Style Underperformer:
Sector Underperformers:
- 1) Steel -1.74% 2) Education -1.56% 3) Papers -.94%
Stocks Falling on Unusual Volume:
- ANR, CTCM, BBEP, NRP, ROCK, TS, STO, HK, EROC, LNC, COT, EBIX, SAM, SHPG, NVDQ, KRA, DXPE, PBF, TGI, CYOU, SMA, HSH, CXO, CTRX, EVEP, PHH, IP and TS
Stocks With Unusual Put Option Activity:
- 1) EBIX 2) ABBV 3) DCTH 4) ANR 5) JDSU
Stocks With Most Negative News Mentions:
- 1) WPZ 2) DXPE 3) EXC 4) SSI 5) ANSS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Homebuilders +2.28% 2) Hospitals +2.16% 3) Airlines +2.02%
Stocks Rising on Unusual Volume:
- IPHI, PRU, DLLR, MFC, TSO, SNI, PGTI, REGI, YELP, BZH, GNRC, APD, HOS, OIS, MGM, BKD, ABMD, V, STX, CNQR, HAR, DXCM, CNQR, NUS, PXD, AOL, ANGI, NCT, GM, SFY, BEAM and CI
Stocks With Unusual Call Option Activity:
- 1) SE 2) LBTYA 3) YELP 4) BZH 5) V
Stocks With Most Positive News Mentions:
- 1) TSCO 2) FLR 3) CNX 4) GILD 5) EMN
Charts:
Evening Headlines
Bloomberg:
- U.K. Steps Up Tax Crackdown With Caribbean Accord. The U.K. signed agreements with
territories including Anguilla, Bermuda and the British Virgin
Islands in the latest effort to fight tax evasion as the government
struggles to contain its borrowing. All the British overseas territories
with financial centers signed up to the government’s effort, “marking a
turning point in the fight against tax evasion and illicit finance,”
the Treasury said in a statement in London today. “This represents a
significant step forward in tackling illicit finance and sets the global
standard in the fight against tax evasion,” Chancellor of the Exchequer
George Osborne said in the statement. “I now hope others follow these
governments’ lead and enter into similar commitments to this new
level of transparency, removing the hiding places for those who
seek to evade tax and hide their assets.”
- GM(GM) Pulls Chevrolet Ad Including Song Decried as Racist. General
Motors Co. (GM), seeking to boost China sales 75 percent by 2015,
apologized for a Chevrolet ad that included a song referring to “the
land of Fu Manchu”
where all of the girls sing “ching, ching, chop-suey,” which
one Hong Kong newspaper called racist. “Our intent was not to offend anyone and we’re deeply
sorry if anyone was offended,” Ryndee Carney, a Detroit-based
GM spokeswoman, said yesterday in a telephone interview. “We’re
reviewing our advertising approval processes to make sure this
doesn’t happen again.” GM wants to expand sales in China and plans to spend $11
billion through 2016 on new plants and products in the country.
- China Cyberspies Outwit U.S. Stealing Defense Secrets. Among defense contractors, QinetiQ North America (QQ/) is
known for spy-world connections and an eye- popping product line. Its
contributions to national security include secret satellites, drones,
and software used by U.S. special forces in Afghanistan and the Middle
East. Former CIA Director George Tenet was a director of the
company from 2006 to 2008 and former Pentagon spy chief Stephen Cambone
heads a major division. Its U.K. parent was created as a spinoff of a
government weapons laboratory that inspired Q’s lab in Ian Fleming’s
James Bond thrillers, a connection QinetiQ (pronounced kin-EH-tic) still
touts. QinetiQ’s espionage expertise didn’t keep Chinese cyber-
spies from outwitting the company. In a three-year operation, hackers
linked to China’s military infiltrated QinetiQ’s computers and
compromised most if not all of the company’s research.
- Asian Stocks Fall After U.S. Payroll Growth Slows. Asian
stocks fell for a second day after weaker growth in U.S. payrolls and
manufacturing added to evidence of a slowdown in the world’s largest
economy and as the yen rose, curbing the earnings outlook for Japanese
exporters. BHP Billiton Ltd. (BHP), the world’s largest mining
company, lost 1 percent, leading raw-materials shares lower as metals
prices
declined. Toyota Motor Corp., the world’s biggest carmaker, slid
1.4 percent.
- China Rebar Drops to Five-Month Low on Iron Price, Mill Supplies.
Steel reinforcement-bar futures in Shanghai fell to the lowest level in
almost five months as a decline in the price of iron ore and
consistently high output from local mills pressured the market. The
contract for October delivery on the Shanghai Futures Exchange lost as
much as 1.9 percent to 3,533 yuan ($574) a metric ton today, the
cheapest since Dec. 3, and was at 3,551 yuan at 10:11 a.m. local time.
Futures, which reopened after a three-day holiday, lost 6.2 percent in
the previous two weeks. “The lower iron ore price is pressuring the market, while Chinese mills’ output remained at a high level,”
Li Meng, analyst at Huatai Changcheng Futures Co., said by phone from
Shanghai today. The average spot price for rebar was up 0.2 percent at
3,574 yuan a ton on April 26, according to the Beijing Antaike
Information Development Co.
- Rubber Drops to One-Week Low as U.S. Data Raise Demand Concerns.
Rubber declined to the lowest level in
more than a week as Japan’s currency advanced, cutting the appeal of the
yen-denominated futures, and reports showed a slower pace of growth in
U.S. manufacturing and payrolls. The contract for October delivery
lost as much as 3.4 percent to 250.8 yen a kilogram ($2,578 a metric
ton), the lowest most-active price since April 24. Futures traded at
253.7 yen on the Tokyo Commodity Exchange at 10:54 a.m., extending
this year’s losses to 16 percent.
- Boston Bomb Trail Leads Into Heart of Putin’s Own War on Terror.
Six blocks from the Caspian Sea, on Kotrova Street in central
Makhachkala, sits a mosque being watched by undercover Russian agents
charged with preventing acts of terror. As worshipers spill out into the
streets, American
investigators are watching now, too, as they try to reconstruct
the events that led to the most high-profile terrorist assault
in the U.S. since Sept. 11, 2001.
- Lehman Sues Intel(INTC) Alleging Breach of $1 Billion Swap Deal. Bankrupt
Lehman Brothers Holdings Inc. sued Intel Corp. (INTC), alleging the
world’s largest semiconductor maker breached a $1 billion swap agreement.
Under a 2008 accord, Intel gave $1 billion to Lehman’s over-the-counter
derivatives unit in August of that year in exchange for 50 million
shares of its stock, to be delivered on September 29, 2008, according to
a complaint filed today in U.S. Bankruptcy Court in Manhattan.
Wall Street Journal:
- Mining Woes Snag Financial Firms. Far from any mine shaft, the legions of bankers, consultants and
lawyers who benefited from a decadelong commodities boom are now
preparing to retrench as the market weakens. Global mining capitals such as Toronto, Johannesburg and London all
flourished amid lofty prices in recent years for everything from gold
and copper to potash. Mining companies have tended to flock to a
handful
of cities to list their shares, set up headquarters and raise cash. But
over the past year, the sector has been hit by a triple whammy of
falling prices, still-rising costs and waning investor interest. Most
mined commodities have fallen sharply since their 2011 highs. Gold is
23% off its highs, and copper closed at an 18-month low Wednesday. Gold
has fallen 14% since the start of this year to $1,446 a troy ounce. As a result, some of the world's biggest miners are slashing outlays,
shedding assets they bought at the top of the market just a few years
ago, and shaking up management teams that spearheaded several years' of
frenetic deal making and fundraising. That is having a spillover effect on the industries servicing miners.
Bankers and brokers involved in the sector are starting to see revenue
dry up, and some are already shedding staff.
- Japan's Nuclear Plan Unsettles U.S.
Japan is preparing to start up a massive nuclear-fuel reprocessing
plant over the objections of the Obama administration, which fears the
move may stoke a broader race for nuclear technologies and even weapons
in North Asia and the Middle East. The Rokkasho reprocessing facility, based in Japan's northern Aomori
prefecture, is capable of producing nine tons of weapons-usable
plutonium annually, said Japanese officials and nuclear-industry
experts, enough to build as many as 2,000 bombs, although Japanese
officials say their program is civilian.
- Clubby London Trading Scene Fostered Libor Rate-Fixing Scandal.
Neil Danziger's trades for Royal Bank of Scotland Group PLC generated
rich commissions for the brokers who handled them. In return, brokers at
London's Tullett Prebon took Mr. Danziger to London strip clubs and
spent long weekends with him in Las Vegas, according to people familiar
with the
relationship. Brokers at R.P. Martin Holdings Ltd., another London firm,
gave him early access to lucrative trades, these people say.
Fox News:
- North Korea reportedly sentences detained American to hard labor. North Korea says an American detained for nearly six months has been
sentenced to 15 years of "compulsory labor" for crimes against the
state. Pyongyang state media said Thursday that the trial took place Tuesday
but provided no other new details in announcing Kenneth Bae's
sentencing. Bae was tried in the Supreme Court on charges of
plotting to overthrow the government. He could've faced the death
penalty. The case further complicates already fraught relations between
Pyongyang and Washington following weeks of heightened rhetoric and
tensions.
MarketWatch.com:
CNBC:
- China April HSBC PMI Eases to 50.4 on Weak Demand. China's factory-sector growth eased in April as new export orders
fell for the first time this year, a private survey showed on Thursday,
suggesting the euro zone recession and sluggish U.S. demand may be
reining in China's economic recovery. The final HSBC
Purchasing Managers' Index (PMI) dropped to 50.4 in April from March's
51.6 and was largely in line with a flash reading last week of 50.5.
Fifty divides expansion from contraction on a monthly basis. China's official PMI on Wednesday painted a similar picture, falling to
50.6 in April from an 11-month high of 50.9 in March as new export
orders fell. "The slower growth of manufacturing activity in
April confirmed a fragile growth recovery of the Chinese economy as
external demand deteriorated and renewed destocking pressures built up,"
said Qu Hongbin, chief China economist at HSBC. A sub-index for new export orders dipped to 48.4, the first time it has
retreated below 50 this year and the lowest level since last October,
reinforcing concerns about the strength of the global economy.
- Visa(V) Earnings Beat, Supported by Strong Growth.
Visa said its net income slipped nearly 2 percent in the fiscal second
quarter from a year earlier, when the company benefited from an
adjustment to its income tax provision. But the
payments-processing company reported growth in service and data
processing revenue, as well as international transactions.
- Facebook(FB) Revenue Beats, but Earnings Miss.
Facebook posted revenue that surpassed Wall Street forecasts on
Wednesday, as the company's mobile ad revenues continued to rise. After
an initial
pop, Facebook shares are slightly higher in extended hours trading.
- US Presses China to Stop Growing Trade Secret Theft. The U.S. Trade Representative's office criticized China on
Wednesday for failing to stop the growing theft of American trade
secrets that are the lifeblood of U.S economic might, in the latest sign
of Washington's frustration with the problem. "Not only are
repeated thefts occurring inside China, but also outside of China for
the benefit of Chinese entities," USTR said in its annual report on
countries with the worst records of protecting U.S. intellectual
property rights. "The United States strongly urges the Chinese
Government take serious steps to put an end to these activities and to
deter further activity by rigorously investigating and prosecuting
thefts of trade secrets by both cyber and conventional means," the
report said.
Zero Hedge:
Business Insider:
CNN:
Pew Research Center:
Reuters:
- Japan PM's "stealth" constitution plan raises civil rights fears. Shinzo Abe makes no
secret of wanting to revise Japan's constitution, which was drafted by
the United States after World War Two, to formalize the country's right
to have a military - but critics say his plans go deeper and could
return Japan to its socially conservative, authoritarian past. Sweeping changes proposed by Abe's Liberal
Democratic Party (LDP) in a draft constitution would strike at the heart
of the charter with an assault on basic civil rights that could muzzle
the media, undermine gender equality and generally open the door to an
authoritarian state, activists and scholars say.
- BOJ April 3-4 minutes: some members wary of risks of bold easing. Some members of the Bank of Japan's
policy board expressed concerns that large-scale purchases of
government debt could actually impair lending and disturb the
functioning of financial markets, minutes of their April 3-4 meeting showed on Thursday. Members
raising concerns about expanded easing voted for the change in policy,
but their reservations could suggest that there are differing levels of
enthusiasm about the central bank's overhaul of monetary policy. Some
members also said the BOJ should allow for a range of six to eight years
for the average maturity of government debt purchased, as this could
lessen disruptions to financial markets.
- EU gives support to Italy's Letta, cautions on debt. European Council President
Herman Van Rompuy said on Wednesday that the European Union
supported efforts by new Italian prime minister Enrico Letta to grow Italy's economy, but public finances must be kept in order.
Telegraph:
China Securities Journal:
- Beijing April Used Home Transactions Plunge. Beijing's April used home transactions fell 48% year-on-year.
- China Should Watch for Rising "Hidden" Bad Loans. China's non-performing loan rate could be underestimated by "a large measure" because of "hidden" bad loans, Zhang Monan, a researcher with the State Information Center, wrote today. Chinese banks' growth has slowed and their non-performing loan ratios have increased this year because of a downward momentum in the economy, Xhang wrote. The debt-to-equity ratio at Chinese non-financial companies is "excessively" high, he wrote. New off-balance-sheet financing in some banks exceeds on-the-books credit growth, he said. Bad loans cold increase when asset prices drop, Zhang wrote.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 107.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 87.0 +.75 basis point.
- NASDAQ 100 futures +.28%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Trade Deficit for March is estimated at -$42.3B versus -$43.0B in February.
- Preliminary 1Q Non-farm Productivity is estimated to rise +1.0% versus a -1.9% decline in 4Q.
- Preliminary 1Q Unit Labor Costs are estimated to rise +.7% versus a +4.6% gain in 4Q.
- Initial Jobless Claims are estimated to rise to 345K versus 339K the prior week.
- Continuing Claims are estimated to rise to 3030K versus 3000K prior.
Upcoming Splits
Other Potential Market Movers
- The Eurozone PMI Manufacturing, ECB rate decision, ECB's Draghi speaking, China Non-Manufacturing PMI, Challenger Job Cuts report for April, RBC Consumer Outlook Index for May, Australian inflation data, ISM New York for April, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, (DD) investor day and the (STRA) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 92.0 -12.38%
- Total Put/Call 1.01 +14.77%
Credit Investor Angst:
- North American Investment Grade CDS Index 77.12 +3.0%
- European Financial Sector CDS Index 147.16 +1.0%
- Western Europe Sovereign Debt CDS Index 94.33 unch.
- Emerging Market CDS Index 234.24 +2.18%
- 2-Year Swap Spread 14.5 +.75 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -18.0 -.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- Yield Curve 143.0 -3.0 bps
- China Import Iron Ore Spot $134.10/Metric Tonne unch.
- Citi US Economic Surprise Index -3.80 -2.1 points
- 10-Year TIPS Spread 2.30 -4 basis points
Overseas Futures:
- Nikkei Futures: Indicating +19 open in Japan
- DAX Futures: Indicating +6 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Italy Won’t Seek EU Extension of Budget Deficit Goal, Letta Says. Italian
Prime Minister Enrico Letta
said he would stick to his predecessor’s promise to balance the
budget this year and will work with France to promote more pro- growth
policies in the euro region. Italy will “maintain” its commitment to
eliminate its deficit in structural terms, Letta said at a press conference with French President Francois Hollande in Paris today. The
structural deficit discounts the effects of the recession.
- Landesbank Berlin Quits Euribor in Bank Exodus From Benchmarks. Landesbank Berlin AG, a German
regional lender, became the sixth bank this year to stop
contributing to the panel setting Euribor, adding to an exodus
that includes UBS AG and Rabobank Groep. The bank also stopped contributing to the Eonia and USD
Euribor benchmarks, Euribor-EBF, the Brussels-based industry
group that runs the rate, said in a statement on its website.
- Pope Calls for More ‘Social Justice’ as Workers Take to Streets. Pope Francis urged the unemployed “not to lose hope” amid record
joblessness in the euro area as hundreds of thousands of people
demonstrated across Europe against austerity and for workers’ rights. “I
think about those who are unemployed often because of an economic
conception of society that seeks egoistic profit regardless of social
justice,” the pope told a crowd in St. Peter’s Square for a May Day audience.
- China Leads $4.2 Trillion of Asia-Pacific Property Investments. China led a jump in investment in Asia-Pacific commercial properties to $4.2 trillion in 2012 as
economic growth drove up capital values and supported new
construction, according to London-based broker DTZ. Investors bought $300 billion of commercial property across
the Asia-Pacific region, an 8 percent increase from 2011 in U.S.
dollar terms, a report by DTZ showed today. China overtook Japan
to become the region’s largest market with $1.5 trillion of
investments, up from $1.3 trillion in 2011, DTZ said.
Wall Street Journal:
- First-Quarter Earnings Look Weak Under the Hood.
First-quarter corporate earnings are coming in better than expected,
but the good news ends there. The overall pace of growth, while ahead of
forecasts, is still weak
by historical standards. Sales are clocking in below already reduced
analyst expectations. And companies are trimming their own earnings
guidance for quarters to come. "If anything, things have gotten a
little bit worse than they were at
the beginning of the year," said Savita Subramanian, head of U.S.
equity and quantitative strategy with Bank of America BAC -1.22% Merrill
Lynch. "This is a sign that the easy earnings stories are over." Earnings growth is looking anemic. If reporting continues as expected,
corporate profits will grow 2.5% from the first quarter of last year,
FactSet said. That compares with a long-run average of about 7% profit
growth.
- Truck Surge Revs GM, Ford, Chrysler Sales.
U.S. pickup truck sales boomed in April, lifting Detroit's auto makers
as increasing home construction spurred new-vehicle purchases by
contractors and tradesmen.
- China Grapples With Labor Shortage as Workers Shun Factories.
For 15 years, Cui Haifeng worked in China's manufacturing industry,
stitching together leather to make soccer balls before working her way
up to warehouse manager at a wood-flooring factory. Last month the coal miner's daughter traded a past of factory uniforms
for a blouse and skirt, training as a customer-service representative
for a life insurer in Guangzhou, southern China's largest city.
Fox News:
- 3 more suspects taken into custody in Boston bombing case, police say. Three new suspects have been charged in connection with the Boston
Marathon bombing for conspiring to get rid of an incriminating backpack
full of gutted fireworks belonging to their friend after learning he was
a suspect in the April 15 terror attack, according to an FBI affidavit
released Wednesday.
- Mastermind in Benghazi attack walking free in Libya, sources say. The U.S. has identified the mastermind of the Benghazi attack,
sources tell Fox News, though the individual apparently is walking free
in Libya. The confirmation from multiple sources comes more than seven months
after the assault on two U.S. locations in Benghazi, Libya, where four
Americans -- including Ambassador Chris Stevens -- were killed.
President Obama pledged after the attack that "justice will be done." But one source told Fox News the government is "sitting on" information.
MarketWatch:
CNBC:
- Why an ECB Rate Cut Could Be Too Little, Too Late. Cash-strapped corporates and households in the euro zone are not
seeing any recovery despite the European Central Bank's (ECB) extensive
action, including cheap loans to banks and reductions in interest rates,
suggesting the central bank's methods to jump-start the economy are not
working. Global central bank action continues to push
peripheral borrowing costs lower. But the support from the ECB has
failed to stimulate small businesses and reach households in peripheral
nations.
Zero Hedge:
Business Insider:
dshort.com:
Reuters:
- Construction spending rate hits seven-month low. Construction spending dropped to a seven-month low in March as public outlays
recorded their largest drop since 2006, which could cause the
first-quarter economic growth estimate to be trimmed.
Construction spending fell 1.7 percent to an annual rate of $856.72
billion, the lowest level since August, the Commerce Department said on
Wednesday.
Spending had increased 1.5 percent in February. Economists polled by Reuters had expected construction spending to rise 0.7 percent in March.
- MasterCard(MA) revenue falls short, CEO says Q2 looks "dodgy". MasterCard Inc, the world's
second-largest payment network, reported a higher-than-expected
rise in quarterly profit, but the company's revenue missed
analysts' estimates as a sluggish global economy weighs on
consumer spending. MasterCard shares were down 2.6 percent at $538.54 on
Wednesday afternoon. They had previously risen about 6 percent
this year.
- Delphi profit drops as sales fall in Europe, N. America. Vehicle parts maker Delphi Automotive Plc
reported a 20 percent drop in first-quarter profit on
the back of lower sales in Europe and North America, and
increased its cost cutting. Shares of the company, once the largest U.S. auto parts
supplier, were down 3 percent in midday trading.
- U.S. small businesses cut borrowing for third month in a row. Small U.S. businesses cut back on
borrowing a third straight month in March, all but reversing a
short-lived surge after the Federal Reserve launched its
asset-buying program aimed at boosting growth and jobs. The Thomson Reuters/PayNet Small Business Lending Index,
which measures the overall volume of financing to small U.S.
companies, fell to 98.5 from an upwardly revised 105.4 in
February, PayNet said on Wednesday. PayNet had initially
reported the February figure at 101.3.
- Humana(HUM) doubles profit and raises 2013 view. Humana Inc said its quarterly
profit more than doubled as customers used medical services less
than expected, so the company had to pay fewer claims. Humana
also raised its profit forecast for the year.
CNN:
Financial Times:
- China: Subprime for the masses. With
Chinese workers enjoying a break from their travails on May 1 for
Labour Day, it is an opportune time to look at one gift recently
bestowed on them by the country’s financiers. The gift is a new investment opportunity going by the name ‘fund of
trusts’, which conjures up a sense of diversification and safety. But a
more accurate name might be ‘subprime for the masses’. China’s funds of trusts are inspired by the funds of funds that are
common in developed financial markets, allowing people to invest in a
blend of other funds – whether mutual funds or hedge funds – to gain
broader and more dispersed exposure. In China, the funds are invested
in a cocktail of different trust
products, which include some of the riskiest, high-yielding investments
legally available in the country. This innovation is notable for one
major reason. Until now trust
products have typically required minimum investments of Rmb1mn
($162,000) as a way of ensuring that only wealthy individuals put their
money at risk. With funds of trusts, the entry barrier has been cut to
as little as Rmb100,000 ($16,200). That puts trust investments within
the reach of tens of millions of middle-class Chinese.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -3.33% 2) Alt Energy -2.41% 3) Road & Rail -2.21%
Stocks Falling on Unusual Volume:
- COT, TLM, EGY, IRDM, IDT, BPFH, BONT, VGR, MNST, PMC, PEI, SWI, AZPN, HEP, KFRC, ELGX, CRAY, WEX, IPGP, H, MTW, FARO, TUP, SPB, TRMB, ADT, CLD, OKE, SPW, EPIQ, MRK, CAJ, TRN, FISV, GVA, LII, PEI, SM, MPC, EMN, SPB, EME, WBSN, CODE, VPHM, CLD, ACAS, UCO, H, OKS, QEP, VHS, KKD, BGC, XXIA, CRAY, AGN and RBC
Stocks With Unusual Put Option Activity:
- 1) IYR 2) ALGN 3) CBS 4) HOT 5) EEM
Stocks With Most Negative News Mentions:
- 1) BIIB 2) MSTR 3) AA 4) SLV 5) BA
Charts:
