Thursday, January 05, 2017

Friday Watch

Posted by Gary .....at 8:54 PM
Evening Headlines
Bloomberg:
  • China Ready to Step Up Scrutiny of U.S. Firms If Trump Starts Feud: Sources. China is prepared to step up its scrutiny of U.S. companies in the event President-elect Donald Trump takes punitive measures against Chinese goods and triggers a trade war between the world’s two biggest economies after he takes office, according to people familiar with the matter. The options include subjecting well-known U.S. companies or ones that have large Chinese operations to tax or antitrust probes, the people said, asking not to be identified because the matter isn’t public. Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of American products, according to the people.
  • China's Credit Wheel Has a Creaking Cog.
  • Japan Shares Drop While Dollar Maintains Declines: Markets Wrap. Japanese shares fell after the dollar sank as the reflation trades sparked by Donald Trump’s election showed signs of faltering ahead of Friday’s U.S. jobs report. The Topix index lost 0.5 percent. The greenback held losses for a third day after reaching a 14-year high, as China moved to stem capital outflows and investors reconsidered Federal Reserve intentions. U.S. stocks recovered from session lows to end little changed. The yield on 10-year Treasury notes slid below its level prior to the Fed’s December interest-rate increase, while emerging-market shares erased post-election losses. The offshore yuan surged and gold traded near a four-week high on Thursday. Samsung Electronics Co. shares climbed in Seoul after profit beat estimates. The MSCI Asia Pacific Index slipped 0.2 percent as of 9:45 a.m. in Tokyo. Australia’s S&P/ASX 200 Index added 0.1 percent and New Zealand’s benchmark gauge fell less than 0.1 percent. South Korea’s Kospi advanced 0.4 percent as Samsung climbed.
  • Will OPEC Deliver Promised Output Cuts? Here’s How We’ll Know. The promise of production cuts from OPEC and its partners sent oil rallying in 2016. Now traders want proof they’re delivering on those vows. It won’t come easy. The challenge: Building a coherent picture from the morass of data that emerges at each step along the process, from the wellheads where the oil is produced, to the tankers that carry it, and the depots that store it.
  • U.S. Claims Thousands of D-Link Users Exposed to Hacking. A U.S. consumer protection watchdog sued a Taiwan-based maker of home-networking equipment over claims that lax security left its products vulnerable to hackers. The Federal Trade Commission alleged that D-Link Corp. and a U.S. unit failed to secure their routers and web cameras, exposing thousands of American consumers to targeted online security breaches. Products with inadequate safeguards allowed attackers to “monitor a consumer’s whereabouts in order to target them for theft or other crimes," according to the complaint filed Thursday in San Francisco federal court.
Wall Street Journal:
Zero Hedge:
Busines Insider:
Boersen Zeitung:
  • Pimco's Fels Worried About Future of Euro Zone. Pimco managing director and global economic adviser Joachim Fels said in an interview he is deeply concerned about the situation in euro area and cohesion of the monetary union. Euro zone more vulnerable to crises. No longer sure if political will to maintain the community under any circumstances is available everywhere.
Economic Information Daily:
  • China Should Curb Capital Flows in 'Hot' Cities. China should curb capital flows in "hot" cities to control property prices, a front-page commentary says. Banks should reduce financial support to high-priced property projects, according to the commentary. China should prevent capital flows to property sector via "structured leverage tools," the commentary said.
Night Trading 
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 114.0 -2.25 basis points.
  • Asia Pacific Sovereign CDS Index 33.25 -1.75 basis points.
  • Bloomberg Emerging Markets Currency Index 70.21 -.09%. 
  • S&P 500 futures +.01%. 
  • NASDAQ 100 futures +.03%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (ANGO)/.16
  • (AZZ)/.87
  • (GBX)/.83
Economic Releases
8:30 am EST
  • The Trade Deficit for November is estimated at -$45.4B versus -$42.6B in October.
  • The Change in Non-Farm Payrolls for December is estimated at 175K versus 178K in November.
  • The Unemployment Rate for December is estimated to rise to 4.7% versus 4.6% in November.
  • Average Hourly Earnings for December MoM is estimated to rise +.3% versus a -.1% decline in November. 
10:00 am EST
  • Factory Orders for November are estimated to fall -2.3% versus a +2.7% gain in October.
  • Final Durable Goods Orders for November are estimated to fall -4.6% versus a prior estimate of a -4.6% decline. 
Upcoming Splits 
  • None of note
Other Potential Market Movers
  • The Fed's Evans speaking, Fed's Lacker speaking, Fed's Kaplan speaking and the German Factory Orders report could also impact trading today.
BOTTOM LINE:  Asian indices are mostly higher, boosted by industrial and technology 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 Lower into Final Hour on Earnings Outlook Worries, Yen Strength, Profit-Taking, Retail/Financial Sector Weakness

Posted by Gary .....at 3:23 PM
Broad Equity Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 11.82 -.25%
  • Euro/Yen Carry Return Index 127.88 -.47%
  • Emerging Markets Currency Volatility(VXY) 11.34 +2.16%
  • S&P 500 Implied Correlation 47.16 +1.25%
  • ISE Sentiment Index 104.0 +28.4%
  • Total Put/Call 1.15 +32.18%
  • NYSE Arms .92 -9.48%
Credit Investor Angst:
  • North American Investment Grade CDS Index 64.12 -.11%
  • America Energy Sector High-Yield CDS Index 427.0 -.64%
  • European Financial Sector CDS Index 87.19 +1.68%
  • Western Europe Sovereign Debt CDS Index 20.95 +4.14%
  • Asia Pacific Sovereign Debt CDS Index 33.64 -3.80%
  • Emerging Market CDS Index 227.50 -2.31%
  • iBoxx Offshore RMB China Corporate High Yield Index 132.83 +.03%
  • 2-Year Swap Spread 25.75 +1.5 basis points
  • TED Spread 48.0 +1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -45.0 +1.25 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 70.22 +.66%
  • 3-Month T-Bill Yield .52% -1.0 basis point
  • Yield Curve 119.0 -3.0 basis points
  • China Import Iron Ore Spot $78.93/Metric Tonne +2.17%
  • Citi US Economic Surprise Index 28.90 +3.4 points
  • Citi Eurozone Economic Surprise Index 59.60 -1.0 basis point
  • Citi Emerging Markets Economic Surprise Index 24.0 -1.6 points
  • 10-Year TIPS Spread 1.98%-2.0 basis points
  • 31.3% chance of Fed rate hike at March 15 meeting, 45.0% chance at May 3 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating -31 open in Japan 
  • China A50 Futures: Indicating +64 open in China
  • DAX Futures: Indicating -10 open in Germany
Portfolio: 
  • Slightly Lower: On losses in my retail sector longs and emerging market shorts
  • Disclosed Trades: None
  • Market Exposure: 50% Net Long
0 comments

Today's Headlines

Posted by Gary .....at 2:52 PM
Bloomberg:
  • China Media Warn Trump of ‘Big Sticks’ If He Seeks Trade War. (video) Chinese state media warned U.S. President-elect Donald Trump that he’ll be met with “big sticks” if he tries to ignite a trade war or further strain ties. “There are flowers around the gate of China’s Ministry of Commerce, but there are also big sticks hidden inside the door -- they both await Americans,” the Communist Party’s Global Times newspaper wrote in an editorial Thursday. The article was published in response to Trump picking Robert Lighthizer, a former trade official in the Ronald Reagan administration who has criticized Beijing’s trade practices, as U.S. trade representative. The latest salvo from state-run outlets followed others aimed at Peter Navarro, a University of California at Irvine economics professor and critic of China’s trade practices whom Trump named to head a newly formed White House National Trade Council. Those choices plus billionaire Wilbur Ross, the nominee for commerce secretary, will form an “iron curtain” of protectionism in Trump’s economic and trade team, according to the paper.
  • Trump's Trade Team Suggests His Hardnosed Campaign Talk Was No Bluff. The makeup of President-elect Donald Trump’s trade team suggests he wasn’t joking when he promised voters to shake things up. On the campaign trail, Trump portrayed an America that has been shortchanged by bad trade deals and unscrupulous trading partners, leading to the hollowing out of the nation’s manufacturing sector. He promised to label China a currency manipulator and renegotiate the North American Free Trade Agreement with Canada and Mexico.
  • Draghi’s German Problem Flares Up as Inflation Surge Stirs Anger. Mario Draghi’s German problem has come back to haunt him. In a week that revealed a jump in inflation in Europe’s largest economy, commentators are lining up to urge the European Central Bank president to end his ultra-loose monetary policy. From the allegation that savers face devastation to Bild newspaper’s call to “Raise rates now!” Draghi is once again facing the wrath of Germans fretting that the guardian of price stability will let them down. “The debate is going to get louder, particularly in Germany where people are bred to fear inflation,” said Stefan Kipar, an economist at BayernLB. “But one mustn’t forget that the ECB is setting monetary policy not only for Germany, but for the whole euro area, and that even in Germany the underlying price-pressure remains moderate and inflation should stay below 2 percent in the upcoming year.”
  • French Poll Shows Fillon, Le Pen, Macron in Tight Race. In next April 23’s first round, depending on who else runs, the center-right’s Fillon would receive between 23 and 28 percent, the anti-immigration Le Pen would receive between 22 and 24 percent, and former Economy Minister Macron between 16 and 24 percent, according to a Elabe poll for Les Echos. The top two qualify for a run off May 7.
  • Reflationistas Beware as Global Price Revival Belies Risks Ahead. From goods leaving the factory floor in China’s industrial towns to gasoline at the pump in Europe and America, prices that stayed low for years are finally going up. So that’s a good sign, right? After a period of central bankers fretting about deflation and resorting to unconventional techniques like negative rates to respond, the easy answer is “yes.” But whether faster price gains mean that the world is finally healing from the Great Recession may be revealed only by what happens next. In the rosy case, the global economy is now being offered a tonic by resurgent pricing for key commodities such as oil and iron ore, and a buoyant U.S. entering the presidency of Donald Trump will help drive demand, wages and investment everywhere. In another scenario, a litany of political risks from Trump himself to the potential bungling of Britain’s exit from the European Union await the unwary, and reflation could end up crimping consumer spending while failing to propel wages and investment.
  • Jet-Buying Binge Nears End as Boeing, Airbus Brace for Slowdown. The unprecedented jetliner shopping spree that’s spanned more than a decade is drawing to a close. That’s bad news for Boeing Co. and Airbus Group SE, which face slowing jet sales and the highest level of airplane-delivery deferrals in at least 15 years. Final 2016 tallies to be unveiled over the next few days will probably show aircraft orders trailing shipments, a sign of a weakening market. Airline profits are poised to fall from last year’s peak, with even Persian Gulf juggernauts Emirates and Etihad Airways PJSC tempering growth.
  • Odey’s Hedge Fund Slumps 49.5% in Worst Ever Annual Loss.
  • The Strong Dollar Could Bash the Economy—and It’s Just Getting Started. The surging greenback could slam U.S. manufacturing and trigger capital flight from emerging markets.
  • Barclays Flags ‘Black Swan Threats’ to Commodities This Year. (video) Watch out for the unexpected in commodities in 2017. Barclays Plc said raw materials markets from energy to metals face the high likelihood of disruptions, giving a laundry list of possible threats including a default by Venezuela, riots in Chile and a trade war with China. “The new politics of populism and protectionist trade policies have the potential to disrupt global supply and demand assumptions for various commodities,” analysts including Michael Cohen and Dane Davis wrote in a Jan. 5 report. “We see risks skewed to the upside in 2017, based on a high likelihood of disruption risk.”
  • Libyan Oil Port Said to Re-Open as OPEC Nation Boosts Output. Libya is re-opening its last major oil-export terminal and producing at the highest level in more than two years as the war-torn country benefits from an exemption from OPEC output cuts. The Zawiya terminal is preparing to resume exports after the pipeline supplying it was re-opened, an official at the state-run National Oil Corp. said, asking not to be identified for lack of authorization to speak to news media. With Zawiya shipping, all nine of Libya’s main oil ports would be exporting. Eni SpA began drilling an offshore exploratory well northwest of the capital Tripoli and expects to complete it in 65 days, NOC said Thursday on its website.
  • Trump Tells Confidant He Still Opposes AT&T-Time Warner. (video)
  • Mall Companies Fall As Sears Announces Plans to Close Stores. (video)
Wall Street Journal:
Zero Hedge:
0 comments

Bear Radar

Posted by Gary .....at 1:47 PM
Style Underperformer:
  • Small-Cap Value -1.6%
Sector Underperformers:
  • 1) Retail -2.8% 2) Banks -1.7% 3) Networking -1.3%
Stocks Falling on Unusual Volume: 
  • KNOP, IT, KSS, STZ, MC, M, LUX, ZF, WTW, KRC, ZAYO, DDS, LB, CATO, ZTR, RPM, MG, HRTX, LNDC, RL, FRAN, JWN, PCRX, BKS, PENN, HST, GIII, FOSL, LZB and PCRX
Stocks With Unusual Put Option Activity:
  • 1) ARCC 2) ALXN 3) HOG 4) COH 5) STZ
Stocks With Most Negative News Mentions:
  • 1) BWLD 2) KSS 3) M 4) GHL 5) CVTI
Charts:
0 comments
Subscribe to: Posts (Atom)