Thursday, July 24, 2014

Thursday Watch

Evening Headlines 
Bloomberg:
  • U.S. Weighs New Russia Sanctions as Putin Isolated. The U.S. is debating a new round of sanctions on Russia and pressing the European Union to follow up with its own penalties, Deputy National Security Adviser Ben Rhodes said. Russian President Vladimir Putin’s government is increasingly isolated for his support of the separatists in Ukraine, Rhodes told reporters at the White House today. “It has badly backfired on them because it’s earning him complete international isolation and condemnation,” Rhodes said. He gave no timetable for U.S. action.
  • Kerry’s Gaza Truce Bid Undercut by Rifts in Region. As U.S. Secretary of State John Kerry labors to end the violence in Gaza and Israel, he’s confronting hostility and suspicion among Egypt, Qatar and Turkey, whose rival agendas and diplomatic jockeying bring new difficulty to the negotiations. The top U.S. diplomat hurriedly departed for the Middle East this week with his customary eagerness to tackle complex international issues. “We’ve got to get over there,” Kerry told an aide in a phone call picked by Fox News microphones as he made the rounds of Sunday talk shows. “It’s crazy to be sitting around.” 
  • Skyscraper Mania Grips China as Ambitions Trump Economy. The eastern Chinese city of Suzhou isn’t even the biggest in Jiangsu province, yet it’s joining a national rush for the sky with what’s slated to become the world’s third-tallest building. By 2020, China may be home to six of the world’s 10 highest skyscrapers, including Suzhou’s 700-meter (2,297-foot) Zhongnan Center. Developers finished 37 structures higher than 200 meters, or about 50 stories, in China last year, the most in the world, according to the Chicago-based Council on Tall Buildings and Urban Habitat, a non-profit organization that maintains the world’s largest free database on tall buildings.
  • Asian Stocks Climb for Fourth Day on China Manufacturing. Asian stocks rose for a fourth day, with the regional benchmark index extending a six-year high, after a Chinese manufacturing gauge rose to its strongest reading in 18 months. LG Display Co. (034220) climbed 2.5 percent in Seoul after the supplier of panels for Apple Inc. devices posted second-quarter profit that beat analyst estimates. Fujifilm Holdings Corp. rose 2.1 percent in Tokyo after a report that sales of high-end cameras boosted the company’s first-quarter operating profit. Newcrest Mining Ltd. sank 4 percent as Australia’s biggest gold producer said it may write down the value of its assets by as much as A$2.5 billion ($2.4 billion). The MSCI Asia Pacific Index added 0.2 percent to 148.76 as of 10:03 a.m. in Hong Kong as seven of its 10 industry groups rose.
  • Record Student-Loan Debt Prompts Treasury Push to Stem Defaults. The U.S. Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans and other strapped borrowers restrain economic growth. Leading the effort is Deputy Secretary Sarah Bloom Raskin, who became the department’s No. 2 official in March after more than three years as a Federal Reserve governor. As higher-education debt swells to a record $1.2 trillion, Raskin, 53, is alert to parallels to the mortgage crisis.
Wall Street Journal: 
  • Tragedy Fails to Quiet Ukraine. Two Fighter Jets Shot Down Over Separatist Territory as Kiev Presses Offensive. Two Ukrainian fighter jets were shot down Wednesday over separatist-held territory not far from the site of the Malaysia Airlines crash as international outrage over the tragedy has done little to slow the fierce fighting in eastern Ukraine. While Kiev made significant advances against rebels in the country's east in recent days, Ukrainian and U.S. officials say Russian weapons are continuing to pour over the border. The escalation in fighting suggests Russian President Vladimir Putin has no intention of dialing back his support for the separatists, denting Western hopes that international attention from the airliner crash would force him to change course.
  • Calpers Pulls Back From Hedge Funds. California Pension Fund to Cut Investments by 40%. Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., the California Public Employees' Retirement System, or Calpers. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio, said a person familiar with the changes. A spokesman declined to comment on the size of the reduction but said... 
  • Obama to World: Drop Dead. The most provincial U.S. president in at least a century.  
Fox News:
CNBC: 
Zero Hedge:
Business Insider:
Reuters:
Telegraph:
The Australian:
  • Financial markets are playing down risks: Geithner. FORMER US Treasury Secretary Timothy Geithner has warned investors that financial markets are underpricing risks but he defended vigorously the Obama administration’s record of huge deficit spending and ­unprecedented money creation.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 101.75 -1.25 basis points.
  • Asia Pacific Sovereign CDS Index 70.0 -1.5 basis points.
  • FTSE-100 futures -.07%.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures  +.08%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (DPS)/.91
  • (PTEN)/.32
  • (DO)/.56
  • (PHM)/.25
  • (ABC)/.92
  • (DHI)/.49
  • (HSY)/.76
  • (CELG)/.89
  • (GM)/.59
  • (RCL)/.53
  • (CLF)/-.09
  • (BSX)/.19
  • (PCP)/3.35
  • (LLY)/.66
  • (LUV)/.61
  • (ALXN)/1.07
  • (F)/.36
  • (UA)/.07
  • (ZMH)/1.49
  • (RTN)/1.59
  • (MMM)/1.91
  • (CAT)/1.52
  • (BMY)/.44
  • (UNP)/1.43
  • (ALTR)/.37
  • (SBUX)/.66
  • (CERN)/.40
  • (V)/2.10
  • (AMZN)/-.14
  • (CB)/1.91
  • (KLAC)/.86
  • (FLEX)/.22
  • (DECK)/-1.29
  • (AAL)/1.96
Economic Releases
8:30 am EST
  • Initial Jobless Claims are estimated to rise to 307K versus 302K the prior week.
  • Continuing Claims are estimated to rise to 2510K versus 2507K prior.
9:45 am EST
  • Preliminary Markit US Manufacturing PMI for July is estimated to rise to 57.5 versus 57.3 in June.
10:00 am EST
  • New Home Sales for June are estimated to fall to 475K versus 504K in May.
11:00 am EST
  • The Kansas City Fed Manufacturing Index for July is estimated at 6.0 versus 6.0 in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Japan CPI, Eurozone PMI, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and real estate shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

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