Indices
- S&P 500 1,460.93 +1.41%
- DJIA 13,610.15 +1.29%
- NASDAQ 3,136.18 +.64%
- Russell 2000 842.86 +.65%
- Value Line Geometric(broad market) 363.63 +1.13%
- Russell 1000 Growth 678.13 +1.17%
- Russell 1000 Value 722.46 +1.63%
- Morgan Stanley Consumer 852.48 +1.99%
- Morgan Stanley Cyclical 990.66 +2.27%
- Morgan Stanley Technology 684.66 +.03%
- Transports 5,046.43 +3.14%
- Utilities 479.93 +.88%
- Bloomberg European Bank/Financial Services 84.46 +3.66%
- MSCI Emerging Markets 41.74 +.50%
- Lyxor L/S Equity Long Bias 1,056.31 +.11%
- Lyxor L/S Equity Variable Bias 804.13 +.10%
- Lyxor L/S Equity Short Bias 539.66 unch.
Sentiment/Internals
- NYSE Cumulative A/D Line 159,405 +1.93%
- Bloomberg New Highs-Lows Index 287.0 +140
- Bloomberg Crude Oil % Bulls 34.2 -9.5%
- CFTC Oil Net Speculative Position 215,880 -6.67%
- CFTC Oil Total Open Interest 1,556,877 +.07%
- Total Put/Call .91 -8.08%
- OEX Put/Call 1.36 +67.90%
- ISE Sentiment 86.0 -12.0%
- NYSE Arms 1.23 -26.63%
- Volatility(VIX) 14.33 -8.90%
- S&P 500 Implied Correlation 45.42 -6.98%
- G7 Currency Volatility (VXY) 7.60 -3.31%
- Smart Money Flow Index 11,670.95 +.22%
- Money Mkt Mutual Fund Assets $2.564 Trillion -.50%
- AAII % Bulls 33.86 -6.2%
- AAII % Bears 33.23 -8.86%
Futures Spot Prices
- CRB Index 307.62 -.54%
- Crude Oil 89.88 -2.41%
- Reformulated Gasoline 295.25 +1.30%
- Natural Gas 3.40 +2.38%
- Heating Oil 315.59 +.25%
- Gold 1,780.80 +.41%
- Bloomberg Base Metals Index 219.42 +.04%
- Copper 377.80 +.65%
- US No. 1 Heavy Melt Scrap Steel 347.67 USD/Ton -3.78%
- China Iron Ore Spot 104.20 USD/Ton unch.
- Lumber 276.10 -1.57%
- UBS-Bloomberg Agriculture 1,681.22 -.93%
Economy
- ECRI Weekly Leading Economic Index Growth Rate +4.7% +90 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.4282 +6.36%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 111.98 -.01%
- Citi US Economic Surprise Index 43.5 +37.7 points
- Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 10/24
- US Dollar Index 79.34 -.69%
- Yield Curve 148.0 +8 basis points
- 10-Year US Treasury Yield 1.74% +11 basis points
- Federal Reserve's Balance Sheet $2.791 Trillion +.14%
- U.S. Sovereign Debt Credit Default Swap 49.34 +30.57%
- Illinois Municipal Debt Credit Default Swap 197.0 -4.09%
- Western Europe Sovereign Debt Credit Default Swap Index 140.42 -5.04%
- Emerging Markets Sovereign Debt CDS Index 199.85 -7.23%
- Saudi Sovereign Debt Credit Default Swap 86.93 -4.49%
- Iraq Sovereign Debt Credit Default Swap 483.28 +4.15%
- China Blended Corporate Spread Index 405.0 -10 basis points
- 10-Year TIPS Spread 2.57% +15 basis points
- TED Spread 25.5 -1.25 basis points
- 2-Year Swap Spread 14.0 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -22.0 +4.25 basis points
- N. America Investment Grade Credit Default Swap Index 93.96 -6.1%
- European Financial Sector Credit Default Swap Index 178.63 -12.23%
- Emerging Markets Credit Default Swap Index 214.38 -3.98%
- CMBS Super Senior AAA 10-Year Treasury Spread 97.0 unch.
- M1 Money Supply $2.360 Trillion -.47%
- Commercial Paper Outstanding 975.10 -1.50%
- 4-Week Moving Average of Jobless Claims 375,00 +1,000
- Continuing Claims Unemployment Rate 2.6% unch.
- Average 30-Year Mortgage Rate 3.36% -4 basis points
- Weekly Mortgage Applications 1,020.40 +16.6%
- Bloomberg Consumer Comfort -36.9 +2.8 points
- Weekly Retail Sales +2.40% unch.
- Nationwide Gas $3.79/gallon unch.
- U.S. Heating Demand Next 7 Days 41.0% above normal
- Baltic Dry Index 845.0 +10.3%
- China (Export) Containerized Freight Index 1,214.62 -1.01%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 22.50 unch.
- Rail Freight Carloads 257,225 +2.79%
Best Performing Style
Worst Performing Style
Leading Sectors
- Homebuilders +5.9%
- Airlines +5.1%
- Banks +3.6%
- Road & Rail +3.2%
- Biotech +3.2%
Lagging Sectors
- Oil Service -1.4%
- Networking -1.6%
- Alternative Energy -1.7%
- Restaurants -2.0%
- Computer Hardware -3.9%
Weekly High-Volume Stock Gainers (18)
- SRPT, CRDN, OCN, NC, MDRX, CHUY, MFRM, GNRC, SPSC, GWAY, MUR, TBBK, DFRG, WLP, PCS, AZZ, EBSB and TSRO
Weekly High-Volume Stock Losers (13)
- UBA, AIMC, RPM, LXK, ADTN, HPQ, GMAN, HMSY, FNP, EXPR, MSCI, INFA and NUVA
Weekly Charts
ETFs
Stocks
*5-Day Change
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- VIX 14.22 -2.13%
- ISE Sentiment Index 82.0 -37.4%
- Total Put/Call .90 +12.5%
- NYSE Arms 1.42 +116.35%
Credit Investor Angst:
- North American Investment Grade CDS Index 94.86 bps -.23%
- European Financial Sector CDS Index 178.79 bps -3.76%
- Western Europe Sovereign Debt CDS Index 137.77 bps -4.13%
- Emerging Market CDS Index 214.09 bps -1.53%
- 2-Year Swap Spread 14.0 +.75 basis point
- TED Spread 25.5 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -22.25 +.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .10% unch.
- Yield Curve 147.0 +5 basis points
- China Import Iron Ore Spot $104.20/Metric Tonne unch.
- Citi US Economic Surprise Index 43.50 +25.8 points
- 10-Year TIPS Spread 2.57 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +29 open in Japan
- DAX Futures: Indicating -40 open in Germany
Portfolio:
- Slightly Higher: On gains in my Biotech/Retail sector longs and index hedges
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Metro Cuts Profit Forecast as Europe Slowdown Hurts Sales. Metro
AG (MEO), Germany’s biggest retailer, cut its 2012 profit forecast,
saying Europe’s sovereign-debt crisis is weighing on sales in the south
and east of the region. Earnings before interest and taxes will
decline to about 2 billion euros ($2.6 billion) in 2012, the
Dusseldorf-based retailer said in a statement today. It had previously
forecast earnings would be about the same as 2011’s 2.37 billion euros.
The shares fell the most in about 10 months. “The European consumer environment has worsened further in
recent weeks against the backdrop of rising unemployment, which
has hit a new record high in the euro zone,” said the company,
which owns Media Markt electronics stores. “This has also
started to materially affect Metro Group’s business development,
especially in southern Europe and parts of eastern Europe.”
- Spain Deterred From Bailout Request as EU Questions Deficit Plan. Spain has been deterred from triggering the currency union’s rescue mechanisms because of concerns about how, and even whether, the process would work, Deputy Prime Minister Soraya Saenz de Santamaria said today. “We need to have all the elements on the table and also the certainty that it would materialize” before making a bailout request, Saenz said at press conference in Madrid following the government’s weekly Cabinet meeting. Her comments help explain why Spanish officials have sought to damp expectations of a bailout request amid rising criticism of their plans to tame the budget deficit. Prime Minister Mariano Rajoy has said he is considering a request for European Union bond buying to try to bring down borrowing costs that remain more than 100 basis points above their average for the last decade. EU deficit enforcer Olli Rehn and Spanish central bank governor Luis Maria Linde this week both questioned the math that the government says will deliver the country’s deficit- reduction commitments over the next 15 months. Spain’s high funding costs are complicating the debt-reduction effort. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail.
- Merkel’s First Greek Crisis Visit May Mark Turning Point. German
Chancellor Angela Merkel will travel to Athens for the first time since
Europe’s financial crisis broke out there three years ago, a sign
she’s seeking to silence the debate on pushing Greece out of the euro.
Merkel’s visit to the Greek capital Oct. 9 to meet with
Prime Minister Antonis Samaras underscores the shift in her
stance since she held out the prospect last year of Greece
exiting the 17-nation currency regime.
- Al-Qaeda Affiliates Getting Stronger, Says U.S. Official. Terrorist groups in Mali and Yemen
that are affiliated with al-Qaeda are “gaining strength,” in
large part by taking hostages for ransom, a senior U.S. Treasury
official said today. “The U.S. government estimates that terrorist
organizations have collected approximately $120 million in
ransom payments over the past eight years,” said Deputy
Treasury Secretary David Cohen in a speech to the Royal
Institute of International Affairs at Chatham House in London. U.S. intelligence officials are investigating whether the
two main groups Cohen cited, al-Qaeda in the Islamic Maghreb and
al-Qaeda in the Arabian Peninsula, may have played a role in the
Sept. 11 attack on a U.S. diplomatic post in Benghazi, Libya,
that killed Christopher Stevens, the American ambassador to
Libya, and three other Americans.
- India’s NSE Says 59 Erroneous Orders Caused Index Plunge. The
National Stock Exchange of India said 59 erroneous orders prompted a
plunge in equities that briefly erased about $58 billion in value,
underscoring growing global concern about the integrity of financial
markets. Trading in the S&P CNX Nifty (NIFTY) Index and some
individual companies stopped at 9:49 a.m. in Mumbai for 15 minutes
after the 50-stock gauge tumbled as much as 16 percent. The volume of
stocks in the benchmark index that were traded today almost doubled from
the 100-day average, according to data compiled by Bloomberg. An index
of Indian stocks traded in New York slipped
as much as 1 percent.
- Food Prices May Stay High in Next Six Months on Drought: FAO. Global
food prices will probably stay
high in the next six months after drought in the U.S. and Russia
cut grain supplies, said the United Nations. The global market “will
switch to a short supply mode” for the first time in two years, said
Hiroyuki Konuma, the regional representative for Asia and Pacific at
the UN’s Food & Agriculture Organization. “We will have to monitor
it very
cautiously,” he said in a phone interview on Oct. 3.
- Oil Heads for Third Weekly Drop on Supply/Demand Worries. Futures are set to cap the longest run of weekly decreases
since June after the Energy Department reported on Oct. 3 that
U.S. crude output rose to 6.52 million barrels a day last week,
the most since December 1996. Crude oil for November delivery fell $2.18, or 2.4 percent,
to $89.53 a barrel at 1:49 p.m. on the New York Mercantile
Exchange. The contract dropped as low as $89.01. Prices are down 2.9 percent this week. Brent oil for November settlement slipped 95 cents, or 0.8 percent, to $111.63 a barrel on the London-based ICE Futures Europe exchange.
MarketWatch.com:
- Brace for worst earnings since recession rebound. S&P 500 firms slated to report earnings drop; low-balling is typical. This earnings season threatens to be one of the
roughest since U.S. companies started to pull themselves out of the
Great Recession — even if, as usual, results don’t live up to the worst
of the gloom-and-doom forecasts.
Revenue streams are drying up as China’s growth slows and Europe reels
from crisis to crisis. Companies are finding fewer places to cut costs.
- QE3 was a sign of failure. When Federal Reserve Chairman Ben Bernanke announced a new round of
unconventional monetary stimulus last month, he couched it in the
language of grim necessity, saying:
CNBC:
Zero Hedge:
Business Insider:
24/7 Wall St.:
- Federal Employment Set to Tumble Off Fiscal Cliff. About 14% of the total federal government workforce could lose their jobs if U.S. lawmakers cannot figure out a
way to avoid the looming fiscal cliff. That’s 277,000 non-military jobs,
of which 48,000 would be lost to civilian defense workers and 229,000
would be lost to non-defense workers.
DailyFX:
- Decline in German Factory Orders Dissapoints Expectations. German manufacturing orders dropped by 1.3% in
August (seasonally adjusted), disappointing expectations for a 0.5%
drop, and a reverse from July’s revised 0.3% rise in factory orders.
Manufacturing orders were 4.8% less than August 2011, according to the
Economy Ministry.
HedgeEye.com:
Reuters:
- US stuck with 'extraordinary' level of vacant homes-Fed's Duke. The U.S. housing bust has
saddled the country with an "extraordinary" level of abandoned
properties, inflicting heavy costs on the wider community which
may warrant government aid to ease the problem, a top U.S.
central banker said on Friday. "In order to see the robust economic recovery we all want,
we need to deal effectively with the large volume of
vacant and distressed properties throughout the country," said
Federal Reserve Board Governor Elizabeth Duke.
- VW cuts output target, halts German Passat plant. Volkswagen
halted production in Germany of its Passat cars this week as part of a
wider move to cut its group output target for the year by about 300,000
vehicles because of the
European market slump, company sources said. The global production target for the VW group, which
includes luxury division Audi, has been cut to 9.4 million cars
this year, up on last year's output of 8.5 million but short of
the goal originally set for this year of about 9.7 million, the
sources said on Friday.
- California gasoline prices jump 17 cents a gallon overnight. California gas prices rose
17 cents a gallon overnight due to supply disruptions at some
refineries and seasonally low inventories, bringing the one-week
increase in the Golden State to nearly 36 cents. The average retail price of gasoline was $4.486 on Friday
morning, up from $4.315 on Thursday and $4.131 a week ago,
according to AAA data. The average price was $3.818 a year ago. The average price is just 12 cents below the highest
recorded statewide price of $4.61, which was reached in June of
2008. "It's insane," said Matt Hurd, 35, who works in real estate.
"Especially with this thing," he added, motioning toward his
white SUV. "It's going to cost triple digits to fill it up."
Handelsblatt:
- IMF
Reduces German Economic Growth Forecast. The IMF expects the German
economy to grow .9% each year in 2012 and 2013, lower than the
respective 1% and 1.4% rates forecast in July, citing the fund's World
Economic Outlook to be published Oct. 9.
Style Underperformer:
Sector Underperformer:
- 1) HMOs -1.0% 2) Coal -.90% 3) Software -.70%
Stocks Faling on Unusual Volume:
- FFIV,
AAPL, MRCY, SABA, SPSC, WLP, TM, IQNT, FSLR, IMOS, MBT, MVO,
SRPT, NUVA, ASPS, LQDT, PNRA, MAR, BRLI, CMG, FTK, IMOS, CAKE, BJRI,
CHUY, CTXS, SPLK, INFY, CALM, GMCR, PRXL, EZA and MDCO
Stocks With Unusual Put Option Activity:
- 1) XLY 2) RSX 3) ZNGA 4) FSLR 5) EWA
Stocks With Most Negative News Mentions:
- 1) MRCY 2) CAKE 3) MAR 4) BHI 5) EBAY
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilding +1.65% 2) Education +1.49% 3) Airlines +1.09%
Stocks Rising on Unusual Volume:
- TQNT, SAND, ALJ, ETP, INFA, PAY, AVP, OI, STZ and PBY
Stocks With Unusual Call Option Activity:
- 1) LINE 2) OCN 3) AVP 4) VRNG 5) ACAD
Stocks With Most Positive News Mentions:
- 1) OI 2) TMO 3) STZ 4) LMT 5) XOM
Charts:
Evening Headlines
Bloomberg:
- Draghi Says Next Move Not His as Spain Resists Bailout.
European Central Bank President Mario Draghi signaled European
governments can’t expect much more help from him until they make the
next move. Draghi said nine times during a 54-minute press conference in
Slovenia yesterday that the ECB won’t start intervening in bond markets
until governments like Spain request a bailout and agree to conditions.
He also ruled out allowing the ECB to take losses in any further Greek
debt restructuring and damped speculation of another ECB interest-rate
cut. “Draghi’s message to governments was that he’s not going to do
any more for the time being,” said Jacques Cailloux, chief European
economist at Nomura International Plc in London. “The ECB is ready, if
needed, but their preference is probably
not to have to intervene at all.”
- EU Doubts on Deficit Cutting May Hinder Spain’s Path to Bailout. European
officials’ concern over’s Spain’s ability to reach its 2013
deficit-reduction target may obstruct Prime Minister Mariano Rajoy’s
path toward a possible bailout. Olli Rehn, the European commissioner in
charge of policing budget rules, told Spanish officials their plans to
reduce the shortfall to 4.5 percent of gross domestic product next year
are based on excessively optimistic assumptions about economic growth,
two people familiar with the issue said. Central bank governor Luis
Maria Linde, who met Rehn on his Oct. 1 visit to Madrid, echoed that
view in comments to lawmakers yesterday. There’s “a potential slowdown
in Spain’s application for a European program,” Thomas Costerg, an
economist at Standard Chartered Bank in London, said yesterday by
e-mail. “There is a rising fear that the 2013 budget
and the stress tests may have been some sort of window dressing to get
European assistance.”
- Spain Sees Divorce Driving Breakup of Towns as Recession Deepens.
At 10 a.m. on a hot Friday, Antonio Rodriguez Alvarez and his brother,
Francisco, sit outside a bar in Ecija, Spain, drinking an anise liquor
with water. Unemployed laborers, they visit the job center daily at 9
a.m. in search of work. When there is none, they repair to the bar and
worry. Antonio, 44, is divorced and living with his mother. He split
with his wife partly because of constant fights about money and his lack
of a job. He now weighs going to France, where he heard there is work
picking fruit. His 22-year-old daughter is planning a move to the Canary
Islands to work in the tourism industry. He said he doesn’t blame her. “Young people are leaving this town,” he said. “There’s no hope, no jobs. Days are long. You wake up, it’s the crisis.
You go to bed, it’s the crisis. It’s always the same around
here.”
- Bullard Says Investors Doubt Fed to Hold Inflation to 2%. Federal Reserve Bank of St. Louis
President James Bullard said measures of inflation expectations
indicate bond holders have doubts the central bank will hold
price increases within its 2 percent goal. “Distant inflation expectations
from the TIPS market seem to suggest that investors do not completely
trust the Fed to deliver on its 2 percent inflation target,” Bullard
said today in a speech in Memphis, Tennessee, referring to Treasury
Inflation-Protected Securities. Bullard’s comments echoed Dallas Fed
President Richard Fisher’s concern about rising expectations following
the Federal Open Market Committee’s decision last month to start an
asset purchase program. Policy makers said they could change the size of
the central bank’s monthly asset purchases to reduce any risks from the
program, including higher inflation or a disruption to financial
markets, according to minutes of the Sept. 12-13 meeting released today.
The five-year, five-year forward break-even rate, which projects the
pace of price increases starting in 2017, rose to 2.88 percent on Sept.
14, the day after the FOMC announced a third round of quantitative
easing. That was up half a percentage point from July 26. It dropped to
2.77 percent on Oct. 2. Bullard, who doesn’t vote on monetary policy
this year, said inflation “is sometimes seen as a way to partially
default on existing nominal debts,” and said that approach would hurt
savers, mostly older U.S. households, in his prepared remarks to the Economic Club of Memphis. “A partial default today through higher inflation would be
paid for via higher inflation premiums in future borrowing,” he
said. “This type of policy would likely impair U.S. credit
markets for many years.”
- Mazda China Sales Tumble to 19-Month Low on Anti-Japan Protests.
Mazda Motor Corp. (7261)’s deliveries in China tumbled to the lowest in
19 months as anti-Japan protests flared in the world’s largest vehicle
market, fueling concern larger automakers such as Toyota (7203) Motor
Corp. will follow suit. Mazda saw deliveries in China drop 35 percent to 13,258 vehicles last month,
the automaker said on its website yesterday. That’s the fewest
deliveries since February 2011, meaning the company couldn’t even match
its sales during the aftermath of last year’s earthquake-triggered
tsunami in Japan and floods in Thailand.
- California Refiners Ration Gasoline as Prices Near Record.
Exxon Mobil Corp. (XOM) and Valero Energy Corp. (VLO) are rationing
fuel deliveries to customers in California as refinery outages cut into
the state’s supplies, driving pump prices toward record highs. Valero
halted spot sales of gasoline in Southern California
and is allocating the rest of deliveries to customers. Exxon is
also rationing fuel to customers at West Coast terminals. Retail
prices in California jumped to $4.315 a gallon Oct. 3, according
to AAA, the nation’s biggest motoring organization. The shortage caused Los Angeles-area gasoline station
owners, including Costco Wholesale Corp., to run out of
supplies, shut pumps and, in some cases, charge their highest
prices ever. Spot gasoline in California, already home to some
of the most expensive fuel in the nation because of state
blending requirements, has surged $1 a gallon this week to a
record. “We’re really sort of shell-shocked,” said Tom Robinson,
president of Santa Clara, California-based Robinson Oil Corp.,
which operates 34 Rotten Robbie convenience stores. “If you’ve
been in California long enough, you know how volatile our market
can be. But to see prices go up $1 a gallon since Monday -- I’ve
never seen that before.”
- Zynga(ZNGA) Cuts Bookings Forecast, Citing Diminished Game Demand. Zynga Inc. cut its forecast for full-
year bookings, a predictor of sales, citing lower demand for Web
games such as “The Ville” and delayed introduction of other
titles. Shares tumbled as much as 22 percent. Bookings this year will be $1.085 billion to $1.1 billion,
compared with an earlier forecast for $1.15 billion to $1.225
billion, San Francisco-based Zynga said today in a statement.
The company also wrote down the value of its acquisition of
OMGPop Inc., maker of the “Draw Something” game, and sliced
its forecast for a closely watched measure of profitability.
- Gold Traders More Bullish as Holdings Reach Record: Commodities.
Gold traders are the most bullish in three weeks as investors’ bullion
holdings expanded to a record after central banks pledged to do more to
spur economic growth. Twenty of 32 analysts surveyed by Bloomberg
expect prices to rise next week, nine were bearish and three were
neutral. Investors are holding the most metal ever through gold-backed
exchange-traded products after buying 85.4 metric tons last month, the
most since July 2011. Hedge funds’ bets on a rally
are the biggest in seven months, U.S. Commodity Futures Trading
Commission data show.
Wall Street Journal:
- FBI Team Reaches Libya Attack Site. Federal Bureau of Investigation agents visited the burned-out U.S.
Consulate in Benghazi for the first time on Thursday, more than three
weeks after Ambassador to Libya Christopher Stevens and three other
Americans were killed in an attack there on Sept. 11. The
agents collected evidence for about 12 hours with protection from U.S.
military personnel and perimeter security from Libyan personnel, then
left the city because of security concerns, officials said; the visit
was kept secret to avoid any strike by militants while agents were
there.
- Turkey Strikes Syria, Adds War Powers. Syria Accuses Neighbor of Fueling Conflict As Ankara Shells Positions for Second Day.
Turkey attacked targets inside Syria for a second day Thursday and
its parliament authorized military offensives into foreign countries,
deepening the threat of sustained conflict along the neighbors' 565-mile
common border. Syria, at the United Nations, castigated its neighbor
for policies it said were fueling the conflict. Ankara's military and
legislative moves came a day after Syrian shells
landed in the Turkish border town of Akcakale, killing five people and
spurring Turkish retaliatory strikes.
- Natural Gas Glut Pushes Exports.
- Investors Jump Off the 'Junk' Pile. The massive "junk"-bond boom is raising alarm bells among some large
money managers, who warn the market is showing signs of overheating. So much money has flooded into the junk-bond market from yield-hungry
investors that weaker and weaker companies are able to sell bonds, they
say. Credit ratings of many borrowers are lower and debt levels are
higher, making defaults more likely. And with yields near record lows,
they add, investors aren't being compensated for that risk. Also worrying money managers is that some new sales have similar hallmarks to those that preceded the financial crisis in 2008.
- Foreign Firms Flood Into U.S. Debt Market. "Go Yankees" isn't just an October refrain in baseball. Foreign
borrowers' U.S. dollar-denominated debt, or "Yankee bonds," are offering
investors a chance to pick up higher yields and diversify their
portfolios. Banks in Spain and France, plus corporate borrowers
in Chile, Russia and the U.K., all brought bonds to market Thursday,
selling at least $8.15 billion combined. The internationalization of the
U.S. bond market means investors can diversify portfolios without
having to take on much currency risk. And often, foreign companies offer
higher yields than U.S. counterparts.
- Higgins and Heath: Informed Independents Cool to ObamaCare. Presenting facts about even popular aspects of the health-care law had a side effect: increasing support for Mitt Romney.
- The Obama Matrix. Romney's triumph came from exposing the President's campaign illusions.
Fox News:
- Exclusive: Credit Suisse probed by U.S. over mortgages - sources. U.S. federal and state authorities are investigating Credit Suisse AG
over mortgage-backed securities packaged and sold by the bank, people
familiar with the probe said on Thursday. The Justice
Department and the New York Attorney General are among those probing
Credit Suisse's actions, according to the sources, who spoke on
condition of anonymity.
Zero Hedge:
Business Insider:
NY Times:
- Glut of Solar Panels Poses a New Threat to China. China in recent years established global dominance in renewable energy,
its solar panel and wind turbine factories forcing many foreign rivals
out of business and its policy makers hailed by environmentalists around
the world as visionaries. But now China’s strategy is in disarray.
Though worldwide demand for solar panels and wind turbines has grown
rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a
ferocious price war.
LA Times:
- LAPD stance on illegal immigration puts Chief Beck in hot seat. Los Angeles Police Chief Charlie Beck stepped into the national
immigration debate Thursday, announcing that hundreds of illegal
immigrants arrested by his officers each year in low-level crimes would
no longer be turned over to federal authorities for deportation. The new rules, which are expected to affect about 400 people arrested
each year, mark a dramatic attempt by the nation's second-largest
police department to distance itself from federal immigration policies
that Beck says are unfair to undocumented immigrants suspected of
committing petty offenses.
CNN:
- Work from home soars 41% in 10 years.
The number of Americans working from home has soared 41% in the last
decade. About 13.4 million people currently work from home in the United
States, according to a Census Bureau report out Thursday. That's about
four million more Americans since 1999.
Reuters:
- Actress Daryl Hannah arrested in Keystone pipeline protest. Actress Daryl Hannah was
arrested in Texas on Thursday after she stood in front of an
earth-moving machine clearing ground for the construction of the
controversial Keystone XL pipeline, her representative said. The protest took place outside Winnsboro, Texas, about 80
miles (130 km) east of Dallas, said Hannah's agent, Paul Bassis. Hannah, 51, a longtime environmental activist, was arrested
last year outside the White House in another protest against the
pipeline. The Keystone XL pipeline, a project of TransCanada
Corp, would ship more than half a million barrels a day
of oil sands-derived crude to the Texas Gulf Coast from Canada.
- Facebook(FB) IPO lawsuits to be heard in New York. Dozens of lawsuits against Facebook Inc
, the NASDAQ exchange and various underwriters
will be consolidated before a federal judge in New York, who
must sort through the legal aftermath of Facebook's botched
initial public offering.
- Obama-Romney debate draws 67.2 million TV viewers. More than 67 million
Americans tuned in to Wednesday's first presidential debate
between President Barack Obama and Mitt Romney, ranking the
match-up among the top 10 of the past 30 years. Final Nielsen data on Thursday showed that 67.2 million
people across 11 TV networks watched Obama and Romney go head to
head on the economy - a 28 percent increase on the 52.4 million
who saw the first 2008 debate between Obama and Republican John
McCain.
Financial Times:
- Morgan Stanley(MS) chief warns on Wall St pay. Morgan Stanley is
preparing to wield its axe again with more job cuts and smaller bonuses
planned for next year as the investment bank attempts to boost
shareholder returns. In the latest sign of the pressure Wall Street is under to cut costs
and address high pay levels, James Gorman, chief executive, said that
staff and remuneration would have to be sacrificed as banks cope with
lower profits.
Telegraph:
Les Echos:
- France's
INSEE Sees No Pickup in Economy Through Year End. Institut de la
Statistique et des Etudes Economiques said 2H growth will be +.2% GDP,
down from +.4% forecast in June. INSEE forecasts unemployment will reach
10.2% by year end, 10.6% including overseas territories. French
purchasing power will drop -.5%, the most since 1984, according to INSEE.
Yomiuri:
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 129.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 110.0 -4.25 basis points.
- FTSE-100 futures +.43%.
- S&P 500 futures +.10%.
- NASDAQ 100 futures +.14%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for September is estimated at 115K versus 96K in August.
- The Unemployment Rate for September is estimated to rise to 8.2% versus 8.1% in August.
- Average Hourly Earnings for September is estimated to rise +.2% versus unch. in August.
3:00 pm EST
- Consumer Credit for August is estimated to rise to $7.250B versus -$3.276B in July.
Upcoming Splits
Other Potential Market Movers
- The Fed's Duke speaking, Eurozone Factory Orders report and the BoJ rate decision could also impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by commodity and financial 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.
