Bloomberg:
- Ukraine Rebels Plan Offensive as Government Fortifies Key Port. Pro-Russian rebels in eastern Ukraine are
preparing for a new offensive to expand their territory,
signaling a six-week-old truce is in danger of crumbling. “We’ll try to push them from here to hell because we’re
tired of them killing civilians with indiscriminate fire,”
Alexander Khodakovsky, who commands the 3,500-man Vostok
Brigade, said in an interview at his headquarters in Donetsk.
The campaign may start in the “foreseeable future,” according
to Khodakovsky, who also heads the security council of the self-proclaimed Donetsk People’s Republic. A rebel offensive would shatter the cease-fire and raise
the risk of escalating U.S. and European Union sanctions against
Russia, which they blame for stoking the conflict. Ukraine and
Germany, which brokered the accord with France, are calling for
fresh talks as President Petro Poroshenko’s government and the
insurgents accuse each other of violations.
- Worst Yet to Come for Russian Banks, Sberbank CEO Gref Says. OAO Sberbank Chief Executive Officer Herman
Gref said the worst is yet to come for Russia’s banking industry
still reeling from last year’s collapse of the ruble and the
economic slump. Russia’s banking sector has not yet surpassed “the peak of
its problems,” Gref, who runs the country’s largest lender,
told reporters in Moscow on Friday. “They are still ahead.”
- EU Dangles Prospect of Aid to Entice Greece Into Action. Greece could win an infusion of bailout
money as soon as next week if Prime Minister Alexis Tsipras can
deliver an adequate package of reform measures, an EU official
told reporters in Brussels. European Union leaders sought to revive bailout talks at a
meeting in Brussels by signaling they might soon be ready to
release some funds so long as Greece fulfills its commitments.
The first money could come from profits euro members made when
the European Central Bank bought discounted Greek debt during an
earlier phase of the financial crisis. There’s also money left
in the country’s 240 billion-euro ($258 billion) bailout
program.
- Suicide Bombs Hit Shiite Mosques in Yemen, 120 Reported Dead. Suicide
bombers killed dozens of worshipers
at two mosques in Yemen’s capital Sana’a during Friday prayers,
a day after fighting spread to the south of the country. At least 120
people died in the attacks on the Badr and al-Hashoosh mosques, according to the al-Haris news service, run by
the Interior Ministry. The mosques, like most of the capital,
are controlled by the Shiite Houthi rebel movement, based in
north Yemen, which has been battling forces loyal to President
Abdurabuh Mansur Hadi as well as al-Qaeda militants.
- European Stocks Inch Toward Record as FTSE 100 Rises Above 7,000. European stocks rose near an all-time high
as miners and oil shares led gains. The U.K.’s FTSE 100 Index
climbed above 7,000 for the first time.
The Stoxx Europe 600 Index advanced 0.8 percent to 404.01
at the close of trading. It is 0.4 percent away from a record
close in March 2000, having surpassed the forecasts of 12
strategists surveyed by Bloomberg in January.
- Here's the Next Biggest Threat to Global Crude Oil Prices. The next big threat to oil prices isn’t from
OPEC or Bakken shale. It’s Russian samovars, or teapots. Simple refineries that process crude into fuel oil are
scaling back, because when oil prices slump, the government
reduces the discount that these refiners -- known as teapots to
those in the industry -- get for exporting fuel. They use less
crude, freeing it up for sale abroad, which in turn adds to the
global glut. Russia may increase oil exports by as much as 250,000
barrels a day this year, according to James Henderson, a senior
research fellow at the Oxford Institute for Energy Studies who’s
followed the country’s energy industry for more than 20 years.
That would equate to 5 percent growth in shipments, the most in
at least a decade.
- Oil Rot Spreads as Loan Default Claim Puts Connacher on Brink. A New York lawsuit is threatening to make
Connacher Oil and Gas Ltd. a casualty of crude’s collapse in
Canada’s oil sands as creditors squeeze small producers in one
of the priciest places to extract the fuel. As oil prices resumed their slide to a new six-year low
this week, creditors filed suit on Monday demanding Connacher
immediately repay a $128.4 million loan. If successful, the suit
would make it difficult for the company to stay in business
unless it finds some other source of capital, according to
Moody’s Investors Service Inc.
- European Coal Falls to Lowest Since 2007 as Demand Outlook Dims. European coal prices fell to the lowest in
more than seven years amid a worldwide glut of the fuel as
governments from the U.S. to China boost efforts to shift away
from the most-polluting energy source. Prices for delivery next year to northwest Europe slid as
much as 0.7 percent, according to broker data compiled by
Bloomberg. The benchmark contract is headed for a third straight
weekly decline as demand growth slows in China, the world’s
biggest consumer.
- Iron Ore Slumps Below $55 as China Slowdown Hurts Outlook. Iron ore plunged below $55 a dry metric ton
as signs of a slowdown in China’s economy added to concerns that
demand will weaken from the largest buyer amid a global surplus. Ore with 62 percent content at Qingdao, China, sank to
$54.66 a ton on Friday, according to Metal Bulletin Ltd. That’s
the lowest since at least May 2008, when Metal Bulletin started
compiling weekly prices. Prices retreated 5.2 percent this week,
extending losses in 2015 to 23 percent.
- Tiffany(TIF) Predicts Profit Plunge as Strong Dollar Crimps Sales. (video) Tiffany & Co., the world’s second-largest
luxury jewelry chain, predicted a 30 percent decline in net
income this quarter as currency headwinds and sluggish sales
hamper results. The drop in the first quarter will be followed by a more
“modest” decrease in the following period, the New York-based
company said in a statement on Friday. Worldwide sales will
decline about 10 percent in the first quarter, partly because of
a slowdown in the Americas region, Tiffany said. The stronger dollar has hit Tiffany with a double-whammy by
lowering the value of overseas sales and making it less
attractive for foreign tourists to come to the U.S. to shop.
ZeroHedge:
Business Insider:
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.01% 2) Hospitals -.53% 3) Gaming -.46%
Stocks Falling on Unusual Volume:
- MAC,
SXCP, FOLD, LBIO, TKMR, TIF, CMCM, YOKU, GMED, SONS, VNCE, ARG, FLXN,
DTYS, VIIX, CLDN, LECO, KITE, FWP, PII, EIX, ANAC, DRNA, ASCMA, ASPX, WNC, TGTX, MAC, KITE, SONS and THRX
Stocks With Unusual Put Option Activity:
- 1) LUV 2) TIF 3) IBB 4) HOT 5) MON
Stocks With Most Negative News Mentions:
- 1) DATA 2) TSO 3) UCTT 4) CCG 5) MTGE
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +3.44% 2) Homebuilders +2.18% 3) Oil Service +1.98%
Stocks Rising on Unusual Volume:
- PRTA, RALY, CTRP, BIIB, SQM, NKE, QUNR, KBH and OC
Stocks With Unusual Call Option Activity:
- 1) CVC 2) BIIB 3) NKE 4) NFX 5) HZNP
Stocks With Most Positive News Mentions:
- 1) CTRP 2) BIIB 3) NKE 4) PRTA 5) KBH
Charts:
Evening Headlines
Bloomberg:
- EU Pledges to Extend Russia Sanctions, Delays Confirming. European Union leaders made a pledge to
extend sanctions against Russia until the end of the year,
trying to pressure the Kremlin to uphold the cease-fire in
eastern Ukraine. Yet the political commitment stopped short of the ironclad
decision sought by hardliners in eastern Europe, leaving open
the possibility that the trade and investment curbs might not be
renewed when they expire in July.
- Russian Toilets Used as a Hedge Against Fallout From Ruble Rout. At a time when President Vladimir Putin’s standoff with the
West is slowing the economy and crimping sales at home, Kazakhs
-- the third biggest net buyers of Russian goods -- are boosting
orders to benefit from the 41 percent depreciation that’s made
the ruble the worst-performing currency of the past year.
Purchases of rubles quadrupled in Kazakhstan in January from a
year earlier to total 60 billion rubles ($1 billion) for the
four months from October, according to data from Kazakhstan’s
central bank in Almaty.
- EU Asks Greece for More Reforms to Speed Aid Negotiations. Greece must submit a more concrete reform
plan to euro-area authorities so that bailout talks can speed
up, European Union leaders said after nearly four hours of talks
with Greek Prime Minister Alexis Tsipras in Brussels. With EU chiefs warning that time is running out for Greece
to overcome a standoff over aid, German Chancellor Angela Merkel
and French President Francois Hollande said that the Greek
government needed to submit new measures rapidly.
- Bank Deposit Flight Has Accelerated in Greece: Humes. (video)
- China Starts 10-Year Bond Futures Trading as Rate Controls Ease. China will allow trading of 10-year
government bond futures, the latest step in a plan to build a
market-based yield curve and liberalize interest rates. The China Financial Futures Exchange will officially list
the 10-year contracts on Friday, after allowing trading of five-year sovereign debt futures in September 2013. That followed an
18-year hiatus after an investigation into alleged market
manipulation in the late 1990s.
- Most Asian Stocks Retreat as Materials, Tech Shares Lead Drop. Most Asian stocks dropped, following
declines in U.S. shares, as materials and technology companies
led losses.
About three shares fell for every two that rose on the MSCI
Asia Pacific Index, which added less than 0.1 percent to 146.79
as of 9:05 a.m. in Tokyo.
- Oil Slump Extends to a Fifth Week as Global Glut Seen Expanding. Oil trading near the lowest price in six
years is headed for a fifth weekly drop amid signs the global
supply glut is worsening. Futures were little changed in New York after falling for
the seventh time in eight days on Thursday. The Organization of
Petroleum Exporting Countries needs to keep its production
target unchanged to maintain market share, said Kuwait, the
group’s third-largest member. Iran may increase oil exports
within months of reaching a deal on its nuclear program,
according to U.S. and European officials.
- Tarullo Targets Commodity Risks at Goldman Sachs(GS), Morgan Stanley(MS). Federal Reserve Governor Daniel Tarullo
questioned whether Goldman Sachs Group Inc. and Morgan Stanley
should be allowed to own physical commodities because the
practice exposes them to risks outside traditional banking. The New York-based companies are allowed “to engage in the
extraction, transportation of potentially highly combustible
materials with substantial risks associated with them,” Tarullo
told the Senate Banking Committee on Thursday. Such activity
appears to “breach the wall between banking and commerce.”
Wall Street Journal:
- Iran Talks Stall Over Ending of Sanctions. As March 31 deadline nears for nuclear agreement, Tehran wants U.N. sanctions lifted right away; U.S., Europeans say ‘no way.’
When international sanctions on Iran would be lifted has emerged as
one of the largest remaining stumbling blocks to an agreement to
constrain Tehran’s nuclear program by a March 31 deadline, according to
U.S., European and Iranian officials.
- Crimea Is Still Ukraine. The Russian annexation has robbed Ukrainian citizens on the peninsula of the right to live in their own state.
One year ago, the Ukrainian territory of Crimea was illegally annexed
by our neighbor and partner at the time, the Russian Federation. One
year ago, as Russian special forces sacked the regional parliament and
silenced dissenting voices, a farce referendum was held to position
Moscow’s land grab behind a facade of legitimacy.
- Fed Is Pushing and Pulling on Rates Riddle. Policy makers face challenge in moving long-term yields up; ‘conundrum’ for new era.
- How Foreigners Became America’s Financial Regulators. The Fed and Treasury are answering to a board of the G-20 without admitting it to the American people.
Fox News:
- US to train 750 Ukraine troops as Russian aggression continues. (video) With Russian aggression in eastern Ukraine continuing, the White
House announced Wednesday the U.S. will begin training 750 Ukraine
troops. The news came after a phone call between Vice President Joe Biden and
Ukrainian President Petro Poroshenko and coincided with Russians
celebrating the first anniversary of their country’s annexation of
Crimea.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Financial Times:
- White House reconsiders supporting Israel at UN. The
White House said on Thursday that it was reconsidering the support it
has given Israel at the UN even as Israeli Prime Minister Benjamin
Netanyahu appeared to row back his election campaign comments rejecting a
Palestinian state.
Evening Recommendations
Piper Jaffray:
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.0 +14.0 basis points (new series).
- Asia Pacific Sovereign CDS Index 64.0 +.5 basis point.
- NASDAQ 100 futures +.12%.
Morning Preview Links
Earnings of Note
Company/Estimate
- (DRI)/.84
- (KBH)/.02
- (TIF)/1.51
Economic Releases
Upcoming Splits
Other Potential Market Movers
- The
Fed's Lockhart speaking, Fed's Evans speaking, German PPI, (ICPT)
investor meeting and the (BIIB) Alzheimer data could also impact trading
today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly higher 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: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 14.09 +.86%
- Euro/Yen Carry Return Index 134.15 -1.62%
- Emerging Markets Currency Volatility(VXY) 10.70 +1.04%
- S&P 500 Implied Correlation 59.46 +4.41%
- ISE Sentiment Index 68.0 -11.69%
- Total Put/Call .87 -10.31%
Credit Investor Angst:
- North American Investment Grade CDS Index 63.30 +1.70%
- America Energy Sector High-Yield CDS Index 1,020.0 +40.1%%
- European Financial Sector CDS Index 61.80 +4.0%
- Western Europe Sovereign Debt CDS Index 23.65 +1.52%
- Asia Pacific Sovereign Debt CDS Index 63.20 -.60%
- Emerging Market CDS Index 410.92 +.10%
- iBoxx Offshore RMB China Corporates High Yield Index 114.09 +.08%
- 2-Year Swap Spread 26.0 +.5 basis point
- TED Spread 23.25 +.75 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -23.75 -3.25 basis points
Economic Gauges:
- 3-Month T-Bill Yield .01% -2.0 basis points
- Yield Curve 136.0 -3.0 basis points
- China Import Iron Ore Spot $55.0/Metric Tonne -.87%
- Citi US Economic Surprise Index -72.10 -.2 point
- Citi Eurozone Economic Surprise Index 40.30 -.2 point
- Citi Emerging Markets Economic Surprise Index -1.5 -2.1 points
- 10-Year TIPS Spread 1.80 +7.0 basis points
Overseas Futures:
- Nikkei Futures: Indicating -21 open in Japan
- DAX Futures: Indicating +7 open in Germany
Portfolio:
- Higher: On gains in my medical/biotech/retail sector longs and emerging markets shorts
- Market Exposure: 75% Net Long
Bloomberg:
- Ukraine Calls for New Peace Talks as Tusk Advocates EU Sanctions. Ukraine and Germany called for fresh talks
about a cease-fire between government troops and rebels after
Russia accused its neighbor of putting the peace deal at risk. European Union President Donald Tusk also urged members to
extend sanctions against Russia until the end of the year.
Ukrainian President Petro Poroshenko and German Chancellor
Angela Merkel agreed in a phone call to initiate a meeting
between their foreign ministers and those of France and Russia,
following accusations from Russia that its neighbor was
undermining the truce signed in Belarus’s capital last month. “If everything will be on the brink of collapse because
the Minsk agreements aren’t being observed by one side of the
conflict, then of course vigorous efforts will be needed at all
levels,” Kremlin spokesman Dmitry Peskov told reporters in a
conference call on Thursday.
- EU Leaders Urge Tsipras to Compromise as Time Runs Out. European Union leaders urged Prime Minister
Alexis Tsipras to find a compromise with Greece’s euro-area
creditors, as France and Germany prepared for negotiations on
the sidelines of Thursday’s summit in Brussels. Tsipras will meet later this evening with Chancellor Angela
Merkel, President Francois Hollande and European Central Bank
President Mario Draghi. Also present will be Dutch Finance
Minister Jeroen Dijsselbloem, who leads the euro-area finance
ministers’ group that is the more usual forum for deliberating
Greece’s predicament.
- Merkel Vows to Keep Euro Intact as She Dives Into Greek Standoff. (video) German Chancellor Angela Merkel vowed to
keep the euro intact as the strain of keeping Greece afloat
opened divisions among European Central Bank policy makers. Merkel will meet Greek Prime Minister Alexis Tsipras at a
European Union summit in Brussels Thursday with work to prepare
for more financial aid stalled and the ECB Governing Council
fending off calls from its own banking supervisors to tighten
the screws on the government in Athens. “If the euro fails, Europe fails,” Merkel told German
lawmakers in Berlin before she traveled to Brussels, reprising
an expression she adopted during the height of the debt crisis
from 2010 to 2012.
- The Company Securing Your Internet Has Close Ties to Russian Spies. (video) Kaspersky Lab has published
reports on alleged electronic espionage by the U.S., Israel, and the
U.K.—but it’s yet to look at Russia. Kaspersky Lab sells security software, including antivirus programs
recommended by big-box stores and other U.S. PC retailers. The
Moscow-based company ranks sixth in revenue among security-software
makers, taking in $667 million in 2013, and is a favorite among Best
Buy’s Geek Squad technicians and reviewers on Amazon.com. Founder and
Chief Executive Officer Eugene Kaspersky used to work for the KGB, and
in 2007, one of the company’s Japanese ad campaigns used the slogan “A
Specialist in Cryptography from KGB.”
- European Stocks Rise to Highest Since 2000 After Fed Statement. European stocks climbed to their highest
level since 2000, as the Federal Reserve acknowledged a
moderation in economic growth, fueling speculation it won’t be
in a rush to raise interest rates. All but two of the 19 industry groups on the Stoxx Europe
600 Index advanced, with energy companies leading gains. Royal
Dutch Shell Plc rose 1 percent, while Premier Oil Plc added 8
percent, for the biggest increase on the equity benchmark.
The Stoxx 600 increased 0.6 percent to 400.83 at the close
of trading.
Wall Street Journal:
Fox News:
CNBC:
ZeroHedge:
Business Insider:
Telegraph:
