Monday, March 31, 2014

Stocks Rising into Afternoon on Diminished Russia/Ukraine Tensions, Central Bank Hopes, Quarter-End Window-Dressing, Biotech/Gaming Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.80 -4.23%
  • Euro/Yen Carry Return Index 148.06 +.36%
  • Emerging Markets Currency Volatility(VXY) 8.55 -1.95%
  • S&P 500 Implied Correlation 53.52 -2.25%
  • ISE Sentiment Index 83.0 -23.05%
  • Total Put/Call .96 -2.04%
  • NYSE Arms .96 +26.71% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 69.36 -1.66%
  • European Financial Sector CDS Index 92.62 -2.44%
  • Western Europe Sovereign Debt CDS Index 45.90 -3.03%
  • Asia Pacific Sovereign Debt CDS Index 90.30 -2.40%
  • Emerging Market CDS Index 293.37 -2.29%
  • China Blended Corporate Spread Index 362.75 -2.03%
  • 2-Year Swap Spread 12.75 +.75 basis point
  • TED Spread 20.0 +.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.25 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .03% -1.0 basis point
  • Yield Curve 230.0 +4.0 basis points
  • China Import Iron Ore Spot $116.80/Metric Tonne +4.01%
  • Citi US Economic Surprise Index -32.60 -3.1 points
  • Citi Emerging Markets Economic Surprise Index -8.70 -2.3 points
  • 10-Year TIPS Spread 2.14 unch.
Overseas Futures:
  • Nikkei Futures: Indicating +35 open in Japan
  • DAX Futures: Indicating +37 open in Germany
  • Higher: On gains in my biotech/tech/medical sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  • Market Exposure: 50% Net Long

Today's Headlines

  • Medvedev in Crimea as Ukraine Rejects Russia Proposal. Prime Minister Dmitry Medvedev arrived in Crimea in the first visit by a top official since Russia annexed the peninsula, as Ukraine rejected the Kremlin’s demands that it grant its regions greater powers. Medvedev’s trip today came just hours after U.S. Secretary of State John Kerry demanded Russia pull its forces back from Ukraine’s border at talks in Paris with Russian Foreign Minister Sergei Lavrov, saying they are “creating a climate of fear and intimidation in Ukraine.” Lavrov demanded that Ukraine should devolve power to give its regions more autonomy and ensure the rights of Russian speakers. 
  • IMF Says European Banks Had Up to $300 Billion Subsidy. Large banks in the euro area benefited from as much as $300 billion in implicit public subsidies four years after the global financial crisis because of investors’ expectations that governments would not let them fail, according to the International Monetary Fund.
  • European Stocks Climb After Weekly Gain as Novartis Rises. European advanced, after the biggest weekly gain in more than a month, as investors awaited economic data out of Europe and America later this week. Novartis AG climbed 3.5 percent after the Swiss drugmaker said the last phase of a clinical trial showed a treatment for chronic heart failure helped patients live longer. Banca Monte dei Paschi di Siena SpA jumped to a 14-month high after its biggest investor said it is selling an additional stake. RWE AG lost 1.3 percent after UBS AG recommended avoiding the stock. The Stoxx Europe 600 Index added 0.2 percent to 334.31 at the close of trading in London.
  • Hedge Fund Letters to Tell of Favorite Trades Unraveling. Pity the poor folks who have to write letters to investors on behalf of equity-focused hedge funds this month. Various measures of performance indicate the alternative investment vehicles may have a lot of explaining to do in March. The Global X Guru Index ETF (GURU), which aims to mimic returns of the top hedge-fund stock holdings, has lost 2 percent this month for its worst performance versus the Standard & Poor’s 500 Index since it was created in 2012.
Wall Street Journal:
  • South Korea Fires Back at North Amid Pyongyang's Drills. Shells From Both Countries Fell in the Sea, South Korean Official Says. North Korea fired artillery across its maritime border with South Korea in the Yellow Sea on Monday as part of a military drill, prompting South Korea to return fire in the latest reminder of the unstable security situation on the Korean peninsula. The latest provocation from Pyongyang came just as the U.S. and South Korea conducted a large-scale joint military exercise focused on amphibious operations in South Korea
  • WSJ's Hilsenrath: Yellen Sees Slack in Economy. Federal Reserve Chairwoman Offers Defense of Central Bank's Easy-Money Policies.
Fox News:
Business Insider:

Bear Radar

Style Underperformer:
  • Large-Cap Value +.62%
Sector Underperformers:
  • 1) Gold & Silver -1.90% 2) Oil Service -.31% 3) Energy -.22%
Stocks Falling on Unusual Volume:
Stocks With Unusual Put Option Activity:
  • 1) NUAN 2) XLU 3) XLP 4) MRO 5) KRE
Stocks With Most Negative News Mentions:
  • 1) GM 2) BBRY 3) TSLA 4) TWTR 5) BA

Bull Radar

Style Outperformer:
  • Small-Cap Growth +1.32%
Sector Outperformers:
  • 1) Gaming +2.62% 2) Airlines +1.98% 3) Biotech +1.96%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
  • 1) ACAS 2) COP 3) CI 4) FDO 5) CHRW
Stocks With Most Positive News Mentions:
  • 1) T 2) COP 3) JNJ 4) MU 5) CMI

Monday Watch

Weekend Headlines 
  • Russia’s Sovereign Bond Rating May Be Cut, Moody’s Says. Russia’s government bond rating was put on review for downgrade by Moody’s Investors Service, which cited a weakening economy amid the conflict with Ukraine. The ratings company said if the review leads to a downgrade, the most likely outcome would be a one-level adjustment. Russia’s Baa1 rating is the third-lowest investment grade.
  • McCain Looks to U.S. Companies in Russia If Putin Pushes. The U.S. should consider forcing major American companies such as General Electric (GE:US) and Exxon Mobil to suspend business in or pull out of Russia if President Vladimir Putin attempts to take more territory from Ukraine or other neighboring nations, said Senator John McCain of Arizona. 
  • Abe Bliss Broken as Foreigners Flee Topix in Biggest Drop. In just one quarter, the developed world’s biggest stock rally has given way to its worst slump. Japan’s Topix index, up 51 percent last year, has fallen 8.9 percent in the three months since, almost twice as much as the next-worst market, Hong Kong. The retreat is emboldening short sellers, whose trades made up as much as 36 percent of daily Tokyo Stock Exchange volume this month. Foreign investors sold 975 billion yen ($9.5 billion) of Japanese shares in one week in March, the most since the crash of 1987. 
  • Japan Industrial Output Unexpectedly Drops as Tax Hike Looms. Japan’s industrial production fell in February, undershooting all forecasts by economists surveyed by Bloomberg News, as the first sales-tax increase since 1997 risks stalling recovery in the world’s third-biggest economy. Output fell 2.3 percent from the previous month, the steepest drop in eight months, the trade ministry said in Tokyo today. The median estimate of 28 economists was for a 0.3 percent gain. A separate gauge of manufacturing fell in March for a second straight month.
  • China Defaults Sow Property Cash Crunch Concern: Distressed Debt. The specter of default in China's trust loans market is deepening the distress of property developers that also borrowed in dollars. Eighteen companies owning $15.2 billion, from behemoth China Vanke Co. to junk-rated Glorious Property Holdings Ltd., have "material exposure" in excess of 10% to trust financing, a form of non-bank lending that's helped homebuilders proliferate in China, Moody's Investors Service said. This year alone, the number of bonds from Chinese developers considered distressed based on their yields has almost doubled to 18. Part of China's $7.5 trillion shadow-banking system, trust financing has been key to fueling the nation's 10% annual growth rate in the past decade by providing easy credit to companies considered too risky by banks. After trust loans to the property, solar, coal and other industries tripled in the past three years to 10.9 trillion yuan($1.8 trillion).
  • Taiwan Protest Draws More Than 100,000 Against China Trade Deal. More than 100,000 Taiwanese marched in Taipei to protest a trade deal with China, challenging President Ma Ying-jeou’s plan to improve economic relations between the political rivals. As many as 350,000 people joined the rally yesterday in a turnout that was “more than we expected,” said Chen Wei-ting, a leader of students against the pact. The National Police Agency estimated there were 116,000 demonstrators. Protesters gathered outside the presidential office a day after Ma rejected demands to withdraw an agreement to open Taiwan’s service industries to competitors from China. 
  • China’s Stocks Fall to Extend Biggest Quarterly Loss Since June. China’s stocks fell, extending the benchmark index’s bigest quarterly loss since June, before tomorrow’s official manufacturing report and as China Minsheng Bank Corp.’s profit disappointed investors. Minsheng Bank dropped more than 3 percent in Shanghai and Hong Kong. BesTV New Media Co., which formed a game console venture with Microsoft Corp. in Shanghai’s free-trade zone, plunged 6.7 percent after resuming trade. Poly Real Estate Group Co. slumped 2.6 percent as a measure of real-estate companies fell the most among industry groups. The Shanghai Composite Index (SHCOMP) slid 0.4 percent to 2,032.67 at 10:55 a.m. local time.
  • Asia Stocks Rise 4th Day as Consumer Shares Lead Gain. Asian stocks rose, with the regional benchmark heading for its fourth straight daily gain, as consumer shares led advances. The MSCI Asia Pacific Index climbed 0.4 percent to 137.22 as of 10:54 a.m. in Tokyo. Japan’s Topix (TPX) index added 0.3 percent as the yen held last week’s losses versus the dollar and even as data showed industrial production unexpectedly fell 2.3 percent in February from January. A three percentage-point sales-tax increase takes effect in Japan tomorrow. 
  • Copper Set for Biggest Quarterly Drop Since June on China. Copper fell, extending a quarterly loss on concern that an economic slowdown in China, the biggest metals consumer, will lower demand. The metal for delivery in three months on the London Metal Exchange retreated 0.5 percent to $6,640 a metric ton by 10:05 a.m. in Hong Kong. Prices are down 9.8 percent since the start of the year, poised for the biggest quarterly drop since June.
  • Flight 370 Search Gains Vessel With Black Box-Detector. Australian ship Ocean Shield will join the hunt for the missing Malaysian jet after being fitted with equipment to detect the black-box recorder, as Prime Minister Tony Abbott said there was no time limit on the search.
  • Latin America More Vulnerable Than Pre-2008 Crisis, IDB Says. Latin America’s vulnerability to external shocks is greater today than before the 2008 financial crisis because governments have increased spending and companies have taken on more foreign debt to fuel growth, the Inter-American Development Bank said. “History teaches that exits from extremely low U.S. interest rates may be smooth or bumpy,” the IDB said in a report released today at its annual meeting in Costa do Sauipe, Brazil. “Changes to the expected path of short-term U.S. interest rates could affect capital inflows that have strong and persistent effects on growth in some countries.”
  • Obama Changes to Health Law Illegal, McMorris Rodgers Says. President Barack Obama is “picking and choosing” how the 2010 health-care law will be implemented and “doesn’t have the flexibility” legally to do so, Representative Cathy McMorris Rodgers said. Asked if she was saying such changes to the law are illegal, McMorris Rodgers, a Republican from Washington State, replied, “Yes, I am.” 
  • GM(GM) Widens Ignition Recall by 971,000 to 2.59 Million Cars. General Motors Co. (GM) is expanding the recall of small-car ignition switches by 971,000 vehicles worldwide to cover 2008 to 2011 vehicles that were built with safe parts yet may have received faulty replacements. It also increased the death toll linked to the switches.
  • High-Speed Traders Rip Investors Off, Michael Lewis Says. The U.S. stock market is a rigged game where high-frequency traders with advanced computers make tens of billions of dollars by jumping in front of investors, according to author Michael Lewis, who spent the past year researching the topic for his new book “Flash Boys.”
Wall Street Journal: 
  • Investors Breathe Life Into European Banks' Bad Loans. Lack of Restructuring in U.S. Has Driven Up Demand. Hedge funds and private-equity investors are bidding up prices of some troubled assets in Europe, sparking a surge in sales by banks seeking to rid themselves of soured corporate loans.
Fox News:
  • Rogers: Troop movement, 'covert operation' suggests Putin not finished in Ukraine. Russian President Vladimir Putin is showing telltale signs that he intends to extend his control over Ukraine and perhaps elsewhere in Eastern Europe, House Intelligence Committee Chairman Rep. Mike Rogers said Sunday. Beyond assembling military armor and tens of thousands of troops along the Russia-Ukraine border, Putin is moving troops in northern Georgia and planting intelligence officers in Ukraine, the Michigan Republican told “Fox News Sunday.” He said Russian troops in the northern region of Georgia, known as South Ossetia, are on the move, perhaps to go into Armenia or toward the Baltic Sea. “There’s no way I’d take this as any other way than [Putin] is working for a land bridge,” Rogers said.
Zero Hedge:
Business Insider:
Financial Times: 
  • Bad loan writedowns soar at China banks. The five biggest Chinese banks, which account for more than half of all loans in the country, removed Rmb59bn ($9.5bn) from their books in debts that could not be collected, according to their 2013 results. That was up 127 per cent from 2012, and the highest since the banks were rescued from insolvency, recapitalised and publicly listed over the past decade. The sharp acceleration in write-offs is the latest indication of the turbulence now buffeting China’s financial system.
Svenska Dagbladet:
  • Putin Wants to Regain Baltics, Finland, Former Adviser Says. Baltics, Finland "not of Putin's agenda today or tomorrow, but it no one stops him, the issue will come up sooner or later," Andrei Illarionov, former adviser to Russian President Vladimir Putin, is quoted as saying. Putin will say "Bolsheviks committed treason against Russian national interests in 1917 by granting independence to Finland."
Korea Central News Agency:
  • North Korea Says It Doesn't Rule Out 'New Form' of Nuclear Test. North Korea will "utilize" its nuclear deterrent in its military exercises in response to U.S. drills, its foreign ministry says in statement. The test may take place in "a new form", the statement said.
Financial News:
  • Cutting RRR Would Delay China's Deleveraging Process. Using reserve ratio tool will cause markets to get the wrong signal that monetary policy is starting to be loosened, which is not in line with the goal of controlling liquidity, according to a commentary on page 2 of today's Financial News written by Xu Shaofeng. China's monetary authority currently appears to lean toward using reform for liquidity control, such as the standing lending facility trial that started in January and the re-lending quota in March, the commentary said. Cutting banks reserve ratio will delay the deleveraging process of financial institutions and enterprises considering that the nation's economy still relies on investment and debt, the commentary said.
  • Minister Says China Faces Downward Economic Pressure. Industry Minister Miao Wei said China still faces strong downward economic pressure in an interview with Caixin's New Century magazine. Some reforms will be good in the long term while they may affect current economic growth, Miao said.
Night Trading
  • Asian indices are -.25%. to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 128.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 92.5 -.25 basis point.
  • FTSE-100 futures +.21%.
  • S&P 500 futures +.38%.
  • NASDAQ 100 futures +.45%.
Morning Preview Links

Earnings of Note

  • (CALM)/1.59
  • (VRNT)/.84
Economic Releases 
9:00 am EST
  • The ISM Milwaukee for March is estimated to rise to 51.0 versus 48.59 in February.
9:45 am EST
  • The Chicago Purchasing Manager for March is estimated to fall to 59.5 versus 59.8 in February.
10:30 am EST
  • The Dallas Fed Manufacturing Activity Index for March is estimated to rise to 2.5 versus .3 in February.
Upcoming Splits
  • (EOG) 2-for-1
  • (PEGA) 2-for-1
Other Potential Market Movers
  • The Fed's Yellen speaking, France GDP, Eurozone CPI, USDA Crop report, China Manufacturing PMI, Reserve Bank of Australia decision and the (ING) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and commodity shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the week.

Sunday, March 30, 2014

Weekly Outlook

U.S. Week Ahead by MarketWatch (audio)
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by

BOTTOM LINE: I expect US stocks to finish the week mixed as Russia/Ukraine tensions, global growth fears and increasing emerging markets/European debt angst offset central bank hopes, short-covering and bargain-hunting. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Friday, March 28, 2014

Market Week in Review

S&P 500 1,857.62 -.48%*

 photo ppp_zps736a929d.png

The Weekly Wrap by

*5-Day Change

Weekly Scoreboard*

  • S&P 500 1,857.62 -.48%
  • DJIA 16,323.0 +.12%
  • NASDAQ 4,155.75 -2.83%
  • Russell 2000 1,151.81 -3.51%
  • S&P 500 High Beta 30.75 -1.63%
  • Wilshire 5000 19,526.90 -.90%
  • Russell 1000 Growth 826.57 -1.28%
  • Russell 1000 Value 942.07 +.04%
  • S&P 500 Consumer Staples 439.31 +.55%
  • Morgan Stanley Cyclical 1,486.88 -.93%
  • Morgan Stanley Technology 922.24 -1.45%
  • Transports 7,451.46 -.85%
  • Utilities 526.94 +1.01%
  • Bloomberg European Bank/Financial Services 108.77 +.58%
  • MSCI Emerging Markets 40.58 +4.31%
  • HFRX Equity Hedge 1,174.13 -.71%
  • HFRX Equity Market Neutral 968.57 +.13%
  • NYSE Cumulative A/D Line 209,193 -.29%
  • Bloomberg New Highs-Lows Index -1 -164
  • Bloomberg Crude Oil % Bulls 50.0 +62.50%
  • CFTC Oil Net Speculative Position 391,174 +1.79%
  • CFTC Oil Total Open Interest 1,604,566 -1.15%
  • Total Put/Call .98 +10.11%
  • OEX Put/Call .93 -9.71%
  • ISE Sentiment 109.0 -3.54%
  • NYSE Arms .76 -40.15%
  • Volatility(VIX) 14.41 -3.93%
  • S&P 500 Implied Correlation 54.76 +.77%
  • G7 Currency Volatility (VXY) 7.61 +5.26%
  • Emerging Markets Currency Volatility (EM-VXY) 8.72 -2.90%
  • Smart Money Flow Index 11,302.70 -2.46%
  • ICI Money Mkt Mutual Fund Assets $2.643 Trillion -.12%
  • ICI US Equity Weekly Net New Cash Flow -$3.810 Billion
  • AAII % Bulls 31.2 -15.3%
  • AAII % Bears 28.6 +9.4%
Futures Spot Prices
  • CRB Index 305.21 +1.94%
  • Crude Oil 101.67 +2.13%
  • Reformulated Gasoline 293.75 +.88%
  • Natural Gas 4.48 +3.94%
  • Heating Oil 295.79 +1.16%
  • Gold 1,293.80 -3.05%
  • Bloomberg Base Metals Index 184.79 +1.34%
  • Copper 304.15 +3.14%
  • US No. 1 Heavy Melt Scrap Steel 362.33 USD/Ton -.09%
  • China Iron Ore Spot 112.30 USD/Ton +1.44%
  • Lumber 334.40 -.39%
  • UBS-Bloomberg Agriculture 1,519.84 +2.37%
  • ECRI Weekly Leading Economic Index Growth Rate 2.9% +60 basis points
  • Philly Fed ADS Real-Time Business Conditions Index .1384 -1.42%
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 121.28 +.02%
  • Citi US Economic Surprise Index -29.50 +3.1 points
  • Citi Emerging Markets Economic Surprise Index -6.40 -2.2 points
  • Fed Fund Futures imply 36.0% chance of no change, 64.0% chance of 25 basis point cut on 4/30
  • US Dollar Index 80.18 +.08%
  • Euro/Yen Carry Return Index 147.53 +.24%
  • Yield Curve 227.0 -5 basis points
  • 10-Year US Treasury Yield 2.72% -2 basis points
  • Federal Reserve's Balance Sheet $4.184 Trillion +.12%
  • U.S. Sovereign Debt Credit Default Swap 20.04 -11.56%
  • Illinois Municipal Debt Credit Default Swap 141.0 unch.
  • Western Europe Sovereign Debt Credit Default Swap Index 47.34 +1.28%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 92.52 -3.48%
  • Emerging Markets Sovereign Debt CDS Index 259.31 -10.46%
  • Israel Sovereign Debt Credit Default Swap 88.0 -.56%
  • Russia Sovereign Debt Credit Default Swap 235.83 -13.93%
  • China Blended Corporate Spread Index 370.28 -2.69%
  • 10-Year TIPS Spread 2.14% -1 basis point
  • TED Spread 19.75 +1.0 basis point
  • 2-Year Swap Spread 12.0 -1.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.75 basis point
  • N. America Investment Grade Credit Default Swap Index 70.19 +1.17%
  • European Financial Sector Credit Default Swap Index 94.94 -3.12%
  • Emerging Markets Credit Default Swap Index 300.25 -5.25%
  • CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 84.0 -4.5 basis points
  • M1 Money Supply $2.739 Trillion -1.94%
  • Commercial Paper Outstanding 1,025.30 +.60%
  • 4-Week Moving Average of Jobless Claims 317,750 -20,750
  • Continuing Claims Unemployment Rate 2.2% unch.
  • Average 30-Year Mortgage Rate 4.40% +8 basis points
  • Weekly Mortgage Applications 361.20 -3.47%
  • Bloomberg Consumer Comfort -31.50 -2.5 points
  • Weekly Retail Sales +2.8% +20 basis points
  • Nationwide Gas $3.54/gallon +.01/gallon
  • Baltic Dry Index 1,412 -11.70%
  • China (Export) Containerized Freight Index 1,050.42 -1.70%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 unch.
  • Rail Freight Carloads 260,713 +1.84%
Best Performing Style
  • Large-Cap Value unch.
Worst Performing Style
  • Small-Cap Growth -4.5%
Leading Sectors
  • Hospitals +3.9%
  • Energy +2.2%
  • Steel +2.1%
  • Agriculture +2.0%
  • Utilities +1.0%
Lagging Sectors
  • I-Banks -3.7% 
  • Gaming -4.1%
  • Internet -4.1%
  • Alt Energy -6.3%
  • Biotech -7.0%
Weekly High-Volume Stock Gainers (7)
Weekly High-Volume Stock Losers (39)
Weekly Charts
*5-Day Change

Stocks Slightly Higher into Final Hour on Yen Weakness, Quarter-End Window Dressing, Short-Covering, Healthcare/Energy Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: Slightly Lower
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 14.79 +1.16%
  • Euro/Yen Carry Return Index 147.49 +.71%
  • Emerging Markets Currency Volatility(VXY) 8.72 -.23%
  • S&P 500 Implied Correlation 56.15 +.57%
  • ISE Sentiment Index 108.0 +.93%
  • Total Put/Call .93 +12.05%
  • NYSE Arms .96 +9.43% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 70.58 -.57%
  • European Financial Sector CDS Index 94.94 -2.80%
  • Western Europe Sovereign Debt CDS Index 47.34 unch.
  • Asia Pacific Sovereign Debt CDS Index 92.52 -.22%
  • Emerging Market CDS Index 299.07 +3.23%
  • China Blended Corporate Spread Index 370.28 +.48%
  • 2-Year Swap Spread 12.0 +.5 basis point
  • TED Spread 19.75 -.5 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -3.25 -.5 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .04% +1.0 basis point
  • Yield Curve 226.0 +4.0 basis points
  • China Import Iron Ore Spot $112.30/Metric Tonne unch.
  • Citi US Economic Surprise Index -29.5 +1.5 points
  • Citi Emerging Markets Economic Surprise Index -6.4 +.8 point
  • 10-Year TIPS Spread 2.14 unch.
Overseas Futures:
  • Nikkei Futures: Indicating +98 open in Japan
  • DAX Futures: Indicating +3 open in Germany
  • Slightly Lower: On losses in my biotech sector longs and emerging markets shorts
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back
  • Market Exposure: 25% Net Long

Bear Radar

Style Underperformer:
  • Small-Cap Growth +.29%
Sector Underperformers:
  • 1) Biotech -1.71% 2) Coal -1.35% 3) Drugs +.28%
Stocks Falling on Unusual Volume:
Stocks With Unusual Put Option Activity:
  • 1) NDAQ 2) CTIC 3) COP 4) AA 5) CCL
Stocks With Most Negative News Mentions:
  • 1) BAC 2) CZR 3) GM 4) BX 5) CREE

Bull Radar

Style Outperformer:
  • Small-Cap Value +.90%
Sector Outperformers:
  • 1) Hospitals +2.09% 2) Gold & Silver +1.74% 3) HMOs +1.56%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
  • 1) EPI 2) IDRA 3) APOL 4) S 5) NRG
Stocks With Most Positive News Mentions:
  • 1) RH 2) AA 3) RHT 4) IBM 5) MON
Evening Headlines 
  • Crimea Resolution Backed by U.S. Barely Gets UN Majority. Ukraine and its backers won support from little more than half the members of the United Nations General Assembly to declare invalid Crimea’s referendum to secede, as Russia wielded diplomatic and economic pressure for members to abstain or cast no ballot. The 193-member General Assembly voted 100-11 today to pass a nonbinding resolution describing the Crimean referendum as “having no validity” and calling on all states and agencies to not recognize “any alteration of the status” of Crimea. Fifty-eight members abstained, and 24 were absent.
  • Ukrainian Bailout to Test Cabinet's Mettle Amid Threats. An hour after Ukraine’s lawmakers yesterday passed the laws needed to unlock a $27 billion international lifeline, protesters chanting “Revolution!” gathered by parliament, forcing deputies to evacuate. The demonstration, sparked by one of the nationalist Pravyi Sektor group’s leaders being killed in a firefight with police this week, shows the extent of the challenges Ukraine new leaders must overcome to keep the bailout money flowing.
  • China’s Developers Face Shakeout as Easy Money Ends: Mortgages. The collapse of a Chinese developer in a city south of Shanghai foreshadows a shakeout among the nation’s almost 90,000 real estate companies as the government reins in credit and the housing market slows. Zhejiang Xingrun Real Estate Co., a closely held developer based in Fenghua, is insolvent, with 3.5 billion yuan ($562 million) of debt. Its residential projects have been halted and authorities have detained its largest shareholder and his son, according to the city’s government.
  • Japan Inflation Unchanged in February Before Sales-Tax Rise. Japan’s inflation rate matched forecasts in February ahead of a sales-tax increase next week that could challenge the Bank of Japan’s effort to stoke 2 percent price gains. Consumer prices excluding fresh food rose 1.3 percent from a year earlier, the statistics bureau said today in Tokyo, matching the median estimate of 30 economists surveyed by Bloomberg News on the BOJ’s key inflation gauge. Household spending fell for the first time in six months and retail sales slowed, while the jobless rate dropped to 3.6%, other data released today show.
  • Japan Is Taxing Itself Into Trouble. On April 1, Japan's national sales tax will rise to 8 percent from 5 percent. Unless wages rise by an equal amount, the effect will be a drop in consumer spending. Japanese automakers anticipate a sales decline of as much as 16 percent during the next 12 months. Even if this isn't enough to push the economy into recession, raising the sales tax is a bad move that will undermine Prime Minister Shinzo Abe's agenda for the world's third-largest economy.
  • Asian Stocks Swing. Asian stocks swung between gains and losses, with the regional benchmark heading for its biggest weekly increase since September. Telecommunication shares led declines while banks and brokerages led gains. The MSCI Asia Pacific Index fell 0.1 percent to 135.93 as of 9:32 a.m. in Tokyo after rising less than 0.1 percent.
Wall Street Journal:
  • Russian Buildup Stokes Worries. Pentagon Alarmed as Troops Mass Near Ukraine Border. Russian troops amassing near Ukraine are actively concealing their positions and establishing supply lines that could be used in a prolonged deployment, ratcheting up concerns that Moscow is preparing for another major incursion and not conducting exercises as it claims, U.S. officials said. Such an incursion could take place without warning because Russia has already deployed the array of military forces needed for such an operation, say officials briefed on the latest U.S. intelligence. The rapid speed of the Russian military buildup and the efforts to camouflage the forces and equipment have stoked U.S. fears, in part because American intelligence agencies have struggled to assess Russian President Vladimir Putin's specific intentions
  • Crisis in Ukraine. Streaming Coverage:
  • Amazon(AMZN) Plans Free Streaming Media Service. Website Said to Drop Strategy of Only Offering Video to Users of Its Prime Shipping Service.
  • Climate Forecast: Muting the Alarm. Even while it exaggerates the amount of warming, the IPCC is becoming more cautious about its effects
  • Noonan: Mr. Putin's Revealing Speech. At the Kremlin, he makes the case for an increasingly aggressive Russia.
  • Restoration Hardware(RH) swings to profit. Restoration Hardware Holdings Inc. swung to a fiscal fourth-quarter profit as the high-end-home-goods retailer reported continued sales growth and said it had hired retail veteran Doug Diemoz as its chief development officer.
Zero Hedge:
Business Insider:
  • U.S. high-frequency trading ban unlikely -Nasdaq. U.S. regulators are unlikely to put rules in place that would harm high-frequency trading (HFT) as doing so would make trading more difficult and expensive for all investors, Robert Greifeld, chief executive officer of Nasdaq OMX Group said on Thursday. 
  • Red Hat(RHT) forecasts disappointing full-year profit. Red Hat Inc reported better-than-expected quarterly results, helped by strong subscription growth for its Linux operating system, but forecast full-year adjusted profit below average analyst estimate. 
  • GameStop(GME) shares fall as 2014 forecast disappoints. Video game retailer GameStop Corp on Thursday forecast full-year earnings below market expectations as it is yet to see an uptick in sagging video game software sales, despite robust hardware sales driven by the launches of Microsoft's Xbox One and Sony's PlayStation 4 consoles.
    The Obama administration will press ahead Friday with tough requirements for new coal-fired power plants, moving to impose for the first time strict limits on the pollution blamed for global warming. The proposal would help reshape where Americans get electricity, away from a coal-dependent past into a future fired by cleaner sources of energy. It's also a key step in President Barack Obama's global warming plans, because it would help end what he called "the limitless dumping of carbon pollution" from power plants.
  • UN: 400,000 Displaced This Year in Iraq Violence. The United Nations envoy to Iraq says about 400,000 people have been displaced this year by ongoing violence in western Iraq, and the U.N. Security Council is expressing "grave concern" about recent developments particularly in Ramadi and Fallujah.
Evening Recommendations
Cantor Fitzgerald:
  • Rated (ORCL) Buy, target $50.
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 92.75 -.75 basis point.
  • FTSE-100 futures +.15%.
  • S&P 500 futures +.21%.
  • NASDAQ 100 futures  +.19%.
Morning Preview Links

Earnings of Note

  • (BBRY)/-.54
  • (FINL)/.85
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 +.3% in February versus a +.4% gain in January.
  • The PCE Core for February is estimated to rise +.1% versus a +.1% gain in January.
9:55 am EST
  • Final Univ. of Mich. Consumer Confidence for March is estimated to rise to 80.5 versus a prior estimate of 79.9.
Upcoming Splits
  • (MLI) 2-for-1
  • (INSY) 3-for-2
  • (EOG) 2-for-1
Other Potential Market Movers
  • The Fed's George speaking, UK GDP, German CPI and (DRI) investor conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by tech and real estate 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.