Style Outperformer:
Sector Outperformers:
- 1) HMOs +3.58% 2) I-Banking +3.43% 3) Biotech +1.52%
Stocks Rising on Unusual Volume:
- DLLR, HUM, OPTR, EHTH, OMPI, VOD, NUAN, UNH, ASH, HTZ, WCG, AET, CI, DVA, WLP, URBN, VHS, CBST and CHKR
Stocks With Unusual Call Option Activity:
- 1) NDAQ 2) HCA 3) DAL 4) TPX 5) UNH
Stocks With Most Positive News Mentions:
- 1) GNC 2) EHTH 3) DVA 4) FFIV 5) SCVL
Charts:
Evening Headlines
Bloomberg:
- Cyprus Seeks More Time to Meet Targets in Talks With Troika. Cyprus
government officials will seek easier bailout terms in talks with
representatives of the European Union and International Monetary Fund
today, before a meeting of euro-area finance officials later this week.
“Final outstanding issues in talks with the troika primarily relate to
the wider financial sector and fiscal policy and adjustment,” Christos
Stylianides, the government’s spokesman, said in Nicosia yesterday. The
government has been granted an extension to 2017 from 2016 to secure a
primary budget surplus, which excludes interest payments, and it hopes
to negotiate an additional year to 2018, he said.
- China's
Electricity Use Darkens Metals Outlook: Chart of the Day. China's
shrinking electricity use may signal a decelerating economy, a bearish
sign for a price index of industrials metals that posted a first-quarter
decline for the first time in 12 years. A gauge of six prices from the
LME fell 5.6% in the three months ended March, the first drop for the
period since 2001. China's electricity demand in January and February
gained 5.5% from a year earlier, compared with an increase of 6.7% in
those months in 2012 and more than 12% in 2011. "China's power
consumption data is flatlining, and that augurs poorly for metals,"
Peter Sorrentino, a senior fund manager who helps oversee $14.7 billion
at Huntington Asset Advisors in Cincinnati, said in a telephone
interview.
- Hong Kong Businesses Vanish as Rents Soar: Real Estate.
Over the past decade, car-repair shop owner Benny Chan has seen more
than 70 percent of his small-business peers disappear as his Hong Kong
neighborhood fills up with high-end Western bars and Japanese
restaurants. “Rents here are going up multiple times,” said Chan,
who’s been in business since 1985 in the Tai Hang area, just east of the
ritzy Causeway Bay shopping district. “We’ll all be out of here in the
next four to five years.”
- China Cited by U.S. for Trade Barriers on Autos, Steel, Beef. China continues to restrict U.S.
producers of autos, steel and beef from gaining access to its
markets, and its protection of intellectual-property rights
remains inadequate, the U.S. Trade Representative’s office said.
While the Asian nation has made progress opening its
markets to foreign competition, “some serious problems remain,
such as China’s refusal to grant trading rights for certain industries,”
according to the agency’s annual report to Congress on trade barriers,
released today. The USTR also released two other reports covering health
and regulatory trade
barriers in China and other countries.
- China Backs North Korea Economic Zone Amid Kim Nuclear Threat. China expressed support for developing a shared economic zone in a North Korean border city amid Kim Jong Un’s threats to build nuclear weapons and attack South Korea and the U.S. Chen Jian, a vice commerce minister, said at a briefing in
Beijing today that he’s “optimistic” about the zone in Rason.
“Various work in the Rason zone is proceeding smoothly,” Chen
said to reporters. “I haven’t heard anything that it has slowed
down.”
- Japan Auto Sales Fall on End of Subsidies as Korea Extends Slump. Japanese vehicle sales fell the most
in six quarters after government subsidies ended, while
deliveries in South Korea extended their slump. The number of
vehicles sold in Japan, Asia’s second-largest auto market, fell 9.4
percent to 1.53 million during the quarter, with Toyota Motor Corp.
(7203) seeing a 15 percent drop, according to association data released yesterday. In
South Korea, the region’s fourth-largest vehicle market, deliveries
declined 2.5 percent as Hyundai Motor Co. (005380) saw a 0.7 percent
contraction, based on company statements.
- Corn, Silver, Rubber Expanding Commodity Bear Markets on Supply. Corn, silver and rubber tumbled into
bear markets, joining slumps in commodities such as sugar and
wheat, on signs that expanding supplies will outpace demand amid
increasing concern that global growth will falter. The price of corn in Chicago plunged the most in 24 years
yesterday, leaving futures down 23 percent from last year’s
closing high and exceeding the 20 percent benchmark for bear
markets. The Standard & Poor’s GSCI Agriculture Index of eight
raw materials touched a nine-month low yesterday, falling 21
percent from its 2012 peak. Silver in New York and rubber in
Tokyo were down more than 20 percent from closing highs.
- Copper Below March Low Signaling More Losses: Technical Analysis. Copper futures that posted their
biggest first-quarter decline in more than a decade are headed
lower this month, according to technical analysis by Paul Kavanaugh at FuturePath Trading LLC.
The attached chart shows the contract for May delivery on the Comex in
New York closed at $3.3745 a pound yesterday, below the intraday low on
March 19 of $3.388, the lowest for a most- active contract since August.
That suggests the price will drop within a few weeks to $3.31, the
lowest price for the May contract last year, Kavanaugh said.
- S&P 500 Rally Shows Analysts Slow or Investors Sanguine. The advance that pushed the Standard
& Poor’s 500 Index (SPX) to a record left companies trading closer to
analyst price estimates than any time in at least seven years. Shares in the index are 5 percent away from analysts’ mean
forecasts after the benchmark gauge rallied 10 percent in the
first quarter, according to data compiled by Bloomberg starting
in 2006. That’s the smallest difference ever for the median
stock and compares with the historical average of 14 percent.
- Humana(HUM) Among Insurers Winning U.S. Medicare Payment Rise. UnitedHealth
Group Inc. (UNH), Humana Inc. (HUM) and other medical insurers won an
increase rather than a reduction in U.S. payments for Medicare Advantage
plans starting next year. Humana shares jumped 9.8 percent in late
trading. The February proposal for a 2.2 percent cut in a rate that
determines the payments is being revised to a 3.3 percent
increase, according to a decision today by the Centers for
Medicare and Medicaid Services. The change came after insurers
and more than 130 lawmakers complained the Obama administration
relied on faulty accounting assumptions.
- Small-Business Insurance Market Promised by Health Law Delayed. Small-business employees will have
to wait a year before they can choose their own medical-coverage
after the Obama administration delayed implementation of a
provision in the 2010 U.S. health-care law. Starting in 2014,
workers at companies with fewer than 100
employees were supposed to have been able to choose from a
variety of health plans through new small-business insurance
marketplaces. They’ll instead wait until at least 2015,
according to regulations released by the U.S. Department of Health and
Human Services. In the meantime, small-business employees will face a
situation similar to what most companies offer, with their
employers choosing the coverage. Health insurers will still
offer the plans, though they’ll be competing for business from
companies, not individuals.
Wall Street Journal:
- Regulators Let Big Banks Look Safer Than They Are. Capital-ratio rules are upside down—fully collateralized loans are considered riskier than derivatives positions. The
recent Senate report on the J.P. Morgan Chase "London Whale" trading
debacle revealed emails, telephone conversations and other evidence of
how Chase managers manipulated their internal risk models to boost the
bank's regulatory capital ratios. Risk models are common and
certainly not illegal. Nevertheless, their use in bolstering a bank's
capital ratios can give the public a false sense of
security about the stability of the nation's largest financial
institutions. Capital ratios (also called capital adequacy
ratios) reflect the percentage of a bank's assets that are funded with
equity and are a key barometer of the institution's financial
strength—they measure the bank's ability to absorb losses and still
remain solvent. This should be a simple measure, but it isn't. That's
because regulators allow banks to use a process called "risk weighting,"
which allows them to raise their capital ratios by characterizing the
assets they hold as "low risk."
- Iran Cools Nuclear Work as Vote Looms. Supreme Leader Ayatollah Ali Khamenei has decided to keep Iran's nuclear
program within limits demanded by Israel for now, according to senior
U.S., European and Israeli officials, in a move they believe is designed
to avert an international crisis during an Iranian election year.
- Businesses Stay Cautious About Renting Office Space. Businesses moved slowly to fill office space in the first quarter, reflecting continued caution about the economic recovery. An additional 4 million square feet of office space was leased during
the quarter, increasing the amount of occupied space by just 0.12%,
according to real-estate research service Reis Inc. Asking rents
increased 0.7% to $28.66 a square foot annually, while the national
office vacancy rate fell to 17% from 17.1%.
- Gulf States Curtail Online Dissent. Some Persian Gulf monarchies have been shutting down critics who use
social media to spread their views, in response to rising dissent
unleashed by the region's Arab Spring rebellions.
- Wind-Power Subsidies? No Thanks. I'm in the green-energy business. If Washington sent a little less 'green' our way, it would be good for the industry.
Fox News:
- China mobilizing troops, jets near N. Korean border, US officials say. China has placed military forces on heightened alert in the
northeastern part of the country as tensions mount on the Korean
peninsula following recent threats by Pyongyang to attack, U.S.
officials said. Reports from the region reveal the Chinese People's Liberation Army
(PLA) recently increased its military posture in response to the
heightened tensions, specifically North Korea's declaration of a "state
of war" and threats to conduct missile attacks against the United States
and South Korea. According to the officials, the PLA has stepped up military
mobilization in the border region with North Korea since mid-March,
including troop movements and warplane activity. China's navy also conducted live-firing naval drills by warships in
the Yellow Sea that were set to end Monday near the Korean peninsula, in
apparent support of North Korea, which was angered by ongoing
U.S.-South Korean military drills that are set to continue throughout
April.
MarketWatch.com:
Zero Hedge:
Business Insider:
Reuters:
- Spain to revise down 2013 GDP growth target to -1 percent.
Spain will revise down its economic growth forecast for 2013 next week
and seek more time from the European Union to reduce its budget deficit
as
recession cuts deeper than previously expected, a government source told
Reuters. Spain's gross domestic product
(GDP) will be forecast to shrink by 1 percent, rather than 0.5 percent,
the source said, adding that the government intended to shift emphasis
to growth rather than deficit reduction. Spain will increase its 2013 deficit target to 6 percent of GDP, from an existing forecast of 4.5 percent.
- March was bloodiest month in Syria war: rights group. March was the bloodiest month yet in Syria's two-year conflict, with more than
6,000 people killed, a third of them civilians, the Syrian Observatory for Human
Rights said on Monday. The group opposes President Bashar al-Assad but has monitored human rights
violations on both sides of a revolt that began as peaceful protests but is now
a brutal war between forces loyal to Assad and an array of rebel militias. The
Britain-based Observatory, which has a network of sources across Syria,
has documented 62,554 dead in the conflict, said Rami Abdelrahman, the
head of the group. "But we know the number is much, much higher," he
told Reuters by telephone.
"We estimate it is actually around 120,000 people. Many death tolls are more
difficult to document so we are not officially including them yet."
- Nasdaq(NDAQ) to buy eSpeed platform for $750 mln. Nasdaq
OMX Group Inc agreed to buy the eSpeed platform from BGC Partners Inc
for $750 million in cash, providing the exchange operator an entry point
in the electronic fixed income business - one of the largest and the
most liquid cash markets in the world. The deal gives Nasdaq more exposure to fixed income markets, at a time when falling stock trading volumes have spurred the
exchange operator to find other income sources.
- A fiscal warning from two former U.S. budget chiefs. Two former U.S. budget chiefs
who worked for presidents from opposing political parties said
on Monday that the government should reduce military spending,
scale back Social Security payments and end decade-old income
tax cuts to reduce the federal deficit.
Financial Times:
Telegraph:
The Standard:
Shanghai Securities News:
- China 2nd Mortgage Rules May Vary City to City. People's Bank of
China won't make unified requirements for down payments and interest
rates on second home mortgages after local governments announced
detailed property curbs, citing a person familiar with the matter. Local
branches of the central bank can "appropriately" raise both
requirements, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 98.0 +.5 basis point.
- NASDAQ 100 futures +.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Factory Orders for February are estimated to rise +2.9% versus a -2.0% decline in January.
Afternoon:
- Total Vehicle Sales for March are estimated to fall to 15.3M versus 15.33M in February.
Upcoming Splits
Other Potential Market Movers
- The Fed's
Lockhart speaking, Fed's Kocherlakota speaking, Fed's Evans speaking,
Fed's Lacker speaking, Eurozone Manufacturing PMI, Eurozone Unemployment
data, German Consumer Confidence, China Non-Manufacturing PMI, ISM New
York for March, weekly retail sales reports and the IBD/TIPP Economic
Optimism Index for April could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology 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 Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 62.0 -34.74%
- Total Put/Call .98 +10.11%
Credit Investor Angst:
- North American Investment Grade CDS Index 90.09 -.78%
- European Financial Sector CDS Index 194.48 +.07%
- Western Europe Sovereign Debt CDS Index 105.01 -.03%
- Emerging Market CDS Index 275.0 +3.59%
- 2-Year Swap Spread 17.0 -1.25 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -19.25 unch.
Economic Gauges:
- 3-Month T-Bill Yield .07% -1 bp
- China Import Iron Ore Spot $137.30/Metric Tonne unch.
- Citi US Economic Surprise Index 12.20 -6.7 points
- 10-Year TIPS Spread 2.52 unch.
Overseas Futures:
- Nikkei Futures: Indicating unch. open in Japan
- DAX Futures: Indicating +4 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech, biotech and medical sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Coal -3.13% 2) Oil Tankers -2.72% 3) Airlines -2.22%
Stocks Falling on Unusual Volume:
- DLLR, CJES, SBGI, COLB, ICLR, AMBA, GASS, TFX, NSR, BAS, GIII, SBY, LNN, MNRO, ARII, SNX, RHT, CSH, ADC, TCAP, SIMO, ADT, WLT, WDAY and SHOS
Stocks With Unusual Put Option Activity:
- 1) ADT 2) X 3) TSLA 4) HD 5) TXN
Stocks With Most Negative News Mentions:
- 1) DSX 2) CJES 3) VMW 4) ALGT 5) XOM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Hospitals +.08% 2) Retail -.03% 3) Biotech -.08%
Stocks Rising on Unusual Volume:
- AM, TSLA, EBAY, TAP and GME
Stocks With Unusual Call Option Activity:
- 1) OKE 2) KMI 3) GME 4) SE 5) VRNG
Stocks With Most Positive News Mentions:
- 1) AM 2) RTN 3) MON 4) IPG 5) POT
Charts:
Weekend Headlines
Bloomberg:
- Bank of Cyprus’s Customers May Lose as Much as 60% on Deposits.
Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc
accounts exceeding 100,000 euros ($128,000) as part of an aid deal to
stop the country from going bankrupt. Customers will have 37.5 percent
of their deposits above this amount converted into shares with full
voting rights and access to any future Bank of Cyprus dividend, the
Nicosia-based central bank said in an e-mailed statement. A further 22.5
percent will be temporarily withheld to ensure the
lender meets the terms of its recapitalization, as agreed under Cyprus’s
loan agreement with international creditors, the central bank said.
- Euro Drops After Monthly Drop on Weak Economic Recovery. The euro weakened following a
decline last month as economic data signal the 17-nation region
is struggling to recover, damping demand for the currency. The euro
fell versus most of its 16 major counterparts
ahead of a report tomorrow that may show unemployment in the
bloc climbed to a record in February, two days before European Central
Bank officials meet to set interest rates. The yen strengthened, after
last month capping its longest string of losses in 12 years, as a drop
in Asian stocks spurred demand for
safer assets. The Australian dollar slid after gains in Chinese
manufacturing missed estimates.
- China’s Home Prices Increase Most in 26 Months, SouFun Says. China’s
March new home prices posted the biggest gain in more than two years as
buyers rushed into the market ahead of property curbs by local
governments, driving real estate stocks higher. Prices climbed for
the 10th month, rising 1.1 percent to 9,998 yuan ($1,610) per square
meter (10.76 square feet) from February, SouFun Holdings Ltd. (SFUN),
the country’s biggest real estate website owner, said in a statement
today after a survey
of 100 cities. That’s the biggest increase since January 2011.
- Beijing, Shanghai Add to Home Curbs as China Acts to Cool Market.
China’s largest cities, including
Beijing and Shanghai, tightened rules on home purchases after the nation
asked local governments to step up efforts to cool the property market.
Beijing, the capital, banned single-person households from buying more
than one residence while Shanghai prohibited banks from giving credit to
third-home buyers, according to the local administration websites. The
two cities will also enforce a 20 percent tax on capital gains from
property sales. “This will help calm people’s panic about home
prices,” said Yi Xianrong, a Beijing-based researcher at the Chinese
Academy of Social Sciences, which advises the Cabinet.
- Kim Calls Nuclear Weapons Top Priority as Korea Tensions Climb. Kim
Jong Un called nuclear weapons development one of North Korea’s top
priorities as his country ratcheted up tensions by declaring a state of
war with South Korea and reiterating threats to attack the U.S. Nuclear
arms can “never be abandoned” nor “traded with billions of dollars,” Kim
said yesterday at meeting of the ruling Workers’ Party Central
Committee, the state-run Korean Central News Agency reported. North
Korea’s rubber stamp parliament meets today to ratify his remarks.
- Japan March Business Confidence Improves Less Than Estimated. Confidence among big Japanese manufacturers improved by less than
economists estimated, in a sign that the weaker yen is yet to boost
conditions for the nation’s exporters. The quarterly Tankan
(JNTSMFG) for large manufacturers rose to minus 8 in March from minus 12
in December, the Bank of Japan said in Tokyo today. The median estimate
of 24 economists surveyed by Bloomberg News was for minus 7. A negative
figure means pessimists outnumber optimists.
- Rebar Slumps to Lowest Since December on China PMI, Inventories. Steel
reinforcement-bar futures in Shanghai declined to the lowest level in
more than three months after a Chinese manufacturing indicator missed
analysts’
estimates and inventories of the building material swelled. The contract for delivery in October dropped as much as 2
percent to 3,733 yuan ($601) a metric ton on the Shanghai
Futures Exchange, the lowest level since Dec. 14, and traded at
3,736 yuan at 10:36 a.m. local time. Futures lost 4.5 percent in
the first quarter.
- Copper Drops to 8-Month Low in Shanghai on China Manufacturing. Copper
slumped for a fifth day in Shanghai to the lowest level since August as
a key gauge of Chinese manufacturing missed estimates, stoking concern
demand in the biggest consuming nation is slowing. Copper for delivery in July on the Shanghai Futures Exchange fell as much as 1.9 percent to 53,800 yuan ($8,666) a
metric ton, the lowest level since Aug. 3, before trading at
54,080 yuan by 10:14 a.m. local time. Futures for May delivery
lost 1.3 percent to $3.3590 a pound on the Comex. The London
Metal Exchange is closed today for a public holiday.
- Bullish Bets Rebound at Fastest Pace in Four Years: Commodities. Investors are boosting wagers on
higher commodity prices at the fastest pace in almost four years,
rebounding from the least bullish position since 2009, on signs
that the U.S. is accelerating and Europe’s debt crisis is easing. Hedge
funds and other large speculators increased net-long positions across
18 U.S. futures and options by 10 percent to 679,191 contracts in the
week ended March 26, data from the Commodity Futures Trading Commission
show. The bets surged 67 percent in three weeks, the biggest advance
since May 2009. Wagers on higher oil prices climbed the most this year,
while those for cattle are at a six-week high.
- SAC Siege by U.S. Seen Slowing in Steinberg’s Indictment.
SAC Capital Advisors LP may seem under siege by federal prosecutors,
with the steady drumbeat of indictments over the past few years and the
invariable 6 a.m. knock at the door as one employee after another meets
agents of the Federal Bureau of Investigation’s New York office.
Wall Street Journal:
- Era of Fed Stimulus Wanes.
Between U.S. stocks reaching highs and Treasury yields holding near
all-time lows, one of these two contrary markets will eventually have to
give. "We are getting closer to the end," John Brynjolfsson, managing director
of global macro hedge fund Armored Wolf LLC, said of the Fed's stimulus
efforts. "Discussion of tapering helps to make the exit less of a
digital on-off decision, and should allow the Fed to more gradually wean
the markets off its support."
Fox News:
- US sends F-22 jets to join South Korea drills. The
United States has sent F-22 stealth fighter jets to South Korea to join
Seoul forces in military drills as North Korea warns the Korean
Peninsula has entered "a state of war." A senior U.S. official
confirms to Fox News that the F-22 Raptors were deployed to Osan Air
Base in South Korea from Japan on Sunday to support ongoing U.S.-South
Korean military drills.
CNBC:
- Italian President at Center of Storm as Deadlock Continues. Italy's 87-year-old President Giorgio Napolitano will face the greatest
test of his career during his final weeks in office as he tries to end
the standoff preventing a new government being formed more than a month
after elections.
- Emerging Markets Dump Euro Reserves. The euro's challenge to the international status of the U.S. dollar has
been set back a generation as new data shows developing countries
dumping the European currency from their official reserves.
Business Insider:
Reuters:
El Pais:
- Spanish
Prime Minister Mariano Rajoy is preparing a new financing model for
autonomous region of Catalonia to stem wave of separatism. New offer for
Catalonia would alert leaders of other autonomous communities who would
require same treatment.
Le Journal du Dimanche:
- 70% of French people remain unconvinced that President Francois Hollande has a clear strategy to fight rising unemployment, according to an Ifop poll.
Yonhap News:
- South Korea to Strongly Respond to Any North Korea Provocation, South Korean President Park Geun Hye Says.
Sankei:
- Japan, U.S. to Hold Island-Recapturing Drill in June. Japan's
Ground, Maritime and Air Self-Defense Force to join drills in
California. First time for Maritime and Air SDFs to join similar
exercise. Japan, U.S. to draft plan to defend disputed islands, VOA said
China Securities Journal:
- China
Financial System Faces 'Large' Risks. Problems including high levels of
corporate debt, shadow banking and property bubbles are worth concern,
citing former People's Bank of China adviser Yu Yongding. Yu said local
government financing vehicles may "deteriorate" again. China economic
growth may be weaker than expected as a result of tightening monetary
policy and M2 growth target of 13%, Yu said.
- China will
manage property demand and supply and continue curbs on speculation,
citing Qin Hong, director of policy research at the Ministry of Housing
and Urban-Rural Development.
Weekend Recommendations
Barron's:
- Bullish commentary on (STM), (RT), (T), (WLP), (STX), (WU) and (ETN).
Night Trading
- Asian indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.50 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 97.5 +2.25 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Construction Spending for March is estimated to rise +1.0% versus a -2.1% decline in February.
- ISM Manufacturing for March is estimated to fall to 54.0 versus 54.2 in February.
- ISM Prices Paid for March is estimated to fall to 60.0 versus 61.5 in February.
Upcoming Splits
Other Potential Market Movers
- The RBA rate decision and Final Markit US PMI for March could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.
