Friday, December 13, 2013

Friday Watch

Evening Headlines 
  • Aussie Dollar’s Longest Drop in 28 Years Driven by RBA Jawboning. The Australian dollar headed for its longest stretch of weekly losses since 1985, as the central bank head intensified his efforts to talk down the world’s fifth-most traded currency. Governor Glenn Stevens signaled a weaker Aussie is preferable over lower interest rates to help spur the nation’s slowing economy. The Aussie touched a more-than-three month low of 89.14 U.S. cents after Stevens said a level of 85 U.S. cents “would be closer to the mark than 95 cents,” in an interview published in the Australian Financial Review today. The governor last month put markets on notice, saying, while the benefits of intervention haven’t “so far” outweighed the costs, it “doesn’t mean we will always eschew” currency sales. 
  • China Mobile Gives $919 Discount on Samsung and Sony 4G Handsets. China Mobile Ltd. (941) is offering early adopters of its new fourth-generation wireless service discounts of as much as $919 on eight smartphones from Samsung Electronics Co. (005930), Sony Corp. (6758), HTC Corp. (2498) and five local vendors. In a marketing blitz on billboards at bus stops and subway stations across Beijing, the Samsung, Sony and HTC devices are all prominently featured. Domestic vendors in China Mobile’s first wave of 4G handsets include ZTE Corp. (763), Huawei Technologies Co., and the Coolpad brand of China Wireless Technologies Ltd. 
  • Yen Weakens to Five-Year Low as Most Asian Stocks Advance. The yen slumped to a five-year low while most Asian stocks rose as investors weighed prospects the Federal Reserve will reduce stimulus next week. Metals declined. The yen weakened 0.4 percent to 103.83 per dollar as of 1:45 p.m. in Tokyo and earlier touched 103.87, the lowest level since October 2008. The MSCI Asia Pacific Index of regional equities was little changed, after sliding as much as 0.7 percent to a three-month low.
  • Copper Falls on Record China Output, Fed Tapering Speculation. Copper dropped for the first time in six days, paring a weekly gain, as record output in China spurred oversupply concerns and amid speculation on the timing of stimulus cuts by the U.S. Federal Reserve. The contract for delivery in three months on the London Metal Exchange fell as much as 0.4 percent to $7,195 a metric ton and traded at 7,209.50 at 9:59 a.m. in Shanghai. Today’s loss reduced this week’s gain to 1.2 percent. The metal is down 9.1 percent this year. 
  • Rebar Set for First Weekly Loss in Four as Production Costs Fall. Steel reinforcement-bar futures in Shanghai headed for the first weekly loss in four, as steel production costs declined on lower prices of raw materials. Rebar for May delivery, the most-active contract on the Shanghai Futures Exchange, fell by as much as 1.2 percent to 3,684 yuan ($607) a metric ton, before trading at 3,690 yuan at 10:15 a.m. local time. The contract lost 0.3 percent this week.
  • U.K. Housing Market Seen at Risk of Overheating. Bank of England Governor Mark Carney may be struggling to prevent Britain’s housing market from reaching what he calls “warp speed.” About two-thirds of 27 economists in a Bloomberg News survey said property in the U.K. is at risk of overheating. The survey, published today, also showed that the outlook for the economy has improved, with forecasts for growth this quarter raised to 0.7 percent from 0.6 percent last month. 
  • Keystone Backed in Poll by 56% of Americans as Energy Security. More Americans view the Keystone XL oil pipeline as a benefit to U.S. energy security than as an environmental risk, even as they say Canada should do more to reduce greenhouse gases in exchange for approval of the project. A Bloomberg National Poll shows support for the $5.4 billion link between Alberta’s oil sands and U.S. Gulf Coast refineries remains strong, with 56 percent of respondents viewing it as a chance to reduce dependence on oil imports from less reliable trading partners. That compares with the 35 percent who say they see it more as a potential source of damaging oil spills and harmful greenhouse gas emissions.
  • Cisco(CSCO) Cuts Sales Forecast as Emerging Market Sales Stall. Cisco Systems Inc. (CSCO), the biggest maker of computer-networking equipment, reduced its revenue forecast for the next three to five years amid weaker demand from emerging markets and telecommunications-service providers. The company expects average sales growth of 3 percent to 6 percent in the coming years, Chief Financial Officer Frank Calderoni said today at a meeting with analysts in New York. That’s lower than an earlier projection for sales to rise 5 percent to 7 percent, which the company repeated last month. Cisco is facing reduced spending by phone companies and corporations, as well as slower economic expansion in Europe, Asia and emerging countries.
  • Anadarko’s(APC) Kerr-McGee Held Liable by Judge in Tronox Spinoff. Anadarko Petroleum Corp. and its Kerr-McGee unit acted improperly in the 2005 spinoff of Tronox Inc. and may have to pay as much as $14 billion related to environmental cleanup and health claims, a judge ruled. Anadarko shares plunged on the decision, in which the judge weighed how much money can be recovered from a successor to a polluting company, even after bankruptcy has ostensibly cleaned the slate of obligations.
Wall Street Journal: 
  • In China, Western Companies Cut Jobs as Growth Ebbs. Recruiting and Consulting Firms Feel Squeeze From Pullbacks. After years of rapid expansion in China, some Western companies are shedding jobs as the world's second-largest economy grows at its lowest rate in more than 20 years. Hewlett-Packard Co. says it is laying off a small percentage of its workforce in China, which the company calls one of its most important markets. Johnson & Johnson is cutting its pharmaceutical sales force by an undisclosed amount, people close to the company say.
  • IRS Targeting: Round Two. The first time around, targeting conservatives was a secret. Now, not so much. President Obama keeps claiming that he had no knowledge of the Internal Revenue Service's abusive muzzling of conservative groups. That line is hard to swallow given that his Treasury and IRS are back at it—this time in broad daylight.
Fox News:
  • House overwhelmingly approves two-year budget plan on a bipartisan vote. The House approved a two-year spending plan on Thursday evening, in a strong bipartisan vote that underscored the desire by many lawmakers to avoid a repeat of the October budget showdown. The bill was approved 332-94, over the objections of conservatives concerned it would increase spending in the short-term and liberals concerned it would not extend long-term jobless aid.
  • Going, going ... a number of tax deductions set to expire. Ready for year-end tax planning? In between holiday parties and last-minute shopping, it's worth making sure that you are minimizing your 2013 tax bill. It's almost always wise to maximize your deductions, prune losers from your portfolio and fill your retirement accounts as much as the rules allow. 
  • As wealthy cinch the purse, holiday spending slides: Survey. The survey of 800 people nationwide (with a margin of error of 3.5 percent) predicts a sharp, 9.4 percent drop in holiday spending this year compared with actual outlays a year ago as measured by the National Retail Federation. Americans plan to spend just $681 this holiday season, about on par with 2009, when the nation was clawing its way out of a deep financial crisis.
Zero Hedge: 
Business Insider: 
Washington Post: 
  • U.S. may be open to Islamists joining Syrian rebel coalition. The Obama administration is willing to consider supporting an expanded Syrian rebel coalition that would include Islamist groups, provided the groups are not allied with al-Qaeda and agree to support upcoming peace talks in Geneva, a senior U.S. official said Thursday. In addition, the official said, the Americans would like the Islamic Front groups to return U.S. vehicles, communications gear and other non-lethal equipment they seized last weekend from warehouses at the Syria-Turkey border.
LA Times:
  • Many who enrolled in health plans still await confirmation. Anxiety grows as health plan delays could leave some customers without a policy by Jan. 1. Thousands of Californians have overcome long waits and website glitches to sign up for Obamacare insurance, but now enrollment snags may prevent some of them from actually having coverage starting Jan. 1.
  • United Technologies(UTX) gives muted view for 2014. United Technologies Corp, the world's largest maker of elevators and air conditioners, on Thursday projected earnings to rise 7 percent to 11 percent next year, barely meeting analysts' targets, and gave a revenue view that fell short of Wall Street expectations. 
  • Adobe's(ADBE) Creative Cloud subscriber growth impresses investors. Adobe Systems Inc, the maker of Photoshop and Acrobat software, forecast current-quarter results below analysts' estimates but reported a 22 percent jump in the number of subscribers to its Creative Cloud suite from the preceding quarter. The company's shares rose about 8 percent after initially falling 5 percent in extended trading.
Economic Information Daily:
  • China may keep a "proactive" fiscal policy and "prudent" monetary policy next year and rely on "fine-tuning," citing Gao Peiyong, head of the National Academy of Economic Strategy under the Chinese Academy of Social Sciences.
China Securities Journal:
  • PBOC Official Warns on 'Keynesian Stimulus'. Governments shouldn't overuse "Keynesian stimulus" measures to deal with the global deleveraging, Yao Yudong, an official with the Monetary Policy Department of the People's Bank of China wrote.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.0 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 101.50 -1.5 basis points. 
  • FTSE-100 futures +.13%.
  • S&P 500 futures +.23%.
  • NASDAQ 100 futures +.26%.
Morning Preview Links

Earnings of Note

  • None of note
Economic Releases
 8:30 am EST
  • The Producer Price Index for November is estimated unch. versus a -.2% decline in October. 
  • The PPI Ex Food and Energy for November is estimated to rise +.1% versus a +.2% gain in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China FDI report, (SMG) Investor Day, (LSTR) Mid-Quarter Update and the (CNC) Investor Meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and commodity 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.

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