Broad Equity Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.55 -.55%
- Euro/Yen Carry Return Index 153.58 -.03%
- Emerging Markets Currency Volatility(VXY) 7.59 -.52%
- S&P 500 Implied Correlation 30.38 unch.
- ISE Sentiment Index 116.0 -9.38%
- Total Put/Call 1.0 +28.21%
Credit Investor Angst:
- North American Investment Grade CDS Index 60.90 -.70%
- European Financial Sector CDS Index 62.63 +.21%
- Western Europe Sovereign Debt CDS Index 28.97 +.38%
- Asia Pacific Sovereign Debt CDS Index 62.94 +1.35%
- Emerging Market CDS Index 269.03 -.92%
- China Blended Corporate Spread Index 322.79 -.59%
- 2-Year Swap Spread 19.25 -3.0 basis points
- TED Spread 22.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -8.0 +1.5 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% +1 basis point
- Yield Curve 175.0 -6.0 basis points
- China Import Iron Ore Spot $69.58/Metric Tonne -1.19%
- Citi US Economic Surprise Index 16.40 +3.0 points
- Citi Eurozone Economic Surprise Index -23.70 +1.6 points
- Citi Emerging Markets Economic Surprise Index .3 +.3 point
- 10-Year TIPS Spread 1.86 -2.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +19 open in Japan
- DAX Futures: Indicating +13 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
Bloomberg:
- Germany Vows to Keep Russia Sanctions for Ukraine Impasse. German Chancellor Angela Merkel said
sanctions against Russia will stay as long as the government in
Moscow does little to resolve the conflict in Ukraine. “We’re working on a diplomatic resolution to this
crisis,” Merkel said today in Berlin. “As long as Russia
contributes very little or nothing to overcome this crisis, we
need economic sanctions. They’re unavoidable, although I know
they impact the German and the European economies.” The stance underscores the growing resolve among Ukraine’s
allies as violence between separatists and government troops
sidelines diplomatic efforts to reach a negotiated outcome.
France today ruled out delivery of a warship to Russia.
- Emerging Stocks Decline as Energy Shares Slide; Ruble Weakens. Emerging-market stocks fell from a
three-week high as Chinese energy producers sank and investors
bet yesterday’s rally in Hong Kong was excessive. Russia’s ruble
ended a six-day gain. Brazilian shares rallied. OAO Tatneft dropped 1.5 percent in Moscow and Saudi Basic
Industries Corp. led a 1.8 percent decline in Saudi Arabian stocks. The
Hang Seng China Enterprises Index (HSCEI) dropped 0.6 percent after its
biggest increase in a year yesterday. PetroChina Co. (857) and China
Petroleum & Chemical Corp. slid at least 2.3 percent. Brazil’s
Ibovespa gained 0.4 percent. The ruble weakened 2.1 percent against the
dollar. The MSCI Emerging Markets Index declined 0.3 percent to
1,008.70 at 11:11 a.m. in New York.
- European Stocks Extend Two-Month High as Germany’s DAX Rallies. European stocks rose, extending a
two-month high as German equities posted their longest winning
streak since May 2013.
The Stoxx Europe 600 Index gained 0.2 percent to 346.28 at the close
of trading, after earlier rising as much as 0.6 percent. The DAX Index
(DAX) climbed 0.8 percent.
- Oil Drops as Producers Fail to Deliver Output Pledge.
Brent for January settlement lost $1.26, or 1.6 percent, to
$78.42 a barrel at 12:08 p.m. New York time on the London-based
ICE Futures Europe exchange. The volume of all futures was 5.2
percent above the 100-day average.
- Iron Ore Drops Below $70 for First Time Since ’09 as Glut Widens.
Iron ore traded below $70 for the first time in five years as rising
low-cost supplies by the world’s top miners widen a global glut amid
slowing demand from China, the biggest user. Ore with 62 percent
content delivered to Qingdao fell 1.2 percent to $69.58 a dry metric ton
today, the lowest since June 2009, data from Metal Bulletin Ltd.
showed. Prices are heading for a 13 percent loss this month, the most
since May. Iron ore slumped 48 percent this year as surging output from
Rio Tinto Group (RIO), BHP Billiton Ltd. and Vale SA, the three
largest miners, spurred a glut.
- Million-Dollar Home Sales Gains Slow in Investor Markets. Growth
in million-dollar home sales
is slowing in areas including Miami, Las Vegas and Los Angeles as rising
prices and the strengthening U.S. dollar discourage foreign investors
who helped lead the recovery. In seven investor-heavy markets -- the
Los Angeles, Riverside and Ventura areas of Southern California; Las
Vegas; and Florida’s Fort Lauderdale, Miami and Orlando -- sales of
homes for $1 million or more rose 5 percent in the third quarter from a
year earlier, compared with a 46 percent surge in the
same part of 2013, data compiled by brokerage Redfin Corp. show.
- Ferguson Rocked by Decision: Scenes From the Night. (video)
- More Medicine Goes Off Limits In U.S. Drug-Price Showdown. Steve
Miller is waging war on high-priced medicine, guiding decisions to ban
drugs from the health plans of millions of Americans and sending
companies reeling in a $270 billion market. He and his colleagues at Express Scripts Holding Co. (ESRX) say they are just getting started.
Wall Street Journal:
ZeroHedge:
Business Insider:
Reuters:
Frankfurter Allgemeine Zeitung:
- Russian Economy Minister Compares Sanctions to 'Avalanche'.
Russia's economy is feeling the effects of sanctions in access to global
capital markets, balance of payments, outflow of capital, currency,
inflation, citing interview with Economy Minister Alexei Ulyukaev.
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.91% 2) Oil Service -1.31% 3) Energy -1.23%
Stocks Falling on Unusual Volume:
- MNRO, AVG, WDAY, HDB, BECN, CASY, ANFI, HRL, DEO, DANG, GRMN, P, VAL, DAKT, HAL, OC, IBN, LXFT, CEO, EPZM, WAGE, PXD, RLI, SNN and NFLX
Stocks With Unusual Put Option Activity:
- 1) COP 2) EWY 3) F 4) XLE 5) DE
Stocks With Most Negative News Mentions:
- 1) P 2) BAC 3) JAH 4) LVLT 5) CNX
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +.95% 2) Airlines +.78% 3) HMOs +.22%
Stocks Rising on Unusual Volume:
- AERI, DSKY, DY, NES, SIG, POST, PANW, QIHU, VDSI and BWS
Stocks With Unusual Call Option Activity:
- 1) TIBX 2) AEO 3) QEP 4) OAS 5) HST
Stocks With Most Positive News Mentions:
- 1) TJX 2) PANW 3) WERN 4) NUAN 5) TIF
Charts:
Evening Headlines
Bloomberg:
- Abe Sales Tax Backfiring With More Debt Not Less: Japan Credit. What started as a plan to reduce
Japan’s debt is turning into a reason to issue more bonds. Prime Minister Shinzo Abe’s administration implemented a
higher sales tax in April to boost revenue as government liabilities ballooned to 1 quadrillion yen ($8.5 trillion), more
than double the nation’s yearly economic output. Consumption
plunged and the economy fell into a recession, prompting
companies including Mirae Asset Global Investments Co. and High
Frequency Economics to predict even more sovereign debt sales to
revive growth.
- Singapore Predicts 3% Growth This Year as Global Outlook Falters.
Singapore said a global slowdown in the final months of the year will
cap full-year economic growth at about 3 percent before an uneven
recovery in 2015. The island’s expansion will probably ease after gross
domestic product rose 3.3 percent in the first three quarters from a
year earlier, the Ministry of Trade and Industry said today. GDP grew
2.8 percent in the three months through September from a year earlier,
and gained an annualized 3.1 percent from the second quarter, more than
an October estimate.
- ECB’s Coeure Says Officials Won’t Rush as They Debate All Assets.
The European Central Bank won’t make a hasty decision to add more
stimulus and will hinge any measures on incoming economic data,
Executive Board member
Benoit Coeure said. “We’ll have to understand how what we’ve already decided
works -- we’re not going to rush to a new decision without
knowing,” Coeure said yesterday in an interview with Bloomberg
Television’s Francine Lacqua. “We have to look at the data
around us, and we have to discuss thoroughly all possible
options in particular when it comes to buying new assets.
There’s unanimous agreement in the Governing Council that there
might be situations where we’d have to do more.”
- Asian Stocks Advance Third Day as Japan Plays Catch-Up.
Asian stocks rose, with the regional benchmark gauge heading for a
three-day advance, as consumer and industrial shares climbed as Japanese
stocks rallied after a holiday. The MSCI Asia Pacific Index (MXAP) added 0.1 percent to 140.62 as
of 9:03 a.m. in Tokyo.
- Hagel Exit Shows Obama Has Taken Power Away From Pentagon.
President Barack Obama pushed Defense Secretary Chuck Hagel out of his
job today after less than 21 months, with White House officials citing
disagreements over Iraq and Syria policy. Hagel, who had grown increasingly frustrated with tight
White House management of policy, was ready to go anyway, a U.S.
defense official said. He resigned without a fight.
Wall Street Journal:
Fox News:
- Grand jury in Ferguson case does not indict officer in Michael Brown shooting. Protesters fired about 100 gunshots, burned buildings, looted stores
and vandalized police cars in Ferguson, Mo. Monday night after a grand
jury did not indict a police officer who shot and killed an unarmed
black teenager in August. Heavily armed police fired pepper spray and smoke canisters to disperse the crowd of protesters. It was not immediately clear if there were any injuries or if anyone had been arrested.
CNBC:
- David Tepper to return billions to clients. Billionaire money manager David Tepper plans to return
billions of dollars to clients amid a year of poor performance by his
hedge funds. Appaloosa Management will return between 10
percent and 20 percent of investor assets by the end of 2014, according
to a person familiar with the firm.
Zero Hedge:
Business Insider:
China Securities Journal:
- China Rate Cut Isn't Start of Full-Scale Stimulus. China can't go
back to the old ways of boosting investment with stimulus and leading
to an asset bubble, according to a front-page commentary. Long-term
costs would be higher if China continues to cut benchmark interest rates
to control financing costs, the commentary said.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 62.0 -2.0 basis points.
- NASDAQ 100 futures -.10%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- 3Q GDP is estimated to rise +3.3% versus a prior estimate of a +3.5% gain.
- 3Q Personal Consumption is estimated to rise +1.9% versus a prior estimate of a +1.8% gain.
- 3Q Core PCE is estimated to rise +1.4% versus a prior estimate of a +1.4% gain.
9:00 am EST
- The FHFA House Price Index for September is estimated to rise +.4% versus a +.5% gain in August.
- The 3Q Hour Price Purchase Index is estimated to rise +1.0% versus a +.81% gain in 2Q.
- The S&P/CS 20 City Home Price Index MoM SA for September is estimated to rise +.3% versus a -.15% decline in August.
10:00 am EST
- The Consumer Confidence Index for November is estimated to rise to 96.0 versus 94.5 in October.
- The Richmond Fed Manufacturing Index for November is estimate to fall to 16.0 versus 20.0 in October.
Upcoming Splits
Other Potential Market Movers
- The
German GDP report, $35B 5Y T-Note auction, US weekly retail sales
reports and the (JEC) analyst day could also impact trading today.
BOTTOM LINE: Asian
indices are mostly lower, weighed down by commodity and industrial
shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 12.56 -2.64%
- Euro/Yen Carry Return Index 153.62 +.77%
- Emerging Markets Currency Volatility(VXY) 7.66 -1.42%
- S&P 500 Implied Correlation 30.38 +.3%
- ISE Sentiment Index 121.0 +45.78%
Credit Investor Angst:
- North American Investment Grade CDS Index 61.74 -3.16%
- European Financial Sector CDS Index 62.50 -2.85%
- Western Europe Sovereign Debt CDS Index 28.55 -7.0%
- Asia Pacific Sovereign Debt CDS Index 62.61 -2.0%
- Emerging Market CDS Index 270.80 +.32%
- China Blended Corporate Spread Index 324.71 -.75%
- 2-Year Swap Spread 22.25 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.5 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% +1 basis point
- China Import Iron Ore Spot $70.42/Metric Tonne +.16%
- Citi US Economic Surprise Index 13.40 -6.5 points
- Citi Eurozone Economic Surprise Index -25.30 +10.7 points
- Citi Emerging Markets Economic Surprise Index 0.0 +1 point
- 10-Year TIPS Spread 1.88 unch.
Overseas Futures:
- Nikkei Futures: Indicating +158 open in Japan
- DAX Futures: Indicating -3 open in Germany
Portfolio:
- Higher: On gains in my tech/retail/biotech/medical sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
