Style Outperformer:
Sector Outperformers:
- 1) Semis +2.75% 2) Networking +2.71% 3) Hospitals +2.54%
Stocks Rising on Unusual Volume:
- SNI, JDAS, FIRE, HPY, SM, MDC, SHOO, STLD, CYH, AZPN, VC, CTRX, HSC, IDCC, VRTX, OCR, RS, HSH and ROK
Stocks With Unusual Call Option Activity:
- 1) AMAT 2) TTWO 3) DTG 4) ARO 5) WU
Stocks With Most Positive News Mentions:
- 1) SSI 2) LMT 3) M 4) MRO 5) CHK
Charts:
Night Trading
- Asian equity indices are -.75% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 119.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 93.75 -2.75 basis points.
- FTSE-100 futures +.21%.
- S&P 500 futures -.24%.
- NASDAQ 100 futures -.11%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (CBOE)/.38
- (PFE)/.52
- (MDC)/.21
- (ADP)/.62
- (ATK)/1.48
- (XOM)/1.96
- (SUP)/.19
- (EL)/.77
- (LLL)/1.85
- (ABC)/.68
- (AVP)/.23
- (CI)/1.36
- (K)/.81
- (APA)/2.27
- (OPEN)/.37
- (LVS)/.60
- (RKT)/1.38
- (SBUX)/.45
- (DWA)/.11
- (FSLR)/1.07
- (HIG)/.83
- (FLR)/1.96
- (AIG)/.87
- (PBI)/48
- (JOE)/-.01
- (WMS)/.19
- (VNO)/1.16
- (PCLN)/11.79
- (NEM)/.89
- (ONXX)/-1.21
- (EXC)/.72
- (MHK)/1.02
- (NILE)/.13
- (HCA)/.78
- (LNKD)/.11
- (EIX)/1.00
- (DTG)/1.66
- (EQIX)/.58
Economic Releases
8:15 am EST
- ADP Employment Change for October is estimated at 135K versus 88.2K in September.
8:30 am EST
- Preliminary 3Q Non-farm Productivity is estimated to rise +1.8% versus a +2.2% gain in 2Q.
- Preliminary 3Q Unit Labor Costs are estimated to rise +.8% versus a +1.5% gain in 2Q.
- Initial Jobless Claims are estimated to rise to 370K versus 369K the prior week.
- Continuing Claims are estimated to fall to 3250K versus 3254K prior.
10:00 am EST
- Consumer Confidence for October is estimated to rise to 73.0 versus 70.3 in September.
- ISM Manufacturing for October is estimated to fall to 51.0 versus 51.5 in September.
- ISM Prices Paid for October is estimated to fall to 56.5 versus 58.0 in September.
- Construction Spending for September is estimated to rise +.7% versus a -.6% decline in August.
Afternoon:
- Total Vehicle Sales for October are estimated to rise to 14.9M versus 14.88M in September.
Upcoming Splits
Other Potential Market Movers
- The Fed's Lockhart speaking, Fed's Rosengren speaking, Challenger Job Cuts report for October, RBC Consumer Outlook Index for November, Final Oct. Markit US PMI, weekly Bloomberg Consumer Comfort Index, Australia PMI, UK PMI, Brazil industrial production, China Central Committee Meeting and the EIA natural gas inventory report 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 modestly lower. The Portfolio is 25% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Mixed
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 18.79 +5.50%
- ISE Sentiment Index 106.0 unch.
- Total Put/Call .83 -16.16%
- NYSE Arms .87 -45.23%
Credit Investor Angst:
- North American Investment Grade CDS Index 99.28 bps -1.25%
- European Financial Sector CDS Index 175.0 bps +.39%
- Western Europe Sovereign Debt CDS Index 106.85 bps -.22%
- Emerging Market CDS Index 234.59 bps -.29%
- 2-Year Swap Spread 9.75 -.25 basis point
- TED Spread 20.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -24.0 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .11% unch.
- Yield Curve 140.0 -2 basis points
- China Import Iron Ore Spot $119.30/Metric Tonne -.42%
- Citi US Economic Surprise Index 48.10 -2.1 points
- 10-Year TIPS Spread 2.50 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +13 open in Japan
- DAX Futures: Indicating +3 open in Germany
Portfolio:
- Slightly Higher: On gains in my Medical/Retail sector longs and index hedges
- Disclosed Trades: None
- Market Exposure: 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Biotech -2.40% 2) HMOs -2.01% 3) Oil Service -1.92%
Stocks Faling on Unusual Volume:
- BIRT, LPS, IPGP, ONB, FMBI, IPHI, IQNT, TLM, END, CBEY, PBR, LGCY, LLY, PBH, MNST, COT, WU, IRG, DCM, HURN, H, IPXL, QEP, RVBD, ONB, CAM, WPC, MSTR, VRSN, LPNT, MVO, ANIK, ALLT, CLNE, COR, NS, UHS, EQT, CBG, FB, RDC, IMGN, CPNO, AGCO, TWGP, CRL, RBC, CQP, GLT, H, AREX, TUMI, LUFK, VVUS and WCG
Stocks With Unusual Put Option Activity:
- 1) LOW 2) CTSH 3) ALL 4) HIG 5) DIS
Stocks With Most Negative News Mentions:
- 1) WU 2) HURN 3) CRNT 4) WFC 5) FB
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.87% 2) Education +1.13% 3) Oil Tankers +.89%
Stocks Rising on Unusual Volume:
- GNW, SHF, OPNT, GNRC, WRC, PVH, VRSK, CLH, CVLT, LECO, PWR, CAVM, UBS, F, HMSY, EXP, OC, URI, LEG and CTCT
Stocks With Unusual Call Option Activity:
- 1) HLF 2) ALL 3) GFI 4) RSX 5) VIXY
Stocks With Most Positive News Mentions:
- 1) WRC 2) RRGB 3) UNH 4) HON 5) ISRG
Charts:
Evening Headlines
Bloomberg:
- EU Convenes on Greece as Samaras Coalition Squabbles. Euro-area
finance chiefs will try to shunt Greece’s bailout plan back on track
today as officials split on whether the country needs another debt
writedown and Greek politicians squabble over further austerity
measures. With recession biting, policy makers are again seeking ways to
keep Greece in the euro and avert an exit that former
Deutsche Bank Chief Executive Officer Josef Ackermann said would
cost “several hundred billion” euros. Finance ministers will
hold a conference call at 12:30 p.m. Brussels time and may
release a statement afterwards. European officials are grappling over ways to fill Greece’s
financing gap two weeks before a decision is due on whether to
give the country a further round of emergency funds. While
German Chancellor Angela Merkel has signaled her desire to stand
behind Greece’s euro membership, Prime Minister Antonis Samaras’s coalition is still at odds over the steps needed to
secure more money.
- Monti
Government Runs Into Rising Political Risks: Euro Credit. Prime
Minister Mario Monti is trying to counter rising risks for Italy's
public finances after an anti-austerity movement emerged as the largest
political force in Sicily and his predecessor, Silvio Berlusconi,
threatened to withdraw support for the government.
- Hollande Faces Competitiveness Calls Amid Job Cuts. Renault
SA (RNO) says if President Francois Hollande wants more cars built in
France, he needs to tackle the country’s high labor costs and rigid work
rules.
- Hungary Retail Debt-Sale Plan Threatens to Drain Bank Deposits. Hungary’s
plan to add euro bonds to household debt offerings while aid talks
stall risks starving local banks of deposits and may prolong the second
recession in
four years, policy makers and investors in Budapest said.
- China Stocks Fall to One-Month Low as PetroChina Drops on Profit.
Chinese stocks declined, dragging the benchmark index to a one-month
low, as lower-than-estimated profit at PetroChina Co. overshadowed
higher earnings at Industrial Bank Co. PetroChina, the country’s biggest
oil company, sank 0.7 percent. Beiqi Foton Motor Co. (600166), China’s
largest commercial- vehicle maker, slumped the most since July 2011
after reporting a loss.
- Gasoline Supply Seen at 1990 Low on Sandy. Gasoline stockpiles on the U.S. East
Coast may sink to the lowest level since at least 1990 as
Hurricane Sandy moves ashore, curtailing fuel production and
distribution, based on Energy Department data. Refineries accounting for 94 percent of regional processing
capacity shut or reduced rates before Sandy, the largest
tropical storm on record in the Atlantic, approached the East
Coast yesterday. Colonial Pipeline Co., which operates the
largest link between Gulf Coast refiners and East Coast
distributors, planned to shut its main line delivering fuel to
Philadelphia and New York Harbor late yesterday as customers
shuttered operations. Prices had jumped 5.9 percent in three days, breaking the
longest losing streak since 1986, as the storm headed directly
for the heart of East Coast fuel refining and distribution.
Gasoline inventories in the central Atlantic area are already 16
percent below a year earlier. Sandy threatens to flood and
disrupt power at refineries and terminals that account for one-
third of U.S. finished gasoline production, according to BNP
Paribas SA.
- New York Subway System Faces Weeks to Recover From Storm. New York’s subway system may take
weeks of work and tens of billions of dollars to be restored to
full service as officials assess the toll from floods,
hurricane-force winds and electrical damage that crippled the
most populous U.S. city’s transportation hub. “I can say unequivocally that the MTA last night faced a
disaster as devastating as it has ever faced in its history,”
Metropolitan Transit Authority Chairman Joe Lhota said at a news
conference today.
- Hotel Recovery Hurt as Sandy Causes Cancellations, Damage. Revenue growth at U.S. hotels,
already hurt by slowing traveler demand, will be hampered
further by Sandy, the superstorm that blacked out much of
southern Manhattan and flooded areas along the East Coast. Starwood Hotels & Resorts Worldwide Inc. and real estate
investment trusts including Host Hotels & Resorts Inc., owner of
the Westin New York Grand Central, and Hilton Times Square
landlord Sunstone Hotel Investors Inc. are among the companies
that probably will be most affected by Sandy because of their
properties in the U.S. Northeast, said Nikhil Bhalla, a senior
lodging analyst at FBR & Co. in Arlington, Virginia. Room-revenue growth was “generally soft through the first
three weeks of the month,” before Sandy hit, Bhalla said in an
e-mail. “So I expect results for the last week of October to be
notably soft.”
Wall Street Journal:
- Live Updates: Hurricane Sandy.
- Questions Cloud Market Reopening. Critics
Fault Wall Street for a Lack of Disaster Preparedness; Friction Over
NYSE's Backup Plan. U.S. stock markets were preparing to open in the
wake of Sandy on
Wednesday, ending a shutdown that left investors unable to trade for two
days and sparked recriminations over whether Wall Street should have
been better prepared to handle the impact of such a storm. The New
York Stock Exchange said Tuesday that it plans to open as
usual at 9:30 a.m. and that its trading floor and headquarters in lower
Manhattan were "fully operational" despite widespread blackouts and
flooding in that part of the city. The Nasdaq Stock Market and other
exchanges will open as well. Bond markets will follow suit.
- Apple(AAPL) Shake-Up Signals Tim Cook Era.
- M.B.A.s Rethink Wall Street. Repeated cutbacks have dulled Wall Street's luster for some prospective
Masters of the Universe, in the latest reflection of the gloom
overhanging the finance industry.
- Sudan, After Blast, Greets Iran Ships.
Iranian naval commanders met Tuesday with their counterparts in Sudan to
discuss joint training exercises, in the wake of explosions at a
weapons factory that Sudan blamed on Israeli jets.
- In Vancouver, Home Sales Hit the Brakes.
After a blistering, multiyear run that saw ramshackle bungalows fetch
seven-figure sums, one of the hottest real-estate markets in North
America seems to be cooling, damped in part by government changes meant
to deflate what many policy makers saw as the start of a bubble.
- Caesars Packs Up in Macau, Leaving Spoils to Its Rivals. "When you have that much capital devoted to an asset that's not
delivering its potential, you need to consider other options," says
Steven Tight, the company's president of international development.
- Some Investors Likely to Face New Tax Bite. Those Dabbling in Real Estate Could See Surtax on Rental Income Starting Jan. 1; Just Who Qualifies Is in Question.
- David Gamage: ObamaCare's Costs to the Working Class. Perverse incentives will make part-time work more attractive than a better-paying full-time job.
- Big Storm Opportunism. Did you know Hurricane Sandy favors higher marginal tax rates?
CNBC:
Zero Hedge:
Business Insider:
Gallop:
Rasmussen Reports:
Financial Times:
- Chinese Cos. Report Increase in Unpaid Bills in 3Q.
66% of Chinese cos. said in 3Q financial results that unpaid bills had
increased in the 3-mo. period from a yr earlier, citing its own analysis
of S&P Capital IQ data. Sany Heavy reported accounts receivables
were 83% higher as of the end of 3Q.
Telegraph:
FAZ:
- The German government will swiftly implement a European Court of Justice ruling on the taxation of dividends
of foreign corporations that will cause tax revenue losses. Federal and
state governments face tax revenue losses of about 1.5 billion euros
each in 2013 and 2014 and 600 million euros each in 2015 and 2016.
Xinhua:
- China will use the latest international benchmark to revise China's gdp calculation, citing Peng Zhilong, an official from the nation's statistics bureau.
Securities Times:
- Regulators may allow brokers to sell credit default swaps and other derivatives, citing people familiar with a meeting between regulators and Goldman Sachs China.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 123.0 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 96.50 -.5 basis point.
- FTSE-100 futures +.01%.
- S&P 500 futures +.13%.
- NASDAQ 100 futures -.23%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (ETN)/1.09
- (H)/.17
- (RDC)/.48
- (MA)/5.92
- (HES)/1.19
- (PWR)/.39
- (IPGP)/.79
- (COCO)/.04
- (CLX)/.96
- (STE)/.51
- (CMI)/1.83
- (AGCO)/1.02
- (MGM)/-.17
- (GM)/.60
- (WCG)/1.47
- (AMT)/.74
- (CAM)/.88
- (CRUS)/.71
- (ALL)/1.13
- (HTZ)/.61
- (IPI)/.35
- (TSO)/.34
- (FSLR)/1.07
- (RGR)/.80
- (V)/1.50
- (WMB)/.27
- (MET)/1.28
- (PZZA)/.54
- (MUR)/1.20
- (BMC)/.87
- (BWA)/1.19
- (SPW)/1.06
Economic Releases
8:30 am EST
- The 3Q Employment Cost Index is estimated to rise +.5% versus a +.5% gain in 2Q.
9:45 am EST
- Chicago Purchasing Manager for October is estimated to rise to 51.0 versus 49.7 in September.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,750,000 barrels versus a +5,896,000 barrel gain the prior week. Distillate
inventories are estimated to fall by -1,400,000 barrels versus a
-646,000 barrel decline the prior week. Gasoline supplies are estimated
to fall by -500,000 barrels versus a +1,439,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.13% versus a -.2% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The Fed's Williams speaking, France/Germany Bond Auctions, Germany retail sales data, Eurozone inflation data, Eurozone unemployment data, Canada GDP, China Manufacturing PMI, NAPM-Milwaukee report for October and the weekly MBA applications report 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 25% net long heading into the day.
