Wednesday, November 09, 2016

Thursday Watch

Posted by Gary .....at 11:25 PM
Evening Headlines
Bloomberg:
  • After Brexit and Trump, Populists Target Next Dominoes in Europe. After success in Britain and the U.S., populists are setting their sights on the next five dominoes at risk. Votes are looming within less than a year in Italy, Austria, the Netherlands, France and then Germany. Exasperation with the political and business establishment over a raft of grievances from inequality to immigration will likely shape all of these votes, with the outcome increasingly hard to predict.
  • Yuan Falls to Six-Year Low Amid Concern Trump Will Target China. The yuan slipped to a six-year low as concern about China’s trade relationship with a more protectionist U.S. provided a new reason to sell the currency that’s heading for a third annual loss. The yuan fell 0.2 percent to 6.7907 per dollar at 11:35 a.m. in Shanghai, its lowest level since September 2010, and extending its drop this year to 4.4 percent. Declines versus the greenback were minor compared with peers after the central bank barely weakened the fixing, following a 1.4 percent surge by the Bloomberg Dollar Index on Wednesday. Trump has called China a "grand master" at currency manipulation and has threatened tariffs of up to 45 percent on the country’s imports, a step that Commonwealth Bank of Australia estimated would cut China’s shipments to the the U.S. by 25 percent in the first year.
  • A Different China Awaits Trump. (video)
  • Asian Stocks Rebound After Selloff as Markets Reassess Trump Win. Asian stocks jumped the most in almost eight months to join a global rebound on speculation Donald Trump will pursue business-friendly policies. Japanese shares surged as the yen slumped. The MSCI Asia Pacific Index added 2.3 percent to 136.49 as of 10 a.m. in Tokyo, heading for the biggest increase since March 2. The measure tumbled 3.2 percent on Wednesday, the most since Brexit roiled global markets, after Trump shocked investors by winning the U.S. presidential race against opponent Hillary Clinton.
  • SolarCity(SCTY) Heads Quietly Into the Sunset.
  • Twitter(TWTR) Names Anthony Noto COO, Initiates CFO Search. (video)
Wall Street Journal:
Fox News:
  • Trump election raises big questions for ObamaCare, immigration, Supreme Court. (video) President-elect Donald Trump hasn’t minced words about what legacy legislation would be on the chopping block from President Obama's administration. From the start, Trump has vowed to repeal ObamaCare within his first 100 days in office. His upset victory early Wednesday immediately raises thorny questions about what’s next for a range of hot-button issues – from the vacancy on the Supreme Court to pending trade deals to immigration policy to health care.
Zero Hedge:
Business Insider:
Feedspot.com:
Night Trading 
  • Asian equity indices are +1.0% to +3.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 117.5 -1.25 basis points. 
  • Asia Pacific Sovereign CDS Index 36.75 +1.5 basis points.
  • Bloomberg Emerging Markets Currency Index 71.72 +.04%. 
  • S&P 500 futures -.02%. 
  • NASDAQ 100 futures +.32%.
Morning Preview Links

Earnings of Note
Company/Estimate 
  • (AZN)/.96
  • (KSS)/.70
  • (M)/.41
  • (NAT)/-.15
  • (PRTY)/.12
  • (RL)/1.71
  • (SODA)/.23
  • (KORS)/.88
  • (MSCC)/.90
  • (JWN)/.52
  • (NVDA)/.68
  • (DIS)/1.16
Economic Releases
8:30 am EST
  • Initial Jobless Claims are estimated to fall to 260K versus 265K the prior week.
  • Continuing Claims are estimated to fall to 2025K versus 2026K prior.    
2:00 pm EST
  • The Monthly Budget Deficit for October is estimated at -$75.0B versus -$136.6B in September.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Bullard speaking, $15B 30Y T-Bond auction, Canadian Home Price report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Suntrust Robinson Humphrey Financial Tech/Business/Government Services Conference, (SRCL) investor day, (MET) investor day, (SCSS) investor meeting, (ROK) investor meeting, (IRBT) analyst day and the (COP) analyst meeting could also impact trading today.
BOTTOM LINE:  Asian indices are higher, boosted by metals/mining and financial shares in the region. I expect US stocks to open higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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Stocks Surging into Final Hour on Election Uncertainty End, Yen Weakness, Short-Covering, Biotech/Financial Sector Strength

Posted by Gary .....at 3:09 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Mixed
  • Volume: Heavy
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 15.05 -19.69%
  • Euro/Yen Carry Return Index 120.78 -.26%
  • Emerging Markets Currency Volatility(VXY) 10.28 +9.25%
  • S&P 500 Implied Correlation 45.01 -25.12%
  • ISE Sentiment Index 71.0 -15.48%
  • Total Put/Call 1.07 -28.19%
  • NYSE Arms .48 -50.32% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 74.38 -1.88%
  • America Energy Sector High-Yield CDS Index 659.0 +.41%
  • European Financial Sector CDS Index 96.73 +.8%
  • Western Europe Sovereign Debt CDS Index 19.75 +2.92%
  • Asia Pacific Sovereign Debt CDS Index 37.07 +4.79%
  • Emerging Market CDS Index 243.62 +4.40%
  • iBoxx Offshore RMB China Corporate High Yield Index 132.72 -.01%
  • 2-Year Swap Spread 25.5 +1.75 basis points
  • TED Spread 48.0 +.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -44.5 +2.0 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 71.67 -1.24%
  • 3-Month T-Bill Yield .43% +1.0 basis point
  • Yield Curve 117.0 +17.0 basis points
  • China Import Iron Ore Spot $70.98/Metric Tonne +3.92%
  • Citi US Economic Surprise Index -9.0 +.8 point
  • Citi Eurozone Economic Surprise Index 33.4 +.1 point
  • Citi Emerging Markets Economic Surprise Index -4.90 +1.7 points
  • 10-Year TIPS Spread 1.86% +12.0 basis points
  • 83.1% chance of Fed rate hike at Feb. 1 meeting, 85.4% chance at March 15 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +1,014 open in Japan 
  • China A50 Futures: Indicating +71 open in China
  • DAX Futures: Indicating +7 open in Germany
Portfolio: 
  • Higher: On gains in my medical/biotech/tech/retail sector longs and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 75% Net Long
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Today's Headlines

Posted by Gary .....at 2:45 PM
Bloomberg:
  • Europe Braces for Trump Trade Assault as Economy Struggles. (video) The forecasts for Europe’s fragile economic recovery now have a Trump-shaped hole in them. Just hours after Donald Trump was declared winner of the U.S. presidential race, the European Commission published calculations for the outlook in the 19-nation euro area for slower growth in the region’s four biggest economies: Germany, Italy, Spain and France. Those projections were completed before the surprise result of the vote was known, suggesting there may be more risks to come. With campaign pledges that range from ripping up trade deals to expelling undocumented workers, the impact of the oncoming Trump presidency is incalculable but potentially severe for the major trading partners of the world’s biggest economy. The euro area -- already burdened by the U.K.’s decision to leave the European Union and a roster of populist candidates lining up for elections over the next 12 months -- looks especially vulnerable.
  • Italy’s Next in the Crosshairs for Anti-Establishment Wave. The anti-establishment whirlwind is headed for Italy now that it has sent Donald Trump to the White House. Italian government bonds slid in the wake of Trump’s stunning victory, reflecting worries that Prime Minister Matteo Renzi will lose a referendum on political reform, scheduled for Dec. 4.
  • Trump Win Spells More Trouble for Abenomics. Donald Trump’s stunning election victory delivers yet another blow Prime Minister Shinzo Abe’s efforts to revive Japan’s economy, underscoring the vulnerability of Abenomics to fluctuations in the yen and financial markets. Fears of a hard landing in China and the U.K.’s Brexit vote sent investors fleeing risk assets earlier this year, with many seeking the perceived safety of the yen, in the process eroding the profits of Japan’s exporters and the central bank’s inflation goal. The currency surged again as investors reacted to Trump’s win during Asian trading, though the rally eased as the European morning began. Trump’s win all but dooms the Trans-Pacific Partnership trade agreement, which could have boosted Japanese manufacturers. Abe was also counting on the pact as a catalyst for long-promised structural reforms in protected sectors of the economy. "This is a critical moment for Abenomics,” said Yasunari Ueno, the chief market economist at Mizuho Securities Co. in Tokyo. "A huge political obstacle has suddenly fallen in front of it.”
  • Russia Stocks Jump as Trump Win Stokes Bets for Sanctions Relief. (video) The Micex Index advanced 2.2 percent to 2,011.11 by 6:43 p.m. in Moscow, the biggest gain in the developing world, as most equity gauges declined after Trump pulled off an electoral upset by winning the race to the White House. The ruble was down 0.4 percent at 64.0 per dollar as Brent crude retreated.
  • Emerging Markets Drop as Investors Weigh Trade Risk Under Trump. (video) Emerging-market stocks fell the most since June and Mexico’s peso plunged the most in the world as Donald Trump’s presidential election victory stoked concern that the U.S. may adopt protectionist policies, jeopardizing benefits to developing nations from trade deals and immigration. The peso, the currency most vulnerable to Trump’s policies, fell toward its lowest closing level against the dollar on record as the Republican candidate defied forecasts by winning the race for the White House. A gauge of developing-nation exchange rates ended a two-day gain. The MSCI Emerging Markets Index was headed for its biggest one-day slump since the U.K. vote to leave the European Union in June. Technology and industrial stocks declined the most as 10 of the benchmark gauge’s 11 industry groups slumped. The MSCI Emerging Markets Index slid 2.4 percent to 880.40 at 11:26 a.m. in New York.
  • Industry Rift Widens on Trump as European Stocks Stage Rebound. (video) Winners separated from losers as European stocks rallied to their biggest turnaround since March, with health-care providers and miners surging, while utilities and food exporters bore the brunt of selling, following Donald Trump’s victory in the U.S. presidential election. Drugmakers, the region’s largest sector, jumped the most since 2008, supporting equity benchmarks as Trump won the race to govern the region’s biggest export market. Novo Nordisk A/S and Shire Plc rose more than 4 percent, after investors punished the shares in recent weeks amid disappointing earnings and speculation Hillary Clinton would push for drug-price controls as president. Rio Tinto Group led miners to the biggest gain on the Stoxx Europe 600 Index, as base and precious metal prices jumped. The Stoxx 600 rose 1.5 percent at the close, after earlier dropping as much as 2.4 percent, capping its biggest three-day gain since July. The volume of shares changing hands was about 68 percent higher than the 30-day average. Risk aversion was still evident in some industry groups.
  • Trump Day-One Winners and Losers Piling Up Fast Across the Globe. (video)
  • 2016 Election Center. (map)
  • Fed Faces Overhaul as Washington Braces for Trump-Led Shakeup. The leadership, powers and policies of the Federal Reserve may look very different in 18 months. President-elect Donald Trump can’t remove Fed Chair Janet Yellen from office before her four-year term expires. By mid-2018, however, Trump can replace the Fed’s top personnel and potentially alter monetary and regulatory policies. Some members of the Republican-controlled Congress may also take aim at the Fed’s independence from political influence. “Trump will have the ability to substantially reshape the nation’s central bank,” said Aaron Klein, a research fellow at the Brookings Institution in Washington.
Wall Street Journal:
Zero Hedge:
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Bear Radar

Posted by Gary .....at 2:02 PM
Style Underperformer:
  • Large-Cap Growth +.3%
Sector Underperformers:
  • 1) Hospitals -14.8% 2) Utilities -3.3% 3) Foods -2.4%
Stocks Falling on Unusual Volume: 
  • KSU, TRIP, HMSY, HCA, THC, MMS, STZ, IGF, MOH, GMED, RGR, IPXL, PCTY, SWHC, AMSG, CNC, SPA, LTRPA, EVHC, HRC, CSIQ, TMH, PAYC, LPNT, VCRA, SO, PHH, WU, ALB, MO, VCRA, PM, MPW, MD, VAR, SRE, TMH, XEL, GM, TSLA, LH, HRB, ISRG, CERN, ISRG, SBAC, BR, SYK, HOLX, ASH, CTSH, O, SCTY, PLD, AMT, CAFD, HLS, HASI, NEE, GPRE, MUSA, INGR, NEP, PEGI, NYLD, PAYC, WCG, UHS, NCLH, COTY and THC
Stocks With Unusual Put Option Activity:
  • 1) BK 2) XLV 3) EWW 4) KSS 5) JWN
Stocks With Most Negative News Mentions:
  • 1) MMS 2) HCA 3) GM 4) KSU 5) BWA
Charts:
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