Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.21% 2) Retail +1.86% 3) Hospitals +1.66%
Stocks Rising on Unusual Volume:
- ANIK, EXAM, EIGI, AMBC, ZU, CRI, ANF, PRAN, NFX, DLTR, BKS, FENG, RP, LOW, SUNE, RRD, FRGI, EIGI, SCTY, DYAX, FEYE, TGT, SLCA and NEWM
Stocks With Unusual Call Option Activity:
- 1) AVNR 2) QEP 3) DLTR 4) TASR 5) CLR
Stocks With Most Positive News Mentions:
- 1) ANF 2) TGT 3) GOOG 4) BKS 5) HD
Charts:
Evening Headlines
Bloomberg:
- Ukraine Vows to Protect Bank Deposits as Government Vote Delayed. Ukraine is weighing measures to stem
cash withdrawals after as much as 7 percent of deposits were
taken from banks during last week’s bloody uprising,
underscoring the need for action to fend off a default. Withdrawals
peaked with as much as 30 billion hryvnias
($3.1 billion) Feb. 18-20 as police and anti-government demonstrators
fought in the center of Kiev, Natsionalnyi Bank Ukrainy Governor Stepan
Kubiv, 51, appointed Feb. 24, said yesterday in his first interview.
- Crisis Gauge Rises to Record High as Swaps Avoided: China Credit.
China's credit-market gauges are triggering alarm bells, as banks grow
cautious in lending to each other while investors prefer the safest
government bonds. The spread between the two-year sovereign yield and
the similar-maturity interest-rate swap, a gauge of financial stress,
reached 121 basis points on Feb. 19, the widest in Bloomberg data going
back to 2007. Two days later, the cost to lock in the three-month
Shanghai interbank offered rate for one year reached an eight-month high
of 94 basis points over similar contracts based on repurchase
agreements, which are considered safer because they involve government
securities as collateral.
- China Mulls Holidays for Nanjing Massacre, Japan Defeat. China
is considering new national holidays to mark the Nanjing Massacre and
Japan’s defeat in World War II, the official Xinhua News Agency reported. Sept. 3 may be designated a victory holiday and Dec. 13 a
national memorial day for victims of Nanjing, Xinhua said
yesterday, citing draft decisions by the Standing Committee of
the National People’s Congress. The actual number of Chinese
killed in the weeks after Japanese forces captured Nanjing in
1937 is in dispute. China estimates the figure at 300,000, with
some Japanese nationalists denying the massacre occurred at all.
- China Faces Lost Decade as Stocks Echo Japan: Chart of the Day. China’s stock market is turning Japanese. The CHART OF THE
DAY shows the Shanghai Composite Index is repeating a pattern in the
Nikkei 225 Stock Average during the 1980s and 1990s. The Japanese gauge
tumbled as much as 80 percent from its 1989 peak as a collapse in home
prices hobbled the nation’s financial system and led to a decade of
tepid economic growth. The Shanghai index has dropped 60 percent since
the end of 2007, erasing almost $2 trillion of market value.
- China’s Yuan Trades Near Seven-Month Low as PBOC Lowers Fixing. China’s
yuan traded near the weakest level in seven months as the central bank
lowered its daily reference rate amid speculation it is looking to
counter one-way appreciation speculation on the currency. The
People’s Bank of China cut the yuan’s fixing by 0.01 percent to 6.1192
per dollar, the weakest since Dec. 20. The currency in Shanghai slipped
0.01 percent to 6.1270 as of 10:20 a.m., according to China Foreign
Exchange Trade System prices. It touched 6.1351 earlier, the weakest
since July 30. The spot rate was 0.13 percent lower than the fixing,
after the two
converged yesterday for the first time since September 2012.
- Asia Stocks Pare Drop as Aussie Falls Amid China Concerns.
Asian stocks pared declines, with the benchmark index set for a first
monthly gain since October, and natural gas headed for its biggest
three-day rout since 2007. The Australian dollar weakened against all
peers amid concern China’s economy is slowing as financial stress
builds. The MSCI Asia Pacific Index slipped 0.1 percent by 12:32 p.m. in Tokyo, after falling as much as 0.4 percent, and has
advanced 2.3 percent this month. The CSI 300 Index of shares in
Shanghai and Shenzhen traded near its lowest close since
December 2012.
- Copper Trades Near Three-Week Low on Global Growth Concerns. Copper
traded near a three-week low
after a report showed flagging U.S. consumer confidence and amid concern
that China’s growth is slowing, damping demand prospects from the
world’s two biggest users. The contract for delivery in three months
on the London Metal Exchange was little changed at $7,066 a metric ton
by 11:11 a.m. in Tokyo. The metal touched $7,034 yesterday, the
lowest since Feb. 6. Futures are down 4 percent this year.
- Credit Suisse Helped Clients Hide Billions, Senate Says. Credit
Suisse Group AG (CSGN) helped American customers hide as much as $10
billion in assets from the Internal Revenue Service, more than double
the amount previously known, according to a U.S. Senate committee. A
report by the Senate Permanent Subcommittee on Investigations
criticized the Zurich-based bank for failing to discipline any senior
executives in the face of widespread tax evasion fostered by 1,800
Credit Suisse employees serving U.S.
clients. The firm also misled investors about growth in its
private banking unit, according to the report.
Wall Street Journal:
Fox News:
- Increased domestic spending may be behind proposed military cuts, CBO report suggests. As the Obama administration announces proposed sweeping defense cuts,
a Congressional Budget Office report documents how increases in other
areas of domestic spending may be forcing the White House to reduce
money for the military. The CBO report finds that mandatory spending, which includes Social
Security, Medicare and Medicaid, is projected to rise $85 billion, or 4
percent, to $2.1 trillion this year.
Zero Hedge:
Business Insider:
Reuters:
- First Solar(FSLR) profit hit by choppy revenue from projects. U.S. solar company First Solar Inc
reported a lower-than-expected quarterly profit and
forecast weak first-quarter earnings, hurt by irregular revenue
from its solar projects. The solar panel maker's shares, which have gained
three-quarters of their value in the past year, slipped 12
percent after the bell on Tuesday.
China Securities Journal:
- China
Should Expand Property Tax Reform Trial. China should "actively" expand
the property tax reform trial to fight against speculation in the
property market, Jia Kang and Liang Ji, researchers at Finance
Ministry's research institute for fiscal science, write in an article.
Shanghai Securities News:
- China to Strengthen Property Land Control This Year. China will
strengthen control of land used in property development this year to
ensure land prices are "reasonable," citing Liao Yonglin, head of the
land use and management department of Ministry of Land and Resources.
The newspaper says such comments signal that property control policies
will continue.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 136.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 103.25 -2.5 basis points.
- NASDAQ 100 futures +.20%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- New Home Sales for January are estimated to fall to 400K versus 414K in December.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+1,155,000 barrels versus a +973,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -760,000 barrels versus a
+309,000 barrel gain the prior week. Distillate inventories are
estimated to fall by -1,160,000 barrels versus a -339,000 barrel decline
the prior week. Finally, Refinery Utilization is estimated to fall by
-.16% versus a -.3% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Pianalto speaking, Fed's Rosengren speaking, UK GDP data, $35B 5Y
T-Note auction, weekly MBA mortgage applications report, (APA) investor
day, (RRD) investor day, (OUTR) analyst day, Simmons Energy Conference,
KeyBanc Consumer Conference, Keefe Bruyette Bank Conference and the
BofA Merrill Ag Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and financial
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 Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.22 -.07%
- Euro/Yen Carry Return Index 146.40 +.35%
- Emerging Markets Currency Volatility(VXY) 8.71 +.46%
- S&P 500 Implied Correlation 52.53 +.19%
- ISE Sentiment Index 101.0 -16.53%
- Total Put/Call .78 +1.30%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.71 +1.30%
- European Financial Sector CDS Index 86.89 +.11%
- Western Europe Sovereign Debt CDS Index 53.0 unch.
- Asia Pacific Sovereign Debt CDS Index 103.14 -2.49%
- Emerging Market CDS Index 303.09 +.20%
- China Blended Corporate Spread Index 358.50 +.06%
- 2-Year Swap Spread 13.5 +.25 basis point
- TED Spread 19.25 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.75 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 239.0 -3.0 basis points
- China Import Iron Ore Spot $119.10/Metric Tonne -.67%
- Citi US Economic Surprise Index -14.60 -2.8 points
- Citi Emerging Markets Economic Surprise Index 13.90 +.2 point
- 10-Year TIPS Spread 2.17 +1 basis point
Overseas Futures:
- Nikkei Futures: Indicating -160 open in Japan
- DAX Futures: Indicating -30 open in Germany
Portfolio:
- Higher: On gains in my biotech/retail sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Goldman(GS) Sticks to Ukraine Currency Rout Call: East Europe Credit. As Ukraine investors greeted the
ouster of President Viktor Yanukovych with the biggest bond
rally this year, calls by interim leaders for as much as $35
billion in aid are weighing on the currency. The yield on Ukraine’s dollar bonds due in 2023 dropped 93
basis points yesterday to a four-week low of 9.26 percent, the
biggest decline since Dec. 17, before rising 12 basis points today. The
hryvnia weakened 6.4 percent to 9.8 per dollar at 2:57 p.m. in Kiev,
data compiled by Bloomberg show. That extended this year’s decline to 16
percent, the most among currencies tracked by Bloomberg after the
Argentine peso and the
Kazakh tenge.
- Ukraine Central Bank Seeks to Halt Deposit Outflow After 7% Drop. Ukraine is considering measures to
stem withdrawals after as much as 7 percent of deposits were
taken from banks during last week’s deadly clashes in the
capital, according to the new governor of the central bank. Withdrawals
peaked between Feb. 18-20 as police and anti-government demonstrators
fought in the center of Kiev, Stepan Kubiv, who was appointed yesterday,
said in his first interview.
As much as 30 billion hryvnias ($3.1 billion) were withdrawn
during the three-day period, he said.
- Nomura Risk Rises in Early Warning for Abenomics: Japan Credit.
Nomura Holdings Inc.'s bond risk has risen this year even as its
borrowing costs fell, as doubt emerge over the prospects for Prime
Minister Shinzo Abe's stimulus policies. The cost to insure the debt of
Japan's biggest brokerage against non-payment has climbed 24 basis
points in 2014 to 99.3 on Feb. 24, according to CMA. That compared with
an 8.3 point increase in the Markit iTraxx Japan index to 75.8, while
the gauge for U.S. financial companies was unch. at 74.0.
- Emerging Market CDS Trading Jumps 31% in 2013, EMTA Says. Trading
in emerging market credit default swaps increased to $1.064 trillion in
transactions, according to a survey of 12 major dealers conducted by
EMTA. 4Q trading up +94% from the same period in 2012 to $276 billion.
Largest CDS volumes in 4Q were in Brazil, at $65 billion. "Sovereign CDS
has increasingly become more widely used as a hedging tool, especially
as the EM corporate market has exploded over the last several years,"
EMTA wrote, citing Jeff Williams, a strategist at Citigroup.
- China’s Stocks Fall on Property Concerns as Yuan Weakens. China’s stocks dropped, sending the benchmark index to its biggest retreat in five months, amid speculation a weaker property market and falling currency will curb corporate earnings. The yuan sank the most since 2010. The Shanghai Composite Index (SHCOMP) declined 2 percent to 2,034.22, extending its four-day retreat to 5.1 percent. China Vanke Co.’s B shares tumbled 8 percent, leading declines among developers. Qingdao Haier Co. (600690), the nation’s biggest refrigerator maker, lost 3.9 percent. The yuan depreciated 0.46 percent, the steepest drop since Nov. 1, 2010, to close at 6.1266 per dollar.
- Tepco Says Fukushima Radiation ‘Significantly’ Undercounted. Tokyo Electric Power Co. (9501) is re-analyzing 164 water samples collected last year at the wrecked Fukushima atomic plant because previous readings “significantly undercounted” radiation levels. The utility known as Tepco said the levels were
undercounted due to errors in its testing of beta radiation,
which includes strontium-90, an isotope linked to bone cancer.
None of the samples were taken from seawater, the company said
today in an e-mailed statement.
- Caixa Said to Curb Lending as Brazil Seeks to Avoid Rating Cut.
Caixa Economica Federal, the bank owned by Brazil's government, will
slow lending growth this year by about 40% to help protect the nation's
credit rating, said a person familiar with the matter. The bank expects
to expand its loan book by 22% this year, after 37% growth in 2013, said
the person.
- European Stocks Are Little Changed With Vivendi Declining.
European stocks were little changed, paring earlier losses in the last
hour of trading and closing at its highest level since January 2008.
Jyske Bank A/S (JYSK) rallied 11 percent after buying BRFkredit A/S.
Vivendi SA (VIV), the French company preparing to spin off its phone
business SFR, slipped 1.1 percent after posting fourth-quarter revenue
that missed analysts’ estimates. Fresenius Medical Care AG slumped 5.7
percent after the world’s biggest provider of kidney dialysis forecast a
decline in 2014 profit. The Stoxx Europe 600 Index gained less than
0.1 percent to 338.39 at the close of trading in London after earlier
falling as much as 0.5 percent.
- WTI Crude Falls on China Growth Concern Amid Ample Supply.
WTI for April delivery decreased $1, or 1 percent, to $101.82 a barrel
at 2:07 p.m. on the New York Mercantile Exchange. The volume of all
futures traded was 20 percent below the 100-day average. Futures are up
3.5 percent this year.
- Rail Stocks to Lag Behind Earnings as U.S. GDP Help Fades: EcoPulse. Shares of U.S. railroad companies are poised to lag behind the
broader market after more than a decade of outpacing it, as the boost to
earnings from U.S. growth could start to wane. The relative
performance of the Standard & Poor’s Supercomposite Railroads
Index -- which includes Union Pacific Corp. (UNP), Norfolk Southern
(NSC) Corp. and CSX Corp. -- has stalled in the last 12 months, leading
the S&P 500 Index by 2.9 percentage points after being ahead by
almost 500 percentage points since 2000.
- JPMorgan Sees 8,000 Consumer, Mortgage Bank Job Cuts in 2014. JPMorgan Chase &
Co. (JPM:US), the biggest U.S. bank, said it would eliminate about
8,000 jobs in the consumer and mortgage banking units this year as
demand for
refinancings declines. The reductions would bring total staffing cuts to 24,500 in
the two divisions since the start of 2013, New York-based
JPMorgan said in a presentation today. Last year, the firm said
it would eliminate as many as 19,000 in the two divisions by the
end of 2014.
- Polar Air to Lock on Eastern U.S. at Least to Mid-March. The eastern U.S. will be locked into
a pattern of cold air, boosting energy use, through the first
half of March, forecasters say. Frigid weather will dominate from
the Midwest to the Northeast as well as eastern Canada for at least the
next two weeks and possibly beyond, said Matt Rogers, president of
Commodity Weather Group LLC in Bethesda, Maryland.
Wall Street Journal:
- Fed's Tarullo Sees Signs of Market Risks. The Federal Reserve's leading bank supervisor, Daniel Tarullo, said
Tuesday that he is seeing modestly increased risks in credit markets,
particularly in corporate bonds and leveraged loans. Mr. Tarullo said the U.S. central bank shouldn't rule out using
monetary policy to fight potentially damaging asset bubbles, but
stressed it should first try to employ and refine current existing
regulatory tools for spotting such threats to financial stability. "High-yield corporate bond and leveraged loan funds, for instance,
have seen strong inflows, reflecting greater investor appetite for risky
corporate credits, while underwriting standards have deteriorated,
raising the possibility of large losses going forward," Tarullo told
a
conference sponsored by the National Association for Business Economics.
"At present, our monitoring does find some evidence of increased
duration and credit risk, but the increases appear relatively moderate
to date--particularly at the largest banks and life insurers," Mr.
Tarullo said. "Monetary policy action cannot be taken off the table as a
response to the build-up of broad and sustained systemic risk."
ZeroHedge:
Business Insider:
Digital Journal:
- TransUnion: Auto Loan Debt Rises for 11th Straight Quarter; Delinquencies Remain Subdue. Auto loan debt per borrower increased for the 11th
straight quarter, moving up 4.4% from $16,060 in Q4 2012 to $16,769 in
Q4 2013. On a quarterly basis, auto loan debt also increased from
$16,685 in Q3 2013. The auto loan delinquency rate (the ratio of borrowers 60
days or more delinquent on their auto loans) increased to 1.14% in Q4
2013, up on both a quarterly and yearly basis (from 1.04% in Q3 2013 and
1.09% in Q4 2012).
Reuters:
Telegraph:
US-China Perception Monitor:
Style Underperformer:
Sector Underperformers:
- 1) Hospitals -4.21% 2) Steel -2.35% 3) Coal -1.12%
Stocks Falling on Unusual Volume:
- RP, ALSN, PERY, JONE, TRNX, WMGI, SDRL, THC, GTLS, SINA, ROSE, ANFI, CCOI, EXPD, TNC, WNS, RST, CCIH, RMS, SGY, LLL, CHH, BAGL, LCI, DLR, PGTI, UPL, TREX and RP
Stocks With Unusual Put Option Activity:
- 1) ACAS 2) SPLS 3) OIH 4) MW 5) XLB
Stocks With Most Negative News Mentions:
- 1) LMT 2) THC 3) SLM 4) FXI 5) IPG
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +1.23% 2) Internet +.75% 3) Biotech +.65%
Stocks Rising on Unusual Volume:
- ITMN, ZU, VSI, PPO, BLMN, XPO, RAX, TSLA, DDS, LNKD, LYV, BCRX, KNDI, INFI, SPNC, EGHT, TPC, RAX, AYR, VSI, ACTG, FEYE and FNP
Stocks With Unusual Call Option Activity:
- 1) ITMN 2) BSX 3) STSI 4) WLL 5) HBAN
Stocks With Most Positive News Mentions:
- 1) M 2) LOW 3) ITMN 4) BBRY 5) TSLA
Charts:
