Style Underperformer:
Sector Underperformer:
- 1) Hospitals -.63% 2) Networking -.61% 3) Gaming -.40%
Stocks Faling on Unusual Volume:
- INFA,
QLIK, MPEL, MXWL, THC, LPNT, ASIA, NTAP, UAL, NUVA, BWP, STWD, HMSY,
SRPT, GMED, OPTR, MSCI, ISCA, BAH, TDC, MAKO, ICFI, ENDP, MCRS, KSS,
TMH, ROST, BPL, ELLI, ENS, AVY and MANT
Stocks With Unusual Put Option Activity:
- 1) EWA 2) MBI 3) MRO 4) MAR 5) KBE
Stocks With Most Negative News Mentions:
- 1) NUVA 2) APA 3) YUM 4) TSLA 5) RKT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Coal +4.79% 2) Gold & Silver +2.15% 3) Banks +1.68%
Stocks Rising on Unusual Volume:
- TTWO, MFRM, OCN, NFLX and BKS
Stocks With Unusual Call Option Activity:
- 1) PCS 2) TJX 3) RENN 4) MDRX 5) VWO
Stocks With Most Positive News Mentions:
- 1) COST 2) ROST 3) TJX 4) CRM 5)PCS
Charts:
Evening Headlines
Bloomberg:
- Romney in Debate Says Obama Favors ‘Trickle-Down Government’. Republican presidential nominee Mitt Romney said President Barack Obama favors a form of “trickle-
down government” that will result in more taxes and
regulations, as the two met in their first debate in the race
for the White House. “That’s not the right answer for America,” Romney, 65,
said tonight at the University of Denver.
- Draghi Stares at Spain as Bond Brinkmanship Keeps ECB Waiting. Mario
Draghi is waiting for Spain to get back to him on whether his plan to
save the euro is needed. One month after the European Central Bank
president unveiled an unprecedented bond purchase program to rescue
Europe’s embattled southern fringe, Spanish Prime Minister Mariano Rajoy
is showing reluctance to ask for the aid he pushed for with Italy on
concern about the terms attached to it. As ECB
policy makers meet in Slovenia today, Spanish 2-year note yields are
more than 50 basis points higher than the five-month low touched on
Sept. 7, the day following their last decision. “We’re back at this
game of brinkmanship between the ECB and governments again, and it’s a
case of who makes some concessions first,” said Nick Matthews,
senior European economist at Nomura International Plc in London. “The
markets will continue to play a significant role here and Draghi needs
them to turn up the pressure.” Spain will face a test of that pressure today as it sells
as much as 4 billion euros ($5.2 billion) of bonds after Finance
Minister Luis De Guindos said that officials are still
considering whether they actually need ECB help.
- Spain
Off Balance-Sheet Debt Worsens Rajoy's Battle: Euro Credit. Liabilities
that the Spanish government has held off its balance sheet are winding
up on the taxpayers' tab , threatening Prime Minister Mariano Rajoy's
efforts to haul the economy out of a five-year slump. Government debt
will leap 17 percentage points to 85% of gdp this year as the state
absorbs the cost of bailing out banks, the power system and public
contractors.
- France’s LBO Firms Predict ‘Death’ From Hollande’s 75% Carry Tax. French private-equity fund managers
are predicting their own exile if lawmakers back President
Francois Hollande’s proposed tax increases on the profit the
industry makes from investments. Hollande, who released his first
annual budget on Sept. 28,
plans to tax fund managers’ share of the profit from their
investments, known as carried interest, at a rate of as much as
75 percent, part of a wider effort to increase taxes on the wealthy and
narrow the country’s deficit. France also plans to as much as double
taxes on capital gains and restrict the amount
of debt interest payments a company can deduct from its taxable
income, a measure that will reduce returns on leveraged buyouts.
Lower levies in the U.K. will lure professionals across the
English Channel from where they can still try to buy French
companies, Parisian dealmakers say.
- European Banks Told to Hold On to $258 Billion of Fresh Capital.
The European Union’s top banking regulator told the bloc’s lenders to
hold on to more than 200 billion euros ($258 billion) in capital raised
to pave the way for tougher global standards. The 27 banks that were
required by the European Banking Authority to submit plans for their
capital raising attained a total of 116 billion euros, the London-based
EBA said yesterday.
Including aid to Greek and Spanish banks, European lenders
increased their capital reserves by more than 200 billion euros
since 2011, according to an EBA report published on its website.
- No
Use in Competitive QE, Intervention, Japan's Sakakibara Says. Japan and
other advanced economies are reaching the limit of what they can do to
stimulate growth through monetary easing, said Eisuke Sakakibara, a
former Ministry of Financial officials.
- India Slowdown Thwarts Carmakers’ Sales Search Beyond U.S. With sales crashing in Europe and
slowing in China, carmakers are looking for signs of growth
beyond the U.S. market. In India, it’s not looking good. The holiday season, just under way there, typically
accounts for about a quarter of new auto purchases. This year,
the market is uncharacteristically moribund as the economy is
projected to grow at its slowest pace in a decade. That’s
especially tough for Hyundai Motor Co. (005380) and Tata Motors Ltd. (TTMT), the
second- and third-biggest carmakers by volume in India. “Everyone is counting on India to deliver future growth,”
said Deepesh Rathore, the New Delhi-based India managing
director of IHS Automotive, an industry-research company. “The
festive season is a trigger for sales in the second half.”
- Applied Materials(AMAT) to Cut Up to 9 Percent of Staff Amid Slump. Applied Materials Inc. (AMAT), the largest producer of chipmaking equipment, plans to eliminate as much as
9 percent of its workforce as lackluster personal-computer
demand leads customers to slow orders for manufacturing tools. The company will cut 900 to 1,300 jobs, resulting in pretax
costs of $180 million to $230 million, through a voluntary
retirement program and other actions. The restructuring will
save $140 million to $190 million a year, Santa Clara,
California-based Applied Materials said in a statement today.
- Chemical
Bond Risk at Record on China Slowdown: Japan Credit. The bond risk of
Japanese manufacturers that rely on China as a market for chemicals used
in plastics, resins and adhesives jumped to records on faltering
domestic output and signs of continued cooling in the world's
second-biggest economy. Credit-default swaps on Mitsui Chemicals Inc.
increased 183 basis points last quarter, reaching a record of 390 on
Sept. 26, CMA data show. Contracts on Sumitomo Chemical Co., Japan's
second-largest maker of the products, climbed 161 in the period,
reaching their highest level ever at 284 on the same day.
- Precious
Metals Are 'Standout Exposures', Morgan Stanley Says. Gold, silver and
platinum are "standout exposures" in current environment, bank says.
Precious metals to provide absolute positive performance. Silver to
provide relative outperformance. Aluminum, nickel, lead, zinc in
oversupply, vulnerable to renewed growth concerns.
Wall Street Journal:
- Candidates Spar Over Taxes. Obama, Romney Lay Out Differing Views of Government, Regulation, Deficit Cuts. Cutting to the heart of their differences, President Barack Obama and
Republican Mitt Romney laid out contrasting visions for the federal
government in their first debate in Denver, sparring over tax-cut
proposals, regulations and deficit-reduction plans. Mr. Romney cast Mr. Obama as a champion of big government and spending
who would raise taxes on job-creating small businesses, calling his
approach "trickle-down government."
- Small Businesses Fear Fiscal Cliff Awaits at Year-End. Many small-business executives said they have little confidence that
lawmakers and the president will be able to avoid a fiscal cliff by
December 31. A survey of 833 business owners released Wednesday found
that 47% of
small-business owners and chief executives said they don't expect the
country will avoid the tax increases and deep spending cuts that are set
to take effect at year-end unless Congress and President Barack Obama
agree on a new deficit-reduction plan. In comparison, 38% of respondents
said they thought lawmakers would be able to reach an agreement.
Another 14% weren't sure.
- Henninger: 2012's Sure Losers—Young People. Hi, I'm Marty and I'll be your waiter for the next 40 years.
- Can We Believe the Presidential Polls? Last week's CBS/New York Times poll had Obama ahead by nine points in Florida. That's not very likely.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Forbes:
CNN:
- CNN Poll: Romney wins debate by big margin. Sixty-seven percent of registered voters who watched the debate said GOP
nominee Mitt Romney won the debate, while 25% said President Barack
Obama came out as the winner, according to a CNN/ORC International Poll
released late Wednesday night.
Reuters:
- Tennessee fungal meningitis outbreak spreads to other states. State and federal
health officials said on Wednesday that they expected more cases to be
reported in a deadly outbreak of fungal meningitis they believe is
linked to steroid injections given for pain at two clinics in Tennessee. So far two people have died and
18 others have been sickened in Tennessee from meningitis linked to the
outbreak. Four other states have reported cases, with a total of 26
illnesses and four deaths, said Centers for Disease Control and
Prevention spokesman Curtis Allen. In
addition to the 18 who are sick in Tennessee, one case has been
reported in North Carolina, two in Florida, three in Virginia and two in
Maryland. The other deaths include one each in Virginia and in
Maryland, Allen said.
- U.S. strip mall recovery stalls in the third quarter. The nascent recovery at U.S.
strip malls stalled in the third quarter as retail sales
struggled. But large regional malls continued to rebound, driven
by top-quality malls with high-end department and specialty
stores, real estate research firm Reis Inc said Thursday. The retail real estate sector has been among the hardest hit
in commercial property. At the mercy of consumer spending, the
sector has reflected the diverse pressures and changes since the
housing crisis began in 2007.
- Island plans by Tokyo's nationalist governor may stoke fresh China tensions. Tokyo
Governor Shintaro Ishihara, a fiery nationalist whose failed bid to buy
a group of disputed islands ignited a crisis with China, is pushing
ahead with a plan to build structures there to hammer home Japan's claim, officials involved told Reuters. Although such a move is not imminent, it would be certain to
strain Japan's already shaky relations with China and could
prompt a rebuke from the Obama administration, which has urged
both sides to ease tensions by setting aside the dispute. Ishihara's gambit appears aimed at forcing a new showdown in
the island dispute with China.
- Morgan Stanley(MS) in talks to sell majority of commodity business - FT. Morgan Stanley is in talks to sell
a majority stake in its commodities business to the Qatar
Investment Authority, the Financial Times said, quoting people
familiar with the deal.
- World Bank lowers Latin American growth forecast to 3 pct. Economic growth in Latin
America will be lower than previously estimated due to the
continuing worldwide slowdown, the World Bank said in a report
on Wednesday. It forecast growth at 3 percent this year, below its
previous projection of 3.5 to 4 percent.
Telegraph:
Ming Pao Daily:
- Hong
Kong's number of visitors from mainland China fell 10% from a year
earlier to 456,000 in the first four days of the week-long Golden Week
holidays, citing figures from the city's Immigration Department. Michael
Tien, founder of clothing retailer G2000 Group, said sales from
mainland China visitors dropped 30% in the first two days of the
holiday, according to the report.
Wen Wei Po:
- Mainland
China Buyers of Hong Kong Homes Fall 20%. Buyers from China account for
10-20% of property in Hong Kong at present, compared with more than 30%
previously, citing Fung Lam, Centaline's associate director of project
development and investment. Interest from mainland buyers has declined
because of rising prices, a slowing Chinese economy and a booming
property market in Shenzhen, Lam said.
Evening Recommendations
Piper Jaffray:
- Rated (QDEL) Overweight, target $26.
Night Trading
- Asian equity indices are -.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 132.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 114.25 -2.5 basis points.
- FTSE-100 futures +.23%.
- S&P 500 futures +.44%.
- NASDAQ 100 futures +.51%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 370K versus 359K the prior week.
- Continuing Claims are estimated to rise to 3275K versus 3271K prior.
10:00 am EST
- Factory Orders for August are estimated to fall -5.9% versus a +2.8% gain in July.
2:00 pm EST
Upcoming Splits
Other Potential Market Movers
- The
ECB rate decision, BoE rate decision, ECB's Draghi speaking, Fed's
Bullard speaking, Challenger Jobs Cuts report for September, RBC
Consumer Outlook Index for October, weekly Bloomberg Consumer Comfort
Index, weekly EIA natural gas inventory report and the (ORCL) analyst
meeting could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by automaker and financial 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.
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 15.53 -1.15%
- ISE Sentiment Index 115.0 -24.68%
- Total Put/Call .94 +30.56%
- NYSE Arms .91 -21.56%
Credit Investor Angst:
- North American Investment Grade CDS Index 96.55 bps -1.8%
- European Financial Sector CDS Index 187.23 bps -4.09%
- Western Europe Sovereign Debt CDS Index 144.17 bps -.80%
- Emerging Market CDS Index 216.31 bps -.85%
- 2-Year Swap Spread 13.50 -.75 basis point
- TED Spread 26.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -26.0 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .09% unch.
- Yield Curve 138.0 unch.
- China Import Iron Ore Spot $104.20/Metric Tonne unch.
- Citi US Economic Surprise Index 17.40 +6.5 points
- 10-Year TIPS Spread 2.47 -1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +43 open in Japan
- DAX Futures: Indicating -10 open in Germany
Portfolio:
- Higher: On gains in my Biotech/Medical/Retail/Tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and covered some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Global Services Weaken as Europe Slides Into Recession: Economy. Services
industries from Asia to Europe cooled last month after the euro-area
debt crisis pulled economies including Spain and Italy into recession
and damped global growth prospects. The purchasing managers’ index
fell to 53.7 in September from 56.3 in August, the National Bureau of
Statistics and China Federation of Logistics and Purchasing in Beijing
said today. That’s the lowest since at least March 2011. In the
euro-area, a gauge slipped to 46.1 last month from 47.2 and a U.K.
measure also fell. Readings below 50 indicate contraction.
- BNP Is Coming Under Pressure With SocGen to Isolate Risk. French lenders’ trading assets have
grown to almost match the size of the nation’s economy, making them vulnerable to government efforts to wall off banking risk.
Investment-banking units of BNP Paribas SA (BNP), Societe Generale SA,
Credit Agricole SA (ACA) and Natixis (KN) SA have 2.05 trillion euros
($2.64 trillion) in trading assets, including bonds, equities and
derivatives, data compiled from the banks show. That’s a 21 percent jump
in the 12 months to June and a two-year high, just shy of France’s
$2.77 trillion gross domestic product.
- U.S. States Teetering on Brink of Fiscal Cliff, Ganeriwala Says. The possibility of automatic federal budget cuts threatens U.S. states’ well-being, even as their revenue recovers,
said Manju Ganeriwala, the incoming president of the National
Association of State Treasurers. “We’re approaching the cliff,
and hopefully it’s a climbing down and not just jumping from the cliff,”
Ganeriwala, Virginia’s treasurer, said today at the State &
Municipal Finance Conference hosted by Bloomberg Link in New York.
- Oil Falls to Four-Day Low as U.S. Supply Increases, China Slows.
Oil fell to its lowest in four days
after U.S. crude stockpiles climbed for a fourth week and a measure of
China’s economy declined, signaling fuel demand may be faltering in the
world’s biggest users of the commodity. Brent oil for November settlement on the London-based ICE
Futures Europe exchange dropped $1.28, or 1.2 percent, to
$110.29 a barrel.
- BlackRock(BLK) Leads Firms Poised to Win From Hedge Fund Ads. The firms most likely to benefit
first from new rules that would allow hedge funds to conduct
wide advertising campaigns aren’t hedge funds.
- Hewlett-Packard(HPQ) Plunges as Whitman Projects Profit Drop. Hewlett-Packard
Co. (HPQ) Chief Executive Officer Meg Whitman forecast fiscal 2013
profit that missed estimates and said a turnaround at the computer maker
won’t
happen any time soon, sending shares to a more than nine-
year low. “The recent financial performance of HP has not been
good,” Whitman said at a meeting with financial analysts today.
“The single biggest challenge facing Hewlett-Packard has been
the multiple changes in CEOs,” she said. “It’s going to take
longer to right this ship than any of us would like.”
Wall Street Journal:
- Obama, Romney Look to Win Over the Undecided. After jousting from afar for months, Barack Obama and Mitt Romney
will meet Wednesday night in one of their last best chances to sway
undecided voters and solidify support among the party faithful. For 90 minutes beginning at 9 p.m. EDT, the presidential candidates
will share a stage at the University of Denver, laying out their ideas
about domestic issues. The first of three televised presidential debates
will heavily emphasize the economy, with both men trying to persuade
voters that they understand their struggles and can improve the economic
landscape in the next four years.
- Apple(AAPL) Suppliers Now Mass-Producing Tablets Smaller Than Existing iPad -Sources.
- Tensions Rise as Syrian Shells Land in Turkey.
Syrian mortar rounds landed in a Turkish border town on Wednesday,
killing five people and wounding at least a dozen, opening a potentially
dangerous new phase along the neighbors' increasingly tense shared
border. Three Syrian shells fell on Akcakale, a Turkish town in
the southern province of Sanliurfa, shortly after 3:30 p.m. local time,
sending residents scattering to find cover, said Abdulhakim Ayhan, the
town's mayor.
- Dozens Killed in Syrian Suicide Blasts.
Dozens of people were killed and wounded, many of them government
soldiers, in multiple car bombings in the northern Syrian city of
Aleppo. The attacks bore the hallmarks of al Qaeda-inspired or
-linked jihadists, signaling a bloodier phase in the conflict in the
city, where opposition rebels have been deadlocked in battle with the
regime for nearly three months.
MarketWatch.com:
CNBC:
- California Cities in 'Conga Line' For Fiscal Trouble. Then
came Stockton. Mammoth Lakes. San Bernardino. Which California city
will go bankrupt next? "There's a lot of them lined up in the conga
line," said Marilyn Cohen, CEO of Envision Capital Management. Up
next could be the city of Atwater, where civic leaders will vote
Wednesday night on declaring a fiscal emergency. They may even lay off a
quarter of the town’s 90-person workforce.
- Fed Easing Has Little Impact So Far: Out of Bullets? "We've been range-bound as everyone digests the information," said
Robert Laura, president of Synergos Financial Group in Brighton, Mich.
"There's nothing that's going to take us any higher. The headwinds out
there are too large for QE to overcome."
- There's Too Much Debt, Here's What to Do: Kyle Bass. Kyle Bass, who famously made a fortune shorting the subprime market
before the housing market collapse, is worried that there's too much
debt in the world. “We’ve never been here before,” said Bass,
founder of hedge fund Hayman Capital, in an interview Wednesday on
CNBC'S “Squawk on the Street.” “It has been the largest peacetime
accumulation of debt in history.” And that makes investment decisions
extremely difficult, Bass said.
Zero Hedge:
Business Insider:
WeKnowMemes:
Reuters:
Telegraph:
Style Underperformer:
Sector Underperformer:
- 1) Education -2.52% 2) Oil Service -2.03% 3) Computer -1.85%
Stocks Faling on Unusual Volume:
- QLIK,
CBEY, MRCY, DELL, HPQ, SSL, RNF, CAJ, ARI, PCS, BGS, HPY, RNF,
SSL, PCL, FIRE, HII, ISIS, PSSI, ERJ, MON, SUSS, KRA, EXXI, KSU,
SYT, BJRI, POT, CLB, ESI, DX, FNP and SPN
Stocks With Unusual Put Option Activity:
- 1) HCA 2) PCS 3) HPQ 4) GPS 5) CCJ
Stocks With Most Negative News Mentions:
- 1) POT 2) XRTX 3) DELL 4) XOM 5) PBR
Charts:
