Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.06% 2) Hospitals +2.05% 3) HMOs +.83%
Stocks Rising on Unusual Volume:
- RTRX, TWC, SKX, GNRC, CTRP, BAH, CPA, GT, CBS, AFSI, VHC, VNDA, WWAV, SHLD, BGC, MOH, ROVI, ACC, SBGI, DBD, DATA, PANW, CFX and FEYE
Stocks With Unusual Call Option Activity:
- 1) HUN 2) OWW 3) TWC 4) CFN 5) AFSI
Stocks With Most Positive News Mentions:
- 1) TAP 2) BKC 3) DPS 4) GOOG 5) TWC
Charts:
Evening Headlines
Bloomberg:
- Australian Unemployment Jumps to 10-Year High; Aussie Drops. Australia's unemployment rate
climbed to the highest in more than 10 years in January,
spurring traders to pare bets on an interest-rate increase and sending the Aussie to its biggest drop in almost three weeks. The jobless rate rose to 6 percent from 5.8 percent, the statistics bureau said in Sydney. The median estimate was an
increase to 5.9 percent in a Bloomberg News survey of
economists. The number of people employed fell by 3,700. “There’s no spinning it, Australia’s labour market is
weak,” said Katrina Ell, an economist at Moody’s Analytics in
Sydney. “Businesses are not confident in future economic
conditions so are trimming jobs and working their existing staff
harder.”
- Samsung Miss in Worst Season Since ’06 Jars Bulls: Korea Markets. Stock strategists are cutting
forecasts for gains in South Korea amid the most widespread
profit disappointments in seven years. Samsung Electronics Co. (005930) and Posco are among the 74 percent
of Kospi index companies whose fourth-quarter earnings missed
analyst projections, on track for the highest proportion since
the second quarter of 2006, data compiled by Bloomberg show.
- Asian Stocks Drop After Longest Streak of Gains This Year.
Asian stocks dropped after the regional benchmark index climbed for a
sixth day yesterday to cap its longest run of advances this year. Asahi
Group Holdings Ltd. slid 3.2 percent in Tokyo after Japan’s
second-largest beermaker’s net-income forecast missed estimates. Tokyo
Tatemono Co. plunged 13 percent after the developer predicted full-year
operating profit below analyst expectations. Qantas Airways Ltd. jumped
6.7 percent after the Sydney Morning Herald reported that Australian
Treasurer Joe Hockey said the nation’s biggest carrier met
pre-conditions for
government support.
The MSCI Asia Pacific Index slipped 0.6 percent to 135.64
as of 11:25 a.m. in Tokyo after rising as much as 0.1 percent.
- Rebar Near Lowest Since September 2012 as Spot Market Still Weak. Steel reinforcement-bar futures in
Shanghai traded near the lowest level since September 2012 amid
a weak post-holiday spot market and rising inventory. Rebar for May
delivery on the Shanghai Futures Exchange traded at 3,389 yuan ($559) a
metric ton at 10:01 a.m. local time. Futures settled at 3,386 yuan on
Feb. 11, the lowest close
for a most-active contract in 17 months.
- Cisco(CSCO) Third-Quarter Sales Forecast May Miss Some Some Estimates. Cisco Systems
Inc. issued a sales outlook for the fiscal third quarter that may miss
some analysts’ estimates amid weakness in emerging markets and a slump
in demand from telecommunications-service providers. Revenue will
decline 6 percent to 8 percent in the current period ending in April,
the San Jose, California-based company said on a conference call today.
That indicates sales of $11.2 billion to $11.5 billion, while analysts
projected $11.3 billion on average, according to data compiled by
Bloomberg (CSCO:US). The shares fell in extended trading.
Wall Street Journal:
- For Many, Few Health-Plan Choices, High Premiums on Online Exchanges. Analysis Shows Americans in Poorer Counties Have Limited Options on Health-Care Exchanges. Hundreds of thousands of Americans in poorer counties have few choices
of health insurers and face high premiums through the online exchanges
created by the health-care law, according to an analysis by The Wall
Street Journal of offerings in 36 states.
Barron's:
Fox News:
MarketWatch.com:
- Cisco(CSCO) CFO: ‘There’s been a slowdown, and it’s very abrupt’. The
emerging markets problems Cisco spoke of last quarter are still there,
and it’s hard to say when they will go away, Chief Financial Officer
Frank Calderoni said
Wednesday. “Clearly, there’s been a slowdown and it’s been very abrupt,” he told
MarketWatch after the company’s earnings call. “It’s difficult to
determine how long it will last.”
CNBC:
- Whole Foods(WFM) lowers 2014 guidance; shares slip. Whole Foods Market on Wednesday lowered its 2014 sales forecast after first-quarter sales missed Wall Street expectations. The grocery chain's shares fell more than 6 percent in after-hours trading. Same-store sales, a key gauge of performance for retailers, rose 5.4 percent for the fiscal first quarter, ended Jan. 19.
- Docs face 'crushing' costs from diagnosis code switch, AMA says. Doctors face "crushing" costs from a looming rule change that will
shake up the way diagnosis codes used for insurance claims are filed,
the American Medical Association warned Wednesday. In some cases,
the AMA expects doctors will have to pay three times the original
estimate for implementing these new and more numerous codes.
- Are EM companies the real debt worry? (video) Emerging markets have convulsed recently amid concerns about
government balance sheets, but investors may want to worry more about
corporate ones instead. Dramatic falls in the currencies of
countries such as Argentina and Turkey have triggered widespread selling
across the emerging markets with the "Fragile Five" – India, Indonesia,
Brazil, Turkey and South Africa –among the worst hit.
Zero Hedge:
ValueWalk:
Business Insider:
Reuters:
Telegraph:
- World asleep as China tightens deflationary vice. We keep our fingers crossed as we glimpse the first foam of a deflationary
Ch'ient'ang'kian coming our way from China. The world's central banks have
no margin for error. China's Xi Jinping has cast the die. After weighing up the unappetising choice
before him for a year, he has picked the lesser of two poisons. The balance of evidence is that most powerful Chinese leader since Mao Zedong
aims to prick China's $24 trillion credit bubble early in his 10-year term,
rather than putting off the day of reckoning for yet another cycle. This may be well-advised for China, but the rest of the world seems remarkably
nonchalant over the implications. Brazil, Russia, South Africa, and the
commodity bloc are already in the cross-hairs.
Financial Express:
- IBM India to Cut About 700-800 Workers.
Economic Information Daily:
- China Listed Coal Cos. See 2013 Losses, Profit Slump. Sixteen Chinese listed coal companies are reporting losses or declines in profits for 2013, citing Wind data. 17 of 27 listed coal companies have issued profit alerts or preliminary earnings reports as of yesterday. Debt-to-asset ratio at almost half of listed coal companies were above 50% for the first 3 quarters of last year, the report cites Wind as saying.
Shanghai Daily:
- Beijing Pollution Makes It 'Barely Suitable' for Living. Beijing is "barely suitable" for living because of heavy pollution,
citing a blue paper for world cities compiled by the Shanghai Academy
of Social Sciences and the Beijing-based Social Sciences Academic Press.
Beijing air was highly polluted at least once a week on average in 2013, the report said.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 139.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 106.25 -.25 basis point.
- NASDAQ 100 futures -.26%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Retail Sales Advance for January are estimated unch. versus a +.2% gain in December.
- Retail Sales Ex Auto for January are estimated to rise +.1% versus a +.7% gain in December.
- Retail Sales Ex Auto and Gas for January are estimated to rise +.1% versus a +.6% gain in December.
- Initial Jobless Claims are estimated to fall to 330K versus 331K the prior week.
- Continuing Claims are estimated to fall to 2960K versus 2964K prior.
10:00 am EST
- Business Inventories for December are estimated to rise +.4% versus a +.4% gain in November.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Yellen speaking, ECB Monthly Bulletin, China CPI, $16B 30Y T-Bond
auction, weekly EIA natural gas inventory report, Bloomberg US Economic
Survey for February, weekly Bloomberg Consumer Comfort Index, (IT)
investor day, (EMR) investor conference and the (ZION) investor
conference 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 50% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Volume: Slightly Below Average
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- Volatility(VIX) 14.47 -.28%
- Euro/Yen Carry Return Index 145.26 -.50%
- Emerging Markets Currency Volatility(VXY) 8.84 -1.89%
- S&P 500 Implied Correlation 51.95 +1.35%
- ISE Sentiment Index 161.0 +85.06%
- Total Put/Call .85 +1.19%
Credit Investor Angst:
- North American Investment Grade CDS Index 65.43 -.25%
- European Financial Sector CDS Index 90.14 +.65%
- Western Europe Sovereign Debt CDS Index 53.28 +.54%
- Asia Pacific Sovereign Debt CDS Index 106.08 -.38%
- Emerging Market CDS Index 322.83 +.59%
- China Blended Corporate Spread Index 356.68 -1.39%
- 2-Year Swap Spread 11.75 -.5 basis point
- TED Spread 20.0 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.75 -.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% -1.0 basis point
- Yield Curve 242.0 +3.0 basis points
- China Import Iron Ore Spot $121.0/Metric Tonne +.83%
- Citi US Economic Surprise Index 25.90 +.2 point
- Citi Emerging Markets Economic Surprise Index 21.10 +8.0 points
- 10-Year TIPS Spread 2.18 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -35 open in Japan
- DAX Futures: Indicating +4 open in Germany
Portfolio:
- Slightly Higher: On gains in my tech/medical/biotech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Emerging-Market Shakeout Putting Reserves Into Focus: Currencies. Foreign-exchange reserves are emerging as the latest battleground
between traders and developing nations trying to stem the worst rout in
their currencies since 2008. Nations with the smallest reserves
to fend off currency speculators will continue to see their exchange
rates under pressure, options prices show. Of the 31 major currencies
tracked by Bloomberg, traders are most bearish on Argentina’s peso,
Turkey’s lira, Hungary’s forint, Indonesia’s rupiah and South Africa’s
rand, while the forwards market signals that Ukraine’s hryvnia will fall
20 percent in a year. “If you start to burn too quickly through your
foreign reserves, it’s an ominous sign -- and of course in the forex
market, they smell blood,” Robbert Van Batenburg, the director of market
strategy at broker Newedge Group SA in New York, said Feb. 5 by phone.
“It creates this domino effect.”
- PBOC Singling Out Industries Fuels Nomura Anxiety: China Credit. The
singling out of three debt types
most at risk by the People’s Bank of China has prompted Nomura Holdings
Inc. to warn that rising borrowing costs will make it even harder to
avoid a default by these issuers. The PBOC will enhance monitoring of local government financing vehicles, industries with overcapacity and property
developers to prevent default risks from spreading, according to
its fourth-quarter policy report issued on Feb. 8. Jinzhou
Economic Technology Zone Development Group Co., an LGFV in
Liaoning province, sold new seven-year bonds at 9.1 percent in
January, while Guangxi Nonferrous Metal Group Co. issued nine-month bills at 8.5 percent. That’s almost twice as high as the
yield on 2021 government debt.
- RBS May Be Cut by Moody’s on Weaker Capital Position. Royal
Bank of Scotland Group Plc’s credit rating may be downgraded by Moody’s
Investors Service after the bank said last month that full-year results
would be hurt by provisions and conduct-related costs. “As a result, the bank will report a weaker than
previously anticipated regulatory capital position at end-December 2013, weakening its standalone credit profile,”
Moody’s said in a statement today.
- Draghi Said to Face Backlash in Dispute Over Italian Colleague. Mario
Draghi is facing resistance from euro-area central bank chiefs on his
choice for a senior position in the currency bloc’s new bank supervisor,
said three people with knowledge of the matter. Ignazio Angeloni,
an Italian who is Director General of the institution’s
financial-stability wing, is the European Central Bank president’s pick
for one of four seats the Governing Council will appoint to the
Supervisory Board that starts oversight of the region’s biggest lenders
in November, the people said. Draghi encountered heated opposition at a
council dinner on Feb. 5, said two of the people, who asked not to be
identified as the issue is private.
- European Stocks Rise for Sixth Day on ING, SocGen Profit. European stocks rose for a sixth day, their longest winning streak this year, as companies from ING Groep NV (INGA) to Societe Generale SA (GLE) posted profit that beat estimates, and a report showed Chinese exports surged. ING and Societe Generale each gained more than 3.5 percent. Norsk Hydro ASA (NHY) added 3.6 percent after reporting quarterly sales that exceeded estimates. Telenor ASA (TEL) dropped the most since May 2012 after the Norwegian telecommunications operator reported earnings that trailed analysts’ predictions.
The Stoxx Europe 600 Index advanced 0.8 percent to 332 at
the close of trading.
- WTI Crude Rises to 4-Month High as Cushing Supply Drops. WTI for
March delivery advanced 37 cents, or 0.4 percent, to $100.31 a barrel
at 12:29 p.m. on the New York Mercantile Exchange after climbing to
$101.38, the highest level since Oct. 18. Oil traded at $101.21 a barrel before the report. The volume
of all futures was 49 percent above the 100-day average.
- Fed Makes ‘Fool’s Paradise’ on Low Rates, AIG’s Miller Says. Record-low borrowing costs that
helped fuel the stock market rebound are insufficient to sustain
a U.S. economic recovery, said Steve Miller, the chairman of
American International Group Inc. “It’s a fool’s paradise,” Miller said on Bloomberg Television today. “We’re basically printing money to keep
everybody happy in the short term.” “Janet is going to keep rates low for a while,” Miller
said in an interview with Tom Keene and Scarlet Fu. “But you
can’t keep that going forever. So we need to get real on
government spending.”
- Obamacare Raises Medicaid Cost as Insurers Shift Tax Bill. Health
insurers told to pay $150 billion in taxes over a decade to help fund
Obamacare are now shifting at least part of that cost back to taxpayers. Congress passed the insurer tax four years ago to help cover the uninsured under the Patient Protection and Affordable
Care Act. Now, the industry is pushing to include some of the
cost in contracts with Medicaid programs for the poor that are
jointly funded by state and federal governments.
- ‘Historic’ Storm Ices Atlanta as Northeast Faces Snow. A
potentially historic winter storm
threatens to coat Georgia with ice, knocking out power and grounding
thousands of planes, before bringing snow to Northeastern cities
including Washington and New York. New York may get 1-3 inches (3-8
centimeters) of snow tonight, and Washington as much as 4 inches,
according to the latest update by the National Weather Service at 6:51
a.m. in
New York. Atlanta is forecast to receive as much as half an inch
of ice today.
Wall Street Journal:
CNBC:
ZeroHedge:
Business Insider:
Rolling Stone:
Forbes:
Reuters:
Style Underperformer:
Sector Underperformers:
- 1) HMOs -1.32% 2) Airlines -.77% 3) Retail -.60%
Stocks Falling on Unusual Volume:
- RLOC, AMAG, EEFT, VSAT, MKTO, RAX, WCG, SBGI, ANDE, FEYE, LO, QLYS, HELE, AAWW, RCI, INTU, TRI, JBT, OMC, WPC, ASPS, RNR, CSOD, SDRL, MNK, AMZN, PGEM, INTU, TRI, NLNK and CVA
Stocks With Unusual Put Option Activity:
- 1) LO 2) FOSL 3) WFM 4) Z 5) STZ
Stocks With Most Negative News Mentions:
- 1) CVX 2) FEYE 3) JCP 4) INTU 5) WMB
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Computer Hardware +.68% 2) Education +.65% 3) Hospitals +.37%
Stocks Rising on Unusual Volume:
- ACO, FSL, DHRM, BLOX, MRIN, CTRL, PNK, TRMB, OC, SGEN, SCI, PKG, PHH, CNVR, FOSL, VAL, SN, TRIP, DVA and SALE
Stocks With Unusual Call Option Activity:
- 1) ZTS 2) SBGI 3) TRIP 4) FIG 5) CXO
Stocks With Most Positive News Mentions:
- 1) HII 2) A 3) MSFT 4) TWTR 5) WU
Charts:
