Bloomberg:
- Rebel Elections Snarl Ukraine Talks as Putin Resists EU. Separatists’ plans to bring forward
elections in rebel-held regions of Ukraine have become a
sticking point in talks between the European Union and Russia aimed at resolving conflict.
Russian President Vladimir Putin refused to denounce votes planned for
Nov. 2 in Luhansk and Donetsk in the east of the country despite
pressure from European leaders including Germany’s Angela Merkel and the
U.K.’s David Cameron at talks in
Milan today, according to a Downing Street official.
- Putin’s Ruble Rescue Plan Crashes Into Global Market Rout.
Russia’s efforts to ease a dollar funding crunch that is exacerbating
the ruble’s decline are being hampered by a global market rout. The
ruble fell to a fresh record yesterday, bond yields jumped and the cost
of insuring government debt against non-payment was within 10 basis
points of the highest level since
2011 even as the central bank announced a $50 billion repurchase
agreement program and the Finance Ministry pledged an additional
$3 billion.
- Dallas Lab Worker Isolated on Carnival Cruise for Possible Ebola Contact. (video)
A
health worker from the Dallas hospital that diagnosed the first U.S.
case of Ebola has voluntarily been isolated aboard a Carnival Corp.
cruise ship. The worker, a lab supervisor at Texas Health Presbyterian Hospital, hasn’t
exhibited any symptoms of Ebola since she boarded the Carnival Magic
bound for the Caribbean on Oct. 12 in Galveston, Texas, according to an
e-mailed statement today from Carnival Corp.
- ECB Says Too-Slow Governments a Threat to Europe Revival. European Central Bank policy makers
said governments must accelerate plans to strengthen their
economies or risk derailing the region’s recovery. “Talking vaguely about structural reforms, but not doing
them, is the worst of all worlds,” Executive Board member
Benoit Coeure said today in Riga. “It creates uncertainty over
the path of real interest rates, without in tandem raising
expectations of future growth.”
- Italian Bonds Drop as Greek Concern Sparks Worst Week in a Year. Italian bonds fell, with 10-year
yields set for the biggest weekly increase in more than a year,
as prospects of Greece exiting its bailout combined with the threat of recession to sap demand for higher-yielding assets.
Spain’s government securities dropped for a third day before the
country’s rating review by Moody’s Investors Service, a day after a debt
sale fell short of its maximum target amid turmoil prompted by a surge
in Greek yields. German 10-year bonds headed for a fifth week of gains
as economic reports this
week and gauges showing a decline in inflation expectations
fueled concern the euro area is heading for recession.
- Rolls-Royce Sales to Drop on Russia Sanctions, Economic Woes.
Rolls-Royce Holdings Plc (RR/) said sales will decline this year and
could fall again in 2015 as a worsening economic situation prompts
clients to delay orders and sanctions over the Ukraine crisis stall
Russian contracts. Shares of London-based Rolls-Royce fell as much as 16 percent
as the world’s second-biggest maker of aircraft engines said revenue
will drop by between 3.5 and 4 percent in 2014, with free cash flow
dwindling to about 350 million pounds ($564
million), or less than half the figure previously anticipated.
- Corporate Gloom Spreads in Europe as Rolls-Royce to Nestle Miss. While
Rolls-Royce Holdings Plc (RR/)’s gas turbines and Jimmy Choo Plc
(CHOO)’s $1,995 peep-toe sandals have nothing in common, today the two
companies encapsulated the corporate decline that’s gripping Europe. It’s been a tough week for European companies, with Rolls-Royce cutting its full-year target for sales and cash flow,
leading the stock to drop the most in eight month, while Jimmy
Choo sold shares to the public at the bottom end of its range.
- European Stocks Rise Most Since 2011 on Stimulus Pressure. (video)
European stocks climbed the most in almost three years, ending their
longest losing streak in 11 years, as an ailing euro-area economy
increases pressure on policy makers to provide more stimulus measures. The Stoxx Europe 600 Index jumped 2.8 percent to 318.68 at the close of trading, after a
7.7 percent slump in the past eight days dragged it to the lowest level
of the year.
- FHFA Said to Plan Steps to Ease Lending to Riskier Buyers. A U.S. housing regulator plans new
steps to encourage banks to lend to buyers with less than-perfect credit scores,
according to two people with direct knowledge of the matter. Melvin L.
Watt, the director of the Federal Housing Finance Agency, will clarify
in a speech next week when banks are required to buy back failing loans
from Fannie Mae (FNMA) and Freddie
Mac, said the people, who asked not to be identified because his
plans aren’t public.
Fox News:
CNBC:
ZeroHedge:
Financial Times:
- Junk bonds caught in flight from risk. A sell-off in US stocks this week hit the junk bond markets as investors
shunned the riskier securities amid fears about the outlook for the
global economy.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.71% 2) Oil Service -.73% 3) Retail -.31%
Stocks Falling on Unusual Volume:
- URBN, NLNK, NFLX, ATHN, GIII, MYGN, SNDK, CMA, GOOGL, GOOG, TS, CF, CMRX, EGL, COF, CWEI, FRAN, COV, BRS, KSU, AMSF, KT, VNR, FARO, WPZ, FRAN, AREX, XONE and URBN
Stocks With Unusual Put Option Activity:
- 1) HCA 2) COF 3) BAX 4) HIG 5) DOW
Stocks With Most Negative News Mentions:
- 1) CWEI 2) TIFF 3) LULU 4) RIG 5) URBN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +4.17% 2) Biotech +2.41% 3) HMOs +2.39%
Stocks Rising on Unusual Volume:
- ESI, TTPH, QLGC, XLNX, PPC, REGN, SRPT, TXT, HAL, GBX, BAS, SUNE, FMI, EQIX, EMES, CJES, BCEI, CPHD, NYLD, HAL, SLB, MRC, BHI, SLCA, VMC, ICPT, HON, CHKR, WAL, NTCT, ITT, VC, HUN, WLL, TWC, LINE, ADTN, CLH, OXY and HDS
Stocks With Unusual Call Option Activity:
- 1) URBN 2) JDSU 3) WY 4) TWC 5) ESI
Stocks With Most Positive News Mentions:
- 1) TXT 2) BA 3) MS 4) PCYC 5) SLB
Charts:
Evening Headlines
Bloomberg:
- Putin Threatens EU Gas Squeeze Raising Stakes for Ukraine. Russian
President Vladimir Putin flew into Milan last night for peace talks
with European Union leaders after threatening to cut the supply of
natural gas through Ukraine if the government in Kiev diverts fuel for
domestic use. After missing an earlier meeting time because he
stayed on at a military parade in Serbia, Putin met German Chancellor
Angela Merkel shortly before midnight as they prepared for formal talks
on Ukraine scheduled for 8 a.m. today. Ukrainian President Petro
Poroshenko also
met Merkel as well as Italian Prime Minister Matteo Renzi and EU
President Herman van Rompuy.
- Asian Stocks Rebound From Six-Month Low on Fed Outlook.
Asian stocks rose from a six-month low after a Federal Reserve official
said the central bank should consider delaying the end of bond
purchases and U.S. data eased concern over the global economy. The
MSCI Asia Pacific Index (MXAP) climbed 0.1 percent to 134.93 as of 9:01
a.m. in Tokyo after closing yesterday at the lowest since March 25.
The gauge is heading for a sixth straight weekly decline as faltering
recoveries in China and Europe spark concern global economic growth will
slow and the Fed considers when to raise interest rates.
Wall Street Journal:
- In Liberia, U.S. Soldiers Race Ebola. As Outbreak Spreads, International Community Rebuilds Nation’s Health-Care System. American and Liberian soldiers hammer, saw and sweat in the afternoon
sun here in a frenetic campaign to build the county’s first
Ebola-treatment unit. Soon, the soldiers will have floodlights to work
round-the-clock shifts.
- Corporate-Debt Market Slows to a Crawl. Banks’ Reduction of Bond Inventories Is Fueling Lack of Liquidity. Corporate-bond investors have struggled this week to find trading
partners for some large orders, causing unusual price drops and raising
concerns that trading could freeze in future market turmoil.
- Global Markets Catch the Chinese Flu. The ill effects of Beijing’s borrowing and spending binge are rippling through the world economy. It has become almost politically correct to blame the latest global
growth scare on the usual suspects, Japan and Europe, and to suggest
that if only those skinflint Germans would spend more, all would be
better.
Fox News:
CNBC:
- Google(GOOG) shares slide after Q3 earnings miss. Google shares dipped after it delivered quarterly earnings and revenue that missed estimates. The online giant's cost per click—how much it earns when a user clicks its advertisers' ad—continues to decline. During the third quarter, CPC dropped 2 percent, year over year, versus expectations of a 4 percent decline, according to
StreetAccount. Meanwhile, the number of paid clicks rose about 17
percent from a year ago, compared to forecasts for growth of 23.5
percent, according to StreetAccount. Shares fell as much as 6 percent before easing in after-hours trading.
- Short seller Carson Block considers hedge fund firm. Short seller Carson Block, the founder of research firm Muddy Waters who
has exposed accounting problems at a slew of Chinese companies, said on
Thursday that he is seriously considering launching a hedge fund
investment firm.
Zero Hedge:
Business Insider:
Reuters:
- CF Industries(CF), Yara International end merger talks. CF Industries Holdings Inc ended merger talks with Norway's Yara International ASA after the companies failed to agree on terms of a deal that would have
created a global fertilizer giant with an enterprise value
approaching $30 billion.
- Fusion-io integration hurts chipmaker SanDisk's(SNDK) revenue forecast. Chipmaker
SanDisk Corp forecast current-quarter revenue below analysts' estimates
due to lower revenue from Fusion-io Inc, a solid-state storage products
maker it acquired in June. SanDisk's shares fell 5 percent in extended trading, after
the company also reported lower-than-expected revenue for the
third quarter.
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 goaFed's Williams: Can't wait too long to raise rates
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 126.0 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 76.5 +2.75 basis points.
- NASDAQ 100 futures +.13%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Housing Starts for September are estimated to rise to 1008K versus 956K in August.
- Building Permits for September are estimated to rise to 1030K versus 998K in August.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for October is estimated to fall to 84.0 versus 84.6 in September.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Yellen speaking on inequality, Fed's Rosengren speaking and the
Canadian inflation data could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and technology
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.
Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 25.56 -2.53%
- Euro/Yen Carry Return Index 141.81 -.10%
- Emerging Markets Currency Volatility(VXY) 8.66 unch.
- S&P 500 Implied Correlation 67.11 -8.25%
- ISE Sentiment Index 79.0 -18.56%
- Total Put/Call .98 -25.19%
Credit Investor Angst:
- North American Investment Grade CDS Index 73.83 -.21%
- European Financial Sector CDS Index 78.14 +4.39%
- Western Europe Sovereign Debt CDS Index 34.89 +12.87%
- Asia Pacific Sovereign Debt CDS Index 76.94 +4.14%
- Emerging Market CDS Index 279.18 -3.21%
- China Blended Corporate Spread Index 348.92 +2.34%
- 2-Year Swap Spread 27.25 unch.
- TED Spread 21.25 -1.25 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -10.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% +2.0 basis points
- Yield Curve 182.0 +4.0 basis points
- China Import Iron Ore Spot $80.32/Metric Tonne -2.70%
- Citi US Economic Surprise Index 18.30 +6.0 points
- Citi Eurozone Economic Surprise Index -54.3 +2.8 points
- Citi Emerging Markets Economic Surprise Index -22.60 +1.3 points
- 10-Year TIPS Spread 1.90 +5 basis points
Overseas Futures:
- Nikkei Futures: Indicating -48 open in Japan
- DAX Futures: Indicating -23 open in Germany
Portfolio:
- Slightly Higher: On gains in my biotech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long