Sunday, March 29, 2015

Monday Watch

Weekend Headlines 
  • Greek Markets Show All at Risk Should Mistake Trigger a Default. In Athens, the unspeakable is at risk of becoming the inevitable. Market metrics show Greece is in danger of sinking under the burden of its debt, putting repayments of about 500 billion euros ($546 billion) owed to European taxpayers, rescue funds, banks and bondholders in jeopardy. Prime Minister Alexis Tsipras is locked in talks with creditors over measures attached to Greece’s bailout loans and a government official said on Friday the country won’t service its debt if creditors don’t release the funds. The government has also floated a restructuring that would link some future payments to economic growth, reduce interest rates and allow more time for repayments. While their intention is to exclude private bondholders, the danger is that talks collapse and Greece leaves the euro, leaving all parties facing losses
  • ECB Nerves Fray on Greece as Supervisors Rile Central Bankers. Inside the five-month-old union between monetary policy and financial oversight at the European Central Bank, nerves are beginning to fray. As officials seek to replace deposits fleeing Greek banks without blatantly financing the state, the efforts of the institution’s new Single Supervisory Mechanism to do its part are irking the old guard. Central bankers under ECB President Mario Draghi worry that overly-strict orders to lenders could worsen the Greek turmoil. After building an institutional pillar that has supervised the euro area’s largest banks since November, the ECB is now facing one of the worst flare-ups in six years of sovereign-debt crisis. Officials must work out how to align their two policy arms in a way that can find a path through the Greek turmoil and set a template for handling banking turbulence to come. 
  • Japan’s Industrial Output Drops, Adding to Signs of Weakness. Japan’s industrial production fell more than forecast in February, adding to pressure from a drop in consumer spending and faltering inflation. Output declined 3.4 percent from January, when it rose 3.7 percent, the trade ministry said in Tokyo on Monday. The median estimate of 28 economists surveyed by Bloomberg was for a decline of 1.9 percent. The data is the weakest since June last year and underscores the fragility of Japan’s recovery from a recession last year. 
  • Too much of everything spurs commodity exodus as price wars rage. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. U.S. exchange-traded funds linked to broad baskets of raw materials saw a net outflow of $1.23 billion over the first three months of the year, the most of any quarter since the securities were created in 2006, data compiled by Bloomberg show. Bank of America Corp. says ample supplies have unleashed price wars, and Goldman Sachs Group Inc. predicts a 20 percent drop for commodities already near a 13-year low. Morgan Stanley and Societe Generale SA also have cut forecasts for a whole range of items.
Wall Street Journal:
  • Marco Rubio Makes Plans for 2016 Run. Florida Republican senator is tentatively set to announce his White House bid in Miami. Sen. Marco Rubio (R., Fla.) is laying plans to announce his presidential bid in two weeks, a step that, along with other recent activity among likely contenders, shows the early sparring and positioning in the 2016 race for the White House is about to accelerate.
  • Uncertain of Obama, Arab States Gear Up for War. A pan-Arab coalition with a patchy record steps up as Yemen falls apart and U.S. policy remains unclear. Few organizations boast a reputation of dysfunction comparable to the Arab League’s. Over seven decades the Arab League has distinguished itself through infighting and fecklessness. But now, with the Obama administration seen as missing in action in the Middle East, the alliance of 22 countries is undergoing a renaissance. 
Fox News:
Zero Hedge:
Business Insider:
Night Trading
  • Asian indices are -.25% to +1.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 1113.0 unch.
  • Asia Pacific Sovereign CDS Index 62.0 +.75 basis point.
  • S&P 500 futures +.34%.
  • NASDAQ 100 futures +.42%.
Morning Preview Links

Earnings of Note

  • (AIR)/.37
  • (CALM)/1.13
  • (UTIW)/-.07
  • (PWRD)/.37
Economic Releases
8:30 am EST
  • Personal Income for February is estimated to rise +.3% versus a +.3% gain in January.
  • Personal Spending for February is estimated to rise +.2% versus a -.2% decline in January.
  • PCE Core for February is estimated to rise +1.3% versus a +1.3% gain in January.
10:00 am EST
  • Pending Home Sales for February are estimated to rise +.4% versus a +1.7% gain in January.
10:30 am EST
  • Dallas Fed Manufacturing Activity for March is estimated to rise to -9.0 versus -11.2 in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Fischer speaking and the Eurozone industrial production/CPI reports could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate 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 25% net long heading into the week.

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