Style Underperformer:
Sector Underperformers:
- 1) Hospitals -1.01% 2) Utilities +.28% 3) REITs +.32%
Stocks Faling on Unusual Volume:
- HCA, THC, CYH, VVUS, CBM, TBBK, CVC, XCO, PWE, CHTR, ESRX, BSFT, NVO, CDE, Z, GNRC, FOSL, IMPV, NYX, TDW, DISCA, NSM, DWRE, NLY, MR, PCYC, MSCI, SNCR, AT and ET
Stocks With Unusual Put Option Activity:
- 1) ESRX 2) HCA 3) HL 4) NYX 5) HUM
Stocks With Most Negative News Mentions:
- 1) CDE 2) SREV 3) TWTC 4) TER 5) ENR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Education +3.24% 2) Steel +2.45% 3) Defense +1.92%
Stocks Rising on Unusual Volume:
- ALJ, UBS, DISH, TSU, VIV, RYAAY, MYGN, FN, ENOC, MM, AFSI, JIVE, HAS, AOL, THO, RYAAY, WTW, VSI, CSC, ANDE, TESO, BZH, RTEC, CVD, MED, SYKE, EOG, KLIC, AFSI, THO, WGO, CLNE, PSX, NSR, R, FIS, NTI, DRIV, TXI, MLM, SLH, BCOR, EOG, VMC, FBC, FUN, KRO and CHMT
Stocks With Unusual Call Option Activity:
- 1) ESRX 2) AOL 3) DECK 4) CDE 5) FOSL
Stocks With Most Positive News Mentions:
- 1) CVD 2) ODP 3) ACI 4) MRO 5) SIAL
Charts:
Evening Headlines
Bloomberg:
- Euro Near 8-Week Low on Greece Aid Concern, Slowing Data.
The euro traded 0.2 percent from an
eight-week low amid concern Greece will struggle to win bailout
funds, risking its future in the European monetary bloc. The shared
currency maintained declines versus most of its 16 major counterparts
ahead of data that may add to signs the region’s debt crisis is hurting
growth. Australia’s dollar climbed to the highest in five weeks
after the Reserve Bank unexpectedly left interest rates unchanged. The
Dollar Index was near the strongest level in two months before today’s
U.S. presidential election. The yen advanced as Japanese shares fell,
boosting demand for haven assets. “The euro is looking softer in a
risk-averse market ahead of the Greek parliamentary vote on its budget
and austerity measures,” said Ken Takahashi, assistant vice president of
global markets in New York at Sumitomo Mitsui Trust Bank Ltd. (TRBK) “Should they be rejected, concerns about a Greek exit could
flare up again and the euro could see another leg down.”
- Enel Credit Rating Cut by Moody’s on Falling Demand, Regulation. Enel
SpA (ENEL), Italy’s biggest utility, had its credit rating cut by
Moody’s Investors Service to Baa2 from Baa1 on concerns falling demand
is hurting profit margins. “Whilst Moody’s expects the company to continue to take
measures to limit the impact on its financial profile, these are
unlikely to be sufficient to counter the increased risks and
pressures,” Moody’s said yesterday in a statement.
- China’s Stocks Drop Most in Week; China Eastern, Moutai Decline. Chinese
stocks fell, dragging down the benchmark index by the most in a week,
before a Chinese leadership congress and U.S. presidential election this
week. China Eastern Airlines Corp. [], the nation’s second-biggest
domestic carrier, slid 2.8 percent after Credit Suisse Group AG
downgraded the stock to underperform. Liquor maker Kweichow Moutai Co.
(600519) paced declines for consumer staples producers on speculation
recent gains were excessive relative to earnings prospects. Aluminum
Corp. of China Ltd. and China Shenhua Energy Co. led losses for metal
and energy producers on concern Europe will struggle to contain its
sovereign debt problems. The Shanghai Composite Index (SHCOMP) slumped 1.5 percent to
2,082.40 at the 11:30 a.m. local-time break, heading for the
biggest decline since Oct. 26.
- Copper
Orders in China See 'No Big Recovery," Macquarie Says. Copper
stockpiles in bonded warehouses in Shanghai at about 750,000 tons vs
300,000 tons end-2011, Bonnie Liu, analyst at Macquarie Group Ltd. said
in an emailed research note. There are more than 1 millions tons of
aluminum inventories in "visible" warehouses in China. Aluminum output
will be around 22 million tons this year, may rise 10% next year,
leading to further build-up of inventories, with demand growth in 2013
estimated at 7-8%.
- Netanyahu Says Iranian Nuclear Program to Cease If Re-Elected. Israeli Prime Minister Benjamin Netanyahu, who faces national elections in January, said the Iranian nuclear
program would cease to exist by the end of his next term, should he be
re-elected. “The responsibility, in the end, is that
of the prime minister,” Netanyahu said when asked if Israel could
decide to strike Iran even if the military chief of staff opposed such
a move.
- Apple(AAPL) Said to Be Exploring Switch From Intel for Mac. Apple
Inc. (AAPL) is exploring ways to replace Intel Corp. (INTC) processors
in its Mac personal computers with a version of the chip
technology it uses in the iPhone and iPad, according to people familiar
with the company’s research. Apple engineers have grown
confident that the chip designs used for its mobile devices will one day
be powerful enough to run its desktops and laptops, said three people
with knowledge of the work, who asked to remain anonymous because the
plans are confidential. Apple began using Intel chips for Macs in 2005.
- China Most Threatening Cyberspace Force, U.S, Panel Says. China is “the most threatening actor
in cyberspace” as its intelligence agencies and hackers use
increasingly sophisticated techniques to gain access to U.S.
military computers and defense contractors, according to the
draft of an annual report mandated by Congress. Chinese hackers are moving into “increasingly advanced
types of operations or operations against specialized targets,”
such as sensors and apertures on deployed U.S. military
platforms, according to the report. “China’s persistence, combined with notable advancements
in exploitation activities over the past year, poses growing
challenges to information systems and their users,” the U.S.-
China Economic and Security Review Commission said in the draft
obtained by Bloomberg News. “Chinese penetrations of defense
systems threaten the U.S. military’s readiness and ability to
operate.”
- Suzuki Pulls Out of U.S. Car Market After Almost Three Decades. Suzuki
Motor Corp. (7269) will pull out of the U.S. car market after almost
three decades, following Saab Automobile and Isuzu Motors Ltd. (7202)
among automakers making their exits after failing to earn profits in the
country. Suzuki will stop the sale of new automobiles in the U.S.,
though it will continue offering motorcycles, all-terrain vehicles and
boat motors, the Hamamatsu, Japan-based carmaker said in a statement
today. The company’s U.S. distributor filed for bankruptcy protection in
Santa Ana, California as part of
the reorganization.
Wall Street Journal:
- Election 2012: Streaming Coverage.
- In Battlegrounds, an Eye on Recount Rules. With Photo Finishes Possible in Several States, Observers on Both Sides Scrutinize Provisions for Rechecking Vote Tallies.
- Lagarde Puts Pressure on White House Winner. The head of the International Monetary Fund said Monday the pressure
is on the next resident of the White House, warning of global
reverberations if the so-called fiscal cliff is not addressed quickly
once the election is decided. IMF Managing Director Christine Lagarde, speaking at the end of two
days of meetings of finance officials in Mexico City, told reporters
that the global recovery is fragile and “remains at risk if the needed
policy actions are not implemented.” Foremost on the list of things that
must be addressed: the package of tax increases and across-the-board
spending cuts that could take effect at the beginning of next year in
the U.S. if Congress and the White House fail to take action before year
end.
- Deadly Blasts Escalate Strife in Bahrain. Five bombs exploded in districts of Bahrain's capital popular with
tourists and Westerners, killing two expatriates and escalating tensions
between the government and its opponents in the Persian Gulf monarchy. There was no claim of responsibility for Monday's attacks in Manama.
Bahrain's security forces regularly clash with extremist factions of the
largely Shiite Muslim political opposition, which is frustrated by the
slow pace of political change by the Sunni leadership.
- Europe, Central Bank Spar Over Athens Aid. Discord Over Who Should Shoulder Burden of Giving Greece More Time to Repay Loans Comes Ahead of Crucial Deadline.Europe's governments and the European Central Bank are at odds about
who should shoulder the financial burden of giving Greece more time to
repay its loans and remain part of the euro zone. The search for
a solution for Greece, whether by forgiving some of the money it owes
or giving it yet more bailout loans, has come back to haunt the currency
union ahead of the ECB's monthly policy meeting on Thursday.
- Greeks Plan Strikes On Eve of Votes. Greece's three-party coalition is having to prepare for two major votes
on austerity in Parliament this week, at the same time a series of
strikes is set to paralyze the country in protest of the plans, and as
the coalition deals with internal divides.
- Stephens: Liberal Exceptionalism. How long can the laws of fiscal—and political—gravity be suspended?
Barron's:
Fox News:
- Exclusive: Cable warning of Benghazi consulate vulnerability would have gone to White House, officials say. Current and former intelligence officials tell Fox News that a
classified State Department cable sent Aug. 16 -- and which said the
Benghazi consulate could not defend against a "coordinated attack" --
would certainly have gone to the White House National Security Council
staff. "The National Security Council sees everything," a former senior
intelligence official told Fox News. "The staff are sitting on top of
all the cable traffic which means the national security advisor (Tom
Donilon) and deputy national security advisor (Denis McDonough) have
some explaining to do. If Libya was of interest to this administration,
the national security staff saw it."
CNBC:
Zero Hedge:
Business Insider:
NY Post:
- EXCLUSIVE: Rochdale rogue trader probe. The FBI has started a probe of a rogue Wall Street trader for alleged stock manipulation, The Post has learned. The
trader, identified by people familiar with the probe as David Miller,
of Rochdale Securities, allegedly made an unauthorized purchase of 1.6
million shares of Apple — a $1 billion trade that has rocked the small
brokerage and put it on the brink of extinction.
The Blaze:
Gallop:
USA Today:
- CBS transcript: Obama wouldn't call Benghazi terrorism. On the eve of the presidential election CBS News program 60 Minutes
released a transcript of an interview with President Obama in which he
said it was "too early to tell" whether the attack on the U.S. consulate
in Libya was an act of terrorism. The statement appears to
contradict Obama's claim in a second debate with GOP presidential
candidate Mitt Romney that he identified the Sept. 11 attack that killed
Ambassador Christopher Stevens and three other Americans as a terror
attack the day after it happened.
Reuters:
- Nike(NKE) close to selling Cole Haan to Apax: sources. Nike Inc is in final negotiations to sell its Cole Haan handbag and shoe brand
to private equity firm Apax Partners, in a deal that could fetch around
$500 million, according to three people familiar with the matter.
- Express Scripts(ESRX): 2013 views too aggressive; shares fall. U.S. pharmacy benefits manager Express
Scripts Holding Co said analyst forecasts for its 2013
results were too aggressive, casting doubt on how well it is
integrating its $29 billion purchase of Medco Health Solutions
Inc and sending its shares down 14 percent.
- Zillow(Z) forecasts weak revenue on losing advertiser. Real estate website Zillow Inc forecast fourth-quarter revenue below analysts' estimates after it lost
one of its larger advertisers, Foreclosure.com, sending the company's
shares down 25 percent in after-market trading.
- Fed's Williams: QE3 to likely top $600 billion. The U.S. Federal Reserve's
latest round of asset purchases will probably top $600 billion,
surpassing its second round of bond-buying, as the central bank
continues to buy assets until the labor market improves, a top
Fed official said on Monday.
Telegraph:
MailOnline:
China Daily:
- China Labor Force May Decline by 30 Million by End of Decade. A decrease in the labor force will result in a lower savings ratio, diminishing returns and slower economic growth, citing Cai Fang, director of the Institute of Population and Labor Economics under the Chinese Academy of Social Sciences. China's cheap labor is "drying up", he said.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 117.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 89.5 -1.0 basis point.
- FTSE-100 futures +.22%.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.11%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (NYX)/.41
- (EMR)/1.05
- (MRO)/.65
- (DTV)/.92
- (CVS)/.84
- (DISH)/.56
- (FOSL)/1.16
- (MMC)/.38
- (CVC)/.16
- (TDW)/.75
- (DISCA)/.63
- (CSC)/.47
- (NWSA)/.37
- (DOX)/.69
- (RAX)/.19
Economic Releases
10:00 am EST
- JOLTs Job Openings for September are estimated to rise to 3653 versus 3561 in August.
Upcoming Splits
Other Potential Market Movers
- The US election, Eurozone Services PMI, Eurozone PPI, Germany Factory Orders, ISM New York for October, 3Y T-Note auction, weekly retail sales reports and the Piper Jaffray Tech/Media/Telecom Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Modestly Higher
- Sector Performance: Mixed
- Volume: Light
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- VIX 18.26 +3.81%
- ISE Sentiment Index 113.0 -22.6%
- Total Put/Call .81 -.10%
- NYSE Arms .90 -30.66%
Credit Investor Angst:
- North American Investment Grade CDS Index 96.84 bps -.72%
- European Financial Sector CDS Index 174.51 bps +1.26%
- Western Europe Sovereign Debt CDS Index 113.86 bps +3.93%
- Emerging Market CDS Index 235.54 bps -2.26%
- 2-Year Swap Spread 9.5 -.25 basis point
- TED Spread 22.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -25.75 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .09% unch.
- Yield Curve 141.0 -2 basis points
- China Import Iron Ore Spot $120.50/Metric Tonne +.33%
- Citi US Economic Surprise Index 52.80 -3.8 points
- 10-Year TIPS Spread 2.47 -1 basis point
Overseas Futures:
- Nikkei Futures: Indicating +13 open in Japan
- DAX Futures: Indicating +10 open in Germany
Portfolio:
- Higher: On gains in my tech, biotech, medial and retail sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, covered some of my (EEM) short, added to my (AAPL) long
- Market Exposure: Moved to 75% Net Long
Bloomberg:
- German Yield Falls Below Zero on Greece Vote; Spanish Bonds Drop. German government bonds rose, pushing two-year note yields below zero
for the first time in two months, as Greece prepared for a vote as soon
as this week on austerity measures needed to keep the nation in
the euro. Ten-year bund yields fell to the lowest level in more
than five weeks as Greek Prime Minister Antonis Samaras struggled to win
political support for the measures needed to assure the country’s
financial lifeline. Spanish bonds declined for a second day after a
report showed jobless claims rose the most in nine months in October.
The country is scheduled to sell a combined 4.5 billion euros ($5.75
billion) of debt with maturities of up to 20 years this week. “The market is clearly in a more negative sentiment and we can see Spanish yields creeping higher again,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. Greece is “approaching a
more decisive phase again and investors will look for safety until we
get past those hurdles,” he said.
- Italy Said to Rebuff Bad Bank Plan That May Boost Sovereign Tie. Italian Treasury officials rejected
proposals to create a so-called bad bank for the non-performing
loans of the nation’s lenders amid concern the plan would
strengthen the link between sovereign and bank debt, said people
with knowledge of the matter. At least three restructuring advisers held talks with
government officials about a bad bank that Italy could fund
without seeking external aid, said the people, who declined to
be identified because the discussions were private. The bad bank
could hold 30 billion euros ($39 billion) to 100 billion euros
of assets and lenders would receive government bonds in return
for their bad loans, according to one person.
- Italian GDP to Shrink as Unemployment Gains, Istat Says.
The Italian economy won’t start
recovering until the second half of 2013 as foreign demand fails
to offset the effect of a decline in household spending, the national
statistics institute said. Gross domestic product will shrink 2.3
percent in 2012 and 0.5 percent in 2013, Rome-based Istat said today in an e-mailed
report. In May, Istat projected a 1.5 percent contraction this
year and a 0.5 percent expansion next. Household consumption
will fall 3.2 percent in 2012 and 0.7 percent in 2013, Istat
said today. The euro region’s third-biggest economy will experience an
“easing of unfavorable pressures and a modest recovery in the
second half” of next year, according to the report. Still,
household “spending will remain negative due to the persistent difficulties in the labor market.” Italy’s jobless rate will rise to 10.6 percent this year, before climbing to 11.4 percent in 2013, Istat said. Its GDP
projections are subject to downward revisions should “global
trade slow down and tensions on financial markets sharpen,” the
statistics agency said.
- World-Beating Euro Imperiled by Biggest Loan Drop Since ’09. The euro’s three-month rally against all but one of its major peers
is imperiled by a deepening credit crunch for European companies that
adds to the risk of another recession as the region’s counterparts
recover. The currency has weakened 3.1 percent versus the dollar
from a four-month high on Sept. 17 as small and medium-sized companies
that Deutsche Bank AG says generate as much as 70 percent of the economy
are starved of credit. Loans from European banks slumped 0.8 percent in
September from a year earlier. The last time lending contracted that
much, in October 2009, the euro fell 5.8 percent in the following three
months.
- Breaking: Gallup to Show Romney, Obama in Dead Heat. Gallup editor-in-chief Frank Newport tells Bloomberg Businessweek
that the release of Monday’s tracking poll, set for 1 p.m., will show
Mitt Romney leading President Obama 49 percent to 48 percent among
likely voters nationally. This is the first tracking poll released since
Hurricane Sandy and is notable for the strong movement to Obama.
- U.S. Debt Risk Soars as Election Anxiety Fuels Fiscal Cliff Woes. The cost of insuring U.S. Treasuries
jumped by the most in three years before tomorrow’s presidential
election on concern a failure to tackle the so-called fiscal
cliff will tip the world’s largest economy into recession. Credit-default swaps on U.S. government debt rose as much
as seven basis points to 37, and cost 35 basis points at 11:30
a.m. in New York, according to data compiled by Bloomberg.
That’s the biggest increase since at least 2009 when Bloomberg
began tracking the data. As Americans prepare to vote for President Barack Obama or
Republican Mitt Romney, Group of 20 finance ministers pressed
the U.S. to prevent the $600 billion in tax increases and
government spending cuts set to occur unless Congress can reach
a budget compromise by the end of the year.
- Apple Sells 3 Million IPads in Debut Fueling Optimism. Apple Inc. said it sold 3 million units of its iPad mini and fourth-generation
iPad during the debut weekend, a sign that the new devices can help the
company withstand accelerating competition in the tablet market. “Demand
for iPad mini exceeded the initial supply and while many of the
pre-orders have been shipped to customers, some are scheduled to be
shipped later this month,” Cupertino, California-based Apple said today
in a statement.
- Michigan Couple Stole GM(GM) Secrets for Chinese, U.S. Says. A
former General Motors Co. (GM) engineer and her husband stole trade
secrets of the automaker’s related to hybrid-car technology to help
develop such vehicles in China, a U.S. prosecutor said at the beginning
of their trial.
Wall Street Journal:
- Election 2012: Streaming Coverage.
- Wave of Death Hit New York Enclave. As superstorm Sandy barreled toward New York City, Jack Paterno, who got
around in a wheelchair, stayed put in the low-lying neighborhood of
Midland Beach. Nearby family members assumed the storm wasn't going to
be so bad. But when it hit, a wall of water submerged Mr. Paterno's
one-story bungalow in a matter of minutes.
- Bomb Blasts Rock Bahrain's Capital. A series of bomb blasts in Bahrain's capital killed two people Monday,
authorities said, a sign that some factions within the opposition may be
increasingly turning to violence in the nearly 21-month uprising
against the Gulf nation's Western-backed rulers.
- Intense Fighting Erupts in Syrian Capital. Palestinian supporters and opponents of Syria's regime got swept up in
intense fighting in Damascus Monday while rival rebel groups clashed
over control of a border crossing with Turkey, activists said.
CNBC:
- Middle Class Worse Off Than You Think: MIT Professor.
- Natural Gas Could Be Bigger Than the Internet, Welch Says. Too much regulation is standing in the way of the key to America's
energy future and in turn its economic growth, former General Electric
Chairman Jack Welch said on CNBC. Removing barriers to developing
natural gas is every bit as important as resolving the "fiscal cliff" of
spending cuts and tax increases that looms ahead, the head of the Jack
Welch Management Institute at Strayer University said in a "Squawk Box"
interview. "We have a chance in this country to make this the American
century," Welch said. "This gas thing is huge. The gas that we have
found is in the
first inning — it's like the Internet in 1990. This is the first inning
of the great American century."
- Is Asia Planting the Seeds of the Next Financial Crisis? Asia’s economies may still be booming, but a worrying amount of private
sector credit is laying the groundwork of the next financial crisis,
according to a new research by Capital Economics.
RasmussenReports:
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows
Mitt Romney attracting support from 49% of voters nationwide, while
President Obama earns the vote from 48%. Two percent (2%) prefer some
other candidate, and one percent (1%) remains undecided.
Reuters:
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gaming -2.22% 2) Utilities -1.65% 3) Gold & Silver -.60%
Stocks Faling on Unusual Volume:
- TWC, LBTYA, PWE, LRE, EBIX, PCYC, WAC, OCN, ENDP, NKA, ETR, NSM, CHTR, MHP, PLL and EQIX
Stocks With Unusual Put Option Activity:
- 1) SYY 2) MCO 3) CI 4) MPC 5) OCN
Stocks With Most Negative News Mentions:
- 1) CCC 2) AVP 3) GM 4) ETR 5) TWX
Charts:
