Style Outperformer:
Sector Outperformers:
- 1) Road & Rail +2.69% 2) Oil Tankers +2.01% 3) Homebuilders +1.67%
Stocks Rising on Unusual Volume:
- GPOR, OPTR, GWRE, VHC, UNXL, MAKO, QCOR, DLTR, PDCE, COH, JBHT, VRSK, EAT, LNKD, SLCA, GPOR, KSU, TPX, VRTX, STWD and CRZO
Stocks With Unusual Call Option Activity:
- 1) ENDP 2) DLTR 3) DF 4) UNXL 5) NI
Stocks With Most Positive News Mentions:
- 1) ETN 2) DE 3) IP 4) EXPD 5) TJX
Charts:
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 84.25 +1.0 basis point.
- NASDAQ 100 futures -.01%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (CRI)/.85
- (NRG)/-.12
- (AES)/.30
- (LAMR)/.10
- (JOY)/1.14
- (ITT)/.38
- (TGT)/1.48
- (TJX)/.81
- (JCP)/-.24
- (LTD)/1.74
- (RGR)/.82
- (MYL)/.64
- (MNST)/.41
- (CECO)/-.33
- (CPRT)/.36
- (DLTR)/.99
Economic Releases
8:30 am EST
- Durable Goods Orders for January are estimated to fall -4.7% versus a +4.6% gain in December.
- Durables Ex Transports for January are estimated to rise +.2% versus a +1.3% gain in December.
- Cap Goods Orders Nondef Ex Air for January are estimated to fall -1.3% versus a +.3% gain in December.
10:00 am EST
- Pending Home Sales for January are estimated to rise +1.8% versus a -4.3% decline in December.
10:30 am EST
-
Bloomberg consensus estimates call for a weekly crude oil inventory
build of +2,500,000 barrels versus a +4,143,000 barrel gain the prior
week. Gasoline supplies are estimated to fall by -1,000,000 barrels
versus a -2,884,000 barrel decline the prior week. Distillate
inventories are estimated to fall by -1,550,000 barrels versus a
-2,277,000 barrel decline the prior week. Finally, Refinery Utilization
is estimated to rise +.2% versus a -.9% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bernanke addressing House, UK GDP, weekly MBA mortgage applications report, German consumer confidence, (CSTR) analyst day, (AAPL) annual meeting, BofA Merrill Ag Conference, Keefe Bruyette Woods Bank Conference and the KeyBanc Consumer Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by mining and consumer shares in the region. I expect US stocks to open modestly higher 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: Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- ISE Sentiment Index 105.0 +23.53%
- Total Put/Call 1.09 -4.39%
Credit Investor Angst:
- North American Investment Grade CDS Index 89.28 -1.01%
- European Financial Sector CDS Index 167.54 +11.5%
- Western Europe Sovereign Debt CDS Index 107.33 +8.85%
- Emerging Market CDS Index 237.60 +.79%
- 2-Year Swap Spread 15.0 +.75 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -21.5 -1.75 bps
Economic Gauges:
- 3-Month T-Bill Yield .11% -1 bp
- China Import Iron Ore Spot $151.90/Metric Tonne unch.
- Citi US Economic Surprise Index 7.70 +12.7 points
- 10-Year TIPS Spread 2.51 -1 bp
Overseas Futures:
- Nikkei Futures: Indicating +5 open in Japan
- DAX Futures: Indicating +36 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Merkel’s Euro Doctrine Threatened as Italians Snub Austerity. Silvio Berlusconi may have the last
laugh -- at Europe’s expense. Once the subject of German Chancellor Angela Merkel’s
barely suppressed titters, the former Italian leader roared back
from the political wasteland in yesterday’s election, blocking
the formation of a new Italian government and fracturing the
euro zone’s brittle newfound stability. The billionaire’s resurrection coupled with the emergence
of comedian-turned-politician Beppe Grillo risked igniting anti-
austerity forces in southern Europe’s depressed economies,
overturning the German-led crisis-management formula and
renewing doubts about popular backing for the euro. “This is a catastrophe for Europe,” Luxembourg Foreign
Minister Jean Asselborn said in a telephone interview. “There
are a lot of people in Italy, in Europe, who think that Europe
is to blame for Italy’s problems. Second, I have very serious
doubts that populism would make it possible to find a solution
to create stability in Italy.”
- Italy Confronts Vacuum as Leaders Seek to Avoid Election.Italian party chiefs began jockeying to forge a coalition of
rivals and head off a second vote as a political vacuum of at least a
month loomed, threatening to whipsaw financial markets. In the
aftermath of an inconclusive election, Democratic Party leader Pier
Luigi Bersani and resurgent ex-Premier Silvio Berlusconi may be seeking
to avoid a ballot that would favor populist Beppe Grillo, whose movement
was the top vote-getter in its first national contest. No formal steps
can be taken until a new parliament convenes March 15. “If they
don’t change strategy and go vote again with similar candidates, the
risk is a Grillo landslide,” Giovanni Orsina, a history professor at
Luiss Guido Carli University in Rome, said in an interview today.
- Italy’s Bonds Slump After Inconclusive Elections.
Italy’s government bonds slumped, leading declines among securities
from Europe’s high-deficit nations, as inconclusive election results
triggered renewed concern that the region’s sovereign-debt crisis will
worsen. Italian 10-year yields climbed the most in 14 months as results
showed pre-election favorite Pier Luigi Bersani won the
lower house by less than a half a percentage point, while Silvio
Berlusconi, the former premier fighting a tax-fraud conviction,
gained a blocking minority in the Senate. Spanish and Portuguese
securities also slid, while German and Finnish bonds advanced
for a fourth day. Italy sold 8.75 billion euros ($11.4 billion)
of six-month bills at the highest yield since October. Italy’s 10-year yield climbed 40 basis points, or 0.4
percentage point, to 4.89 percent at 4:42 p.m. London time after
rising as much as 44 basis points, the biggest increase since
Dec. 19, 2011. The extra yield, or spread, investors demand to hold
Italian 10-year securities instead of similar-maturity bunds
widened 50 basis points to 344 basis points after expanding to
347 basis points, the most since Dec. 11.
- Bank Credit Risk Surges in Europe Amid Italian Election Deadlock. The cost of insuring against default
on European bank debt surged to the highest in three months on
concern deadlock in Italy’s elections will trigger a flight from risky assets as a political vacuum roils markets. The
Markit iTraxx Financial Index of credit-default swaps on 25 banks and
insurers climbed 12 basis points to 163, at 11:30 a.m. in London, the
highest since Nov. 28 and headed for the biggest monthly increase since
May. Contracts insuring
Italy’s bonds rose 43 basis points to a 2 1/2-month high of 293,
the biggest jump since December 2011. Italy faces months of political turbulence which may
see President Giorgio Napolitano install an interim government
to write a new election law as the prelude to another vote.
- “Gridlock in parliament means gridlock in the economy,” Alberto
Gallo, the head of European macro credit research at Royal Bank of
Scotland Group Plc in London, wrote in a client note. “The longer the
instability lasts, the more the recession can deepen, pushing up
unemployment, defaults and bad loans. In the worst-case scenario, the
weaker banks could see deposit outflows re-emerge.” The Markit iTraxx
Europe Index of swaps on investment-grade companies rose seven basis
points to 120, the highest since Nov. 30. The Markit iTraxx Crossover
Index of swaps on 50 companies
with mostly speculative-grade ratings climbed as much as 26
basis points to 470, the highest this year before paring the
gain to 465 basis points.
- European Stocks Decline on Italian Election Deadlock.
European stocks declined as Italy’s inconclusive parliamentary election
renewed concern that the Mediterranean nation will dilute its austerity
program and the region’s sovereign-debt crisis will deepen. Italian shares led the retreat, with the FTSE MIB Index (FTSEMIB) tumbling 4.9 percent.
- ECB Should Join ‘Currency War’ to Weaken Euro, Montebourg Says. The European Central Bank should
weaken the euro, confronting the new “currency war” head on to
help address economic stagnation in the region, French Industry
Minister Arnaud Montebourg said today. Calling for a more activist and “political” management of
the currency shared by 17 European nations, Montebourg said at a
press conference in Paris that he wants “the European Central
Bank to do its job.” “The euro is too strong and doesn’t correspond to economic
fundamentals,” he said. The ECB “should prepare to confront a
new currency war in which the weakening of currencies becomes a
political tool.”
- Italy Votes for Chaos and the Euro Crisis Is Back. Italy’s parliamentary election could
not have gone worse for the country or the euro area. It is now possible that in the coming months the currency
zone’s third-largest economy will need a bailout from
international creditors, at a time when Italy will have no
government in place to ask for, or negotiate, a rescue. In case
you had any doubts, the euro-area crisis is back.
- UBS Sees Iron Ore Plunging 54% to Lowest Since ’09 on Supply. Iron ore, trading near 16-month
highs, may slump 54 percent to the lowest level since 2009 as China boosts production and global supply climbs, said UBS AG.
(UBSN) Rates may tumble to $70 a ton in the three months ending
September after trading between $130 and $160 through June, Sydney-based
commodity analyst Tom Price said in a phone
interview today. China is the world’s biggest importer. “We expect a big
correction in the third quarter,” said
Price. “We see a big lift in supply.”
- Aluminum Falls as Commodities Slide on Inconclusive Italian Vote. Aluminum
fell for a seventh session in London as commodities slid amid concern
that the euro-area debt crisis might worsen, following an inconclusive
election in Italy. The Standard & Poor’s GSCI Spot Index of 24
raw materials fell to the lowest since Jan. 17. China, the biggest
aluminum consumer, is set to have a “significant” surplus of about
700,000 metric tons that is likely to be partly shipped in the
form of semi-fabricated products, according to Goldman Sachs
Group Inc. “There is selling across the board as there is so much
uncertainty because of Italy,” Walter de Wet, an analyst at
Standard Bank Plc, said today in a telephone interview. “The
fundamentals are also very weak.” Aluminum for delivery in three months declined 0.5 percent
to $2,027.50 a metric ton at 3:09 p.m. local time on the London
Metal Exchange. Prices earlier touched $2,010, the lowest since
Nov. 29.
- Brazil’s Unemployment Rises More Than Forecast in January.
Brazil’s unemployment rate rose more than analysts predicted in January
as the world’s second-biggest emerging economy continues to respond
slowly to government efforts to spur growth. The jobless rate jumped to 5.4 percent from the record low 4.6 percent in December,
the national statistics agency said in Rio de Janeiro today. Economists
had forecast unemployment would rise to 5.2 percent, according to a
survey by Bloomberg of 28
analysts.
- Consumer Confidence in U.S. Increases More Than Forecast. The Conference Board’s index climbed to 69.6, exceeding all
forecasts in a Bloomberg survey of economists, from a revised
58.4 in January, data from the New York-based private research
group showed today. It was the first improvement in four months
and the biggest since November 2011.
Wall Street Journal:
MarketWatch:
Fox News:
CNBC:
- Foreign Autos Shut Out Big 3 In New Report. In a report that will trouble fans of the Big 3, the annual selection of top automobiles and top brands by Consumer Reports shows Detroit falling behind its foreign competitors. In fact, for
the first time since 2007 the top ten vehicles picked by Consumer
Reports does not include a model built by General Motors, Ford or
Chrysler.
- Bernanke: My Inflation Record at the Fed Is One of the Best.
Federal Reserve Chairman Ben Bernanke strongly defended the central
bank's easy monetary policy before a Senate committee on Tuesday and
said there's
little risk of a spike in inflation in the near term. In
criticizing the central bank's easy monetary policy, Sen. Bob Corker, a
Republican from Tennessee, called Bernanke the biggest dove since World
War II.
- Why Italy’s Stalemate Could Mean Chaos for Euro Zone.
Zero Hedge:
Business Insider:
Reuters:
- Strong sales help Home Depot(HD) outshine Lowe's(LOW). Improvements in the U.S. housing market and sales tied to Hurricane Sandy helped Home Depot Inc report a higher-than-expected quarterly profit and outshine rival Lowe's Cos Inc for the 15th straight quarter.
- French jobless claims hit 15-year high in Jan. The
number of people out of work in France shot up again in January after a
smaller rise in December, piling new pressure on Socialist President
Francois Hollande who has made tackling joblessness his top priority.
The number of jobseekers in mainland France jumped by 43,900 or 1.4
percent, signalling a return to the rapid pace of increase seen over 19
straight months to December - although
half of the rise was due to a change in methodology in January. Without the adjustment the January increase would have been
22,800, still a much bigger jump than the 8,000 seen in December
and dealing a blow to Hollande, who has promised to stem the
rise in unemployment by the end of 2013.
Telegraph:
Frankfurter Allgemeine Zeitung:
- Lars Feld, a member of a panel of economic advisers to German
Chancellor Angela Merkel, said the euro crisis will return "with a
vengence" as capital loss will lead to higher risk premiums for Italy's
interest rates, citing an interview. Anton Boerner, head of Germany's
BGA exporters' association, says Italy must reform tax, labor, judicial
system or risk "irreparable damage" of euro. Boerner says if Italy not
willing to reform, "we have to think about how to deal with a modified
eurozone".
Baltic News Service:
- European Union President Herman Van Rompuy said Italy has "no
alternatives" to continuing fiscal reforms. "Now it's up to the leading
politicians to make the necessary compromises to form a government on a
stable basis and keep the course of fiscal consolidation and reforms.
There is no way back, there are no alternatives."
Valor:
- Bank of America's(BAC) Brazil credit exposure has risen to $10 billion.
Style Underperformer:
Sector Underperformers:
- 1) Education -3.40% 2) Alt Energy -1.13% 3) Gaming -.90%
Stocks Falling on Unusual Volume:
- TDS, ROSE, EEQ, TI, TTM, CIB, IRE, SU, AMCX, SPWR, NVS, ACHN, VSI, BDBD, OKS, CHMT, HSII, SF, GLF, EXPD, SHOO, INVN, TRAK, OKE, CF, WDR, ECPG, TSN, TV, HFC, XLNX, MELI, QIHU, SGY, WBMD, APOL, VVUS and TWI
Stocks With Unusual Put Option Activity:
- 1) VFC 2) EXPD 3) HD 4) XOP 5) ADSK
Stocks With Most Negative News Mentions:
- 1) SCHW 2) LO 3) CB 4) JPM 5) UTHR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.19% 2) Gold & Silver +1.39% 3) Computer Services +.42%
Stocks Rising on Unusual Volume:
- HD, CWH, ALC, SLCA and EBIX
Stocks With Unusual Call Option Activity:
- 1) SPXS 2) ADSK 3) PCS 4) NDAQ 5) CLX
Stocks With Most Positive News Mentions:
- 1) ESV 2) AMAT 3) TASR 4) HD 5) AMT
Charts:
