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Thursday, January 29, 2015

Thursday Watch

Posted by Gary .....at 12:21 AM
Evening Headlines 
Bloomberg: 
  • Russia Set to Hold Main Rate at 17% With No Cut Seen Before June. Russia will probably keep its main interest rate unchanged this week and is unlikely to cut it from an emergency level before June as stabilizing the ruble and taming inflation take precedence over a looming recession, according to two surveys of economists. The first reduction this year is likely in June or July, according to a majority of respondents in a survey of 23 economists. The central bank will act once the inflation rate has dropped to 11.2 percent or less, based on the median of 18 estimates. All but one analyst in a separate survey of 19 economists predict the Bank of Russia will hold its benchmark at 17 percent at a meeting on Friday. 
  • Russian Consumer Crunch Spurs Tinkoff Stock Volatility. Price swings in TCS Group Holding Plc have surged to the highest level in eight months as analysts cut projections for the consumer lender amid a financial crisis that’s making it more difficult for Russians to pay their debts. Fifty-day historical volatility, a measure of price fluctuations during the period, jumped to 73 percent Wednesday as the company’s London-traded shares headed for an eighth straight monthly decline. The stock has sunk 84 percent from its October 2013 initial public offering price of $17.50.
  • Greece Wants a Debt Break. What About Its Poorer Neighbors? The 40-year-old prime minister’s rise to power has put him on a collision course with Germany, as he struggles to deliver on his campaign promises to renegotiate his country’s debt and overturn the painful austerity demanded by Greece's creditors. But if Tsipras is to bring home the deal he feels Greece deserves, he will have to more than face down the Germans. He’ll have to win over skeptical taxpayer in other euro zone countries, reassure European leaders worried about insurgent challenges of their own and make the case that – in a Europe still reeling from the 2008 global financial crisis – Greece is uniquely deserving of assistance.
  • Japan’s Retail Sales Unexpectedly Slump in Challenge to Abe. Japanese retail sales unexpectedly fell in December, underscoring challenges to Prime Minister Shinzo Abe’s effort to stoke a recovery in the world’s third-biggest economy. Sales slid 0.3 percent from November for a third straight monthly decline, the trade ministry said Thursday in Tokyo. That compared with the median estimate for a 0.3 percent gain in a Bloomberg News survey. Sales increased 1.7 percent in 2014.
  • With India Bulls Everywhere, a Rare Look at the Risks. There are times in financial-market rallies where the gains become so spectacular and the euphoria reaches such a pitch that it becomes easy to forget about the risks. India, it could be argued, is going through such a moment. 
  • China Stocks Fall for Third Day as CSRC Starts New Margin Probe. China’s stocks fell for a third day, sending the benchmark index to a one-week low, amid speculation increased regulatory scrutiny of margin loans will spur some leveraged investors to reduce holdings. Citic Securities Co. and Haitong Securities led declines for financial companies with losses of at least 1.8 percent. The securities regulator plans a new round of checks into the margin-lending businesses of brokerages, the Xinhua News Agency reported Wednesday night. Trainmakers China CNR Corp. and CSR Corp. rose at least 1.6 percent after the government said it will promote railway firms’ overseas investments. “The authorities sent a signal that they don’t feel comfortable,” said Yuliang Chang, Hong Kong-based strategist at Deutsche Bank AG. The pace of growth in margin lending and umbrella trusts “is creating a systemic risk in the financial industry,” he said. The Shanghai Composite Index dropped 0.9 percent to 3,275.18 at 10:28 a.m. local time.
  • Asian Stocks Track U.S. Declines After Federal Reserve Statement. Asian stocks fell, tracking declines in U.S. equities, after the Federal Reserve cited international risks to the American economy and oil slumped below $45 per barrel. The MSCI Asia Pacific Index slid 0.5 percent to 141.74 as of 9:01 a.m. in Tokyo. The Fed acknowledged global risks in its statement Wednesday, saying that it will take into account readings on “international developments” as it decides how long to keep key rates near zero. While boosting their assessment of the economy, policy makers said inflation will probably slow further. U.S. oil supplies climbed to their highest level in data going back more than 30 years, exacerbating concerns over a global supply glut.
  • Copper Poised to Catch Up With Oil’s Collapse: Chart of the Day.
  • Tesla(TSLA) Bears Rev Engine on Falling Oil, China Skepticism. Slumping oil prices have restored Tesla Motors Inc.’s status as a favorite among short sellers and bearish options traders. Speculation that a 58-percent plunge in West Texas Intermediate crude since June and competition from General Motors Co. will hurt demand have pushed short sales to a one-year high. The difference in the cost of bearish options versus bullish ones has almost quadrupled from September, reaching the highest level since November 2012, data compiled by Bloomberg show.
Wall Street Journal: 
  • U.S. Must Return Guantanamo for Normal Relations With Cuba, Raúl Castro Says. Demands Come as Two Nations Move Toward Renewing Full Diplomatic Relations. Cuban President Raúl Castro demanded Wednesday that the U.S. return the base at Guantanamo Bay, lift the half-century trade embargo on Cuba and compensate his country for damages before the two nations re-establish normal relations. 
  • Islamic State Offshoots Spring Up in Egypt, Other Countries. Egyptian Army Battles a Deadly Sinai Insurgency. The video looks hard to distinguish from the ones filmed in Syria and Iraq. Islamic State gunmen arrive in a fleet of pickup trucks, set up checkpoints on a busy highway and start hauling away suspected collaborators with the “apostate” government. It ends, predictably, with forced confessions and gruesome, close-up shots of killings.
  • Militants Driven From Pakistan Flock to Afghan Towns. Migration to Lawless Regions Pose New Threat to National Security. Arab and Central Asian Islamist militants have moved into Afghanistan after a military offensive by Islamabad largely eliminated havens in Pakistan’s tribal areas, Afghan officials and local residents say, posing a potential new threat to the country’s already tenuous security.
  • Up to Six Million Households Facing Penalty for Skipping Health Insurance. The Fine for Not Carrying Insurance in 2014 is $95 per Adult, or 1% of Family Income. The U.S. government estimates as many as six million households may have to pay a penalty for not having had health-insurance coverage last year as required under the Affordable Care Act, officials said Wednesday.
  • Building Toward Another Mortgage Meltdown. In the name of ‘affordable’ loans, the White House is creating the conditions for a replay of the housing disaster. The Obama administration’s troubling flirtation with another mortgage meltdown took an unsettling turn on Tuesday with Federal Housing Finance Agency Director Mel Watt’s testimony before the House Financial Services Committee. 
Fox News:
  • Fox News Poll: 47 percent say Obama downplays threat from Islamic terrorists.
MarketWatch.com: 
  • Sands China's quarterly profit falls 18%. Sands China Ltd. (1928.HK), the Macau unit of Las Vegas Sands Corp. (LVS), said Thursday fourth-quarter net income dropped 18% from a year earlier amid a softer gaming market in Macau.
Zero Hedge:
  • The Most Ridiculous Charts From Facebook's(FB) Quarterly Earnings. (graph)
  • Fed-nado Crushes Stocks And Crude; Long Yields Hit Record Low. (graph)
  • Crude Contagion: California's Kern County Declares Fiscal Emergency Due To Plunging Oil Price.
  • Another Ex-Central Planner Speaks Up: Currency War Policy "Risks Major Downward Shock To Asset Prices".
  • Teachers' Retirement Funds Are Piling Into Manhattan Real Estate At Record High Prices.
  • Norway Regulator Fears Housing Bubble "Isn't Sustainable". (graph)
  • The Homebuilder Hope Trade Deja Vu. (graph)
Business Insider:
  • McDonald's(MCD) CEO Is Out.
  • ISIS Just Gave Japan Another Ominous Deadline.
  • Raul Castro Says The US Must Return Guantanamo Bay Before Ties Are Normalized.
  • The Aussie Dollar Is Getting Smoked. (graph)
  • More Fireworks Could Be Coming Out Of Greece After Syriza's Win.
  • Why Shake Shack Won't Be The Next Chipotle(CMG).
Reuters: 
  • Petrobras(PBR) still faces default risk despite release, fund says. Brazilian state-run oil company Petrobras still runs the risk of being declared in default on billions of dollars of debt even after releasing its delayed third-quarter earnings before a self-imposed deadline, a New York-based hedge fund said on Wednesday. 
  • Samsung Elec Q4 profit meets guidance; outlook cautious. Samsung Electronics Co Ltd on Thursday reported its first annual earnings decline in three years, as strong chip earnings failed to make up for weakness in the South Korean giant's smartphone business.
  • Qualcomm(QCOM) says key customer passed on new chip, stock drops. Qualcomm Inc reduced its outlook for fiscal 2015, saying it expects its newest Snapdragon mobile chip will not be used in a major customer's flagship smartphone, sending its shares lower. The San Diego, California, company also warned that "challenges" with another of its chips had hurt its competitiveness in China, where Qualcomm has been disappointed with growth that has fallen short of expectations.
Bild:
  • EU's Schulz Sees Non Majority for Greek Debt Cut. EU Parliament President Martin Schulz says he will speak frankly to Greek Prime Minister Alexis Tsipras on trip to Athens and tell him to ask the billionaires who stashed money abroad to pay their taxes, citing an interview. Sees coalition with right-wing populist party as problematic, remains to be seen how the parties will cope with their internal contradictions. Greece's rejection of sanctions against Russia doesn't mark a successful debut; EU sanctions have held together and solo efforts don't go so easily without consultations.
Le Figaro:
  • EC President Juncker Says Greece Should Respect Europe. Europe won't provide credit unless Greece sticks to commitments, European Commission President Jean-Claude Juncker says in an interview. No question of forgiving Greek debt, he said. A country can't take "democratic choice" to go against European treaties, Juncker said.
Economic Information Daily:
  • China 2014 Tax Revenue Growth Lowest in 20 Years. Tax revenue grew 8.8% to 10.4t yuan, citing data from the State Administration of Taxation.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -1.0% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 112.0 +2.0 basis points.
  • Asia Pacific Sovereign CDS Index 69.25 -1.25 basis points.
  • S&P 500 futures +.22%.
  • NASDAQ 100 futures +.13%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (ABT)/.65
  • (APD)/1.49
  • (ALXN)/1.27
  • (BABA)/.76
  • (AUO)/.68
  • (BAX)/1.31
  • (BEAV)/.86
  • (BX)/.91
  • (CAM)/1.20
  • (CAH)/1.10
  • (CELG)/.99
  • (COH)/.66
  • (CL)/.74
  • (COP)/.60
  • (DOW)/.69
  • (EMC)/.68
  • (F)/.23
  • (HOG)/.33
  • (LLL)/2.278
  • (NOC)/2.25
  • (PSX)/1.37
  • (POT)/.47
  • (DGX)/1.05
  • (RTN)/1.81
  • (RCL)/.43
  • (RYL)/.96
  • (SHW)/1.39
  • (SWK)/1.51
  • (VLO)/1.29
  • (VIAB)1.29
  • (ZMH)/1.70
  • (AMZN)/.17
  • (BIIB)/3.77
  • (BRCM)/.87
  • (CB)/2.15
  • (CSC)/1.12
  • (DECK)/4.52
  • (GOOG)/7.13
  • (MCHP)/.62
  • (RHI)/.61
  • (V)/2.49
  • (WYNN)/1.43
Economic Releases 
8:30 am EST
  • Initial Jobless Claims are estimated to fall to 300K versus 307K the prior week.
  • Continuing Claims are estimated to fall to 2405K versus 2443K prior.
10:00 am EST
  • Pending Home Sales for December are estimated to rise +.5% versus a +.8% gain in November.
Upcoming Splits
  • (SMBC) 2-for-1
Other Potential Market Movers
  • The Eurozone CPI, Japan CPI, $35B 5Y T-Note auction, $29B 7Y T-Note auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (KATE) conference call could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by real estate and industrial 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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