Tuesday, April 11, 2017

Today's Headlines

Bloomberg:
  • Russia Opens New Front in U.S. Rivalry With Taliban Support. Russia and the U.S. are increasingly sparring over Afghanistan, adding to rapidly souring ties between the Kremlin and President Donald Trump’s administration. U.S. Defense Secretary James Mattis has voiced alarm at Russia’s actions in Afghanistan, where it’s been cultivating links with the Taliban amid a campaign waged by the terrorist group against Afghan and NATO forces. His comments come as local Afghan officials and a former Taliban commander say there is evidence Russia is supplying arms to the insurgents. U.S. officials won’t go that far in public, but U.S. Central Command chief General Joseph Votel has told a congressional panel that Russia was probably providing the group with weapons.
  • China H Shares Slide to One-Month Low Amid Regulation Worries. Chinese shares traded in Hong Kong slumped to their lowest in more than a month amid concern China may ramp up oversight of financial markets and as geopolitical risks linger. The Hang Seng China Enterprises Index fell 0.9 percent at the close. China Galaxy Securities Co. was among the biggest decliners, while China Life Insurance Co. retreated to its lowest price since Feb. 6. The Hang Seng Index slipped 0.7 percent to 24,088.46, and the Shanghai Composite Index reversed losses in the afternoon to advance 0.6 percent.
  • Complacent No More: Hedging Costs Jump in Europe’s Stock Market. (graph) With less than two weeks to go before the first round of French presidential elections, investors are racing to protect gains that have pushed the region’s shares to their highest prices in more than a year. The cost of hedging against declines in the Euro Stoxx 50 Index has surged to its highest level since the U.K. referendum on European Union membership, rebounding from near a 15-month low in just a little more than a week. Even as equities have remained stable, a gauge tracking volatility expectations has climbed for 10 straight days, the longest streak since November.
  • Euro Volatility Spread Steepens to Record High on France: Chart. Investors are showing increasing concern before the French presidential elections, with market complacency giving way to extreme cautiousness. The spread between one-month and one-week implied volatilities on the euro versus the dollar closed at a record high of 6.35 percentage points on Monday, as near-term risks remain subdued and focus is almost solely placed on the chance that anti-euro candidate Marine Le Pen wins the race.
  • European Stocks Steady as Real Estate Rally Offsets Tech Slump. The Stoxx Europe 600 Index lost less than 0.1 percent at the close after swinging between a 0.3 percent gain and a 0.5 percent decline. Banks fell to a one-month low, while Dialog Semiconductor Plc led technology shares to the worst drop in the broader index after Bankhaus Lampe warned that Apple Inc. may cut back on its use of the company’s chips.
  • Clean Energy Investment Drops 17% as China and U.S. Scale Back. Clean-energy investment fell 17 percent in the first quarter, keeping pace with last year’s decline, as the U.S. and China both scaled back support for wind and solar farms. The $53.6 billion funneled into projects such as renewable energy, efficiency and electric cars during the first three months of the year marked the lowest investment for the quarter since 2013, according to Bloomberg New Energy Finance. A surge in financing for large offshore wind projects at the start of last year wasn’t repeated in 2017.
Wall Street Journal:
MarketWatch.com: 
  • China car-sales growth slows in March. Growth in China's car sales slowed sharply in March, illustrating the effects of a higher sales tax on the world's biggest car market. Sales of vehicles, excluding those typically used for commercial purposes, grew 1.7% to 2.1 million units in March from a year earlier, the government-backed China Association of Automobile Manufacturers said Tuesday. This marked a slowdown from the 6.3% growth in the first two months of the year. By comparison, sales grew nearly 10% in March 2016 from the previous year. South Korean manufacturers suffered from the fallout of a continuing political dispute between Beijing and Seoul over the latter's deployment of a missile-defense system--a step the Chinese government has vehemently opposed. The dispute has led to the boycotting of Korean products by many Chinese consumers, hitting sales of Hyundai Motor Co. and Kia Motors Corp. in China in March, analysts say.
Zero Hedge: 
Business Insider:

Bear Radar

Style Underperformer:
  • Large-Cap Growth -.1%
Sector Underperformers:
  • 1) Coal -1.8% 2) Road & Rail -.8% 3) Semis -.9%
Stocks Falling on Unusual Volume: 
  • KNX, MHLD, SWFT, ON, ADS, NGHC, HUBG, AFSI, SKM, HZNP and CRUS
Stocks With Unusual Put Option Activity:
  • 1) SMH 2) UAL 3) RAD 4) AMAT 5) WFM
Stocks With Most Negative News Mentions:
  • 1) AVGR 2) AFSI 3) HUBG 4) OMED 5) ON
Charts:

Bull Radar

Style Outperformer:
  • Small-Cap Value +.5%
Sector Outperformers:
  • 1) Gold & Silver +2.5% 2) Tobacco +1.4% 3) Homebuilding +1.1%
Stocks Rising on Unusual Volume:
  • SALE, AXON, PICO, CCS, UNFI, AGX, RPD, PFSI, GOL, ILMN, BANC, YELP, PLSE and GOLD
Stocks With Unusual Call Option Activity:
  • 1) ASNA 2) RCII 3) LB 4) CME 5) TSO
Stocks With Most Positive News Mentions:
  • 1) STX 2) CCUR 3) TTI 4) ARCO 5) TOL
Charts:

Morning Market Internals

NYSE Composite Index:
  • Volume Running -14.6% Below 100-Day Average
  • 1 Sector Rising, 9 Sectors Declining
  • 48.5% of Issues Advancing, 46.8% Declining
  • 47 New 52-Week Highs, 4 New Lows
  • Vix 15.1 +7.2%
  • TRIN/Arms 1.34 +16.9%

Monday, April 10, 2017

Tuesday Watch

Night Trading 
  • Asian equity indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 96.0 +.5 basis point
  • Asia Pacific Sovereign CDS Index 21.25 unch.
  • Bloomberg Emerging Markets Currency Index 71.66 -.03%.
  • S&P 500 futures +.03%. 
  • NASDAQ 100 futures +.03%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (OZRK)/.72
  • (VNCE)/-.05
  • (HCSG)/.29
Economic Releases
6:00 am EST 
  • The NFIB Small Business Optimism Index for March is estimated to fall to 104.7 versus 105.3 in February.  
10:00 am EST
  • JOLTS Job Openings for February are estimated to rise to 5663 versus 5626 in January.   
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Kashkari speaking, Japan Machine Orders, Eurozone Manufacturing/Industrial Production reports, UK CPI report, WasDe Crop report, $24B 3Y T-Note auction, weekly US retail sales reports, (ALK) monthly traffic report and the (AAL) monthly traffic report 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 mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.

Stocks Slightly Higher into Final Hour on Oil Gain, Short-Covering, Technical Buying, Energy/Retail Sector Strength

Broad Equity Market Tone:
  • Advance/Decline Line: About Even
  • Sector Performance: Mixed
  • Volume: Light
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 13.59 +5.5%
  • Euro/Yen Carry Return Index 122.77 -.06%
  • Emerging Markets Currency Volatility(VXY) 9.38 -.53%
  • S&P 500 Implied Correlation 44.72 -.82%
  • ISE Sentiment Index 84.0 +27.27%
  • Total Put/Call 1.10 +15.8%
  • NYSE Arms 1.11 -27.13%
Credit Investor Angst:
  • North American Investment Grade CDS Index 65.42 -.13%
  • America Energy Sector High-Yield CDS Index 349.0 -.16%
  • European Financial Sector CDS Index 91.31 +2.68%
  • Western Europe Sovereign Debt CDS Index 12.84 +5.85%
  • Asia Pacific Sovereign Debt CDS Index 21.28 +.52%
  • Emerging Market CDS Index 210.87 +.27%
  • iBoxx Offshore RMB China Corporate High Yield Index 136.45 -.15%
  • 2-Year Swap Spread 32.0 -1.5 basis points
  • TED Spread 34.5 +.25 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -29.5 -3.75 basis points
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 71.68 -.02%
  • 3-Month T-Bill Yield .81% unch.
  • Yield Curve 109.0 unch.
  • China Import Iron Ore Spot $74.71/Metric Tonne -.98%
  • Citi US Economic Surprise Index 35.60 -3.2 points
  • Citi Eurozone Economic Surprise Index 38.90 -2.2 points
  • Citi Emerging Markets Economic Surprise Index 24.70 -4.5 points
  • 10-Year TIPS Spread 1.93 -2.0 basis points
  • 63.2% chance of Fed rate hike at June 14 meeting, 65.1% chance at July 26 meeting
Overseas Futures:
  • Nikkei 225 Futures: Indicating +18 open in Japan 
  • China A50 Futures: Indicating -23 open in China
  • DAX Futures: Indicating +13 open in Germany
Portfolio: 
  • Slightly Higher: On gains in my retail sector longs and emerging markets shorts 
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long