Sunday, April 30, 2017

Monday Watch

Today's Headlines
  • China Manufacturing Gauge Declines From a Nearly Five-Year High. China’s official factory and services gauges pulled back from multi-year highs, dimming the outlook for the sustainability of the past two quarters’ acceleration in economic growth. Manufacturing purchasing managers index fell to 51.2 in April from an almost five-year high of 51.8 in March, missing the median estimate of 51.7 in a Bloomberg survey and falling short of all projections. Non-manufacturing PMI dropped to a six-month low of 54 from 55.1 last month. Gauges still show momentum, as numbers higher than 50 indicate improving conditions.
  • Macron Hunts for French Rural Votes, Le Pen Cheers New Ally. French presidential front-runner Emmanuel Macron hunted Saturday for votes in rural France where his far-right opponent, Marine Le Pen, is making inroads among country folk who feel left behind. Back in Paris, Le Pen announced that if she wins the presidency in the May 7 runoff she would name former rival Nicolas Dupont-Aignan, her new campaign ally, as her prime minister. The move aims to secure the nearly 1.7 million votes that the anti-European Union conservative got when he was eliminated from the presidential race in the first round of balloting.
  • Turkey Threatens Further Strikes on U.S.-allied Syrian Kurds. Turkish President Recep Tayyip Erdogan said Sunday his country may take further action against Kurdish militants in Iraq and Syria, as U.S.-backed forces in Syria closed in on the last neighborhoods of a former stronghold of the Islamic State group. The U.S. views the Kurdish-led Syrian Democratic Forces as the most effective partner to counter the Islamic State group in northern Syria, an assessment bolstered by the SDF's steady advances against the jihadists. But it has complicated relations with Turkey, which views the group's Kurdish component as an extension of a terror group operating inside its own borders.
  • Cautious Start for Stocks as Global Growth Wanes. The MSCI Asia Pacific Index was flat after capping a fourth straight month of gains. Stocks in Japan were little changed in light trading as China’s factory gauge fell more than expected from March’s almost five-year high. The yen recouped some of last week’s slide as investors weighed the possibility of escalating tension between the U.S. and North Korea. On top of all that, Congress will have this week to agree on a spending bill or risk a shutdown, after passing a stopgap measure Friday.
  • Libya's Oil Output Rebounds as Sharara, El Feel Fields Restarted. Libya’s crude production rebounded to more than 700,000 barrels a day as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after a halt. The Sharara field is currently producing 216,400 barrels a day, while the El Feel, or Elephant, deposit is pumping 26,500 and is expected to boost output further, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday by phone. Crude from Sharara started flowing to the Zawiya refinery after the port of Zawiya re-opened last week following a three-week closure. El Feel, idled since April 2015, also restarted last week.
  • Oil Price Optimism Wears Off as Texas Wildcatters Drill On. The relentless drilling ramp-up in America’s top shale plays is making investors more skeptical that an oil price rebound is on the horizon. After increasing their bets on rising West Texas Intermediate crude for three straight weeks, money managers slashed the wagers by 21 percent, according to U.S. Commodity Futures Trading Commission data. Producers in Texas are leading the longest shale revival since 2011, making OPEC-led efforts to rebalance the market increasingly difficult.
  • What Trump’s Done—or Undone—for Business in 100 Days.
  • Fox, Blackstone Said Teaming to Make Competing Tribune Bid. Twenty-First Century Fox Inc. is teaming with Blackstone Group LP to make an offer to acquire TV-station owner Tribune Media Co., rivaling a planned bid by Sinclair Broadcast Group Inc., people familiar with the situation said. The all-cash bid would be funded by Blackstone while Fox would contribute its TV stations to the joint venture that would acquire Tribune, said one of the people, who declined to be identified because the talks are private. The two sides are in talks about a deal ahead of a deadline this week for final bids. No agreement has yet been reached.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are unch. to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 94.50 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 22.25 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.29 unch.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures +.03%.

Earnings of Note
  • (AMG)/3.18
  • (AWI)/.56
  • (CAH)/1.45
  • (DO)/.09
  • (DISH)/.69
  • (L)/.66
  • (AMD)/-.04
  • (AGU)/-.07
  • (CGNX)/.28
  • (RCII)/-.02
  • (THC)/-.52
  • (VNO)/1.25
Economic Releases
8:30 am EST
  • Personal Income for March is estimated to rise +.3% versus a +.4% gain in February.  
  • Personal Spending for March is estimated to rise +.2% versus a +.1% gain in February.
  • The PCE Core MoM for March is estimated to fall -.1% versus a +.2% gain in February. 
10:00 am EST
  • ISM Manufacturing for April is estimated to fall to 56.5 versus 57.2 in March.
  • ISM Prices Paid for April.
  • Construction Spending MoM for March is estimated to rise +.4% versus a +.8% gain in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The BoJ Minutes and the (AXP) general meeting could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lowr and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

Weekly Outlook

BOTTOM LINE: I expect US stocks to finish the week mixed as earnings optimism, healthcare/tax reform hopes and diminished government shutdown fears offset European election worries, geopolitical concerns and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.

Saturday, April 29, 2017

Today's Headlines

  • EU Throws Down Brexit Gauntlet to Britain as Talks Edge Closer. European Union leaders threw down the gauntlet to the U.K. ahead of Brexit talks, listing demands Prime Minister Theresa May must satisfy before they will discuss the sweeping trade deal she wants and urging her to be more realistic in her expectations. Any doubts about the scale of the task facing the U.K. in withdrawing from the EU after four decades were laid to rest at a Brussels summit of the region’s leaders on Saturday. A tough negotiating stance was endorsed unanimously, within minutes and to applause. The U.K. responded by saying it expects a confrontation.
  • Japan, Philippines Urge U.S., North Korea to Avoid War Brink. Philippines President Rodrigo Duterte joined China in pleading with the leaders of North Korea and the U.S. to tone down their nuclear brinksmanship, even as he agreed with Japanese Prime Minister Shinzo Abe that negotiations to end the standoff would be useless. “We have to caution everybody including those who’d give the advice to the two players because you have nuclear warheads to just show restraint,” Duterte said Saturday after wrapping up a meeting of leaders of the Association of Southeast Asian Nations in Manila.
  • Le Pen Has Potential Prime Minister, No Rush on Euro Exit. Marine Le Pen would name nationalist politician Nicolas Dupont-Aignan prime minister and signaled no rush for a French euro exit if she’s elected president in a bid to gain additional voter support. “We will create a government of national unity,” Le Pen, 48, said Saturday as she appeared with Dupont-Aignan on BFM television. Dupont-Aignan said they briefly discussed their platforms and that she trusts him and his party will remain independent as part of their newly-born alliance. Le Pen said her program, which includes raising barriers on trade and immigration, remains quite unchanged except for minor points. Leaving the euro is not a “preliminary” in her protectionist agenda and any exit process would be smooth.
  • Fed's Low-and-Slow Strategy Tested by Business-Spending Pickup. U.S. business investment is finally showing signs of life, and the Federal Reserve may have to reconsider its low-and-slow approach to raising interest rates if such spending becomes a vital force for the economy. Underneath a weak reading of first-quarter gross domestic product on Friday, non-residential investment in structures, equipment and intellectual property grew at a 9.4 percent annualized pace, the fastest since the fourth quarter of 2013. While the Bureau of Economic Analysis attributed the increase to a significant jump in “mining exploration, shafts, and wells” -- which reflects a surge in oil-and-gas drilling -- almost all categories of investment showed gains.
Wall Street Journal:
  • Had bullish commentary on (LRCX), (VZ), (JPM), (EPC), (FNSR), (ACIA), (OCLR), (WDC), (CAT) and (MU).
  • Had bearish commentary on (IBM), (NFLX), (CMG) and (TSLA).
Zero Hedge:

Friday, April 28, 2017

Market Week in Review

  • S&P 500 2,384.71 +1.54%*
 photo mlk_zpssqjvhob8.png

The Weekly Wrap by

*5-Day Change

Weekly Scoreboard*

  • S&P 500 2,384.71 +1.54%
  • DJIA 20,940.0 +1.94%
  • NASDAQ 6,046.23 +2.37%
  • Russell 2000 1,403.24 +1.74%
  • S&P 500 High Beta 37.13 +.92%
  • Goldman 50 Most Shorted 126.23 +2.68%
  • Wilshire 5000 24,740.90 +1.51%
  • Russell 1000 Growth 1,168.35 +2.0%
  • Russell 1000 Value 1,128.47 +.99%
  • S&P 500 Consumer Staples 566.15 +.16%
  • Vanda Cyclicals-Defensives 1.3220 +3.6%
  • Morgan Stanley Technology 1,423.84 +2.88%
  • Transports 9,096.16 -.43%
  • Utilities 704.37 -.14%
  • Bloomberg European Bank/Financial Services 99.69 +4.97%
  • MSCI Emerging Markets 40.04 +1.74%
  • HFRX Equity Hedge 1,196.22 +1.02%
  • HFRX Equity Market Neutral 1,002.29 +.51%
  • NYSE Cumulative A/D Line 288,491 +.84%
  • Bloomberg New Highs-Lows Index 632 +349
  • Bloomberg Crude Oil % Bulls 48.48 -8.42%
  • CFTC Oil Net Speculative Position 443,883 +1.57%
  • CFTC Oil Total Open Interest 2,161,434 -1.46%
  • Total Put/Call .91 -16.5%
  • OEX Put/Call 10.0 +1,471.0%
  • ISE Sentiment 81.0 +8.0%
  • NYSE Arms .87 -53.67%
  • Volatility(VIX) 11.0 -25.08%
  • S&P 500 Implied Correlation 43.05 -3.41%
  • G7 Currency Volatility (VXY) 8.13 -12.3%
  • Emerging Markets Currency Volatility (EM-VXY) 8.65 -4.1%
  • Smart Money Flow Index 19,208.78 -.22%
  • ICI Money Mkt Mutual Fund Assets $2.642 Trillion +.59%
  • ICI US Equity Weekly Net New Cash Flow -$.373 Billion
  • AAII % Bulls 38.1 +48.0%
  • AAII % Bears 31.7 -18.1%
Futures Spot Prices
  • CRB Index 181.27 -.21%
  • Crude Oil 49.03 -.86%
  • Reformulated Gasoline 154.80 -6.03%
  • Natural Gas 3.28 +6.17%
  • Heating Oil 150.40 -3.73%
  • Gold 1,268.70 -1.42%
  • Bloomberg Base Metals Index 175.44 +1.42%
  • Copper 259.50 +1.90%
  • US No. 1 Heavy Melt Scrap Steel 258.33 USD/Ton -9.47%
  • China Iron Ore Spot 68.80 USD/Ton +.85%
  • Lumber 379.80 -5.01%
  • UBS-Bloomberg Agriculture 1,083.36 -.11%
  • Atlanta Fed GDPNow Forecast +.2% -30.0 basis points
  • ECRI Weekly Leading Economic Index Growth Rate +5.9% -60.0 basis points
  • Philly Fed ADS Real-Time Business Conditions Index -.0190 -30.1
  • US Economic Policy Uncertainty Index 85.63 -47.8%
  • S&P 500 Blended Forward 12 Months Mean EPS Estimate 135.24 +.42%
  • Citi US Economic Surprise Index -4.80 -6.0 points
  • Citi Eurozone Economic Surprise Index 70.40 +21.1 points
  • Citi Emerging Markets Economic Surprise Index 39.50 -.3 point
  • Fed Fund Futures imply 86.7% chance of no change 13.3% chance of 25 basis point hike on 5/3
  • US Dollar Index 98.98 -.74%
  • MSCI Emerging Markets Currency Index 1,583.78 +.03%
  • Euro/Yen Carry Return Index 126.74 +3.8%
  • Yield Curve 103.0 -3.0 basis points
  • 10-Year US Treasury Yield 2.3+7.0 basis points
  • Federal Reserve's Balance Sheet $4.431 Trillion -.20%
  • U.S. Sovereign Debt Credit Default Swap 24.83 -5.09%
  • Illinois Municipal Debt Credit Default Swap 394.0 -.06%
  • Western Europe Sovereign Debt Credit Default Swap Index 9.17 -21.95%
  • Asia Pacific Sovereign Debt Credit Default Swap Index 22.26 -7.3%
  • Emerging Markets Sovereign Debt CDS Index 44.48 -9.46%
  • Israel Sovereign Debt Credit Default Swap 67.21 -2.47%
  • South Korea Sovereign Debt Credit Default Swap 57.19 +2.0%
  • Russia Sovereign Debt Credit Default Swap 153.50 -6.28%
  • iBoxx Offshore RMB China Corporate High Yield Index 137.16 +.10%
  • 10-Year TIPS Spread 1.93% +6.0 basis points
  • TED Spread 37.25 -.5 basis point
  • 2-Year Swap Spread 31.25 -3.5 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -33.75 -.5 basis point
  • N. America Investment Grade Credit Default Swap Index 64.20 -4.87%
  • America Energy Sector High-Yield Credit Default Swap Index 367.0 +.02%
  • European Financial Sector Credit Default Swap Index 74.36 -17.58%
  • Emerging Markets Credit Default Swap Index 196.36 -5.5%
  • CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 144.0 unch.
  • M1 Money Supply $3.431 Trillion +.27%
  • Commercial Paper Outstanding 980.20 +.5%
  • 4-Week Moving Average of Jobless Claims 242,250 -750
  • Continuing Claims Unemployment Rate 1.4% unch.
  • Average 30-Year Mortgage Rate 4.03% +6.0 basis points
  • Weekly Mortgage Applications 406.20 +2.68%
  • Bloomberg Consumer Comfort 50.80 +.9 point
  • Weekly Retail Sales +1.90% -10.0 basis points
  • Nationwide Gas $2.40/gallon -.02/gallon
  • Baltic Dry Index 1,134.0 -5.1%
  • China (Export) Containerized Freight Index 818.99 +1.54%
  • Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 -17.65%
  • Rail Freight Carloads 257,848 -2.27%
Best Performing Style
  •  Small-Cap Growth +2.2%
Worst Performing Style
  •  Mid-Cap Value +.5%
Leading Sectors
  • Gaming +5.8%
  • Internet +4.3%
  • Robotics +3.5%
  • Medical Equipment +3.3%
  • Biotech +3.2%
Lagging Sectors
  • Coal -.8% 
  • Steel -1.1%
  • Oil Service -1.2%
  • REITs -2.2%
  • Gold & Silver -4.2%
Weekly High-Volume Stock Gainers (34)
Weekly High-Volume Stock Losers (27)
Weekly Charts
*5-Day Change