Tuesday, September 27, 2016

Wednesday Watch

Posted by Gary .....at 9:58 PM
Evening Headlines
Bloomberg:
  • Hong Kong-Shanghai Link Looks Lopsided as Outflows Jump: Chart.
  • Asian Stocks Drop as Topix Shares Go Ex-Dividend, Oil Volatile. Asian stocks fell, pushed down by declines in Japanese shares and a weaker oil price as hopes of an output cut fizzled. The MSCI Asia Pacific Index declined 0.5 percent to 141.33 as of 9:06 a.m. in Tokyo. The Topix index dropped 1.1 percent, the most in two-and-a-half weeks, as more than half the companies on the benchmark traded without the right to the next dividend. The yen was at 100.49 per dollar. Oil trading was volatile, with the price below $45 a barrel as investors scaled back expectations of a deal on output cuts when OPEC ministers meet later Wednesday.
  • Bond Market in Deepest Central Bank-Induced Slumber Since 2014. (video) Concerns about a contentious U.S. presidential election and the health of Germany’s largest bank still aren’t enough to stir a Treasuries market emboldened by accommodative central banks. A measure of expected price swings in Treasuries sank to its lowest level since December 2014 as turmoil elsewhere in financial markets pushed investors into haven assets. Benchmark 10-year securities rallied for a second day after Monday’s U.S. presidential debate and as European stocks halted a two-day rout amid concern about Deutsche Bank AG’s financial footing.
Wall Street Journal:
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -1.0% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 115.25 -7.25 basis points. 
  • Asia Pacific Sovereign CDS Index 32.25 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 73.09 -.03%. 
  • S&P 500 futures -.21%. 
  • NASDAQ 100 futures -.19%.
Morning Preview Links

Earnings of Note
Company/Estimate 
  • (ATU)/.30
  • (BBRY)/-.05
  • (PAYX)/.57
  • (WOR)/.77
  • (PIR)/-.06
Economic Releases
8:30 am EST
  • Preliminary Durable Goods Orders for August are estimated to fall -1.5% versus a +4.4% gain in July. 
  • Preliminary Durables Ex Transports for August are estimated to fall -.5% versus a +1.3% gain in July.
  • Preliminary Cap Goods Orders Non-Defense Ex Air for August are estimated to fall -.1% versus a +1.5% gain in July.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,307,500 barrels versus a -6,200,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -612,500 barrels versus a -3,204,000 barrel decline the prior week. Distillate inventories are estimated to rise by +760,630 barrels versus a +2,238,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to fall by -.49% versus a -.9% decline the prior week.  
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, Fed's Kashkari speaking, Fed's Bullard speaking, Fed's Mester speaking, Fed's George speaking, OPEC Meeting Day 3, Japan Retail Sales report, $28B 7Y T-Note auction, weekly MBA mortgage applications report, (MCO) investor day and the (CHS) analyst day 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 25% net long heading into the day.
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Stocks Rising into Final Hour on Diminished Political Uncertainty, Less Emerging Markets/US High-Yield Debt Angst, Technical Buying, Tech/Airline Sector Strength

Posted by Gary .....at 3:23 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.22 -8.9%
  • Euro/Yen Carry Return Index 117.53 -.30%
  • Emerging Markets Currency Volatility(VXY) 10.14 -2.62%
  • S&P 500 Implied Correlation 46.50 -6.36%
  • ISE Sentiment Index 71.0 +39.2%
  • Total Put/Call .97 -15.65%
  • NYSE Arms 1.31 +10.3% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 77.76 -1.78%
  • America Energy Sector High-Yield CDS Index 684.0 -.76%
  • European Financial Sector CDS Index 102.07 +2.62%
  • Western Europe Sovereign Debt CDS Index 24.54 +2.1%
  • Asia Pacific Sovereign Debt CDS Index 32.58 +.48%
  • Emerging Market CDS Index 235.26 -1.69%
  • iBoxx Offshore RMB China Corporate High Yield Index 132.08 +.04%
  • 2-Year Swap Spread 25.5 -.25 basis point
  • TED Spread 61.5 -7.0 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -42.0 -4.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 73.10 +.40%
  • 3-Month T-Bill Yield .25% +7.0 basis points
  • Yield Curve 81.0 -4.0 basis points
  • China Import Iron Ore Spot $56.63/Metric Tonne -.25%
  • Citi US Economic Surprise Index -5.20 +.2 point
  • Citi Eurozone Economic Surprise Index -10.70 -1.2 points
  • Citi Emerging Markets Economic Surprise Index -11.7 +2.1 points
  • 10-Year TIPS Spread 1.54% -2.0 basis points
  • 49.9% chance of Fed rate hike at Dec. 14 meeting, 53.0% chance at Feb. 1 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -193 open in Japan 
  • China A50 Futures: Indicating -29 open in China
  • DAX Futures: Indicating +21 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my index hedges and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long
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Today's Headlines

Posted by Gary .....at 3:01 PM
Bloomberg:
  • China Exchange Said to Mull Tighter Property Bond Sale Rules. The Shanghai Stock Exchange is considering raising the threshold for property developers to sell exchange-traded notes, according to people familiar with the matter. Under the rules being considered, the exchange would only accept note-offering applications from developers rated AA or higher, according to the people, who asked not to be identified because the details haven’t been announced. The firms would also need to meet at least one of the following requirements: be listed either onshore or offshore; be owned by a province, a provincial capital, some major city or the central government; or be among the top 100 builders ranked by the China Real Estate Association.
  • China’s Xiaomi Guns for Apple(AAPL) With Latest Premium Smartphone.
  • China’s Shibor Climbs to Seven-Week High as PBOC Withdraws Funds. Yuan borrowing costs in Shanghai rose to a seven-week high as China’s central bank pulled funds from the financial system for the second day in a row. The one-month Shanghai Interbank Offered Rate climbed to 2.74 percent, the highest since Aug. 4, according to the National Interbank Funding Center. The fixing was released after the nation’s monetary authority drained a net 95.1 billion yuan ($14.3 billion) from the financial system, adding to Monday’s 245 billion yuan withdrawal that was the biggest in six months.
  • Yen Erases Drop as Traders Switch Focus to Europe’s Banking Woes. The yen rebounded, erasing an earlier decline, as stocks fell and Deutsche Bank AG dropped to a fresh record. The resurgence in demand for the relative safety of the Japanese currency showed the post-U.S. presidential debate effect inherited from Asian markets didn’t last long in the European day. Instead, renewed concerns over the health of the continent’s banking sector and the prospect of U.S. fines for Volkswagen AG came into play, reducing the yen’s fall.
  • Saudi Stocks Drop Most in World After Kingdom Cuts Pay, Bonuses. Saudi Arabian stocks fell more than any other market in the world as the kingdom announced measures to cut the budget deficit that are likely to damp consumer spending. Not a single stock rose on the Tadawul All Share Index, which retreated 3.8 percent on Tuesday, the most since January. The hotel and media indexes were the biggest decliners on a percentage basis, while Al Rajhi Bank was the largest contributor to the main gauge’s loss.
  • Europe Stocks Halt 2-Day Rout as Banks Pare Drop After U.S. Data. (video) European stocks halted a selloff after better-than-forecast U.S. economic data helped recoup most intraday losses in bank shares. The Stoxx Europe 600 Index added less than 0.1 percent at the close, wiping out a drop of as much as 0.7 percent after data showed American consumer confidence in September rose to a 2007 high, while the services industry expanded more than estimated. Europe’s equity gauge rose 0.7 percent earlier in the session, following a two-day slide. A gauge of Stoxx 600 banks was down 0.2 percent, after slipping as much as 1.3 percent. Commerzbank AG fell 2.2 percent after a report it plans to cut jobs and suspend dividend payments. Credit Suisse Group AG slid 3.3 percent after its chief said the lender is mulling further cost cuts at the global markets unit that posted a loss earlier this year. Deutsche Bank AG was unchanged at a record low. “Markets are nervous, but panic levels haven’t been triggered yet,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. His firm oversees $260 million. “Some European financials are really not in a very healthy shape, and the market is aware of it. We had a summer during which volatility stayed at the beach, but now we are back in the game and we have to learn to deal with it.”
  • Iran Doesn’t Want Oil Deal in Algiers, Won’t Freeze Output. (video) Iran is not willing to freeze its oil output at current levels and doesn’t intend to forge an agreement with other major crude producers at talks in Algiers this week, the nation’s oil minister said. Iran wants to raise its crude production to 4 million barrels a day, Bijan Namdar Zanganeh told Bloomberg Television in an interview Tuesday. OPEC’s third-largest producer -- with daily output of 3.6 million barrels last month -- will talk to other members at the International Energy Forum in the Algerian capital and it’s possible the group could reach a formal supply deal at its November meeting in Vienna, he said.
  • IEA’s Birol Warns Oil Supply Will Exceed Demand Until Late 2017. (video) Global oil output will exceed demand until late 2017, the head of the International Energy Agency said before major producing nations gather for talks. "We don’t see the oil market re-balancing until late 2017" provided there’s no “major intervention,” IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg Television in Algiers.
  • Dallas Police See Exodus as Doubts Rise on Pension Promises. Dallas’s police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true. With the city considering benefit cuts to help close a retirement-fund shortfall that grew by $1.2 billion last year, more than 200 workers have decided to retire or leave, about double the normal rate, said Mayor Pro Tem Erik Wilson, who sits on the Dallas Police and Fire Pension System’s board. That’s threatening to put further pressure on the fund as benefits come due, including lump-sum payouts to older employees who’ve been drawing a paycheck while earning a guaranteed 8 percent return on their pensions. “I’ve had 40 to 50 officers in my office this week asking what they should do,” said James Parnell, 52, secretary-treasurer of the Dallas Police Association and 25-year veteran. “They’re very nervous about what is going to happen, they’re fearing a run on the money.”
  • Fed’s Fischer Says Wages Beginning to Respond to Labor Market. (video) Federal Reserve Vice Chairman Stanley Fischer said low interest rates have helped deliver U.S. labor market gains that are feeding through to higher wages. “With unemployment now below 5 percent we’re beginning to see the fruits of a higher-pressure labor market,” Fischer said Monday in response to questions following a speech at Howard University in Washington. “So, we’ve been getting there, and again, it’s pressure keeping, keeping interest rates low, that helps cause this to happen.”
Wall Street Journal:
Fox News:
  • Lester Holt spins debate for Hillary six huge ways, plays 'Gotcha' with Trump. (video) Journalists got their wish. Presidential debate moderator Lester Holt hoisted Hillary Clinton’s campaign high in the air like Atlas. Holt repeatedly called out Trump, as both the Clinton campaign and the liberal media had begged him to do. Holt reminded viewers he’s liberal – from pushing the birther issue to harassing Trump about his tax returns to a wildly biased question about Clinton as “the first woman nominated by a party” not having “the look.” Clinton skated by with a 15-second response on her emails while Trump was asked repeated follow-up questions while Hillary was not. There was no “deplorables” question and Holt promoted the birther meme without noting its origin in the Clinton camp.
Zero Hedge:
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Bear Radar

Posted by Gary .....at 1:33 PM
Style Underperformer:
  • Mid-Cap Value -.1%
Sector Underperformers:
  • 1) Oil Tankers -3.9% 2) Gold & Silver -1.1% 3) Utilities -.5%
Stocks Falling on Unusual Volume: 
  • SXL, DKT, RICE, DTK, FDS, WLH, LGND, DXB, IRT, LXK, CRI, CAR, NEOG, MTN, EQT, PBYI, PNRA, CXW, GWPH, ACOR, BABY, GPRO, GPOR, LNKD and HTZ
Stocks With Unusual Put Option Activity:
  • 1) NKE 2) CZR 3) EWY 4) TXN 5) DXJ
Stocks With Most Negative News Mentions:
  • 1) CRI 2) GILD 3) SJM 4) CPS 5) CHK
Charts:
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