Style Outperformer:
Sector Outperformers:
- 1) Steel +3.98% 2) Oil Service +2.90% 3) Coal +2.66%
Stocks Rising on Unusual Volume:
- ESPR, ADVS, CSIQ, IDTI, SPLS, WLL, SM, AN, LEA, SPR, LPI, OAS, WPZ, ROSE, SN, LINE, SSNC, TROX, SC and EPE
Stocks With Unusual Call Option Activity:
- 1) FSL 2) ODP 3) NLY 4) OAS 5) SSYS
Stocks With Most Positive News Mentions:
- 1) JEC 2) LMT 3) WLL 4) EMN 5) JLL
Charts:
Evening Headlines
Bloomberg:
- Obama Urged by Former Officials to Arm Ukrainians Against Rebels. Eight top former U.S. officials urged the
White House on Monday to start sending lethal weaponry to
Ukraine in its battle against pro-Russian rebels, adding to the
pressure on the administration as fighting there has escalated
again. Administration officials say they are focused on a
diplomatic solution but are examining all options. The call by the eight former officials came in a new report
that urges the administration and NATO to send $3 billion of
military aid, including anti-armor missiles, to bolster
Ukrainian forces over the coming three years.
- Greece is seeking a third debt restructuring: Who’s on the hook? Greek Prime Minister Alexis Tsipras is asking the rest of the euro
area to reduce his country’s debt burden. So who’s on the hook if he
succeeds? Tsipras has already pledged to repay in full Greece’s obligations to
the International Monetary Fund and the European Central Bank. He’s also
said private investors won’t be asked to shoulder additional losses
after taking the hit for two restructurings since the start for the
European crisis. That leaves European taxpayers in the firing line.
- Greece Said to Retreat on Debt Writedown Amid EU Opposition. Greece retreated from its call on the euro area to
write down its debt, and instead proposed to exchange existing
borrowings for new bonds linked to the country’s growth. Speaking to about 100 financiers in London
late on Monday, Finance Minister Yanis Varoufakis outlined plans to swap
some Greek debt owned by the European Central Bank and the European
Financial Stability Fund for the new securities, according to a person
who attended the meeting and asked not to be identified because they
weren’t authorized to speak publicly. Varoufakis indicated that the move
would allow Greece to avoid imposing a formal haircut on creditors, the
person said.
- Lenovo Profit Beats Estimates on Smartphone Share. (video) Lenovo surged the most in a year in Hong Kong trading after posting
profit that beat analysts’ estimates as its Motorola Mobility
acquisition helped capture a larger share of the global smartphone
market. Bloomberg's Ed Lococo reports on "On The Move Asia."
- Asia Stocks Follow U.S. Shares Higher as Oil Rises to Month High. Asian stocks rose, tracking a jump in U.S.
equities, as energy shares led gains after oil rebounded to a
one-month high.
The MSCI Asia Pacific Index rose 0.2 percent to 140.62 as
of 9:00 a.m. in Tokyo. Crude gained on speculation investors
bought contracts to close out bearish bets amid a falling rig
count. Shares in Australia climbed before the central bank
reviews its benchmark interest rate.
- Islamic State Reach Cited by Pentagon Gloomier Than Obama’s View. Islamic State extremists are expanding their
international footprint in the Mideast and North Africa, the
U.S. military’s top intelligence official said, offering a far
bleaker security assessment than have President Barack Obama and
his political appointees. The Sunni extremist group is extending its reach beyond
Iraq and Syria using “ungoverned and under-governed areas” to
establish affiliates in Algeria, Egypt and Libya, Marine
Lieutenant General Vincent Stewart, director of the Defense
Intelligence Agency, said in prepared testimony obtained in
advance of a House Armed Services Committee hearing Tuesday.
- Fed Says Some Banks Tightened Oil Loans, Saw Auto Loan Risk. The Federal Reserve said some banks
tightened standards or terms to energy-industry borrowers in the
fourth quarter, after the price of oil plunged. U.S. banks “reported little change in their standards”
for commercial and industrial loans overall, the Fed said today
in its Senior Loan Officer Opinion Survey, conducted Dec. 30 to
Jan. 13 with 73 domestic banks and 23 U.S. branches of foreign
banks. “Banks which reported having tightened either their
standards or terms on C&I loans predominantly pointed to
industry-specific problems as the main reason for having
tightened their lending policies to non-financial businesses,”
the Fed said. “Some survey respondents specifically noted their
concerns about the oil and gas sector resulting from the sharp
decline in the price of oil as a reason that they had tightened
their lending policies.” Banks anticipated more risk with sub-prime car loans, with
71 percent saying they expect loan quality to be unchanged while
29 percent said “loan quality is likely to deteriorate
somewhat,” according to the Fed survey.
Wall Street Journal:
- FCC to Propose Strong ‘Net Neutrality’ Rules. Agency Would Regulate Broadband Providers Tightly Like Telecommunications Firms. The Federal Communications Commission is about to fundamentally
change the way it oversees high-speed Internet service, proposing to
regulate it as a public utility. Chairman Tom Wheeler is
reaching for a significant expansion of the agency’s authority to
regulate broadband providers, according to multiple people familiar with
the matter.
- What Democrats and the CBO Don’t Get. The numbers reveal that a robust economy, not higher taxes, is the most reliable way to increase federal revenue. The recent rule change by House Republicans to incorporate the
macroeconomic impact of major legislation into official budget
estimates—“dynamic scoring”—has triggered heated criticisms. But three
decades of hard accounting data, in addition to supporting the rule
change, should prompt Washington to reconsider the way it thinks about
what drives federal revenues.
Barron's:
- Stratasys(SSYS) Plunges 27%: Q4, ’15 View Miss on MakerBot; Steps Up Spending. The stock has deepened its decline, now down $21.33, or almost 27%, at $58.76.
Shares of 3-D printer maker Stratasys (SSYS) are down $15.08, over 18%,
at $65, and fell as much as 22%, in late trading, after the company this
afternoon warned its revenue in Q4 will miss analysts’ expectations,
owing to problems getting new product out the door within its consumer
MakerBot unit. Shares of competitors are also trading down: 3D
Systems (DDD) is off $2.70, or almost 9%, at $27.55; Voxeljet (VJET) is
down 43 cents, or 5%, at $7.99; and ExOne (XONE) is down 33 cents, or
2.3%, at $14.14.
MarketWatch.com:
- China debt party nears the end of road. Despite an interest-rate cut late last year, China’s economy has got
off to a slow start, with weak factory and service-sector readings. The
typical response to such data is to expect more monetary stimulus. But
have we reached the point where rate cuts are no longer able to lift
China’s debt-heavy economy? As China enters its third year of
slowing growth, there is growing concern the debt reckoning cannot be
kicked down the road any longer. Credit has been growing faster than the
economy for six years, and there has always been a recognition this
cannot continue indefinitely.
Zero Hedge:
Business Insider:
Gallop:
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 110.0 -3.0 basis points.
- Asia Pacific Sovereign CDS Index 70.0 -1.25 basis points.
- NASDAQ 100 futures -.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
9:45 am EST
10:00 am EST
- Factory Orders for December are estimated to fall -2.4% versus a -.7% decline in November.
- The IBD/TIPP Economic Optimism Index for February is estimated at 51.5 versus 51.5 in January.
Afternoon:
- Total Vehicle Sales for January are estimated to fall to 16.6M versus 16.8M in December.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Kocherlakota speaking, Fed's Bullard speaking, UK Construction
PMI, weekly US retail sales reports, (DAL) January traffic data, (EMR)
annual meeting, (SAP) investor day and the (WEN) investor day could also
impact trading today.
BOTTOM LINE: Asian
indices are mostly higher, boosted by commodity and consumer shares
in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. 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: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 21.31 +1.62%
- Euro/Yen Carry Return Index 139.03 +.37%
- Emerging Markets Currency Volatility(VXY) 10.98 +.18%
- S&P 500 Implied Correlation 67.50 -1.56%
- ISE Sentiment Index 98.0 unch.
- Total Put/Call 1.07 -4.46%
Credit Investor Angst:
- North American Investment Grade CDS Index 69.16 -.28%
- America Energy Sector High-Yield CDS Index 768.0 +.37%
- European Financial Sector CDS Index 66.73 -2.63%
- Western Europe Sovereign Debt CDS Index 26.33 +4.61%
- Asia Pacific Sovereign Debt CDS Index 71.21 -.18%
- Emerging Market CDS Index 401.26 -.88%
- iBoxx Offshore RMB China Corporates High Yield Index 113.47 -.01%
- 2-Year Swap Spread 23.75 -.25 basis point
- TED Spread 24.75 +.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -14.5 -.75 basis point
Economic Gauges:
- 3-Month T-Bill Yield .01% unch.
- China Import Iron Ore Spot $62.45/Metric Tonne +.39%
- Citi US Economic Surprise Index -8.50 -4.45 points
- Citi Eurozone Economic Surprise Index 12.0 +2.0 points
- Citi Emerging Markets Economic Surprise Index -5.20 -.4 point
- 10-Year TIPS Spread 1.64 unch.
Overseas Futures:
- Nikkei Futures: Indicating +37 open in Japan
- DAX Futures: Indicating -12 open in Germany
Portfolio:
- Slightly Lower: On losses in my biotech sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 50% Net Long
Bloomberg:
- Ukraine Rebel Leader Calls for Mobilization After Talks Fail. A Ukrainian separatist leader ordered a
military mobilization as the conflict with government forces
escalated after peace talks failed to secure a truce. The call-up seeks to increase the rebel army to as many as
100,000 people, Alexander Zakharchenko, head of the self-declared Donetsk republic, said Monday, according to the
separatist-run DAN news service. The new troops will be deployed
against a Ukrainian military build-up in the south of the
conflict zone so that “by spring, they’ll be meeting a
different force,” he said, according to DAN.
- Greece Standoff Sparks Ire Over Economic Risks. U.S. and British leaders are expressing
frustration at Europe’s failure to stamp out financial distress
in Greece and the risk it poses to the global economy. U.K. Chancellor of the Exchequer George Osborne, whose
government faces voters in three months, became the latest
critics, following comments by Britain’s central banker, Mark
Carney, and U.S. President Barack Obama. “It’s clear that the standoff between Greece and the euro
zone is fast becoming the biggest risk to the global economy,”
Osborne said after meeting Greek Finance Minister Yanis
Varoufakis in London. “It’s a rising threat to our economy at
home.”
- Merkel Says Euro Area at Crossroads by Avoiding Tough Choices. German Chancellor Angela Merkel said the
euro is at a crossroads and called on members of the currency
union to settle on a common path to remain competitive with the
rest of the world. “We have to come to an agreement that we all strive for
this -- and really honestly strive for it,” Merkel told a group
of students in Budapest, Hungary. “Otherwise there will
continue to be very great tensions within the euro area.”
- Russia’s Manufacturing at Weakest Since 2009 as Ruble Sinks. Russian manufacturing slipped to a 5 1/2-year low as the nation’s worst currency crisis since 1998 stokes
inflation and weighs on businesses already facing a recession. The Purchasing Managers’ Index fell to 47.6 last month, the
lowest since June 2009, from 48.9 in December, HSBC Holdings Plc
said Monday in a statement, citing data compiled by Markit
Economics. Readings below 50 indicate a deterioration in
conditions. “Signs of contracting business activity became more
visible,” said Alexander Morozov, HSBC’s chief economist for
Russia and the Commonwealth of Independent States. “Meanwhile,
price pressures intensified further, increasing the probability
of a ‘bad equilibrium:’ high price growth amid falling demand.”
- Banks’ $2.7 Trillion Debt Habit Will Be Curbed, Nouy Says. The days of European lenders being allowed
to load up on government debt without having to account for risk
are numbered, according to Daniele Nouy, the euro area’s top
bank supervisor. A regulatory loophole that allows banks to apply a zero
risk weight to much of their government debt holdings and avoid
any capital charge should be closed, said Nouy, who heads the
European Central Bank’s oversight arm. “It was confirmed during the crisis that there are no
risk-free assets,” Nouy said in an interview in Frankfurt. “So
there should be a risk weight, capital requirements for
sovereign exposures.” Nouy said she sees movement toward
closing the loophole. “It will happen.”
- Currency Warriors Shoot Blanks in Failing to Boost Economies. The big guns of the global currency war may
be firing blanks. A dozen interest rate cuts already this year from Canada to
India plus quantitative easing in the euro area have investors
declaring the central bankers share the same goals: weaker
exchange rates and faster inflation. The risk is a race to the bottom: a series of competitive
devaluations in which nations turn increasingly aggressive in
their efforts to seize share in international trade markets.
That worry will form the backdrop when Group of 20 finance
ministers and central bankers convene next week in Istanbul.
- Europe Stocks Erase Losses at End of Trading Day. European stocks ended the day little
changed, erasing declines in the last 1 1/2 hour of trading.
Futures on the Euro Stoxx 50 Index rose.
The Stoxx Europe 600 Index advanced less than 0.1 percent
to 367.28, after falling as much as 0.8 percent, as energy
companies rallied the most in two weeks.
- Oil Extends Gains From 6-Year Low; Strike Boosts Gasoline. Oil extended a surge from the lowest level
in almost six years on speculation some investors are buying
contracts to close out bearish bets. Gasoline rose as a refinery
strike entered a second day. West Texas Intermediate futures gained as much as 4.8
percent while Brent increased as much as 5 percent before paring
gains. Hedge funds and other speculators held the largest number
of short contracts in WTI in four years. Oil rallied 8.3 percent
on Friday as drillers pulled 94 rigs from U.S. fields last week,
the most on record. Gasoline jumped to a five-week high.
- Oil Companies Draw on Creative Financing to Stay Afloat After Prices Tumble. North America’s small and mid-sized energy
companies are searching for creative ways to stay afloat as
investors smell blood in the water from the almost 60 percent
fall in the price of oil since June. Oil and natural gas companies are straining for solutions
before cuts in credit lines and increases in lending rates hit
home in April, when banks re-price the collateral used to secure
revolving credit lines. Some are turning to more creative forms
of financing as familiar sources of money dry up.
- Specialist Doctors Head for Exit as U.S. Shifts Payments. The Obama administration’s push to transform
the way the U.S. pays for health care is splitting the medical
profession, as family doctors embrace changes that oncologists,
neurologists and other specialists are concerned will cause
turmoil. The government set a timetable last week to extinguish
Medicare’s “fee-for-service” system, which rewards the
quantity of care over quality. That’s adding to pressure on
physicians who have been debating whether to join their local
hospital, merge their practices into ever-bigger groups or get
out of medicine.
Barron's:
ZeroHedge:
Business Insider:
@LOggOl:
Financial Times:
Telegraph:
Het Financieele Dagblad:
- ECB QE Plan Won't Have Any Impact, Rabobank CFO Says. ECB QE is a
dramatic step and won't lead to anything, citing Rabobank Chief
Financial Officer Bert Bruggink in an interview.
Style Underperformer:
Sector Underperformers:
- 1) Biotech -1.81% 2) Hospitals -1.42% 3) Airlines -1.41%
Stocks Falling on Unusual Volume:
- ARDX, MCO, PBI, TRW, FCN, MCO, PBI, TRW, FCN, HA, GES, DBVT, SONS, WYN, NGVC, CPSI, SYY, OTEX, SNA, BZH, ICPT, EXR, ARLP, LABL, CAVM, CHSP, OMER, TGI, MAN and CLDT
Stocks With Unusual Put Option Activity:
- 1) DHR 2) THC 3) S 4) BHI 5) ANF
Stocks With Most Negative News Mentions:
- 1) ANF 2) DOW 3) LULU 4) OPHT 5) KOP
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Steel +2.89% 2) Oil Service +2.21% 3) Construction +1.82%
Stocks Rising on Unusual Volume:
- OAS, NMM, WAC, TEN and SCTY
Stocks With Unusual Call Option Activity:
- 1) CAM 2) AWAY 3) TMV 4) DAL 5) HA
Stocks With Most Positive News Mentions:
- 1) DECK 2) ISRG 3) DISH 4) PSB 5) T
Charts:
