Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.4 -6.17%
- Euro/Yen Carry Return Index 135.82 +.21%
- Emerging Markets Currency Volatility(VXY) 10.56 -.58%
- S&P 500 Implied Correlation 64.06 -2.12%
- ISE Sentiment Index 94.0 +3.3%
- Total Put/Call .94 -11.32%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.94 -.93%
- America Energy Sector High-Yield CDS Index 1,027.0 +2.01%
- European Financial Sector CDS Index 65.89 -.28%
- Western Europe Sovereign Debt CDS Index 21.60 -2.79%
- Asia Pacific Sovereign Debt CDS Index 60.70 -2.24%
- Emerging Market CDS Index 315.73 -.29%
- iBoxx Offshore RMB China Corporates High Yield Index 114.30 +.08%
- 2-Year Swap Spread 24.25 -.25 basis point
- TED Spread 24.0 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -23.5 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .02% -1.0 basis point
- China Import Iron Ore Spot $52.69/Metric Tonne -.85%
- Citi US Economic Surprise Index -60.8 +2.1 points
- Citi Eurozone Economic Surprise Index 64.90 +12.8 points
- Citi Emerging Markets Economic Surprise Index -.8 +.6 point
- 10-Year TIPS Spread 1.75 -3.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating +260 open in Japan
- DAX Futures: Indicating +42 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical/retail/biotech/tech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Greek Plans to Unlock Aid Need Lots of Work, EU Aides Say. Greece’s proposed plans to bolster its
finances in exchange for unlocking bailout funds still need lots
of work, three European officials said. The 15-page draft, which was discussed Sunday in Brussels,
requires more information and details and was a long way from
serving as the basis of a deal, said one of the aides, who asked
not to be named because the talks were private. Seeking a strategy that passes muster with European
officials now withholding loans as the country’s cash crunch
deepens, Greece’s government foresees a net increase of 3.7
billion euros ($4 billion) in receipts this year. The biggest
chunk would be as much as 875 million euros from the
“intensification of audits on lists of bank transfers and
offshore entities,” according to the draft.
- Ukraine Faces 30% Risk of Messy Default as Creditor Talks Begin. As Ukraine prepares for debt restructuring
talks, most analysts expect the nation to avoid a messy default. Finance Minister Natalie Jaresko last week urged Ukraine’s
bondholders to back a debt overhaul in negotiations set to begin
within days, or risk bigger losses later. The probability of a
disorderly default -- one where there’s no agreement with
investors -- is about 30 percent, according to the median of 21
analysts surveyed by Bloomberg on March 20-26.
- Canadian Junk Market Freezes as Poloz Compounds Oil Collapse. If the Bank of Canada’s surprise interest
rate cut was meant to spur companies to borrow, it’s not working
in the nation’s high-yield bond market. Even after the central bank lowered borrowing costs on Jan.
21, the current quarter is the first in three years without a
single company tapping Canada’s junk-bond market for funds,
according to data compiled by Bloomberg. In contrast, U.S. junk
bond issuance has already surged to the highest level in six
months, the data show.
- Europe Stocks Rise Most in Three Weeks on Central-Bank Optimism. European stocks rose the most in almost
three weeks, poised for their best quarter since 2009, amid
optimism central banks will continue to support global growth.
The Stoxx Europe 600 Index rose 1.1 percent to 399.84 at
the close of trading, extending gains after data showed pending
sales of U.S. homes rose more than forecast in February.
- These Charts Show Clearly Why Oil Prices Crashed. (video) In 2014 U.S. oil expanded the most since at least 1900.
- S&P 500 Profit Reversals Hard to Stop as Bad Quarters Add Up. Analysts predict Standard & Poor’s 500 Index
profits are about to decrease for three straight quarters.
Investors better hope they don’t. History shows that once earnings drop for that long, they
almost always keep falling, and usually take the market with
them. In fact, among 17 declines that got to nine months since
the Great Depression, exactly one stopped there, in 1967. Any sign that U.S. earnings are about to collapse is enough
to strike fear in money managers who have watched shares triple
as profits rose almost every year since 2009. Even if analysts
are right about the duration of the skid, earnings contractions
of three quarters or more have triggered bear markets 82 percent
of the time over the past eight decades.
- UnitedHealth(UNH) Pays $12.8 Billion for Catamaran’s Drug Clients.
- Horizon to Buy Hyperion for $1.1 Billion, Gain Orphan Drugs.
ZeroHedge:
Business Insider:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.03% 2) Education -.64% 3) Oil Service -.42%
Stocks Falling on Unusual Volume:
- ALTR, BDSI, WWE, LBIO, AIR, NEWT, OVAS, HWAY, SERV, WBAI, PLT, KRFT, MYL, ROLL, CBMG, CALA, EGL, LO, CALM, QUNR, INXN, STRA, JMEI, WLL, YOKU, EVEP and HWAY
Stocks With Unusual Put Option Activity:
- 1) EWJ 2) FEZ 3) MMM 4) KO 5) CIEN
Stocks With Most Negative News Mentions:
- 1) ROLL 2) LINE 3) JASO 4) WWE 5) ALTR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.36% 2) Energy +1.39% 3) Computer Services +1.26%
Stocks Rising on Unusual Volume:
- HPTX, ICEL, CTRX, ASPX, ADI, XON, MSG, HZNP, DYN, RTRX, THRM, DWA, GNC, FBHS, RCPT, ITG, MSG and SIVB
Stocks With Unusual Call Option Activity:
- 1) ALTR 2) HZNP 3) EA 4) XON 5) ZIOP
Stocks With Most Positive News Mentions:
- 1) LMT 2) ADI 3) FINL 4) UNH 5) SSP
Charts:
Weekend Headlines
Bloomberg:
- Greek Markets Show All at Risk Should Mistake Trigger a Default. In Athens, the unspeakable is at risk of
becoming the inevitable. Market metrics show Greece is in danger of sinking under
the burden of its debt, putting repayments of about 500 billion
euros ($546 billion) owed to European taxpayers, rescue funds,
banks and bondholders in jeopardy. Prime Minister Alexis Tsipras is locked in talks with
creditors over measures attached to Greece’s bailout loans and a
government official said on Friday the country won’t service its
debt if creditors don’t release the funds. The government has
also floated a restructuring that would link some future
payments to economic growth, reduce interest rates and allow
more time for repayments. While their intention is to exclude
private bondholders, the danger is that talks collapse and
Greece leaves the euro, leaving all parties facing losses.
- ECB Nerves Fray on Greece as Supervisors Rile Central Bankers. Inside the five-month-old union between
monetary policy and financial oversight at the European Central
Bank, nerves are beginning to fray. As officials seek to replace deposits fleeing Greek banks
without blatantly financing the state, the efforts of the
institution’s new Single Supervisory Mechanism to do its part
are irking the old guard. Central bankers under ECB President
Mario Draghi worry that overly-strict orders to lenders could
worsen the Greek turmoil. After building an institutional pillar that has supervised
the euro area’s largest banks since November, the ECB is now
facing one of the worst flare-ups in six years of sovereign-debt
crisis. Officials must work out how to align their two policy
arms in a way that can find a path through the Greek turmoil and
set a template for handling banking turbulence to come.
- Japan’s Industrial Output Drops, Adding to Signs of Weakness. Japan’s industrial production fell more than
forecast in February, adding to pressure from a drop in consumer
spending and faltering inflation. Output declined 3.4 percent from January, when it rose 3.7
percent, the trade ministry said in Tokyo on Monday. The median
estimate of 28 economists surveyed by Bloomberg was for a
decline of 1.9 percent.
The data is the weakest since June last year and
underscores the fragility of Japan’s recovery from a recession
last year.
- Too much of everything spurs commodity exodus as price wars rage. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. U.S. exchange-traded funds linked to broad baskets of
raw materials saw a net outflow of $1.23 billion over the first three
months of the year, the most of any quarter since the securities were
created in 2006, data compiled by Bloomberg show. Bank of America Corp.
says ample supplies have unleashed price wars, and Goldman Sachs Group
Inc. predicts a 20 percent drop for commodities already near a 13-year
low. Morgan Stanley and Societe Generale SA also have cut forecasts for a
whole range of items.
Wall Street Journal:
- Marco Rubio Makes Plans for 2016 Run. Florida Republican senator is tentatively set to announce his White House bid in Miami. Sen. Marco Rubio (R., Fla.) is laying plans to announce his presidential
bid in two weeks, a step that, along with other recent activity among
likely contenders, shows the early sparring and positioning in the 2016
race for the White House is about to accelerate.
- Uncertain of Obama, Arab States Gear Up for War. A pan-Arab coalition with a patchy record steps up as Yemen falls apart and U.S. policy remains unclear. Few organizations boast a reputation of dysfunction comparable to the
Arab League’s. Over seven decades the Arab League has distinguished
itself through infighting and fecklessness. But now, with the Obama
administration seen as missing in action in the Middle East, the
alliance of 22 countries is undergoing a renaissance.
Fox News:
MarketWatch.com:
Telegraph:
Night Trading
- Asian indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 1113.0 unch.
- Asia Pacific Sovereign CDS Index 62.0 +.75 basis point.
- NASDAQ 100 futures +.42%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Personal Income for February is estimated to rise +.3% versus a +.3% gain in January.
- Personal Spending for February is estimated to rise +.2% versus a -.2% decline in January.
- PCE Core for February is estimated to rise +1.3% versus a +1.3% gain in January.
10:00 am EST
- Pending Home Sales for February are estimated to rise +.4% versus a +1.7% gain in January.
10:30 am EST
- Dallas Fed Manufacturing Activity for March is estimated to rise to -9.0 versus -11.2 in February.
Upcoming Splits
Other Potential Market Movers
- The Fed's Fischer speaking and the Eurozone industrial production/CPI reports could
also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by real estate 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 week.