Broad Equity Market Tone:
- Advance/Decline Line: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 12.99 +.93%
- Euro/Yen Carry Return Index 148.52 +.04%
- Emerging Markets Currency Volatility(VXY) 8.96 -1.97%
- S&P 500 Implied Correlation 49.82 -.20%
- ISE Sentiment Index 138.0 -8.61%
- Total Put/Call .73 +4.29%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.96 -.11%
- European Financial Sector CDS Index 86.15 +2.69%
- Western Europe Sovereign Debt CDS Index 50.0 -3.85%
- Emerging Market CDS Index 280.90 -.38%
- 2-Year Swap Spread 11.75 +.75 basis point
- TED Spread 20.50 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -1.25 unch.
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 254.0 -3 basis points
- China Import Iron Ore Spot $131.0/Metric Tonne -.38%
- Citi US Economic Surprise Index 63.90 +.5 point
- Citi Emerging Markets Economic Surprise Index 4.70 +1.6 points
- 10-Year TIPS Spread 2.30 +2 basis points
Overseas Futures:
- Nikkei Futures: Indicating +71 open in Japan
- DAX Futures: Indicating +35 open in Germany
Portfolio:
- Higher: On gains in my biotech sector longs, index hedges and emerging markets shorts
- Market Exposure: 25% Net Long
Bloomberg:
- Emerging-Market Stocks Decline as Vale Tumbles on China. Emerging-market
stocks fell to a
four-month low as concern China’s economic growth will falter sank
commodity producers from Vale SA (VALE5) to Minmetals Development Co.
South Africa’s rand slid to the lowest level in five years. The MSCI Emerging Markets Index dropped 0.9 percent to 964.84 at 11:03 a.m. in New York. The Shanghai Composite Index (SHCOMP) declined to a five-month low as Great Wall Motor Co. (2333) led a slide in automakers and Minmetals retreated 6.3 percent. Brazil’s
Ibovespa (IBOV) drove losses among major stock indexes in the Americas
as Vale, the world’s biggest iron-ore producer, fell 2 percent. The
rand slumped to the lowest since October 2008 on speculation the Federal
Reserve will end debt purchases this year. All 10 groups in the measure
for developing-nation stocks
retreated, led by consumer and commodity companies. “China is slowing down; what they don’t want is a hard landing,” Quincy Krosby, a market strategist at Prudential Financial Inc. in Newark, New Jersey, said by phone. Her firm
oversees more than $1 trillion. “There’s also an adjustment
process as the Fed begins to taper. As the data begin to gain
more traction than initially expected, you’d have the Treasury
market making adjustments, and that has ramifications in the
emerging markets.”
- Copper Declines Most in Eight Weeks Amid China Growth Concerns. Copper fell the most in eight weeks
amid signs of a slowing economy in China and speculation that
the Federal Reserve will further curb stimulus in the U.S.,
fueling demand concerns in the two biggest users of the metal. China’s producer prices, a measure of cost of goods as they
leave the factory, extended the longest slide since the 1990s in
December, adding to evidence that the economy weakened last
month. Fed officials saw diminishing economic benefits from the
central bank’s asset purchases, according to minutes of last
month’s policy meeting released yesterday. “Metals are taking their cue from China-related
concerns,” Edward Meir, an analyst at INTL FCStone in New York,
wrote in a note. “The eagerly awaited Federal Reserve minutes
showed a central bank that is now intent on proceeding with its
tapering program.”
- Fitch China Analyst Chu, Who Warned on Debt, Leaving Agency. Charlene Chu, a Beijing-based analyst
at Fitch Ratings who said China could face a debt crisis after
lending reached double the size of its economy, is leaving the
company after almost eight years. Her warnings that China’s debt could spark a crisis
preceded Fitch’s April downgrade of the country’s long-term
local-currency debt rating, the first cut by one of the top
three rating companies in 14 years. Albert Edwards, global
strategist at Societe Generale SA, said in 2013 Chu was “a
heroine” and “deserves a medal of honor for her stark warnings
about the Chinese credit bubble.” “I have to commend them for giving me the freedom to
express what is a pretty negative view on China, despite the
complications it has brought to Fitch’s own business development
here,” said Chu.
- Draghi Strengthens Pledge to Keep Rates at Record Lows. Mario
Draghi strengthened the European Central Bank’s pledge to keep interest
rates low for as long as necessary and warned that it’s too soon to say
the euro region is out of danger. “The Governing Council strongly
emphasizes that it will maintain an accommodative stance of monetary
policy for as long as necessary,” Draghi told reporters in Frankfurt today after the ECB kept its key rate at a record low of 0.25 percent.
- EUR Money Markets May Push-Back Against Dovish Draghi. Euro
money-market rates likely to drift higher in coming weeks as LTRO
payback restarts, Bert Lourenco, head of EMEA rates research at HSBC
says in an interview, even as ECB President Draghi says would act if
unwarranted monetary tightening seen.
- Draghi Faces Mission Conflict as ECB Reviews Banks.
Mario Draghi’stwo biggest policy tasks for this year threaten to run
into conflict. The European Central Bank president convenes the first
rate-setting meeting of 2014 in Frankfurt today with a to-do list that
includes supporting
the recovery in the 18-nation currency bloc and carrying out a
balance-sheet review of its largest lenders. The risk is that banks pull
back even further on loans, derailing the already-fragile economic
revival, to avoid being ordered to raise more capital.
- Fresenius Bond Offering Seen Setting Record-Low Euro Junk Coupon.
Fresenius SE, a German health-care services provider, is marketing
high-yield bonds that may pay a record-low coupon for non-financial
debt, as the average cost of borrowing holds at the lowest ever.
- European Stocks Decline as Draghi Warns Danger Not Over. European stocks declined as President Mario Draghi reiterated the European Central Bank’s pledge to keep interest rates low as he warned that it’s too soon to say the euro region is out of danger. Arkema SA dropped 3.1
percent after cutting its full-year earnings forecast. Wm Morrison
Supermarkets Plc slid the most in more than five years after saying
annual profit will be at the lower end of analysts’ estimates. TGS Nopec
Geophysical Co. jumped 17 percent after raising its annual revenue
projection. AstraZeneca Plc rose 0.7 percent after a diabetes pill it
developed with Bristol-Myers Squibb Co. won U.S. approval. The Stoxx Europe 600 Index retreated 0.4 percent to 328.41 at the close of trading.
- WTI Crude Declines to Seven-Month Low on Ample Supply. “The
fundamentals don’t look good,” said Phil Flynn, senior market analyst
at the Price Futures Group in Chicago. “Crude production continues to
surge ahead and the refiners are processing this into fuel that is going
into storage. There’s also economic uncertainty before tomorrow’s
employment report.” WTI for February delivery slipped 56 cents, or
0.6 percent, to $91.77 a barrel at 12:24 p.m. on the New York Mercantile
Exchange. Futures touched $91.70, the lowest level since June 3.
The volume of all futures traded was 4.4 percent lower than the
100-day average. The contract has fallen 6.8 percent since the
start of the year.
- Corn Pile Biggest Since 1994 as Crop Overwhelms Use: Commodities. Stockpiles of corn in the U.S., the
world’s top grower, are rising at the fastest pace in 19 years
as a record crop overwhelms increased demand for the grain used
to make livestock feed and ethanol. Inventories on Dec. 1, the first tally since the harvest
was complete, probably totaled 10.764 billion bushels (273.4
million metric tons), 34 percent more than a year earlier,
according to the average of 24 analyst estimates in a Bloomberg
survey. The biggest gain for that date since 1994 signals ample
supplies may extend the slump in March futures by 10 percent to $3.75 a bushel, according to Newedge USA LLC’s Dan Cekander.
- Aussie Falls for 3rd Day Versus Dollar on Fed Taper Speculation.
The Aussie slid 0.3 percent to 88.72 U.S. cents at 5:18
p.m. in Sydney from yesterday, and fell 0.2 percent to
NZ$1.0751. On Dec. 18, it reached 88.21 U.S. cents, the weakest
since August 2010, and touched NZ$1.0733, a level unseen since
October 2008.
- Retailers Cut Forecasts as December Discounts Hurt Profits. Retailers
of all stripes -- from
home-goods merchant Pier One Imports Inc. (PIR) to discounter Family
Dollar Stores Inc. (FDO) and luxury lingerie seller L Brands Inc. -- are
providing hard evidence that the discount war that marked the holiday
season will take a toll on profit. L Brands, which owns the
Victoria’s Secret and Bath & Body Works brands, and Family
Dollar today cut profit forecasts after reporting disappointing December
sales as promotions that failed to lure shoppers hurt margins. Pier One
cut its fourth-quarter forecast after December sales trailed the
chain's expectations. The early results are showing that the discounts -- as
steep as 75 percent off at luxury department-store chain Neiman
Marcus Group LLC -- didn’t generate sufficient traffic or spur
enough purchases of full-priced merchandise to make up for the
lost revenue.
- Funds With $100 Billion May Be Too Big to Fail, FSB Says. Investment funds that manage more
than $100 billion in assets may be labeled too big to fail,
global regulators said, as they seek to expand financial
safeguards beyond banks and insurers. Hedge funds with trading activities exceeding a set value
of $400 billion to $600 billion would also be assessed by
national authorities to gauge whether they need extra rules
because their collapse could spark a crisis, the Financial Stability Board said in a statement yesterday.
Wall Street Journal:
- Beijing Moves to Bolster Claim in South China Sea. China is trying to bolster the legal basis
for its maritime-security forces operating in contested areas of the
South China Sea, threatening to complicate already-fraught relations
with southern neighbors. A new
regulation enacted by the southern island province of Hainan requires
non-Chinese fishing vessels wanting to operate in the South China Sea to
first obtain permission from China's central government. The new
regulation is the latest move by China to assert its claim to disputed
territories on its fringes.
Fox News:
- Christie apologizes over lane closures, fires top aide.
New Jersey Gov. Chris Christie publicly apologized Thursday for
controversial lane closures last year that were arranged by his
associates as an apparent act of political revenge, and fired a top aide
who was at the center of the scandal. "I come out here to apologize to
the people of New Jersey," he said. "I am embarrassed and humiliated."
The governor added: "I am stunned by the abject stupidity that was shown
here."
MarketWatch:
CNBC:
ZeroHedge:
- JPMorgan(JPM) To Exit Foodstamp, Other Prepaid Cards Business. Mess with us, we'll mess with you. That is the message one can derive
from JPMorgan's surprise announcement that it plans to "sell or wind
down its business of issuing prepaid cards for corporate payrolls and
government tax refunds and benefits."
ValueWalk:
Business Insider:
NY Times:
- Chinese Film Director Fined for Exceeding Child Limits. China’s most internationally known film director, Zhang Yimou, and his
wife were ordered by a government office on Thursday to pay a $1.24
million fine for violating family planning limits by having three
children.
Time:
- Janet Yellen: The Sixteen Trillion Dollar Woman. In her first and only interview as Fed chief, the
economist says why she thinks the housing market is back on track,
companies will invest, and more new jobs are on the way this year. She
now has the world's largest economy in her hands.
Real Clear Politics:
- Iran's Fingerprints in Fallujah. Four years ago, al-Qaeda appeared to have been destroyed in Iraq. Last
week, fighters from the group captured Fallujah, a city where hundreds
of Americans were killed or wounded in the last decade fighting the
jihadists. How did this stunning reversal of fortune happen?
Reuters:
- France's debt load in 'danger zone' - national audit office. France's national debt has reached a danger zone at an estimated 93.4 percent economic output last year,
the head of the public audit office said on Thursday. "The level that's been reached has put our country in a danger zone," the
president of the audit office Didier Migaud said in a speech. "Efforts
undertaken so far are not sufficient to get out." France's national debt stood at 90.2 percent of GDP at the end of 2012.
- Brazil sells new 10-year local bond at record-high yield. Brazil's Treasury on Thursday
paid the highest yield ever to launch a new 10-year benchmark
fixed-rate domestic bond, underscoring investor concerns about
the deterioration of the country's fiscal and economic
fundamentals.
Financial Times:
- Federal Reserve faces prospect of bond market showdown over rates.
Bond traders are bringing forward their expectations of when the
Federal Reserve will start to tighten policy, leading to a jump in
short-term US borrowing costs. Recent economic data have pointed to a gathering American
recovery, and could result in a showdown between policy makers and the
Treasury market.
Telegraph:
Xinhua:
- China to Crack Down on 'Illegal' Journalism, Publishing. Five
"special campaigns" to target "counterfeit" reporters, for-profit
journalism, children's books, teaching materials for primary, middle
school students, paper, magazine publishing, citing statement from State
General Administration of Press, Publication, Radio, Film & TV.
- China Bank-Card Consumer-Confidence Index Drops in December.
Bankcard Consumer Confidence Index drops 1.25 points y/y, .77 points m/m
to 85.43 points.
Style Underperformer:
Sector Underperformers:
- 1) Steel -2.40% 2) Coal -2.40% 3) Networking -1.73%
Stocks Falling on Unusual Volume:
- VRTU, BBBY, FOX, CTRP, FDO, AMAG, TAL, SIG, ORMP, BBL, YRCW, TBBK, VOXX, FDML, LB, ZLC, CMGE, PIR, ADTN, ESI, ENOC, CSL, UL, MWV, ZUMZ, BWLD, UNFI, BIG, SHLD, TCS, AEL, TFM, SCHN, ADTN, SKYW, OVTI and GLPI
Stocks With Unusual Put Option Activity:
- 1) IBB 2) UAL 3) SPLS 4) YRCW 5) HAL
Stocks With Most Negative News Mentions:
- 1) AA 2) LB 3) MU 4) FB 5) BIDU
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +1.36% 2) HMOs +1.28% 3) Utilities +.38%
Stocks Rising on Unusual Volume:
- ICPT, GWPH, RCPT, SGMO, GPN, UAL, PWRD, ANGI, M and SWHC
Stocks With Unusual Call Option Activity:
- 1) ARO 2) UAL 3) BBBY 4) TSN 5) USG
Stocks With Most Positive News Mentions:
- 1) OMC 2) F 3) FDO 4) COST 5) GOOG
Charts:
Evening Headlines
Bloomberg:
- China Tells Banks to Improve Disclosures in Shadow-Lending Fight. China’s banking regulator told lenders to publish data including
off-balance-sheet assets and interbank liabilities as the government
steps up scrutiny of the shadow-finance industry. Lenders with total
assets of 1.6 trillion yuan ($264 billion) or more must publish 12
indicators within four months of the end of each financial year, the
China Banking Regulatory Commission said in a statement yesterday. The
requirement is in line with rules published by the Basel
Committee on international banking regulation in July, the CBRC said.
- China’s Producer Prices Slide in Sign of Weakness in Economy.
China’s producer prices, a measure of the cost of goods as they leave
the factory, extended the longest slide since the 1990s in December,
adding to evidence that the world’s second-largest economy weakened last
month. The producer-price index (SHCOMP) fell 1.4 percent from a
year before, the 22nd straight drop, and consumer prices rose 2.5
percent -- less than the 2.7 percent median forecast in a Bloomberg News
survey, a government report showed in Beijing. Today’s
releases followed declines in gauges of manufacturing and services based
on surveys of purchasing managers.
- Shadow Banking. The
scale of it is almost unfathomable: over $70 trillion worldwide. The
Financial Stability Board says it poses “systemic risks” to the global
financial system. It’s growing at phenomenal rates in China and India
and booming in Western banking capitals as well. The catchall phrase
“shadow banking” encompasses risky investment products, private lending
between individuals, pawnshop and loan-shark operations in emerging
markets, as well as more respectable activities like derivatives,
money-market funds, securities lending and repurchase agreements at
financial institutions in Europe and the U.S. The common denominator
is that these activities flourish outside the regular banking system
and often beyond the control of regulators and monetary policy. Together
they show how hard it is to restrict risky lending without causing
harm.
- Bank of Korea Holds Rate Even as Yen Clouds Export Outlook. The Bank of Korea kept its benchmark interest rate unchanged for an eighth straight month, even as a
weak yen clouds the outlook for exporters competing with
Japanese companies. Governor Kim Choong Soo and his board held the
seven-day repurchase rate at 2.5 percent after a cut in May, the central
bank said in a statement in Seoul today. Eighteen of 19 economists
surveyed by Bloomberg News predicted the outcome,
with Goldman Sachs Group Inc. foreseeing a cut.
- Asian Stocks Fall as China Producer Prices Extend Decline.
Asian stocks fell as China’s factory-gate prices extended the longest
streak of declines since the Asian financial crisis and Federal Reserve
minutes showed officials saw diminishing benefits from bond buying.
Canon Inc. lost 1.8 percent in Tokyo on a report operating profit at the
world’s biggest camera maker probably missed its own forecast. Belle
International Holdings Ltd., China’s No. 1
seller of footwear, fell 2.3 percent after surging 13 percent
yesterday. Daiei Inc. slumped 7.3 percent in Tokyo as the
supermarket operator cut full-year forecasts.
The MSCI Asia Pacific Index lost 0.5 percent to 139.16 as
of 11:26 a.m. in Tokyo, with about five stocks falling for every
three that rose.
- Rebar Rises for a Second Day as China Steel Output Declines.
Steel reinforcement-bar futures in Shanghai climbed for a second day,
extending a recovery from an almost seven-month low, as China’s crude
steel output fell. Rebar for May delivery on the Shanghai Futures
Exchange gained as much as 0.6 percent to 3,488 yuan ($576) a metric ton
before trading at 3,478 yuan at 10:05 a.m. local time. The most-active contract closed at 3,465 yuan on Jan. 7, the lowest close
since its inception in May.
- Corn Falls to 40-Month Low, Wheat Drops on Global Supply Outlook. Corn futures tumbled to a 40-month
low and wheat fell to the cheapest since 2011 on speculation
that a U.S. government report this week will show ample world
supplies. Oilseeds also slumped. Inventories of corn in the season
ending Oct. 1 probably
will rise to 163.08 million metric tons, the highest since 2001,
and U.S. winter-wheat planting climbed to a six-year high,
according to Bloomberg surveys before the Department of
Agriculture’s report on Jan. 10. Canadian Canola futures extended a
slump to the lowest since August 2010, and soybeans in Chicago dropped.
- Iraq Is New Schism for Saudis in Strained Alliance With West. Few goods transit the desert border
between the Middle East’s two biggest oil producers, and Saudi
authorities have built a fence to help ensure that political
instability in Iraq doesn’t cross over either. Dysfunctional ties between the countries have come into
focus as a wave of violence sweeps Iraq, turning it into another
arena where Saudi interests are diverging from those of the U.S.
Fighting is centered in Anbar province, bordering Saudi Arabia,
where Sunni fighters with ties to al-Qaeda are rebelling against
the Shiite-led government of Nouri al-Maliki, which is supported
by Iran.
- Bed Bath & Beyond(BBBY) Falls After Profit Trails Analysts’ Estimates.
Bed Bath & Beyond Inc. (BBBY) fell in extended trading after it
reported quarterly net income and forecast fourth quarter profit that
trailed analysts’ estimates. The shares declined 8.4 percent to $72.99 at 4:50 p.m. after gaining less than 1 percent to $79.68 at the close in New York.
Wall Street Journal:
- Fed Eyes Bubble Risks, Minutes Show. Federal Reserve officials in December turned
their attention to the risk of dangerous financial bubbles emerging as
they scanned a brightening economic outlook and formulated a plan to
gradually wind down their bond-buying program this year. While
officials agreed that threats to financial stability were modest, the
issue was at the center of wide-ranging discussions about emerging
threats to the economy, according to minutes of the central bank's Dec.
17-18 policy meeting, which were released Wednesday with the traditional
three-week lag. Watching for bubble threats could become one of the first big issues on the plate of Fed Vice Chairwoman Janet Yellen, who takes the reins as chairwoman on Feb. 1 after Ben Bernanke's term as the Fed's leader ends.
- Borrowers Hit Social-Media Hurdles. Regulators Have Concerns About Lenders' Use of Facebook(FB), Other Sites.
More lending companies are mining Facebook, Twitter and other
social-media data to help determine a borrower's creditworthiness or
identity, a trend that is raising concerns among consumer groups and
regulators. Lending companies—some of which are backed with venture
funding from Google Ventures, the venture-capital arm of Google Inc.,
and Accel Partners, an early Facebook Inc. investor—are looking at
potential problems such as whether applicants put the same job
information on their loan application as they posted on LinkedIn, or if
they shared on Facebook that they had been let go by an employer. A
small business that draws negative reviews on eBay also could undermine
its chances of getting more credit, lending companies say.
- Bridge-Spat Emails Pose Questions For Christie.
Emails suggesting that close aides to New Jersey Gov. Chris Christie
engineered traffic jams as political retribution against a Democratic
mayor are turning into a major test for the national ambitions of a
popular Republican considered a leading 2016 presidential contender.
- Gates on Obama. The former Pentagon chief's memoir explains what the world knows. The open secret of Washington memoirs is that they typically confirm
what we already know or suspect. In the case of the excerpts from the
forthcoming book by
Robert Gates,
who was Defense Secretary for two years under George W. Bush and two and a half under President
Obama,
this isn't reassuring.
Fox News:
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- Novartis sued by U.S. states over alleged kickbacks to pharmacy firm. U.S.
states have sued Novartis over accusations the Swiss drugmaker paid
kickbacks to a New York pharmacy company to promote its Exjade drug to
treat excessive iron in the blood, the New York Attorney General
said. The complaint, unsealed on Wednesday, says Novartis paid New
York-based specialty pharmacy company BioScrip to keep
patients on Exjade at a time when the Swiss company feared patients were
discontinuing its use because of harmful side effects.
- Russia again blocks U.N. Security Council from condemning Syria attacks. Russia blocked a U.N. Security Council
statement on Wednesday that would have expressed outrage at deadly
airstrikes by Syrian President Bashar al-Assad's forces and condemned
the use of missiles and "barrel bombs" in towns, U.N. diplomats said.
Russia, a staunch Assad ally, opposed a similar statement on
December 19 that would have condemned attacks by Syrian government
troops on civilians. Russia, joined by China, has also vetoed three
Security Council resolutions that would have condemned Assad's
government and threatened it with sanctions.
- Qualcomm(QCOM) CEO says still in the dark on China antitrust probe.
Qualcomm's CEO
Paul Jacobs said on Wednesday that the U.S. mobile chipmaker still has
not been notified about why it has come under antitrust scrutiny in
China since late last year. In November, Qualcomm announced that China's
National
Development and Reform Commission had launched an antitrust
probe into the company. The chipmaker said it was unaware of any
possible violations.
- U.S. Senate panel to mull regulation of banks, physical commodities. A subcommittee of the powerful Senate
Banking Committee has scheduled a hearing for Jan. 15 to discuss
regulating Wall Street's role in physical commodity markets.
Among the witnesses scheduled to speak at the panel are top oversight
officials with the Federal Energy Regulatory Commission and the
Commodity Futures Trading Commission, and an official from the Federal
Reserve's banking supervision arm. The hearing comes as the Fed
reconsiders exemptions given to banks since the early 2000s that allow
them to engage in the previously prohibited trading of physical
commodities.
Financial Times:
- France
Should Impose Tax on Smartphones, Film Report Says. Govt-commissioned
film industry report revives proposal to introduce 1% tax on sale of
devices such as smartphones, tablets.
Telegraph:
21st Century Business Herald:
- China
to Cut 2014 Railway Fixed-Asset Investment. China's 2014 railway
fixed-asset investment will be lower than the 660b yuan spent in 2013,
citing a person who will attend a railway work conference organized by
China Railway Corp. today. China Railway Corp. is cutting investment to
pay more attention to investment returns, the report says.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 138.50 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 108.0 -1.5 basis points.
- NASDAQ 100 futures -.02%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to fall to 335K versus 339K prior.
- Continuing Claims are estimated to rise to 2850K versus 2833K prior.
Upcoming Splits
Other Potential Market Movers
- The Fed's Kocherlakota speaking, Fed's George speaking, ECB rate decision, BoE rate decision, China Industrial Production/Consumer Confidence, China CPI, $13B 30Y T-Bond auction, Challenger Job Cuts report for December, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report and the RBC Consumer Outlook for January could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Mixed
- Volume: Slightly Above Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 12.95 +.23%
- Euro/Yen Carry Return Index 148.40 -.10%
- Emerging Markets Currency Volatility(VXY) 9.11 -.11%
- S&P 500 Implied Correlation 50.36 +.86%
- ISE Sentiment Index 155.0 +1.31%
- Total Put/Call .72 +1.41%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.19 +1.52%
- European Financial Sector CDS Index 83.87 +3.74%
- Western Europe Sovereign Debt CDS Index 52.0 unch.
- Emerging Market CDS Index 281.20 +2.64%
- 2-Year Swap Spread 11.0 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -1.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% unch.
- Yield Curve 257.0 +3 basis points
- China Import Iron Ore Spot $131.50/Metric Tonne -1.72%
- Citi US Economic Surprise Index 63.40 +2.4 points
- Citi Emerging Markets Economic Surprise Index 3.10 +1.6 points
- 10-Year TIPS Spread 2.28 +4 basis points
Overseas Futures:
- Nikkei Futures: Indicating -106 open in Japan
- DAX Futures: Indicating +3 open in Germany
Portfolio:
- Higher: On gains in my biotech/medical sector longs, index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
