Style Underperformer:
Sector Underperformers:
- 1) Hospitals -.77% 2) Education -.75% 3) Biotech -.31%
Stocks Falling on Unusual Volume:
- LVLT, NOG, KOS, EQIX, BBEP, VAL, RNF, QCOM, COF, MTGE, ORIG, CUB, PRI, QLYS, DNB, TMH, NOG, MMC, NTI, TGH, CRK, BWP, PRE, DMND, HUN, MYGN, AFL, TRP, SSW, KO and HUN
Stocks With Unusual Put Option Activity:
- 1) HCA 2) JDSU 3) PAY 4) FOSL 5) JNK
Stocks With Most Negative News Mentions:
- 1) CUB 2) QCOM 3) NBL 4) NFLX 5) BK
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.93% 2) Alt Energy +.64% 3) Gold & Silver +.65%
Stocks Rising on Unusual Volume:
- CNO, GTE, BCS, KORS, AVP, FOSL, MAS, AOL, BKD, SCTY, SPR, GY, AIZ, TEX and FIRE
Stocks With Unusual Call Option Activity:
- 1) ZIOP 2) BKD 3) MAS 4) BWLD 5) AVP
Stocks With Most Positive News Mentions:
- 1) OMC 2) GWW 3) NTAP 4) KORS 5) HPQ
Charts:
Evening Headlines
Bloomberg:
- South Korea Says Likely North Korea Conducted a Nuclear Test. North
Korea likely conducted its third nuclear test today, a South
Korean government official said, escalating tensions with an
international community that has sought to curb the totalitarian state’s
atomic ambitions. “Artificial quake tremors from North Korea
are likely to be a nuclear test but we will need to take a closer look
at the details to be sure,” South Korean Defense Ministry spokesman Kim
Min Seok said by phone. Japanese Prime Minister Shinzo Abe called a
meeting of his security council.
- Euro-Skeptic Grillo Pushes for Italy Debt Renegotiation in Vote.
Beppe Grillo, the Italian comic poised to play a spoiler in this
month’s national elections, is gaining ground in opinion polls as he
campaigns for sovereign
debt relief to revive the country’s stagnant economy. “The debt must be
renegotiated and the interest on the
debt must be renegotiated,” Grillo said yesterday in a
Bloomberg Television interview in Trento. “We won’t have growth
in this country for 10 years if the climate stays as it is.”
Grillo, a self-described populist, has rallied to nearly 20
percent in some polls with a call to reconsider euro membership
and to drive established politicians from parliament.
- Egyptians Rally Against Mursi on Anniversary of Mubarak Ouster. Egyptians
rallied against President Mohamed Mursi to mark the second anniversary
of his predecessor’s ouster, in a show of force that could precipitate
more violence. Security forces beefed up their presence outside the
presidential complex in anticipation of marches descending on the area
on the second anniversary of Hosni Mubarak’s departure, the state-run
Middle East News agency said. Dozens of protesters
temporarily blocked the 6th of October bridge spanning the Nile
in central Cairo, chanting slogans against Mursi and his Muslim
Brotherhood, it said.
Wall Street Journal:
- Rubio Gains GOP Influence. Sen. Marco Rubio plans to follow his prime-time response to the
president's State of the Union address with his own legislative push on
education funding and help for small businesses—all part of a larger
effort to build his image as a conservative leader with a bipartisan
bent.
The Florida senator's star turn as GOP
spokesman Tuesday night, when he will give his party's official response
to the president, comes as Republicans increasingly look to the
41-year-old lawmaker to be a flag-carrier for the party after its
election setbacks last year.
- More Stable Airlines Fly Out of Mergers. Fliers Poised to Benefit From Greater Investments, Stability.
The U.S. airline industry is starting to fly high again. An expected
merger agreement this week between AMR Corp.'s American Airlines and US
Airways Group Inc. could end the latest chapter on consolidation that
has helped to stabilize an industry troubled for decades.
- New Rules for Credit-Default Swaps Targeted for April. The credit-default-swap market is set to get its second major
overhaul or “big bang” this year as the industry looks to fix structural
problems some traders say have been stifling the market. A panel of representatives from banks and investment firms plan to
finish new rules for CDS by April, said a person briefed on their
discussions. The International Swaps and Derivatives Association and its
legal counsel, Allen & Overy, are leading the effort. If supported
by enough market participants, the changes would likely be implemented
in the second quarter, the person said. The proposals include changes to the effective dates of the
protection CDS offer and the assets that can be delivered for settlement
in cash. The new rules have the potential to affect trillions of
dollars of financial contracts tied to the debt of companies and
governments around the world.
- Push to Gauge Value of College Gains Steam. U.S. and state officials are intensifying efforts to hold colleges
accountable for what happens after graduation, a sign of frustration
with sky-high tuition costs and student-loan debt. Sens. Ron
Wyden (D., Ore.) and Marco Rubio (R., Fla.) are expected to reintroduce
this week legislation that would require states to make more accessible
the average salaries of colleges' graduates. The figures could help
prospective students compare salaries by college and major to assess the
best return on their investment.
Dow Jones:
- Moody's Cuts Outlook On Advanced Economies Even as Risks Ease. Moody's Investors Service lowered its outlook Tuesday for the world's advanced economies, even as risks to the global economic recovery continue to diminish. The rating company predicts that real gross domestic product growth for the eight countries in the G-20 of advanced economies, including the U.S., Japan, Germany and the U.K., will be around 1.4% in 2013, 0.2 percentage points lower than Moody's previous forecast in November, reflecting recent weak data. "While business confidence should strengthen as the economic situation improves, fiscal consolidation and high
unemployment will continue to impede recovery," Moody's said in its latest Global Macro Outlook report, published
Tuesday.
MarketWatch.com:
CNBC:
- State of the Union May Well Set Tone for Budget Talks. President
Barack Obama's State of the Union speech Tuesday could
drive market focus straight to the next skirmish in the budget
and deficit battle with Congress, depending on his tone. Traders are
watching to see how the president addresses the "sequester," or the
automatic spending cuts that would kick in after March 1, if there is no
action by Congress to stop them. "I think we're going to see more of a
line drawn in the sand on
sequestration," said David Gilmore of FX Analytics. "It will be
interesting to see where he is on reducing the deficit. I think we've
learned about the fiscal cliff is stuff happens at the last minute. Can
kicks should be expected. There's no reason for suicide watch when it
comes to fiscal policy."
Zero Hedge:
Business Insider:
CNN:
- Drones become big business. Companies
benefiting from this spending include Northrop Grumman (NOC), General
Atomics, Lockheed Martin (LMT), Boeing (BA), Israel Aerospace, and
Textron (TXT).
The Blaze:
Real Clear Politics:
- In Health Care, One Law Is Working Like a Charm. “We have to pass the bill so you can find out what’s in it,” said
Nancy Pelosi during the debate over Obamacare. The Affordable Care Act
passed, and Americans are now finding out. It’s not a pretty picture.
Take employment. “Medical device makers in Massachusetts and
elsewhere are warning of potential job losses,” reports The Boston
Globe, because of a 2.3-percent tax on medical devices imposed by law.
Even liberal-heartthrob-turned-Massachusetts-Senator Elizabeth Warren, a
supporter of the law, says repealing that tax is “essential.”
Reuters:
- BNY Mellon(BK) loses U.S. tax case, to take $850 mln profit hit. BNY Mellon Corp said on
Monday it will take an $850 million charge against first-quarter
profit after losing a high-stakes tax case to the U.S. Internal
Revenue Service, a move that will also erode some of its
capital. The BNY Mellon case was the first to go to trial since the
IRS accused several U.S. banks of generating artificial foreign tax credits through loans with London-based Barclays Plc
.
- PIMCO flagship fund decreases mortgage holdings in Jan. The PIMCO Total Return Fund,
the world's largest bond fund run by Bill Gross, decreased its
mortgage holdings to its lowest level since mid-2011, ahead of
the prospect of higher interest rates and emerging inflationary
pressures.
- Venezuela Devaluation Hits US, European Companies. Venezuela's latest currency devaluation will hurt a range of U.S. and
European companies that sell to consumers in the country, as
state-imposed price controls make it more difficult for those companies
to protect their profits.
Telegraph:
- ECB executive warns on Cyprus aid delays. European Central Bank executive board member Joerg Asmussen is pressing for
agreement over Cypriot aid within weeks, in a move which will agitate a
German government keen to delay any action.
Evening Recommendations
Bernstein:
- Downgraded Facebook(FB) to Market Perform, lowered target to $27 from $33.
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 114.0 unch.
- Asia Pacific Sovereign CDS Index 88.0 unch.
- NASDAQ 100 futures -.11%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
7:30 am EST
- The NFIB Small Business Optimism Index for January is estimated to rise to 89.0 versus 88.0 in December.
10:00 am EST
- JOLTs Job Openings for December are estimated at 3700 versus 3676 in November.
2:00 pm EST
- The Monthly Budget Deficit for January is estimated at -$2.00B versus -$27.41B in December.
Upcoming Splits
Other Potential Market Movers
- The Fed's Plosser speaking, Fed's Lacker speaking, Fed's George speaking, ECB's Draghi speaking, BoE's Carney speaking, 3Y T-Note auction, Germany inflation data, Iran/IAEA Hearings, EU's transaction tax decision, weekly retail sales reports, CSFB Financial Services Forum, Goldman Tech/Internet Conference(AAPL presentation), Stifel Nicolaus Transports Conference and the (BSX) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by consumer and automaker shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 102.0 -23.9%
- Total Put/Call 1.06 +17.78%
Credit Investor Angst:
- North American Investment Grade CDS Index 89.57 +20.20%
- European Financial Sector CDS Index 156.73 +1.03%
- Western Europe Sovereign Debt CDS Index 104.94 -.24%
- Emerging Market CDS Index 225.67 -.58%
- 2-Year Swap Spread 16.0 +.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -18.0 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .06% unch.
- China Import Iron Ore Spot $155.10/Metric Tonne n/a
- Citi US Economic Surprise Index -10.0 +2.5 points
- 10-Year TIPS Spread 2.54 unch.
Overseas Futures:
- Nikkei Futures: Indicating +272 open in Japan
- DAX Futures: Indicating -7 open in Germany
Portfolio:
- Slightly Lower: On losses in my biotech/tech sector longs
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- EU Crisis Damage Seen in Worst Quarter Since Lehman Wake.
Euro-area economic data due this week will probably show the damage
inflicted by the region’s sovereign debt crisis with the worst quarterly
decline in output for almost four years. Gross domestic product shrank
0.4 percent in the fourth quarter, according to the median of 45 estimates gathered by Bloomberg News. That would be the biggest decline since the
first quarter of 2009, when GDP fell 2.8 percent in the wake of the
collapse of Lehman Brothers Holdings Inc. The data is due to be
published on Feb. 14.
- Fed Joining in Alarm Over Distortion It Enabled: Credit Markets.A Federal Reserve governor is
joining those warning that junk-debt investors are poised for
losses, while his institution’s policies spur them to keep buying the debt. “High-yield is as overbought as I have ever seen it,”
Dan Fuss, whose $22.7 billion Loomis Sayles Bond Fund beat 98 percent
of its peers in the past three years, said in an interview in London
last month. “This is absolutely, from a valuation point, ridiculous.” “We
are seeing a fairly significant pattern of reaching- for-yield behavior
emerging in corporate credit,” the Fed’s Stein said in a Feb. 7 speech
in St. Louis. If the observation is accurate, he said, “it does not bode
well for the expected returns to junk bond and leveraged-loan
investors.” “The idea here is to keep rates low enough for a long enough
time that the economy builds up enough steam,” Tawil
said. “I don’t know if our economy is capable of picking up the
steam necessary.”
- Bill to Limit Too-Big-to-Fail Bank Risk Prepared in U.S. House.
U.S. Representative John Campbell plans to offer legislation aimed at
reducing the size of “too- big-to-fail” banks by requiring them to hold
more capital including long-term debt. Campbell’s bill comes as a number
of lawmakers and regulators from both parties -- including Federal
Reserve Governor Daniel Tarullo -- argue that the 2010 Dodd-Frank Act
failed to curb the growth of large banks and express support for
renewed efforts to limit the kind of systemic risk that fueled
the 2008 financial crisis.
Wall Street Journal:
- Economic Anxiety Shadows State of the Union.
Four times, President Barack Obama has stood in the well of the House
of Representatives and delivered a State of the Union address—and four
times economic anxieties have
largely overshadowed his efforts to push a broad agenda.
Fox News:
- Speculation mounts on who will be next pope. The likely successor to Pope Benedict XVI will continue his conservative
vision with a younger, more energetic outlook and perhaps hail from
Africa, Asia or Latin America, religious experts told FoxNews.com.
CNBC:
- Accounting Risk Clouds Big US Business Bets in China. Tales of shady business practices abound in China — fake revenues,
phony invoices, sham factories - but until recently, the problem seemed
confined mostly to Chinese companies. No longer. Concern is growing about risks to U.S.-based multinationals in a
country where American audit regulators are locked out by the Chinese
government and bribery and fraud are routine.Questions about transparency and integrity weigh heavily on China.
Reuters:
Financial Times:
- Caterpillar(CAT) digs into trouble in China. Caterpillar
has come badly unstuck. It has been bleeding market share as homegrown
companies – many deploying suspiciously similar technology – have
grabbed sales. Caterpillar’s chief Chinese rival, Sany Heavy,
surpassed it in market share for excavators for the first time in 2011.
Last year, a drop-off in construction pushed all-important excavator
sales down more than 30 per cent from the previous year, according to
Barclays data. As if that were not bad enough, Caterpillar has been
forced to make a costly and embarrassing goodwill impairment charge of
$580m after uncovering alleged accounting misconduct at a Chinese mining
equipment company it acquired six months before.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.30% 2) Gaming -1.75% 3) HMOs -1.60%
Stocks Falling on Unusual Volume:
- NVO, GMXR, GPOR, PZE, RGEN, TI, CIB, PBR, TSLA, POWI, WNC, CZR, NKA, MOH, RNF, PVG, MYGN, CHUY, RNR, LAZ, GNRC, HRC, CCJ, UAN, SAP, SLH, ROC, OPEN, BVN, VMW, SIAL, TWC, ALR and RDEN
Stocks With Unusual Put Option Activity:
- 1) LNG 2) FE 3) PAY 4) LNKD 5) A
Stocks With Most Negative News Mentions:
- 1) AMGN 2) LUFK 3) CMA 4) BA 5) HPQ
Charts:
