ($749) on a new iPhone
6S from Apple Inc. “just isn’t an option.” That’s because the lion’s
share of his 7,000 yuan monthly pay goes toward the mortgage on the
downtown apartment he bought last year. And he’s perfectly happy with
the 2,000 yuan handset he got from Huawei Technologies Co. The
29-year-old embodies the challenges in China for Apple, which has lost
ground to local competitors.
- Nintendo Set to Plunge After Saying Pokemon Go’s Impact Limited. Shares
are set to open at about 23,235 yen, down 17 percent from Friday’s
close, according to the exchange order book as of 9:01 a.m. in Tokyo.
Its U.S.-listed shares dropped 11 percent on Friday in New York. The
company cannot fall more than 18 percent today in Tokyo, as per exchange
rules on the maximum a stock can move per day.
- Saudi Stocks Lead Gulf Equity Drop as Trading Volumes Plummet. Saudi Arabian stocks led a retreat across Gulf Arab equities as trading volumes plunged.
Four benchmark gauges in the six-nation Gulf Cooperation Council
declined, with Bloomberg’s GCC 200 Index posting its longest losing
streak in two months. Saudi Arabia’s Tadawul All Share Index dropped
1.2 percent as trading volumes sank 23 percent below the six-month
average. Dubai’s DFM General Index lost 0.8 percent as about 123 million
shares were traded, 59 percent below the average.
- Asian Stocks Rise as Yen Boosts Japan, Investors Await Fed, BOJ. The
MSCI Asia Pacific Index gained 0.1 percent to 134.14 as of 9:01 a.m. in
Tokyo, with utilities and financial shares leading the advance. The
BOJ iswidely expected to add to stimulus at the end of a two-day
meeting on July 29, with 32 of the 41 analysts surveyed by Bloomberg
predicting policy makers will expand their record program. Futures
traders see the odds of the Fed raising interest rates on Wednesday at
just 10 percent.
- Oil Trades Near Two-Month Low as U.S. Drilling Gains Amid Glut.
Oil traded near the lowest close in two months as U.S. producers
increased drilling amid a global glut. Futures were little changed in
New York after slipping 3.8 percent last week. Rigs targeting oil in
the U.S. rose for a fourth week to 371, the longest run of gains since
August, Baker Hughes Inc. said Friday. Money managers added the most
bets in a year on falling West Texas Intermediate prices during the week
ended July 19, according to Commodity Futures Trading Commission data.
- Oil Bulls Headed Over Demand Cliff as Refinery Shutdowns Loom. Beware,
oil bulls: Just as U.S. oil production sinks low enough to drain
supplies, demand is about to fall off a cliff. American gasoline
consumption typically ebbs in August and September as vacationers return
home, and refiners use that dip to shut for seasonal maintenance. Over
the past five years, refiners’ thirst for oil has dropped an average of
1.2 million barrels a day from July to October.
@Breaking911:
Reuters:
- PBOC
Adviser Sees Downward Pressure on China Economy. Downward pressure on
Chinese economy is still fairly strong, PBOC adviser Bai Chongen said.
Tax cuts would be more effective in boosting growth than interest rate
reductions at this point, he said.
People's Daily:
-
China
Auto Industry May Face Overcapacity Risks. China will have to face the
problem of structural overcapacity in the auto industry with the slowing
down of the market growth. Producer's capacity utilization for passenger cars with 81% in 2015 while that for commercial vehicles was only 52%, citing report covering 37 major auto producers. China's auto industry needs to act early to prevent and defuse overcapacity risks, the report said.
Night Trading
- Asian indices are unch. to +.5% on average.
- Asia Ex-Japan Investment Grade CDS Index 118.25 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 47.5 -.5 basis point.
- Bloomberg Emerging Markets Currency Index 72.19 -.09%.
- S&P 500 futures +.13%.
- NASDAQ 100 futures +.14%.
Earnings of Note
Company/Estimate
- (DHR)/1.22
- (KMB)/1.47
- (PETS)/.31
- (COL)/1.58
- (S)/-.08
- (AVB)/2.04
- (ESRX)/1.57
- (GILD)/3.02
- (LVS)/.56
- (TXN)/.77
Economic Releases
10:30 am EST
- The Dallas Fed Manufacturing Index for July is estimated to rise to -8.0 versus -18.3 in June.
Upcoming Splits
Other Potential Market Movers
- The German IFO Index and the 2Y T-Note auction could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity 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.
BOTTOM LINE: I expect US stocks to finish the week modestly lower on rising European/Emerging Markets/US High-Yield debt angst, commodity weakness, diminishing central bank hopes, technical selling, terrorism fears, earnings outlook concerns and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.
Bloomberg:
- S&P 500 Rally Streak Hits Fourth Week as Defensive Sway Weakens. The
high-defense, low-volatility stock cabal whose leadership has defined
the rally of 2016 is beginning to see its influence wane. For the first
time in two months, it’s been technology and commodity stocks -- not
utilities or household goods makers -- that have led the S&P 500
Index as it climbed in the 12 days since since earnings season began.
Computer and software companies were the best group in the five days
that just ended, too, powering the benchmark gauge for American equity
to a record and its fourth straight weekly advance.
- Turkey Rejects Reference to Its Developments at G-20 Meeting. Turkey
rejected any reference to its political developments in a Group of 20
communique being finalized at a gathering of finance ministers and
central bank governors in China Saturday. The meeting coincides with a
continuing crackdown by President Recep Tayyip Erdogan and his
government against political opponents in the aftermath of a coup
attempt earlier this month. German Finance Minister Wolfgang
Schaeuble told reporters in Chengdu, China, that he would express great
concern about developments in Turkey to Deputy Prime Minister Mehmet
Simsek, who is also attending the sessions.
- Kuroda Says BOJ to Add Stimulus If Needed, Cites Heli-Money Ban. Bank
of Japan Governor Haruhiko Kuroda reiterated that the central bank is
prepared to step up stimulus if needed, while noting again that
so-called helicopter money is prohibited.
“We have said we will check risks in the economy and prices and expand
monetary stimulus if it’s needed to achieve our price stability target
at the earliest time possible,” Kuroda told reporters on Saturday in
Chengdu, China, where he’s attending a Group of 20 meeting. Speaking
less than a week before the next BOJ policy decision, he said he would
present an assessment of Japan’s economy and monetary policy to his
counterparts.
- Schaeuble Is Putting Financial Transaction Tax on Global Agenda. German
Finance Minister Wolfgang Schaeuble said on Saturday he’s putting
efforts to tax financial transactions on the global agenda after
attempts in Europe have stalled, even if results will only materialize
after “years.” Speaking to reporters in Chengdu, China, on the
sidelines of a meeting of Group of 20 finance chiefs, Schaeuble cited
G-20 progress in efforts to curb tax avoidance, through the Base Erosion
and Profit Shifting initiative, as encouragement for his plan.
“Everybody agrees that it would be right to do this at a global level,
but no one has tried,” Schaeuble said. “That’s why I’ve given it a go
and said that this is something we should get under way as the next step
in our fruitful cooperation” on tax matters.
- Lagarde Seen Likely to Avoid Jail Time, Keep IMF Job Amid Trial. Christine
Lagarde is likely to avoid jail time and keep her job as head of the
International Monetary Fund after she was ordered to stand trial in
France on charges that carry a potential prison term.
- Oil Drops to Two-Month Low Amid Ample U.S. Supply, Rising Dollar. Futures
fell 1.3 percent in New York. U.S. crude and gasoline supplies are at
the highest seasonal levels in at least two decades, government data
show. Record June demand of the fuel wasn’t enough to make a dent in
stockpiles that ended the month at the highest since 1984 for this time
of year, the American Petroleum Institute said. The summer driving
season ends Sept. 5 on Labor Day. Oil also slipped as the dollar rose to
a more than seven-week high.
- Time to Short-Sell the Hamptons.
Barron's:
- Had bullish commentary on (FB), (SWHC), (MTG), (RDN), (ESNT), (MDT), (CMCSA), (TJX), (ATVI), (AHS), (ANET) and (SPLK).
- Had bearish commentary on (ESRX), (UNH) and (CVS).
Fox News:
- Kerry: Air conditioners as big a threat as ISIS. Secretary of State John Kerry said
in Vienna on Friday that air conditioners and refrigerators are as big
of a threat to life as the threat of terrorism posed by groups like the
Islamic State. The Washington Examiner reported
that Kerry was in Vienna to amend the 1987 Montreal Protocol that would
phase out hydrofluorocarbons, or HFCs, from basic household and
commercial appliances like air conditioners, refrigerators, and
inhalers.
Business Insider:
Washington Post:
- Blast Kills at Least 80 During Peaceful Protest in Kabul. At
least 80 people were killed and more than 230 wounded Saturday when
attackers detonated explosives amid a huge crowd of peaceful protesters
in the Afghan capital, most of them from the country’s Shiite ethnic
Hazara minority, Afghan officials said. Spokesmen for the Islamic
State quickly claimed responsibility for the attack at a traffic circle
jammed with demonstrators, according to Afghan media. The group’s media
office said two Islamic State fighters detonated suicide belts among the
crowd, in two separate bombings
AP:
- AP: Hacked emails show Democratic party hostility to Bernie Sanders. A
cache of more than 19,000 emails from Democratic party officials,
leaked in advance of Hillary Clinton's nomination at the party's
convention next week in Philadelphia, details the acrimonious split
between the Democratic National Committee and Clinton's former rival,
Sen. Bernie Sanders. Several emails posted by Wikileaks on its document
disclosure website show DNC officials scoffing at Sanders and his
supporters and in one instance, questioning his commitment to his Jewish
religion. Some emails also show DNC and White House officials
mulling whether to invite guests with controversial backgrounds to
Democratic party events.
The Telegraph:
- The helicopters fly on for now, but one day they will crash. Prepare yourself for things to get a whole lot stranger. That whirring in the background is the sound of helicopters preparing to drop trillions of yen on the streets of Tokyo. The Bank of Japan meets next week to decide whether to lead the world ever deeper into an Alice in Wonderland world of experimental monetary policy.
