Evening Headlines
Bloomberg:
- Global Deflation Bug Sends CPI Swap to ‘09 Low: Australia Credit. Australian expectations for inflation have slumped to a five-year low
as a global trend of falling prices infects the world’s
highest-yielding AAA debt market. The three-year inflation swap fell to 1.99 percent yesterday, the lowest level since July 2009.
The contracts allow investors to swap a fixed rate for the change in
Australia’s consumer-price index. The country’s inflation rate was last
below 2 percent in the second quarter of 2012.
- Oil Export Plunge Signals Canada Economy Running on Empty. Plummeting oil prices are taking a toll on
Canada’s energy exports and threatening to leave little in the
economy’s tank for 2015. Shipments of crude oil and bitumen dropped 9.9 percent to
C$6.9 billion ($5.8 billion) in November, the biggest decline in
almost three years, the federal statistics agency said Wednesday
from Ottawa. The trade report is among early signs this may be a
tough year for an economy that’s suffered least among developed
nations from the 2008 financial crisis, as energy-export woes
add to concerns the nation’s housing market is in jeopardy.
- Youngest Suspect in Paris Magazine Shooting Surrenders, AFP Says.
The youngest suspect in the deadly attack on French satirical magazine
Charlie Hebdo has surrendered, Agence-France Presse said, as the police
named two other assailants being sought. French police released pictures of the two brothers, identifying them as Said
and Cherif Kouachi, aged 34 and 32 respectively. The younger accomplice
was Hamyd Mourad, 18, Le Point magazine said.
- China Stocks Fall Most in Two Weeks as Strategists See Losses. China’s
stocks fell the most in two weeks amid concern recent rallies were
excessive as strategists from Bank of America Corp. and HSBC Holdings
Plc forecast declines this year for the benchmark index from current
levels. Financial companies, the second-best performer over the past
year, slid the most among industry groups after HSBC downgraded the
industry. Citic Securities Co. (600030), China Construction Bank Corp.
and China Life Insurance Co. all dropped more than 3 percent. Huaneng
PowerInternational Inc. retreated
3.6 percent after jumping 40 percent over the past two months.
Data tomorrow will likely show declines in producer prices
accelerated last month.
- Asian Stocks Rise; U.S. Futures, Ringgit Advance With Oil.
Asian stocks climbed from a three-week low as Samsung Electronics Co.
beat earnings estimates and Japanese exporters rallied on a weaker yen.
U.S. equity-index futures signaled a second day of gains as crude oil
rose, boosting Malaysia’s ringgit. The MSCI Asia Pacific Index rose 1.1 percent by 12:30 p.m. in Tokyo, climbing for the first time in four days
as Samsung, the world’s biggest smartphone maker, added 0.5 percent.
Toyota Motor Corp. led Japan’s Topix index to a 1.5 percent gain as the
yen slipped a second day.
- Derivatives Show Traders Are Undeterred on Rates by FOMC Minutes. Derivatives show minutes from the Federal
Reserve’s last meeting did little to alter traders’ expectations
that policy makers will begin raising interest rates this year.
That's where the similarities on the outlook for rates between
the bond market and the central bank ends. Federal funds futures show a 59 percent chance of the Fed
raising its near-zero policy rate in September, little changed
from before the release of the Dec. 16-17 meeting minutes. For
the years ahead, traders see the Fed increasing rates to only
about half the 3.75 percent peak level policy makers predict.
Wall Street Journal:
- Small Businesses Snub Health Exchanges for Coverage. Owners, Brokers Blame Limited Federal Tax Credits and Small Menu of Offerings. Some small-business owners are snubbing the new health-insurance
exchanges, operating under the Small Business Health Options Program,
citing limited federal tax credits and a small menu of insurance
offerings in a few states, companies and health-insurance brokers said.
CNBC:
Zero Hedge:
Business Insider:
Financial Times:
- Save Ukraine to counter Russia, says Soros. Billionaire
investor George Soros has accused western leaders of dangerously
miscalculating their strategy towards Russia and Ukraine, arguing that
the crisis there posed a lethal risk to the eurozone.
Telegraph:
China Times:
- China
Won't Release Govt Loan Data for the Moment. China won't publicize
outstanding local govt debt data for the moment. Release of the data may
affect financing ability of local govts and trigger too much media
reporting, an unidentified local finance dept official said.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 -8.5 basis points.
- Asia Pacific Sovereign CDS Index 72.25 -2.0 basis points.
- NASDAQ 100 futures +.77%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to fall to 290K versus 298K the prior week.
- Continuing Claims are estimated to rise to 2360K versus 2353K prior.
3:00 pm EST
- Consumer Credit for November is estimated to rise to $15.0B versus $13.226B in October.
Upcoming Splits
Other Potential Market Movers
- The Fed's Rosengren speaking, Fed's Kocherlakota speaking, China CPI report, BoE Rate Decision, Challenger Job Cuts report for December, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (BKS) holiday sales report, (SIG) holiday sales call, (VRX) guidance call and the (ROVI) analyst briefing could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and
industrial 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 Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 20.36 -3.65%
- Euro/Yen Carry Return Index 147.48 +.32%
- Emerging Markets Currency Volatility(VXY) 10.65 -.84%
- S&P 500 Implied Correlation 66.65 -.95%
- ISE Sentiment Index 95.0 -4.04%
- Total Put/Call 1.08 -3.57%
Credit Investor Angst:
- North American Investment Grade CDS Index 70.65 -1.31%
- America Energy Sector High-Yield CDS Index 718.0 +2.65%
- European Financial Sector CDS Index 71.55 +.06%
- Western Europe Sovereign Debt CDS Index 29.85 +2.12%
- Asia Pacific Sovereign Debt CDS Index 72.48 -2.53%
- Emerging Market CDS Index 378.66 -1.82%
- China Blended Corporate Spread Index 369.68 +2.96%
- 2-Year Swap Spread 22.50 -.5 basis point
- TED Spread 23.25 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.5 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% +1.0 basis point
- Yield Curve 136.0 +4.0 basis points
- China Import Iron Ore Spot $70.96/Metric Tonne -.74%
- Citi US Economic Surprise Index 29.30 +6.5 points
- Citi Eurozone Economic Surprise Index 10.60 -.3 point
- Citi Emerging Markets Economic Surprise Index -12.80 +1.1 points
- 10-Year TIPS Spread 1.57 -1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +285 open in Japan
- DAX Futures: Indicating +5 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/biotech/retail/medical 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 Outperformer:
Sector Outperformers:
- 1) Homebuilders +3.16% 2) Biotech +2.50% 3) Gaming +2.12%
Stocks Rising on Unusual Volume:
- SONC, ALKS, GEVA, OVTI, HALO, CPB, GBX, RMTI, LOCK, LEN, ISIS and LOCO
Stocks With Unusual Call Option Activity:
- 1) SC 2) ARNA 3) INFN 4) SLXP 5) MTG
Stocks With Most Positive News Mentions:
- 1) LMT 2) SONC 3) MDT 4) FSLR 5) MU
Charts:
Evening Headlines
Bloomberg:
- Euro-Area Prices Seen Falling as Risk of Deflation Spiral Mounts. Consumer prices in the euro area probably
fell for the first time in more than five years last month,
pushing the European Central Bank closer to adding stimulus as it battles to revive inflation. Prices
dropped an annual 0.1 percent in December, according to the median
forecast of economists in a Bloomberg survey. That would be the first
decline since October 2009.
- Shorts in Tokyo Soars to Record on Abenomics Skepticism. Bearish
bets on Japanese stocks surged to a
record because foreign investors are increasingly skeptical that
Prime Minister Shinzo Abe will succeed in reviving the world’s
third-biggest economy, said Reorient Group Ltd. Short-selling of shares
on the Tokyo Stock Exchange accounted for 37.8 percent of trading value
yesterday, the highest ratio since the bourse began keeping daily
records in 2008. The Topix index sank 2.9 percent yesterday. Investors
pulled $245 million out of the biggest U.S.-listed exchange-traded fund
that tracks Japanese shares on Jan. 5, the second-largest daily outflow
since May 2013, data compiled by Bloomberg
show.
- There's a Leadership Crisis in Chinese Property Firms -- They're Defaulting. Who's Next to Go? The loan default by Kaisa Group Holdings Ltd., after the second
surprise exit of a Chinese property tycoon in six months, is prompting
investors to ask who’s next. The 2019 notes from the builder,
based in the southern city of Shenzhen, have tumbled 38.4 cents on the
dollar to a record low of 25.3 cents, after the resignation of the
developer’s chairman triggered a loan default Dec. 31. The perpetual
securities of Agile Property Holdings Ltd. dropped 17 cents to 67 since
its billionaire chairman was placed under control of prosecutors in
September before being released last month without details of the
detention. China’s junk dollar notes have lost 3.9 percent in 2015, the worst start to a year ever in Bank of America Merrill Lynch indexes, after Kaisa Chairman Kwok Ying Shing resigned days after two other executives left their
positions. Developers that rely on personal relations in securing land
from the government are among the most at risk from President Xi
Jinping’s local-government financing shakeup and anti-graft drive.
- Asian Stocks Extend Drop, Led by Energy Companies on Oil Plunge.
Asian stocks fell, after yesterday sinking the most in nine months, as
U.S. equities extended declines and the slump in crude oil deepened. The
MSCI Asia Pacific Index (MXAP) declined 0.3 percent to 134.57 as of
9:03 a.m. in Tokyo, with energy companies dropping the most. The
Asian gauge slumped 1.7 percent yesterday and the Standard &
Poor’s 500 Index fell for a fifth day, extending the longest losing
streak in 13 months. West Texas Intermediate oil sank below $48 a barrel
in New York amid speculation data on U.S. supplies today will fuel
concern over a global glut. “With the U.S. markets again under pressure,
the lead for Asia looks bleak,” Evan Lucas, a markets strategist in
Melbourne at IG Ltd., wrote in an e-mail to clients today. “Until oil
finds bottoms, the markets will remain in a downward trajectory.” Japan’s Topix index dropped 0.5 percent. Short-selling on the Tokyo Stock Exchange reached 37.8 percent of total trading
value yesterday, the highest since at least October 2008, when
bourse data became available.
- Copper, Aluminum Hold Losses as Oil’s Slump Fuels Growth Concern. Copper held near a four-year low while
aluminum languished near the weakest in seven months on fears
oil’s slump signals a slowdown in economic growth and weaker
commodities demand. Oil in New York traded near $48 a barrel and the euro area is poised to post its first drop in consumer prices since 2009,
fueling pessimism over the global economy.
- Obama Picks Ex-Bank of Hawaii CEO Landon to Be Fed Governor.
President Barack Obama plans to nominate Allan Landon, the former
chief executive officer of Bank of Hawaii Corp. (BOH), to be a Federal
Reserve governor after months of pressure to select a policy maker with
community banking
experience.
Wall Street Journal:
- Deep Debt Keeps Oil Firms Pumping. Producers Have Increased Their Borrowings by 55% Since 2010. American oil and gas companies have gone heavily into debt during the
energy boom, increasing their borrowings by 55% since 2010, to almost
$200 billion. Their need to service that debt helps explain why
U.S. producers plan to continue pumping oil even as crude trades for
less than $50 a barrel, down 55% since last June. But signs of strain
are building in the oil patch, where revenue growth hasn’t kept pace.
MarketWatch.com:
Zero Hedge:
Business Insider:
Telegraph:
Bild:
- German Govt Preparing for Possible Greek Euro Exit. Chancellery
sees risk of bank collapse in the event of possible election of leftwing
alliance Syriza, citing government officials. If alliance wins and
cancels reform program, final installment of EU10b in aid won't be
transferred to Athens. Concern that if Greece leaves the euro, there may
be a customer deposit run to secure euros that could lead to a banking
collapse and possibly oblige the European banking union to spend
billions.
National:
- Oil
Oversupply Could Take Years to Fix, Mazrouei Says. Oversuppy in crude
markets "needs time to be absorbed," U.A.E. Energy Minister Suhail Al
Mazrouei says. Oil prices could see correction this year, depending on production growth from non-OPEC members; oversupply could take "months or years" to be absorbed depending on reaction from non-OPEC producers. UAE not changing oil industry development plans due to crude price fluctuations; plans to boost country's output to 3.5m b/d under way, won't be changed.
Evening Recommendations
Cowen:
- Rated (JWN) Outperform, target $91.
- Rated (SIG) Outperform, target $150.
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 123.50 +8.5 basis points.
- Asia Pacific Sovereign CDS Index 74.25 +3.75 basis points.
- NASDAQ 100 futures +.26%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:15 am EST
- The ADP Employment Change for December is estimated at 225K versus 208K in November.
8:30 am EST
- The Trade Deficit for November is estimated at -$42.0B versus -$43.4B in October.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+911,110 barrels versus a -1,754,000 barrel decline the prior week.
Gasoline supplies are estimated to rise by +3,666,670 barrels versus a
+2,951,000 gain the prior week. Distillate inventories are estimated to
rise by +1,972,220 barrels versus a +1,874,000 barrel gain the prior
week. Finally, Refinery Utilization is estimated to fall -.04% versus a
+.9% gain the prior week.
2:00 pm EST
- Fed Minutes from 12/17 meeting.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Evans speaking, Eurozone CPI, China Trade Balance, weekly MBA
mortgage applications report, Goldman Sachs Energy Conference, (LLY)
guidance call and the (ROVI) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 22.52 +13.4%
- Euro/Yen Carry Return Index 147.59 -1.03%
- Emerging Markets Currency Volatility(VXY) 10.71 -.46%
- S&P 500 Implied Correlation 71.07 +4.78%
- ISE Sentiment Index 66.0 -2.94%
- Total Put/Call 1.21 +2.54%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.05 +2.45%
- America Energy Sector High-Yield CDS Index 700.0 +4.99%
- European Financial Sector CDS Index 71.48 +3.65%
- Western Europe Sovereign Debt CDS Index 28.45 +5.0%
- Asia Pacific Sovereign Debt CDS Index 74.66 +5.89%
- Emerging Market CDS Index 385.67 +1.92%
- China Blended Corporate Spread Index 359.04 +3.88%
- 2-Year Swap Spread 23.0 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.75 +1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% +1.0 basis point
- Yield Curve 132.0 -5.0 basis points
- China Import Iron Ore Spot $71.49/Metric Tonne +.87%
- Citi US Economic Surprise Index 22.80 -4.8 points
- Citi Eurozone Economic Surprise Index 10.90 -1.5 points
- Citi Emerging Markets Economic Surprise Index -13.90 +.4 point
- 10-Year TIPS Spread 1.58 -7.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -243 open in Japan
- DAX Futures: Indicating -21 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Gaming -3.01% 2) Road & Rail -2.63% 3) Alt Energy -2.47%
Stocks Falling on Unusual Volume:
- IDTI, ZION, WATT, KORS, KITE, QGEN, CEMP, SSL, WBAI, AAVL, PVH, URI, CLDN, GPC, IOC, PLOW, GEVA, HEES, DEO, WTW, CNSL, VRNS, OCN, IMKTA, IPHI, SE, PLOW, NSC, MDCO, RDUS, CSX, CMC, HTH, ARCB, PVH, NDLS, HLX, CYBX, ISIS, VNCE, NBIX, GEVA and ICPT
Stocks With Unusual Put Option Activity:
- 1) EA 2) CBS 3) CREE 4) CSX 5) AKS
Stocks With Most Negative News Mentions:
- 1) KORS 2) CSX 3) FFIV 4) URI 5) CAT
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.12% 2) Steel +2.34% 3) Utilities +1.76%
Stocks Rising on Unusual Volume:
- AOL, ALKS, LOCO, EBIX and BLUE
Stocks With Unusual Call Option Activity:
- 1) HBAN 2) ACAS 3) AEO 4) INFN 5) HL
Stocks With Most Positive News Mentions:
- 1) WAG 2) STZ 3) HUM 4) SLXP 5) CNC
Charts:
Evening Headlines
Bloomberg:
- Global Sovereign Bonds Rally as Yields Fall to Record Low 1.28%. Global
sovereign bonds rallied, pushing
yields to a record low, after oil tumbled and traders prepared for the
European Central Bank to start buying government debt as soon as this
month. Bonds in the Bank of America Merrill Lynch Global Broad Market
Sovereign Plus Index had an effective yield of 1.28 percent as of
yesterday, an all-time low based on data starting in 1996. Stock declines are fueling demand for the relative safety of debt. From Japan to Australia to Germany (GDBR10), yields are
dropping to records.
- Singapore Alert to Risks as Cracks Emerge for Junk: Asean Credit.
Demand for higher returns in Singapore bonds
from the city’s swelling private banking industry has brought
with it greater risks. Three out of every 10 notes sold last year are
yielding more than 6 percent. Halcyon Agri Corp. (HACL) went to
debtholders last month asking them to waive interest cover requirements
before it’s even had to stump up a coupon payment. Bloomberg’s default
model shows that VTB Capital SA has an almost 50 percent chance of
reneging on its debt. “The recent swings have been a good wake-up
call,” said Vishal Goenka, the Singapore-based head of local currency
trading in Asia for Deutsche Bank AG. “Investors need to
analyze the credit quality of issuers more thoroughly.”
- Asian Stocks Extend Selloff With Oil Near $50; Yen Climbs. Asian stocks fell the most in seven weeks,
extending a global selloff after crude oil plunged to the lowest
level since 2009. The yen rose and a gauge of government bond
yields fell to a record as investors sought haven assets.
The MSCI Asia Pacific Index sank 1.4 percent by 10:11 a.m.
in Tokyo.
- Oilfield Writedowns Loom as Market Collapse Guts Drilling Values. Tumbling crude prices will trigger a flood of oilfield
writedowns starting this month after industry returns slumped to a
16-year low, calling into question half a decade of exploration.
With
crude prices down more than 50 percent from their 2014 peak, fields as
far-flung as Kazakhstan and Australia are no longer worth pumping, said a
team of Citigroup Inc. (C:US) analysts led by Alastair Syme. Companies
on the hook for risky, high-cost projects that don’t make sense in a
$50-a-barrel market include international titans such as Royal Dutch
Shell Plc and small
wildcatters like Sanchez Energy Corp.
- Biggest Oil-Rig Drop Since 2009 Spells Tough Year Ahead. U.S.
oil drillers laid down the most rigs in the fourth quarter since 2009.
And things are about to get much worse. The rig count fell by 93 in the
three months through Dec. 26, and lost another 17 last week, Baker
Hughes Inc. (BHI) data show. About 200 more will be idled over the next
quarter as U.S. oil explorers make good on their promises to curb
spending, according to Moody’s Corp. Drillers are already running the
fewest rigs in nine months
after a 46 percent drop in U.S. benchmark West Texas
Intermediate oil in 2014, the steepest decline in six years and
the second-worst since the commodity began trading in 1983.
- Hedge Funds Resume Bullish Gold Bets as Greece Vote Looms. Hedge funds are stepping back onto the gold bandwagon as political turmoil in Greece and government actions in Asia helped send prices to their biggest monthly advance since June. Bullish wagers on the metal increased for the first time in three weeks and have more than doubled since mid-November, U.S. government data show. Short holdings dropped for the sixth week in seven. Bullion rose for a second straight month in December.
- Trahan Pauses 39-Month Bull Call Citing Contagion Risk. Francois Trahan, a three-year U.S. equity
market bull who was ranked top portfolio strategist by
Institutional Investor in 2014, is turning cautious on stocks. U.S.
shares are “at risk” because oil’s decline makes a
crisis in a crude-producing nation “inevitable,” wrote Trahan, the head
of strategy for Cornerstone Macro LP in New York, in a note to clients.
Slowing growth in China and the possibility of a financial meltdown in
Japan also pose threats to American equities, he wrote.
Wall Street Journal:
- IG to Play Starring Role in Review of Fed. Inspector General’s Office Will Be Front and Center in Look at Whether the Central Bank Goes Easy on Wall Street. The Federal Reserve’s inspector general, a little-noticed presence
outside the central bank, is poised to play a starring role in a
high-profile review of the Fed’s ability to regulate Wall Street.
Barron's:
CNBC:
Zero Hedge:
Business Insider:
Telegraph:
China Business News:
- China Local Debt Estimates May Rise 'significantly'. Debt that local govts owe with fiscal
funds may stand at as much as 15t yuan, compared with 10.9t yuan as of
end-June in 2013 reported by the National Audit Office, citing a person
familiar with the matter.
Evening Recommendations
Night Trading
- Asian equity indices are -2.0% to -1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 +6.0 basis points.
- Asia Pacific Sovereign CDS Index 70.5 +2.25 basis points.
- NASDAQ 100 futures -.08%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:00 am EST
- Factory Orders for November are estimated to fall -.5% versus a -.7% decline in October.
- ISM Non-Manufacturing Composite for December is estimated to fall to 58.0 versus 59.3 in November.
Upcoming Splits
Other Potential Market Movers
- The
UK Services PMI report, RBC Consumer Outlook Index for January, Final
Markit US Services PMI for December, US weekly retail sales reports and
CES could also impact trading today.
BOTTOM LINE: Asian indices are 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 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 20.98 +17.99%
- Euro/Yen Carry Return Index 149.06 -1.32%
- Emerging Markets Currency Volatility(VXY) 10.85 +.84%
- S&P 500 Implied Correlation 68.38 +3.81%
- ISE Sentiment Index 84.0 +18.31%
- Total Put/Call 1.14 -5.0%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.87 +4.25%
- America Energy Sector High-Yield CDS Index 664.0 +2.43%
- European Financial Sector CDS Index 68.96 +9.34%
- Western Europe Sovereign Debt CDS Index 27.09 +8.51%
- Asia Pacific Sovereign Debt CDS Index 69.90 +2.21%
- Emerging Market CDS Index 380.71 +10.3%
- China Blended Corporate Spread Index 345.65 +.93%
- 2-Year Swap Spread 22.75 unch.
- TED Spread 23.50 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -15.75 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% -1.0 basis point
- Yield Curve 137.0 -9.0 basis points
- China Import Iron Ore Spot $70.87/Metric Tonne -.55%
- Citi US Economic Surprise Index 27.60 -.7 point
- Citi Eurozone Economic Surprise Index 12.40 +3.4 points
- Citi Emerging Markets Economic Surprise Index -14.30 -2.4 points
- 10-Year TIPS Spread 1.65 -6.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -294 open in Japan
- DAX Futures: Indicating -13 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
Bloomberg:
- 'Grexit' Is Back: A Greek Exit From the Euro Raises Fears of Fiscal Contagion. (video) Mario Draghi’s July 2012 pledge to do “whatever it takes” to keep the euro intact has kept speculators at bay for almost three years. Bond yields fell from Dublin to Athens, giving governments room to cut budgets and start revamping their economies. While it’s not been a period of robust growth, the talk of crisis has abated and even Greece’s six-year recession ended. What’s not changed is the risk entailed by Greece’s potential departure from the 19-nation currency bloc. What Citigroup Inc.’s Ebrahim Rahbari termed “Grexit” is back in play and it remains the worst possible
outcome in the view of economists at Berenberg Bank and ING-DiBa AG.
- Samaras Faces Greeks Skeptical of His Euro-Exit Warnings.
“It’s all propaganda meant to scare people,” Moschou said on Jan. 2 as
she served Greek wine and brandy to customers at Vrettos, a 106-year-old
distillery tucked away in the old town of Athens below the Acropolis.
“I don’t believe it.”
- Ruble Starts New Year With Plunge as Oil Declines to 2009 Low. The ruble picked up right where it left off
last year, weakening as oil prices extended declines. Russia’s
currency slid 7.2 percent to 60.37 per dollar at 8:06 p.m. in Moscow, in
its first day of trading of 2015 after a 46 percent decline last year.
Government bonds fell, with the five-year yield climbing 16 basis points
to 15.63 percent.
- EU’s Fractured Politics Is Biggest 2015 Risk, Eurasia Group Says. The
success of anti-European Union parties
and fraying bonds among EU nations are the biggest risks facing
investors in 2015, Eurasia Group said. The stand-off over Ukraine
between Russia and the U.S. and its European allies, China’s slowing
economy and Islamic State’s designs outside of its Iraqi and Syrian
bases are among the New
York-based Eurasia Group’s leading threats for this year,
according to its annual Top Risks report released today.
- German Inflation, Weakest Since 2009, Raises Pressure on ECB. German consumer prices are close to stagnating, adding to signs that
euro-area inflation is turning negative and potentially bolstering the case for more European Central Bank stimulus.
Inflation in the region’s largest economy slowed to 0.1 percent in
December, the Federal Statistics office said today. That’s the lowest
rate since October 2009 and below the median forecast of 0.2 percent in a Bloomberg survey of economists.
- Get Used to Higher Stock Volatility, Deutsche Bank Says: Options. While unanimity is the buzzword for
strategists forecasting gains in the U.S. stock market this
year, another consensus is developing among options analysts. Deutsche Bank AG became at least the third major bank
telling equity derivatives clients to prepare for more frequent
bouts of turbulence in 2015 as the Standard & Poor’s 500 Index (VIX)’s bull market approaches its seventh year. The opinion came before the benchmark gauge plunged as much as 1.9 percent today and the
Chicago Board Options Volatility Index increased for the fifth
time in six days.
- Aurelius Pushes Petrobras Debt Claim as Default Odds Soar.
Aurelius Capital Management LP’s bid to declare Petroleo Brasileiro SA
(PETR4) in default underscores just how far the state-controlled oil
producer has fallen in the eyes of
bond investors. The cost to protect against a Petrobras non-payment for one
year has soared to the highest since the aftermath of the
financial crisis, after the New York-based hedge fund said in a
letter obtained by Bloomberg News last week that the company had
violated debt contracts by failing to report third-quarter
results.
- Emerging Stocks Decline With Currencies on Greece; Ruble Weakens.
Emerging-market stocks fell for a third day
and currencies weakened as speculation that Greece may drop the euro
reduced demand for riskier assets. A gauge of 20 developing-nation
currencies slid 0.6 percent to a 12-year low. Sasol Ltd. (SOL), world’s
biggest maker of motor fuel-from-coal, dropped the most in a month in
Johanesberg. Petroleo Brasileiro SA paced a slump in Brazilian stocks.
Dubai’s DFM General Index led losses in the Gulf region as Brent crude
touched the lowest level since May 2009. The ruble tumbled 6.2 percent.
Turkish
bonds and stocks climbed after a report showed the nation’s
inflation rate dropped more than economists forecast.
The MSCI Emerging Market Index slid 1.3 percent to 941.35
at 11:05 a.m. in New York.
- Europe Stocks Slide Most in More Than Three Years on Oil, Greece.
A slump in energy shares and concern that Greece may leave the European
currency union sent euro-area stocks to their biggest slump in more
than three years. The Euro Stoxx 50 Index slid 3.7 percent to
3,023.14, and the Stoxx Europe 600 Index dropped 2.2 percent to 333.99
at the close of trading. Greek lenders posted some of the biggest losses on the
Stoxx 600, as the ASE slid 5.6 percent to its lowest close since
November 2012. Piraeus Bank SA slumped 5.2 percent, National
Bank of Greece SA dropped 7.4 percent, Alpha Bank AE slid 5.7
percent and Eurobank Ergasias SA declined 6.9 percent.
- WTI Falls Below $50 a Barrel First Time in 5 1/2 Years.
WTI slid as much as 5.2 percent in New York. Brent fell below $55 in
London for the first time since May 2009. Russia’s output rose to a
post-Soviet high while Iraq, the second-largest producer in OPEC, plans
to boost crude exports to a record this month.
- Bears go missing in S&P 500 forecasts.
Two years of stocks going straight up have chased just about every
skeptic from the U.S. market. Among professional forecasters on Wall
Street, none
tracked by Bloomberg sees a retreat in 2015, with the average estimate
calling for an 8.1 percent advance. At the same time, buyers of
exchange-traded funds ended an obsession with bonds last quarter,
sending four times as much cash to U.S. shares. Pessimism, the constant companion of a bull market
poised to become the second-longest since the Kennedy administration, is
suddenly nowhere to be found after the Standard & Poor’s 500 Index
climbed 44 percent since 2012. While strategists are predicting a rally
that would rank as the smallest in four years, the threat of higher
interest rates and weakening prospects for global growth aren’t creating
any full-blown bears after the U.S. beat all but four of the largest
developed markets in 2014.
Wall Street Journal:
- France and Germany Push Athens on Bailout Commitments. French President Francois Hollande Raises Possibility of Greece Leaving Eurozone. France and Germany on Monday stepped up pressure on Greece to meet
the terms of its two international bailouts, returning to the
brinkmanship of the eurozone debt crisis as the shared currency dropped
to a nine-year low.
MarketWatch.com:
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -6.76% 2) Coal -5.93% 3) Energy -4.85%
Stocks Falling on Unusual Volume:
- IGOV, CHRW, LOCK, NOC, USM, AVX, VNCE, ARMK, SSL, FLS, E, WTW, TOT, CIB, PEO, APOG, BTI, ESL, PHG, SNY, BBL, GDV, BP, NNI, NRX, AB, SEM, CAT, WTW and SCHN
Stocks With Unusual Put Option Activity:
- 1) BBY 2) XLF 3) EWG 4) KRE 5) DO
Stocks With Most Negative News Mentions:
- 1) CAT 2) MS 3) AKAM 4) COP 5) JPM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) REITs +.17% 2) Gold & Silver -.41% 3) Biotech -.43%
Stocks Rising on Unusual Volume:
- CNAT, CEMP, ISIS, KITE, CMCM, LOCO, ICPT and SGMS
Stocks With Unusual Call Option Activity:
- 1) BBBY 2) CSX 3) KO 4) OCR 5) ISIS
Stocks With Most Positive News Mentions:
- 1) CME 2) GPS 3) ZMH 4) REGN 5) CEMP
Charts:
