Style Outperformer:
Sector Outperformers:
- 1) Retail +.73% 2) Biotech +.46% 3) Hospitals +.43%
Stocks Rising on Unusual Volume:
- PSMI, DYN, TA, JRJC, QUNR, TUES, TFM, CRM, GMCR, SEAS, ROST, TRUE, GPS, ATHM, LEJU, VJET, RPRX and GME
Stocks With Unusual Call Option Activity:
- 1) PVA 2) FL 3) CRM 4) ZION 5) AGN
Stocks With Most Positive News Mentions:
- 1) ROST 2) DYN 3) CRM 4) TFM 5) AKS
Charts:
Evening Headlines
Bloomberg:
- Islamic State Poses Imminent Threat to U.S., Hagel Says. The
militant Islamic State poses an
“imminent threat” to the U.S. and may take years to defeat,
Defense Secretary Chuck Hagel said. “They are an imminent threat to
every interest we have, whether it’s in Iraq or anywhere else,” Hagel
said today at a Pentagon news conference. The beheading by Islamic
State of American journalist James Foley, shown in a graphic video
released this week, has drawn fresh attention and international
condemnation to the terrorist group that has seized a swath of Syria and
Iraq in its quest to create a Sunni caliphate. Islamic State “is as sophisticated and well-funded as any group that we have seen,” Hagel said. “They’re beyond just a
terrorist group. They marry ideology, a sophistication of
strategic and tactical military prowess. They are tremendously
well funded.”
- Russian Convoy Set to Enter Ukraine. A convoy carrying humanitarian aid
from Russia is poised to start crossing the border to Ukraine as
world leaders step up diplomatic efforts to ease tension in the
country wracked by separatist unrest. Deliveries may start today to
Ukraine’s easternmost regions, where months of fighting has left
thousands of residents without water and electricity, the Red Cross
said. German Chancellor Angela Merkel will arrive tomorrow in Kiev,
while Ukrainian President Petro Poroshenko said he’ll seek to negotiate a
peace agreement with his Russian counterpart, Vladimir Putin, and
European Union representatives next week.
- Poorly Paid Chinese Savers Skirt Deposits for Structured Notes. Chinese
investors looking for a
better return than what they’re getting on bank deposits have boosted
structured product offerings in the nation to the most in more than 18
months. The number of structured offerings, which in China are sold
under the banner of wealth- and asset-management products, offered by
banks jumped to 253 in July, the most since December 2012, according
to research firm Cnbenefit. Savers diverted 1.6 trillion yuan ($260
billion) of deposits into asset-management products last month, sending
local-currency bank holdings down
by a record amount, central bank data back to 2000 show.
- India to Unveil Warship to Deter Chinese Submarines Near Coast. India will unveil its first home-built anti-submarine warship tomorrow in a move to deter China from conducting underwater patrols near its shores. Defense
Minister Arun Jaitley will commission the 3,300-ton INS Kamorta at the
southeastern Vishakapatnam port. The move comes a week after Prime
Minister Narendra Modi introduced the largest indigenously built
guided-missile destroyer and vowed to bolster the country’s defenses so
“no one dares to cast an evil glance at India.”
- Smell of Ebola Lingers as Health Workers Fight Disease.
Ebola has a specific smell, says Sebastian Stein, a medical worker in
Sierra Leone. While he can’t really describe it, he can tell you the
effect. “It’s full on. It’s in your face,” he said. Sulaiman
Kanneh Saidu, who runs an Ebola treatment center, recalls running to a
police station to escape an angry mob when he tried to move a diagnosed
patient, along with other suspected cases, to a hospital. The mob wanted
the patients treated at home, and that’s where they ended up, he said.
- Li & Fung Falls on Challenging U.S., Europe Outlook.
Li & Fung Ltd. (494), the world’s largest supplier of clothes and
toys to retailers, fell the most in eight months in Hong Kong trading
after saying conditions will remain challenging in key U.S. and European
markets. The company controlled by William and Victor Fung dropped
as much as 5.1 percent, the biggest intraday decline since Dec.
12, to HK$9.95 and traded at HK$10 as of 9:55 a.m.
- Asian Stocks Advance, Extending Weekly Gain, on U.S. Data.
Asian stocks rose after reports from U.S. housing to manufacturing
showed the world’s largest economy is strengthening. Japan’s Nikkei 225
Stock Average headed for a 10th day of gains, the longest winning streak
in 26 years. Iluka Resources Ltd. climbed 4.3 percent in Sydney,
leading an advance in the region, after posting an unexpected profit.
Santos Ltd. jumped 3.8 percent as earnings increased at the Australian
oil and gas producer. SoftBank Corp. accounted for the largest gain on
the Nikkei 225, rising 0.6 percent in Tokyo. The MSCI Asia Pacific
Index (MXAP) added 0.2 percent to 148.74 as of 9:36 a.m. in Hong Kong,
on course for a second week of gains.
- Italy May Need More From Draghi as Debt Load Mounts: Euro Credit. Italy’s
best hope may again be the bond market’s favorite Italian: Mario
Draghi. The nation’s mounting debt, coupled with a shrinking economy, is
close to unsustainable, Ashoka Mody, a former deputy director at the
International Monetary Fund, said yesterday in a telephone interview from New Delhi.
“Unless there is an extraordinary fiscal effort or a growth recovery,
the Italian debt must be regarded with a reasonable probability to be
unsustainable today,” said Mody, now a visiting professor in
international economic policy at the Woodrow Wilson School, Princeton
University.
Wall Street Journal:
- U.S. Eyes Wider Action on Islamist Militants. Killing of Journalist Fuels Push for International Campaign; Officials Say Syria Vital to Defeating Islamic State. The beheading of journalist James Foley has prompted American
officials to begin working to knit together a broader international
campaign to combat the extremists of the Islamic State, an effort that
the Pentagon warned will require taking the fight beyond Iraq and into
neighboring Syria. The Obama administration has indicated it is
prepared to continue selective airstrikes against the extremists inside
Iraq, where they have seized significant swaths of territory. But Gen.
Martin Dempsey, the chairman of the Joint Chiefs...
- U.S. Bond Issuance Nears $1 Trillion. Companies Take Advantage of Low Interest Rates to Issue Bonds. U.S. corporate-bond issuance is hurtling toward a record for the
third consecutive year, as companies take advantage of a surprising
interest-rate decline to stock up on cash. Companies around the
globe have sold about $994.9 billion of bonds in the U.S. this year as
of Thursday morning, according to data provider Dealogic, which has
figures dating back to 1995. That is up more than 4% from a year ago,
with sales on pace to cross the..
Fox News:
- Pentagon broke law with Bergdahl prisoner swap, government watchdog says. (video) A nonpartisan government watchdog agency said Thursday that the
Pentagon broke the law when it swapped five Taliban leaders for Army
Sgt. Bowe Bergdahl earlier this year. The Government Accountability
Office, in a legal opinion issued at
the request of congressional lawmakers, said the Defense Department
violated the law by failing to notify key Capitol Hill committees at
least 30 days in advance. Further, the report said the Pentagon broke
another law by using funds that were not technically available.
CNBC:
- Fed's Charles Plosser on 'risky' policy, watching wages. (video) The Federal Reserve's current policy on interest rates is too
"risky" and could lead to "traumatic" consequences, one of the Fed's
most outspoken hawks said on Thursday. "We are running a very risky policy, if you will,
given where the stance of the economy is and seems to be going," Charles
Plosser, the president of the Federal Reserve Bank of Philadelphia,
said in an interview.
Zero Hedge:
Business Insider:
Reuters:
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 100.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 68.5 -1.25 basis points.
- NASDAQ 100 futures +.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The Fed's Yellen speaking, ECB's Draghi speaking and the Canadian inflation report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial 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 day.
Broad Equity Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 11.58 -1.70%
- Euro/Yen Carry Return Index 143.94 +.19%
- Emerging Markets Currency Volatility(VXY) 6.65 -1.77%
- S&P 500 Implied Correlation 49.44 +.39%
- ISE Sentiment Index 143.0 +48.96%
- Total Put/Call .67 -22.98%
Credit Investor Angst:
- North American Investment Grade CDS Index 56.18 -2.52%
- European Financial Sector CDS Index 62.54 -2.72%
- Western Europe Sovereign Debt CDS Index 31.91 -.31%
- Asia Pacific Sovereign Debt CDS Index 68.86 -1.18%
- Emerging Market CDS Index 273.30 +.59%
- China Blended Corporate Spread Index 312.91 -.36%
- 2-Year Swap Spread 22.25 +.5 basis point
- TED Spread 21.50 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -13.0 +1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -2.0 basis points
- Yield Curve 194.0 -2.0 basis points
- China Import Iron Ore Spot $91.90/Metric Tonne -.43%
- Citi US Economic Surprise Index 4.0 +5.8 points
- Citi Emerging Markets Economic Surprise Index -14.60 -2.7 points
- 10-Year TIPS Spread 2.18 unch.
Overseas Futures:
- Nikkei Futures: Indicating +54 open in Japan
- DAX Futures: Indicating -5 open in Germany
Portfolio:
- Higher: On gains in my tech/medical sector longs
- Market Exposure: 75% Net Long
Bloomberg:
- Israel Airstrike Kills Three Hamas Commanders in Gaza Strip. An
Israeli airstrike killed three senior military commanders from the Gaza
Strip’s ruling Hamas movement a day after Prime Minister Benjamin
Netanyahu warned that forces would hunt militant leaders down. The
raid, coming close behind an apparent attempt on the life of Hamas’s top
military chief, was followed by a barrage of rockets on Israel from
Gaza and a wave of Israeli aerial attacks on the Palestinian territory.
The surge in violence threatens to overwhelm Egyptian efforts to halt
six weeks of hostilities that have killed 2,075 Palestinians, including
27 today, according to Gaza officials, and 67 on the Israeli side. The
last in a series of Egypt-brokered truces unraveled Aug. 19.
- Red Cross Says Russian Aid May Head to Ukraine Tomorrow. The
Red Cross said truckloads of
Russian humanitarian aid may start crossing the border tomorrow
to eastern Ukraine, where months of fighting has cut off water and
electricity to residents of the region’s biggest cities. Inspections of
almost 300 Russian trucks have begun, Laurent Corbaz, the International
Committee of the Red Cross’s
head of operations for Europe, said today in Moscow. The
organization had been seeking security guarantees as battles
raged on between Ukraine’s army and pro-Russian separatists.
- Euro Area Shows Signs of Weakening as Surveys Miss Forecasts.
Euro-area manufacturing and services activity slowed in August,
signaling that the economy of the 18-nation region remains vulnerable to
weak inflation and rising tensions with Russia. A Purchasing Managers Index for both industries fell to 52.8 from 53.8 in July, London-based Markit Economics said today. A reading exceeding 50
indicates expansion. Economists predicted a decline to 53.4, according
to the median of 20 estimates in a Bloomberg News survey.
- French Manufacturing Activity Shrinks for Fourth Month in August.
French manufacturing activity contracted for a fourth month in August,
signaling that the euro area’s second-largest economy is unlikely to
return to growth after stagnating in the first half. A Purchasing Managers Index for the
manufacturing industry fell to 46.5 from 47.8 in July, London-based
Markit Economics said today. That’s the lowest level in more than a
year. Economists forecast no change, according to a Bloomberg News
survey. A composite gauge of both manufacturing and services activity
rose to 50, the mark that divides expansion from contraction, from 49.4.
- Euro-Area Consumer Sentiment Drops as Ukraine Threatens Recovery.
Euro-area consumer confidence declined in August as escalating
political tensions in eastern Europe threaten the region’s already
faltering economic recovery. An index of household sentiment in the
euro zone decreased to minus 10 from minus 8.4 in July, the European
Commission in Brussels said in a preliminary report today. That is below
the median forecast of minus 9.1 in a Bloomberg News survey of 22 economists.
- Europe Stocks Rise as Data Signals Need for Stimulus.
European stocks rose to the highest level this month as investors bet
that a slowdown in euro-area manufacturing and services growth will
increase pressure on the European Central Bank to do more to support the
recovery. Raiffeisen Bank International AG (RBI) rallied 11 percent
after posting second-quarter net income that exceeded analysts’
projections. Nobel Biocare Holding AG advanced 3.9 percent after
raising its 2014 profit-margin forecast. Fresnillo Plc led
mining companies lower.
The Stoxx Europe 600 Index added 0.7 percent to 337.51 at
the close of trading.
- Fed Optimism Spurs Record Bets Against Stock Volatility.
A soft touch on monetary policy will
continue to suppress stock volatility, or so suggests the record
stretch of cash going into an exchange-traded note that rallies as calm
returns to equities. The Chicago Board Options Exchange Volatility
Index, known as the VIX (VIX), has decreased 31 percent this month and
investors are wagering on further declines. In the five weeks through
Aug. 15, they put almost $320 million into the VelocityShares Daily
Inverse VIX Short Term ETN (XIV) -- the longest stretch of weekly
investments since the note began trading in 2010.
- High-Speed Traders Enlist Chilton to Improve Image in Washington.
Former U.S. Commodity Futures
Trading Commission member Bart Chilton, an outspoken critic of
some high-speed trading practices while at the agency, has been
enlisted in a Washington-based effort to improve the image of an
industry beset by regulatory and legislative scrutiny.
MarketWatch.com:
Fox News:
CNBC:
- Japan has fallen victim to the Keynesian scam. Japan
saw its economy shrink at an alarming 6.8 percent annualized rate in
the second quarter, proving its greatest national disaster, Abenomics,
has failed and the Japanese economy has fallen victim to the
scam called Keynesian economics.
ZeroHedge:
Business Insider:
Reuters:
- U.S. regulators step up warnings to banks for poor risk-spotting. U.S.
regulators are sending some of the biggest global banks verbal warnings
as they crack down on the firms' poor grasp of their own weaknesses,
and push for rapid improvements in risk assessment, according to two
sources familiar with the matter. The firms who received the warnings
are among the largest banks in the world, but the sources declined to
name individual firms because the enforcement actions are not public.
Style Underperformer:
Sector Underperformers:
- 1) Gold -2.53% 2) Airlines -.94% 3) Social Media -.86%
Stocks Falling on Unusual Volume:
- KIN, KIRK, SSI, WUBA, SHLD, CSII, CEM, CYBX, UGLD, RARE, GES, FBRC, REX, ATHM, PLKI, SA, FNV, BITA, CLDX, KB, RAVN, LEJU, ADES, COUP, HAIN, SPLS and CLDX
Stocks With Unusual Put Option Activity:
- 1) SHLD 2) SPLS 3) DXJ 4) EBAY 5) HFC
Stocks With Most Negative News Mentions:
- 1) CATO 2) HAIN 3) FB 4) AA 5) AAL
Charts: