Style Outperformer:
Sector Outperformers:
- 1) Gaming +3.23% 2) Oil Service +2.38% 3) Coal +2.18%
Stocks Rising on Unusual Volume:
- TQNT, JOSB, TREX, HUM, PANW, GTAT, FI, VOD, MW, AKRX, PCAR, KNDI, SRPT, PVA, YELP, FANG, NFX, FSLR, ISIS, CXO, CLI and SWKS
Stocks With Unusual Call Option Activity:
- 1) STSI 2) DFS 3) JOSB 4) TWO 5) WMB
Stocks With Most Positive News Mentions:
- 1) TREX 2) BA 3) RKT 4) SMP 5) NFLX
Charts:
Weekend Headlines
Bloomberg:
- Ukraine Interim Leader Warns of Economic Danger. Ukrainian parliament Speaker
Oleksandr Turchynov, handed presidential powers as lawmakers
prepare to form a coalition government, warned that the economy
was in a “pre-default situation.” Lawmakers in Kiev worked on
reshaping government after ousting Viktor Yanukovych from the presidency
for a role in the violence that killed at least 82 people last week.
The U.S. and
the European Union pledged aid for a new cabinet. Border guards
stopped Yanukovych at an airport in the eastern city of Donetsk
two days ago. He wasn’t detained.
- U.S.-EU Ready to Help Cash-Strapped Ukraine as President Ousted. The U.S., Europe and the U.K. said they stand ready to help Ukraine
following its president’s ouster, days after Standard & Poor’s said
the former Soviet republic risks default. “We are here ready to
help just as soon as there is someone at the end of the telephone,” U.K.
Chancellor of the Exchequer George Osborne said in an interview
yesterday in Sydney. “We should be there with a checkbook to help the
people of Ukraine rebuild their country.”
- China Rebuts Lew as Emerging Markets Keep Up Pressure on Fed. China
led developing markets in hitting back at the U.S. as South Africa kept
up pressure on the Federal Reserve to consider the spillover effects of
tapering its bond-buying program. A day after Treasury Secretary Jacob
J. Lew questioned the pace of China’s economic opening, Chinese Finance
Minister Lou Jiwei said yesterday the U.S. economy had been buoyed by
monetary policy rather than structural changes. South Africa’s
Deputy Finance Minister Nhlanhla Nene called on the Fed to weigh the
impact on developing nations as it pares stimulus. “The tension is
likely to continue,” said Tomo Kinoshita, chief economist at Nomura
Holdings Inc. in Tokyo. “China is on the side of the emerging economies
rather than on the side of
the advanced economies.”
- China’s Home Price Gains Slow in Big Cities on Lending Curbs.
New home price growth in China’s first-tier cities slowed in January
after local governments implemented property measures to rein in
escalating values and banks tightened
lending. Home prices in the capital city of Beijing and the
southern business hub of Shenzhen both rose 0.4 percent from a month
earlier, the National Bureau of Statistics said in a statement today,
the slowest pace since October 2012. Prices in Shanghai added 0.5
percent, the smallest increase since November 2012, and those in
Guangzhou gained 0.7 percent.
- India’s Modi Attacks Chinese ‘Expansion’ in Tougher Border Stand.
Indian opposition prime ministerial
candidate Narendra Modi criticized China for its “expansionary mindset”,
signaling he would take a tougher stance in a territorial dispute along
their Himalayan frontier. Speaking at an election rally in the
remote northeastern Indian state of Arunachal Pradesh that is partly
claimed by China, Modi said India would never give up parts of its
territory. Instead he urged China to pursue closer economic ties
with India for the benefit of both nations as they try to meet a
target of $100 billion in bilateral trade by next year.
- Thai Farmers Lose Pickup Trucks as Protests Raise Debt Risk. Koon Thaveepat is in danger of
losing his pickup truck and his livelihood. He’s behind on loan
payments as Thailand’s anti-government protests delay state rice-purchase payments, threatening to plunge thousands of
farmers deeper into debt.
- Beijing Air Pollution Reaches 11-Times WHO Recommended Levels. Beijing’s air pollution reached 11
times World Health Organization-recommended levels today, as the
country’s meteorological department forecast smog in north and
central China to continue. The concentration of PM2.5, fine
particulates that pose the greatest risk to human health, was 290
micrograms per cubic meter at 3 p.m. near the city’s Tiananmen Square,
the Beijing Municipal Environmental Monitoring Center said on its
website. The WHO recommends levels of no higher than 25 micrograms per
cubic meter in 24 hours.
- G-20 Renews Vow on Shadow Banking Amid Talk of China Risk. Global finance officials renewed
their promise to address risks from unregulated lending and said
their drive to end bailouts for large banks should be nearly
finished this year. Group of 20 finance ministers and central bank governors
meeting in Sydney over the weekend said they are focused on
“substantially completing” efforts to prevent lenders from
becoming too big to fail and addressing the risks of shadow
banking before a summit of the nations’ leaders in November.
- IMF’s Lagarde Sees Tapering Spurring Further Market Volatility.
The dialing back of Federal Reserve
stimulus will cause further ructions in financial markets even as it
marks an improvement in the global economy, International Monetary Fund
Managing Director Christine Lagarde said. “The tapering that we see
is a result of the significant improvement of the global economy, but
particularly the U.S. economy, and that in and of itself is positive,”
Lagarde said today in an interview following a meeting of Group-of-20
finance chiefs in Sydney. “There will continue to be volatility on the
markets as a result of this tapering.”
- Indonesia’s GDP Growth May Slow to Least Since 2009, Basri Says.
Indonesia’s Finance Minister Chatib
Basri said economic growth may slow this year to the least since
2009 as the government reins in the current-account deficit. Southeast
Asia’s largest economy may grow between 5.5 percent and 5.8 percent in
2014, Basri said today in an
interview in Sydney following a meeting of Group of 20 finance
chiefs. The state budget had assumed expansion of 6 percent.
Gross domestic product expanded 5.8 percent in 2013.
- China Shares Drop on Loan Curb Reports as Gas Surges. Chinese shares tumbled on reports of
property-lending curbs, metals fell and the won dropped against
all major peers. Natural gas climbed to its highest price in
five years and oil rallied as forecasts for frigid weather in
the U.S. bolstered the outlook for energy demand.
Gauges of Chinese shares in the mainland and Hong Kong tumbled more
than 1.9 percent at 11:17 a.m. in Tokyo amid reports that some banks
restricted lending to developers and
related sectors. The MSCI Asia Pacific Index erased gains to
fall 0.2 percent.
- Tokyo Rubber Follows Shanghai Lower Amid China Property Concerns. Rubber
in Tokyo and Shanghai sank as concern grew that property prices in
China will retreat, weakening raw-material demand from the largest
consumer. The contract for July delivery on the Tokyo Commodity Exchange
dropped as much as 5 percent, the biggest decline for a most-active
future since Jan. 27, to 215.5 yen a kilogram ($2,105 a metric ton) by
12:10 p.m. local time. Rubber for May delivery on the Shanghai
Futures Exchange plunged by the daily price limit to 14,805 yuan
($2,429) a ton. That’s the lowest
level for Shanghai futures since June 2009.
- Maduro Warns Venezuela Opposition as Caracas Protests Return. Venezuelan
President Nicolas Maduro told opposition governors to take part in
talks he called for next week or face “consequences” as Caracas
residents prepare for dueling rallies today. Maduro, in a news
conference from the presidential palace yesterday, said opposition
groups were trying to overthrow his government, backed by the political
“right” in Latin America, foreign media and the U.S. “There is a
campaign to demonize, to isolate, the Bolivarian revolution,” said
Maduro, sitting in front of a portrait of late President Hugo Chavez.
“It’s an international campaign that is trying to divide Latin America.”
- U.S. Corporate Credit Swaps Index Rises First Time in Four Weeks. A gauge of U.S. corporate credit
risk rose for the first week in four on signs the Federal Reserve is unlikely to slow the pace of stimulus cuts. The
Markit CDX North American Investment Grade Index, a credit-default
swaps benchmark used to hedge against losses or to speculate on
creditworthiness, added 1.3 basis points for the week to 65.1 basis
points as of 5:20 p.m. in New York, according to prices compiled by Bloomberg. The measure rose 0.4 basis
point today. Moody’s Liquidity-Stress Index for speculative-grade
companies increased to 4.5 percent in mid-February, from 4.2
percent at the end of 2013, analysts led by John Puchalla at
Moody’s Investors Service wrote in a research note today. The
index rises when corporate liquidity appears to weaken and falls
when it improves. The risk premium on the Markit CDX North American High Yield Index, tied to the debt of 100 speculative-grade
companies, widened 6 basis points for the week to 322.9 after
increasing by 1.8 today, Bloomberg prices show.
- Treasury Yield Curve Narrows as U.S. Economic Growth Falters. The
difference between yields on two- and 10-year Treasuries narrowed for
the first time in three weeks as investors questioned the pace of the
economic expansion after reports showed harsh weather weighed on U.S.
growth. The premium investors demand to hold benchmark 10-year
notes instead of two-year securities fell to 242 basis points, or 2.42
percentage points, as retail sales and existing home sales fell and a
manufacturing index declined. Fed chair Janet Yellen testifies
before the Senate Feb. 27, a week after minutes from the central bank’s
last meeting showed policy makers are
unlikely to slow a reduction in bond purchases used to support
growth. The Treasury will sell $109 billion in fixed- and
floating-rate notes next week.
Wall Street Journal:
- U.S. Examines Swiss Insurance Products In Tax Crackdown. Products Can Be Used Legally By Americans to Defer Taxes. U.S. authorities are scrutinizing Americans' use of Swiss insurance
products to determine if they have been used to hide assets, signaling a
potential new direction in the U.S. legal crackdown on tax evasion in
the Alpine country, according to people with knowledge of the matter.
CNBC:
- Ukraine on European course; US warns Putin against grab. Ukraine's interim leadership pledged to put the country back on course
for European integration now Moscow-backed Viktor Yanukovych had been
ousted from the presidency, while the United States warned Russia
against sending in its forces.
Business Insider:
Financial Review:
- India’s Rajan lashes US over international reform. The outspoken head of India’s central bank has lashed out at the US
Congress for failing to back International Monetary Fund reform, saying
emerging markets wanting more say on the body were starting to seek
alternatives.
“There is only so long the world can wait for the US to get its act
together [on IMF reform],” central bank governor Raghuram Rajan told
Financial Review Sunday in an interview.
People's Daily:
- U.S. Must Not Use Dalai Lama Against China. President Barack
Obama's decision to meet with the Dalai Lama is "regrettable" and will
damage the relationship the two countries have developed over the years,
Deng Yushan and Zhou Yan of Xinhua News wrote in a report on the
editorial page. "No matter what Obama discusses with the Dalai Lama this
time, it will have no bearing on China as far as the Tibet issue is
concerned," it said.
China Securities Journal:
- China Property Investment High Growth Hard to Keep. Continued high growth for China's property investment may be difficult as the economy is slowing and restructuring, according
to a front-page commentary by reporter Zhang Min. Investment in many
smaller cities is saturated as indicated by a lot of new unsold homes.
Larger cities have limited market room because the Communist Party at its 3rd plenum vowed to strictly control population in big cities.
Shanghai Securities News:
Weekend Recommendations
Barron's:
- Bullish commentary on (KALU), (HD), (LOW), (M), (KSS), (ROST), TJX), (WMT),(TGT) and (RL).
- Bearish commentary on (KMP), (CHK), (PXD), (RRC) and (QEP).
Night Trading
- Asian indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 138.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 104.75 -.25 basis point.
- NASDAQ 100 futures -.05%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Chicago Fed National Activity Index for January is estimated to fall to -.2 versus .16 in December.
10:30 am EST
- Dallas Fed Manufacturing Activity for February is estimated to fall to 3.0 versus 3.8 in January.
Upcoming Splits
Other Potential Market Movers
- The
Eurozone CPI, FDIC's Hoenig speaking, JPMorgan High Yield/Leverage
Finance Conference, Citi Healthcare Conference and the (CAR) investor
day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by real estate and industrial 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 week.
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 modestly lower on rising
energy prices, increasing emerging markets debt angst, global growth worries, technical
selling, a stronger yen and profit-taking. My intermediate-term trading
indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.
S&P 500 1,836.25 +.35%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Indices
- Russell 2000 1,164.63 +1.47%
- S&P 500 High Beta 30.77 +1.15%
- Wilshire 5000 19,384.30 +.57%
- Russell 1000 Growth 867.85 +.40%
- Russell 1000 Value 919.25 +.56%
- S&P 500 Consumer Staples 426.31 -.09%
- Morgan Stanley Cyclical 1,463.20 +.35%
- Morgan Stanley Technology 924.06 +.35%
- Transports 7,308.60 +.37%
- Bloomberg European Bank/Financial Services 111.55 +.14%
- MSCI Emerging Markets 39.48 +1.22%
- HFRX Equity Hedge 1,171.57 +.31%
- HFRX Equity Market Neutral 962.58 +.14%
Sentiment/Internals
- NYSE Cumulative A/D Line 206,615 +.73%
- Bloomberg New Highs-Lows Index 365 -11
- Bloomberg Crude Oil % Bulls 14.29 -51.41%
- CFTC Oil Net Speculative Position 416,441+8.92%
- CFTC Oil Total Open Interest 1,650,294 +.24%
- Total Put/Call .69 -15.85%
- OEX Put/Call 1.27 +81.43%
- ISE Sentiment 105.0 +9.38%
- Volatility(VIX) 14.68 +3.82%
- S&P 500 Implied Correlation 51.61 -.04%
- G7 Currency Volatility (VXY) 7.62 -2.43%
- Emerging Markets Currency Volatility (EM-VXY) 8.82 +1.97%
- Smart Money Flow Index 11,884.82 +.75%
- ICI Money Mkt Mutual Fund Assets $2.664 Trillion -1.81%
- ICI US Equity Weekly Net New Cash Flow $4.159 Billion
- AAII % Bulls 42.2 +5.2%
- AAII % Bears 22.8 -16.7%
Futures Spot Prices
- Reformulated Gasoline 283.33 +2.13%
- Heating Oil 309.92 +1.94%
- Bloomberg Base Metals Index 192.21 +.78%
- US No. 1 Heavy Melt Scrap Steel 374.33 USD/Ton -5.9%
- China Iron Ore Spot 122.40 USD/Ton -.65%
- UBS-Bloomberg Agriculture 1,432.35 +3.47%
Economy
- ECRI Weekly Leading Economic Index Growth Rate 2.5% -80 basis points
- Philly Fed ADS Real-Time Business Conditions Index -.3088 +6.54%
- S&P 500 Blended Forward 12 Months Mean EPS Estimate 120.54 +.16%
- Citi US Economic Surprise Index -7.7 -27.4 points
- Citi Emerging Markets Economic Surprise Index 13.60 -6.5 points
- Fed Fund Futures imply 30.0% chance of no change, 70.0% chance of 25 basis point cut on 3/19
- US Dollar Index 80.24 +.11%
- Euro/Yen Carry Return Index 146.87 +1.0%
- Yield Curve 241.0 -2 basis points
- 10-Year US Treasury Yield 2.73% -1 basis points
- Federal Reserve's Balance Sheet $4.106 Trillion +.71%
- U.S. Sovereign Debt Credit Default Swap 25.55 -5.94%
- Illinois Municipal Debt Credit Default Swap 143.0 -5.86%
- Western Europe Sovereign Debt Credit Default Swap Index 53.0 -1.85%
- Asia Pacific Sovereign Debt Credit Default Swap Index 104.66 -.48%
- Emerging Markets Sovereign Debt CDS Index 244.29 -9.52%
- Israel Sovereign Debt Credit Default Swap 94.50 +1.07%
- South Korea Sovereign Debt Credit Default Swap 67.50 +.75%
- China Blended Corporate Spread Index 355.55 +.31%
- 10-Year TIPS Spread 2.14% -3 basis points
- TED Spread 20.0 -2.5 basis points
- 2-Year Swap Spread 13.75 +.5 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.25 unch.
- N. America Investment Grade Credit Default Swap Index 64.48 +.38%
- European Financial Sector Credit Default Swap Index 90.25 +2.22%
- Emerging Markets Credit Default Swap Index 318.32 -3.32%
- CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 90.0 -10.0 basis points
- M1 Money Supply $2.716 Trillion -2.85%
- Commercial Paper Outstanding 1,028.10 +3.7%
- 4-Week Moving Average of Jobless Claims 338,500 +1,700
- Continuing Claims Unemployment Rate 2.3% unch.
- Average 30-Year Mortgage Rate 4.33% +5 basis points
- Weekly Mortgage Applications 380.90 -4.1%
- Bloomberg Consumer Comfort -30.6 +.1 point
- Weekly Retail Sales +3.0% +20 basis points
- Nationwide Gas $3.39/gallon +.05/gallon
- Baltic Dry Index 1,164 +5.24%
- China (Export) Containerized Freight Index 1,1133.98 -3.13%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 -7.67%
- Rail Freight Carloads 236,625 -3.86%
Best Performing Style
Worst Performing Style
Leading Sectors
Lagging Sectors
Weekly High-Volume Stock Gainers (25)
- ZLC, FRX, ANIP, ELLI, LOGM, CRAY, ZBRA, UCTT, PRAA, PTCT, CHDX, ACT, RATE, VHC, ACO, RPTP, IM, COLM, CHE, URS, SWY, RTRX, JCOM, BGS and WIRE
Weekly High-Volume Stock Losers (17)
- LZB, STMP, AMWD, DRC, OCR, BCOR, WAC, SN, EIG, GNC, PBPB, TRLA, HAWK, SM, WTW, GDP and CONN
Weekly Charts
ETFs
Stocks
*5-Day Change
Broad Equity Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.67 -.81%
- Euro/Yen Carry Return Index 146.97 +.44%
- Emerging Markets Currency Volatility(VXY) 8.82 -.68%
- S&P 500 Implied Correlation 52.01 -2.38%
- ISE Sentiment Index 113.0 -8.13%
- Total Put/Call .67 -22.09%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.75 +.03%
- European Financial Sector CDS Index 90.25 -1.89%
- Western Europe Sovereign Debt CDS Index 53.0 unch.
- Asia Pacific Sovereign Debt CDS Index 104.36 -.68%
- Emerging Market CDS Index 318.82 -2.87%
- China Blended Corporate Spread Index 355.55 -.54%
- 2-Year Swap Spread 13.75 -.25 basis point
- TED Spread 20.0 +1.0 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -5.25 -.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% -1.0 basis point
- Yield Curve 242.0 -1.0 basis point
- China Import Iron Ore Spot $122.40/Metric Tonne -.41%
- Citi US Economic Surprise Index -7.70 -1.2 points
- Citi Emerging Markets Economic Surprise Index 13.60 -2.2 points
- 10-Year TIPS Spread 2.14 unch.
Overseas Futures:
- Nikkei Futures: Indicating -60 open in Japan
- DAX Futures: Indicating -26 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech sector longs and emerging markets shorts
- Market Exposure: 50% Net Long
