Style Underperformer:
Sector Underperformers:
- 1) Steel -2.30% 2) Gaming -1.42% 3) Coal -1.41%
Stocks Falling on Unusual Volume:
- UIL, AMPE, CYOU, CLMT, ZOLT, NKTR, LL, DXCM, AZZ, ROYT, PODD, UAL, ACN, IGT, TS, CNH, IP, MSCC, ATRO, MKC, RKT, ANF, QIHU, BNNY, UNXL, LNKD and SAI
Stocks With Unusual Put Option Activity:
- 1) CTB 2) KSS 3) JCP 4) NKE 5) NSM
Stocks With Most Negative News Mentions:
- 1) JCP 2) AAPL 3) YELP 4) FB 5) TSLA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +.67% 2) Alt Energy +.55% 3) Software +.47%
Stocks Rising on Unusual Volume:
- HALO, MHR, BSBR, RDA, FINL, NKE, TSL and FL
Stocks With Unusual Call Option Activity:
- 1) MTW 2) NKTR 3) GERN 4) IP 5) ZOLT
Stocks With Most Positive News Mentions:
- 1) PEGI 2) T 3) FLIR 4) TASR 5) JOY
Charts:
Evening Headlines
Bloomberg:
- Soros Adviser Turned Lawmaker Sees Crisis by 2020: Japan Credit.
Takeshi Fujimaki, a former adviser to billionaire George Soros and now a
member of Japan’s upper house of parliament, said a fiscal crisis in
Asia’s second-biggest economy is inevitable and neither a higher sales
tax nor the 2020 Olympics will be able to stop it. “I decided to
become a politician because I think financial crisis will come sooner or
later,” Fujimaki said in a Sept. 24 interview in Tokyo. “This total
debt will continue to increase. I don’t think Japan can survive until
2020.”
- Japan Inflation Accelerates to Fastest Since 2008 on Energy. Consumer prices excluding fresh food increased 0.8 percent from a year earlier, the statistics bureau said today in Tokyo.
The median forecast of 30 economists surveyed by Bloomberg News
was for a gain of 0.7 percent. Stripping out energy and
perishables, prices fell 0.1 percent.
- Asia Stocks Set for Best Monthly Gain Since Sept. 2010. Tokyo
Electric Power Co. (9501) gained 7.5 percent as the operator of the
crisis-ridden Fukushima Dai-Ichi nuclear station received approval for
nuclear safety checks. Australand Property Group gained 1.3 percent in
Sydney after JPMorgan Chase & Co. advised buying shares of the
developer. Mirabela Nickel Ltd. (MBN) slumped 52 percent after the
Australian producer of the metal said it may
miss its output forecast. The MSCI Asia Pacific Index rose 0.1 percent to 140.66 as
of 9:53 a.m. in Hong Kong.
- Copper Drops, Paring Quarterly Gain, as Data Stoke Stimulus Bets. Copper declined for the first time
in three days, paring the biggest quarterly gain since March
2012, as reports showed the U.S. economy improved, boosting the
case that the Federal Reserve may reduce its stimulus.
The metal for delivery in three months on the London Metal
Exchange fell as much as 0.3 percent to $7,227 a metric ton and traded at $7,240.25 by 11:04 a.m. in Tokyo.
Wall Street Journal:
- No Clear Path to Avoid Shutdown as House GOP Stands Firm. Congress's rocky
path to avoiding a government shutdown became even rougher Thursday, as
Speaker John Boehner said the House wouldn't accept the spending plan
likely to emerge from the Senate.
The Ohio Republican's announcement
foreshadows a set of last-minute legislative volleys between the House
and Senate to fund federal agencies ahead of a deadline Monday, the
final day of the fiscal year. he Senate is expected to pass a bill Friday that would fund the
government for the first 1½ months of the new fiscal year. But Senate
Democrats plan to restore money for the Affordable Care Act that House
Republicans had stripped out, leaving the two chambers in conflict.
CNBC:
Zero Hedge:
Business Insider:
New York Times:
- Report Warns of Chinese Municipal Debt Risks. A report by Nomura said Thursday that Chinese
municipal debt, a focal point of major concern about the country’s
economy, had grown at an alarming 39 percent clip in recent years. The report by Nomura estimated that the financing vehicles used by local
governments to raise cash had created debts totaling at least 19
trillion renminbi, or $3.1 trillion, by the end of last year and posed a
“major risk to the economy.”
Mish's Global Economic Trend Analysis:
Reuters:
- Some U.S. brokers not policing 'hold' recommendations: regulator. Some securities
brokerages are struggling with an industry rule requiring, among other
things, policies to make sure that recommendations to hold securities
are appropriate for their investors, according to findings this week by
Wall Street's industry-funded watchdog.
The Financial Industry
Regulatory Authority (FINRA) rule, which took effect in July 2012,
required that investments recommended by brokerage firms be suitable for
investors at all times, and not just when investors buy them. In the
past, brokers mainly had to worry only that their "buy" and "sell"
recommendations were suitable at the time of sale.
Economic Information Daily:
- China's Local Debt May Have Doubled From End-2010.
New audit of local government debt shows size of debt may have almost
doubled from 2011 results, citing a person involved in the audit. China
found outstanding local government debt of 10.7t yuan at end-2010,
according to audit results released in 2011, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 149.50 +.5 basis point.
- Asia Pacific Sovereign CDS Index 116.25 -1.25 basis points.
- NASDAQ 100 futures +.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Personal Income for August is estimated to rise +.4% versus a +.1% gain in July.
- Personal Spending for August is estimated to rise +.3% versus a +.1% gain in July.
- The PCE Core for August is estimated to rise +.1% versus a +.1% gain in July.
9:55 am EST
- Final Univ. of Mich. Consumer Confidence for September is estimated to rise to 78.0 versus a prior estimate of 76.8.
Upcoming Splits
Other Potential Market Movers
- The Fed's Dudley speaking, Fed's Evans speaking, Fed's Rosengren speaking, Fed's Evans speaking, Eurozone CPI Report, Eurozone Consumer Confidence Report and the Eurozone Industrial Production Report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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
25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.34 +2.36%
- Euro/Yen Carry Return Index 138.96 +.08%
- Emerging Markets Currency Volatility(VXY) 10.04 +1.1%
- S&P 500 Implied Correlation 46.72 -1.37%
- ISE Sentiment Index 80.0 -4.76%
- Total Put/Call .71 -26.04%
Credit Investor Angst:
- North American Investment Grade CDS Index 79.86 +.34%
- European Financial Sector CDS Index 140.72 +3.26%
- Western Europe Sovereign Debt CDS Index 85.0 +.37%
- Emerging Market CDS Index 282.97 +2.80%
- 2-Year Swap Spread 13.25 +.25 basis points
- TED Spread 25.25 +2.0 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -6.25 -1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .00% -1 basis point
- Yield Curve 230.0 +2 basis points
- China Import Iron Ore Spot $133.80/Metric Tonne unch.
- Citi US Economic Surprise Index 47.8 +.8 point
- Citi Emerging Markets Economic Surprise Index 3.90 -1.6 points
- 10-Year TIPS Spread 2.20 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +59 open in Japan
- DAX Futures: Indicating -1 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 25% Net Long
Bloomberg:
- China Stocks Drop to 3-Week Low as Free-Trade Firms Fall. China’s
stocks fell to the lowest level in almost three weeks as companies
linked to the Shanghai free-trade zone tumbled amid concern gains were
excessive. Shanghai International Port Group Co. (600018) and
Shanghai Material Trading Co. slumped by the 10 percent daily limit
after more than doubling this quarter. Haitong Securities Co.
(600837), the country’s second-largest listed brokerage by market value,
declined for a third day after saying it plans to buy a Shanghai-based
leasing company from private-equity firm TPG. The Shanghai Composite
Index (SHCOMP) dropped 1.9 percent to 2,155.81 at the close, the lowest
level since Sept. 6. China’s local markets will be shut Oct. 1-7 for
National Day holidays. The statistics bureau is due to release August
data on industrial companies’ profits at 9:30 a.m. tomorrow.
Shanghai International Port traded at 27.5 times 12-month projected
earnings on Sept. 25, the highest level since April 2010, according to
data compiled by Bloomberg. Shanghai Jielong Industry Corp. (600836)
slumped 10 percent to 10.12 yuan after saying in an exchange statement
that the approval of the Shanghai free-trade zone will have no direct
impact on the
company’s earnings in the short term. The stock jumped 50
percent in the past month through yesterday.
- European Stocks Little Changed as U.S. Jobless Decline.
European stocks were unchanged as
data showing the number of Americans filing jobless claims
unexpectedly fell last week offset investor concern that budget
wrangling in Washington will lead to a government shutdown. Ladbrokes
(LAD) Plc plunged to its lowest price in almost a year after issuing a
profit warning for its digital division. Thomas Cook Group Plc slid 6.6
percent after it said winter bookings have slowed. Hennes & Mauritz
AB (HMB), Europe’s second-biggest clothing retailer, rose to its highest
price after posting third-quarter profit that beat analysts’ estimates.
The Stoxx Europe 600 Index was unchanged at 313.02 at the
close of trading.
- WTI Rebounds From 12-Week Low; Iran Diplomats in New York.
WTI for November delivery was up 42 cents at $103.08 a barrel on the
New York Mercantile Exchange as of 1:51 p.m. London time, after falling
by 46 cents earlier today. WTI settled yesterday at the lowest close
since July 3. The volume
of all futures traded was 42 percent below the 100-day average.
Prices are up 5.2 percent this quarter and 12 percent higher in
2013.
- House Debt-Cap Conditions Hit Resistance in Budget Fight. House Republican leaders offered a
proposal today to increase the U.S. debt ceiling that drew
protests from some members as the disputes over federal spending
risk a government shutdown in four days. The leaders are
preparing for what House Speaker John Boehner last month called a “whale
of a fight” on the debt limit. They think they would win public support
for pairing
spending cuts, looser regulations and an Obamacare delay with
the increase in the debt cap rather than risking a government
shutdown over the budget on Oct. 1.
- Lacker Says Expanding Fed Assets Increases Costs of Any Missteps.
Federal Reserve Bank of Richmond
President Jeffrey Lacker, who voted repeatedly last year against
expanding stimulus, said the Fed’s $3.72 trillion-dollar balance sheet
and guidance on the likely path of interest rates increase the risks and
costs of policy mistakes. “My concern is that the combination of
forward guidance and a very large balance sheet has raised the
likelihood of policy mistakes going forward, and also has raised the
cost of such mistakes, should they occur,” Lacker said today in a speech at the Swedbank Economic Outlook Seminar in Stockholm. “When a central bank uses its independent balance sheet to
choose among private sector assets, it invites special pleading
from interest groups and risks entanglement in distributional
politics,” Lacker said. “Of the risks associated with unconventional monetary
policies, those associated with central bank holdings of
unconventional asset classes may be the most consequential,” he
said.
- Democrat Manchin Breaks Ranks to Back Mandate Delay.
U.S. Senator Joe Manchin of West Virginia broke ranks with fellow
Democrats and said he’d support a stopgap spending plan that delays the
individual mandate in President Barack Obama’s health-care law. “There’s
no way I could not vote for it,” Manchin said at
a Bloomberg Government breakfast today. “It’s very reasonable
and sensible.” “Don’t put the mandate on the American public right now,”
Manchin said. “Give them at least a year. If you know you
couldn’t bring the corporate sector, you gave them a year, don’t
you think it’d be fair?”
- Americans Reject by 61% Obama Demand for Clean Debt Vote.
Americans by a 2-to-1 ratio disagree with President Barack Obama’s
contention that Congress should raise the U.S. debt limit without
conditions. Instead, 61 percent say that it’s “right to require
spending cuts when the debt ceiling is raised even if it risks default,”
because Congress lacks spending discipline, according to a Bloomberg
National Poll conducted Sept. 20-23. That sentiment is shared by almost
three-quarters of Republicans, two-thirds of independents, and a
plurality of Democrats. Just 28 percent of respondents backed Obama’s
call for a clean bill that has no add-on provisions. “Sometimes it
can be hard to negotiate if Republicans are making irrational demands,
but to say ‘I’m not going to talk at all’ -- I’ve just never found
not negotiating to be an effective way to get something done,” Sam
Manders, a 29-year-old lacrosse coach from Gray, Maine, and a Democrat,
said in a follow-up interview.
- Boomers Face Caregiver Shortage as U.S. Offers New Rules: Jobs.
Fewer Americans signed contracts in August to buy previously owned
homes, a sign that rising mortgage rates may have slowed housing market
momentum. The index of pending home sales fell 1.6 percent, after a
revised 1.4 percent decrease in July that was bigger than initially
reported, figures from the National Association of Realtors showed today
in Washington. Economists forecast a 1 percent decline in the gauge
from the month before, according to a median estimate in a Bloomberg survey.
- Iron-Ore
Freight Swaps for 4Q Slump 8.6% to $29,250/d: Clarkson. Biggest one-day
decline for Capesize contracts since Jan. 8. Spot shipping rates slide
3.3% to $40,813/day today: Baltic Exchange data.
- Negative Rates on Treasury Bills Show Little Debt-Limit Concern. A slide below zero in rates on some
Treasury bills that mature beyond October shows investors have
little angst lawmakers may fail to agree on a debt limit. Treasury
bills that mature as soon as November traded below
zero today, with the bill maturing on Nov. 29 having a negative
0.005 percent rate at 2:02 p.m. New York time. The three-month bill rate
was negative 0.0051 percent, compared to 0.0152 percent yesterday.
Treasury bills that mature on Oct. 24 were at
a rate of 0.038 percent, up from 0.018 percent yesterday.
Wall Street Journal:
- Boehner Weighs GOP Options on Spending Bill as Shutdown Looms. House Speaker Says Measure Must Include Some Republican Provisions. House Speaker John Boehner (R., Ohio) said the House is unlikely to pass a short-term spending
bill to keep the government funded beyond Monday if it doesn't include
policy proposals favored by GOP lawmakers.
- Mortgage Trouble in Chinese City. Borrowers Walk Away From Homes in Wenzhou. Tighter credit and falling housing prices in the eastern Chinese city of Wenzhou
have led to a wave of mortgage defaults and abandoned properties in the city,
where persistent property-price drops have flown in the face of a national
upturn in prices. Homeowners in the city have abandoned 580 homes and there are another 15
cases of mortgages in default, according to a national state-radio broadcast
citing a local official in charge of investigating mortgage defaults. The
broadcast, which followed local-media reports of more widespread defaults,
didn't give a timeframe for the cases cited, and the official numbers are hardly
staggering. But the trend is noteworthy because Chinese property buyers have typically
preferred to hang on to their investments rather than surrender to a sinking
market. Credit problems are the key reason behind the rising number of buyers
who walk away from their purchases, the official said.
Barron's:
CNBC:
Zero Hedge:
Business Insider:
New York Times:
Reuters:
- Mexico to escape recession after floods, but risks to growth rise: Reuters poll. Mexico is
unlikely to be dragged into recession by severe flooding that has laid
waste to large areas of farmland, destroyed homes and killed dozens of
people, but the flooding has increased risk, a Reuters poll showed on
Wednesday.
Mexican gross domestic product
(GDP) suffered a surprise contraction of 0.7 percent in the second
quarter compared with the previous three month period after eking out
growth of less than one tenth of a point in the January-March period. That stumbling performance has put Latin America's second biggest economy on track for its worst year since 2009.
- Italian bond yields rise as political tensions flare anew. Italian government bond yields
jumped on Thursday as tensions within the country's fragile
governing coalition flared up again, a day before an auction at which Italy aims to raise up to 6 billion euros.
Italian bonds underperformed all other euro zone paper as centre-right
deputies supporting former premier Silvio Berlusconi renewed threats to
resign if their leader is expelled
from parliament after a tax fraud conviction.
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -1.77% 2) Oil Tankers -.76% 3) Homebuilders -.50%
Stocks Falling on Unusual Volume:
- SZYM, AWAY, LGND, WIN, CLMT, TEO, INXN, TCPC, WPRT, FUR, HTZ, CZR, JBL, CAR, RUE, XONE, LLY, TTF, BERY, GCAP, CLFD, PBH, SNX, ECOM, EHTH, AI, JOBS and ENSG
Stocks With Unusual Put Option Activity:
- 1) LAMR 2) NIHD 3) JBL 4) BBBY 5) JCP
Stocks With Most Negative News Mentions:
- 1) PBR 2) BBRY 3) Z 4) F 5) TSLA
Charts:
