Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 11.58 -1.20%
- Euro/Yen Carry Return Index 143.16 -.12%
- Emerging Markets Currency Volatility(VXY) 6.56 -2.24%
- S&P 500 Implied Correlation 49.46 +1.39%
- ISE Sentiment Index 86.0 -9.47%
- Total Put/Call .76 -13.64%
Credit Investor Angst:
- North American Investment Grade CDS Index 56.19 unch.
- European Financial Sector CDS Index 58.63 -7.49%
- Western Europe Sovereign Debt CDS Index 28.85 -7.16%
- Asia Pacific Sovereign Debt CDS Index 66.04 -1.94%
- Emerging Market CDS Index 275.54 -.90%
- China Blended Corporate Spread Index 309.67 -.22%
- 2-Year Swap Spread 22.25 unch.
- TED Spread 21.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.0 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% +1.0 basis point
- China Import Iron Ore Spot $88.90/Metric Tonne -.34%
- Citi US Economic Surprise Index 27.30 +22.1 points
- Citi Emerging Markets Economic Surprise Index -13.40 +.8 point
- 10-Year TIPS Spread 2.15 unch.
Overseas Futures:
- Nikkei Futures: Indicating +35 open in Japan
- DAX Futures: Indicating -12 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/biotech/medical/tech sector longs
- Market Exposure: 50% Net Long
Bloomberg:
- Putin Holds Poroshenko Talks as Ukraine Tension Grows. Russian
President Vladimir Putin began talks with his Ukrainian counterpart,
Petro Poroshenko, as tensions flared on the two nations’ border. Putin
said he’s ready for an exchange of opinions on Ukraine as he addressed a
summit of the Russian-led Customs Union in Minsk, Belarus.
Poroshenko said he’s optimistic about the meeting, which includes
European Union foreign-policy chief Catherine Ashton and the presidents
of Belarus and Kazakhstan. “I understand that all players who’ve been
drawn into the situation would like to exit with dignity,” Poroshenko
said in Russian. “I’m ready to discuss different options that would
allow such an exit strategy -- an exit to a peaceful future for Ukraine,
an exit to a peaceful future for Europe.”
- Agricultural Bank Braces for More Bad Loans Amid Slowdown. Agricultural
Bank of China Ltd., the lender with more retail customers than the
population of the euro zone, set aside more money for future bad loans
amid the nation’s economic slowdown. The bank boosted provisions for potential soured credit by
56 percent to 15.6 billion yuan ($2.5 billion) in the three
months ended June 30 from a year earlier, according to a Hong
Kong exchange filing yesterday. Net income rose 12 percent, the
weakest pace in five quarters, to 50.6 billion yuan.
- European Stocks Climb for a Second Day as Lenders Advance.
European stocks climbed, completing their biggest two-day gain in four
months, as banks advanced on further speculation that the euro area will
introduce an asset-purchase program. BNP Paribas SA and Societe
Generale SA both gained more than 1.5 percent. WPP Plc (WPP) added 1.4
percent as the advertising agency posted sales that beat projections.
Telecity Group Plc (TCY) declined the most in six months after the
operator of data centers said its chief executive officer will step
down. The Stoxx Europe 600 Index rose 0.7 percent to 342.96 at the close of trading.
- Iron Ore Risks Extending Drop to Lowest Since 2009. Iron
ore prices are at risk of slumping to the lowest level since 2009 as
increased supplies from Australia and Brazil boost a global surplus and
prompt the closure of some higher-cost Chinese suppliers. The
commodity may retreat to $80 a metric ton this year, according to Helen
Lau, an analyst at UOB Kay Hian Ltd. in Hong Kong, who’s tracked the
market for seven years. Ore with 62 percent content at Qingdao, China,
fell 1.2 percent to $89.02 a ton today, according to Metal Bulletin
Ltd.’s website. That’s the lowest since September 2012, when it bottomed
at $88.08. A price below $88.08 would be the lowest since October 2009.
Prices tumbled 34 percent this year as mining companies from BHP
Billiton Ltd. (BHP) to Rio Tinto (RIO) Group increased output, pushing
the global seaborne market into a glut. Major producers in Australia,
which have average costs of about $40 to $50 a ton, are continuing to
increase supplies even with prices near the lowest level in five years, Australia & New Zealand Banking
Group Ltd. said in a report today.
- S&P 500 P/E Reversal Seen as Yield Gap Narrows: Chart of the Day.
ZeroHedge:
Business Insider:
Washington Free Beacon:
Reuters:
- Islamic State turns radical Islam on Syria Muslims. As Islamic State militants advanced in the Syrian province of Deir al-Zor last
month, those who had held out against them faced a simple choice: beg for mercy
or face certain death. Their options were laid out in stark religious terms by the militant
Islamists who are trying to carve out their own state in Syria and Iraq.
Defeated fighters were required to "atone" or die, a choice set out in Islamic
terms and implying that resisting Islamic State rule amounted to a sin against
God.
Style Underperformer:
Sector Underperformers:
- 1) Gaming -.75% 2) Utilities -.74% 3) Airlines -.56%
Stocks Falling on Unusual Volume:
- BKW, SAFM, BBY, QUNR, RGS, KANG, QIHU, BNS, TSL, MOV, VMW, AMBA, GILD, NUS, CPA, GRUB, DSLV, LTM, ECOL, TRUE, IRBT, RIO, TOUR, LO, LRN, TA and PSEC
Stocks With Unusual Put Option Activity:
- 1) JNS 2) BBY 3) LEN 4) EWW 5) OIH
Stocks With Most Negative News Mentions:
- 1) NWL 2) CGI 3) SAVE 4) QIHU 5) UPS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) HMOs +1.39% 2) Oil Service +1.32% 3) Gold & Silver +1.28%
Stocks Rising on Unusual Volume:
- THI, DGLY, JRJC, DSW, ARWR, ISIS, VLCCF, KNDI, KERX, KITE, ENPH, CLDX, DYAX and MOBL
Stocks With Unusual Call Option Activity:
- 1) LNG 2) DSW 3) UUP 4) ISIS 5) END
Stocks With Most Positive News Mentions:
- 1) JAH 2) AMZN 3) CELG 4) TWTR 5) ANF
Charts:
Evening Headlines
Bloomberg:
- Putin to Meet Poroshenko as Ukraine Tensions Escalate. Russian
President Vladimir Putin is set to meet his Ukrainian counterpart,
Petro Poroshenko, as tensions flare on the two nations’ border. The
leaders will attend talks today with European Union representatives in
Minsk, Belarus, during a summit of the Customs Union, a Russian-led
trade bloc. No separate bilateral meeting is yet planned between them, Russian Foreign Minister Sergei Lavrov said yesterday.
The talks are bringing no respite to the conflict that the United
Nations says has left at least 2,000 dead since Putin annexed Crimea in
March. Ukraine yesterday said an armored column including 10 tanks
entered from Russia as the government in Moscow unveiled plans to send a
second convoy with humanitarian aid into its neighbor’s rebel-held
territory.
- Asian Stock Index Little Changed as Valuations Climb. Asian stocks were little changed after valuations on the regional benchmark index climbed to the highest level this year.
Boart Longyear Ltd. (BLY) fell 10 percent, the most in a month, after
the Australian mining-services firm posted a first-half loss. Dena Co., a
Japanese website owner, surged 5.9 percent, leading gains in the
region. Hyundai Heavy Industries Co. climbed 3 percent in Seoul,
accounting for the largest increase on South Korea’s Kospi index. China
Modern Dairy Holdings Ltd. climbed 7.8 percent in Hong Kong after sales
topped analyst estimates. The MSCI Asia Pacific Index (MXAP) slid less than 0.1 percent to
148.64 as of 9:38 a.m in Hong Kong.
Wall Street Journal:
- Russia Plans New Aid Convoy; Ukraine Says Moscow Moved Tanks. Kiev Says Moscow Sent Tanks, Armored Vehicles Into Its Territory.
Russia said it wants to send a second convoy of what it calls
humanitarian aid into Ukraine in the coming days, while Kiev accused
Moscow of moving tanks across the border, further damping hopes for
peace talks between the Ukrainian and Russian presidents set for Tuesday
in Minsk.
- Insurgency Deepens Iraqi Ethnic, Sectarian Divides. Militant Offensive Threatens to Divide Territory Along Ethnic, Religious Lines. Sunni families in northern Iraq are being prevented from returning to
their homes, suspected by their neighbors and Kurdish authorities who
control the area of collaborating with the extremist group Islamic
State. The offensive by the Sunni militants is threatening to
reshape the demographics of once-mixed communities by dividing territory
along ethnic and religious lines, Iraqi and Kurdish officials say. Kurds,...
Fox News:
- Obama authorizes use of surveillance drones over Syria. President Obama has authorized the use of drones for surveillance in
Syria even as the Assad regime demanded that the U.S. seek permission
before launching any airstrikes on its territory against Islamic State
targets. A senior U.S. official confirmed to Fox News that Obama this weekend
authorized the use of drone surveillance over Syria for the first time.
Zero Hedge:
ValueWalk:
Business Insider:
Financial Times:
- James Bullard says Fed will need to alter guidance. The
US Federal Reserve will soon need to modify its policy statement as the
economy improves and asset purchases end, said St Louis Fed president
James Bullard. Mr Bullard said in an interview with the Financial Times
that the Fed would have to alter both its declaration of “significant”
underutilisation of labour resources and its pledge not to change rates
for a “considerable time” after it stops buying assets.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 99.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 67.5 -.25 basis point.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Durable Goods Orders for July are estimated to rise +8.0% versus a +.7% gain in June.
- Durables Ex Transports for July are estimated to rise +.5% versus a +.8% gain in June.
- Cap Goods Orders Non-Defense Ex Air for July are estimated to rise +.2% versus a +1.4% gain in June.
9:00 am EST
- The FHFA House Price Index for June is estimated to rise +.3% versus a +.4% gain in May.
- The S&P/CS 20 City MoM SA for June is estimated unch. versus a -.31% decline in May.
10:00 am EST
- Consumer Confidence for August is estimated to fall to 89.0 versus 90.9 in July.
- The Richmond Fed Manufacturing Index for August is estimated to fall to 6.0 versus 7.0 in July.
Upcoming Splits
Other Potential Market Movers
- The 2Y $29B T-Note auction and the weekly US retail sales reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed 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: Underperforming
Equity Investor Angst:
- Volatility(VIX) 11.55 +.70%
- Euro/Yen Carry Return Index 143.24 -.33%
- Emerging Markets Currency Volatility(VXY) 6.68 +.91%
- S&P 500 Implied Correlation 48.31 +7.71%
- ISE Sentiment Index 95.0 -18.80%
- Total Put/Call .89 -4.30%
Credit Investor Angst:
- North American Investment Grade CDS Index 56.19 -3.09%
- European Financial Sector CDS Index 63.41 +.78%
- Western Europe Sovereign Debt CDS Index 31.17 +.26%
- Asia Pacific Sovereign Debt CDS Index 68.07 +.47%
- Emerging Market CDS Index 2277.93 -.95%
- China Blended Corporate Spread Index 310.35 -.42%
- 2-Year Swap Spread 22.25 -.25 basis point
- TED Spread 22.25 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -13.75 -1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .02% unch.
- Yield Curve 189.0 -2.0 basis points
- China Import Iron Ore Spot $89.20/Metric Tonne -1.0%
- Citi US Economic Surprise Index 5.20 +.7 point
- Citi Emerging Markets Economic Surprise Index -14.20 +.6 point
- 10-Year TIPS Spread 2.15 unch.
Overseas Futures:
- Nikkei Futures: Indicating -33 open in Japan
- DAX Futures: Indicating -25 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail/biotech/medical sector longs
- Market Exposure: 50% Net Long
