Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.15 -1.05%
- Euro/Yen Carry Return Index 145.94 +.39%
- Emerging Markets Currency Volatility(VXY) 8.87 -.11%
- S&P 500 Implied Correlation 51.76 +.62%
- ISE Sentiment Index 86.0 -41.89%
- Total Put/Call .80 -6.98%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.50 -1.13%
- European Financial Sector CDS Index 90.75 +.68%
- Western Europe Sovereign Debt CDS Index 54.0 +1.34%
- Asia Pacific Sovereign Debt CDS Index 108.82 +2.38%
- Emerging Market CDS Index 329.98 +1.36%
- China Blended Corporate Spread Index 353.86 -.79%
- 2-Year Swap Spread 13.0 +1.25 basis points
- TED Spread 21.0 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.75 -1.0 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% -1.0 basis point
- China Import Iron Ore Spot $122.0/Metric Tonne +.83%
- Citi US Economic Surprise Index 23.10 -2.8 points
- Citi Emerging Markets Economic Surprise Index 19.90 -1.2 points
- 10-Year TIPS Spread 2.19 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating +115 open in Japan
- DAX Futures: Indicating +37 open in Germany
Portfolio:
- Higher: On gains in my tech/medical/biotech sector longs
- Disclosed Trades:Covered some of my (IWM)/(QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- China Auto Brands Doomed If Foreign Ownership Relaxed.
Chinese brands will be “killed in
the cradle” if the government allows foreign automakers to
become more independent from their domestic partners in the
world’s biggest car market, the country’s main auto group said.
- Ibovespa Futures Tumble as Brazil Retail Sales Unexpectedly Drop. Ibovespa
futures declined after a report that showed retail sales in Brazil
unexpectedly declined in December added to concern that growth is
faltering in Latin America’s largest economy. Banco do Brasil SA,
the nation’s biggest bank by assets, may be active after posting
fourth-quarter earnings that missed analysts’ estimates. Embraer SA
(EMBR3) may move after winning a plane order from India’s Air Costa.
Itau Unibanco Holding SA (ITUB4) may be active after Banco Bradesco SA’s
brokerage raised its recommendation on the lender to the equivalent of
buy. Ibovespa futures contracts expiring in April sank 1.3
percent to 48,210 at 9:24 a.m. in Sao Paulo.
- Europe Stocks Snap Six-Day Gain as BNP Paribas Declines.
European stocks retreated, halting
their longest winning streak of the year, as companies from Rolls-Royce
Holdings Plc to BNP Paribas (BNP) SA reported results. Rolls-Royce
slumped the most since August 2000 after predicting sales will fail to
grow this year for the first time in a decade. BNP Paribas slipped 2.6
percent after France’s largest bank unexpectedly reported a drop in
fourth-quarter profit. Nestle SA (NESN) lost 1.5 percent after
forecasting growth near the low end of its target in 2014. Renault SA
jumped 5.6 percent after posting profit that beat projections. The Stoxx Europe 600 Index dropped 0.2 percent to 331.48 at the close of trading in London after earlier losing as much as 1
percent.
- Natural Gas Soars as Report Shows Biggest Supply Drop in 7 Years. Gas gained as much as 5.7 percent after the Energy
Information Administration said inventories tumbled 237 billion
cubic feet to 1.686 trillion in the week ended Feb. 7. A storm
is bringing heavy snow, sleet and ice from Virginia to Maine after cutting power to more than half a million customers across
the South.
- Afghanistan Defies U.S. in Freeing 65 ‘Dangerous’ Prisoners. Afghanistan released 65 men accused of killing civilians and soldiers, ignoring American pleas to keep them locked up in the latest sign of worsening ties between
the nations after 13 years of war. Evidence against the men freed was never seriously
considered by Afghan authorities, the U.S. Embassy in Kabul said
in a statement. The U.S. military said some of the men released
from a former American-run prison north of the capital were
Taliban members who pose a threat to civilians.
Wall Street Journal:
- Total Smartphone Shipments Fall in China in the Fourth Quarter -- Update. Total smartphone shipments in China fell 4% in the fourth quarter of 2013 from
the third quarter, according to research firm IDC, the latest signal that the
explosive growth in the world's largest smartphone market is likely to moderate
in coming years. According to IDC, 90.8 million handsets were shipped in the fourth quarter,
compared with 94.8 million in the third. It is the first drop in shipments in
more than two years, and could signal harder times for both domestic and foreign
smartphone companies looking to China for growth. "This is the first hiccup we've seen in an otherwise stellar growth path, "
IDC analyst Melissa Chau wrote in a note. "We are now starting to see a market that is becoming less about capturing
the low-hanging fruit of first-time smartphone users and moving into the more
laborious process of convincing existing users why they should upgrade to this
year's model," she added.
- Vital Signs: It’s Not Just Weather Holding Back Shopping. Nonstore retailers also took a hit in January. Their sales fell 0.6%,
the first decline since August and the largest since May 2013. Internet
shopping should be immune to weather, so the drop suggests more than ice
and storm is holding back shoppers.
Fox News:
- Oregon facing pressure, probes over dysfunctional ObamaCare website. Despite receiving $160 million in taxpayer money, Oregon's ObamaCare
website has yet to properly sign up a single person for health care. And there could be consequences. An Oregon legislator has gone to the
FBI. Top officials have resigned. The state is investigating. And there
could be a federal probe as soon as Thursday.
MarketWatch:
ZeroHedge:
ValueWalk:
Business Insider:
NY Times:
Futures Magazine:
- Copper tanks, does China have a cold? Copper futures headed for the biggest drop in almost two weeks on signs
that demand may ebb this year in China, the wold’s biggest consumer of
industrial metals.
Reuters:
- China detains man for spreading 'panic' with bird flu rumors.
Police in central China have detained a man who spread "panic" with a
graphic rumor about the arrival of bird flu in his home province, state
media reported on
Wednesday.
Wild rumours abound on
Chinese social media sites, driven in part by a broad belief that the
government always seeks to cover up bad news and that state media are
untrustworthy. The man
detained by authorities, who was identified only by his surname, Zhou,
and hails from the central province of Hubei, posted the rumor over the
weekend via the popular mobile messaging platform Wechat, the
official
Xinhua news agency said. "The post was spread widely among netizens and
aroused panic among the public," it said, adding that Hubei's health
officials.
- Pernod warns China to stay weak through June. French drinks group Pernod Ricard
cut its annual profit growth goal on Thursday, saying
demand for its Martell cognac and Ballantine's whisky in China,
its second-largest market, would stay sluggish through end-June. The owner of Mumm champagne and Absolut vodka, which posted
an 18 percent fall in first-half sales to China, had previously
expected demand to start improving from the second half of its
financial year to June 30."The recovery in China will take longer than expected," CEO
Pierre Pringuet told Reuters in a telephone interview. "We had anticipated an upturn from the start of the Chinese
New Year (in February) but the government kept its tough stance
on ostentatious behaviour."
- Slow Asia economy weighs on Starwood Hotels(HOT) forecast. Starwood Hotels & Resorts Worldwide Inc
forecast first-quarter revenue below analysts'
estimates, mainly due to a slow Asian economy and a strong U.S.
dollar. Starwood's shares fell as much as 5 percent after the owner
of the Sheraton and Westin hotel chains also reported a drop in
fourth-quarter revenue and did not say if it had bought back
shares in January.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Road & Rail -.81% 2) Construction -.81% 3) Agriculture -.40%
Stocks Falling on Unusual Volume:
- MGNX, CAB, CHTR, ITRI, URS, CMCSA, WFM, MDCO, BGS, CMCSK, CJES, DHRM, ANGI, HOT, Z, NKA, MKTO, ATK, NTAP, ECOL, IPI, CSCO, LPSN, SN, INCY, AEL, JAH, DISCA and PETX
Stocks With Unusual Put Option Activity:
- 1) CMCSA 2) WFM 3) Z 4) ADBE 5) SPWR
Stocks With Most Negative News Mentions:
- 1) GM 2) UAL 3) ANGI 4) CHTR 5) ITRI
Charts:
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
