Wednesday, December 21, 2016

Thursday Watch

Evening Headlines
Bloomberg:
  • Germany Had Monitored Berlin Truck Attack Suspect for Months. (video) German officials had deemed the Tunisian man being sought in a manhunt across Europe a threat long before a truck plowed into a Christmas market in Berlin — and even kept him under covert surveillance for six months this year before halting the operation. Now the international manhunt for Anis Amri — considered the prime suspect in Monday's deadly rampage — is raising questions about how closely German authorities are monitoring the hundreds of known Islamic extremists in the country. The issue puts new pressure on Chancellor Angela Merkel, who is running for re-election next year. Critics are lambasting her for allowing hundreds of thousands of asylum-seekers to enter the country, allegedly without proper security checks.
  • BNP Paribas' Lo: See More Defaults in China in 2017. (video) Brexit and Politics Cast Shadow Over U.K. After Tumultuous 2016. The U.K.’s long-predicted Brexit slump may finally arrive.
  • Japan Stocks Echo U.S. Drop as Oil Decline Halts: Markets Wrap. Futures on China and Hong Kong share gauges foreshadowed declines after the Dow Jones Industrial Average failed to reach the much-heralded 20,000 mark amid thinner volumes in the lead up to year-end. The Bloomberg Dollar Spot Index was steady after a 0.1 percent drop Wednesday, with the New Zealand dollar stronger following data that indicated faster-than-expected economic growth. Crude oil held above $52.50 a barrel after a report showing U.S. stockpiles increased drove it down 1.9 percent Wednesday.
  • Micron(MU) Rises on Quarterly Sales Forecast, Restored Growth. Micron Technology Inc., the largest U.S. maker of memory chips, predicted sales that exceeded some analysts’ estimates on demand for phone and computer parts that is beginning to outstrip supplies. Shares jumped as much as 10 percent in extended trading after the forecast.
Wall Street Journal:
Zero Hedge:
Business Insider:
Telegraph:
Night Trading 
  • Asian equity indices are -.5% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 121.55 -1.75 basis points.
  • Asia Pacific Sovereign CDS Index 37.25 -.5 basis point.
  • Bloomberg Emerging Markets Currency Index 69.54 +.03%
  • S&P 500 futures -.03%. 
  • NASDAQ 100 futures -.02%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (CAG)/.45
  • (RAD)/.05
  • (CALM)/-.48
  • (CTAS)/1.15  
Economic Releases 
8:30 am EST
  • Chicago Fed National Activity Index for November is estimated to fall to -.1 versus -.08 in October.
  • 3Q GDP is estimated to rise +3.3% versus a prior estimate of a +3.2% gain.
  • 3Q GDP Price Index is estimated to rise +1.4% versus a prior estimate of a +1.4% gain.
  • 3Q Personal Consumption is estimated to rise +2.8% versus a +2.8% prior estimate. 
  • 3Q Core PCE QoQ is estimated to rise +1.7% versus a prior estimate of a +1.7% gain.
  • Durable Goods Orders for November are estimated to fall -4.9% versus a +4.6% gain in October.
  • Durables Ex Transports for November are estimated to rise +.2% versus a +.8% gain in October.
  • Cap Goods Orders Non-Defense Ex-Air for November are estimated to rise +.4% versus a +.2% gain in October.
  • Initial Jobless Claims are estimated to rise to 257K versus 254K the prior week.
  • Continuing Claims are estimated to fall to 2010K versus 2018K prior.
9:00 am EST
  • The FHFA House Price Index MoM for October is estimated to rise +.5% versus a +.6% gain in September.
10:00 am EST
  • Personal Income for November is estimated to rise +.3% versus a +.6% gain in October.
  • Personal Spending for November is estimated to rise +.3% versus a +.3% gain in October.
  • PCE Core MoM for November is estimated to rise +.1% versus a +.1% gain in October.
  • The Leading Index for November is estimated to rise +.1% versus a +.1% gain in October.
11:00 am EST
  • The Kansas City Fed Manufacturing Activity Index for December is estimated to rise to 4.0 versus 1.0 in November. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The China Business Indicators, Bloomberg Economic Expectations for December, weekly Bloomberg Consumer Comfort Index and weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly 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 day.

Stocks Slightly Lower into Final Hour on Yen Strength, Oil Decline, Profit-Taking, Biotech/REIT Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Light
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 11.32 -1.14%
  • Euro/Yen Carry Return Index 128.07 +.17%
  • Emerging Markets Currency Volatility(VXY) 11.20 -.97%
  • S&P 500 Implied Correlation 49.57 -8.05%
  • ISE Sentiment Index 81.0 -29.0%
  • Total Put/Call .86 -7.5%
  • NYSE Arms 1.49 +88.4%
Credit Investor Angst:
  • North American Investment Grade CDS Index 66.59 -.67%
  • America Energy Sector High-Yield CDS Index 491.0 +8.58%
  • European Financial Sector CDS Index 93.85 +.39%
  • Western Europe Sovereign Debt CDS Index 20.37 +.64%
  • Asia Pacific Sovereign Debt CDS Index 37.34 -.77%
  • Emerging Market CDS Index 241.57 -.38%
  • iBoxx Offshore RMB China Corporate High Yield Index 133.11 +.06%
  • 2-Year Swap Spread 28.5 +1.5 basis points
  • TED Spread 47.75 -.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -57.0 +1.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 69.54 +.21%
  • 3-Month T-Bill Yield .51% unch.
  • Yield Curve 134.0 +1.0 basis point
  • China Import Iron Ore Spot $79.19/Metric Tonne -.54%
  • Citi US Economic Surprise Index 22.8 +.5 point
  • Citi Eurozone Economic Surprise Index 56.70 -2.1 basis points
  • Citi Emerging Markets Economic Surprise Index 7.70 +.8 point
  • 10-Year TIPS Spread 1.93% unch.
  • 33.1% chance of Fed rate hike at March 15 meeting, 42.0% chance at May 3 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +28 open in Japan 
  • China A50 Futures: Indicating -21 open in China
  • DAX Futures: Indicating -1 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my retail/biotech sector longs 
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Value -.3%
Sector Underperformers:
  • 1) HMOs -1.1% 2) Biotech -.8% 3) Alt Energy -.7%
Stocks Falling on Unusual Volume: 
  • FINL, LNN, FDX, WGO, SGY, LXRX, NYCB, VMI, ACN, AAAP, FMI, DCO, ACIU, PRA, CACI, SJR, CFNL, CYBR, ACAD, AGX, MKTX, TWTR, PI, ITT, VYGR and SCMP
Stocks With Unusual Put Option Activity:
  • 1) BBBY 2) PYPL 3) NKE 4) FDX 5) XLNX
Stocks With Most Negative News Mentions:
  • 1) OAS 2) USB 3) JCP 4) CEMP 5) FINL
Charts:

Bull Radar

Style Outperformer:
  • Mid-Cap Value -.1%
Sector Outperformers:
  • 1) Gaming +1.3% 2) Foods +.3% 3) Hospitals .3%
Stocks Rising on Unusual Volume:
  • INVN, SWNC, SUN, BITA, SCS, CLVS and TWLO
Stocks With Unusual Call Option Activity:
  • 1) INVN 2) SLCA 3) DLTR 4) TLT 5) GIS
Stocks With Most Positive News Mentions:
  • 1) MNST 2) SUN 3) GLW 4) AGN 5) NKE
Charts:

Morning Market Internals

NYSE Composite Index:

Tuesday, December 20, 2016

Wednesday Watch

Night Trading 
  • Asian equity indices are unch. to +.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 123.25 unch.
  • Asia Pacific Sovereign CDS Index 37.75 +.25 basis point.
  • Bloomberg Emerging Markets Currency Index 69.36 -.05%
  • S&P 500 futures +.04%. 
  • NASDAQ 100 futures +.03%.
Morning Preview Links

Earnings of Note
Company/Estimate

  • (ACN)/1.49
  • (ATU)/.17
  • (FINL)/-.18
  • (LNN)/.62
  • (PAYX)/.56
  • (WGO)/.33
  • (AIR)/.35
  • (BBBY)/.98
  • (MLHR)/.54
  • (MU)/.29
  • (RHT)/.58
Economic Releases 
10:00 am EST
  • Existing Home Sales for November are estimated to fall to 5.5m versus 5.6m in October.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,432,500 barrels versus a -2,563,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +1,033,700 barrels versus a +497,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,070,100 barrels versus a -762,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.31% versus a +.1% gain prior.
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The weekly MBA Mortgage Applications report could also impact trading today.
BOTTOM LINE:  Asian indices are slightly higher, boosted by commodity and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.