Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.49% 2) Hospitals +.37% 3) Utilities +.12%
Stocks Rising on Unusual Volume:
- SYNA, THRX, QLIK, WOOF, CSTR, LOGM, FSL, GNC, ALV, DLB, UIS, INFA, CERN, DHI, AXS and JCP
Stocks With Unusual Call Option Activity:
- 1) WMB 2) CERN 3) GRPN 4) QLIK 5) AMZN
Stocks With Most Positive News Mentions:
- 1) LOGM 2) AFL 3) R 4) K 5) AVP
Charts:
Evening Headlines
Bloomberg:
- ECB Data to Show Extent of Capital Flight in Cyprus.
The European Central Bank will publish data today showing how much money
savers withdrew from the euro region’s banks after a botched attempt to
tax Cypriot savers as part of a European Union-led bailout. The ECB
will publish data for euro-area bank deposits including Cyprus after 10
a.m. in Frankfurt. In February, the month before the rescue, Cypriot
deposits decreased 2.2 percent to 46.4 billion euros, down from 47.4
billion the previous
month. It was the ninth straight decline.
- China’s Politburo Warns on Financial Risks as Recovery Falters. China’s
top leaders said the country must guard against financial risks and
boost consumption amid signs that the recovery in the world’s
second-biggest economy is faltering. “China needs to cement its domestic
economic growth momentum and guard against potential risks in financial
sectors,” the Politburo Central Committee said in a statement late yesterday published by the official Xinhua News Agency.
- Japan’s Bigger Price Decline Shows Size of Kuroda Task: Economy.
Japan’s consumer prices fell the most in two years, underscoring the
challenge facing Bank of Japan (8301) Governor Haruhiko Kuroda as he
works to meet a 2 percent inflation target. Consumer prices excluding
fresh food slid 0.5 percent in March from a year earlier, the
statistics bureau said today in Tokyo. The median estimate of 25
economists surveyed by Bloomberg News was for a 0.4 percent decline.
Overall prices dropped 0.9 percent.
- Japan-China Defense Officials to Meet as Island Tensions Flare. Defense
officials from Japan and China will meet today in Beijing, signaling
Asia’s two biggest economies are trying to soothe rising tensions over
East China Sea islands claimed by both. The officials are scheduled
to meet this evening, Japanese Defense Minister Itsunori Onodera told
reporters in Tokyo. The two sides will discuss ways to improve maritime
communication
over territorial issues, he said.
- S. Korea Demands North Respond Today on Joint Factory Talks. South
Korea demanded North Korea agree by today to negotiations aimed at
re-opening a jointly-run industrial park that has been shuttered for
more than two weeks
or face reprisals. North Korea hadn’t responded as of 10:47 a.m. local
time to
yesterday’s offer by Park Geun Hye’s administration to hold
talks on the Gaeseong industrial zone, Unification Ministry
spokesman Kim Hyung Suk told reporters in Seoul. The South will
wait until noon to take “serious measures” if there is no
reply, Kim said, declining to elaborate.
- Brazil May Have to Step Up Rate Raise Pace, Hamilton Says. Brazil’s
central bank may have to step up the pace of interest rate increases to
tame above-target inflation, its director for economic policy, Carlos
Hamilton, said today. Swap rates rose. “I have a growing conviction
that the Copom may be prompted to reflect on the possibility of
intensifying the use of its monetary policy tool, the Selic rate,”
Hamilton said at an event in Sao Paulo, referring to the bank’s policy
making
committee.
- Gold Advances to Highest Since Rout, Set for Best Week Since ’11. Gold headed for its best week since
October 2011 as demand rose after the worst slump in three
decades. Silver was set for the best week since November. Bullion for immediate delivery climbed as much as 1.2
percent to $1,485.50 an ounce, the highest since April 15 when it plummeted 9.1 percent. The metal traded at $1,476.33 by 10:25 a.m. in Singapore, set for a 5.2 percent gain this week.
- Brown-Vitter Bill Could Force Banks to Shrink, S&P Analysts Say. U.S. banks could be forced to break
up or shed assets because of a push by federal lawmakers to
raise capital requirements at the largest firms, Standard &
Poor’s said. Senator Sherrod Brown, an Ohio Democrat, and Republican
David Vitter of Louisiana unveiled legislation this week that
would mandate a 15 percent capital cushion for banks with more
than $500 billion in assets. Meeting the requirements may force
lenders to raise as much as $1.2 trillion in additional equity
and would drive down returns, S&P said yesterday in a report. “We do not see equity markets being able to meet the
massive level of common equity the bill requires of the largest
banks,” the analysts wrote in the report. “The largest banks
would need to break up or deleverage.”
- Baidu(BIDU) Net Income Misses Analysts’ Estimates. Baidu
Inc., the owner of China’s largest Internet search engine, reported
first-quarter profit that fell short of analysts’ estimates as
advertising revenue per customer declined. Net income climbed 8.5
percent to 2.04 billion yuan from 1.88 billion yuan a year earlier, the
Beijing-based company said in a statement today. That missed the 2.19
billion yuan average
of analysts’ estimates, according to data compiled by Bloomberg.
- Samsung Electronics Posts Record Profit on Galaxy Models. Samsung Electronics Co. (005930) posted a record quarterly profit that topped analyst estimates as surging
sales of Galaxy handsets helped Asia’s biggest technology
company overcome sluggish demand for TVs.
Wall Street Journal:
- U.S. Believes Syria Used Gas.
White House Shifts Assessment on Chemical Weapons; New Pressure to
Respond. U.S. intelligence agencies now believe the embattled regime of
Syrian
President Bashar al-Assad has used chemical weapons, the White House
told Congress on Thursday, saying the agencies have "varying degrees of
confidence" in the assessment. Coming in a detailed letter to lawmakers,
the findings mark a turning
point in the Obama administration's approach to the two-year civil war,
constituting the administration's most explicit acknowledgment that the
bloodletting in Syria has reached a point that might require U.S.
military involvement.
But administration officials, saying more proof is needed, avoided
declaring that Mr. Assad had violated restrictions set by President
Barack Obama against the use of chemical weapons.
- Fed Zeroes In on Vulnerability to Rate Rise. The Federal Reserve is scrutinizing the nation's biggest banks to
ensure they can handle an eventual rise in interest rates, as concern
grows among regulators about the risks posed by a long low-interest-rate
environment. On Thursday, a panel of federal regulators charged with identifying
market risks warned that a sudden rise in interest rates could have a
destabilizing effect on financial markets. The Financial Stability
Oversight Council, in its third annual report, cited interest-rate risk
as one of seven major vulnerabilities to financial stability. "A sudden spike in yields and volatilities could trigger a disorderly
adjustment, and potentially create outsized risks," the council said in
its report.
- Senators Pass Bill to Ease Air-Travel Delays.
- Shopping Tax Free on the Web Nears End. Online
shoppers, beware. Freedom from sales taxes is on the way out. Late
Thursday afternoon, in a 63-to-30 procedural vote, the Senate
cleared the way for passage of a bill to effectively end tax-free
shopping online. A final Senate vote is scheduled for May 6. The bill, called the Marketplace Fairness Act, would allow states to
require online sellers around the country to collect sales tax for them
on purchases made by their residents.
Fox News:
- Reps challenge DHS ammo buys, say agency using 1,000 more rounds per person than Army. Republican Rep. Jason Chaffetz said Thursday that the Department of
Homeland Security is using roughly 1,000 rounds of ammunition more per
person than the U.S. Army, as he and other lawmakers sharply questioned
DHS officials on their "massive" bullet buys. "It is entirely ... inexplicable why the Department of Homeland
Security needs so much ammunition," Chaffetz, R-Utah, said at a
hearing. The hearing itself was unusual, as questions about the department's
ammunition purchases until recently had bubbled largely under the radar
-- on blogs and in the occasional news article. But as the Department of
Homeland Security found itself publicly defending the purchases,
lawmakers gradually showed more interest in the issue.
CNBC:
- Bundesbank Faults ECB Bond-Buying Plan: Paper. The head of the Bundesbank has sharply criticized
the European Central Bank's plan to buy the debt of highly indebted
states in a confidential report, according to German newspaper
Handelsblatt. In the 29-page report prepared for Germany's
Constitutional Court, the Bundesbank warns that the purchase of such
debt could "compromise the independence of the central bank" and could
be difficult to stop, the paper said in an article made available on
Thursday.
- Chinese Can't Get Enough of 'Super Cities'. Chinese investors can't seem to be getting enough of commercial real
estate abroad - having already spent $1 billion in the first quarter on
buying property, they are now on track to spend a whopping $5 billion
for the whole year, according property services firm Jones Lang LaSalle.
- Starbucks(SBUX) Earnings Meet Estimates, Guidance Misses.
Starbucks reported fiscal second-quarter earnings that met analysts'
expectations on Thursday as the company recorded record revenue. The
shares fell in
after-hours trading after disappointing third-quarter guidance.
- Electronics Arts(EA) Hit With More Layoffs.
Zero Hedge:
Business Insider:
New York Times:
- Southern Europe’s Recession Threatens to Spread North. No company symbolizes German industrial might like Daimler, the giant
maker of Mercedes-Benz autos and trucks. So when the company said this
week that it, too, had finally been caught in the downdraft of the
European economic crisis, it was an ominous sign for all of the
Continent, if not the whole world.
- RUSSIA TOLD U.S. BOMB SUSPECT WAS RADICAL ISLAMIST. On March 2011, the Russian security service sent a stark warning to the
FBI, reporting that Tamerlan Tsarnaev was “a follower of radical Islam”
who had “changed drastically since 2010” and was preparing to travel to
Russia’s turbulent Caucasus to connect with underground militant groups.
Six months later, Russia sent the same warning to the CIA.
- Reinhart and Rogoff: Responding to Our Critics. In an Op-Ed essay for The New York Times, we have tried to defend our
research and refute the distorted policy positions that have been
attributed to us. In this appendix, we address the technical issues
raised by our critics.
The Blaze:
Reuters:
- US-based stock funds have $7.3 bln outflow - Lipper.
- Amazon(AMZN) growth slows, while profit margins expand. Amazon.com Inc's
revenue growth slowed in the first quarter as the
world's largest Internet retail struggled overseas, but margins
jumped on lower shipping expenses and the expansion of more
profitable new businesses. Amazon shares fell 1.9 percent to $269.43 in after-hours
trading on Thursday following the results. "The message there is North America was better than expected
but international was softer. The question is ... 'Is this a
reflection of macro trends in Europe, or is there something else
going on there?'" said Telsey Advisory Group analyst Tom Forte. Europe's lackluster economies are weighing on corporate
sales in the region - even for fast-growing e-commerce
businesses. EBay Inc, Amazon's main rival, reported
disappointing results last week and noted European weakness. International revenue rose 16 percent in the most-recent
quarter, year-over-year, down from a 31 percent growth rate in
the same period of 2012.
- KLA-Tencor(KLAC) sees revenue below expectations, economy weighs. Chip equipment maker KLA-Tencor Corp
reported lower quarterly results and said its outlook
for the rest of the year has weakened due to manufacturers'
concerns about the global economy. KLA-Tencor's stock fell nearly 5 percent in extended trade
after Chief Executive Rick Wallace said on a conference call he
was seeing a pause in demand from contract manufacturers and
gave a current quarter revenue estimate that was below
expectations.
- U.S. council warns of threat of cyber attacks, market runs. Regulators should guard
against runs on the shadow banking system and watch out for
cyber attacks on banks in coming months, the top U.S. financial stability group said on Thursday.
The Financial Stability Oversight Council, which was set up after the
2007-2009 crisis to watch for developing threats to the financial
system, also urged a reform of market benchmarks after a global
rate-rigging scandal hit the Libor interbank rate. "Technological
failures, natural disasters, and cyberattacks can emanate from anywhere,
at any time," the report said. "Preparation and planning to address
these potential situations
are essential to maintain the strength and resilience of our
financial system."
- Expedia(EXPE) Warns of Lower Hotwire Profit.
Online-travel agency Expedia beta on earnings but warned of a lower
full-year profit from its discount travel website Hotwire due to higher
car-rental rates and
increased competition. The online travel agency's shares dropped more
than 7 percent after initially popping more than 4 percent.
The Economist:
- Euro Crisis: The Fankfurt Veto. AUSTERITY has been under fire from all corners, lately: from IMF reports
showing painfully high multipliers on fiscal cuts, to challenges to the
Reinhart-Rogoff debt-threshold research, to the European Commission,
whose president, Jose Manuel Barroso, noted this week that austerity in
Europea has "reached its limits".
Telegraph:
- The great Spanish nation can end its crucifixion at will by leaving EMU.
The mind goes numb. Spanish unemployment jumped by yet another 237,000
people in the first quarter to 6.2 million, or 27.2pc. This is
equivalent to roughly 8.3 million in Britain, or 39 million
in the United States. The country is losing 3,581 jobs a day. There are
1.9m households where no member of the family has a job.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 88.75 -1.25 basis points.
- NASDAQ 100 futures -.25%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (AEP)/.81
- (B)/45
- (BKW)/.16
- (CVX)/3.07
- (DHI)/.19
- (FLIR)/.36
- (GT)/.34
- (LYB)/1.44
- (NOV)/1.37
- (SPG)/2.01
- (TYC)/.39
- (VFC)/2.19
- (WY)/.22
Economic Releases
8:30 am EST
- Advance 1Q GDP is estimated to rise +3.0% versus a +.4% gain in 4Q.
- Advance 1Q Personal Consumption is estimated to rise +2.8% versus a +1.8% gain in 4Q.
- Advance 1Q GDP Price Index is estimated to rise +1.3% versus a +1.0% gain in 4Q.
- Advance 1Q Core PCE is estimated to rise +1.1% versus a +1.0% gain in 4Q.
9:55 am EST
- The Final Univ. of Michigan Consumer Confidence for April is estimated to rise to 73.5 versus a prior estimate of 72.3.
Upcoming Splits
Other Potential Market Movers
- The BoJ rate decision could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open mixed and weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- ISE Sentiment Index 109.0 -9.92%
- Total Put/Call .98 +25.64%
Credit Investor Angst:
- North American Investment Grade CDS Index 78.66 -1.63%
- European Financial Sector CDS Index 159.87 +1.2%
- Western Europe Sovereign Debt CDS Index 95.17 -2.8%
- Emerging Market CDS Index 238.73 +1.20%
- 2-Year Swap Spread 13.5 +.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -18.0 -.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- China Import Iron Ore Spot $134.60/Metric Tonne -.37%
- Citi US Economic Surprise Index -6.20 +1.7 points
- 10-Year TIPS Spread 2.40 +2 basis point
Overseas Futures:
- Nikkei Futures: Indicating +111 open in Japan
- DAX Futures: Indicating -12 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail, medical, biotech and tech sector longs
- Market Exposure: 50% Net Long
Bloomberg:
- Spain Jobless Rate Breaches 27% to Highest in 37 Years on Recession Woes. Spanish
unemployment rose more than economists forecast in the first quarter to
the highest in at least 37 years as efforts to tackle the European
Union’s biggest budget deficit crimped economic growth. The number of
jobless increased to more than 6 million for the first time, climbing
to 27.2 percent of the workforce, compared with 26.02 percent in the
previous three months, the National Statistics Institute in Madrid said today. That was more than the 26.5 percent median forecast
of eight economists surveyed by Bloomberg News. Prime Minister Mariano
Rajoy will tomorrow unveil measures aimed at halting a six-year economic
slump. Spain’s recession dragged into a seventh quarter in the first
three months of 2013, leaving the country with more than a fifth of all
jobless people in the EU. “The pace of the increase is surprising given we were supposed to be in a softer phase of the recession,” Ricardo Santos, a euro region economist at BNP Paribas SA in London, said in a telephone interview. “We could now end the year at 28 percent unemployment and we may see a downward revision of first-quarter
growth.”
- French Joblessness Climbs to Record, Adding Pressure on Hollande. French jobless claims rose to the
highest ever, increasing pressure on President Francois Hollande
to revive an economy that has been stalled for two years. The number of people actively looking for work increased by
36,900, or 1.2 percent, to 3.225 million, the labor ministry
said today in an e-mailed statement. Economists expected an
increase of 25,000, according to the median of three forecasts
gathered by Bloomberg News. The 23rd monthly increase takes the total number of
jobseekers past the previous record of 3.195 million, which was
set in January 1997 when Jacques Chirac had been president for
less than two years.
- Gold Rises Most Since September as Central Banks Join Buyers.
Gold climbed the most since September on central-bank buying and signs
of more investor demand following last week’s biggest drop in three
decades. Gold futures for June delivery jumped 2.2 percent to
$1,454.50 an ounce at 10:38 a.m. on the Comex in New York, heading for
the biggest gain since Sept. 13. On April 15, the metal slumped 9.3
percent, the most since March 1980.
- Grain Ships Have Biggest Fall This Year as Cargo Demand Slows. Rates for dry bulk carriers hauling
grains and minerals fell the most in a single session this year
as demand for cargoes slowed. Day rates for Panamaxes, 750-foot-long
ships capable of hauling about 75,000 metric tons of cargo, slid 3.8
percent to $8,955, the most since Dec. 20, according to the Baltic Exchange in London, which publishes shipping prices on more than 50 maritime routes. Today’s decrease, the third in a row, means
costs plunged to the lowest since April 12, exchange data show.
Rates for grain-carrying Panamaxes declined 6.7 percent
over the last three sessions.
- Iran Told Hezbollah to Join Syria War, Says Group Ex-Leader. Iran pressed Hezbollah fighters to
join the civil war in Syria to bolster President Bashar al- Assad’s armed struggle, according to Sobhi al-Tofaili, a
disaffected former leader of the militant group. The allegation, made on Lebanon’s Future Television, echoes
similar comments by George Sabra, interim leader of the Syrian
National Coalition, at a press conference in Turkey on April 22. The former Hezbollah secretary said that at least 138
militiamen had died in Syria and scores had been wounded.
Wall Street Journal:
Fox News:
- Lawmakers demand 'action' in Syria after intel confirms chemical weapons use. Top-ranking lawmakers on both sides of the aisle declared Thursday
that the "red line" in Syria has been crossed, calling for "strong" U.S.
and international intervention after administration officials revealed
the intelligence community believes chemical weapons were used. Sen. John McCain, R-Ariz., and Sen. Dianne Feinstein, D-Calif.,
chairwoman of the Senate intelligence committee, were among those urging
swift action.
- Boston Marathon bombers' next target was Times Square, says Bloomberg. DEVELOPING:
The Boston Marathon bombing suspects had Times Square in their sights
before law enforcement authorities put an end to their bloody terror
spree, according New York Mayor Michael Bloomberg. "New York was
next on their list of targets," Bloomberg said of brothers Tamerlan and
Dzhokhar Tsarnaev. Bloomberg said he received confirmation of the
chilling second phaseof their plot from the FBI.
“The fact is, New York City remains a prime target for those who hate
America and want to kill Americans.”
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- 3M(MMM) cuts 2013 outlook on falling electronics demand. Diversified U.S. manufacturer 3M Co cut its 2013 profit forecast on
Thursday, citing weakening demand for flat-panel televisions as well as
the stronger U.S. dollar. The lowered outlook came after first-quarter profit and revenue both missed Wall Street expectations.
- Brazil's central bank signals interest rate hikes ahead. All the members of the
Brazilian central bank's board agree on the need to raise
interest rates to fight naggingly high inflation, but lingering
worries about the global economy could limit the scope of the
tightening cycle. In the minutes
from its most recent rate-setting meeting released on Thursday, the
central bank warned that monetary policy must remain "especially
vigilant" and signaled that it will look to administer rate hikes
cautiously to avoid tripping up the tepid economic recovery under way in
Brazil.
- COLUMN-Market euphoria misreads the signals from Brussels and Rome: Kaletsky.
- Watchmakers fret over China sales slump. Luxury watchmakers expect sales
growth to slow this year as a recovery in the United States and
buoyant Middle East demand fail to offset a China slump more deep-rooted than a temporary blip caused by anti-corruption moves. The heads of Swatch Group's biggest brand Omega and
LVMH flagship brand TAG Heuer as well as high-end
independents Patek Philippe and Ulysse Nardin all said demand in
Greater China had tumbled, particularly for high-end models.
USA Today:
The Guardian:
- Crisis for Europe as trust hits record low. Poll in European Union's six biggest countries finds Euroscepticism is soaring amid bailouts and spending cuts. "The
damage is so deep that it does not matter whether you come from a
creditor, debtor country, euro would-be member or the UK: everybody is
worse off," said José Ignacio Torreblanca, head of the ECFR's Madrid
office. "Citizens now think that their national democracy is being
subverted by the way the euro crisis is conducted." The most dramatic fall in faith in the EU has occurred in Spain,
where the banking and housing market collapse, eurozone bailout and
runaway unemployment have combined to produce 72% "tending not to trust"
the EU, with only 20% "tending to trust".
Style Underperformer:
Sector Underperformers:
- 1) Papers -.48% 2) Drugs -.12% 3) REITs -.04%
Stocks Falling on Unusual Volume:
- CAP, VPFG, CRR, INTU, PLD, RJF, QCOM, CLW, CTXS, BLL, SWY, VAR, ARII, UFS, VCI, PRLB, OIS, MMM, RS, TSCO, MLNX, QLIK, KEP, HLIT and VIP
Stocks With Unusual Put Option Activity:
- 1) DNDN 2) SWY 3) HRB 4) WM 5) LGF
Stocks With Most Negative News Mentions:
- 1) INTU 2) TILE 3) CFR 4) SWK 5) D
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Education +4.84% 2) Disk Drives +3.62% 3) Steel +3.02%
Stocks Rising on Unusual Volume:
- INFN, NXST, NIHD, TVL, COG, SYMM, RNDY, OTEX, STMP, ANGI, CRI, FIO, MEOH, BYI, LTM, JAH, AKAM, NOW, CAB, CAKE, FFIV, CLF, RCL, CLGX, TER, RRD, EQT, ALXN, RYL, CDNS, SCI, BG, BC, LRCX, LKQ, KKR, WDC, WDAY, CCI, PHM, LPS, LEA, BYD, BIIB, WLT and FRAN
Stocks With Unusual Call Option Activity:
- 1) RVBD 2) PXP 3) FIO 4) LRCX 5) RCL
Stocks With Most Positive News Mentions:
- 1) WLP 2) KNX 3) WM 4) JNJ 5) UPS
Charts: