Broad Equity Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 13.32 -.82%
- Euro/Yen Carry Return Index 146.03 -.54%
- Emerging Markets Currency Volatility(VXY) 7.36 -.27%
- S&P 500 Implied Correlation 56.73 -.27%
- ISE Sentiment Index 100.0 -13.04%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.0 -.15%
- European Financial Sector CDS Index 74.65 +3.61%
- Western Europe Sovereign Debt CDS Index 32.21 +.61%
- Asia Pacific Sovereign Debt CDS Index 84.85 +1.43%
- Emerging Market CDS Index 269.38 +2.27%
- China Blended Corporate Spread Index 359.77 +.36%
- 2-Year Swap Spread 13.75 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -4.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 224.0 +2.0 basis points
- China Import Iron Ore Spot $102.70/Metric Tonne -.96%
- Citi US Economic Surprise Index -9.10 +.6 point
- Citi Emerging Markets Economic Surprise Index -25.40 -.2 point
- 10-Year TIPS Spread 2.18 unch.
Overseas Futures:
- Nikkei Futures: Indicating -40 open in Japan
- DAX Futures: Indicating +21 open in Germany
Portfolio:
- Higher: On gains in my tech/retail/medical/biotech sector longs
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Putin Visits Crimea as 20 Die in Eastern Ukraine Clashes.
Russian President Vladimir Putin visited the Crimea region he annexed
in March amid growing tensions as Ukraine said about 20 pro-Russian
separatists died in clashes in the eastern port city of Mariupol.
Putin’s trip to Sevastopol, the home of Russia’s Black Sea Fleet, was
his first since the Crimean peninsula seceded from Ukraine. Ukrainian
Interior Minister Arsen Avakov said on his Facebook account at
least one serviceman was killed and five wounded in the fighting in
Mariupol after about 60 rebels attacked a police building. The city is
less than 60 kilometers (37 miles) from the Russian border.
- Putin's Export Machine Rolls Right Over Sanctions, Outcry. Vladimir Putin’s incursion into Ukraine and the international
condemnation that followed haven’t put a dent in Russia’s exports of gas
and raw materials. The world’s largest energy producer shipped 2
percent more gas to Europe in the first three months of 2014 than it
did in the same period last year, government data show. Diesel output
for export increased, while cargoes of grains, palladium and nickel
either climbed or were about the same. Russia’s crude oil exports fell
0.2 percent from last year.
- China’s Stocks Fall for Fourth Weekly Drop as Great Wall Plunges. China’s stocks fell, sending the benchmark
index to a fourth week of losses, after Great Wall Motor Co. delayed
sales of a vehicle and small-company shares slumped amid concern new
equity sales will divert funds. Great Wall Motor Co., China’s biggest
maker of sport utility vehicles, plunged 10 percent in Shanghai and 17
percent in Hong Kong after it pushed back sales of its new flagship
Haval H8 SUV. Goertek Inc., an Apple Inc. supplier, led declines for
technology companies. Data today showed the consumer-price index rose
1.8 percent in April, compared with the median estimate of a 2.1 percent
gain. The producer-price index slid 2 percent, the 26th straight
decline. The Shanghai Composite Index (SHCOMP) slipped 0.2 percent to 2,011.14 at the close, extending this week’s loss to 0.8
percent.
- European Stocks Decline From Six-Year High Amid Earnings.
European stocks fell from their highest level in more than six years as
companies from Telefonica SA to Petroleum Geo-Services ASA (PGS) posted
earnings that missed analysts’ estimates. Telefonica dropped 2.6
percent after saying first-quarter operating income slid 14 percent. PGS
fell the most in almost three months after also reporting lower profit
margin. Petrofac Ltd. tumbled the most since November after predicting
net income will decrease in 2014. Vestas (VWS) Wind Systems A/S rose 7.6
percent after posting an unexpected profit in the first quarter. The Stoxx Europe 600 Index slipped 0.3 percent to 338.54 at
the close of trading, paring its fourth weekly gain to 0.2
percent.
- Iron Ore Slumps to Lowest Since 2012 as Surplus Deepens.
Iron ore retreated to the lowest level since 2012, capping a fourth
weekly loss and nearing $100 a ton, as increased seaborne supplies of
the steel-making raw material boosted a global glut. Ore with 62 percent
content delivered to the Chinese port
of Tianjin fell 1 percent to $102.70 a dry ton, the lowest level
since September 2012, according to data from The Steel Index
Ltd. The commodity dropped 23 percent this year, after falling
7.4 percent last year.
- Ralph Lauren(RL) Falls After Sales Forecast Trails Estimates.
Ralph Lauren Corp. fell the most in nine months in New York trading
after forecasting first-quarter sales that would be less than analysts’
estimated. The shares slid 5.1 percent to $144.25 at 9:48 a.m. and
earlier dropped as much as 6.6 percent for the biggest intraday
decline since Aug. 7. New York-based Ralph Lauren fell 14
percent this year through yesterday, compared with a 1.5 percent
gain for the Standard & Poor’s 500 Index. Sales in the quarter through June will rise as much as 5
percent, the company said today in a statement, implying revenue
of about $1.74 billion. Analysts estimated $1.81 billion, on
average.
Wall Street Journal:
- Ukraine Says Some 20 Separatists Killed in East. Clash Comes as Rebels Push Ahead With Referendum on Autonomy. Police and security forces killed about 20 separatists Friday,
Ukraine's interior minister said, in severe fighting between the
government and pro-Russian separatists in the country's eastern
provinces. Arsen Avakov said a firefight broke out in the
southeastern city of Mariupol after gunmen took control of a police
station. Ukrainian armed forces then stormed the building, bringing on
"a full-scale military...
MarketWatch:
CNBC:
- Art Cashin: Watch this 'canary in the coal mine'. (video) Art Cashin said he's carefully watching the Nasdaq Composite, the stock
market's current "canary in the coal mine." The bulls are happy it
successfully defended support around 4015, but remain cautious.
ZeroHedge:
ValueWalk:
Business Insider:
Reuters:
- Stratasys(SSYS) sticks to forecast, disappointed investors sell. 3D printer maker
Stratasys Ltd reported an adjusted quarterly profit that matched the
average market estimate and stuck to its full-year forecast on Friday,
disappointing investors who had expected better on both counts. Stratasys shares fell as much as 9.6 percent in early
trading as investors also overlooked a better-than-expected rise
in adjusted revenue, helped in part by the acquisition of
consumer 3D printer maker MakerBot last year.
Telegraph:
Interfax:
- Putin Says Other Countries Must Respect Russia. Russia asking
other countries to treat with respect its right for historical justice,
self-determination, citing Russian President Vladimir Putin.
Style Underperformer:
Sector Underperformers:
- 1) Utilities -1.0% 2) Gold & Silver -.91% 3) Steel -.87%
Stocks Falling on Unusual Volume:
- ARP, FUEL, PUK, PRO, AIRM, FF, TUMI, WPPGY, UBNT, SGY, POST, CODI, AAOI, MAIN, ACET, DRQ, AZN, CRTO, ERF, RL, HPT, ABCO, TTI, EBS, MASI, AMCX, PMT, AREX, JAZZ, SSYS, TUMI, SSTK, DRQ, BCEI, XON, POST, TTI, DEPO and UVE
Stocks With Unusual Put Option Activity:
- 1) VRNG 2) KSS 3) RL 4) JNPR 5) SSYS
Stocks With Most Negative News Mentions:
- 1) GS 2) MS 3) FUEL 4) ANDE 5) F
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Computer Services +.69% 2) Gaming +.54% 3) Retail +.45%
Stocks Rising on Unusual Volume:
- IBN, MDVN, PPO, CSC, OLED and AKRX
Stocks With Unusual Call Option Activity:
- 1) EPI 2) CLNE 3) IPG 4) THC 5) SPLS
Stocks With Most Positive News Mentions:
- 1) MAR 2) AAPL 3) YELP 4) TWTR 5) NVDA
Charts:
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:
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:
Business Insider:
Reuters:
Evening Recommendations
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.
- NASDAQ 100 futures -.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
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
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.
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%
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
- 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