Saturday, October 31, 2015

Today's Headlines


  • Fed's Updated Model of Economy Suggests It's Time to Raise Rates. The Federal Reserve Board released an updated version of its large-scale model on the U.S. economy that may hold clues into why policy makers pivoted at their meeting earlier this week toward a December interest-rate increase. The revised inputs and calculations on Friday suggest the economy will use up resource slack by the first quarter of 2016, according to an analysis by Barclays Plc, and that also indicates Fed staff lowered their near-term estimate for how fast the economy can grow without producing inflation -- a concept known as potential growth. “The output gap appears closed,” said Michael Gapen, chief U.S. economist at Barclays’s investment-banking unit in New York. “This means further progress would lead to resource scarcity and potential upward pressure on inflation in the medium term.” Gapen said that may explain why U.S. central bankers signaled this week that they will consider the first interest-rate increase since 2006 at their next meeting, on Dec. 15-16.
  • Orban Accuses Soros of Stoking Refugee Wave to Weaken Europe. Hungarian Prime Minister Viktor Orban accused billionaire investor George Soros of being a prominent member of a circle of "activists" trying to undermine European nations by supporting refugees heading to the continent from the Middle East and beyond. "His name is perhaps the strongest example of those who support anything that weakens nation states, they support everything that changes the traditional European lifestyle," Orban said in an interview on public radio Kossuth. "These activists who support immigrants inadvertently become part of this international human-smuggling network." 
  • Puerto Rican Govt Could Run Out of Cash Nov. 15, Report Says. The Puerto Rican government could run out of cash as soon as Nov. 15, forcing it to order a partial shutdown or reduce working hours for public employees, the island’s budget director told a local newspaper. Luis Cruz Batista, executive director of the Office of Management and Budget, said the government is monitoring cash flow and has $150 million in reserves to fund essential services, including schools, police and health care, even if other agencies are reduced or temporarily shuttered.
  • Bearish Gas Bets Surge to Record in Ugliest October Since 2008. Hedge funds raised bearish bets on U.S. natural gas to an all-time high just before prices capped their worst performance for the month of October since 2008 on the outlook for record stockpiles. Money managers increased their net-short position in gas contracts by 2.4 percent to 155,589 in the week ended Oct. 27, according to the U.S. Commodity Futures Trading Commission. Long-only bets declined for the fifth consecutive week. Gas futures that have historically rallied in October ahead of the winter heating season instead slid 8 percent on forecasts for mild weather and an expanding supply glut.
  • U.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan. The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system. Banks such as Wells Fargo & Co. and JPMorgan Chase & Co. will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest U.S. banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022. “Big banks have issued a lot of debt under current rates that, when re-issued to comply with TLAC and meet market demands, will cost considerably more,” Petrou said. The Fed has kept interest rates near zero since 2008, though Fed officials have indicated they may raise rates in December.
  • FDA Says Chinese Pfizer(PFE) Plant Hid Failures, Used Old Ingredients. A Pfizer Inc. plant in China that was being inspected by Food and Drug Administration regulators in order to ship drugs to the U.S. kept a second set of quality and manufacturing records that didn’t match official ones, according to an FDA review of the facility. During an April inspection of Pfizer’s plant in the northern Chinese city of Dalian, FDA inspectors said in their report that employees hid quality failures, used expired manufacturing materials or ones that hadn’t been recently checked, and retested failing products until they passed. 
  • Valeant Hits 2-Year Low as Ackman Ignored; Citron Plans Report. (video) Valeant Pharmaceuticals International Inc. tumbled to a two-year low, closing out its worst month ever, after billionaire shareholder William Ackman failed to persuade investors the stock was undervalued and short-seller Citron Research hinted at fresh allegations of wrongdoing.
  • Paul Singer Backs Marco Rubio. Billionaire rejects last-minute pleas by Jeb Bush campaign to hold off his decision. Marco Rubio's highly-touted debate performance on Wednesday has already yielded significant a tangible benefit: The Republican presidential candidate has snagged the support of mega-donor Paul Singer, in a move that will be widely seen in the political world as a blow to struggling rival Jeb Bush.
Wall Street Journal:
  • Russian Plane Crashes in Egypt’s Sinai Peninsula Killing 224 People. Kogalymavia flight was en route to St. Petersburg from Sharm El Sheikh. A Russian passenger jet crashed in Egypt’s Sinai Peninsula, killing all 224 people on board, after losing contact with aviation authorities on Saturday. Egyptian officials said the Airbus A321 jetliner, which was operated by Russian carrier Kogalymavia, was flying to St. Petersburg from Sharm El Sheikh, a resort town popular with Russian tourists, when it disappeared from radar screens.
Zero Hedge:
Business Insider:
  • Report: CNBC producers were told to move on after disastrous debate. After a broadly criticized Republican presidential debate the night before, CNBC staffers were told on Thursday to move on from coverage of event, according to a report Friday from a competing news channel. In a post-mortem from CNN media reporter Brian Stelter, unnamed CNBC staffers said they were "shell shocked" after the debate, which caught nearly universal ire for the moderators' lack of preparedness and "bias." 
Il Sole 24 Ore:
  • Draghi: 'Open Question' Whether Further Stimulus Is Necessary. ECB President Mario Draghi says further stimulus still an "open question," according to interview.

Friday, October 30, 2015

Market Week in Review

  • S&P 500 2,079.36 +.2%*
 photo iom_zpsywjqq3b0.png
The Weekly Wrap by

*5-Day Change

Weekly Scoreboard*

  • S&P 500 2,079.36 +.2%
  • DJIA 17,663.54 +.1%
  • NASDAQ 5,053.75 +.44%
  • Russell 2000 1,161.86 -.36%
  • S&P 500 High Beta 31.39 unch.
  • Goldman 50 Most Shorted 108.99 -2.83% 
  • Wilshire 5000 21,504.97 +.2%
  • Russell 1000 Growth 1,015.38 +.75%
  • Russell 1000 Value 987.06 -.29%
  • S&P 500 Consumer Staples 512.23 -1.65%
  • Solactive US Cyclical 128.0 -.58%
  • Morgan Stanley Technology 1,100.23 +.25%
  • Transports 8,128.07 -2.02%
  • Utilities 580.50 -2.34%
  • Bloomberg European Bank/Financial Services 104.08 -2.72%
  • MSCI Emerging Markets 35.89 +.1%
  • HFRX Equity Hedge 1,166.10 +1.17%
  • HFRX Equity Market Neutral 1,042.98 +.75%
  • NYSE Cumulative A/D Line 233,530 -.41%
  • Bloomberg New Highs-Lows Index -94.0 -235
  • Bloomberg Crude Oil % Bulls 55.0 unch.
  • CFTC Oil Net Speculative Position 236,575 -5.80%
  • CFTC Oil Total Open Interest 1,676,033 +3.87%
  • Total Put/Call .91 +18.18%
  • OEX Put/Call 7.12 +849.33%
  • ISE Sentiment 101.0 -7.34%
  • NYSE Arms 1.42 +46.39%
  • Volatility(VIX) 15.07 +4.22%
  • S&P 500 Implied Correlation 58.58 -2.25%
  • G7 Currency Volatility (VXY) 9.37 -4.49%
  • Emerging Markets Currency Volatility (EM-VXY) 10.81 -.55%
  • Smart Money Flow Index 17,870.67 +.72%
  • ICI Money Mkt Mutual Fund Assets $2.717 Trillion +.68%
  • ICI US Equity Weekly Net New Cash Flow -$.070 Billion
  • AAII % Bulls 40.4 +16.2%
  • AAII % Bears 20.6 -14.3%
Futures Spot Prices
  • CRB Index 195 .61 +.98%
  • Crude Oil 46.59 +4.46%
  • Reformulated Gasoline 137.16 +5.80%
  • Natural Gas 2.32 +1.53%
  • Heating Oil 151.67 +4.28%
  • Gold 1,141.40 -1.84%
  • Bloomberg Base Metals Index 143.64 -3.36%
  • Copper 231.75 -1.38%
  • US No. 1 Heavy Melt Scrap Steel 152.33 USD/Ton unch.
  • China Iron Ore Spot 49.83 USD/Ton -3.47%
  • Lumber 251.50 -3.64%
  • UBS-Bloomberg Agriculture 1,067.53 +.86%
  • ECRI Weekly Leading Economic Index Growth Rate -2.8% -10.0 basis points
  • Philly Fed ADS Real-Time Business Conditions Index -.1908 +6.88%
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 125.52 +.19%
  • Citi US Economic Surprise Index -12.7 -12.6 points
  • Citi Eurozone Economic Surprise Index 32.7 +10.5 points
  • Citi Emerging Markets Economic Surprise Index -10.5 +2.9 points
  • Fed Fund Futures imply 50.0% chance of no change, 50.0% chance of 25 basis point hike on 12/16
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.07 -39.07%
  • US Dollar Index 97.0 -.08%
  • Euro/Yen Carry Return Index 138.64 -.88%
  • Yield Curve 142.0 -3.0 basis points
  • 10-Year US Treasury Yield 2.15% +7.0 basis points
  • Federal Reserve's Balance Sheet $4.451 Trillion -.27%
  • U.S. Sovereign Debt Credit Default Swap 24.0 unch.
  • Illinois Municipal Debt Credit Default Swap 265.0 -.66%
  • Western Europe Sovereign Debt Credit Default Swap Index 19.05 +1.22%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 72.47 +1.73%
  • Emerging Markets Sovereign Debt CDS Index 159.55 -4.22%
  • Israel Sovereign Debt Credit Default Swap 74.84 +1.91%
  • Iraq Sovereign Debt Credit Default Swap 799.60 -3.11%
  • Russia Sovereign Debt Credit Default Swap 276.70 -5.81%
  • iBoxx Offshore RMB China Corporates High Yield Index 122.65 +.53%
  • 10-Year TIPS Spread 1.53% +1.0 basis point
  • TED Spread 26.5 -5.75 basis points
  • 2-Year Swap Spread 11.25 -1.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -29.25 unch.
  • N. America Investment Grade Credit Default Swap Index 78.47 -.95%
  • America Energy Sector High-Yield Credit Default Swap Index 1,130.0 +5.14%
  • European Financial Sector Credit Default Swap Index 69.47 +.61%
  • Emerging Markets Credit Default Swap Index 325.05 +.13%
  • CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 126.50 unch.
  • M1 Money Supply $3.003 Trillion -.44%
  • Commercial Paper Outstanding 1,056.20 -.6%
  • 4-Week Moving Average of Jobless Claims 259,250 -4,000
  • Continuing Claims Unemployment Rate 1.6% unch.
  • Average 30-Year Mortgage Rate 3.76% -3.0 basis points
  • Weekly Mortgage Applications 417.40 -3.54%
  • Bloomberg Consumer Comfort 42.80 -.9 point
  • Weekly Retail Sales +1.30% +10.0 basis points
  • Nationwide Gas $2.18/gallon -.04/gallon
  • Baltic Dry Index 728.0 -5.94%
  • China (Export) Containerized Freight Index 744.44 -1.03%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 27.50 -26.67%
  • Rail Freight Carloads 268,621 -2.37%
Best Performing Style
  • Large-Cap Growth +.9%
Worst Performing Style
  • Small-Cap Value -1.2%
Leading Sectors
  • Biotech +3.9%
  • Hospitals +3.5%
  • Gaming +3.4%
  • HMOs +3.1%
  • Medical Equipment +2.6%
Lagging Sectors
  • Homebuilders -3.6% 
  • Road & Rail -5.4%
  • Education -6.9%
  • Gold & Silver -8.0%
  • Coal -29.8%
Weekly High-Volume Stock Gainers (34)
Weekly High-Volume Stock Losers (49)
Weekly Charts
*5-Day Change

Stocks Slightly Lower into Afternoon on Earnings Outlook Concerns, Technical Selling, Profit-Taking, Financial/Road & Rail Sector Weakness

Broad Equity Market Tone:
  • Advance/Decline Line: Slightly Lower
  • Sector Performance: Mixed
  • Volume: Slightly Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • Volatility(VIX) 14.26 -2.4%
  • Euro/Yen Carry Return Index 138.81 -.07%
  • Emerging Markets Currency Volatility(VXY) 10.82 -.37%
  • S&P 500 Implied Correlation 57.25 -2.12%
  • ISE Sentiment Index 82.0 -38.81%
  • Total Put/Call .87 +2.35%
  • NYSE Arms 1.07 -5.11% 
Credit Investor Angst:
  • North American Investment Grade CDS Index 78.40 -.26%
  • America Energy Sector High-Yield CDS Index 1,131.0 +.557%
  • European Financial Sector CDS Index 69.32 -.73%
  • Western Europe Sovereign Debt CDS Index 19.06 +2.53%
  • Asia Pacific Sovereign Debt CDS Index 72.48 -2.61%
  • Emerging Market CDS Index 324.99 -.74%
  • iBoxx Offshore RMB China Corporate High Yield Index 122.65 +.18%
  • 2-Year Swap Spread 11.25 -.75 basis point
  • TED Spread 26.5 -1.75 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -29.25 +1.25 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 71.89 +.28%
  • 3-Month T-Bill Yield .07% +1.0 basis point
  • Yield Curve 142.0 -3.0 basis points
  • China Import Iron Ore Spot $49.83/Metric Tonne +.36%
  • Citi US Economic Surprise Index -12.7 -2.2 points
  • Citi Eurozone Economic Surprise Index 32.7 +7.0 points
  • Citi Emerging Markets Economic Surprise Index -10.50 +2.0 points
  • 10-Year TIPS Spread 1.53 +1.0 basis point
  • # of Months to 1st Fed Rate Hike(Morgan Stanley) 4.07 -.24
Overseas Futures:
  • Nikkei 225 Futures: Indicating -168 open in Japan 
  • China A50 Futures: Indicating -63 open in China
  • DAX Futures: Indicating -3 open in Germany
  • Slightly Higher: On gains in my medical/retail sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 25% Net Long

Today's Headlines

  • U.S. to Send First Troops to Syria to Combat Islamic State. The U.S. will intensify its military action in Syria, deploying fewer than 50 special operations forces inside the country for the first time to help coordinate the fight against Islamic State, White House Press Secretary Josh Earnest said. The new action represents an escalation of the U.S. fight against the terrorist group in Syria, where Russia has begun its own air campaign against rebels fighting the regime of President Bashar al-Assad. U.S. officials have complained that the Russians have largely targeted moderate rebel forces instead of Islamic State militants. President Barack Obama has repeatedly said that local forces must lead the fight against Islamic State, with training and assistance from the U.S. A White House official, who asked not to be identified in advance of an announcement, said in an e-mail that the special operations forces would coordinate local ground forces and the U.S.-led coalition engaging with Islamic State.
  • ICBC More Than Doubles Bad-Loan Provisions as Economy Cools. Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, reported a 0.5 percent increase in quarterly profit from a year earlier as it more than doubled provisions for bad loans. Net income climbed to 72.7 billion yuan ($11.5 billion) in the three months ended Sept. 30, a Hong Kong exchange filing showed Friday. That was close to the 72.8 billion yuan average of three analyst estimates compiled by Bloomberg. The lender set aside 19.3 billion yuan of provisions for bad loans in the quarter, more than double the amount a year earlier. “ICBC’s earnings growth in the fourth quarter may be even slower or they may even see a profit decline,” said Chen Xingyu, a Shanghai-based analyst at Phillip Securities Research. “The bad-loan situation will only deteriorate over the next year.”
  • Europe Stocks Cap Biggest Monthly Gain Since 2009 Amid Earnings. European shares were little changed on the final day of trading in a month that has seen their strongest rally in six years. IAG SA slipped 2.5 percent after its 2015 forecast trailed analyst predictions. L’Oreal SA fell 4.6 percent on worse-than-projected sales, dragging a gauge of personal and household goods to the biggest drop among industry groups. Banco Bilbao Vizcaya Argentaria SA lost 3.5 percent after posting a loss. BNP Paribas SA and Airbus Group SE added at least 1.8 percent after their profits topped estimates.
  • Big Oil Faces Big Dividend Dilemma. (video)
  • Sliding Inflation Expectations Lean Against Fed's Faith in Higher Prices. Officials say they need to be "reasonably confident" in the outlook for prices before raising rates. Results of two consumer surveys suggest expectations for inflation in the medium and long term are slipping. A monthly poll conducted by the University of Michigan showed U.S. households projected annual inflation will average 2.5 percent 5 years to 10 years from now, according to data released Friday. That matches the lowest on record in data going back to 1979.  
  • These Are the Charts That Scare Wall Street. (graph) Breakevens that go bump in the night and other spooky things. Sometimes there are announcements that send chills down Wall Street's collective spine. Other times, it's a well-defined trend portending disaster or threatening to upend the status quo that inspires fright. With Halloween just around the corner, we asked some of Wall Street's brightest for the charts that are more terrifying than Freddy Krueger. This is what we got back. 
  • Morgan Stanley(MS): The Grinch Could Ruin Christmas for Most Retailers. Consumers may have extra money, but they're not spending it. Morgan Stanley analysts aren't predicting a lot of cheer for retailers this holiday season. The bank sees holiday sales growth slowing this year despite an increase in the financial health of many consumers, according to analysts led by Kimberly Greenberger. In a note titled "The grinch could steal Christmas," they argue that while consumers will have plenty of extra pocket money this season, that won't necessarily translate into extra spending.
  • Obamacare Premiums Jump, But Insurers Still Struggle for Profit. Many people shopping for health coverage this weekend on the websites created by Obamacare are going to see double-digit percentage increases in their premiums. That’s still not enough for some insurers. Anthem Inc. says there remain competitors in the government-run marketplace offering premiums that aren’t enough to profitably provide the coverage patients will require. Prices in some areas probably will have to climb in 2017 and even 2018 to reach levels that make sense, according to Chief Financial Officer Wayne Deveydt. Meantime, Anthem will sacrifice market share to keep its plans profitable, he said. “When you have fewer national enrollees and you have price points that we don’t believe are sustainable, we’ve just made a conscious decision we’re not going to chase it,” Deveydt told analysts on a conference call on Wednesday. 
  • Ackman, and His $448-a-Share Call, Fall Flat in Valeant Defense. As the billionaire William Ackman spent some four hours Friday defending his outsize bet on Valeant Pharmaceuticals International Inc., the rest of Wall Street dismissed his arguments and kept unloading shares of the besieged drug giant.
Fox News:
  • RNC boss vows debate changes as GOP candidates threaten to go around party. (video) Republican National Committee Chairman Reince Priebus is vowing to “reset” his party’s presidential debates in the wake of Wednesday’s controversial face-off -- but he still faces a possible revolt by frustrated candidates reportedly looking at taking power away from the party.
  • Chevron(CVX) slashes 2016 budget to weather low oil prices. Chevron Corp, the second-largest U.S.-based oil producer, slashed its 2016 capital budget by 25 percent and said it would lay off roughly 10 percent of its workforce, one of the most-drastic reactions to date to the plunge in crude prices CLc1. Chevron said on Friday it plans to spend between $25 billion to $28 billion next year and expects to further slash spending in 2017 and 2018 as well, an acknowledgment that oil prices are not expected to rise at all in the near future. The San Ramon, California-based company also said it would lay off 6,000 to 7,000 workers as part of the cuts.

Bear Radar

Style Underperformer:
  • Small-Cap Value -.18%
Sector Underperformers:
  • 1) Coal -3.26% 2) Banks -1.26% 3) Alt Energy -1.10%
Stocks Falling on Unusual Volume:
Stocks With Unusual Put Option Activity:
  • 1) EA 2) CVS 3) OCN 4) SCTY 5) EPD
Stocks With Most Negative News Mentions:
  • 1) SCTY 2) BTU 3) CTRL 4) RKUS 5) DGI

Bull Radar

Style Outperformer:
  • Mid-Cap Growth +.37%
Sector Outperformers:
  • 1) Computer Hardware +3.71% 2) Gaming +1.51% 3) Steel +1.44%
Stocks Rising on Unusual Volume:
Stocks With Unusual Call Option Activity:
  • 1) MDR 2) KEY 3) KSS 4) LNKD 5) CVS
Stocks With Most Positive News Mentions:
  • 1) EXPE 2) LNKD 3) YRCW 4) HON 5) EMC

Morning Market Internals

NYSE Composite Index:

Thursday, October 29, 2015

Friday Watch

Evening Headlines 
  • China Banks Enter Eye of Storm Adding Risky Debt to Wealth Funds. The wealth-management products that banks sell at branches across China are often considered as safe as deposits by customers. There are growing reasons to question that faith. The ability of Chinese lenders’ $2.4 trillion of WMPs to generate the returns they promise is being undermined as monetary easing has pushed corporate bond yields to a five-year low. Loath to lose market share by advertising weaker performance, managers of the funds have been adding leverage, extending maturities and buying higher-yielding notes that are rarely traded, according to consultancy CNBenefit and HSBC Holdings Plc. "A large number of WMP funds have entered the bond market and used maturity mismatches and leverage to raise yields," said Gao Shanwen, chief economist at Essence Securities Co. in Beijing. "If you add the implicit guarantee to that, along with a general lack of transparency and regulation, the bond market really could be the next eye of the storm in financial markets." Banks are piling into riskier debt despite warnings of a leverage-fueled bubble from local brokerages, at least five bond defaults this year and the weakest economic growth in a quarter century.
  • Taiwan Economy Shrinks for First Time Since 2009 on Export Slump. Taiwan’s economy contracted on a yearly basis for the first time since the global financial crisis as a slump in exports amid an uneven global recovery dragged on consumption. Gross domestic product fell 1.01 percent in the three months through September from a year earlier, according to preliminary data released by the statistics bureau Friday. That compares with 0.52 percent growth originally reported in the previous quarter and the 0.5 percent drop projected by the median estimate in a Bloomberg survey of economists. Taiwan’s exports are sliding as economic growth in the top destination of China slowed further to a six-year low last quarter.  
  • Asian Stocks Poised for Monthly Advance as Investors Await BOJ. Asian stocks stayed on track for their biggest monthly gain in five years as investors awaited a Bank of Japan decision on monetary policy. The MSCI Asia Pacific Index was little changed at 133.85 as of 9:05 a.m. in Tokyo, with Australian banks dragging on the gauge while Samsung Electronics Co. jumped.
  • Fed Sparks Dash for Cheap Debt With December Hike Back on Table. The Federal Reserve has lit a fire under corporate borrowers who are again faced with the prospect of an interest-rate increase this year. Companies from Microsoft Corp. to American Express Co. and Norfolk Southern Corp. rushed back to the bond market to lock in cheap borrowing costs before the central bank ends its unprecedented zero-rate era. Fed Chair Janet Yellen and policy makers signaled this week they remain prepared to raise their key rate as soon as their next meeting starting Dec. 15, causing pushing the perceived odds of a rate increase to 50 percent. "The message has been sent that if you have issuance planned, it might be a good idea to go now," said Hans Mikkelsen, head of U.S. investment-grade credit strategy at Bank of America Corp. in New York. "You can’t be sure what the market will look like when the Fed starts to raise rates."
  • Philidor Said to Modify Prescriptions to Boost Valeant(VRX) Sales. A specialty pharmacy that fills prescriptions for Valeant Pharmaceuticals International Inc. has altered doctors’ orders to wring more reimbursements out of insurers, according to former employees and an internal document. Workers at the mail-order pharmacy, Philidor RX Services LLC, were given written instructions to change codes on prescriptions in some cases so it would appear that physicians required or patients desired Valeant’s brand-name drugs -- not less expensive generic versions -- be dispensed, the former employees said. Typically, pharmacists will sell a generic version if not precisely told to do otherwise by a “dispense as written” indication on a script. The more "dispense as written" orders, the more sales for the brand-name drugmaker.
Wall Street Journal: 
  • Iranian-American Executive Arrested in Iran. Move adds to signs that hard-liners are trying to block foreign investors in wake of nuclear deal. Iranian security forces have arrested an Iranian-American businessman who had promoted improved ties between the two countries, adding to signs that hard-liners in Tehran are trying to block foreign investors from entering the Islamic Republic in the wake of the historic nuclear deal.
  • U.S. Backs Off Hard Line on Syrian President’s Future. White House signals it would allow Bashar al-Assad to take part in political transition. The Obama administration entered a crucial round of international talks on Syria’s war prepared to accept a deal that leaves President Bashar al-Assad in place for several months or more during the transition to a new government.
  • Clinton’s ‘A’ Economy. Slow business investment means another growth slump. Hillary Clinton told the Boston Globe the other day that she’d give President Obama “an A” grade for his handling of the economy. “I don’t think he gets the credit he deserves for saving our economy from falling into a Great Depression,” she said, listing a variety of his policies. The likely Democratic nominee is running for Mr. Obama’s third term, so we wonder if that means taking credit for the likes of Thursday’s third quarter GDP report of 1.5% growth. The report validated the disparate evidence that the economy hit...
Fox News: 
  • CNBC moderators get bipartisan drubbing for debate performance. Analysts across the political spectrum may be at odds over who won the third Republican presidential debate, but they seem to agree on one thing: the CNBC moderators had a very bad night. The negative reaction to the debate questions and other factors has become a story unto itself, almost overshadowing the actual policy debates that broke out in between the candidate-moderator rancor Wednesday night. The Republican candidates and observers complained the questions were demeaning, silly, and designed to provoke confrontation rather than genuine policy discussion. Others took aim at the debate format, and wondered about the moderators’ professionalism. On several sites aggregating Twitter reaction, the moderators were declared the losers, “hands down.” The Washington Post declared it “CNBC’s really bad debate night.” “The moderators had a worse night than the New York Mets … this was a trainwreck,” Fox News' Howard Kurtz charged Thursday, referring to Game 2 of the World Series, and calling the debate questions “condescending, snide, hostile and borderline insulting.
Zero Hedge: 
Business Insider:
  • Justice Scalia warns that the Supreme Court is causing the 'destruction of our democratic system'. Supreme Court Justice Antonin Scalia was extra fiery during a talk at Santa Clara University in California this week, saying in no uncertain terms that the court had been making a lot of bad decisions. In his speech, Scalia said he believes the "liberal" Supreme Court is heralding the "destruction of our democratic system," according to an account from the SF Gate. According to Scalia, the court is giving citizens rights the Constitution doesn't specifically guarantee, like gay marriage and federally subsidized health insurance.
Economic Information Daily:
  • China to Reduce Focus on Growth in Next 5-Year Period. China will reduce focus on economic growth and place priority on preventing "external financial impacts" during 2016-2020 of its next 5-year plan, citing Zhang Ping, researcher at Chinese Academy of Social Sciences.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.50% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 130.75 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 74.5 +2.0 basis points.
  • Bloomberg Emerging Markets Currency Index 71.71 +.02%. 
  • S&P 500 futures +.32%.
  • NASDAQ 100 futures +.35%.

Earnings of Note
  • (AAN)/.48
  • (ABBV)/1.08
  • (AXL)/.68
  • (BUD)/1.26
  • (CBOE)/.73
  • (CVX)/.76
  • (CL)/.72
  • (CVS)/1.29
  • (ETN)/.98
  • (XOM)/.90
  • (ITT)/.59
  • (LM)/.99
  • (MCO)/1.07
  • (MYL)/1.37
  • (PSX)/2.24
  • (COL)/1.40
  • (STX)/.57
  • (WY)/.27
  • (CCJ)/.30
Economic Releases
8:30 am EST
  • 3Q Employment Cost Index is estimated to rise +.6% versus a +.2% gain in 2Q.
  • Personal Income for September is estimated to rise +.2% versus a +.3% gain in August.
  • Personal Spending for September is estimated to rise +.2% versus a +.4% gain in August.
  • Real Personal Spending for September is estimated to rise +.2% versus a +.4% gain in August.
  • PCE Core for September is estimated to rise +.2% versus a +.1% gain in August.
9:00 am EST
  • ISM Milwaukee for October is estimated to rise to 44.0 versus 39.44 in September.
9:45 am EST
  • Chicago Purchasing Manager for October is estimated to rise to 49.4 versus 48.7 in September.
10:00 am EST
  • Final Univ. of Mich. Consumer Sentiment for October is estimated to rise to 92.5 versus a prior estimate of 92.1.
Upcoming Splits
  • (GPN) 2-for-1
Other Potential Market Movers
  • The Fed's Williams speaking, Eurozone CPI/German Unemployment reports, BoJ rate decision and the (F) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity 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 50% net long heading into the day.