Evening Recommendations
Deutsche Bank:
- Cut (AAPL) to Hold, target $102.
Night Trading
- Asian equity indices are -.75% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 98.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 71.75 +.25 basis point.
- NASDAQ 100 futures +.23%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Trade Deficit for August is estimated at -$40.8B versus -$40.5B in July.
- The Change in Non-Farm Payrolls for September is estimated at 215K versus 142K in August.
- The Unemployment Rate for September is estimated at 6.1% versus 6.1% in August.
- Average Hourly Earnings for September are estimated to rise +.2% versus a +.2% gain in August.
9:45 am EST
- Final US Services PMI for September is estimated at 58.5 versus a prior estimate of 58.5.
10:00 am EST
- ISM Non-Manufacturing for September is estimated to fall to 58.5 versus 59.6 in August.
Upcoming Splits
Other Potential Market Movers
- The Eurozone Services PMI could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Above Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- Volatility(VIX) 16.07 -3.82%
- Euro/Yen Carry Return Index 143.46 -.05%
- Emerging Markets Currency Volatility(VXY) 7.86 -2.36%
- S&P 500 Implied Correlation 56.27 -4.34%
- ISE Sentiment Index 73.0 +52.08%
- Total Put/Call 1.0 -23.66%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.23 -2.49%
- European Financial Sector CDS Index 63.46 +1.13%
- Western Europe Sovereign Debt CDS Index 27.17 +1.27%
- Asia Pacific Sovereign Debt CDS Index 71.66 -.29%
- Emerging Market CDS Index 281.03 -1.78%
- China Blended Corporate Spread Index 319.67 +1.14%
- 2-Year Swap Spread 26.25 -.5 basis point
- TED Spread 22.50 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -9.75 +1.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- Yield Curve 190.0 +2.0 basis points
- China Import Iron Ore Spot $77.50/Metric Tonne n/a
- Citi US Economic Surprise Index 11.40 -1.0 basis point
- Citi Emerging Markets Economic Surprise Index -19.40 -.2 point
- 10-Year TIPS Spread 1.96 unch.
Overseas Futures:
- Nikkei Futures: Indicating -76 open in Japan
- DAX Futures: Indicating +42 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/medical/retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
- Market Exposure: Moved to 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Oil Service -2.03% 2) Coal -1.83% 3) Semis -.82%
Stocks Falling on Unusual Volume:
- HMC, ZINC, CREE, RDUS, WBMD, AGU, GTLS, GRMN, HSBC, SLCA, LINE, LNG, GD, EMES, PTEN, ALGN, MASI, BBEP, GPRO, EXP, TOT, QRE, OILT, CLMT, ALLY, ARP, KKR, FTK, SN, GBX, HP, GPRE, SMCI, PTEN, CJES, GDP, DWA, PEIX, PTLA, MASI and ENPH
Stocks With Unusual Put Option Activity:
- 1) GME 2) LOW 3) AA 4) EWY 5) HD
Stocks With Most Negative News Mentions:
- 1) CREE 2) AGU 3) CBI 4) SINA 5) WYNN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Utilities -.26% 2) Foods -.33% 3) Restaurants -.34%
Stocks Rising on Unusual Volume:
- RLD, MYL, KITE, NYT, AN, VOLC, KNDI and LAD
Stocks With Unusual Call Option Activity:
- 1) SWN 2) MYL 3) MDLZ 4) ETE 5) GSAT
Stocks With Most Positive News Mentions:
- 1) T 2) DAL 3) RAD 4) AKS 5) DRI
Charts:
Evening Headlines
Bloomberg:
- China Backs Hong Kong’s Leung on Front Page of People’s Daily. China’s central government is “very
satisfied” with Hong Kong Chief Executive Leung Chun-ying and
will continue to support his leadership as protesters block
streets in the city, the official People’s Daily said. China also backs the police handling of the “illegal
activities,” the Communist Party’s premier newspaper said in a
front-page commentary today. Occupy Central protests have
violated Hong Kong’s rule of law, caused serious traffic
congestion, disrupted social order and hurt peace and
prosperity, the newspaper said. The People’s Daily is published by the Communist Party’s
Central Committee and watched closely as an indicator of
government intentions. In a similar unsigned commentary
yesterday, the newspaper said: “Occupy Central hurts Hong Kong
and its people; if we let it drag on the consequences will be
unimaginable.”
- Islamic State Nears Kurdish Town as Turk Lawmakers Debate Troops. Islamic State forces are closing in on the Syrian town of Kobani, a
key Kurdish stronghold near the border with Turkey, as Turkish lawmakers
prepare to authorize the army to send troops to the neighboring
country. Militants driving tanks and firing mortars captured the
final village on the outskirts of Kobani and were one kilometer from
the town’s entrance, according to Ibrahim Ayhan, a lawmaker from the
pro-Kurdish People’s Democracy Party. Airstrikes yesterday failed to
slow their advance, he said by phone. The U.S military said there were
three strikes near Kobani, which destroyed an armed vehicle, artillery
piece, and tank.
- War Severs Ukraine’s Industrial Arteries as Economy Sinks. The
bloody conflict in Ukraine’s east is severing the arteries that connect
the nation’s economy. The effects are being felt hundreds of miles from
the unrest in industries as different as electricity and food
processing. Power plants at the other end of the country are being starved of coal because of disruptions to mining, while in
Kiev, one of Ukraine’s biggest poultry producers is looking
abroad for incubatory eggs after output was halted at its
facility near the war-ravaged city of Donetsk.
- China to Impose Quota on Local Government Debt Amid Rising Risks. China
announced plans to cap the amount of debt local governments can take on
and ban them from additional borrowing through financing vehicles as
authorities step up efforts to control risks to the financial system. All borrowing by provinces and cities will need to be
within a quota set by the State Council, China’s cabinet, and
approved by the National People’s Congress, according to a
statement posted to the central government’s website today. No
figures were given for the possible amounts of the quotas. The central government won’t bail out local authorities,
who will be held responsible for repaying their debt, it said.
- RBA Says Talks on Home Lending Curbs May Go Beyond Investors. Australian
central bank officials
said possible steps to cool the nation’s housing market wouldn’t
necessarily be limited to investor lending curbs. The Reserve Bank of
Australia is discussing with the Australian Prudential Regulation
Authority “steps that might be taken to reinforce sound lending
practices, particularly for investor finance, though not necessarily
limited to that,” Assistant Governor Malcolm Edey, who is
responsible for the financial system, and Luci Ellis, the head of the
central bank’s financial stability unit, said in a statement to a
parliamentary
panel in Canberra today.
- Burgundy to Noodle Prices Rise as Weaker Yen Hurts Consumers. The weakening yen
is starting to squeeze Japanese consumers as prices rise for everything
from Burgundy wine to instant noodles, threatening Prime Minister
Shinzo Abe’s plans to revive the country’s economy. The currency slid to 110 yen to the dollar yesterday, the lowest
level in six years, making imported goods and materials more expensive.
Though inflation is one of Abe’s monetary goals, the yen’s sharp slide
undermines steps to boost consumer spending and endangers public backing
for his economic program.
- Asia Stocks Heading for Five-Day Decline on Fed Concern.
Asian stocks fell, with the benchmark index heading for a fifth day of
losses, amid concern over the end of the Federal Reserve’s stimulatory
bond-buying program and signs of weakness in the euro-area economy. The
MSCI Asia Pacific Index (MXAP) slid 0.1 percent to 139.64 as of 9:02
a.m. in Tokyo after retreating to a four-month low yesterday. The measure capped its biggest monthly drop in more
than two years in September amid concern Chinese growth is
slowing and that the Federal Reserve may increase U.S. interest
rates sooner as it ends asset purchases.
- Dollar Approaches Strongest in 2 Years Versus Euro. The dollar approached its strongest
level in two years against the euro as diverging central-bank
policies pushed U.S. Treasury yields to almost the highest
versus their German counterparts since 1999. The greenback fell from
a six-year high versus the yen amid
bets it gained too much, too fast. Germany sold 10-year bonds to yield
less than 1 percent for the first time, reflecting Europe’s economic
quagmire and the additional steps the European Central Bank may take to
spur a recovery. The Federal Reserve is considering when to raise
interest rates. Stocks slid.
- Dallas Parents Worried Over Ebola Exposure at Schools. Four
days after Dallas Ebola patient Thomas Eric Duncan was hospitalized
after earlier being sent away from the ER, some parents removed their
children from school because of reports he was in contact with five
students. Duncan was first seen at Texas Health Presbyterian
Hospital Dallas on Sept. 26, according to information supplied by the
hospital’s front desk. He was sent home from the emergency room with
antibiotics
even though he told a nurse he had recently been in Africa, hospital
officials said yesterday.
- SEC’s Gallagher Sees Bond Bubble Hurting Retail Investors. The
$10 trillion U.S. corporate bond market has been inflated by companies
taking advantage of record low interest rates for the last five years,
Securities and Exchange Commission member Daniel M. Gallagher said today. “It clearly looks like a bubble,” Gallagher said at a
market structure conference sponsored by the Security Traders
Association. “You have a buildup of assets and you have to
think about the downside if the bubble gets pricked.”
Wall Street Journal:
- U.S. Monitors Contacts of Ebola Patient in Texas. Officials Look for Symptoms in at Least a Dozen People Who May Have Come Into Contact With Liberian Man. Health authorities are monitoring for
symptoms of Ebola in at least a dozen people who came into contact with a
Liberian man before he was hospitalized in Dallas, moving to contain
the deadly disease before it can spread further in the U.S. Among
those who had contact with the sick man,
Thomas Eric Duncan,
are five children, ranging from elementary to high-school age, as
well as a small group of adults, state and local officials said at a
news conference on Wednesday.
- Secret Service Director Pierson Resigns. Former Chief of Presidential Protective Division Joseph Clancy to Take Over on Interim Basis. The head of the Secret Service resigned under pressure Wednesday after a
series of embarrassing stumbles that outraged lawmakers, caught the
White House by surprise and called into question the security of the
president.
Fox News:
MarketWatch.com:
- Starting next week, a new indicator may roil the markets. The Federal Reserve
will publish a new monthly gauge of the health of the labor market,
called the labor market conditions index, beginning next Monday, the
central bank announced Wednesday. The report is an attempt to dig deeper into labor market trends beyond the standard monthly unemployment rate measure.
Zero Hedge:
- Something's Broken. (graph) NYSE New Lows have surged to 14-month highs and the spread to New Highs is weakest since August 2013.
Business Insider:
The Daily Rapid:
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
Telegraph:
Evening Recommendations
Night Trading
- Asian equity indices are -1.50% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 71.75 +.25 basis point.
- NASDAQ 100 futures +.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to rise to 297K versus 293K the prior week.
- Continuing Claims are estimated to fall to 2425K versus 2439K prior.
10:00 am EST
- Factory Orders for August are estimated to fall -9.5% versus a +10.5% gain in July.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Bullard speaking, Fed's Lockhart speaking, Fed's Dudley speaking,
ECB rate decision, Draghi press conference, Challenger Job Cuts report
for September, RBC Consumer Outlook Index for October, ISM New York for
September, weekly Bloomberg Consumer Comfort Index, weekly EIA natural
gas inventory report, (AN) sales update and the (ORCL) analyst meeting
could also impact trading today.
BOTTOM LINE: Asian indices are 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.