Tuesday, March 11, 2014

Tuesday Watch

Evening Headlines 
  • Russia Stands Fast on Crimea as Ukraine Drills Military. Russia showed no signs of yielding in the Crimea standoff as Ukraine’s prime minister prepared to meet U.S. President Barack Obama and western nations threatened further repercussions if Russia failed to defuse tensions. Ukraine is testing its military’s combat readiness, the Defense Ministry said, while reiterating the government’s desire for a peaceful solution. Russia, which has vowed to defend the ethnic Russians who dominate the Crimean peninsula, accuses Ukraine of ignoring radicals in the nation’s east and said it rejects the legitimacy of the western-backed leadership in Kiev. 
  • SoftBank’s Son Vows ‘Massive Price War’ If T-Mobile Deal Allowed. SoftBank Corp. President Masayoshi Son will start a “massive price war” if U.S. regulators allow him to purchase T-Mobile US Inc., he said in an interview with PBS’s Charlie Rose. The billionaire, who bought control of Sprint Corp. last year, said combining the third- and fourth-largest U.S. mobile-phone carriers would give him enough scale to compete against the largest operators, AT&T Inc. and Verizon Communications Inc.
  • Asia Stocks Climb as Investors Weigh China Credit, BOJ. Asian stocks rose, after the regional benchmark index yesterday dropped the most in two weeks, as investors weighed data showing China’s credit growth trailed estimates in February and awaited the conclusion of the Bank of Japan’s policy meeting. Taiheiyo Cement Corp., Japan’s biggest maker of the product, jumped 4.4 percent on a report the company’s U.S. unit will post its first profit in six years. Yamada Denki Co. added 1.8 percent after JPMorgan Chase & Co. raised its rating on the electronics retailer. Fortescue Metals Group Ltd., Australia’s third-largest producer of iron ore, lost 0.7 percent, extending a two-day slump to 10 percent, after the raw material used to make steel plunged by most since August 2009. The MSCI Asia Pacific Index gained 0.2 percent to 137.95 as of 10:03 a.m. in Tokyo.
  • Copper Has Biggest Two-Day Drop in 28 Months on Economic Concern. Copper futures posted the biggest two-session drop in 28 months on signs of faltering economic growth from France to China, the world’s biggest consumer of industrial metals. On the Comex in New York, copper dropped below $3 a pound for the first time since June. French industrial production production unexpectedly dropped in January for the second straight month, and business confidence declined, separate reports showed today. In China, exports slid in February by the most since 2009, government data showed on March 8. 
  • Iron Ore Plunges Most Since August 2009 on China Concern. Iron ore extended its decline into a bear market, slumping by the most since August 2009, amid concern that demand in China is slowing just as rising output signals a global glut. Ore with 62 percent content delivered to Tianjin fell 8.3 percent to $104.70 a dry ton, the lowest since October 2012 and the biggest drop in more than four years, according to data from The Steel Index Ltd. yesterday. The benchmark price lost 27 percent since Aug. 14, when it reached a five-month high of $142.80. The raw material dropped into a bear market on March 7.
Wall Street Journal: 
  • Stolen Passports Used on Malaysia Airlines Flight Show Gaps in Air Security Around Globe. Investigation Shines Light on Thriving Market for Illicit Documents and Disparity in Aviation Security Around World. The investigation into passengers aboard a missing Malaysia Airlines 3786.KU 0.00% flight who were traveling with stolen passports has drawn attention to a thriving market for illicit documents and the disparity in aviation security across the globe.
Fox News:
  • Russians enter town north of Crimea, say Ukrainians. Ukrainians in the Kherson province just north of Crimea say Russian operatives have moved into the territory, an incursion which, if true, could show Vladimir Putin has more than just the Black Sea peninsula in his sights. Residents of the village of Chonhar, in the Kherson region of Ukraine, say Russian troops showed up last week in armored personnel carriers, prompting the dispatch of Ukrainian troops and a standoff.  The suspected Russian troops pulled back and established a checkpoint on a major road leading north from the Crimean capital of Simferopol.
  • Corporate debt fever rises to new record in 2014. Corporate America's love affair with debt has intensified in 2014, with record levels of borrowing happening as feared rate increases have yet to materialize. This year was supposed to be the one where the rock-bottom rates began to lift as the Federal Reserve eased its foot off the stimulus pedal and economic growth pushed borrowing costs higher.
Zero Hedge:
Business Insider:
  • Urban Outfitters(URBN) warns on current-quarter results after sales miss. Teen apparel retailer Urban Outfitters Inc reported lower-than-expected quarterly sales, citing severe winter weather in the United States, and said it was "very cautious" on its current-quarter performance. Shares of the company, known for its Anthropologie, Free People and Urban Outfitters brands, fell 3 percent in extended trading.
  • 55% of Japanese to Cut Spending After Sales Tax Hike. 72% of interviewees say they are worried about the economy after the increase.
China Youth Daily:
  • People's Bank of China Governor Zhou Xiaochuan said yesterday that restrictions against printing money are lacking, citing Zhou as saying in a speech at a CPPCC meeting. Printing too much money will cause asset bubbles or inflation, Zhou said.
Shanghai Securities News:
  • Australia May Start Probe on Chinese Solar Imports. Australia may start an anti-dumping and anti-subsidy investigation on Chinese solar product imports, citing a person from China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
Evening Recommendations
 Piper Jaffray:
  • Rated (BLOX) Overweight, target $30.
Night Trading
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 128.0 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 94.0 - basis points.
  • FTSE-100 futures +.33%.
  • S&P 500 futures -.06%.
  • NASDAQ 100 futures  -.01%.
Morning Preview Links

Earnings of Note

  • (JW/A)/.84
  • (AEO)/.26
  • (DKS)/1.11
  • (PAY)/.27
Economic Releases
7:30 am EST
  • The NFIB Small Business Optimism Index for February is estimated to fall to 93.8 versus 94.1 in January.
10:00 am EST
  • JOLTs Job Openings for January are estimated to rise to 4015 versus 3990 in December.
  • Wholesale Inventories for January are estimated to rise +.4% versus a +.3% gain in December.
  • Wholesale Sales for January are estimated to rise +.2% versus a +.5% gain in December.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The German trade figues, $30B 3Y T-Note auction, weekly retail sales reports, BofA Consumer/Retail Conference, Barclays Healthcare Conference, Piper Jaffray Tech/Media/Telecom Conference, Pershing Square (HLF) conference call, (CVX) analyst meeting, (MMC) investor day and the (DLPH) investor update 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 50% net long heading into the day.

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