Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -1.93% 2) Homebuilders -.47% 3) Computer Services-.40%
Stocks Falling on Unusual Volume:
- RBS, ANV, SA, CM, LFC, TEO, CVC, ANW, NTLS, IOC, HDB, BSFT, AGNC, PKT, VCRA, ARCP, IMH, DGI, AFCE, JCP, DPM, TRLA, GVA, CPRT, TRS, LKQ, CM, ACTG, VNO, CTRX, AYI, SHLD, AYI and RPXC
Stocks With Unusual Put Option Activity:
- 1) CVC 2) SHLD 3) TXN 4) JCP 5) NUE
Stocks With Most Negative News Mentions:
- 1) ANR 2) RVBD 3) CAT 4) MU 5) ALL
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +1.01% 2) Oil Tankers +.91% 3) Alt Energy +.77%
Stocks Rising on Unusual Volume:
- CLR, BDBD, CBI, AGO, PANL, CLR, MNST, OCN and SPWR
Stocks With Unusual Call Option Activity:
- 1) AMTD 2) AGNC 3) DLTR 4) P 5) RPRX
Stocks With Most Positive News Mentions:
- 1) PNRA 2) JOY 3) P 4) T 5) JAH
Charts:
Evening Headlines
Bloomberg:
- ECB
Masks Crisis as Italy Revives Austerity Debate: Euro Credit. The bond
market, aided and abetted by the European Central bank, is letting
politicians slide on economic reforms. The drop in Spanish and Italian
borrowing costs since the ECB said in September it would support
troubled euro members took the heat off governments without tying them
to the conditions of the mooted bond-buying program, said Mike Turner,
head of strategy at Aberdeen Asset Management Plc. "It's been revealed
that the emperor has no clothes," said Turner.
- Central Banks Spewing Cash Must Consider Exit Timing, Rohde Says. Central bankers across the globe
need to plan for monetary tightening to avoid feeding asset
bubbles, Danish central bank Governor Lars Rohde said. “Beyond the short horizon, central banks have to be
vigilant of the effects, including the effect of negative real
interest rates, and they have to plan for an exit as
normalization progresses,” Rohde said in an e-mailed reply to
questions. Asked whether such policies could fuel asset bubbles, Rohde said, “Yes.”
The warning from the head of Denmark’s central bank, which has kept its
deposit rate below zero since July, comes as policy makers from Japan
to Europe to the U.S. commit to unprecedented
monetary stimulus to jolt their economies into recovery mode.
- Australia Business Investment Unexpectedly Fell Last Quarter. Australian business investment
unexpectedly declined last quarter amid weakness in
manufacturing, while mining companies pared spending plans. Capital spending fell 1.2 percent from the third quarter, when it rose a revised 1.1 percent, the Bureau of Statistics
said in Sydney today. That compares with the median forecast for
a 1 percent gain in a Bloomberg News survey of 19 economists.
- J.C. Penney(JCP) Posts Wider Fourth-Quarter Net Loss. J.C.
Penney Co. (JCP) said its fourth- quarter net loss widened to $552
million and posted its lowest annual sales in more than two decades as
Chief Executive
Officer Ron Johnson’s turnaround plans falter. The net loss in
the quarter ended Feb. 2 expanded to $2.51 a share, from a loss of $87
million, or 41 cents, a year earlier, the Plano, Texas-based company
said today in a statement. Revenue slid 28 percent to $3.88 billion as
sales at stores open at least a year fell 32 percent. Analysts estimated
revenue of $4.08 billion, on average.
- Vale Has Record Quarterly Loss on $5.66 Billion Writedowns. Vale SA (VALE3), the world’s largest iron- ore producer, posted a record quarterly loss after writing down
the value of some of its assets. Profit missed analysts’
estimates on an adjusted basis.
Wall Street Journal:
- Jockeying Stalls Deal on Cuts. Obama, Republicans Bet They'll Have a Stronger Hand After Deadline Expires.
With mandatory across-the-board spending cuts set to begin Friday, the
White House and congressional Republicans are poised to let the deadline
pass, each calculating that their hand in negotiations only grows
stronger if they scorn a quick compromise. The first face-to-face
meeting on the issue between President Barack Obama and congressional
leaders won't happen until Friday—the deadline for Mr. Obama to set in
motion $85 billion in broad spending cuts. None of
the participants expect the morning meeting at the White House to
produce a breakthrough. In the run-up, with no serious talks under way, each side is maneuvering
to ensure the other catches the blame if the cuts kick in.
- Islamists Gain Momentum in Syria. Extremists intent on establishing an Islamist state in Syria have
gained power within the rebel insurgency, while moderates have lost
clout since moves by Washington late last year aimed at the opposite
result, U.S. officials and rebel fighters say. On the eve of the
most recent gathering of the Friends of Syria international opposition
support group in December, the Obama administration designated Syrian
jihadist group Jabhat al-Nusra a terrorist organization, and on the same
day, officially endorsed the moderate face of the rebellion, the
umbrella Syrian Opposition Coalition.
- Gas Boom Projected to Grow for Decades. U.S. natural-gas production will accelerate over the next three
decades, new research indicates, providing the strongest evidence yet
that the energy boom remaking America will last for a generation. The most exhaustive study to date of a key natural-gas field in
Texas, combined with related research under way elsewhere, shows that
U.S. shale-rock formations will provide a growing source of moderately
priced natural gas through 2040, and decline only slowly after that. A
report on the Texas field, to be released Thursday, was reviewed by The
Wall Street Journal.
- EU Reaches Deal to Curb Bank Bonuses. The European Union moved to slap a strict limit on bank executives'
bonuses in the latest effort to curb what is seen by many as corporate
and banking excess. Negotiators for the European Parliament and EU states said they
reached a preliminary deal on a measure that would forbid bonuses that
exceed a bankers' fixed salary. Flexible pay could increase to twice
fixed salary, but only with explicit shareholder approval. The initiative, part of a broader law that forces lenders to build up
more-robust financial cushions, is designed to reduce incentives for
the type of risky behavior widely blamed for contributing to the 2008
financial crisis.
- Henninger: The Obamaian Universe. A place where everything revolves around the fixed planet of public spending.
It may be that we have to move beyond politics alone to explain events
in Washington. We are in the fifth year of the Obama presidency, and
Washington is still dead in the water. Four straight years in which the government of the United States of America fails to
enact a budget is, well, amazing.
CNBC:
Zero Hedge:
Business Insider:
- Sturm Ruger(RGR) fourth-quarter sales jump 52 percent. Gun maker
Sturm Ruger Inc reported a 52 percent jump in quarterly sales as people
rushed to stock up on firearms amid debates over implementing stricter
gun laws, sending its shares up 3 percent after market. Recent concerns over possible
changes to gun laws following mass shootings, unease over the economic
backdrop and the increased acceptance of gun ownership among women and
older people have driven up sales over the last few months. Data
from the FBI's National Instant Criminal Background Check System (NICS)
-- commonly used to gauge the industry's performance -- show background
checks for firearm sales rose nearly 50 percent in December.
- White House, Republicans dig in ahead of budget talks. Positions hardened on
Wednesday between U.S. President Barack Obama and Republican congressional leaders over the budget crisis even as they arranged to hold last-ditch talks to prevent harsh automatic
spending cuts beginning this week.
- Japan govt nominates Kuroda for BOJ governor. Japan's government
nominated Asian Development Bank President Haruhiko Kuroda to be the
next Bank of Japan governor on Thursday, aiming to install an advocate
of aggressive monetary easing who has extensive international experience.
- Fed's Fisher would start tapering of QE3 immediately. An outspoken policy hawk at the
Federal Reserve on Wednesday upped the ante on his criticism of
the U.S. central bank's bond-buying program, arguing he would
like to see the purchases of Treasury and mortgage securities
tapered immediately. Richard Fisher, president of the Federal Reserve Bank of
Dallas, had not previously been explicit about when the Fed
should begin tapering its $85 billion in monthly asset buys.
- Limited(LTD) forecasts profit for quarter and year below estimates. Limited Brands Inc on Wednesday forecast profit for the current quarter and fiscal year below analysts' expectations, and its shares fell 1.3 percent in
after-market trading.
Telegraph:
Xinhua:
- U.S. may levy countervailing duties on hardwood, decorative plywood from China. The U.S. Commerce Department on Wednesday announced
its preliminary affirmative determination in the countervailing duty
(CVD) investigation against imports of hardwood and decorative plywood
from China, signaling that it may pose punitive duties on the products. The department said that Chinese producers and exporters of hardwood
and decorative plywood had received countervailing subsidies of 0.22
percent to 27.16 percent. The Commerce launched antidumping (AD) duty and CVD investigations
against imports of hardwood and decorative plywood from China on Oct.
18, 2012, alleging that these products were sold at less than fair value
in U.S. market, with a dumping margin of 298.36 percent and 321.68
percent and additional subsidies. The department is scheduled to make its preliminary determination of AD investigation at the end of April 2013.
Shanghai Securities News:
- China May Tighten Liquidity in Short Term, ICBC Says. China's
central bank may tighten liquidity in the short term on rising inflation
and capital inflow pressure, Industrial and Commercial Bank of China
said in a research report published today. China may also raise interest
rates if 2H inflation is higher than expected, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are +.50% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 82.5 -1.75 basis points.
- NASDAQ 100 futures +.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (RDC)/.48
- (CVC)/.09
- (SHLD)/.97
- (KSS)/1.62
- (DPZ)/.60
- (BID)/1.09
- (GPS)/.71
- (DECK)/2.58
- (JOE)/.01
- (MDR)/.23
- (CRM)/.40
Economic Releases
8:30 am EST
- 4Q GDP is estimated to rise +.5% versus a prior estimate of a -.1% decline.
- 4Q Personal Consumption is estimated to rise +2.3% versus a prior estimate of a +2.2% gain.
- 4Q GDP Price Index is estimated to rise +.6% versus a prior estimate of a +.6% gain.
- 4Q Core PCE is estimated to rise +.9% versus a prior estimate of a +.9% gain.
- Initial Jobless Claims are estimated to fall to 360K versus 362K the prior week.
- Continuing Claims are estimated to fall to 3143K versus 3148K prior.
9:45 am EST
- Chicago Purchasing Manager for February is estimated to fall to 54.0 versus 55.6 in January.
11:00 am EST
- Kansas City Fed Manufacturing Activity for February is estimated to rise to -1 versus -2 in January.
Upcoming Splits
Other Potential Market Movers
- The Fed's Evans speaking, Fed's Fisher speaking, 7Y T-Note auction, China Manufacturing PMI Official, weekly EIA natural gas inventory report, Germany inflation/unemployment/consumer confidence data, NAPM-Milwaukee for February, weekly Bloomberg Consumer Comfort Index, (STT) Analyst Forum, (DUK) analyst meeting, (HBI) Investor Day, (WLP) investor day and the (COP) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Almost Every Sector Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 108.0 -3.57%
- Total Put/Call .98 -11.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 86.71 -3.09%
- European Financial Sector CDS Index 157.70 -5.86%
- Western Europe Sovereign Debt CDS Index 107.15 -.17%
- Emerging Market CDS Index 234.57 -.97%
- 2-Year Swap Spread 15.50 +.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -19.5 +2.0 bps
Economic Gauges:
- 3-Month T-Bill Yield .11% unch.
- China Import Iron Ore Spot $151.90/Metric Tonne unch.
- Citi US Economic Surprise Index 6.70 -1.0 point
- 10-Year TIPS Spread 2.53 +2 bps
Overseas Futures:
- Nikkei Futures: Indicating +193 open in Japan
- DAX Futures: Indicating +41 open in Germany
Portfolio:
- Higher: On gains in my tech/retail/medical/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Italy Confronts Vacuum as Leaders Seek to Avoid Election. Italian political leaders sparred
over forming a government after inconclusive elections fueled
concern about the outlook for the euro region and the country’s
deepening recession. Beppe Grillo, whose anti-establishment movement was the top vote-getter in Italy’s election this week, rejected a call made
yesterday by Democratic Party leader Pier Luigi Bersani to back
a coalition. Grillo’s movement “must say what they want to do
for this country and for their children,” Bersani said.
- Hollande Jobs Pledge Turning Into Achilles Heel as Claims Rise. French President Francois Hollande’s promise to create jobs by the end of the year is turning into his Achilles heel. Jobless claims rose last month to a 15-year high at 3.17 million, the labor ministry said yesterday. The increase brings
such claims close to the country’s historic peak in January 1997
-- when they stood at 3.21 million -- with no signs they’ll fall
any time soon.
- Spain’s Bankia-Led Bailout Won’t Spell End of Bank Troubles.
Spain’s 41 billion-euro ($54 billion) rescue of lenders, prompted by
record losses at Bankia (BKIA), won’t spell the end of troubles for the
nation’s financial industry as the economy remains mired in recession.
- China Needs Tighter Monetary Policy, State Research Agency Says. China needs to lean toward a tighter
monetary-policy stance as the economy faces risks from excessive
liquidity and credit, according to a research unit of the
nation’s top economic-planning agency. Authorities should drain more cash from the financial
system to manage liquidity and regulators need to enhance
oversight of banks’ off-balance-sheet business, the State
Information Center, a research arm of the National Development
and Reform Commission, said in a report published today in the
official China Securities Journal.
The report adds to signs that the central bank and other
agencies will step up efforts to counter risks from rising
property prices and debt as the economy recovers from the
weakest growth in 13 years.
- China Provinces Cut Growth Targets in Sign Debt Concerns Heeded. Almost half of China’s provinces are
setting their growth sights lower in the wake of the central
government’s emphasis on the quality of expansion over speed, a sign of an increased focus on tackling rising debt.
- Canada Losing Debt Halo as Bull Market Housing Peaks With Carney.
- Gross Says Corporate Bonds Irrationally Priced. Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said asset-price irrationality is rising after years of record low benchmark interest rates by the Federal Reserve. The
level of asset prices signal investors should be cautious and the
degree of irrationality is about six on a scale of one to 10 and rising,
Gross wrote in his monthly investment outlook posted on Newport Beach,
California-based Pimco’s website today. He noted that Fed Governor
Jeremy Stein earlier this month said some credit markets, such as
corporate debt, are showing signs of excessive risk-taking, while not
posing a threat to financial stability.
Wall Street Journal:
- Budget Battle: Live Stream.
- Bernanke: Fed Must Review Exit Strategy Sometime Soon.
Federal Reserve Chairman Ben Bernanke on Wednesday said the Fed sometime
soon will need to review its strategy for exiting its easy money
policies, though it must be careful
not to choke off economic growth by raising interest rates too soon. Mr. Bernanke, in his second day of testimony before Congress, also
defended the central bank's policies against criticism that it is
hurting retirees and other savers. He said raising interest rates too
soon would hurt them and the rest of the economy.
- Italy's Grillo Rules Out Forming Coalition. Beppe Grillo, the former comedian whose upstart Five-Star Movement
increasingly appears to be the only real winner of Italy's general
election, on Wednesday described center-left leader Pier Luigi Bersani
as a "dead man walking" and said his own party wouldn't be joining any
coalition to form a government.
- Phil Gramm: Obama and the Sequester Scare. Governing isn't about blaming someone else. It is about choosing.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
Mortgage Bankers Assoc.:
- Mortgage Applications Decrease in Latest MBA Weekly Survey. Mortgage applications decreased 3.8 percent from one week earlier,
according to data from the Mortgage Bankers Association’s (MBA) Weekly
Mortgage Applications Survey for the week ending February 22, 2013 This
week’s results did not include an adjustment for the Presidents’ Day
holiday. The Market Composite Index, a measure of mortgage loan
application volume, decreased 3.8 percent on a seasonally adjusted basis
from one week earlier. On an unadjusted basis, the Index decreased 3
percent compared with the previous week. The Refinance Index decreased 3
percent from the previous week. The seasonally adjusted Purchase
Index decreased 5 percent from one week earlier and is at its lowest
level since the week ending December 28, 2012.
Reuters:
- Italian president snubs German candidate over "clown" comment. Italian President
Giorgio Napolitano canceled a dinner with the German opposition's
chancellor candidate on Wednesday after he described Italian former
premier Silvio Berlusconi and comic-turned-politician Beppe Grillo as
"clowns". Peer Steinbrueck, a Social
Democrat who will take on Chancellor Angela Merkel in Germany's next
national election in September, has a reputation for gaffes and his
remark created the first diplomatic incident of his accident-prone
campaign.
- Joy Global(JOY) says starting to see big mining projects come back. Mining equipment maker Joy Global Inc
said it was starting to see big projects come back to
the market as global miners, looking for more returns than
volumes, begin to open up their purses to low-risk projects.
Financial Times:
- China to tighten shadow banking rules. China
will rein in its shadow banking system by requiring banks to provide
greater disclosure about their off-balance sheet activities, according to people briefed on the new rules. The
Chinese shadow banking system – credit flows beyond traditional bank
loans – has quadrupled in size since 2008 to about Rmb20tn ($3.2tn), or
40 per cent of economic output.
These flows were crucial in reviving the country’s growth last year.
But banking analysts and rating agencies have warned that they pose an
increasingly serious risk to Chinese economic stability.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -1.71% 2) Alt Energy -.84% 3) Steel +.15%
Stocks Falling on Unusual Volume:
- NTT, LO, ABV, CRAY, MRCY, MO, CWH, PZZA, CRI, FSLR, TGT, MX, BSFT, WRLD, INVN, TG, HXM, ORA, TAC, TRLA, WTI, SCTY, LO, NEM, TDC, SHOS, ABV, MSTR, GG, RPRX, SSP and SPWR
Stocks With Unusual Put Option Activity:
- 1) RDN 2) EWI 3) FSLR 4) KSS 5) TGT
Stocks With Most Negative News Mentions:
- 1) VRSN 2) AH 3) RIG 4) SCHW 5) GLF
Charts:
