Monday, November 14, 2016

Tuesday Watch

Posted by Gary .....at 9:12 PM
Evening Headlines
Bloomberg:
  • China's Central Bank Faces Trump Headache. As if defusing the world’s biggest debt bomb while keeping economic growth humming wasn’t tough enough, Donald Trump’s shock election victory has just made the policy outlook even more complex for People’s Bank of China Governor Zhou Xiaochuan. The president-elect’s threats to slap tariffs of up to 45 percent on Chinese imports cast a shadow over the economy’s stabilization and the world’s most crucial trade relationship. Protectionism may fuel more international use of the yuan, according to Standard Chartered Plc, while UBS Group AG says tariffs may push the PBOC to let the yuan fall further. Longer-term ambitions like capital account opening and yuan internationalization are also clouded, hinging on whether President Trump delivers on candidate Trump’s promises.
  • The Euro-Dollar Parity Bet Is Back. Donald Trump’s electoral upset has breathed new life into the bet that diverging economic paths will drive the euro toward parity with the dollar for the first time since 2002. Traders see about a 45 percent chance the European currency will sink to $1 in the next year, about double the probability assigned a week ago, data compiled by Bloomberg show. The president-elect’s pledges to boost spending and cut taxes are fueling speculation that economic growth will accelerate, pushing the Federal Reserve to raise interest rates more quickly. 
  • Bond Selloff Abates as Dollar Retreats, Asian Stocks Stabilize. The fallout from Donald Trump’s election to the U.S. presidency showed some signs of moderating in financial markets with benchmark Treasuries advancing for the first time in more than a week, the dollar retreating and Asian stocks stabilizing. The yield on U.S. government debt due in a decade fell from its highest level of the year and government debt in Australia halted a three-day slide. The yen rose from near its weakest level since June and gold climbed from a five-month low. U.S. crude oil rebounded from an eight-week low as OPEC members were said to be working to bridge a gap between producers to secure a deal to cut output. The MSCI Asia Pacific Index was up 0.2 percent, with gains in technology shares countering losses in consumer staples.
  • Trump Tech Meltdown Hits Fourth Day With Amazon Cut by $35 Billion. The stock market’s post-election bifurcation sharpened Monday as technology shares extended their worst performance since the start of the bull market on speculation Donald Trump’s trade and immigration policies will translate into lower earnings. Apple Inc., Facebook Inc. and Alphabet Inc. led the S&P 500 Information Technology Index down 1.7 percent for the biggest retreat since September. The group stands out as the only industry that normally benefits from a rising economy not to rally on speculation Trump’s policies will stoke domestic growth. Tech stocks in the benchmark equity gauge have slumped 3.1 percent over four days, trailing the S&P 500 Index by 4.2 percentage points, the most since May 2009. Small caps in the Russell 2000 Index surged 1.2 percent to an all-time high.
  • Hedge Funds Added Tech Stocks Ahead of Trump Victory Sell-Off. Marquee money managers including Moore Capital Management and Point72 Asset Management boosted their holdings of technology firms in the third quarter, before the U.S. presidential election spurred a selloff in the industry.
  • Apple(AAPL) Considers Wearables Expansion With Digital Glasses.
Wall Street Journal:
Fox News:
  • Obama: Trump committed to NATO alliance; Dems should reflect on election loss. (graph) Calling the office of the presidency “bigger than any one person,” President Obama on Monday said the influence America has on a global scale will not be erased by the outcome of one election and added that Donald Trump told him the U.S. would reaffirm its commitment to the NATO alliance. As a candidate for president, Trump said other members of the treaty organization did not contribute enough for the protections it gets in return. Trump’s position seemed to change on the topic in recent days.
Zero Hedge:
Business Insider:
Night Trading 
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 131.50 +12.75 basis points. 
  • Asia Pacific Sovereign CDS Index 46.0 +4.25 basis points.
  • Bloomberg Emerging Markets Currency Index 69.70 +.07%. 
  • S&P 500 futures +.12%. 
  • NASDAQ 100 futures +.12%.
Morning Preview Links

Earnings of Note
Company/Estimate 
  • (BZH)/.59
  • (DKS)/.42
  • (DBD)/.34
  • (HD)/1.58
  • (JD)/-.37
  • (KLIC)/.09
  • (MBLY)/.18
  • (SSYS)/.07
  • (TEVA)/1.28
  • (TJX)/.87
  • (A)/.52
Economic Releases 
8:30 am EST
  • The Import Price Index MoM for October is estimated to rise +.4% versus a +.1% gain in September.
  • Empire Manufacturing for November is estimated to rise to -2.5 versus -6.8 in October.
  • Retail Sales Advance MoM for October is estimated to rise +.6% versus a +.6% gain in September.
  • Retail Sales Ex Autos MoM for October is estimated to rise +.5% versus a +.5% gain in September.
  • Retail Sales Ex Autos and Gas for October is estimated to rise +.3% versus a +.3% gain in September.
10:00 am EST
  • Business Inventories for September are estimated to rise +.2% versus a +.2% gain in August.    
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Fischer speaking, Fed's Rosengren speaking, German GDP report, UK Retail Sales report, Eurozone ZEW Index, US weekly retail sales reports, Stifel Healthcare Conference, Morgan Stanley Consumer/Retail Conference, BofA Merrill Banking/Financial Services Conference, (CAR) Investor Day and the (UAL) Investor Day could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.
0 comments

Stocks Slightly Higher into Final Hour on US Economic Optimism, Yen Weakness, Oil Reversal, Financial/Healthcare Sector Strength

Posted by Gary .....at 3:25 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Modestly Higher
  • Sector Performance: Mixed
  • Volume: Above Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • Volatility(VIX) 14.68 +3.60%
  • Euro/Yen Carry Return Index 121.53 +.53%
  • Emerging Markets Currency Volatility(VXY) 11.51 +2.04%
  • S&P 500 Implied Correlation 33.60 -9.7%
  • ISE Sentiment Index 104.0 +48.57%
  • Total Put/Call .95 -10.38%
  • NYSE Arms .51 -52.09% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 76.98 +1.32%
  • America Energy Sector High-Yield CDS Index 647.0 +.69%
  • European Financial Sector CDS Index 103.25 +2.78%
  • Western Europe Sovereign Debt CDS Index 21.66 +4.01%
  • Asia Pacific Sovereign Debt CDS Index 46.07 +10.16%
  • Emerging Market CDS Index 282.57 +5.81%
  • iBoxx Offshore RMB China Corporate High Yield Index 132.71 -.03%
  • 2-Year Swap Spread 24.0 -.75 basis point
  • TED Spread 41.75 -1.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -45.0 -4.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 69.58 -.73%
  • 3-Month T-Bill Yield .51% +4.0 basis points
  • Yield Curve 124.0 unch.
  • China Import Iron Ore Spot $77.77/Metric Tonne -2.56%
  • Citi US Economic Surprise Index -6.30 +1.6 points
  • Citi Eurozone Economic Surprise Index 36.7 +2.1 points
  • Citi Emerging Markets Economic Surprise Index -3.40 +1.2 points
  • 10-Year TIPS Spread 1.86% -5.0 basis points
  • 92.5% chance of Fed rate hike at Feb. 1 meeting, 93.5% chance at March 15 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +73 open in Japan 
  • China A50 Futures: Indicating -20 open in China
  • DAX Futures: Indicating +18 open in Germany
Portfolio: 
  • Higher: On gains in my biotech/retail sector longs and emerging markets shorts
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long
0 comments

Today's Headlines

Posted by Gary .....at 3:01 PM
Bloomberg:
  • Xi Tells Trump Cooperation ‘Only Choice’ for U.S.-China Ties. (video) Chinese President Xi Jinping told Donald Trump in their first conversation that cooperation was the only correct choice for ties between the world’s two largest economies, with the U.S. president-elect promising “one of the strongest relationships.” Xi told Trump by telephone Monday that the two powers benefited from working together and needed to coordinate efforts to promote global economic growth, state broadcaster China Central Television reported. The pair agreed to meet soon, CCTV said. “China and the U.S. -- as the world’s biggest developing country and the biggest developed country, and the top two global economies -- need to and can cooperate on many issues,” Xi said, according to CCTV. “At this moment, there is an important opportunity and massive potential for China-U.S. cooperation so that both sides need to strengthen coordination.”
  • Trump Hit to Long Bonds Doesn’t Bode Well for Europe’s New Craze. (video) After all the fanfare around European countries selling bonds with the longest-ever maturities, the reaction to Donald Trump’s victory may be a sobering omen. The result of the U.S. presidential election drove up yields on 30-year Treasuries last week by the most since 2009 and bonds from the euro region followed. Securities that mature in half a century or more rather than just years have become the most vulnerable corner of the European market weeks after countries such as Austria and Italy sold them to investors attracted by their higher potential returns in a world of negative rates.
  • Emerging-Market Losses Deepen as Dollar Gains; ETF Outflows Rise. (video) Emerging markets extended losses, threatening the best annual rally since 2012, as the dollar’s strength cut demand for riskier assets in the wake of Donald Trump’s U.S. presidential election victory. The Turkish lira, Russia’s ruble and Brazil’s real helped lead declines among developing-market currencies and a gauge of equities retreated for a fourth day amid speculation the U.S. is headed for an era of rising interest rates and protectionist trade policies. Brazil’s bonds tumbled the most among peers. Bulgarian debt fell after voters chose former Air Force Chief Rumen Radev, a political novice who wants to limit immigration and reduce sanctions on Russia, as the new president.
  • Hong Kong Stocks Drop to Three-Month Low as Property Firms Sink. Hong Kong stocks declined, dragging the benchmark index to a three-month low, as property companies tumbled amid concern borrowing costs will rise. The Hang Seng Index lost 1.4 percent to close at its lowest level since Aug. 5. A gauge of real estate companies traded in the city extended their worst week in four years amid speculation a faster pace of U.S. interest-rate hikes under Donald Trump and higher taxes will curb demand for housing.
  • European Stocks Snap Losing Streak to Surge on Trump Growth Bets. (video) Banks and miners again provided the main support to European shares amid continued investor optimism about the benefits of a Donald Trump presidency, even as energy-related share stumbled. UBS Group AG and HSBC Holdings Plc contributed the most to progress as a measure of lenders reached its highest level since January on speculation that Trump may loosen industry regulations. Commodity producers rose as base metals advanced, with Rio Tinto Group and BHP Billiton Ltd. adding at least 2.5 percent. Total SA and Eni SpA led declines among oil companies as crude fell to a three-month low. RWE AG helped drag utilities to the biggest loss on Stoxx Europe 600 Index, sliding 3.5 percent after posting a worse-than-estimated third-quarter loss. The Stoxx 600 added 0.3 percent at the close of trading, after earlier rising as much as 1.3 percent.
  • OPEC Said to Start Final Diplomatic Push to Heal Oil-Cut Divide. OPEC nations embarked on a final diplomatic effort to secure a deal on oil cuts, with Qatar, Algeria and Venezuela leading the push to overcome the divide between the group’s biggest producers, according to a delegate familiar with the talks.
  • Bond Vigilantes to Trump: Be Careful, It Could Get Painful. (video) When it comes to Donald Trump’s plan to “Make America Great Again,” the bond market is sending the president-elect a simple and unambiguous warning: be careful, or it’s going to cost you. In the days after the billionaire scored a stunning victory with a mix of populist rhetoric and promises to cut taxes, rein in immigration and spend big on infrastructure, America’s financing costs have unexpectedly soared. Yields on Treasuries jumped, contributing to the biggest surge since the “taper tantrum.”
  • Bond Rout Eats Into the One Remaining Valuation Case for Stocks. The selloff in debt that sent 10-year Treasury yields to the highest levels since January threatens to make an already richly priced stock market look downright expensive. That’s because of its effect on a valuation framework known as the Fed model, which says it’s OK to own equities as long as their prices compare favorably with bonds. The comparison plots S&P 500 Index earnings expressed as a percentage of price, now 4.9 percent, against Treasury rates. Spiking bond yields have narrowed the advantage enjoyed by stocks to the least in three years.
  • Behind GOP Unity, Trump Plans May Be Stymied by Fiscal Hawks. (video) In the afterglow of Donald Trump’s unexpected triumph, Republicans exulted over what they could accomplish with control of both chambers of Congress and the White House. But behind the public show of unity, a stark difference looms. House Speaker Paul Ryan is a fiscal hawk who wants to couple tax cuts with deep spending cuts. Trump catapulted himself into the presidency talking about tax cuts too, but he also is proposing a multibillion-dollar infrastructure plan and has vowed to protect entitlement programs like Social Security and Medicare. Such gaps went unmentioned when Trump met with Ryan and Senate Majority Leader Mitch McConnell last week. But ultimately, one side will have to bend, whether Trump ends up moderating his spending and tax-cut plans, or congressional fiscal hawks relent on their opposition to new spending.
  • Pharma's Not Off the Hook for High Drug Prices. Even with a presumably business-friendly president-elect in Donald Trump, drugmakers that have been battered by criticism over high prices in the past year are bracing for Republican and Democratic lawmakers to take aim at the industry. Although Trump’s brief health plan released last week on his transition’s website doesn’t mention drug prices, he has previously voiced support for having the government negotiate prices in Medicare, and allowing the re-importation of cheaper treatments from other countries -- two proposals the pharmaceutical industry has long opposed.
  • Fidelity’s $100 Billion Manager Says Rate Spike May Be Overdone.
Wall Street Journal:
Fox News:
  • Who is Keith Ellison? Left-wing congressman with past ties to Nation of Islam wants DNC job. (video) In an attempt to stave off a civil war in the ranks, Democratic leaders are scrambling to unite behind a candidate for the party's chairmanship – and have landed for now on a Louis Farrakhan-linked congressman who once called for Dick Cheney’s impeachment and compared George W. Bush to Hitler. Rep. Keith Ellison, D-Minn., the first Muslim elected to Congress and a leading progressive among House Democrats, already has picked up the backing of both the Democratic Party’s left – with support from Sens. Bernie Sanders and Elizabeth Warren – and its establishment, receiving endorsements from Senate leaders Chuck Schumer, D-N.Y., and retiring Harry Reid, D-Nev.
Zero Hedge:
Reuters: 
  • Samsung to buy car tech company Harman for $8 billion. Samsung Electronics has agreed to buy Harman International Industries in an $8 billion deal, marking a major push into the auto electronics market and the biggest overseas acquisition ever by a South Korean company.
0 comments

Bear Radar

Posted by Gary .....at 1:53 PM
Style Underperformer:
  • Large-Cap Growth -.4%
Sector Underperformers:
  • 1) Medical Equipment -2.4% 2) Social Media -2.0% 3) Gaming -1.8%
Stocks Falling on Unusual Volume: 
  • TSLA, NGVC, PMF, E, MUC, PBYI, BTT, ELLI, TDG, DCUD, ZBIO, PTY, FNV, CNS, HPI, NVDA, DMO, HBANO, BUD, GGAL, CSAL, GOF, SOJA, AMT, NEWR, LTRPA, TRIP, SBAC, BDX, VNTV, GPN, EW, MDT, AMT, V, CLGX, VIVO, SD, TDG and QTWO
Stocks With Unusual Put Option Activity:
  • 1) XLK 2) SHLD 3) LQD 4) V 5) HUM
Stocks With Most Negative News Mentions:
  • 1) WMS 2) ASPN 3) KORS 4) ELY 5) IRBT
Charts:
0 comments
Subscribe to: Posts (Atom)