Style Underperformer:
Sector Underperformers:
- 1) Telecom -.57% 2) Biotech -.40% 3) Computer Services -.20%
Stocks Falling on Unusual Volume:
- TWTR, MONT, SPR, SWM, SFLY, TYL, OCN, CALD, ASPS, NILE, MDSO, ALR, GEOS, IT, TW, MLI, GIL, CHK, RENT, RRTS, AOL, WAC, PBH, AWH, AIZ, SWI, GPRE, AOL, WNC, SEE, PRGO, FURX, TSO, TMUS, IT, DRIV and P
Stocks With Unusual Put Option Activity:
- 1) AMTD 2) S 3) EXPE 4) OCN 5) VWO
Stocks With Most Negative News Mentions:
- 1) SPR 2) CELG 3) MCHP 4) TUP 5) CERN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +3.06% 2) Retail +2.66% 3) Homebuilders +2.56%
Stocks Rising on Unusual Volume:
- EVHC, GMCR, SODA, AKAM, RPRX, YELP, SNCR, SBH, PENN, MMS, SALE, AAP, DNKN, USG, VMC, ORLY, PTEN, MMS, SALE, VMC, ADS, ENS, IRBT, FLT, CLF, BKD, SBH, SCSS, LB, DIS, KSS, LVLT, EVHC, ESC and ANN
Stocks With Unusual Call Option Activity:
- 1) AMTD 2) AKAM 3) BG 4) GLUU 5) KSS
Stocks With Most Positive News Mentions:
- 1) KO 2) EXC 3) AOL 4) GMCR 5) YELP
Charts:
Evening Headlines
Bloomberg:
- Abe Eyes Window for Biggest Military-Rule Change Since WWII. Prime
Minister Shinzo Abe, pressed by
China and seeking to strengthen ties with the U.S., is
considering Japan’s biggest change in military engagement rules since
World War II. Barred by its interpretation of a pacifist constitution
from protecting other nations’ troops, Japan needs broader deployment
abilities, according to Abe, 59. Having increased defense spending
two years running and set up a U.S.-style National Security Council, Abe
is now seeking to allow Japan to
come to the aid of its allies, telling parliament yesterday that
“it’s about whether we can exercise this right that every
country has.”
- Hedge Funds Rework Positions in Emerging-Market Drop. Traders
who anticipated a year when
riskier bets would pay off are overhauling their foreign-exchange
positions after an emerging-markets rout led to the biggest
currency-fund losses to start the year since 2004. Hedge funds and
other large speculators shuffled holdings of the dollar, yen, pound,
Mexican peso and four other major currencies by a net 102,115 contracts
in the week ended Jan. 28, according to Commodity Futures Trading
Commission data. That’s the biggest realignment since September, with
updated figures due tomorrow. Currencies from the U.K., Japan and Europe
saw the biggest increase in bets on appreciation, while traders added
wagers on declines for Mexico’s and Australia’s currencies.
- Ford(F) to Cut Third of Australia Workforce in June as Demand Falls. Ford
Motor Co. (F) will cut about 300 jobs at its Australian manufacturing
plants and slash production by a third in June as it prepares to close
its car lines in the nation in 2016. Daily production will fall to
between 80 and 90 cars from 133 cars at present, Wes Sherwood, a
spokesman for the Dearborn, Michigan-based carmaker, said by phone
today.
- Draghi as ECB Master of Suspense Keeps Investors on Edge. Mario
Draghi’s habit of springing surprises means that few can say what he’ll
do when European Central Bank officials decide on monetary policy today.
Inflation at a four-year low and volatile market rates speak for
further action by the Governing Council, even after it cut official
rates to record lows in November. At the same time, signs of economic
improvement and the central bank’s prediction that price gains will
gradually return to target suggest the ECB president may prefer to hold
fire. That’s the call by 62 of the 66 economists surveyed by Bloomberg
News, while 4 predict a cut
in the benchmark rate to 0.1 percent from 0.25 percent.
- Torture Stokes Fear and Resolve as Ukraine Standoff Intensifies. As
demonstrations aimed at ousting Russia-backed President Viktor
Yanukovych have spread, so has the brutality of the response, stiffening
his opponents’ resolve and deepening the standoff. Protest groups say seven
activists have died and 26 have been missing since Jan. 16, when
Yanukovych pushed through a series of anti-protest laws that rekindled
unrest. Officials deny acting illegally and accuse the opposition of
falsifying claims to win public support -- a position dismissed by the
U.S. and the European Union.
- Iraqi Militants Seeking Recruits to Attack U.S., Lawmaker Says. Members of a militant group operating
in Iraq and Syria are recruiting people to attack the U.S.,
according to the lawmaker who heads the House Foreign Affairs
Committee in Washington. The Islamic State of Iraq and the Levant “has reportedly
been actively recruiting individuals capable of traveling to the
U.S. to carry out attacks,” Representative Ed Royce, a
California Republican, said at a hearing of his panel yesterday.
- Jihadist Threat Grows as Egypt Turns to al-Seesi for Security. The
rise of Abdelfatah al-Seesi in Egypt is pouring fuel on an Islamist
militant campaign that threatens his image as the only man who can
restore stability. The defense minister, who overthrew elected leader Mohamed Mursi in July, is increasingly touted as a presidential
candidate himself, winning the blessing of fellow generals last
month. Expectations that he’ll end Egypt’s turmoil are helping
to drive gains on markets. Yet the army-backed government’s
strategy for restoring order risks fueling reprisals by militant
Islamist groups who are expanding their capacity to attack.
- Currency Market Roiled by Trader Exits as Lawsky Probes Banks. The foreign-exchange trading business
was in upheaval across Wall Street as senior executives resigned
and others were fired amid an expanding probe of possible
currency manipulation. Benjamin Lawsky, superintendent of New York’s Department of
Financial Services, asked more than a dozen firms including
Deutsche Bank AG, Goldman Sachs Group Inc. and Citigroup Inc.
for documents on their currency-trading practices, said a person
with knowledge of the matter. Deutsche Bank, the top foreign-exchange trader, fired four dealers after an internal probe,
people with knowledge of the move said. Goldman Sachs lost two
partners while Citigroup said its foreign-exchange chief will
leave in March.
- Bankers Propose Bigger Role for Treasury Managing Dealer System. Wall
Street bankers are asking the U.S. Treasury Department to get more
involved in selecting and monitoring the 21 primary dealers that bid at
government debt auctions and serve as counterparties to the Federal
Reserve. The Treasury should periodically disclose performance evaluation of the dealers, as publicized rankings will help
foster competition among the banks and securities companies,
according to a presentation at a meeting yesterday of the
Treasury Borrowing Advisory Committee, known as TBAC.
Wall Street Journal:
- Obama's IRS 'Confusion'. New evidence undercuts White House claims about IRS motivation. House committees are still digging into the IRS political targeting
scandal, and based on a hearing Wednesday there's more to learn. The day
produced more evidence blowing apart President
Obama's
claims that there was "not even a smidgen of corruption" or
political motivation in the IRS handling of groups applying for
tax-exempt status.
Fox News:
- Calls mount to end ban on oil exports as US production booms. When the Arab oil embargo of 1973 shocked the U.S. into long gas
lines and rationing, Congress approved what was a no-brainer at the time
-- a ban on exporting crude oil produced at home. But today, with domestic oil production booming, some are questioning
whether that ban should stay in place. The new concern is that the U.S.
has more oil than its refineries can handle.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- Growing concern with China's behavior at sea - senior U.S. diplomat. The United States
has growing concerns that China's maritime claims in the disputed South
China Sea are an effort to gain creeping control of oceans in the
Asia-Pacific region, a senior U.S. official said on Wednesday.
In congressional testimony,
U.S. Assistant Secretary of State for East Asian and Pacific Affairs
Danny Russel said China's vague territorial claims in the South China
Sea had "created uncertainty, insecurity and instability" among its
neighbors.
- BOJ Iwata: Japan can withstand tax hike pain. Bank of Japan Deputy
Governor Kikuo Iwata said on Thursday the economy can withstand
the pain from a sales tax hike in April as exports and capital
expenditure will gradually pick up and offset the drop in
household spending.
He also said the central bank will not end its ultra-loose
monetary policy unless its 2 percent inflation target is
achieved in a stable manner.
- Kazakh central banker sees many emerging market devaluations in 2014. Kazakhstan's
central bank governor
Kairat Kelimbetov expects to see a lot of emerging market currency
devaluations this year, with the Russian rouble likely to be "close to
collapse again," he said in Geneva on Wednesday. "I think it's kind of a
beginning," he said of a recent emerging markets sell-off. "It's not
only a Russian economy problem but a problem for all the emerging
markets and I think
we will see a lot of devaluation this year. And the situation
with the rouble will be, let's say, close to collapse again."
Rheinische Post:
- German
SPD Wants Counterespionage Against U.S. SPD's interior policy expert
Michael Hartmann says that "who spies on us must expect to become a
target as well," in an interview. Says U.S. cos should be excluded from
future contracts for communication technologies.
Evening Recommendations
Night Trading
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 149.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 114.25 -2.5 basis points.
- NASDAQ 100 futures +.28%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated at -$36.0B versus -$34.3B in November.
- Preliminary 4Q Non-Farm Productivity is estimated to rise +2.8% versus a +3.0% gain in 3Q.
- Preliminary 4Q Unit Labor Costs are estimated to fall -.7% versus a -1.4% decline in 3Q.
- Initial Jobless Claims are estimated to fall to 335K versus 348K the prior week.
- Continuing Claims are estimated to rise to 2998K versus 2991K prior.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Rosengren speaking, ECB rate decision, Draghi Press Conference,
Challenger Job Cuts Report for January, weekly EIA natural gas inventory
report, RBC Consumer Outlook Index for February, weekly Bloomberg
Consumer Comfort Index and the (FIO) analyst day could also impact
trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 19.52 +2.20%
- Euro/Yen Carry Return Index 143.11 -.13%
- Emerging Markets Currency Volatility(VXY) 9.68 -1.02%
- S&P 500 Implied Correlation 59.25 -1.55%
- ISE Sentiment Index 122.0 -17.57%
- Total Put/Call 1.01 unch.
Credit Investor Angst:
- North American Investment Grade CDS Index 72.98 +.07%
- European Financial Sector CDS Index 99.37 -2.33%
- Western Europe Sovereign Debt CDS Index 55.0 -1.22%
- Asia Pacific Sovereign Debt CDS Index 114.19 -2.26%
- Emerging Market CDS Index 331.72 unch.
- 2-Year Swap Spread 12.75 -.5 basis point
- TED Spread 18.0 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -7.0 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .06% +1.0 basis point
- Yield Curve 235.0 +4.0 basis points
- China Import Iron Ore Spot $122.40/Metric Tonne -.16%
- Citi US Economic Surprise Index 30.30 -.8 point
- Citi Emerging Markets Economic Surprise Index 10.20 -.8 point
- 10-Year TIPS Spread 2.12 unch.
Overseas Futures:
- Nikkei Futures: Indicating +38 open in Japan
- DAX Futures: Indicating +18 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/medical sector longs and index hedges
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- Emerging Stocks Fall to Five-Month Low as Petrobras(PBR) Sinks. Emerging-market stocks dropped to a
five-month low as Petroleo Brasileiro SA to Samsung Electronics
Co. slumped amid concern the global economy will slow down.
The MSCI Emerging Markets Index declined 0.2 percent to 915.70 at 10:40 a.m. in New York, extending this year’s slide to
8.6 percent.
- Hong Kong Stocks Decline as Casinos Companies Tumble.
Hong Kong stocks dropped, dragging the city’s benchmark index down to
its lowest level since July, as casino companies tumbled on signs of a
slowdown in Macau gambling revenue and property developers declined.
Galaxy Entertainment Group Ltd. (27) and Sands China Ltd. (1928) plunged
more than 7 percent to lead losses in Hong Kong. Gambling sales growth
in Macau slumped to 7 percent in January, the slowest pace since October
2012, according to official data. A gauge of property shares dropped
for an eighth day as Cheung Kong Holdings Ltd. (1), the developer
controlled by billionaire Li Ka-shing, slid to its lowest level since
September. The Hang Seng Index retreated 0.6 percent to 21,269.38 at
the close, with more than two stocks dropping for each that rose. The
Hang Seng China Enterprises Index (HSCEI) of mainland companies listed
in Hong Kong, known as the H-share index,
declined 0.4 percent to 9,470.62. China’s markets are closed for
holidays until Feb. 7.
- European Stocks Climb as Investors Weigh U.S. Data.
European stocks advanced for the first time in four days as investors
weighed data that showed U.S. services-industries growth accelerated
while employers in the world’s largest economy hired fewer workers than
estimated. GlaxoSmithKline Plc gained 1.6 percent after saying it
expects revenue and profit to increase this year. Swatch Group
AG rose 3.9 percent after posting full-year earnings that beat
projections. Svenska Handelsbanken AB jumped 3 percent after
announcing a special dividend that boosted its annual payout by
53 percent. Hargreaves Lansdown Plc plunged the most since
August 2011 after saying profit margin fell in its first half.
The Stoxx Europe 600 Index added 0.1 percent to 318.04 at
the close.
- Inverse VIX Fund Gets Record Cash on Calm Market Bet: Options. An
exchange-traded fund that appreciates as calm is restored to financial
markets has never been more popular. About $196 million was added last
week to the VelocityShares Daily Inverse VIX (XIV:US) Short-Term ETN,
which rises in value as swings decline, the most since its debut in
November 2010, according to data compiled by Bloomberg.
- Fed’s Plosser Sees 3% Growth in 2014 Warranting Faster QE Taper. Federal
Reserve Bank of Philadelphia
President Charles Plosser, who votes on policy this year, said he
expects the economy to expand 3 percent in 2014 as the jobless rate
falls to 6.2 percent by year-end, warranting a quicker tapering to bond
purchases by the central bank. Policy makers made the first two cuts to asset purchases in
December and January, slowing to $65 billion a month from $85
billion. While welcoming the trims, Plosser said they “may
prove to be insufficient” if growth keeps accelerating.
“My preference is to scale back our purchase program at a
faster pace to reflect the strengthening economy,” he said
today in a speech in Rochester, New York.
- Contagion Rejected as Biggest Bond Buyers Double Down on Junk.
Michael Buchanan knew exactly what to do as markets were rocked in
recent weeks on concern turmoil in developing nations from Argentina to
China and Turkey would cause the global economic recovery to derail: buy
junk bonds.Money managers from Western Asset to AllianceBernstein
Holding LP say they are uncowed by the selloff in emerging markets and stocks, betting that the global economy is strong enough to
withstand such shocks as central banks keep filling the world with cheap
cash.
- Merck(MRK) to Partner With Drugmakers on Immune Cancer Drug Plan. Merck & Co. (MRK:US), the second-biggest U.S. drugmaker by sales, will work with three other drugmakers to
find the most-promising combination treatments for its top
pipeline prospect, an immune system-based cancer medicine.
Wall Street Journal:
MarketWatch:
CNBC:
- The Obamacare tax deconstructed. Several developments related to the Affordable Care Act will be hitting
many filers in the pocketbook this tax season, but they need to keep an
eye on two other issues that could begin affecting millions of people
next tax season.
- Union vote in Tennessee could be labor rally point. Workers
at the Volkswagen assembly plan in Chattanooga, Tenn., will vote next
week on whether to join the United Auto Workers union.
ZeroHedge:
Business Insider:
NY Times:
- E.P.A. Staff Struggling to Create Pollution Rule. In
marathon meetings and tense all-day drafting sessions, dozens of
lawyers, economists and engineers at the Environmental Protection Agency
are struggling to create what is certain to be a divisive but
potentially historic centerpiece of President Obama’s climate change
legacy. If
the authors succeed in writing a lawsuit-proof regulation that is
effective in cutting carbon emissions from America’s 1,500 power plants —
the largest source of the nation’s greenhouse gas pollution — the
result could be the most significant action taken by the United States
to curb climate change.
Reuters:
- Italy investigates rating agencies over 2011, 2012 cuts. The
Corte dei Conti, Italy's main public audit body, has told three rating
agencies that it is investigating cuts in Italy's sovereign debt ratings
in 2011
and 2012, the prosecutor in charge of the case said on Wednesday.
India's
statistics office is likely to say in two weeks that growth this year
will slump further to an 11-year low, undermining the government's
optimism that it would at least be flat at 5% on the back of a recovery
in the second half.
The advanced estimate for FY14 is set to come in below that level, said an official who didn't want to be named.
The economy expanded 4.6% in the first half and would need to rise
5.4% in the second for growth to come in at 5%, which doesn't lo ..
Gloomy outlook: India's GDP may sink below 5% to an 11-year low
Xinhua:
- China reports 11 new H7N9 human cases. Eleven Chinese people were confirmed to be infected
with the H7N9 bird flu on Wednesday in four regions, with 8 in critical
condition, according to local health authorities. The southern province of Guangdong reported 4 new cases, including a
5-year-old girl and a 42-year-old man in Zhaoqing City, a 49-year-old
man in Foshan City and a 56-year-old man in Shenzhen City, said the
provincial health and family planning commission.
South China Morning Post:
Japan’s defence ban must be revised, says government panel. Rewriting
constitution is too hard for now, so reinterpretation to let Tokyo help
allies is vital to counter a resurgent China, advisers warn. Japan’s defence ban must be revised, says government panel. Rewriting
constitution is too hard for now, so reinterpretation to let Tokyo help
allies is vital to counter a resurgent China, advisers warn.
Style Underperformer:
Sector Underperformers:
- 1) Coal -2.54% 2) Oil Service -1.52% 3) Biotech -1.22%
Stocks Falling on Unusual Volume:
- RL, XOOM, DDD, EPZM, HAIN, BWLD, TDW, GHDX, EL, CLNE, CBL, CHRW, CERN, SYT, SSYS, AMBA, RDEN, CTSH, CSGS, GIMO, HUM, ITMN, PNQI, MTH, RGR, LQDT, GILD, HALO, CAMP, GLF, ENV, EL, IACI, MTH, AMBA, NUS, RDEN, XONE, CENX, ENTA, CLNE and BBG
Stocks With Unusual Put Option Activity:
- 1) AKS 2) BWLD 3) RL 4) NAV 5) AKAM
Stocks With Most Negative News Mentions:
- 1) IACI 2) S 3) HUM 4) CTSH 5) ANGI
Charts:
