Thursday, January 08, 2015

Thursday Watch

Evening Headlines 
  • Global Deflation Bug Sends CPI Swap to ‘09 Low: Australia Credit. Australian expectations for inflation have slumped to a five-year low as a global trend of falling prices infects the world’s highest-yielding AAA debt market. The three-year inflation swap fell to 1.99 percent yesterday, the lowest level since July 2009. The contracts allow investors to swap a fixed rate for the change in Australia’s consumer-price index. The country’s inflation rate was last below 2 percent in the second quarter of 2012.
  • Oil Export Plunge Signals Canada Economy Running on Empty. Plummeting oil prices are taking a toll on Canada’s energy exports and threatening to leave little in the economy’s tank for 2015. Shipments of crude oil and bitumen dropped 9.9 percent to C$6.9 billion ($5.8 billion) in November, the biggest decline in almost three years, the federal statistics agency said Wednesday from Ottawa. The trade report is among early signs this may be a tough year for an economy that’s suffered least among developed nations from the 2008 financial crisis, as energy-export woes add to concerns the nation’s housing market is in jeopardy.
  • Youngest Suspect in Paris Magazine Shooting Surrenders, AFP Says. The youngest suspect in the deadly attack on French satirical magazine Charlie Hebdo has surrendered, Agence-France Presse said, as the police named two other assailants being sought. French police released pictures of the two brothers, identifying them as Said and Cherif Kouachi, aged 34 and 32 respectively. The younger accomplice was Hamyd Mourad, 18, Le Point magazine said.
  • China Stocks Fall Most in Two Weeks as Strategists See Losses. China’s stocks fell the most in two weeks amid concern recent rallies were excessive as strategists from Bank of America Corp. and HSBC Holdings Plc forecast declines this year for the benchmark index from current levels. Financial companies, the second-best performer over the past year, slid the most among industry groups after HSBC downgraded the industry. Citic Securities Co. (600030), China Construction Bank Corp. and China Life Insurance Co. all dropped more than 3 percent. Huaneng PowerInternational Inc. retreated 3.6 percent after jumping 40 percent over the past two months. Data tomorrow will likely show declines in producer prices accelerated last month.
  • Asian Stocks Rise; U.S. Futures, Ringgit Advance With Oil. Asian stocks climbed from a three-week low as Samsung Electronics Co. beat earnings estimates and Japanese exporters rallied on a weaker yen. U.S. equity-index futures signaled a second day of gains as crude oil rose, boosting Malaysia’s ringgit. The MSCI Asia Pacific Index rose 1.1 percent by 12:30 p.m. in Tokyo, climbing for the first time in four days as Samsung, the world’s biggest smartphone maker, added 0.5 percent. Toyota Motor Corp. led Japan’s Topix index to a 1.5 percent gain as the yen slipped a second day.
  • Derivatives Show Traders Are Undeterred on Rates by FOMC Minutes. Derivatives show minutes from the Federal Reserve’s last meeting did little to alter traders’ expectations that policy makers will begin raising interest rates this year. That's where the similarities on the outlook for rates between the bond market and the central bank ends. Federal funds futures show a 59 percent chance of the Fed raising its near-zero policy rate in September, little changed from before the release of the Dec. 16-17 meeting minutes. For the years ahead, traders see the Fed increasing rates to only about half the 3.75 percent peak level policy makers predict.
Wall Street Journal: 
  • Small Businesses Snub Health Exchanges for Coverage. Owners, Brokers Blame Limited Federal Tax Credits and Small Menu of Offerings. Some small-business owners are snubbing the new health-insurance exchanges, operating under the Small Business Health Options Program, citing limited federal tax credits and a small menu of insurance offerings in a few states, companies and health-insurance brokers said.
Zero Hedge:
Business Insider:
Financial Times: 
  • Save Ukraine to counter Russia, says Soros. Billionaire investor George Soros has accused western leaders of dangerously miscalculating their strategy towards Russia and Ukraine, arguing that the crisis there posed a lethal risk to the eurozone.
China Times:
  • China Won't Release Govt Loan Data for the Moment. China won't publicize outstanding local govt debt data for the moment. Release of the data may affect financing ability of local govts and trigger too much media reporting, an unidentified local finance dept official said.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.25% to +1.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 115.0 -8.5 basis points.
  • Asia Pacific Sovereign CDS Index 72.25 -2.0 basis points.
  • S&P 500 futures +.68%.
  • NASDAQ 100 futures  +.77%.
Morning Preview Links

Earnings of Note

  • (GPN)/1.20
  • (FDO)/.62
  • (STZ)/1.14
  • (APOL)/.42
  • (BBBY)/1.19
  • (TCS)/.07
  • (RT)/-.14
  • (PSMT)/.73
  • (SCHN)/.11
Economic Releases
8:30 am EST
  • Initial Jobless Claims are estimated to fall to 290K versus 298K the prior week.
  • Continuing Claims are estimated to rise to 2360K versus 2353K prior. 
3:00 pm EST
  • Consumer Credit for November is estimated to rise to $15.0B versus $13.226B in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Rosengren speaking, Fed's Kocherlakota speaking, China CPI report, BoE Rate Decision, Challenger Job Cuts report for December, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (BKS) holiday sales report, (SIG) holiday sales call, (VRX) guidance call and the (ROVI) analyst briefing could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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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