BETWEEN THE HEDGES

Friday, May 09, 2014

Friday Watch

Posted by Gary .....at 1:19 AM

Evening Headlines
Bloomberg:

Ukraine Renews Dialogue Offer as Russia Holds Army Drills. Ukraine’s leaders said they’re ready for a dialogue with peaceful representatives of the eastern regions, where pro-Russian separatists said they’ll push ahead with a vote on autonomy after Russian President Vladimir Putin called for a delay. Putin yesterday presided over nationwide army drills, a day after he softened his tone by promising to withdraw troops from the border, voicing support for Ukraine’s presidential election, and saying it’s not the right time for a referendum on secession in the Donetsk and Luhansk regions. Ukrainian premier Arseniy Yatsenyuk said he’s concerned that Russia is “planning provocations” today, when the country holds army parades to celebrate victory in World War II.

Tumble in Fuel Sales Adds to Evidence of China Slowdown. Declining demand for ship fuel in Singapore, the merchant fleet’s biggest refueling hub, is signaling weakening prospects for a rebound in Chinese growth. Fuel oil for immediate delivery traded at the biggest discount to later supplies in 16 months on April 28, according to data from PVM Oil Associates Ltd. Sales of so-called bunker dropped for a third month in March, the longest retreat since November 2007, the latest Maritime and Port Authority data show.

Brazil Rate Increase Seen More Likely After Awazu Speech. Brazilian policy makers will continue with the inflation fight they started in April 2013, central bank Director Luiz Awazu Pereira said today, referring to when the country began the world’s longest tightening cycle. After his comments, swap rates on the contract due in January 2017 extended earlier gains as traders unwound bets the central bank will keep interest rates unchanged at 11 percent this month.

Investors Pull $400 Million From Emerging-Market Bond ETFs. Investors are pulling out of exchange- traded funds for emerging-market bonds at the fastest pace since November after a three-month rally pushed down yields and dimmed the allure of the securities. U.S.-based ETFs focused on developing-country bonds have posted a net outflow of $400 million this month, according to data compiled by Bloomberg through yesterday. That’s bigger than any full month since November, when they lost $406 million.

Japan Stocks Rise While China Drops on CPI; Nickel Jumps. Japanese shares rose a second day, paring a weekly decline, as investors weighed earnings reports from the country’s biggest companies and Canon Inc. announced a share buyback. Nickel extended gains from a two-year high amid supply concerns and the Philippines peso jumped. The Topix index rose 0.9 percent by 12:01 p.m. in Tokyo, paring its weekly decline to 1.1 percent. The MSCI Asia Pacific Index advanced 0.2 percent, while a gauge that excludes Japan fell 0.1 percent as Chinese shares retreated after inflation in Asia’s largest economy fell short of estimates.

Wall Street Journal:

Ukraine Crisis: Streaming Updates.

Omnicom and Publicis Call Off $35 Billion Merger. Obstacles Mounted Over Power-Sharing, Taxes, Regulatory Approvals.

Carl Icahn's Son Brett Is Setting Up a Hedge Fund. Brett Icahn and Partner David Schechter Have Had Success With Netflix and Other Investments.

Fox News:

Pro-Russian separatists to go ahead with eastern Ukraine referendum. The pro-Russia insurgency in eastern Ukraine decided Thursday to go ahead with Sunday's referendum on autonomy despite a call from Russian President Vladimir Putin to delay it. While Putin's call on Wednesday to postpone the vote was seen as part of an effort to step back from confrontation and negotiate a deal with the West, he fueled tensions again on Thursday by overseeing military exercises that Russian news agencies said simulated a massive retaliatory nuclear strike in response to an enemy attack.

CNBC:

At Alibaba, chairman Ma's dealings raise red flags. Part-way through Alibaba Group's long-awaited IPO prospectus was a subtle, but striking, warning: investors should know that lead founder and executive chairman Jack Ma might work against the company's best interests.

Zero Hedge:

Stunning Clip Of How Russia Is "Not" Preparing For Nuclear War. (video)

Art Bubble Also Cracking As 21 Of 71 Works Fail To Sell At Latest Sotheby's Auction.

IRS Audited Tea Party Donors Ten Times More Often Than Regular Americans.

The IMF Goes To War In Ukraine.

Chart Of The Day: The Fed (And Friends) $10 Trillion Visible Hand. (graph)

Russell 2000 Enters 10% "Correction" Near 6-Month Lows. (graph)

Business Insider:

Apple(AAPL) In Negotiations To Buy Audio Company Beats Electronics For $3.2 Billion.

Reuters:

U.S.-based stock funds see $7 bln outflow over week-Lipper.

Nvidia(NVDA) quarterly forecast matches Wall St's but stock drops.

Evening Recommendations

None of note

Night Trading

Asian equity indices are -.25% to +.50% on average.

Asia Ex-Japan Investment Grade CDS Index 122.25 -2.75 basis points.

Asia Pacific Sovereign CDS Index 83.75 -2.25 basis points.

FTSE-100 futures -.16%.

S&P 500 futures -.06%.

NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

(ALU)/-.04

(MT)/.06

(CQB)/.14

(EBIX)/.37

(SATS)/.05

(HLT)/.09

(RL)/1.63

(SSYS)/.40

(WLH)/.13

Economic Releases
10:00 am EST

JOLTs Job Openings for March are estimated to fall to 4100 versus 4173 in February.

Wholesale Inventories for March are estimated to rise +.5% versus a +.5% gain in February.

Wholesale Sales for March are estimated to rise +1.1% versus a +.7% gain in February.

Upcoming Splits

None of note

Other Potential Market Movers

The Fed's Fisher speaking, Fed's Kocherlakota speaking, UK industrial production, Canadian unemployment rate, USDA's WASDE report and the (BHI) analyst conference could impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by consumer 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 25% net long heading into the day.

Thursday, May 08, 2014

Stocks Reversing Lower into Final Hour on Russia/Ukraine Tensions, Yen Strength, Technical Selling, Biotech/Gaming Sector Weakness

Posted by Gary .....at 3:17 PM

Broad Equity Market Tone:

Advance/Decline Line: Lower

Sector Performance: Most Sectors Declining

Volume: Slightly Above Average

Market Leading Stocks: Underperforming

Equity Investor Angst:

Volatility(VIX) 13.53 +.97%

Euro/Yen Carry Return Index 146.72 -.83%

Emerging Markets Currency Volatility(VXY) 7.48 -.93%

S&P 500 Implied Correlation 57.50 +1.84%

ISE Sentiment Index 111.0 +37.04%

Total Put/Call .87 -3.33%

NYSE Arms 1.07 +16.79%

Credit Investor Angst:

North American Investment Grade CDS Index 64.44 -.40%

European Financial Sector CDS Index 72.08 -4.63%

Western Europe Sovereign Debt CDS Index 31.92 -3.88%
Asia Pacific Sovereign Debt CDS Index 83.75 -2.58%

Emerging Market CDS Index 263.25 -2.09%

China Blended Corporate Spread Index 358.46 +.90%
2-Year Swap Spread 13.50 -.25 basis point

TED Spread 19.75 unch.

3-Month EUR/USD Cross-Currency Basis Swap -4.75 -1.0 basis point

Economic Gauges:

3-Month T-Bill Yield .03% unch.

Yield Curve 222.0 +4.0 basis points

China Import Iron Ore Spot $103.70/Metric Tonne -1.33%

Citi US Economic Surprise Index -9.70 +1.5 points

Citi Emerging Markets Economic Surprise Index -25.20 +2.5 points

10-Year TIPS Spread 2.18 +2.0 basis points

Overseas Futures:

Nikkei Futures: Indicating -93 open in Japan

DAX Futures: Indicating -38 open in Germany

Portfolio:

Slightly Higher: On gains in my tech/retail sector longs and index hedges

Disclosed Trades: Added to my (IWM)/(QQQ) hedges

Market Exposure: Moved to 25% Net Long

Bear Radar

Posted by Gary .....at 1:10 PM

Style Underperformer:

Small-Cap Value +.14%

Sector Underperformers:

1) Education -1.71% 2) Gaming -1.53% 3) Utilities -1.26%

Stocks Falling on Unusual Volume:

TSLA, NICE, GPOR, LQDT, TDC, GEOS, AMCX, TROX, IILG, BDBD, CIE, PMT, ANDE, HMHC, LXFR, WMC, RGP, NPSP, DST, QRE, BRSS, KERX, NKA, ICE, AEGR, NVDA, BRDR, ICE, ARP, NLY, PHH, UNT, CVRR, RGP, DF, RNG, CLR, PODD, TXTR, WMC, GEOS, VNDA and ISBC

Stocks With Unusual Put Option Activity:

1) MCP 2) HES 3) MMM 4) HD 5) NUAN

Stocks With Most Negative News Mentions:

1) CVX 2) TDC 3) PSA 4) CLF 5) ACI

Charts:

ETFs Falling on Unusual Volume

Stocks Falling on Unusual Volume

Bull Radar

Posted by Gary .....at 11:45 AM

Style Outperformer:

Large-Cap Value +.27%

Sector Outperformers:

1) Social Media +2.71% 2) Semis +1.71% 3) Retail +1.54%

Stocks Rising on Unusual Volume:

CTL, BCS, TWTR, AVG, WAC, FOX, EXPD, GMCR, SCTY, WWAV, CSLT, STE, Z, GIMO, NSM, HAIN, FUEL, BRKR, FOXA, YELP, SONC, CTL, SFM, LB, SSNI, LNKD and PENN

Stocks With Unusual Call Option Activity:

1) CTL 2) CHTP 3) END 4) KERX 5) ODP

Stocks With Most Positive News Mentions:

1) PCLN 2) TWTR 3) FEYE 4) LMT 5) F