Thursday, November 06, 2014

Thursday Watch

Evening Headlines 
  • Ukraine Truce Teeters as Kerry, Merkel Warn on Sanctions. Ukraine’s two-month-old truce is in peril amid new fighting as insurgents raised doubts about a cease-fire and the U.S. and Germany sounded warnings that Russia risked more sanctions over the conflict. A move by Ukrainian President Petro Poroshenko to revoke the special status of the rebel-held areas will scuttle the truce struck in Minsk, the breakaway regions said in a joint statement today. German Chancellor Angela Merkel urged the European Union to consider more sanctions, while U.S. Secretary of State John Kerry warned “pressure will increase” if the Sept. 5 agreement isn’t implemented
  • BOJ Runs Into Critical Analysts After Kuroda Easing Shock. Hours after the Bank of Japan caught central-bank watchers off guard by boosting stimulus, officials were fending off complaints about its communications. A meeting on Oct. 31 with about 50 analysts and economists on the BOJ’s new outlook ran on for two hours -- twice the usual time -- as the discussion turned to how well Governor Haruhiko Kuroda and other officials telegraphed their views before the decision, said people who were present. The questions came like a torrent, with some complaining about the BOJ’s bond purchase plan and its communications with the market, according to analysts who asked not to be named as the gathering was private. 
  • Billionaire Enclave Prices Drop on Singapore Property Curbs. Australian hedge-fund manager Stephen Fisher says he was lucky to have bought his luxury home on Sentosa, a Singapore resort island that has attracted the wealthy, in 2005, before property curbs kicked in. “I would be very wary of buying a second property in Singapore as I would have to pay higher taxes, which makes it less attractive,” Fisher, 50, chairman of First Degree Global Asset Management, said in a phone interview.
  • Dollar Climbs on U.S. Economy; Japan Stocks Rise With Oil. The dollar rose, climbing to a seven-year high against the yen on signs of U.S. economic strength. Japanese stocks rose for a sixth day while oil extended gains. The greenback added 0.3 percent to 115.03 yen by 11:05 a.m. in Tokyo, the strongest level since November 2007. The U.S. currency rose to a 14-month high versus the Korean won and held gains against the euro with the Bloomberg Dollar Spot Index little changed at its highest level since 2009. The Topix index rose 0.2 percent, holding a six-year high.
  • Lead Falls to 17-Month Low as China Economic Growth Slows. Lead fell to a 17-month low in London after a private gauge of economic activity indicated growth slowed during October in China, the world’s biggest metals consumer. A composite index of Chinese services, manufacturing and construction fell for third third time in four months, Markit Economics said today. The Bloomberg Commodity Index (BCOM) of 22 raw materials dropped to the lowest since July 2009 as the dollar rose to a five-year high against a 10-currency basket. 
Wall Street Journal:
  • U.S. Money-Laundering Probe Touches Putin’s Inner Circle. Federal Prosecutors Investigating Financial Transactions Involving Billionaire Gennady Timchenko. U.S. prosecutors have launched a money-laundering investigation of a member of Vladimir Putin’s inner circle, several people familiar with the efforts said, in a politically sensitive escalation of pressure on the Russian president’s cadre of billionaire supporters.
  • Regulator Wants Greater Use of Bank Monitors. New York’s Lawsky Says Independent Monitors Enforcing Settlements Can Sniff Out Other Trouble. New York state’s top financial regulator plans to expand his scrutiny of banks and other firms using a tool previously reserved for companies that were in legal trouble.
  • Kudlow: Obama stirring a ‘rat’s nest’ of backlash. (video) After listening to recent comments from President Barack Obama, CNBC's Larry Kudlow said on his current track, the president was facing "a rat's nest" of troubles and woes that would end in arguments and disagreement.
Zero Hedge:
  • What A Difference 2 Weeks Makes. (graph) The percentage of Bullish advisors surged by the most on record... and yet we keep being told how negative everyone is? 
Business Insider:
LA Times:
NY Times:
  • More Expensive Cars Are Leading to Longer-Term Loans. Six-year loans are now typical, and terms stretching as long as 96 months — eight years — are available at some lenders. The downside of longer loans, however, can be considerable. Longer loan terms are considered riskier for the lender, so they carry higher interest rates, which will increase the total cost of buying the car. If you’re paying off the car loan for seven or more years, you’re more likely to be tired of the vehicle and trade it in immediately for another one once it is paid off, starting the debt cycle again.
National Interest: 
  • The Doomed Dragon: Is China's Economy Headed for a Crash Landing? "China is growing too slowly and accumulating debt too fast. Its leaders have rejected fundamental reform. They still have the power to delay a reckoning but seem helpless to change the direction of events." China, at the moment, is in fact growing in the low single digits, if it’s growing at all, and it is heading into one of the biggest debt crises in history, if not the biggest. The shock of a Chinese collapse will roil the global economy.
  • Whole Foods(WFM) profit beats on market share gains. Upscale grocer Whole Foods Market Inc reported a better-than-expected quarterly profit as the company increased its market share and launched new products. Shares of the largest U.S. organic and natural food supermarket chain rose 8.1 percent in after-hours trading as it also gave an upbeat forecast for next year.
Obama takes on coal with first-ever carbon limits
Read more at cuts 2014 GDP growth forecast, keeps fiscal goaFed's Williams: Can't wait too long to raise rateTripAdvisor profit sags as costs jump; shares slide
China Business News:
  • China Unlikely to Cut Overall Rates Next Year. An across-the-board interest rate cut is unlikely, citing a person familiar with the matter. The person said the Chinese government held a meeting recently to discuss the 2015 growth target and overall policy.
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 107.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 63.5 -.75 basis point.
  • FTSE-100 futures -.10%.
  • S&P 500 futures -.24%.
  • NASDAQ 100 futures  -.18%.
Morning Preview Links

Earnings of Note

  • (AAWW)/.87
  • (AOL)/.52
  • (WEN)/.09
  • (CECO)/-.58
  • (AAP)/1.88
  • (DTV)/1.30
  • (APA)/1.38
  • (DIS)/.88
  • (CSC)/1.01
  • (NVDA)/.35
  • (IGT)/.30
  • (FSLR)/.64
  • (SLXP)/1.57
Economic Releases
8:30 am EST
  • Initial Jobless Claims are estimated to fall to 285K versus 287K the prior week.
  • Continuing Claims are estimated to fall to 2363K versus 2384K prior.
  • Preliminary 3Q Non-Farm Productivity is estimated to rise +1.5% versus a +2.3% gain in 2Q.
  • Preliminary 3Q Unit Labor Costs are estimated to rise +.5% versus a -.1% decline in 2Q.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Mester speaking, Fed's Evans speaking, Fed's Powell speaking, ECB rate decision, ECB's Draghi speaking, BoE rate decision, German Factory Orders report, weekly EIA natural gas inventory report, Challenger Job Cuts report for October, RBC Consumer Outlook Index for November, weekly Bloomberg Consumer Comfort Index, Raymond James Airline/Transport Conference, (FB) Q&A and the (EMN) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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