Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +1.03% 2) HMOs +.66% 3) Networking +.40%
Stocks Rising on Unusual Volume:
- AMZN, IRE, WIN, EPOC, UNXL, NSM, VVUS, WAC, IMAX, ALKS, MPEL, DDD, GGC, MCP, TWI, HAR, VHC, SCTY, WLT, SLCA, VPHM and RNF
Stocks With Unusual Call Option Activity:
- 1) ACAS 2) P 3) NSM 4) SWKS 5) LVS
Stocks With Most Positive News Mentions:
- 1) NSR 2) BABY 3) MGP 4) BA 5) XOM
Charts:
Weekend Headlines
Bloomberg:
- Senate Minority Leader McConnell Says Spending Must Be Cut. Senate
Minority Leader Mitch McConnell said now is the time for the U.S.
Congress to cut government spending. Speaking in an interview on ABC’s
“This Week” program, the Kentucky senator said Congress has finished
dealing with taxes. “The tax issue is finished, over, completed,”
McConnell said on ABC. “Now the question is what are we going to do about
the biggest problem confronting our country and our future and
that’s our spending addiction.”
- Lagarde Says Debt Ceiling, Euro Crisis Threaten Global Growth. Failure
to find a solution to the
U.S. debt-ceiling debate and matters in Europe will result in a
“major world economic crisis,” International Monetary Fund
Managing Director Christine Lagarde said. Without a resolution, there
will be a crisis “due to the size of the economies of these two and
their relationship with other countries in terms of trade and
investment,” she told reporters in the Malawian capital, Lilongwe,
today. While the U.S. Congress approved a deal to avoid raising taxes on
most Americans in the so-called fiscal cliff, policy makers need to
agree on raising the $16.4 trillion debt ceiling, which it reached on
Dec. 31, according to the Treasury Department. Extraordinary measures
the agency is taking will be exhausted as early as mid-February, the
Congressional Budget Office said.
- Plosser Says Fed Must Defend 2% Explicit Target for Inflation. Federal
Reserve Bank of Philadelphia President Charles Plosser said the central
bank should take the steps necessary to ensure inflation stays near its
goal of 2 percent. “It is important that the Fed credibly commit to
defending that target either on the upside or the downside,” Plosser
said today to a meeting of economists in San Diego. “Right now, it would
not be good either for our credibility or for the economy
for us to have deflation. For the Fed at this point, we have
established a target and we need to defend that target.”
- China Stock Rally May End Without Reform, Shanghai Alliance Says.
China’s new leaders need to push ahead with reform of state-owned
companies to extend the biggest monthly gain for Chinese stocks in two
years, according to the Shanghai government’s investment arm. The new generation of Communist Party leaders headed by Xi Jinping needs to break the monopoly of government enterprises by
introducing more competition and to ease financing for smaller
companies to keep economic growth at about 7 percent to 8
percent over the next 10 years, Pang Yang, chief executive
officer with the financial-service advisory unit of Shanghai
Alliance Investment Ltd., said in an interview at a Bloomberg
hedge-fund forum in Shanghai on Jan. 5.
- Banks Win Watered Down Liquidity Rule to Prevent Lending Squeeze. Global central bank chiefs agreed to water down and delay a planned
bank liquidity rule to counter warnings that the proposal would strangle
lending and stifle the economic recovery. Lenders
will be allowed to use an expanded range of assets including some
equities and securitized mortgage debt to meet the so-called liquidity
coverage ratio, or LCR, following a deal struck by regulatory chiefs
meeting yesterday in Basel, Switzerland. Banks will also have an extra
four years to fully comply with the measure.
- Hedge Funds Squeezed With Shorts Beating S&P 500 by Most in Year.
Speculators are abandoning money- losing bets that stocks with the
closest links to the U.S. economy will fall as America’s most-hated
shares stage the best rally in a year relative to the broader market. The
20 stocks with the highest short sales in the Standard & Poor’s 500
Index (CYC) rose an average of 5.1 percent in December,
compared with 0.7 percent for the full gauge, according to data
compiled by Bloomberg. The performance gap is the widest since
January 2012.
- Bulls Boost Wagers as Prices Rally for Fourth Week: Commodities. Speculators
increased their bullish commodity wagers for the first time since
November as signs of accelerating growth in China and the U.S. drove
prices higher for a fourth consecutive week. Hedge funds and other
money managers raised their net-long positions across 18 U.S. futures
and options by 2.4 percent to 691,832 contracts in the week ended Dec.
31, the first gain since Nov. 27, U.S. Commodity Futures Trading
Commission data
show. Cotton holdings climbed to the highest since September
2011, and those for sugar reached a nine-week high. Gold wagers
rose for the first time in three weeks.
Wall Street Journal:
- U.S. Tax Bonanza May Be Tapped Out. Windfall (wĭnd'fôl,): an unexpected, unearned, or sudden gain or advantage.
All the talk about the fiscal cliff and the inadequacy of the
last-minute deal to avert it obscures one fact: It probably provided the
government with tens of billions of dollars in unexpected tax receipts. The bad news: This bonanza didn't come free. It may have robbed the
Treasury Department of significant future revenue. Its daily reports may
soon begin to make that clear.
- Fiscal Cliff: Live Stream.
- Bank-Foreclosure Settlement Nears. Federal Reserve's Acquiescence Clears Way for Agreement Valued at $10 Billion.
- Defiant Assad Rules Out Talks With Rebels. Syrian President Bashar al-Assad issued a defiant call to war to
defend the country against what he called a foreign-inspired rebellion,
ruling out talks with rebels and rejecting international peace efforts
for a political plan of his own that keeps him in power.
The proposal, made Sunday in Mr.
Assad's first national address in six months, dims any chance of a quick
resolution to the longest, deadliest and most complicated of the Middle
East's Arab Spring revolts.
After the speech to a cheering audience
of supporters in Damascus, international critics repeated calls for Mr.
Assad, whose family's four-decade rule of Syria sparked an uprising in
2011, to step down. A U.S. State Department spokeswoman called his
proposal for political reforms "another attempt by the regime to cling
to power."
- For Newly Minted M.B.A.s, a Smaller Paycheck Awaits. Like many students, Steve Vonderweidt hoped that a master's degree in
business administration would open doors to a new job with a higher
paycheck.
But now, about eight months after
receiving his M.B.A. from the University of Louisville, Mr. Vonderweidt,
36 years old, hasn't been able to find a job in the private sector, and
continues to work as an administrator at a social-service agency that
helps Louisville residents obtain food stamps, health care and other
assistance. He is saddled with about $75,000 in student-loan debt—much
of it from graduate school.
- White House to Go on Offense for Hagel Pick. Aides Say Obama to Stand Firm on Defense Secretary Choice Despite GOP Criticism of Ex-Senator's Stance on Israel, Iraq.
- Law-Firm Partners Face Layoffs.
- Inconvenient Truths About Al Jazeera. Al
Gore's due diligence must have missed the on-air party, with cake, for a
deadly terrorist. Al Gore and his co-investors just sold liberal cable
channel Current TV to Al Jazeera, the network bankrolled by the emir of
Qatar. How much in carbon offsets does Mr. Gore need to balance his
estimated $100 million from the sale to an oil sheik? But there's a more serious issue here than hypocrisy. Current's
owners could have simply said they sold to the highest bidder, with the
emir paying an estimated $500 million for a network with viewership of
only 22,000. Instead they glorified Al Jazeera.
- The Education of John Boehner. Leverage
for the next clash: GOP willingness to let the spending sequester take
effect. What stunned House Speaker John Boehner more than anything else
during his prolonged closed-door budget negotiations with Barack Obama
was this revelation: "At one point several weeks ago," Mr. Boehner
says, "the president said to me, 'We don't have a spending problem.' "
Fox News:
- Pelosi says upcoming fiscal deals should include greater tax increase. House Minority Leader Nancy Pelosi said Sunday that recent tax
increases are “not enough” to solve the country’s fiscal problems and
argued that additional hikes should be included in upcoming
deficit-reduction deals. "The president had originally said he wanted $1.6 trillion in
revenue," the House’s top Democrat told CBS’ "Face the Nation." "He took
it down to $1.2 (trillion) … but that is not enough on the revenue
side."
- Budget watchdogs extend campaign, say recent fiscal deal doesn't cut it.
Budget watchdogs are warning that the hard-fought, highly touted fiscal
deal doesn’t cut it – literally. Sure, President Obama signed a
last-minute deal crafted by the Senate and finally passed by the
Republican-controlled House that avoided tax increases for most
middle-class earners. But the agreement failed to cut the country’s
estimated $16.4 trillion debt or resolve other major fiscal concerns,
the watchdog groups argue. “We don’t think it’s time for a standing
ovation and slaps on the back,” says the bipartisan group Fix the Debt.
Washington lawmakers “haven’t actually solved anything yet. In fact,
they punted on the most difficult issues.”
CNBC:
Zero Hedge:
Business Insider:
Washington Examiner:
- Feud over Obama health care reforms to intensify in coming months. The spotlight on President Obama's health care
overhaul will intensify in coming months as states and businesses gear
up for sweeping changes that could determine whether the public embraces
the president's signature legislative achievement or decries it as
government overreach.
Reuters:
Passauer Neue Presse:
- Wolfgang Ischinger, organizer of the Munich Security Conference,
says annual investment in defense has been cut by 6% in Europe due to
the financial crisis, threatening the continent's safety.
YLE:
- Half
of Finns are ready to stop financial aid to crisis-stricken euro
countries even at the risk of a break-up of the single currency, citing a
poll. 50% say no to bailouts even at the risk of a euro break-up, 33% say bailouts should continue. 67% of Finns think the worst of the crisis isn't over, 18% say the worst is past.
Il Messaggero:
- Berlusconi party PDL is close to agreement with Northern League
to run jointly at next elections, citing interview with PDL head
Angelino Alfano.
corriere.it:
- Former Italian Prime Minister Silvio Berlusconi ruled out any
future collaboration with Prime Minister Mario Monti, saying his image
has collapsed.
Weekend Recommendations
Barron's:
- Bullish commentary on (D), (SO), (DUK), (EMC), (BP), (FCX), (MCP), (WFT), (POT) and (DAL).
- Bearish commentary on (ASYS), (STP), (TSL), (MBTN), (YGE), (PPO) and (FSLR).
Night Trading
- Asian indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 100.5 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 79.25 +.5 basis point.
- NASDAQ 100 futures -.18%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The Eurozone PPI, JPMorgan Healthcare Conference, CES and the Citi Internet/Media/Telecom Conference 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 lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.
U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.
BOTTOM LINE: I expect US stocks to finish the week mixed as US fiscal cliff concerns and Eurozone debt angst offset diminishing global growth fears and short-covering. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.
S&P 500 1,466.47 +3.41%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 879.15 +4.99%
- Value Line Geometric(broad market) 380.72 +4.65%
- Russell 1000 Growth 675.36 +3.34%
- Russell 1000 Value 739.44 +3.72%
- Morgan Stanley Consumer 861.36 +3.1%
- Morgan Stanley Cyclical 1,090.70 +5.29%
- Morgan Stanley Technology 704.64 +3.38%
- Transports 5,534.06 +5.10%
- Bloomberg European Bank/Financial Services 93.52 +3.59%
- MSCI Emerging Markets 44.57 +2.83%
- Lyxor L/S Equity Long Bias 1,077.38 -.07%
- Lyxor L/S Equity Variable Bias 807.58 +.79%
Sentiment/Internals
- NYSE Cumulative A/D Line 164,732 +4.25%
- Bloomberg New Highs-Lows Index 660 +751
- Bloomberg Crude Oil % Bulls 58.3 +16.7%
- CFTC Oil Net Speculative Position 198,078 +1.7%
- CFTC Oil Total Open Interest 1,473,345 -.22%
- Total Put/Call .84 -20.75%
- OEX Put/Call 1.14 +100.0%
- ISE Sentiment 119.0 +40.0%
- Volatility(VIX) 13.83 -28.97%
- S&P 500 Implied Correlation 61.39 -9.92%
- G7 Currency Volatility (VXY) 7.86 -3.44%
- Smart Money Flow Index 10,951.38 +.35%
- Money Mkt Mutual Fund Assets $2.665 Trillion unch.
Futures Spot Prices
- Reformulated Gasoline 276.43 -1.03%
- Heating Oil 301.77 -1.95%
- Bloomberg Base Metals Index 215.02 +1.56%
- US No. 1 Heavy Melt Scrap Steel 349.67 USD/Ton unch.
- China Iron Ore Spot 153.30 USD/Ton +9.97%
- UBS-Bloomberg Agriculture 1,534.96 -2.55%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 4.9% -50 basis points
- Philly Fed ADS Real-Time Business Conditions Index .2398 -6.87%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 112.66 +.50%
- Citi US Economic Surprise Index 34.10 -13.6 points
- Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 1/30
- US Dollar Index 80.50 +1.04%
- Yield Curve 163.0 +18 basis points
- 10-Year US Treasury Yield 1.90% +20 basis points
- Federal Reserve's Balance Sheet $2.899 Trillion +.33%
- U.S. Sovereign Debt Credit Default Swap 39.49 +9.69%
- Illinois Municipal Debt Credit Default Swap 174.0 -2.14%
- Western Europe Sovereign Debt Credit Default Swap Index 101.51 -8.07%
- Emerging Markets Sovereign Debt CDS Index 149.66 -7.36%
- Israel Sovereign Debt Credit Default Swap 127.75 -6.05%
- Iraq Sovereign Debt Credit Default Swap 446.87 -4.02%
- China Blended Corporate Spread Index 376.0 +7 basis points
- 10-Year TIPS Spread 2.48% +4 basis points
- TED Spread 24.0 -6.25 basis points
- 2-Year Swap Spread 13.75 -.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -19.25 -2.0 basis points
- N. America Investment Grade Credit Default Swap Index 86.75 -9.18%
- European Financial Sector Credit Default Swap Index 125.70 -10.82%
- Emerging Markets Credit Default Swap Index 193.73 -7.96%
- CMBS Super Senior AAA 10-Year Treasury Spread 90.0 unch.
- M1 Money Supply $2.463 Trillion +1.27%
- Commercial Paper Outstanding 1,081.80 +1.50%
- 4-Week Moving Average of Jobless Claims 360,000 +3,200
- Continuing Claims Unemployment Rate 2.5% unch.
- Average 30-Year Mortgage Rate 3.34% -1 basis point
- Weekly Mortgage Applications 650.30 -10.37%
- Bloomberg Consumer Comfort -31.8 +.3 point
- Weekly Retail Sales +2.50% +10 basis points
- Nationwide Gas $3.30/gallon +.02/gallon
- U.S. Heating Demand Next 7 Days n/a
- Baltic Dry Index 706.0 +1.0%
- China (Export) Containerized Freight Index 1,113.58 n/a
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 25.0-9.09%
- Rail Freight Carloads 155,800 -35.12%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (5)
- ZIP, DUF, LNDC, ALJ and FII
Weekly High-Volume Stock Losers (0)
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 112.0 -19.4%
- Total Put/Call .86 +4.88%
Credit Investor Angst:
- North American Investment Grade CDS Index 85.79 +.16%
- European Financial Sector CDS Index 125.71 +1.67%
- Western Europe Sovereign Debt CDS Index 101.51 -.59%
- Emerging Market CDS Index 193.86 +.89%
- 2-Year Swap Spread 13.5 +.75 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -19.0 +.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .07% unch.
- China Import Iron Ore Spot $153.30/Metric Tonne +2.34%
- Citi US Economic Surprise Index 34.10 -.6 point
- 10-Year TIPS Spread 2.48 +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +102 open in Japan
- DAX Futures: Indicating +10 open in Germany
Portfolio:
- Higher: On gains in my retail/medical/tech/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 75% Net Long
