Wednesday, April 09, 2014

Wednesday Watch

Evening Headlines 
Bloomberg: 
  • Ukrainians Crowd Kiev Soup Kitchens as More Flee Russian Control. Exiled during Soviet times and repatriated to Ukraine 22 years ago, Susanna Yagyaeva is on the move again as Russia’s military returns to her homeland. A week after abandoning Crimea as President Vladimir Putin’s forces overran the Black Sea peninsula, the Tatar mother of one was scrubbing pots at a makeshift hostel in a Soviet-built sanatorium 800 kilometers (500 miles) away in Kiev. As parts of eastern Ukraine now agitate for a split, the United Nations said tens of thousands more Ukrainians may seek shelter, jobs and aid because of fear of violence and discrimination. “We left everything behind,” said Yagyaeva, 47, tugging at her silk headscarf as a lunch of borscht beetroot soup and buckwheat was prepared in a cramped kitchen. “We don’t want a Russian passport. We want to live in peace and friendship with everyone. So we came here.”
  • Snoozing Staff at Yiwu Show China Exports Sputtering. “I don’t see a future for these places if they continue to make low-end products,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “They have to restructure their products and move up the value chain, and that applies to China more broadly.”
  • Asian Stocks Outside Japan Rise; Topix Drops on Yen Gains. Asian stocks outside Japan rose, with a gauge of regional shares heading for the highest close in five months, as consumer companies advanced. Japanese equities fell after the yen rose the most since August. David Jones Ltd. (DJS), Australia’s biggest department store by market value, surged 23 percent after agreeing to a takeover offer from South African retail chain Woolworths Holdings Ltd. Nissan Motor Co. (7201), a Japanese carmaker that gets about 79 percent of sales outside Japan, slid 2.8 percent. Mitsui O.S.K. Lines Ltd. retreated 5.8 percent in Tokyo as the world’s largest merchant-fleet operator sells convertible bonds. The MSCI Asia Pacific excluding Japan Index gained 0.8 percent to 481.92 as of 9:43 a.m. in Hong Kong. Japan’s Topix index slid 1.7 percent as the yen traded at 101.88 per dollar. The currency strengthened 1.3 percent yesterday to touch a three-week high
  • Renzi Cuts Italy Growth Forecast With Call for Rich to Give More. Italian Prime Minister Matteo Renzi cut the government’s forecast for economic growth and renewed his promise to slash benefits for top civil servants, saying the working poor are shouldering too much of the pain. Gross domestic product will expand 0.8 percent this year, Renzi said late yesterday in a news conference in Rome after his cabinet approved his multi-year budget plan. That compares with the 1 percent growth projected in September by Renzi’s predecessor, Enrico Letta. Italy’s GDP contracted 1.9 percent last year, the second decline in a row.
  • Global Growth Threatened in $623 Trillion Derivatives Overhaul. Global regulators’ failure to align efforts to reform the $693 trillion derivatives market threatens to undermine economic growth, according to the International Swaps & Derivatives Association. Investors are struggling to adapt to regional differences to changes agreed by the Group of 20 nations as the industry meets for its annual conference in Munich today. In the U.S. traders have been reporting derivatives transactions to data repositories and have been required to have central clearinghouses back their contracts since last year, while European regulators are still defining the requirements.
Wall Street Journal: 
  • Ukraine Moves to Assert Control in East. Russia Warns That Use of Force Could Plunge Country into Civil War. Ukrainian police took back a government building from pro-Russian separatists in one volatile eastern city Tuesday, but armed men dug in behind reinforced barricades in other cities, warning against an assault even as some disarray began to show. Russia warned Ukraine's new government that the use of force to dislodge demonstrators who had taken over buildings in eastern Ukraine, where many ethnic Russians live, could plunge the country into civil war.
  • The Outlaw Vladimir Putin. Moscow's flouting of treaties, international law and the Geneva Conventions is raising world-wide dangers.
Fox News:
  • Latest ObamaCare surprise: Most won't be able to buy health insurance until end of year. There is yet another ObamaCare surprise waiting for consumers: from now until the next open enrollment at the end of this year, most people will simply not be able to buy any health insurance at all, even outside the exchanges. "It's all closed down. You cannot buy a policy that is a qualified policy for the purpose of the ACA (the Affordable Care Act) until next year on January 1," says John DiVito, president of Flexbenefit which has 2,500 brokers.
MarketWatch.com:
CNBC:
  • Will Japan’s tax hike spur a fiscal crisis? (video) Japan's consumption tax hike is likely to dent economic growth this quarter and some analysts believe it may shock the country into a recession and possibly even a fiscal crisis. "It is definitely a severe negative shock for Japan's economy," Takuji Okubo, chief economist at Japan Macro Advisors, told CNBC Monday.
Zero Hedge: 
Business Insider:
NY Times:
  • Tech-Focused Hedge Fund to Return $2 Billion to Investors. As investors nurse steep losses from  technology stocks, one hedge fund has decided to return money to investors and turn its focus to companies not listed on the stock market. Coatue Management, the $7 billion technology-focused hedge fund founded by Philippe Laffont, will return more than $2 billion to investors in its flagship fund.
Reuters:
  • NATO to triple Baltic air patrol from next month. NATO will triple its usual number of fighter jets patrolling over the Baltics next month to beef up its eastern European defenses due to tension with Russia over Ukraine, a NATO military official said on Tuesday.
  • Fed should be more specific about rate-hike plans - Plosser. The Federal Reserve should be even more specific about when it plans to tighten policies after it took a step in the right direction last month, a top U.S. central banker said on Tuesday. Philadelphia Federal Reserve Bank President Charles Plosser said, however, that the central bank is "not even close to withdrawing support prematurely," when asked by reporters about longer-term plans. He said the timing of the first rate rise, which will probably come next year, will be "all about the data."
South China Morning Post: 
Evening Recommendations
Jefferies:
  • Rated (CVX) Buy, target $140.
  • Rated (LMNS) Buy, target $16.
Sterne Agee:
  • Rated (ISRG) Underweight, target $440. 
  • Rated (NMBL) Buy, target $43.
Piper:
  • Cut (ARO) to Underweight, target $4.
  • Raised (HIBB) to Overweight, target $63.
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 122.50 -3.5 basis points.
  • Asia Pacific Sovereign CDS Index 87.75 -1.25 basis points.
  • FTSE-100 futures +.15%.
  • S&P 500 futures +.02%.
  • NASDAQ 100 futures  +.04%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (STZ)/.76
  • (BBBY)/1.60
  • (APOG)/.29
  • (RT)/-.07
  • (PSMT)/.87
  • (PGR)/.39
Economic Releases
10:00 am EST
  • Wholesale Inventories for February are estimated to rise +.5% versus a +.6% gain in January.
  • Wholesale Sales for February are estimated to rise +1.0% versus a -1.9% decline in January.

10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +970,000 barrels versus a -2,379,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -940,000 barrels versus a -1,574,000 barrel decline the prior week. Distillate inventories are estimated to fall by -290,000 barrels versus a +554,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.09% versus a +1.7% gain the prior week.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Evans speaking, Fed's Taruillo speaking, China Trade Balance/New Loans/Money Supply, Australia Unemployment Rate, Eurozone Trade Balance, USDA's WASDE report, $21B 10Y T-Note auction and the weekly MBA Mortgage Applications report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

No comments: