Style Underperformer:
Sector Underperformers:
- 1) Education -3.40% 2) Alt Energy -1.13% 3) Gaming -.90%
Stocks Falling on Unusual Volume:
- TDS, ROSE, EEQ, TI, TTM, CIB, IRE, SU, AMCX, SPWR, NVS, ACHN, VSI, BDBD, OKS, CHMT, HSII, SF, GLF, EXPD, SHOO, INVN, TRAK, OKE, CF, WDR, ECPG, TSN, TV, HFC, XLNX, MELI, QIHU, SGY, WBMD, APOL, VVUS and TWI
Stocks With Unusual Put Option Activity:
- 1) VFC 2) EXPD 3) HD 4) XOP 5) ADSK
Stocks With Most Negative News Mentions:
- 1) SCHW 2) LO 3) CB 4) JPM 5) UTHR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.19% 2) Gold & Silver +1.39% 3) Computer Services +.42%
Stocks Rising on Unusual Volume:
- HD, CWH, ALC, SLCA and EBIX
Stocks With Unusual Call Option Activity:
- 1) SPXS 2) ADSK 3) PCS 4) NDAQ 5) CLX
Stocks With Most Positive News Mentions:
- 1) ESV 2) AMAT 3) TASR 4) HD 5) AMT
Charts:
Evening Headlines
Bloomberg:
- Italy Renews Market Jitters as Voters Reject Monti Austerity.
Italy’s inconclusive election triggered renewed market
jitters over Europe’s debt crisis as recession-scarred voters
repudiated budget rigor and established former comedian Beppe Grillo as a
political force. In the four-way race, pre-election favorite Pier Luigi
Bersani led for control of the lower house by less than a half
percentage point. Silvio Berlusconi, the former premier fighting a
tax-fraud conviction and charges of paying a minor for sex, called for a
recount and won a blocking minority in the Senate. In its first
national contest, Grillo’s group got 25 percent support and was probably
the most-voted party in the lower house. “The political situation
across Europe is effectively a race between austerity and reforms on the
one hand and the rise of populist movements on the other.” said Alberto
Gallo, head of European macro credit research at Royal Bank of Scotland
Group Plc. “Austerity is painful, and if reforms are not implemented in
time, you
run the risk of social unrest and populism. It hasn’t happened so far in
Greece, it hasn’t happened in Portugal or Spain, but we are very close
in Italy.”
- Grillo’s Anti-Austerity Wave Crashes Into Italian Parliament. Beppe Grillo, the comic banned from
Italian television two decades ago for ridiculing a corrupt
cadre of ruling lawmakers, had his political satire rewarded
yesterday with about 180 seats in Parliament. Grillo’s parliamentary list filled with political neophytes
amassed enough votes in yesterday’s election to deny a majority
to front-runner Pier Luigi Bersani and a comeback to three-time
Premier Silvio Berlusconi. As his competitors seek to cobble
together a make-shift alliance, the 64-year-old Grillo is
keeping his distance and preparing for a new vote. “They can’t hold us back any longer,” Grillo said late
yesterday in a video posted to his website. “They might go on
another seven or eight months and produce a disaster, but we
will be watching and working to keep it under control.”
- Spanish
Graft Distracts Rajoy From Fixing Economy: Euro Credit. Prime Minister
Mariano Rajoy's battle to curb borrowing and revive the Spanish economy
is being thrown off track by corruption scandals rocking his party. "The
government is so distracted defending itself against accusations that
it isn't getting on with the job of getting the economy on track,
meeting the huge disgruntlement of the general public and trying to hold
the country together," said Marc Ostwald, a strategist at Monument
Securities Ltd. in London.
- U.S. 10-Year Yield Falls Most Since November on Italy’s Vote.
Treasuries rose, pushing 10-year
yields down the most since November, as polls indicated the euro
area’s third-largest economy, Italy, may be left with a hung
parliament, stoking refuge demand. “The move today is all about the
Italian elections, which is giving a bid to Treasuries,” said Larry
Milstein, managing director in New York of government-debt trading at
R.W. Pressprich & Co. “When there is concern about one of the largest economics in Europe with one of the largest debt loads in the
region, you will see a flight to quality.”
- Gillard Slips in Australia Poll as Tax Damages Credibility. Prime
Minister Julia Gillard slipped behind opposition rival Tony Abbott as
Australia’s preferred leader for the first time since August after her
credibility was
dented when a mining tax she helped design brought in less
revenue than forecast.
- Stagflation Sparks BRIC-Worst Default Risk Surge: Brazil Credit.
Brazil’s creditworthiness in the swaps market is eroding at the fastest
pace among the biggest developing nations as inflation in Latin
America’s largest economy exceeds growth by the most in three years. The cost to protect Brazil’s dollar-denominated government bonds against
losses rose 21 basis points in the past month to 128 basis points,
increasing the price of credit-default swaps on $10 million of debt to
$128,000.
- Moody’s Promises Caps on Mortgage-Bond Ratings as Terms Loosen. Moody’s Investors Service said it
won’t assign its top ratings to certain residential mortgage-
bond deals with issuer-friendly terms, signaling a potentially
tougher stance than competitors as the market revives. Home-loan securities without government backing probably
will be able to get rankings only as high as Moody’s Aa tier if
“significant” limits are placed on when and how repurchases
can be forced of mortgages that fail to match their stated
quality, the New York-based firm said today in a report.
- Fed Faces Explaining Billion-Dollar Losses in Stress of QE3 Exit. Federal
Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could
result in more than a half trillion dollars of paper losses on the
central bank’s books if interest rates rise abruptly from recent levels.
That sum is the difference between the value of securities in the Fed’s
portfolio on Dec. 31 and what they may fetch in three years, according
to data compiled by MSCI Inc. of New York for Bloomberg News.
Wall Street Journal:
- Messy Italian Election Shakes World Markets. In a national election meant to push Italy further down a path of
economic reform, voters delivered political gridlock that could once
again rattle Europe's financial stability. Markets in Europe and the U.S. gyrated even in response to early
returns. The Dow Jones Industrial Average swung nearly 300 points,
ending with its worst day in almost four months, as the prospects of a
stable government appeared to drop.
- Banks Face Key Hurdle in Libor Fight. Banks suspected by regulators around the world of manipulating interest
rates are trying to escape another mire: more than 30 lawsuits filed by
borrowers, lenders and other plaintiffs who claim they were cheated by
the same financial institutions.
Fox News:
- Republicans urge Obama to end 'road show,' work with Senate to avert automatic cuts. House Republican leaders on Monday urged President Obama to "stop
campaigning" and hunker down with Congress to find an alternative to the
bludgeon of spending cuts set to hit Friday, saying now is not the time
"for a road-show president." The plea came as the president prepared to head Tuesday to Newport
News, Va., a major military community, to highlight the impact of
Pentagon cuts on a shipbuilding facility. Obama's Cabinet secretaries
also continued to issue dire warnings about the impact of so-called
sequestration if the $85 billion in cuts begin to take effect March 1. House
Speaker John Boehner and his deputies, emerging late Monday to
field a few questions from the press, said the Virginia stop shows Obama
is more interested in scoring political points than making a deal.
"This is not time for a road-show president," House Republican Whip
Kevin McCarthy, R-Calif., said. House Republican Leader Eric Cantor,
R-Va., whose state Obama is
visiting, repeatedly accused the president of offering a "false choice"
-- between passing tax increases and allowing steep cuts to take effect.
The president has blamed Republicans for holding up a deal, which under
Obama's terms would include a mix of cuts and revenue increases through
closing tax loopholes. Republicans suggest there's still time to
replace the sequester with cuts -- not tax hikes -- that makes sense.
"If the president was serious, he'd sit down with (Senate Democratic
Leader) Harry Reid and begin to address our problems," Boehner said. Boehner was not backing off his insistence that it's the Senate's turn to act.
MarketWatch.com:
- Autodesk(ADSK) declines after hours following outlook. ‘Fear index’ tracker extends its dayside rally. Stock in Autodesk was down 2.7% at $35.63 after the company forecast first-quarter
adjusted earnings of 41 cents to 46 cents a share and sales of $570
million to $590 million. Analysts polled by FactSet were expecting, on
average, earnings of 51 cents a share on revenue of $588.7 million.
CNBC:
Zero Hedge:
Business Insider:
Forbes:
The Detroit News:
- GM(GM) proposes to pay CEO $11.1 million in '13. General Motors Co. wants to pay its chief
executive $11.1 million in total compensation this year — an increase of more
than 20 percent over 2012— and offer raises to most of its highest paid
executives, according to a document turned over to Congress. The Detroit automaker, which received a
$49.5 billion bailout in 2008 and 2009, must get approval for the pay packages
for its top 25 executives from the Treasury Department, as a condition of its
government bailout. According to a copy of the proposal
obtained by The Detroit News from a source familiar with the documents, GM is
proposing raises for 18 of its top 25 executives for 2013, with each of those
making at least $1.8 million.
Reuters:
- California pension liabilities may swell to $328.6 bln -report. New credit evaluation standards for public pension liabilities proposed by Moody's Investors Service would swell unfunded liabilities for
California's state and local public pension plans to $328.6
billion from $128.3 billion, according to a report released on
Monday.
Financial Times:
- US oil imports from Middle East increase. The
US was more reliant on the Middle East for its oil imports last year,
underscoring the critical importance of the politically unstable region
for the country despite the growing energy independence its shale gas
revolution is bringing.
Telegraph:
- Trillion pound cash mountain to the rescue? It’s unwise to bank on it. Meaningless though it might otherwise be, the downgrade in Britain’s credit
rating at least acts as a reminder of just how deeply mired in post-crisis
gloom the UK economy really is, and quite how difficult extracting the
country from the ruination of more than a decade of banking excess and
burgeoning social spending commitments is proving.
Kyodo:
- Japan
Your Party Tells Abe It Opposes Kuroda as BOJ Head. Yoshimi Watanabe,
head of Japan opposition Your Party, told Prime Minister Shinzo Abe
today.
Beijing Morning Post:
- Ping
An, Minsheng Bank Curbs Mortgage Lending. Ping An Bank and China
Minsheng Bank have stopped mortgage lending in Beijing, citing people
from the banks. Minsheng has halted second-home mortgages, according to
the report. Ping An will stop mortgage lending for the next year.
Shanghai Securities News:
- Beijing has completed a draft of property control measures, which will be released after the central government issues more detailed policies, citing a person familiar with the matter.
China Securities Journal:
- China May Tighten Monetary Policy. China may tighten monetary
policy because of excessive liquidity in the market and rising property
prices, according to a front-page commentary written by a reporter Ren
Xiao. China may manage liquidity in 1H by selling repos or reverse
repos, the commentary said. Home prices rose for a third month adding
pressure to intensify policy-tightening efforts.
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.5 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 83.25 +.25 basis point.
- NASDAQ 100 futures +.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:00 am EST
- The S&P/CS 20 City MoM% SA for December is estimated to rise +.65% versus a +.63% gain in November.
10:00 am EST
- Richmond Fed for February is estimated to rise to -4 versus -12 in January.
- Consumer Confidence for February is estimated to rise to 62.0 versus 58.6 in January.
- New Home Sales for January are estimated to rise to 380K versus 369K in December.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bernanke Senate Testimony, weekly retail sales reports, 5Y T-Note auction,
UK Housing prices, (JPM) investor day, (WBSN) analyst day, RBC
Healthcare Conference, Robert Baird Business Solutions Conference,
Goldman Ag Conference and the Wells Fargo Real Estate Conference could
also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 100.0 -16.67%
- Total Put/Call 1.12 +21.74%
Credit Investor Angst:
- North American Investment Grade CDS Index 89.20 +3.31%
- European Financial Sector CDS Index 150.49 +.31%
- Western Europe Sovereign Debt CDS Index 98.60 -1.95%
- Emerging Market CDS Index 235.95 +.60%
- 2-Year Swap Spread 14.25 -.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -19.75 unch.
Economic Gauges:
- 3-Month T-Bill Yield .12% unch.
- China Import Iron Ore Spot $151.90/Metric Tonne -1.11%
- Citi US Economic Surprise Index -5.0 -.2 point
- 10-Year TIPS Spread 2.52 -2 bps
Overseas Futures:
- Nikkei Futures: Indicating -287 open in Japan
- DAX Futures: Indicating -108 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Italy Projections Show Hung Parliament on Berlusconi.
Italy may require another vote after partial election results suggested
the four-way race may end in a divided parliament, an aide to Democratic
Party candidate Pier Luigi Bersani said. “Those projections show a risk
of ungovernability,” Stefano Fassina, Bersani’s economic-policy
spokesman, said today on Italy’s La7 television. Projections by IPR
Marketing and state-broadcaster RAI showed Bersani was denied victory as
Silvio Berlusconi built a blocking minority in the Senate. Italian
bonds reversed gains and stocks pared a rally on speculation that voters repudiated budget rigor and turned to the premier who was forced out in November 2011 by Europe’s financial crisis.
In Italy, where premiers require control of both houses of parliament,
Berlusconi may have won the Senate race in the swing regions of Sicily,
Campania and Lombardy, according to an IPR projection based on partial
vote counts. “A hung parliament would be a guarantee of paralysis
both in terms of economic program and structural reforms,” Annalisa
Piazza, a fixed-income analyst at Newedge Group in London, said in an
e-mail. “Such a scenario would be the worst-case outlook.”
- Italian Bonds Decline as Polls Indicate Hung Parliament.
Italy’s bonds fell, erasing an
advance that saw 10-year yields decline by the most in six
months, as polls indicated the euro area’s third-largest economy
may be left with a hung parliament. Italian two-year yields reversed the
biggest slide in six weeks as partial results of the country’s election
suggested former Prime Minister Silvio Berlusconi may have built a
blocking minority in the Senate to deny outright victory to Pier Luigi
Bersani. Stefano Fassina, an aide to Bersani, said the nation may
need a second election. German bunds rose as concern the results will
derail austerity measures introduced by outgoing premier Mario Monti
boosted demand for safer assets.
- Euro Declines to Six-Week Low Amid Italian Election Concern.The
euro fell to the lowest in six
weeks versus the dollar after partial election results from Italy
suggested the four-way race may end in a divided parliament requiring
another vote. “We think the euro will remain under pressure until we get
more clarity,” Sireen Harajli, a foreign-exchange strategist in New
York at Credit Agricole SA (ACA), said in a telephone interview. “There’s a lot of uncertainty there, and it’s weighing on the
euro and risk assets in general.” The euro declined 0.4 percent to $1.3144 as of 1:41 p.m. in
New York after gaining as much as 1 percent. It touched $1.3137,
the lowest since Jan. 10.
- China’s Slower Manufacturing Casts Shadow Over Recovery.
China’s manufacturing is expanding at the slowest pace in four months, a
private survey showed, underscoring the headwinds faced by policy
makers in the world’s second-biggest economy. The preliminary reading
of a Purchasing Managers’ Index was 50.4 in February, according to a
statement from HSBC Holdings Plc and Markit Economics today. That
compares with the 52.3 final reading for January and the 52.2 median
estimate of 11 analysts surveyed by Bloomberg News.
- Asian Ship Loans Seen Prolonging Worst Industry Slump in Decades.
Asian banks are prolonging the
shipping industry’s worst slump in decades by lending more money
to fund building of vessels ordered from local yards, according
to HSH Nordbank AG, the world’s biggest marine lender. Record deliveries
of new ships built in the past four years are curbing earnings and
vessel owners’ cash flows, Christian Nieswandt, Hamburg-based HSH
Nordbank’s global head of shipping for Germany, said in interviews in
the city and London on Feb. 21-22. “Significant” numbers can’t repay loans,
he said. The Baltic Dry Index of rates to ship minerals and grains by
sea fell in four of the last five years as the fleet’s growth
outpaced demand for commodities. A delayed recovery will hurt
European banks estimated by Petrofin Research to hold about 75
percent of $500 billion in global shipping loans. Banks are
deferring repayments and restructuring terms to avoid
foreclosures and writing off defaulting loans as vessel prices
plunge to levels below outstanding debt.
- Nickel and Aluminum Drop as China Manufacturing Expansion Slows. Nickel extended the biggest weekly
drop since 2011 in London and aluminum fell after figures showed
manufacturing is expanding at the slowest pace in four months in
China, the world’s largest consumer of the metals. “The majority of metal prices are continuing to show
weakness,” Daniel Briesemann, an analyst at Commerzbank AG in
Frankfurt, said by e-mail today. “Besides the restraint being
exercised by market players on account of the Italian
elections,” the Chinese gauge was “doubtless also weighing on
sentiment,” he said. Nickel for delivery in three months slid 0.8 percent to
$16,832 a metric ton by 10 a.m. on the London Metal Exchange.
Wall Street Journal:
- Italians Seem Set to Reject Austerity in Vote. The makeup of Italy's future government and Parliament was uncertain
as votes were being counted in watershed national elections, but one
trend seemed clear: Italians are fed up with the austerity that has
characterized the past year of the caretaker government. Instant
polls released just after the close of the voting stations at
3 p.m. on Monday showed the center-left Democratic Party winning a
majority in the lower house of Parliament. But projections released
shortly after, based on early counting of actual votes, showed the
center-right coalition run by former Premier Silvio Berlusconi leading
in the upper house of Parliament, the Senate. That divide, if confirmed
by the final vote tally, could steer the country back to a new
election as early as this summer. Both the polls and projections showed two trends: the surge of
popularity of former comedian Beppe Grillo, who campaigned on an
antiausterity, anti-establishment platform; and the lower-than-expected
showing of departing Premier Mario Monti's centrist coalition.
- WSJ Analysis: Fed Exit Strategy a Work in Progress. Two developments are worth watching on the Federal Reserve front
these days. Both relate to Fed planning for how it will withdraw one day
from the aggressive bond buying it is now pursuing to bolster the
markets and the economy. Call the first the tapering debate. Right now the Fed is buying $85
billion per month of U.S. Treasury debt and mortgage-backed securities.
It has said it would continue to buy this debt until it sees substantial
improvement in the outlook for employment.
CNBC:
- One Quarter of US Has More Card Debt Than Savings. For more than half the country, 55 percent, an emergency fund outweighs
credit card debt. Nearly a quarter, 24 percent, admit to having more
debt on plastic than money in the bank, while 16 percent say they have
neither credit card debt nor savings. That puts 40 percent of the
population close to the edge of ruin while everyone else seems to be
sitting pretty.
- Bob Woodward: Obama Made Big Mistake on Sequester.
- Why Consumers May Be On Crash Course. Consumers are clipping coupons at a rate not seen since before the
2007 recession, and that's a troubling sign, according to Coupons.com
CEO Steven Boal. The website tracks how often people view and
print coupons and their redemption rate. Right now, Coupon.com's
Internet Coupon Index, as it's called, shows a spike in coupon offers
and demand.
Zero Hedge:
Business Insider:
New York Times:
- A New Cold War, in Cyberspace, Tests U.S. Ties to China. When the Obama administration circulated to the nation’s Internet
providers last week a lengthy confidential list of computer addresses
linked to a hacking group that has stolen terabytes of data from
American corporations, it left out one crucial fact: that nearly every
one of the digital addresses could be traced to the neighborhood in
Shanghai that is headquarters to the Chinese military’s cybercommand.
Reuters:
- Italy's Election Live.
- Sinopec to buy stake in Chesapeake assets for $1.02 billion. China
Petroleum & Chemical Corp (Sinopec) (600028.SS) will buy half
of Chesapeake Energy Corp's (CHK.N) Mississippi Lime oil and gas
properties in Oklahoma for $1.02 billion to increase its presence in the
booming North American shale gas industry. Output from shale fields
in the United States and Canada has jumped over the last three years
due to the advent of drilling methods such as hydraulic fracturing. Companies
in China, which has the largest shale reserves in the world, are keen
to get the know-how of drilling in such unconventional fields.
China's state-owned CNOOC Ltd (0883.HK) has struck a deal to buy
Canadian oil and gas company Nexen Inc (NXY.TO) for $15.1 billion, while
Pioneer Natural Resources Co (PXD.N) said last month it would sell a
stake in its assets in the Wolfcamp shale field of Texas to Sinochem
Group SINOC.UL for $1.7 billion. Sinopec, Asia's largest oil refiner,
will buy 50 percent of Chesapeake's 850,000 acres of net oil and natural
gas leasehold properties in the Mississippi Lime shale field in
northern Oklahoma, the companies said.
- Lowe's(LOW) makeover bears fruit; Sandy helps sales. Lowe's Cos Inc's quarterly results beat analysts' estimates on Monday as sales benefited
from rebuilding after Hurricane Sandy and the retailer's own efforts to
improve product selection and customer service.
Telegraph:
Bild:
- German SPD Chief Gabriel Still Opposes Cyprus Aid. New govt in
Cyprus doesn't necessarily make it easier for Germany's opposition party
SPD to agree to aid package, SPD leader Sigmar Gabriel said. Gabriel
says Cyprus made money laundering part of its business model.
Les Echos:
- ECB's Coeure Says France Must Stick to Commitments. Asked if
France's wish to delay its 2014 deficit reduction target would put
Europe's stability pact in danger, Benoit Coeure, French board member on
the ECB, said that the question is more important than France alone.
Behavior of big countries is "particularly important" in determining the
credibility of the stability pact, he said. France must stick to
commitment to cut 2013 structural deficit and the nominal deficit
increase must remain as small as possible. France needs spending cuts to
ensure mid-term credibility, he said.
Xinhua:
- Survey highlights opaque Chinese govt procurement. A survey of government procurement prices showed that nearly 80
percent of surveyed products were purchased at a price much higher than
market price, indicating irregularities in government procurement.
The survey was conducted by the Chinese Academy of Social Sciences in
Guangdong, Heilongjiang, Jiangxi and Fujian provinces. The survey
results were issued Monday. Of 19,020 surveyed products, mainly office
utilities, 15,190 were
purchased at a price higher than market price, the survey showed. For
instance, 18 million yuan ($2.88 million) was spent on 2,098
laptops, but only 13.73 million yuan would've been needed if they were
purchased at market price. China's government procurement law states that government procurement prices must be lower than the average market price. Tian He, head of the survey team and a researcher with the CASS, said
a lack of transparency and high procurement prices will invite public
suspicion. The volume of government procurement surged from 100.9 billion yuan
in 2002 to 1.13 trillion yuan in 2011, according to the survey.
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -2.36% 2) Education -2.35% 3) Homebuilders -1.82%
Stocks Falling on Unusual Volume:
- DEPO, WIFI, BSTR, SFUN, TNAV, BBVA, ABV, BP, DEO, BAC, PSO, DDD, CWH, DDS, PANL, TGP, SSYS, CG, MTD, HSNI, BGC, EXLP, DCI, BRY, MJN, FIRE, CCC, ESI, FFIV, ABAX, HAIN, CHK, ABG, UL and PLCE
Stocks With Unusual Put Option Activity:
- 1) ALXA 2) CVC 3) ADSK 4) STT 5) XLI
Stocks With Most Negative News Mentions:
- 1) PLCE 2) NVDA 3) RIG 4) BRY 5) HIG
Charts:
