Thursday, November 15, 2012

Today's Headlines

Posted by Gary .....at 3:09 PM
Bloomberg: 
  • Euro Area in Recession for Second Time in Four Years: Economy. The euro-area economy succumbed to a recession for the second time in four years as governments imposed tougher budget cuts and leaders struggled to contain the debt crisis that broke out in October 2009. Gross domestic product in the 17-nation bloc slipped 0.1 percent in the third quarter after a 0.2 percent decline in the previous three months, the European Union’s statistics office in Luxembourg said today. The result matched the median forecast in a Bloomberg News survey of 44 economists, as unexpected strength in Germany and France was outweighed by contractions elsewhere.
    Europe’s economic malaise is deepening as governments across the region impose budget cuts to narrow their fiscal deficits. Spain and Cyprus this year joined the list of countries seeking external aid, following Greece, Portugal and Ireland. Unions across the region have held protests against austerity measures.
  • French Economy Barely Grows as Hollande Faces Jobless Surge. France’s economy barely expanded in the third quarter, underlining the challenge President Francois Hollande faces in addressing the stagnation that is extending into its second year. Gross domestic product rose 0.2 percent in the quarter from the previous three months when it fell a revised 0.1 percent, national statistics office Insee in Paris said today in an e- mailed statement. Economists had forecast no change, according to the median of 25 estimates in a Bloomberg News survey. GDP rose 0.2 percent from a year earlier. “The third quarter is probably the result of a temporary rebound at the European level,” said Michel Martinez, an economist at Societe Generale in Paris. Business sentiment suggests the French “economy is heading to a moderate recession or at best remaining flat.”
  • Schaeuble Sees Decision on Greek Aid as CDU Allies Balk. German Finance Minister Wolfgang Schaeuble said a European decision on how to sustain Greece’s finances is likely next week. Schaeuble said euro-area policy makers are set to agree at a Nov. 20 meeting on the “priority task” of how to close a Greek financing gap that emerged last week. “We’ll resolve that by Tuesday,” Schaeuble said at a conference in Berlin today. Greece needs to finance a two-year extension in debt-reduction targets. Schaeuble’s need for speed contrasts with a demand by senior members of his Christian Democratic Union party to see a full report from Greece’s monitors, known as the troika, before deciding on further payments.
  • Israel Warns of Escalation After Tel Aviv Missile Firing. Israeli Defense Minister Ehud Barak signaled that Israel is ready to escalate its military operations against Gaza after at least one long-range missile was fired at Tel Aviv by Palestinian militants. The missile attack “and the volume of fire in general towards Israel is an escalation and there will be a price to pay,” Barak said on Channel 2 television today. Israel Army Spokesman Brigadier General Yoav Mordechai told the same channel that the military was calling up 30,000 reservists hours after Prime Minister Benjamin Netanyahu said the military was ready for a “substantial expansion” to stop rocket attacks.
  • Israel Bonds, Stocks Plunge as Ground Operation Considered. Israeli bonds sank the most in almost two months and stocks plunged as the army prepared for a possible ground assault in response to Palestinian rocket fire. The cost of insuring Israel’s debt rose to a 10-week high. The benchmark TA-25 Index fell as much as 1.9 percent, the steepest drop in intraday trading since July 23, and traded 0.9 percent lower as of 11:45 a.m. in Tel Aviv.
  • Israel Credit Risk Jumps as Shekel Sinks After Tel Aviv Targeted. The cost of protecting Israeli bonds against default surged to the highest level in two years and the shekel tumbled after police said a rocket from Gaza was fired at the Tel Aviv area. Israel’s five-year credit-default swaps rose 6.8 basis points to 158.5, the highest since Sept. 6, London prices compiled by Bloomberg show.
  • Oil Falls as Economic Data Weaken, Stockpiles Advance. Oil fell for a third time in four days as data showed U.S. economic growth weakened and as oil inventories rose to a three-month high. Prices fell as much as 0.7 percent as more Americans than forecast submitted claims for unemployment insurance last week and manufacturing in the New York and Philadelphia regions showed contraction. Oil stockpiles increased to 375.9 million barrels last week. “Prices are reflecting the bad economic news,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The weak economy is the biggest overall factor in the oil market.” Crude oil for December delivery fell 41 cents, or 0.5 percent, to $85.91 a barrel on the New York Mercantile Exchange at 11:22 a.m.
  • Jobless Claims in U.S. Jumped Last Week After Sandy. More Americans than forecast submitted claims for unemployment insurance and factory production declined in the northeastern U.S. after superstorm Sandy struck the region. Applications for jobless benefits surged by 78,000 to 439,000 in the week ended Nov. 10, the most since April 2011, the Labor Department said today in Washington. Indexes of manufacturing in the New York and Philadelphia areas showed contractions this month.
  • Philadelphia Fed Manufacturing Index Falls to -10.7 From 5.7. The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 10.7 in November from 5.7 a month earlier. A reading of zero is the dividing line between expansion and contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware. Economists forecast the gauge would decline to 2, according to the median projection in a Bloomberg survey. Estimates ranged from minus 10 to 8. Another report showed manufacturing in the New York region contracted for a fourth straight month in November as superstorm Sandy knocked out electrical power and limited activity.
  • Republican Governors Balk on Health Law After Romney Loss. Republican governors are balking at adopting key provisions of President Barack Obama’s health-care overhaul, a week after Mitt Romney’s defeat dashed their hopes of scuttling the two-year-old law. The state leaders, at a meeting of the Republican Governors Association in Las Vegas, said they’re concerned over costs and regulatory burdens the Patient Protection and Affordable Care Act may impose. Republicans unsuccessfully challenged the law in court and many delayed implementing it, hoping Romney -- who called for the law’s repeal -- would win the Nov. 6 presidential election. “It’s a bad piece of legislation,” Louisiana Governor Bobby Jindal said at a news conference in Las Vegas yesterday. “It’s going to have a lot of unintended consequences.” 
  • Wal-Mart(WMT) Forecast Trails Estimates as Sales Gains Slow. Wal-Mart Stores Inc., the world’s largest retailer, forecast fourth-quarter profit that trailed analysts’ estimates in anticipation of a competitive holiday season and after economic conditions slowed U.S. sales gains. The shares fell the most in more than six months. Fourth-quarter profit will be $1.53 to $1.58 a share, the Bentonville, Arkansas-based company said in a statement. The average estimate of analysts surveyed by Bloomberg was $1.59. Chief Executive Officer Mike Duke has been reducing prices to lure U.S. shoppers that are still suffering amid sluggish economic growth and 7.9 percent unemployment.
Wall Street Journal: 
  • Israel, Hamas Broaden Hostilities. Israel hit the Gaza Strip with airstrikes and artillery shells for a second straight day on Thursday and Hamas ramped up rocket fire at Israel, as both sides widened hostilities in the conflict's bloodiest escalation in four years. The attacks followed an Israeli attack on Wednesday that killed Ahmed Jabari, the commander of Hamas's armed wing, the Ezzedine al-Qassam Brigades. The attack on Mr. Jabari, and a barrage on what Israel said were several other Hamas military sites, came after several days of Hamas rocket attacks on Israeli territory.
Business Insider:
Reuters: 
The Economist: 
Telegraph: 
El Confidencial:
  • Spain Mulls IMF Aid Instead of EU Bailout. Spain is mulling requesting a credit line from the IMF alone as an alternative to a European bailout. An IMF credit line is being studied due to German opposition to European bailout for Spain. PM Rajoy has asked government officials to work on an alternative solution to EU bailout for Spain. 
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Bear Radar

Posted by Gary .....at 1:17 PM
Style Underperformer:
  • Small-Cap Growth -1.12%
Sector Underperformers:
  • 1) Oil Tankers -4.02% 2) Gold & Silver -3.31% 3) Coal -1.71%
Stocks Faling on Unusual Volume:
  • WMT, NGLS, MTES, TPLM, CALL, CLMT, BBEP, DDD, SBGI, TCBI, CTCM, OSIS, VGR, DMND, MHI, MAV, PLCE, FFC, GBAB, AWF, RCS, HYV, HQH, TDG, SAND, WHZ, ROC, GGN, RNP, HPI, PHT, KMP, QQQX, EVV, HPS, NTI, LMCA, ETW, STAG, EPD, KYN, NFJ, TDC, PAA, QRE, VTA, OKS, BX, DSW, WLT, CLMT, FGP, WPZ, DFS, VGR, SDR, KBH, SDT, GGN, MAPP, ALNY, GNC, FBC, CPNO, RNF, VECO and ENOC
Stocks With Unusual Put Option Activity:
  • 1) CCL 2) EWJ 3) CTRP 4) PHM 5) AMAT
Stocks With Most Negative News Mentions:
  • 1) MS 2) Z 3) BG 4) JCP 5) UAL
Charts:
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Bull Radar

Posted by Gary .....at 11:30 AM
Style Outperformer:
  • Mid-Cap Value -.25%
Sector Outperformers:
  • 1) Computer Hardware +1.39% 2) Oil Service +1.29% 3) Education +1.21%
Stocks Rising on Unusual Volume:
  • HMC, TM, RBS, VIAB, SZYM, IOC, NTAP, GME, PETM and HP
Stocks With Unusual Call Option Activity:
  • 1) XLU 2) EDU 3) DMND 4) WMT 5) RTN
Stocks With Most Positive News Mentions:
  • 1) RIG 2) ALK 3) NTAP 4) CAM 5) COF
Charts:
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Thursday Watch

Posted by Gary .....at 12:35 AM
Evening Headlines 
Bloomberg: 
  • Moody’s to Assess U.K.’s Aaa Rating in 2013 Amid Slowing Economy. The U.K.’s top Aaa rating will be assessed at the beginning of next year as the nation’s economy slows amid government efforts to reduce deficits and Europe’s debt crisis, according to Moody’s Investors Service. The economic recovery in the U.K. is likely to be slower than forecast as the private and public sectors reduce their debt loads, Moody’s said yesterday in a report. The government’s Autumn Statement, scheduled to be released in December, may reveal “the likely speed of fiscal consolidation, the growth outlook and, most importantly, the assurances offered that the debt trajectory will stabilize and start to decline within the rating horizon,” Moody’s said. Moody’s negative outlook “is driven by in part concern that the government’s efforts to achieve fiscal consolidation and reduce debt are being hampered by weaker than expected economic prospects,” Sarah Carlson, a London-based analyst at Moody’s, said in a telephone interview. The outlook also considers “the risks posed by the ongoing euro-area sovereign debt crisis,” she said. 
  • Container-Rate Plunge Shows Mediterranean Cast Adrift. Europe’s sovereign-debt crisis has led to a collapse in the rates container lines charge on routes from China to the Mediterranean, creating a two-tier price structure as they boost fees for destinations further north. The cost of a container shipment from Shanghai to Spain or Italy has tumbled 46 percent to $955 in five months, according to ICAP Plc, with the spread between south- and north-European rates widening to $436 as of Nov. 2 from $42 a week earlier.
  • French Transaction Tax Misses Mark as Speculators Find Loopholes. As France begins collecting its financial-transactions tax this month, it is becoming evident that President Francois Hollande’s levy is hitting all but the people it was aimed at: speculators. Hollande, who called finance his “main adversary” during his election campaign, pushed through in August a 0.2 percent transaction tax on share purchases, making France the first and only country so far in Europe to have such a levy. Many investors have been escaping the tax using so-called contracts for difference, or CFDs, offered by prime brokers that let them bet on a stock’s gain or loss without owning the shares. “The target was supposed to be finance with a capital F, which is sort of a black box,” said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “Instead, we are punishing small investors who aren’t to blame and already are frightened off by losses in the market.”
  • Xi Jinping Replaces Hu Jintao as China Communist Party Leader. Xi Jinping replaced Hu Jintao as head of the Chinese Communist Party, ushering in the fifth generation of leaders set to run the world’s second-biggest economy over the next decade. He was also named chairman of the party’s Central Military Commission. Xi, 59, succeeds Hu as general secretary of the 82 million- member party that has run China since 1949, the official Xinhua News Agency announced. He’s joined on the elite Politburo Standing Committee by Li Keqiang, 57, whose new party rank indicates he will replace Premier Wen Jiabao at a March meeting. Xi and Li are both young enough to serve two full five-year terms, stretching their tenures to 2022. Xinhua named seven members to the Standing Committee. The new leadership inherits an economy set to expand this year at the slowest pace since 1999, stymied by lagging growth in the U.S. and European Union, its two biggest export markets.
  • China’s Stocks Slump to Seven-Week Low as New Leaders Announced. China’s stocks fell, dragging down the benchmark index to a seven-week low, as the ruling party announced the nation’s new leaders. China Construction Bank Corp. (939) led declines among lenders after a report showed the industry’s bad loans rose for a fourth quarter. Jiangxi Copper Co., the biggest Chinese copper producer, dropped 1.3 percent as Citigroup Inc. cut its rating on the stock. Citic Securities Co. slid to the lowest in more than two months after it received a warning from its regulator. The Shanghai Composite Index (SHCOMP) retreated 0.6 percent to 2,043.50 at the 11:30 a.m. local-time break, heading for the lowest close since Sept. 26.
  • Panasonic Plans 8,000 Job Cuts Amid Second Straight Loss. Panasonic Corp. (6752) plans to cut 8,000 jobs in the second half of this fiscal year as the Japanese TV maker restructures amid falling demand and a rising yen.
  • Ranks of Poor Americans at Record High Even With Aid. The ranks of poor Americans remained at a record high number last year, even after government-aid programs such as food stamps, housing vouchers and heating subsidies were included, the U.S. Census Bureau said today. The bureau said 49.7 million Americans, or 16.1 percent, are in poverty, up from 49.1 million, or 16 percent, in 2010, according to a new measure the government is using to supplement the official figures released in September. The new method, designed to offer a more comprehensive measure of poverty, includes government aid as income, while subtracting child-care costs, work-related expenses and medical out-of-pocket fees. The official measure, which includes only pretax cash income and is used to determine eligibility for aid programs, put the poverty rate at 15.1 percent, the bureau said.
  • I’m Uncle Sam, and I’m a Debt-aholic by Caroline Baum.
  • Texas Instruments(TXN) Eliminating 1,700 Jobs to Cut Expenses. Texas Instruments Inc. (TXN) is cutting 1,700 jobs to reduce expenses by about $450 million a year, part of a shift away from chips that run mobile electronics to focus on components for cars, industrial equipment and other devices. The measures will result in costs of $325 million, incurred mostly in the current quarter, Texas Instruments said today in a statement. 
Wall Street Journal: 
  • In Final Days, Petraeus Hurt by Libya Clash, Then Affair. In David Petraeus's final days at the helm of the Central Intelligence Agency, his relations with chiefs of other U.S. agencies, including his boss, National Intelligence Director James Clapper, took a contentious turn. At issue was whether the CIA should break its silence about its role in Benghazi, Libya, to counter criticism that increasingly was being leveled at the agency and Mr. Petraeus, said senior officials involved in the discussions. Mr. Petraeus wanted his aides to push back hard and release their own timeline of the Sept. 11 attacks on the U.S. diplomatic compound in Benghazi.
  • Impending  China Bad Debt Headache Likely Bigger Than Expected. China’s incoming generation of new leaders aren’t likely to get much of a honeymoon, with a long list of social and economic issues already clogging up the to-do list. One of those is China’s bad loan problem – and it’s probably already worse than the numbers suggest. That was one finding of a recent report by China Orient Asset Management Corp. – one of the four ‘bad banks’ that were set up over a decade ago to help the major banks deal with their mountainous piles of nonperforming loans – after surveying the players involved in working out, disposing of, buying and sitting on the country’s bad loans. According to the report, 65.39% of bankers said that the real level of nonperforming loans, or NPLs, is higher than the level reported on banks’ books. The survey said that no respondents thought NPLs were lower than their stated book value. 
  • FHA Set to Ask for Taxpayer Funds.
  • Barack Obama's Persuasion Army. The president has finally made the permanent campaign a reality. The job of the Obama persuasion army was to make sure that those targets never stopped having their heads filled via emails, phone calls, meetings and such with what Barack Obama was saying as president. USA Today reported, for example, that when Mr. Obama delivered his State of the Union speech last January—a half-year before Mitt Romney was the official GOP nominee—the campaign's persuasion army held 2,700 house parties. These field operations were the reason the nation's 44th president had to do 153 fundraisers this year. This wasn't just a presidency. It was a political corporation producing political product.
CNBC: 
Zero Hedge: 
Business Insider: 
Insider Monkey: 
The Blaze: 
Reuters: 
  • Analysis: U.S. credit rating could again take hit in 2013. In 2011, the United States emerged from a damaging budget battle with a downgrade of its pristine triple-A rating for the first time in history. In 2013, it could be dealt even a bigger blow. The battle over avoiding the so-called fiscal cliff is the first of a likely series of partisan confrontations in Washington in the coming year that, if not resolved, could cause more downgrades of the U.S. credit rating.
  • BP(BP) expected to admit to criminal misconduct in 2010 spill. BP Plc is expected to plead guilty to criminal misconduct in the 2010 Deepwater Horizon disaster through a plea agreement it has reached with the U.S. Department of Justice that may be announced as soon as Thursday, according to two sources familiar with discussions. The sources, who spoke to Reuters on condition of anonymity, said that BP would plead guilty in exchange for a waiver of future prosecution on the charges.
  • Chuck Schwab says "fiscal cliff" resolution not likely by Dec 31. Investors should brace for volatility over the next few months as U.S. politicians are unlikely to agree on a budget deal by year end, though that could lead to some good buying opportunities, Charles "Chuck" Schwab, founder and chairman of his namesake firm, said on Wednesday. There is a high probability the United States will go over the "fiscal cliff" - a $600 billion mix of tax increases and spending cuts set to kick in on Jan. 1 that threatens to derail the economic recovery - though a resolution is likely by the spring, he said at the Schwab IMPACT conference in Chicago. "Certainly our president for the next four years has presented his position pretty clearly, I think, through the election process, and I think we have a very difficult time seeing a reasonable resolution by December 31," Schwab said.
  • U.S. regulators cut JPMorgan's(JPM) ability to trade power. U.S. federal energy regulators voted on Wednesday to ban JPMorgan Chase from trading in a segment of the electricity market for six months, marking a hefty penalty for the Wall Street bank. 
  • US regulators report possible link between caffeine shot, deaths. The U.S. Food and Drug Administration confirmed on Wednesday the receipt of reports that another caffeine drink, 5-hour Energy, may have been involved in a number of deaths - in this case 13 over the past four years. 
  • Petraeus to testify before closed House hearing on Benghazi. General David Petraeus, who stepped down from his post as CIA director after the revelation of an extramarital affair, is scheduled to testify on Friday at a closed-door congressional hearing about the attack on the U.S. consulate in Benghazi. The House Permanent Select Committee on Intelligence said in a statement on Wednesday that Petraeus will testify on Friday morning.
  • Japan manuf outlook down 4th mth in row -Reuters Tankan. Sentiment among Japanese manufacturers fell for a fourth straight month, a Reuters poll showed, providing more evidence that the world's third-biggest economy is slipping into recession amid a global slowdown and tensions with China.
  • U.S. growth potential shifts to lower gear-CBO. The U.S. economy is recovering at an agonizingly slow pace largely because its potential growth rate has been stunted by structural shifts to its workforce and a dearth of investment, the non-partisan Congressional Budget Office said on Wednesday. In a new report that offered a gloomy outlook for U.S. growth prospects, the CBO said the cumulative rate of growth in U.S. output since the end of the recession in 2009 was running nearly nine percentage points below the average for previous recoveries.
  • Euro zone seen sinking into recession as Germany struggles. The euro zone likely slipped into its second recession since 2009 in the July-September period, as the three-year debt crisis slowed economic growth in Germany to a crawl. Economists expect EU statistics office Eurostat to say on Thursday that the bloc's output shrank 0.2 percent in the third quarter, as it did in the second quarter. That would put the 9.4 trillion euro ($12 trillion) economy, which generates a fifth of global output, officially in recession, although Italy and Spain have been contracting for months and Greece is suffering an outright depression. "The distress in more vulnerable member states has progressively started to affect the remainder of the (European) Union," senior European Commission official Marco Buti said in a report this month forecasting a 0.4 percent contraction for the euro zone in all of 2012. Hopes for a recovery next year are also fading, with the European Commission saying the economy will flatline in 2013. 
Munhwa Ilbo:
  • North Korea has been placing more soldiers, artillery pieces, bunkers and attack helicopters near the western sea border with South Korea since the regime's leader Kim Jong Un visited the area in August, citing South Korean military officials.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -1.0% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 126.25 -.25 basis point.
  • Asia Pacific Sovereign CDS Index 90.75 -.5 basis point.
  • FTSE-100 futures -1.01%.
  • S&P 500 futures +.20%.
  • NASDAQ 100 futures +.16%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (PERY)/.23
  • (DLTR)/.49
  • (HP)/1.24
  • (SSI)/-.30
  • (PLCE)/1.60
  • (WMT)/1.07
  • (VIAB)/1.17
  • (TGT)/.96
  • (GME)/.32
  • (ROST)/.72
  • (GPS)/.63
  • (INTU)/-.06
  • (DELL)/.40
  • (AMAT)/.03
  • (SHLD)/-2.13
  • (ADSK)/.43
Economic Releases
8:30 am EST
  • The Consumer Price Index for October is estimated to rise +.1% versus a +.6% gain in September.
  • The CPI Ex Food & Energy for October is estimated to rise +.1% versus a +.1% gain in September.
  • Empire Manufacturing for November is estimated to fall to -8.0 versus -6.16 in October.
  • Initial Jobless Claims are estimated to rise to 375K versus 355K the prior week.
  • Continuing Claims are estimated to rise to 3181K versus 3127K prior.
10:00 am EST
  • The Philly Fed for November is estimated to fall to 2.0 versus 5.7 in October.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bernanke speaking, Fed's Plosser speaking, Fed's Dudley speaking, Fed's Fisher speaking, Fed's Evans speaking, Fed's Lacker speaking, Eurozone GDP reports, Eurozone CPI, US bank stress tests, weekly EIA natural gas inventory report, Bloomberg November US Economic Survey, weekly Bloomberg Consumer Comfort Index, 3Q Mortgage Delinquencies, 3Q MBA Mortgage Foreclosures, UBS Building/Building Products Conference, (FFIV) analyst day, (PG) analyst meeting and the (QCOM) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and commodity 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.
0 comments

Wednesday, November 14, 2012

Stocks Sharply Lower into Final Hour on Fiscal Cliff Worries, Mideast Unraveling, Global Growth Fears, Eurozone Debt Angst

Posted by Gary .....at 3:55 PM
Today's Market Take:

Broad Market Tone:
  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining.
  • Volume: Around Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 17.77 +6.73%
  • ISE Sentiment Index 97.0 +.1%
  • Total Put/Call 1.06 +27.71%
  • NYSE Arms 1.16 +11.92%
Credit Investor Angst:
  • North American Investment Grade CDS Index 108.55 bps +1.65%
  • European Financial Sector CDS Index 181.30 bps +.79%
  • Western Europe Sovereign Debt CDS Index 119.87 bps +2.54%
  • Emerging Market CDS Index 242.80 bps +1.82%
  • 2-Year Swap Spread 11.5 -.5 basis point
  • TED Spread 21.5 -.75 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -27.5 +.5 basis point
Economic Gauges:
  • 3-Month T-Bill Yield .10% +1 basis point
  • Yield Curve 133.0 -1 basis point
  • China Import Iron Ore Spot $122.40/Metric Tonne +.08%
  • Citi US Economic Surprise Index 57.0 -3.7 points
  • 10-Year TIPS Spread 2.39 -3 basis points
Overseas Futures:
  • Nikkei Futures: Indicating +19 open in Japan
  • DAX Futures: Indicating -45 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Retail sector longs, index hedges and emerging markets shorts
  • Disclosed Trades: None
  • Market Exposure: 25% Net Long
0 comments

Today's Headlines

Posted by Gary .....at 3:28 PM
Bloomberg: 
  • Europe Protests Austerity With Strikes in Spain, Italy. Spanish workers staged a second general strike this year as unions across Europe prepared the biggest coordinated protests yet against budget cuts that policy makers say are unavoidable and labor leaders called economic suicide. In Spain, unions said most auto and metal workers joined the strike and demand for electricity was 12 percent below usual. One of Portugal’s two biggest labor groups also called a strike. Partial walkouts are planned in Greece and Italy, and French unions are urging workers to join protest marches. Opposition to the cuts in health, education and welfare benefits demanded by AAA-rated euro members such as Germany and Finland is growing along with evidence that those measures are failing to rein in the budget deficits or bring down borrowing costs. Demands for less austerity are gaining traction as the International Monetary Fund recommends nations including Spain slow the pace of budget cuts. “This is a strike against the suicidal economic policies of the government,” Ignacio Fernandez Toxo, head of Spain’s CCOO union, told supporters late yesterday.
  • Italy Yields Decline at Sale as German Notes Fetch Negative Rate. Italy sold 3.5 billion euros ($4.46 billion) of three-year notes at the lowest rate in more than two years and the Treasury tapped growing demand for the country’s debt to auction longer-dated securities. The nation attracted bids for 1.5 billion euros of bonds due in 2023 and 2029, its first sale of debt due in more the 15 years since May 2011. The German government sold two-year notes at a negative yield for only the second time on record.   
  • Portuguese Economy Contracts for an Eighth Straight Quarter. Portugal’s economy shrank for an eighth quarter and unemployment rose to a euro-era record as the government implemented austerity measures in an attempt to rein in its budget deficit and curb debt. Gross domestic product declined 0.8 percent in the third quarter from the second quarter, when it fell 1.1 percent, the National Statistics Institute said in a preliminary report today. Economists projected a decrease of 0.6 percent, the median of nine estimates in a Bloomberg survey showed. The jobless rate rose to 15.8 percent in the three months through September from 15 percent in the second quarter, the Lisbon- based statistics institute said in a separate statement.
  • European Stocks Decline on Output Drop, Greek Recession. European (SXXP) stocks fell for the fifth day in six as industrial production dropped the most in at least three years, Greece’s recession deepened, and company results from ICAP Plc (IAP) to Mediaset SpA disappointed investors. ICAP retreated 9.7 percent after the world’s largest broker of transactions between banks reported a slump in earnings. Mediaset declined 3.2 percent after the broadcaster cut its full-year profit forecast. Banca Monte dei Paschi di Siena SpA (BMPS) slid 4.6 percent after posting an unexpected loss.
  • Turkey, Israel Warn Syria Against Violations of Territory. Turkey scrambled its warplanes and warned that it will respond to any violation of its airspace as Syrian jets bombed a rebel-held town near the border for a third day. Israel also vowed to defend its borders. Turkish soldiers were monitoring the fighting from newly dug foxholes in the town of Ceylanpinar as gunfire crackled across the border, NTV television showed today. Authorities used loudspeakers to warn residents to stay away as a Syrian jet dropped four bombs on the town of Ras al-Ayn, the state-run Anatolia news agency said. Several bullets hit houses, businesses and government buildings without causing casualties today, Anatolia said.
  • Oil Advances in New York After Airstrikes by Israel. Oil advanced after an Israeli airstrike killed a leader of Hamas’s militant wing in the Gaza Strip, bolstering concern that unrest in the Middle East will intensify curbing supplies. Futures rose as much as 1.4 percent after the attack, which killed Ahmed al-Jabari and another man, according to Ashraf al- Qedra, a spokesman for the Hamas-run Health Ministry. The strike follows the firing of about 115 rockets from Gaza into Israel this week. Oil fell earlier as U.S. retail sales declined for the first time in four months in October. “The Israeli strike on Gaza has raised the security premium,” said John Kilduff, a partner at Again Capital LLC, a New York-based energy hedge fund. “The Israelis made it clear that this may be the first of many strikes. This episode raises tension in an already troubled region.” Crude oil for December delivery advanced 61 cents, or 0.7 percent, to $85.99 a barrel at 11:12 a.m. on the New York Mercantile Exchange.
  • Thousands Seen Dying If Terrorists Attack ‘Vulnerable’ U.S. Grid. A terrorist attack on the U.S. power grid could be more destructive than superstorm Sandy, possibly costing hundreds of billions of dollars and leading to thousands of deaths, the National Academy of Sciences said. While such an event probably wouldn’t kill people immediately, it could cause widespread blackouts for weeks or months, according to a recently declassified report released today by the Academy. If it occurred during extreme weather, heat stress or exposure to cold may lead to “hundreds or even thousands of deaths,” the authors of the study wrote.
  • Wholesale Prices in U.S. Unexpectedly Fall on Fuel, Vehicles. Wholesale prices in the U.S. unexpectedly fell in October for the first time in five months as energy and vehicle costs dropped. The 0.2 percent decline in the producer price index came after a 1.1 percent increase the prior month, Labor Department figures showed today in Washington. The median estimate in a Bloomberg survey of 73 economists called for a 0.2 percent rise. Excluding volatile food and energy, the so-called core measure decreased 0.2 percent, the first drop since November 2010.
  • Fed Says ‘a Number’ on FOMC Saw Need for Additional QE. A number of Federal Reserve officials said the central bank may need to expand its monthly purchases of bonds next year after the expiration of Operation Twist, according to minutes of their last meeting. “A number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity-extension program,” according to the record of the Federal Open Market Committee’s Oct. 23-24 gathering released today in Washington.
Wall Street Journal: 
CNBC: 
  • How 'Fiscal Cliff' Could Affect Mortgage Interest Deduction. It is arguably one of the most popular U.S. tax deductions, and for some it is the necessary stimulus to buy a home. The mortgage interest deduction, however, is now at risk, due to negotiations over the so-called “fiscal cliff”—the year-end deadline for large spending cuts and the expiration of tax cuts. While it is impossible at this point to know what the outcome will be, it is certainly worth running through the possibilities.  
  • Why More Bankers May Be Starting Hedge Funds. The hedge fund industry is expected to see a wave of new launches in the next year by traders who have lost their jobs at investment banks or who have left in search of better pay.
Forbes:
  • Qihoo Reportedly Launches Mobile Search; Baidu(BIDU) Slides. Qihoo 360, the China-based Internet software provider, has shaken up the country’s Internet search market with its recent entry into the business. As a provider of a popular Web browser, Qihoo was well positioned for a rapid takeoff in the search sector, and in fact appears to be causing considerable trouble for sector leader Baidu.
Reuters: 
  • Greece Sinks Deeper into Depression in Third Quarter.  Greece's economic slump deepened in the third quarter, with output shrinking 7.2 percent on an annual basis as the debt-laden country heads into its sixth year of depression and struggles to meet its bailout targets. The contraction was deeper than the second quarter's 6.3 percent drop and follows the passage of a tough 2013 budget by Prime Minister Antonis Samaras's government that is expected to continue to smother growth for most of next year. Since 2009, the Mediterranean state's economic decline - which Samaras has dubbed Greece's "Great Depression" - has wiped a fifth off economic output and sent unemployment to a record high, putting one in four Greeks out of work. The reading could point to an even grimmer outlook, analysts said, because it was offset by better-than-expected returns from the country's vital tourism sector, which accounts for a fifth of Greece's 215 billion euro economy. A new wave of wage and pension cuts and tax hikes agreed with the country's international lenders for 2013, coupled with a liquidity shortage, was expected to add to the economic misery, making recovery even more distant."The recession will continue to deepen until the first half of 2013, due to the implementation of all the cuts," said Xenophon Damalas, head of investment services at Marfin Egnatia bank in Athens.
  • France considers broad tax clampdown on web companies.
Telegraph:
Immerisia:
  • Greece to Tax Capital Gains on Stocks at 20%. The rate will apply to capital gains on stocks, mutual funds and real estate, citing a copy of draft legislation for tax changes. Greece will apply 3 income tax bands of 21%, 36% and 45%. Tax on deposit interest will increase to 15% from 10%. Greece will increase the corporate tax rate to 26% from 20%.
Australian Financial Review:
  • Australia on Same Path as Spain: S&P. Australia must get its budget into surplus by 2014 to help avoid revision of its AAA credit rating, warns the global director of pubic finance at Standard & Poor’s Financial Services. 
Israel Defense Forces:
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