Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.94 -1.06%
- Euro/Yen Carry Return Index 146.73 -.09%
- Emerging Markets Currency Volatility(VXY) 8.54 +1.55%
- S&P 500 Implied Correlation 57.06 -1.30%
- ISE Sentiment Index 93.0 -2.11%
- Total Put/Call .97 +31.08%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.24 +1.25%
- European Financial Sector CDS Index 83.33 +2.90%
- Western Europe Sovereign Debt CDS Index 36.10 -.84%
- Asia Pacific Sovereign Debt CDS Index 88.08 -.11%
- Emerging Market CDS Index 285.09 +1.57%
- China Blended Corporate Spread Index 359.51 -.11%
- 2-Year Swap Spread 14.0 +.25 basis point
- TED Spread 19.5 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -1.75 unch.
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 226.0 -1.0 basis point
- China Import Iron Ore Spot $117.10/Metric Tonne +.09%
- Citi US Economic Surprise Index -32.70 +4.9 points
- Citi Emerging Markets Economic Surprise Index -22.10 -.2 point
- 10-Year TIPS Spread 2.14 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +79 open in Japan
- DAX Futures: Indicating +29 open in Germany
Portfolio:
- Higher: On gains in my tech/biotech/medical sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Ukraine Deploys Military as Russia Evokes Specter of Civil War. Ukraine unleashed an offensive to dislodge militants from
towns in its eastern Donetsk region as the authorities in Kiev said
elements of Russian special forces were identified among the
anti-government forces. Four militants were killed and two
wounded when Ukrainian troops stormed an airport in Kramatorsk, taking
it under control, Russia’s state-run RIA Novosti news service reported.
Ukrainian units backed by armored personnel carriers blocked all
approaches to the town of Slovyansk, RIA said, citing a pro-Russian
activist, Sergey Tsyplakov. Part of Russia’s 45th Airborne Regiment was
spotted in both of the towns, Ukrainian First Deputy Prime Minister
Vitali Yarema said on Channel 5.
- U.S. Mulls Ukraine With EU as Putin Warns on Intervention. The U.S. and European Union
deliberated deepening sanctions against Russia for stoking
unrest in eastern Ukraine, while President Vladimir Putin said he’s being called on to intervene in the former Soviet republic. The Kiev-based government started an “anti-terrorist” operation in the eastern Donetsk region after fighting between
its forces and pro-Russian separatists who seized police and
security buildings there turned deadly this week.
- Spain Anxiety on Euro Leaves Rajoy With Two-Front Battle.
Spanish Prime Minister Mariano Rajoy is counting on Mario Draghi’s help
in a battle on two fronts against the strength of the euro. With the
currency reaching a level high enough to provoke the European Central
Bank president to threaten action, data today showed slowing euro-area
export growth and figures tomorrow will confirm the damage caused to
inflation. For Spain, the effect has already been double-edged,
depressing consumer prices enough to cause annual declines in an economy
beset with unemployment, while also threatening its export-based
recovery.
- German Investor Confidence Falls for Fourth Month in April.
German investor confidence fell for a fourth month in April,
highlighting the risks to the recovery in Europe’s largest economy. The
ZEW Center for European Economic Research in Mannheim said its index of
investor and analyst expectations, which aims to predict economic
developments six months in advance, slid to 43.2 from 46.6 in March.
Economists forecast a decline to 45, according to the median of 37 estimates in a Bloomberg News survey. The gauge reached a seven-year high of 62 in December.
- Japan’s Population Shrinks for Third Year as Ranks of Aged Grow.
Japan’s population slid for a third year with the proportion of people
over the age of 65 rising to a record, underscoring the challenge the
world’s most-indebted economy faces in financing its aging society.
The population declined by 0.17 percent to 127.3 million as of Oct. 1,
as the country maintains one of the world’s lowest birth rate. People
age 65 or older made up one fourth of the total, the highest-ever
percentage, as postwar baby boomers head into retirement, the Internal
Affairs Ministry said on its website yesterday.
- India’s Consumer Inflation Quickens, Adding Rate Pressure. India’s consumer-price inflation
quickened in March for the first time in four months, keeping
pressure on the central bank to keep interest rates elevated. The consumer-price index rose 8.31 percent from a year
earlier, compared with a revised 8.03 percent in February, the
Central Statistics Office said in New Delhi today. The median
estimate in a Bloomberg News survey of 39 analysts was for an
8.25 percent increase.
- Wynn Resorts(WYNN) Leads Casinos Lower on Drop in China Credit.
Wynn Resorts Ltd. (WYNN) fell as much as 7.5 percent, the most in 17
months, after an analyst said less borrowing in China may lead to a drop
in betting by high rollers in Macau, the casino company’s biggest
market. Wynn, based in Las Vegas, slid 5.6 percent to $198.67 at 1:40
p.m. in New York after tumbling as low as $194.64 to mark the biggest
intraday decline since November 2012. Other U.S.
casino companies with operations in Macau also dropped.
- Worst Attack in Nigeria Capital Kills 75 in Rush Hour. The worst-ever bomb attack on
Nigeria’s capital which killed at least 75 people has sparked
concern Islamists are shifting their targets from the northeast
to the center and south of Africa’s biggest oil producer. President Goodluck Jonathan, who visited the scene, blamed the Islamist militant group Boko Haram for the car bomb.
- Emerging-Market Stocks Fall Most in Month Amid Chinese Slowdown. Emerging-market stocks dropped the
most in a month after data showed a decline in Chinese lending
and the weakest money-supply expansion on record, adding to
concern about a slowdown in the world’s second-largest economy. The
MSCI Emerging Markets Index fell 1.2 percent to 1,000.13 at 10:44 a.m.
in New York. The Shanghai Composite Index sank 1.4 percent while the
one-year interest-rate swap slipped to a month low. Vale SA (VALE:US),
which ships half of its ore and pellets to China, drove a slump in
Brazil’s Ibovespa. The Micex Index (INDEXCF) slid to the most in five
weeks and a debt sale was canceled as talks between U.S. President
Barack Obama and Russian President
Vladimir Putin failed to end a deadlock over Ukraine. China’s broadest measure of new credit plunged 19 percent
in March from a year earlier and growth in M2 money supply
slowed to 12.1 percent from 13.3 percent, the central bank
reported today.
- European Stocks Fall Amid Ukraine Violence, German Data.
European stocks declined, erasing their gains for the year, after a
report that Russian troops entered towns in eastern Ukraine, and as
German confidence data missed economists’ forecasts. SABMiller Plc lost
2.3 percent after saying it is considering options for the sale of its
$1.04 billion stake in Tsogo Sun Holdings Ltd. Rio Tinto (RIO) Group
fell 3.1 percent after reporting first-quarter iron-ore output that
missed forecasts. L’Oreal SA gained 1.1 percent after posting higher
first-quarter European revenue. The Stoxx Europe 600 Index fell 1 percent to 326.58 at the
close of trading.
- Gold Futures Drop Most This Year on Stimulus Concerns.
Gold headed for the biggest drop
this year on concern that a pickup in U.S. consumer prices will
give the Federal Reserve leeway to further scale back stimulus.
Palladium fell for the first time in six sessions.
Wall Street Journal:
MarketWatch:
- Hedge funds helped fuel financial crisis: SF Fed. Research
argues link with housing selloff. Hedge funds helped fuel the global
financial crisis just like banks and insurance firms, according to new
research published by the Federal Reserve Bank of San Francisco that
goes against conventional wisdom on the meltdown of 2007-2009.
CNBC:
- Why Japanese bonds look 'terrible': Kyle Bass. (video) Hayman Capital's Kyle Bass believes Wall Street's recent declines in the
biotech and social media sector, which spread to global stock markets
last week, shows cracks in the Japanese economy.
ZeroHedge:
BaseMetals.com:
Reuters:
- Suspected Islamist rebels abduct over 100 Nigerian schoolgirls: teacher. Suspected
Islamist insurgents have abducted more than 100 female students in a
night raid on a government secondary school in Nigeria's northeast Borno
state, a teacher said on Tuesday.
He said gunmen, believed to be
members of the Boko Haram Islamist group which has attacked schools in
the northeast before as part of their anti-government rebellion, carried
off the students from the school in Chibok late on Monday. "Over 100 female students in our government
secondary school at Chibok have been abducted," said Audu Musa, who
teaches in another public school in the area, around 140 km (90 miles)
south of the Borno state capital Maiduguri. Musa
said he saw eight bodies in the area on Tuesday morning, but did not
give the identity of the victims. "Things are very bad here and
everybody is sad," he said.
Telegraph:
-
France is the new cauldron of Eurosceptic revolution. Britain
is marginal to the great debate on Europe. France is the linchpin, fast
becoming a cauldron of Eurosceptic/Poujadist views on the Right,
anti-EMU reflationary Keynesian views on the Left, mixed
with soul-searching over the wisdom of monetary union across the French
establishment. Marine Le Pen’s Front National leads the latest IFOP poll for the
European elections next month at 24pc. Her platform calls for immediate
steps to ditch the euro and restore the franc (“franc des Anglais” in origin, rid of the English oppressors), and to hold a referendum on withdrawal from the EU.
LondonEveningStandard:
Die Zeit:
- Russia Must Back Off Ukraine, Germany's Steinmeier Says. Russia
must distance itself from involvement with pro-Russian separatists in
eastern Ukraine., German Foreign Minister Frank-Walter Steinmeier says
in an interview.
RIA Novosti:
- Russia Says UN Peacekeepers in East Ukraine Unacceptable. Use of
fore in eastern Ukraine is unacceptable, would halt Geneva talks,
citing comments by Russia Foreign Minister Sergei Lavrov to reporters in
Beijing. Russia calls on Ukraine to stop quashing protests.
- Russia Deeply Concerned by Deaths in Ukraine Operation. Events in
Ukraine developing along worst possible lines, citing Konstantin
Dolgov, Russian Foreign Ministry's special representative for democracy
and human rights. Ukrainian govt appears to have chosen to use fore to
put down protests in southeastern Ukraine. Ukraine's actions risk civil
war, destabilization of situation across country.
- Russia
Calls on U.S. to Restrain Ukraine Crackdown. Russian Deputy Foreign
Minister Sergei Ryabkov says military crackdown on pro-Russian militants
in eastern Ukraine risks "total collapse of the state," citing an
interview.
Style Underperformer:
Sector Underperformers:
- 1) Gaming -5.11% 2) Steel -5.10% 3) Biotech -3.40%
Stocks Falling on Unusual Volume:
- IBB, TQQQ, ZBRA, CNSI, BCO, PBY, MSI, GLOG, INFY, APAM, TKMR, ARWR, SNN, BTI, IMPV, AAN, PLL, TITN, CSH, HCLP, RARE, INDY, ANIP, KPTI, MGNX, PRIM, AMAT, HCLP, NTRS, RCII, CSH, PETM, OZRK, RKT, IEP, AAN, WYNN, SGMS, BABY, MGNX, PBYI, TITN, INCY, ANAC, RTRX, ACAD, BCO, ICPT, ARWR and PBY
Stocks With Unusual Put Option Activity:
- 1) ANV 2) GOOG 3) AOL 4) AMAT 5) FXI
Stocks With Most Negative News Mentions:
- 1) ADBE 2) BBY 3) RYL 4) TOL 5) PETM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Oil Service +.49% 2) Utilities +.36% 3) REITs +.17%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
- 1) ARUN 2) RRC 3) UCO 4) SBGI 5) CL
Stocks With Most Positive News Mentions:
- 1) JNJ 2) KO 3) T 4) TWC 5) TSLA
Charts:
Evening Headlines
Bloomberg:
- Fragile Europe Economy Weakens U.S. Push for Russia Sanctions. The U.S. readiness to impose new
economic sanctions on Russia over Ukraine is offset by the
European Union’s reluctance to introduce stronger measures that
could threaten its already fragile economic recovery. While the Obama administration said yesterday that it’s
prepared to ramp up sanctions, possibly to target specific
sectors of the Russian economy such as financial services and
energy, the EU limited its decision to expanding an existing
list of individuals under asset freezes and travel bans.
- China GDP Gauge Seen Showing More Drop Than Main Measure.
China’s loss of economic momentum in the first quarter was deeper than
the most widely-cited data will show, according to analyst forecasts for
a gauge that’s gaining increasing recognition. Gross domestic product
grew 1.5 percent from the previous three months, according to the median
estimate in a Bloomberg News survey ahead of data released tomorrow,
down from 1.8 percent in the fourth quarter. That indicates a sharper
deceleration than the median projection for 7.3 percent growth from a
year earlier, down from 7.7 percent.
- Chinese Stocks Decline Most in Three Weeks as Money Growth Slows.
China’s stocks declined the most in three weeks, led by financial
companies and commodity producers, after the nation’s money supply
increased at the slowest pace since 2001. Poly Real Estate Group Co. and
Industrial Bank Co. dropped more than 2 percent as a gauge of financial
shares, headed for its biggest loss in a month. China Shenhua Energy
Co., the publicly traded unit of the nation’s largest coal producer,
slid 1.5 percent. Tianjin Faw Xiali Automobile Co. declined 1 percent
after saying its net loss probably widened in the first quarter. The Shanghai Composite Index (SHCOMP) slid 0.9 percent to 2,114.69
at 10:47 a.m. local time, heading for its biggest retreat since
March 20.
- Asian Stock Index Headed for First Advance in Three Days.
Asian stocks rose for the first time in three days after the largest
jump in U.S. retail sales since 2012 added to optimism that the recovery
in the world’s biggest economy is intact. Nissan Motor Co. led Japanese
exporters higher. Asics Corp. gained 3.7 percent in Tokyo after Nomura
Holdings Inc. advised buying shares of the sportswear maker. Rio Tinto
Group (RIO) climbed 1 percent in Sydney after iron-ore production at the
world’s second-largest miner rose to a record in the first quarter. SK
Hynix Inc. advanced 2.3 percent in Seoul after Shinhan Investment
forecast improved profit at the semiconductor maker. The MSCI Asia Pacific Index gained 0.4 percent to 137.83 as of 9:29 a.m. in Tokyo, before markets open in Hong Kong and China.
- Rio Produces Record Iron-Ore Output as Global Supply Gains. Rio
Tinto Group (RIO), the world’s second-largest mining company, said
first-quarter iron ore production rose to a record, swelling global
supply that’s forecast to head into surplus this year. Output rose 8 percent to 52.3 million metric tons from 48.3 million tons a year earlier, London-based Rio said today in a
statement. This missed the 54.7 million-ton median estimate of
seven analysts surveyed by Bloomberg after bad weather affected
mines and ports.
Wall Street Journal:
Fox News:
- Survey shows ObamaCare sending premiums rising at fastest clip in decades. A recent survey of 148 insurance brokers shows that ObamaCare is sending premiums rising at the fastest clip in decades. "For the last, about, five years they've been doing this
survey, so this was the largest percentage increase in any quarter since
they've been doing (it)," says Scott Gottlieb of the American
Enterprise Institute. "But at 12 percent, 11 percent increase on average across all the
states -- that puts it at the upper end of any increase we've seen for
decades." That is the national average in a survey done by Morgan Stanley. But in some states, it found rates are soaring. "There are specific states with exorbitant increases," says Gottlieb.
"Delaware had 100 percent increase, Florida had a 37 percent increase,
Pennsylvania 28 percent increase, California had a 53 percent increase
in their premiums."
MarketWatch.com:
CNBC:
Zero Hedge:
ValueWalk:
- Ron Muhlenkamp’s Q1 Letter Highlights Emerging Market Slowdown. Most of the economic and market trends we’ve been discussing for the past few years remain in place.
Russia’s action in the Ukraine / Crimea may have long-term
implications, particularly for Europe, but the near-term economic
implications are modest. It remains to be seen whether this gets added
to our long-term worry list or not.
Reuters:
Shanghai Securities News:
- China Faces Risk of 7% Growth Shortfall. China 1Q GDP growth may
be about 7.3%, Li Ruoyu, a researcher with the State Information Center,
writes in an article.
China Securities Journal:
- Cass Researcher Says 7% China Growth Acceptable. China can accept
economic growth of about 7% and inflation of about 3%, Zhang Zhuoyuan, a
researcher at Chinese Academy of Social Sciences, says in an interview.
People's Daily:
- China Stimulus Not Needed , NDRC Researcher Says. China doesn't need a
stimulus package to boost the economy at current growth levels, citing
Wang Haifeng, a researcher under the National Development and Reform
Commission, as saying. Full-year growth of even 6.5% should be tolerable to achieve economic restructuring,
Wang said. The 7.5% annual growth target my be the "ceiling instead of
the bottom line," Wang said. The real effects of traditional stimulus
measures are weakening and may not be able to charge the economy as they
have done in the past, Wang said.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 124.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 88.25 unch.
- NASDAQ 100 futures +.07%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Empire Manufacturing for April is estimated to rise to 8.0 versus 5.61 in March.
- The CPI MoM for March is estimated to rise +.1% versus a +.1% gain in February.
- The CPI Ex Food and Energy MoM for March is estimated to rise +.1% versus a +.1% gain in February.
9:00 am EST
- Net Long-Term TIC Flows for February are estimated to rise to @22.5B versus $7.3B in January.
10:00 am EST
- The NAHB Housing Market Index for April is estimated to rise to 50 versus a reading of 47 in March.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Yelling speaking, Fed's Lockhart speaking, Fed's Plosser
speaking, Fed's Rosengren speaking, Fed's Kocherlakota speaking, China
GDP/Industrial Production/Retail Sales reports, German ZEW index, weekly
retail sales reports and the (ITC) Investor Day could also impact
trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity
and industrial shares in the region. I expect US stocks to open
modestly higher and to weaken into the afternoon, finishing modestly
lower. The Portfolio is 25% net long heading into the day.
