Style Underperformer:
Sector Underperformers:
- 1) Biotech -1.02% 2) I-Banking -.91% 3) Retail -.25%
Stocks Falling on Unusual Volume:
- CFX, GNC, NKA, OHRP, WTW, RTRX, TRLA, STMP, A, CGNX, SJM, OXM, MW, LXFT, MASI, DCO, MOVE, Z, PWRD, VFC, VSI, MRTX, AIG, FURX, KSU, IPG, EFX, TAL, RPXC, VFC, CTRL and GDP
Stocks With Unusual Put Option Activity:
- 1) WTW 2) AET 3) ITB 4) EWJ 5) Z
Stocks With Most Negative News Mentions:
- 1) BAC 2) GNC 3) A 4) DISH 5) PRESS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.79% 2) HMOs +1.68% 3) Coal +1.22%
Stocks Rising on Unusual Volume:
- LOGM, CRAY, JCOM, LIVE, ELLI, IM, FONR, RATE, MUR, CIEN, COTY, TRW, H, CLF and CPB
Stocks With Unusual Call Option Activity:
- 1) A 2) TRLA 3) BRCD 4) AUXL 5) RMTI
Stocks With Most Positive News Mentions:
- 1) GT 2) PEP 3) CPB 4) CLF 5) TWC
Charts:
Evening Headlines
Bloomberg:
- China Hard Landing War-Gamed for World Economy.
A hard landing in China would hobble global growth and buoy the dollar,
says Societe Generale SA in a study that war-games the international
implications of a steep decline in China’s expansion. A
plunge to 2 percent from more than 10 percent in 2010 would be enough
to slash 1.5 percentage points from worldwide economic growth in the
first year as China’s troubles are transmitted through trade, banking
and financial market channels, the French bank said in a Feb. 11 report.
- China Banks’ Bad Loans Rise to Highest Since Financial Crisis. Chinese
banks’ bad loans increased for the ninth straight quarter to the
highest level since the 2008 financial crisis, highlighting pressures on
asset quality and profit growth as the world’s second-largest economy
falters. Non-performing loans rose by 28.5 billion yuan ($4.7
billion) in the last quarter of 2013 to 592.1 billion yuan, the highest
since Sept. 2008, the China Banking Regulatory Commission said in a
statement on its website yesterday. Bad
loans accounted for 1 percent of total lending, up from 0.97
percent three months earlier.
- China Inflation Stays Subdued as Producer Prices Extend Decline. China’s
inflation stayed subdued in January while factory-gate prices extended
the longest drop since the 1990s, in a sign of moderating demand in the world’s second-largest economy. The consumer price index rose
2.5 percent from a year earlier, the National Bureau of Statistics said
today in Beijing, the same pace as in December. The producer-price index
fell 1.6 percent.
- Pandemic Potential Seen in Gene Changes of Bird Flu. Genetic
variations in the deadly
bird flu virus circulating in China increase the potential for a
pandemic strain to emerge, researchers in Shanghai said. Three new
variants of the avian influenza type-A H7N9 virus
have been found this winter, spurred by transmission in poultry
and the adaption of genetic material from another strain called
H9N2, scientists at the Shanghai Public Health Clinical Center
and Institutes of Biomedical Sciences said. The new strains may
be behind a wave of infections in Guangdong, the southern
province bordering Hong Kong.
- Kiwi Will Drop With New Zealand Like Ireland in 2007, Jen Says. New Zealand
is “like Ireland in 2007” and it’s only a matter of time before its
currency enters a meaningful depreciation, according to Stephen Jen, a
partner at London-based hedge fund SLJ Macro Partners LLP. While “the case for kiwi seems compelling,” the reality
is “quite different,” Jen, a former International Monetary
Fund official, and colleague Fatih Yilmaz wrote in a note to
clients yesterday. “New Zealand has severe structural
weaknesses that are very similar to those of crisis-hit Southern
European and Southern emerging-market economies. Kiwi may be 20
percent overvalued.”
- SkyBridge Sees Up to $50 Billion in Emerging Outflows.
Anthony Scaramucci’s SkyBridge
Capital says the rout in emerging-market stocks will deepen,
pitting the firm against calls by BlackRock Inc. and Templeton
Asset Management that shares are cheap and will lure buyers.
- Asian Stocks Head for Year’s First Weekly Gain; Rupiah Up.
Asian stocks rose, with a regional
benchmark index heading for its biggest weekly advance since
September. The Australian dollar climbed, Indonesia’s rupiah led
emerging-market currencies higher and gold extended a rally above $1,300
an ounce. The MSCI Asia Pacific Index added 0.6 percent as of 10:44 a.m. in Tokyo.
- Gold Extends Climb to Three-Month High as SPDR Holdings Increase.
Bullion for immediate delivery rose as much as 0.3 percent
to $1,307.16 an ounce, the highest price since Nov. 8, and
traded at $1,306.08 at 10:13 a.m. in Singapore. Gold has traded
above the 100-day moving average since Feb. 10, and is heading
for a close above the 200-day moving average for the first time
since February 2013. This week, bullion is up 3.1 percent.
Wall Street Journal:
Fox News:
CNBC:
- AIG(AIG) cuts workforce by 3% after earnings beat. American International Group reported quarterly earnings and revenue that easily beat analysts'
expectations on Thursday and announced it will cut its workforce by 3
percent because of a charge taken in the fourth quarter.
Zero Hedge:
Business Insider:
NY Times:
Reuters:
- Agilent Tech(A) cuts full-year adj profit forecast. Agilent
Technologies Inc cut its full-year adjusted profit forecast, citing
lower revenue from its electronic measurement business due to
"challenges" in the aerospace and defense market.
Shares of Agilent fell 7 percent in extended trading.
- Apache(APA) Q4 profit misses estimates as output down sharply. U.S.
oil and gas company Apache Corp on Thursday reported a
bigger-than-expected decline in fourth-quarter profit as its output fell
sharply on asset sales and a frigid winter in the United States. Apache
warned of weak fourth-quarter output in January, saying that severe
winter weather in November had disrupted production at its operations in
Oklahoma, Texas and New Mexico.
Financial Times:
- T Rowe Price Fund Manager Warns on US Small Caps. Repeat of last
year's performance by small caps "highly unlikely," citing Henry
Ellenbogen, manager of New Horizons fund. "Small caps as an asset class
will probably not outperform for another year," citing Ellenbogen.
Doesn't see valuations going much higher.
The Guardian:
- Australia’s housing bubble ready to burst, US investment guru claims. House prices set to plummet by up to 50% as ‘demographic crisis’ and falling Chinese demand looms.
If you are one of the many thousands of Australians at risk of being
priced out of the property market, you had better wish that Harry Dent
has got his sums right. Dent, an American investment guru who uses
demographics to forecast economic cycles, thinks the soaring housing market is ready to burst any day now,
perhaps reducing values by as much as 50% in some places. Dent, who was
in Sydney this week to promote his book The Demographic Cliff, has a
formidable record. He claims credit for predicting Japan’s deflationary
decade and the US boom and bust of the past 20 years, and has now turned
his numbers on Australia.
Yomiuri:
- Japan to Cancel Approvals for 670 Solar Projects.
China Securities Journal:
- China's Economic Growth Slowdown 'Inevitable'. A slowdown in
China's economic growth is "inevitable" because of high growth rates
can't be sustained, according to a front-page commentary by reporter Gu
Xin. A recovery of the nation's exports may be hit by the simultaneous
recovery in developed countries and the emerging market crisis, the
commentary said.
Shanghai Securities News:
- China Can Allow 1-2 Local Govt Defaults. China can allow 1-2
local governments to default to "trigger adjustments in local government
debt," Chen Daofu, a researcher at the State Council's Development
Research Center, writes in a commentary. Existing vehicle debt should be
separated from any subsequent financing necessary in risk management,
the commentary says.
Evening Recommendations
RBC Capital:
- Rated (WBMD) Top Pick, target $70.
Night Trading
- Asian equity indices are -.50% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 141.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 108.25 +2.0 basis points.
- NASDAQ 100 futures -.28%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Import Price Index for January is estimated to fall -.1% versus unch. in December.
9:15 am EST
- Industrial Production for January is estimated to rise +.2% versus a +.3% gain in December.
- Capacity Utilization is estimated to rise to 79.3% versus 79.2% in December.
- Manufacturing Production is estimated to rise +.1% versus a +.4% gain in December.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for February is estimated to fall to 80.2 versus 81.2 in January.
Upcoming Splits
Other Potential Market Movers
- The Eurozone GDP report, (HAS) investor update and the (MAT) analyst presentation could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity
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: 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:
