Wednesday, March 11, 2015

Thursday Watch

Evening Headlines 
  • Asian Stocks Advance From One-Month Low as Drugmakers Lead Gains. Asian stocks headed for their first advance this week, after the regional benchmark index closed Wednesday at a one-month low, as health-care and financial shares climbed. The MSCI Asia Pacific Index added 0.1 percent to 142.33 as of 9:01 a.m. in Tokyo after closing yesterday at the lowest since Feb. 12.
  • Oil Shock Leaves Gulf Arabs Ruing Missed Chance to End Addiction. Salim Al Aufi, Oman’s undersecretary for oil and gas, likens attempts to cut the reliance on oil during a price slump to acting “with a gun pointed at your head.” If you have to make decisions under pressure, “you will probably make the wrong ones,” he said March 3 in Muscat during a panel discussion on the impact of the oil shock. Oman relied too much on revenue from crude exports when prices were high, he said.
Wall Street Journal:
  • Iran Occupies Iraq. As the U.S. leads from behind, Tehran creates a Shiite arc of power. While Washington focuses on Iran-U.S. nuclear talks, the Islamic Republic is making a major but little-noticed strategic advance. Iran’s forces are quietly occupying more of Iraq in a way that could soon make its neighbor a de facto Shiite satellite of Tehran. That’s the larger import of the dominant role Iran and its Shiite militia proxies are playing in the military offensive to take back territory from the Islamic State, or ISIS.
  • Euro Plunge Is Picking Up Pace. ECB bond buying continues to drive euro and eurozone-bond yields lower. The yawning gap between the world’s two most influential central banks continued to leave a deep mark on currencies markets Wednesday, with the euro plunging to a 12-year low against the U.S. dollar.
  • ISIS and Russia threaten, and NATO cuts spending. NATO warships conducted rapid reaction drills in the Black Sea this week, and the alliance's chief accused Russia of continued aggression in Ukraine. Meanwhile, NATO member states continue to battle ISIS extremists, who insist their goals include sacking Rome. The North Atlantic Treaty Organization is more relevant than it has been for years. But many of its members are moving further away from meeting their defense spending obligations. 
Zero Hedge:
Business Insider:
  • Shake Shack(SHAK) says comparable sales growth likely to slow in 2015. Shake Shack Inc forecast slowing same-restaurant sales growth in 2015 and swung to a loss in the fourth quarter, helping to send the hamburger chain's shares down as much as 9 percent after its first quarterly report as a public company. Sales at Shacks open at least two years grew 4.1 percent in the year ended Dec. 31, down from 5.9 percent a year earlier, the company said. The company said it expected same-restaurant sales to grow in the low single digits in 2015.
Financial Times:
  • Bloated valuations arrest US bull run. Entering its seventh year, the ageing US equity bull market looks vulnerable. Rising concerns about the outlook for US equities reflect their lofty valuations and expectations of higher interest rates. In the past, the combination of rich share prices during periods of tighter monetary policy has proved challenging for the market.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are +.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 107.75 -1.5 basis points.
  • Asia Pacific Sovereign CDS Index 67.25 -.75 basis point.
  • S&P 500 futures +.14%.
  • NASDAQ 100 futures +.19%.
Morning Preview Links

Earnings of Note

  • (DG)/1.17
  • (GCO)/2.38
  • (HOV)/-.07
  • (PLCE)/.92
  • (ARO)/-.05
  • (LOCO)/.12
  • (ULTA)/1.28
  • (ZUMZ)/.79
Economic Releases
8:30 am EST
  • Retail Sales Advance for February are estimated to rise +.3% versus a -.8% decline in January.
  • Retail Sales Ex Autos for February are estimated to rise +.5% versus a -.9% decline in January.
  • Retail Sales Ex Autos and Gas for February are estimated to rise +.3% versus a +.2% gain in January.
  • Initial Jobless Claims are estimated to fall to 305K versus 320K the prior week.
  • Continuing Claims are estimated to fall to 2400K versus 2421K prior.
  • The Import Price Index for February is estimated to rise +.2% versus a -2.8% decline in January.
10:00 am EST
  • Business Inventories for January are estimated to rise +.1% versus a +.1% gain in December.
12:00 pm EST
  • 4Q Household Change in Net Worth.
2:00 pm EST
  • The monthly budget deficit for February is estimated at -$191.0B versus -$193.5B in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Australia unemployment rate, $13B 30Y T-Bond auction, Bloomberg US Economic Survey for March, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the (UTX) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and pharmaceutical 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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