Style Outperformer:
Sector Outperformers:
- 1) Airlines +1.05% 2) Networking +.89% 3) Semis +.81%
Stocks Rising on Unusual Volume:
- QIHU, HIMX, DIOD, MXWL, PWRD, NRGY, GTE, ABFS, YRCW, AMAP, IMMR, AMBA, WDAY, ALK, MINI, FCS, CTB, INVN and WLK
Stocks With Unusual Call Option Activity:
- 1) NSM 2) SE 3) PXD 4) HTZ 5) TSN
Stocks With Most Positive News Mentions:
- 1) JKHY 2) PXD 3) ADI 4) DG 5) SWKS
Charts:
Weekend Headlines
Bloomberg:
- Spanish Pain Shows ECB Cut Means Nothing to Banks: Euro Credit.
Banks in Spain and Italy are hobbling European Central Bank efforts to
resuscitate growth as they ratchet up the interest rates on company
loans just as official borrowing costs move closer to zero. The increase
in what companies are paying for money underscores the conflict between
lenders bolstering their balance sheets, while central bankers try to
drive the euro-region economy out of recession using monetary policy.
- Japan Seeks to Boost Financial Ties With Asean Amid China Row. Japan said it will boost financial cooperation with Southeast Asian
nations, support their bond markets and make it easier for Japanese
companies to raise funds in local currencies. Asia’s second-largest
economy will also consider reviving emergency monetary arrangements with
Malaysia, Singapore and Thailand, the Japanese finance ministry said in
a statement after a meeting of finance ministers and central bankers
from Japan and the Association of Southeast Asian Nations, or Asean,
near New Delhi on May 3. Japan is strengthening ties with countries in
the region as it tries to revive growth and as tensions with China escalate over a territorial dispute.
- Gillard Says Aussie’s Strength Forces ‘Grave’ Budget Decisions. Prime Minister
Julia Gillard said a 50 percent rise in the value of the Australian
dollar is squeezing trade-exposed businesses and cutting tax revenue,
forcing her government to make “grave” budget decisions. The erosion of tax receipts played a part in the
government’s decision to raise health-care taxation by 0.5
percentage point to fund a national disability insurance
program, Gillard said in an interview with Australian
Broadcasting Corp. television today.
- Australia Retail Sales Fall in March as Households Turn Cautious. Australian retail sales unexpectedly
declined in March for the first time this year as consumers
spent less on household goods, clothing and footwear in an
economy grappling with a weaker outlook. Sales dropped 0.4 percent to A$21.9 billion ($22.5 billion)
from a month earlier, when they rose 1.3 percent, the Bureau of
Statistics said in Sydney today. The result compares with the
median forecast in a Bloomberg News survey of 22 economists for
a 0.1 percent gain.
- N. Korea Says Won’t Invite Anyone From U.S. to Discuss Detainee.
North Korea said it has no plans to invite anyone from the U.S. to
discuss the case of Pae Jun Ho, the American citizen sentenced to 15
years’ hard labor
for unidentified “hostile acts” against the communist country. Pae
was arrested for “many different acts of crime” including plotting to
overthrow the North Korean regime, an unidentified Foreign Ministry
spokesman was cited as saying by the official Korean Central News
Agency. “We have no plans to invite anyone from the U.S. over the problem of
Pae,” the spokesman said, vowing that North Korea will “sternly respond
to illegal acts of U.S. citizens.”
- Indonesia Bulls Brace for Drop as Stocks Collide With Inflation. Money
managers who profited most from Indonesia’s 57 percent stock-market
rally are preparing for a temporary retreat as valuations climb to
record highs and inflation accelerates. The MSCI Indonesia Index is
poised to drop as much as 10 percent before resuming the advance that
sent it to a record on May 1, say Samsung Asset Management and Panin
Asset Management,
whose stock picks in Asia’s sixth-largest economy helped their
funds beat 97 percent of peers since May 2010.
- Algorithms Seen by Marex Driving More Than Half of LME Trading. So-called algorithmic traders may
account for more than half of activity on the London Metal
Exchange, the world’s biggest marketplace for metals, according
to Marex Spectron Group. “Algo-driven trading is probably in the north of 50
percent of LME trading,” Simon Van Den Born, global head of
metals at Marex Spectron, said in an interview in London last
week. He was referring to so-called “outright” trades that
don’t involve borrowing or lending on the exchange.
- WTI Crude Advances a Third Day as Syria Says Attacked by Israel. West Texas Intermediate crude gained
for a third day amid concern that an attack on Syria will raise tension in the Middle East and disrupt supplies.
London-traded Brent also advanced. WTI futures climbed as much as 1.4
percent in New York after Syria’s state news agency said Israeli
aircraft attacked a military research center on the outskirts of
Damascus yesterday. The strikes were a “declaration of war,” Faisal
al-Mekdad, Syria’s Deputy Foreign Minister Faisal, told CNN.
- Rio Tinto(RIO) Says ‘Tough’ Energy, Aluminum Units Need Cost Cutting. Rio Tinto Group (RIO) needs to cut costs to
remain competitive amid ‘very tough times’ for its aluminum,
coal and uranium businesses, Chief Executive Officer Sam Walsh
said. China’s economy dipped in the first three months of the
year and the world economy remains volatile, the head of the
London-based company said today in an interview with Nine
Entertainment Co. television. Waning global demand for commodities is prompting Rio and
rival miners of commodities from gold to coal to trim assets and
staff as they are squeezed by unfavorable foreign exchange
rates, falling prices and rising costs. Iron ore, which accounts
for 91 percent of Rio Tinto’s net income, fell 4.5 percent last
week to its lowest level this year. Cost cutting “is not easy, this is a process that is very,
very tough, but we need to get on top of it because we need to
have a business that will be competitive,” Walsh said. “When I
look at both our energy and our aluminum business, they’re going
through very tough times.”
- JPMorgan(JPM) Should Name Chairman to Watch CEO, ISS Tells Investors. JPMorgan
Chase & Co. (JPM), the biggest U.S. bank, should separate the
roles of chairman and chief executive officer that are both held by
Jamie Dimon, according to advisory firm Institutional Shareholder
Services. Stockholders should vote in favor of a proposal to name an
independent chairman at New York-based JPMorgan’s annual meeting May
21, ISS said yesterday in a report. ISS, a unit of New York- based MSCI
Inc. (MSCI), advises investors on proxy voting and corporate governance.
It also endorsed the proposal for an independent
board chairman last year.
Wall Street Journal:
- Chinese Protest Plans for Industrial Plants. Environmental Fears Are Fueling Opposition Against New Projects That Officials Say Are Needed for Economic Growth. Tension is bubbling in two western Chinese cities as opposition grows
against planned industrial facilities, the latest examples of growing
public environmental concern threatening to derail projects that
officials say are needed for economic growth. In the southwest city of Kunming, capital of Yunnan province, at
least several hundred people flooded downtown streets on Saturday,
demonstrating against an oil refinery and petrochemical processing plant
planned nearby.
Local organizers and the state-run Xinhua news agency confirmed the
protest. Photos posted to China's Sina Weibo microblogging service
showed crowds of perhaps more than 1,000 gathering in downtown Kunming.
Fox News:
- Clinton sought end-run around counter-terrorism bureau on night of Benghazi attack, witness will say.
On the night of Sept. 11, as the Obama administration scrambled to
respond to the Benghazi terror attacks, then-Secretary of State Hillary
Clinton and a key aide effectively tried to cut the department's own
counterterrorism bureau out of the chain of reporting and
decision-making, according to a "whistle-blower" witness from that
bureau who will soon testify to the charge before Congress, Fox News has
learned. That witness is Mark I. Thompson, a former Marine and now
the deputy coordinator for operations in the agency’s counterterrorism
bureau. Sources tell Fox News Thompson will level the allegation against
Clinton during testimony on Wednesday before the House Oversight and
Government Reform Committee, chaired by Rep. Darrell Issa, R-Calif. Fox
News has also learned that another official from the counterterrorism
bureau -- independently of Thompson -- voiced the same complaint about
Clinton and Under Secretary for Management Patrick Kennedy to trusted national security colleagues back in October.
CNBC:
- Tens of Thousands of French Protesters Reject Austerity. Ten of thousands of far-left French protesters marched to denounce
economic austerity on Sunday to mark the end of President Francois
Hollande's first year in office. The march, organised by
the Left Front coalition, drew a range of left-wingers from greens to
trade unionists to the symbolic venue of Bastille Square, site of a
Paris prison that was stormed during the French Revolution of 1789.
Zero Hedge:
- Niall Ferguson – The Great Degeneration. The core message of his presentation was clear: the party of the
last 20 years is now over and the longer we fail to address the real
issues the bigger the hangover will be in the future.
Business Insider:
ValueWalk:
- Hedge fund Leverage Hits an All-Time High: BAML. Hedge fund
leverage has been on the rise over the past few months. We have already
covered the topic several times in 2013. According to the latest data the trend has continued and is close to the peak reached in 2007.
BAML is out with its latest weekly hedge fund monitor (although they
skipped last week). In the report issued on Sunday the 5th of May, BAML
notes that hedge fund leverage is now at $380 billion, which is only $1
billion short of the high reached in 2007. For all intents and purposes,
hedge fund leverage is basically at an all time high.
Reuters:
- China HSBC April services PMI falls to lowest in nearly two years.
Growth in China's services sector slowed sharply in April to its lowest
point since August 2011, a private sector survey showed on Monday, in
fresh evidence that economic revival will remain modest and may be
facing wider risks. The HSBC services Purchasing Managers' Index
(PMI) fell to 51.1 in April from 54.3 in March, with new order expansion
the slowest in 20 months and staffing levels in the service sector
decreasing for the first time since January 2009. The HSBC services
PMI follows a similar survey by China's National Bureau of Statistics,
which found non-manufacturing activity eased to 54.5. In the latest
survey, the sub-index measuring new business orders dropped sharply to a
20-month low of 51.5 in April, with only 15 percent of survey
respondents reporting an increased volume of new orders that month, HSBC
said.
AFP:
- French Finance Minister Stays Firm on Reducing Deficit. French
government won't "loosen in any way" its deficit-reduction measures,
French Finance Minister Pierre Moscovici is cited as saying in an
interview.
Financial Times:
Telegraph:
- Threat to the eurozone is as strong as ever. The eurozone economy has contracted every single quarter since the end of
2011. During the first three months of 2013, the region's GDP shrank by a
punishing 0.6pc, having fallen at a similar pace the quarter before.
Welt:
- German 2013 Tax Revenue May Be Less Than Forecast. German tax
estimator sees tax revenue at EU4bn-EU5bn less than forecast in October.
Would be the first time in 3 yrs estimator cut forecast.
- Barroso Defends Merkel Against Critics of Austerity. It isn't
Angela Merkel's or Germany's mistake for what happens in France or
Portugal, everyone needs to do his homework, Jose Manuel Barroso said in
an interview. Says crisis isn't "result of German politics or mistakes
by the EU". Says Merkel is one of the people, if not the person, who
understands best what happens in Europe.
- SMT Scharf Sees Slower Growth as Boom Fades. Growth will be
"flatter" over next three to five years as volatile commodity markets
slow demand, citing CEO Christian Dreyer in interview.
- EU's
Barroso Warns Germany Against Reform Complacency. EU Commission
President Jose Manuel Barroso warns Germany not to be content with
results of past reforms, saying "complacency" would be "dangerous,"
citing him in an interview.
WirtschaftsWoche:
- Magna to Cut Jobs in Europe, US on Market Downturn. Magna
examining which parts have to be produced close to clients in Europe and
which can be delivered from elsewhere, citing CEO Donald Walker in an
interview. Co. to cut US jobs as well, Walks said.
Bild am Sonntag:
- Giving
Spain, France more time to improve their budgets is compliant with
enforced stability and growth pact, Germany Finance Minister Wolfgang Schaeuble said in an interview. Says EU Commission, German govt agree not to let reform process abate.
Business Recorder:
- EU’s Barnier urges France to economic reforms. European Union Internal Market Commissioner Michel
Barnier, the EU's top financial regulator, called on the French
government to pursue its planned reforms despite the Commission allowing
two more years to meet its budget deficit target. Olli
Rehn, the European monetary affairs commissioner, said on Friday France
badly needed to unlock its growth potential and create jobs, adding
Spain, Italy and the Netherlands as well as France - four of the euro
zone's five largest economies - would remain in recession this year. "It's a moment of truth for the government which needs to have the
political courage to carry out those reforms which will sometimes not be
understood, and require effort," he told French radio Europe 1 in an
interview.
El Economista:
- State-owned bank rescue fund FROB may increase capital injections
in banks it has aided and provide capital to more banks, citing sources
familiar with the matter who are in the financial industry. Spain
so-called bad bank Sareb to require all EU2.5b of European aid planned
for it. Increasing capital needs linked to economic recession, new rules
on bad loans provisioning.
The Fiscal Times:
MEMRI:
- In Advance Of Orthodox Easter In Egypt, Muslim Brotherhood And Salafis Issue Fatwas Forbidding Greeting Copts On Their Holidays. In advance of Orthodox Easter, which will be celebrated by Egypt's
Copts in early May 2013, fatwas have been issued by a Muslim Brotherhood
(MB) official and by officials in Egypt's Salafi stream forbidding
Muslims from greeting Christians on their religious holidays. It should
be mentioned that these fatwas are a departure from the practice of past
MB leaders, who sent greeting cards to the Patriarch and Coptic figures
on their holidays, including Easter, and dispatched representatives to
greet Copts in churches.
Weekend Recommendations
Barron's:
- Bullish commentary on (AAWW) and (CAT).
- Bearish commentary on (FB).
Night Trading
- Asian indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 84.0 -1.25 basis points.
- NASDAQ 100 futures +.22%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The ECB's Draghi speaking, Eurozone Services PMI, Eurozone Retails Sales data, Spanish Unemployment Rate, RBA rate decision, (QSII) analyst day, (CELG) analyst meeting, (AZPN) investor day and the Value Investing Congress could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by commodity and industrial 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 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 rising global growth fears, more Mideast unrest, Eurozone debt angst and earnings worries offset short-covering, central bank hopes and investor performance angst. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.
S&P 500 1,614.42 +2.03%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 954.42 +2.05%
- S&P 500 High Beta 24.43 +3.88%
- Value Line Geometric(broad market) 414.15 +2.18%
- Russell 1000 Growth 741.77 +2.56%
- Russell 1000 Value 816.60 +1.44%
- Morgan Stanley Consumer 1,009.32 +1.64%
- Morgan Stanley Cyclical 1,172.72 +2.29%
- Morgan Stanley Technology 742.54 +3.40%
- Transports 6,218.90 +1.68%
- Bloomberg European Bank/Financial Services 96.72 +3.18%
- MSCI Emerging Markets 43.17 +1.97%
- HFRX Equity Hedge 1,104.14 +.29%
- HFRX Equity Market Neutral 940.99 -.14%
Sentiment/Internals
- NYSE Cumulative A/D Line 188,210 +2.19%
- Bloomberg New Highs-Lows Index 1,399.0 +735
- Bloomberg Crude Oil % Bulls 35.3 -11.8%
- CFTC Oil Net Speculative Position 209,941 -.77%
- CFTC Oil Total Open Interest 1,771,193 +3.04%
- OEX Put/Call 1.02 -62.22%
- ISE Sentiment 106.0 -6.19%
- Volatility(VIX) 12.85 -5.58%
- S&P 500 Implied Correlation 52.04 -1.42%
- G7 Currency Volatility (VXY) 8.82 -2.33%
- Smart Money Flow Index 11,820.65 +1.25%
- Money Mkt Mutual Fund Assets $2.563 Trillion -1.20%
Futures Spot Prices
- Reformulated Gasoline 282.54 +.41%
- Bloomberg Base Metals Index 189.22 -1.22%
- US No. 1 Heavy Melt Scrap Steel 368.0 USD/Ton unch.
- China Iron Ore Spot 128.10 USD/Ton -4.47%
- UBS-Bloomberg Agriculture 1,503.02 +2.46%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 7.2% +40 basis points
- Philly Fed ADS Real-Time Business Conditions Index .2650 -2.29%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 114.98 +.04%
- Citi US Economic Surprise Index .30 +12.7 points
- Citi Emerging Mkts Economic Surprise Index -44.80 -4.4 points
- Fed Fund Futures imply 50.0% chance of no change, 50.0% chance of 25 basis point cut on 6/19
- US Dollar Index 82.12 -.42%
- Euro/Yen Carry Return Index 135.43 +1.68%
- Yield Curve 152.0 +7 basis points
- 10-Year US Treasury Yield 1.74% +8 basis points
- Federal Reserve's Balance Sheet $3.274 Trillion -.07%
- U.S. Sovereign Debt Credit Default Swap 31.50 -3.08%
- Illinois Municipal Debt Credit Default Swap 116.0 -2.96%
- Western Europe Sovereign Debt Credit Default Swap Index 88.82 -7.48%
- Emerging Markets Sovereign Debt CDS Index 181.09 -4.97%
- Israel Sovereign Debt Credit Default Swap 107.18 -5.02%
- South Korea Sovereign Debt Credit Default Swap 69.50 -3.47%
- China Blended Corporate Spread Index 413.0 +4 basis points
- 10-Year TIPS Spread 2.30% -8 basis points
- TED Spread 23.0 +.5 basis point
- 2-Year Swap Spread 14.0 -.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -16.50 +1.75 basis points
- N. America Investment Grade Credit Default Swap Index 71.25 -8.88%
- European Financial Sector Credit Default Swap Index 131.60 -17.38%
- Emerging Markets Credit Default Swap Index 231.63 -3.24%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 100.0 +2.5 basis points
- M1 Money Supply $2.550 Trillion +1.15%
- Commercial Paper Outstanding 997.40 -1.20%
- 4-Week Moving Average of Jobless Claims 342,300 -15,200
- Continuing Claims Unemployment Rate 2.3% unch.
- Average 30-Year Mortgage Rate 3.35% -5 basis points
- Weekly Mortgage Applications 883.80 +1.81%
- Bloomberg Consumer Comfort -28.9 +1.0 point
- Weekly Retail Sales +2.20% +30 basis points
- Nationwide Gas $3.52/gallon +.01/gallon
- Baltic Dry Index 878.0 +.80%
- China (Export) Containerized Freight Index 1,101.57 +.57%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 17.50 unch.
- Rail Freight Carloads 247,569 +2.85%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (31)
- YELP, MDSO, NR, BGFV, OIS, LOGM, MGAM, MDCA, REGI, DXCM, CPTS, CAMP, ULTI, HTWR, REGN, WBSN, TXRH, WAIR, GDOT, DWA, MCO, MIC, IPHI, GNRC, DFRG, BKD, ACT, CODE, VSH, RGC and NYX
Weekly High-Volume Stock Losers (26)
- BWLD, AFCE, ECHO, IPGP, HBHC, WEX, AMZN, FRAN, TRMB, IBKC, MSTR, AGN, AUXL, SWI, ITRI, NATI, PKI, FARO, SAM, EXPE, CHH, KFRC, NUAN, RBC, DXPE and GWAY
Weekly Charts
ETFs
Stocks
*5-Day Change
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Substantially Higher
- Sector Performance: Almost Every Sector Rising
- Market Leading Stocks: Outperforming
Equity Investor Angst:
- ISE Sentiment Index 106.0 +1.3%
- Total Put/Call .90 +1.12%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.34 -3.95%
- European Financial Sector CDS Index 131.70 -5.4%
- Western Europe Sovereign Debt CDS Index 90.61 -3.2%
- Emerging Market CDS Index 231.68 +1.2%
- 2-Year Swap Spread 14.0 unch.
- 3-Month EUR/USD Cross-Currency Basis Swap -16.50 +.75 bp
Economic Gauges:
- 3-Month T-Bill Yield .05% unch.
- China Import Iron Ore Spot $128.10/Metric Tonne -1.0%
- Citi US Economic Surprise Index .30 -3.9 points
- 10-Year TIPS Spread 2.30 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +529 open in Japan
- DAX Futures: Indicating +5 open in Germany
Portfolio:
- Higher: On gains in my retail/tech/medical/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and then added them back
- Market Exposure: 50% Net Long
