Friday, March 06, 2015

Friday Watch

Evening Headlines 
  • Russia’s Woes Show No Sign of Abating. A graphic guide to Russia’s declining fortunes. Vladimir Putin has survived politically, thanks to Russians’ support for his assertive foreign policy. But sanctions over Ukraine and a collapse in oil prices have shaken the economy, draining its foreign exchange reserves.
  • Deutsche Bank(DB) Debt Unit Feels Pinch Amid Review: Credit Markets. Deutsche Bank AG is learning just how hard it is to stay committed to its fixed-income business in a new world for investment banking. After using some of the 8.5 billion euros ($9.4 billion) it raised in a share sale last year to bolster its fixed-income business, its credit unit has been shrinking. Frank Argilagos, its head of high-grade debt sales in New York, exited last month and Joshua Wilkes, co-head of investment-grade trading, departed in January amid restructurings. Jim Kenny, who took over as sole head of the team, entertained an offer this week to join a bond-trading platform before the bank wooed him to stay, said three people with knowledge of the talks. 
  • Ringgit Leads Weekly Drop in Asia Currencies on China Slowdown. Asian currencies fell this week, led by the Malaysian ringgit’s slide to a six-year low, as a weakening growth outlook for China dimmed prospects for regional trade. China set the lowest economic expansion target in more than 15 years after cutting interest rates for the second time in three months at the weekend. The Bloomberg Dollar Spot Index advanced before a report that’s forecast to show U.S. employers added more than 200,000 jobs for a 12th month and ahead of a Federal Open Market Committee meeting that starts March 17.  
  • China Stocks Head for First Weekly Drop in Month on IPO Concerns. China’s benchmark stock index headed for its first weekly decline in a month on concern that new share offerings next week will divert funds from existing stocks. Consumer and health-care shares lost at least 1.5 percent, the most among industry groups, as BYD Co., an electric carmaker, tumbled 7.5 percent, and Xizang Haisco Pharmaceutical Group Co. sank 3.2 percent. The ChiNext index of small companies in Shenzhen tumbled 2.7 percent. Haitong Securities Co. added 2.4 percent, propelling financial companies higher, after traders raised margin debt to a record in Shanghai. The Shanghai Composite Index fell 0.1 percent to 3,245.88 at 11:02 a.m. local time, taking this week’s loss to 1.9 percent.
  • Asia Stocks Rise; Dollar Holds Gain Before Jobs Report. Asian stocks rose while the dollar held gains, with a gauge measuring the U.S. currency against major peers headed for its biggest weekly advance since January, before data on the U.S. jobs market. Oil in New York climbed. The MSCI Asia Pacific Index added 0.5 percent by 11:40 a.m. in Tokyo, paring its first drop in five weeks. 
  • Fed’s Williams Says ‘Serious’ Rate-Rise Discussion Due Mid-Year. Federal Reserve Bank of San Francisco President John Williams said mid-year may be time for a “serious discussion” about raising interest rates as the labor market nears full employment and inflation rebounds. The U.S. will reach maximum employment by year-end or sooner, lifting wages and inflation, which means the Fed should raise rates before achieving its policy goals, Williams, who votes on policy this year, said Thursday in the text of a speech prepared for delivery in Honolulu.
Wall Street Journal:
  • Oil Glut Sparks Latest Dilemma: Where to Put It All. As storage tanks near capacity, some predict spillover will send crude prices even lower. In a world awash in crude, oil producers and traders are facing a billion-barrel conundrum: where to put it all. U.S. crude-oil supplies are at their highest level in more than 80 years, according to data from the Energy Information Administration, equal to nearly 70% of the nation’s storage capacity.
  • Gap(GPS) posts surprise February sales decline. Gap Inc. posted a surprise drop in February same-store sales as its Gap Global and Banana Republic divisions both reported declines. Sales declined 4% while analysts surveyed by Thomson Reuters had projected a 1.4% increase.
Zero Hedge:
Business Insider:
  • EU Legislator Warns Greece Against Misleading Accounting. Manfred Weber, German head of the Christian Democrats in the European Parliament, warns Greek govt against misleading and unacceptable financial and accounting practices, citing an interview. Weber criticized issue of T-bills and EU1.13b backed by the Greek central bank and the rude and provocative tone of Greek officials.
Shanghai Securities News:
  • China Potential Growth May Slow to 6.2% in 2016-2020. Cai Fang, vice president at Chinese Academy of Social Sciences, made a forecast on China's average potential GDP growth in a commentary.
Night Trading
  • Asian equity indices are unch. to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 100.0 -2.0 basis points.
  • Asia Pacific Sovereign CDS Index 62.0 -.75 basis point.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures -.01%.
Morning Preview Links

Earnings of Note

  • (BIG)/1.75
  • (FL)/.91
  • (SPLS)/.3
Economic Releases
8:30 am EST 
  • The Change in Non-Farm Payrolls for February is estimated at 235K versus 257K in January. 
  • The Unemployment Rate for February is estimated to fall to 5.6% versus 5.7% in January.
  • Average Hourly Earnings for February are estimated to rise +.2% versus a +.5% gain in January.
  • The Trade Deficit for January is estimated at -$41.2B versus -$46.6B in December.
3:00 pm EST
  • Consumer Credit for January is estimated to fall to $14.5B versus $14.755B in December.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Eurozone GDP report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology 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.

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