Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 17.17 +5.27%
- Euro/Yen Carry Return Index 143.73 -.59%
- Emerging Markets Currency Volatility(VXY) 8.15 -.85%
- S&P 500 Implied Correlation 61.51 +3.07%
- ISE Sentiment Index 47.0 -34.72%
- Total Put/Call 1.32 +18.92%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.52 +1.67%
- European Financial Sector CDS Index 62.55 -1.21%
- Western Europe Sovereign Debt CDS Index 26.82 -11.1%
- Asia Pacific Sovereign Debt CDS Index 71.04 -.68%
- Emerging Market CDS Index 286.27 +.90%
- China Blended Corporate Spread Index 316.06 -.63%
- 2-Year Swap Spread 26.75 +2.0 basis points
- TED Spread 22.0 -.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -11.0 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 188.0 -4.0 basis points
- China Import Iron Ore Spot $77.50/Metric Tonne n/a
- Citi US Economic Surprise Index 12.40 -5.5 basis points
- Citi Emerging Markets Economic Surprise Index -19.20 -1.1 points
- 10-Year TIPS Spread 1.96 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -182 open in Japan
- DAX Futures: Indicating -36 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
Bloomberg:
- Ukrainian Truce Frays as Rebels Step Up Airport Attacks. Ukrainian government forces repelled
a separatist assault on the Donetsk airport and shelling killed
10 civilians in the eastern city, fraying a cease-fire that had
curtailed violence and casualties for most of last month. Government forces still hold the airport of the biggest
city in the combat zone after repelling a one-hour attack this
morning, the army said on Facebook. The civilians were killed
and at least nine more were wounded, including by a shell that
exploded meters from a school where 70 children were in class,
the Donetsk regional council said on its website.
- Specter of Russian Capital Controls Puts Market on Edge. Holders
of Russia’s ruble-denominated bonds, stung by the worst losses in
emerging markets in the third quarter, are weighing the consequences of
possible capital controls as the currency sinks. “It would be very
negative for your investments in the local currency,” Peter
Schottmueller, who helps manage $17 billion as head of emerging-market
fixed income at Deka Investment GmbH in Frankfurt, said by e-mail
yesterday. Foreign ownership of ruble bonds has dropped and any curbs on
capital flows would further “increase the investment risk,” he said.
- Dallas Ebola Patient Let Go After Telling of Africa Trip. (video) The
first man to be diagnosed in the U.S. with Ebola was sent home by a
Dallas hospital after showing initial symptoms, even after he told a
nurse he was recently in Africa, the center of the disease outbreak. The man would return by ambulance two days later, when he was placed in an
isolation unit and confirmed as infected. The two-day gap, when the man
was in the community and contagious, occurred because “regretfully, that
information was not fully communicated” to other health professionals,
said Mark Lester, a hospital system official.
- Hong Kong Students Threaten Escalation as Councilor Seeks Talks. Hong
Kong’s pro-democracy student leaders threatened to besiege government
offices if demands for free elections and the resignation of the city’s
top
official aren’t heeded, as the government sought to start talks. Demonstrations swelled for a sixth day, with one student leader
estimating the crowd at 9 p.m. at close to 200,000 people. Regina Ip, a
member of the city’s executive council, said today she tried to reach
out to protest organizers.
- Emerging-Market Bond Sales Surge Over $900 Billion on Asia Deals. Emerging-market
bond sales are headed
for an unprecedented year after the busiest nine months on record as
borrowers seek to issue debt before U.S. interest rates start to rise.
Governments and companies in developing nations raised $942 billion in
the first three quarters in overseas and local markets, up 11 percent
from the year earlier, data compiled by Bloomberg show. While sanctions
over the Ukraine crisis brought Russian issuance to a halt, Asian sales
jumped by a fifth, led by China. Ghana sold its longest-maturity
Eurobond, while Hong Kong and South Africa lured Muslim investors with
debut sukuk.
- Europe Stocks Drop as Italy’s Forecasts Cloud Euro-Area.
European stocks fell to the lowest level in more than five weeks after
Italy cut its economic-growth forecasts and U.S. manufacturing data
missed estimates. J Sainsbury Plc slumped to the lowest price in more
than 11 years after saying it won’t see a return to growth in same-store
sales this year. Orange (ORA) SA fell 4.1 percent as Bpifrance sold a
stake in the company for 580 million euros ($731 million). Adidas AG
rose after announcing a plan to return as much as 1.5 billion euros to
shareholders. The Stoxx 600 Europe Index slid 0.8 percent to 340.22 at
the close of trading.
- Nickel Falls to Six-Month Low as Inventories Increase. Nickel prices fell to a six-month low
as inventories monitored by the London Metal Exchange extended
an increase to a record. Aluminum dropped to the cheapest since July. This
year, nickel stockpiles have jumped 37 percent even as Indonesia, the
world’s biggest producer of the mined metal, maintains an ore-export
ban. China is the top user of the metal. Prices entered a bear market on
Sept. 29, falling more than 20
percent from the 2014 closing high on May 13.
- Commodity ETF Outflows Reach Highest This Year on Supply. Investors last month pulled more
money out of U.S. exchange-traded products backed by commodities
than they have all year, as signs of supply gluts drove the
biggest price slump since the financial crisis. About $1.05 billion
was removed from the ETFs in September,
the biggest monthly withdrawal since December, data compiled by
Bloomberg show. Outflows were led by redemptions from precious metals
and energy. Money mangers have cut their combined bullish bets across 18
U.S. traded commodities for 13 straight weeks, the longest streak since
the data begins in 2006, while open interest in raw materials fell last
quarter by the most in two
years.
CNBC:
ZeroHedge:
Business Insider:
IBD:
@PZFeed:
- BREAKING NEWS: 5 students from 4 different schools in Dallas are being monitored after contact with Ebola patient.
Reuters:
RT:
Style Underperformer:
Sector Underperformers:
- 1) Airlines -3.06% 2) Social Media -2.73% 3) Alt Energy -2.72%
Stocks Falling on Unusual Volume:
- OPWR, SYT, PSXP, WPPGY, NKA, B, GTLS, FLY, TRN, ZIV, TSL, CR, GBX, CSC, BBL, SWKS, TK, GEOS, BUD, CAMP, SNX, KEX, ADHD, CSTM, LQDT, PPG, RARE, ASH, AAL, HAWK, KEX, CLH, BGG, LUV, DAL, WMC, WLK, HMSY, DECK, ARCB, THRM, URI, HCLP, CVLT, CAR, GEOS, XON, AMBA, GTLS and ADP
Stocks With Unusual Put Option Activity:
- 1) COG 2) XLB 3) LUV 4) TRIP 5) MDY
Stocks With Most Negative News Mentions:
- 1) BABA 2) SKYW 3) EBAY 4) BZH 5) MOS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.13% 2) Utilities +1.13% 3) REITs +.07%
Stocks Rising on Unusual Volume:
- CVEO, TKMR, PTLA, PRAA, RCAP, AYI, NLNK, NYT, SRPT, BWC and TRUE
Stocks With Unusual Call Option Activity:
- 1) COG 2) OXY 3) TRN 4) DG 5) ANV
Stocks With Most Positive News Mentions:
- 1) ANGI 2) PNRA 3) TSN 4) NRG 5) EXC
Charts:
Evening Headlines
Bloomberg:
- Hong Kong Leader Leung Jeered by Democracy Protesters. Hong Kong’s Chief Executive Leung Chun-ying was jeered by
pro-democracy demonstrators at a ceremony to hoist the Chinese flag as
the city entered the sixth day of protests seeking free elections.
Leung arrived by boat at Golden Bauhinia Square to mark the 65th
anniversary of the founding of the People’s Republic of China. The site
is near the main protests in Admiralty, where organizers estimated more
than 100,000 people gathered last night to demand Leung
step aside and China drop plans to vet candidates in a leadership
election planned for 2017.
- Yahoo(YHOO) Restricted in China as Hong Kong Protests Spur New Control. Users
trying to access Yahoo! Inc.’s (YHOO) main website from mainland China
faced disrupted service yesterday as the government sought to restrict
the flow of information amid student-led protests in Hong Kong. The
www.yahoo.com site was inaccessible in some parts of the country,
according to Greatfire.org, a group that monitors Internet censorship.
The pattern suggested a “man-in-the-middle attack,” in which an attacker
intercepts data that Internet
users exchange with Yahoo’s servers, the group said.
- Putin Reserve Rubles Vanish in Crimea Grab. After proclaiming in 2007 that the ruble was
poised to become a haven for global investors, the Russian leader has
watched it fade, a victim of his nation’s stagnating economy since the
land grab in Ukraine. Now so much money is leaving Russia that its
central bank is considering temporary capital controls, according to two
officials with direct knowledge of the discussions.
- French Policy Stupor Sends Bearish Equity Bets Soaring. French stocks have beaten euro-area stocks for six years. Options traders are betting 2014 will be different.
With a budget deficit poised to rise and economic growth running at
half the region’s rate, investor sentiment on the CAC 40 Index (CAC) is
deteriorating. Options protecting against swings in the equity gauge cost the most since April 2013 relative to the Euro Stoxx 50 Index,
data compiled by Bloomberg show.
- China Factory Gauge Unchanged as Manufacturing Subdued. China’s manufacturing stayed subdued
last month as an official gauge was unchanged, with the world’s
second-largest economy weighed down by a property slump. The
government’s Purchasing Managers’ Index (CPMINDX) was at 51.1 in
September, the same as August’s reading and compared with the 51.0
median estimate in a Bloomberg News survey of economists.
Readings above 50 signal expansion.
- Sydney Homes Costing More Than New York Spurs RBA Review. To
see why Australia’s central bank has shifted its stance on home-lending
curbs, look no further than Sydney’s inner city where a one-bedroom
apartment sold at the weekend for 35 percent more than its last price in
2012. The 54-square-meter (581-square-foot) property in Surry Hills
was purchased by an investor for A$647,000 ($565,931), said Con
Fotaras, a sales consultant at Belle Property Surry Hills who brokered
the transaction. “It’s really hard to put a price on a property at the
moment,” he said of a Sydney market where the median home price is
higher than in New York.
- Rajan Warns Ultra-Low Rates May Distort With No Benefits. Indian central bank Governor Raghuram Rajan warned that near-zero interest rates in developed markets
may be distorting asset prices without creating any real gain in
economic activity. “We have had ultra-low interest rates for close to six
years, and at some point you have dug a hole so deep in terms of
asset prices that any attempt to get out of this has an
immediate effect on asset prices,” Rajan said in an interview
with Bloomberg TV India. While that may be worth the price to
spur the economy, if it doesn’t respond “then you may have
incurred the cost of distorted asset prices without the gain of
real activity.” The debate remains inconclusive, he said.
- Asian Stock Index Retreats on U.S. Confidence, Hong Kong.
Asian stocks fell, with the benchmark index heading for a fourth day of
losses, after consumer confidence in the U.S. unexpectedly declined and
Hong Kong braced for bigger protests as Chinese holidays started. The MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 140.20 as of 9:02 a.m. in Japan after retreating to a four-month low
yesterday.
- Platinum Slides to 5-Year Low as Demand Wanes After Strike Ends. Platinum sank to the lowest level
since 2009 as a surge in the dollar curbed investor interest,
extending the first quarterly loss this year spurred by the resumption of output in South Africa after a strike. Gold held losses near a nine-month low. The metal for immediate delivery fell as much as 1.2
percent to $1,285.50 an ounce, the lowest price since Oct. 5,
2009, extending a retreat from a 10-month high of $1,519.68 in
July. It traded at $1,287 by 8:34 a.m. in Singapore, according
to Bloomberg generic pricing.
- Rising U.S. Crude Exports Move Closer to 1957 Record. U.S.
oil exports, which in July reached the highest level since 1957, are
set to climb to a record by the end of 2014 as producers find ways
around a four-decade restriction on crude leaving the country. The U.S.
sent 401,000 barrels a day abroad in July, 54,000
shy of the record set in March 1957, according to data compiled
by the Energy Information Administration, the Energy Department’s statistical unit. While Canada accounted for 93 percent of the shipments, Italy, Singapore and Switzerland also took U.S. oil. Coupled with Alaskan oil bound for Asia, total U.S. exports will reach 1 million barrels a day by the middle of 2015, according to Citigroup Inc. (C)
- Mosquito Virus That Walloped Caribbean Spreads in U.S. A
mosquito-borne virus that can cause debilitating joint pain lasting for
years has spread to the continental U.S. after infecting hundreds of
thousands of people in the Caribbean and Central America. The virus
is called Chikungunya, an African name meaning “to become contorted.”
While the illness, first identified in Tanzania in 1952, has long
bedeviled Africa and Asia, the
only recorded cases in the U.S. before July involved patients who
contracted the virus abroad.
Wall Street Journal:
- Ukraine Forces Repel Two Fresh Assaults on Donetsk's Airport. Airport Has Become Center of Battles in Recent Days Despite Sept. 5 Truce. Ukrainian forces repelled two fresh assaults by pro-Russia rebels on
the airport in the eastern city of Donetsk on Tuesday, a military
spokesman said, as fighting for the strategic site showed no sign of
ending despite a cease-fire signed nearly a month ago. European
Union diplomats, meanwhile, decided to keep sanctions on Russia in place
while the truce deal is still being implemented. The spokesman, Col....
- Italy's Economic Woes Highlight Dilemma for European Central Bank. Weak Eurozone Inflation, Falling Prices in Italy Put Pressure on ECB to Act.
- Brazil Leader Regains Edge in Election Polls. Two new electoral polls show Brazilian President Dilma Rousseff
widening her lead over her main challenger in a likely second-round
runoff, surveys that disappointed many investors who hope for the
incumbent's ouster. The leader would get 49% of the vote in a
head-to-head showdown with Socialist Party candidate Marina Silva in
late October, said a survey released Tuesday by polling firm Datafolha.
Ms. Silva would capture...
- SEC Grants Citigroup Waivers, Easing Hedge-Fund Curbs. Restrictions Would Have Crimped Some Banking, Including Selling Hedge-Fund Investments to Individuals.
Fox News:
- CDC confirms first case of Ebola in US. The Centers for Disease Control and Prevention (CDC) confirmed on
Tuesday that a patient being treated at a Dallas hospital has tested
positive for Ebola, the first case diagnosed in the United States. The patient left Liberia on September 19 and arrived in the United
States on September 20, CDC director, Dr. Tom Frieden told reporters at a
press conference Tuesday. It’s the first patient to be diagnosed with
this particular strain of Ebola outside of Africa.
MarketWatch.com:
Zero Hedge:
Business Insider:
Reuters:
Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.9Brazil cuts 2014 GDP growth forecast, keeps fiscal goal
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 99.0 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 71.5 -1.75 basis points.
- NASDAQ 100 futures -.08%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:15 am EST
- The ADP Employment Change for September is estimated to rise to 205K versus 204K in August.
9:45 am EST
- Final US Manufacturing PMI for September is estimated at 57.9 versus a prior estimate of 57.9.
10:00 am EST
- ISM Manufacturing for September is estimated to fall to 58.5 versus 59.0 in August.
- ISM Prices Paid for September is estimated to fall to 57.0 versus 58.0 in August.
- Construction Spending for August is estimated to rise +.5% versus a +1.8% gain in July.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+925,000 barrels versus a -4,273,000 barrel decline the prior week.
Gasoline inventories are estimated to fall by -661,110 barrels versus a
-414,000 barrel decline the prior week. Distillate supplies are
estimated to fall by -88,890 barrels versus a +823,000 barrel gain the
prior week. Finally, Refinery Utilization is estimated to fall by -.73%
versus a +.4% gain the prior week.
Afternoon:
- Total Vehicle Sales for September are estimated to fall to 16.8M versus 17.45M in August.
Upcoming Splits
Other Potential Market Movers
- The
Eurozone PMI, weekly MBA Mortgage Applications report, (ADSK) investor
day, (GM) business conference call and the (CP) investor day could also
impact trading today.
BOTTOM LINE: Asian
indices are mostly lower, weighed down by industrial and technology
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.