Monday, May 01, 2017

Today's Headlines

Bloomberg:
  • China's Markets and Economy Are Going in Different Directions. China’s run of solid economic indicators proved little consolation for its shaky financial markets in April. The dichotomy stems from a shift in the leadership’s focus toward reducing leverage -- one that’s set to determine whether growth joins asset prices in heading down. Economists are practically unanimous in saying that reduced debt loads would be good for China’s longer-term health. The big unknown is whether officials can manage that without a dose of short-term pain. As UBS Group AG analysts put it in a note last week: if authorities’ initiatives are "not managed well, it could lead to a rise in credit events, excessive liquidity tightening, faster-than-intended slowdown of credit growth, and greater market volatility."
  • Wheat Futures Surge After U.S. Crop Pummeled by Storm. Wheat prices headed for record gains in Chicago on Monday as the U.S. winter crop faced substantial losses from snow and high winds that slammed into four Midwest states including Kansas, the top grower. More than 12 inches (30 centimeters) of snow fell on ripening wheat in parts of Kansas, Colorado, Oklahoma and Nebraska in the past 24 hours, David Streit, the senior lead forecaster at Bethesda, Maryland-based Commodity Weather Group LLC, said in a telephone interview. While it will take several days before the damage can be assessed accurately as the snow melts, early estimates suggest losses could exceed 50 million bushels, according to Pira Energy.
  • Mnuchin Says Reaching 3% U.S. Economic Growth May Take Two Years. Treasury Secretary Steven Mnuchin said an overhaul of the tax system, regulatory reform and better trade deals will help produce 3 percent U.S. economic growth within two years. Returning health in the U.S. job market, a 12 percent rise in stock prices since Trump’s election and consumer sentiment at the highest in 16 years are painting an optimistic picture of the economy. Even so, the economy expanded at its slowest pace in three years at 0.7 percent in the first quarter-- underlining the challenges of an administration aiming for 3 percent or higher annual growth.
  • EPA, Clean Energy Spared Trump's Ax in $1.1 Trillion Budget Deal. Environmental programs marked for death or deep cuts by President Donald Trump got a reprieve in the government funding deal revealed early Monday by congressional leaders -- at least for now. The Environmental Protection Agency, targeted for $247 million in cuts for this year’s funding, instead escaped with a budget trimmed by $81 million -- or 1 percent -- and no staff reductions. Research divisions within the Department of Energy received increases despite calls by Trump to slash or eliminate them. For example, its advanced research program, which would have been cut in half under Trump’s 2017 spending plan, instead will get a $15 million increase in funding this year.
Wall Street Journal:
Zero Hedge:
Reuters:
  • Macau gambling revenue rises 16.3 percent in April. Revenue at the world's biggest casino hub of Macau rose 16.3 percent in April, as new resorts helped draw high rollers and casual gamblers to the country's only legal casino hub. Gambling revenue in the southern Chinese territory in April was 20.2 billion patacas ($2.52 billion), government data showed on Monday. Analysts were expecting 13-17 percent growth.
Yonhap News:
  • S. Korea's exports soar 24.2 pct in April. South Korea's exports continued to rise in April, extending their winning streak to six months, on the back of brisk overseas sales of ships and chips, the trade ministry said Monday. Outbound shipments came to US$51 billion last month, up a nearly seven-year high of 24.2 percent from $41.1 billion tallied a year earlier, according to the Ministry of Trade, Industry and Energy. It marked the second-largest monthly volume since October 2014, when shipments reached $51.6 billion, while it posted double digit growth for four months in a row for the first time in nearly seven years. The country's exports have been on a steady rise since November led by an upturn in oil prices and recovering world trade. Imports jumped 16.6 percent on-year to $37.8 billion in April. Last month's trade surplus came to $13.3 billion, marking 63 straight months of surplus, the ministry said.

Bear Radar

Style Underperformer:
  • Mid-Cap Value +.1%
Sector Underperformers:
  • 1) Gold & Silver -2.9% 2) Oil Service -1.0% 3) Foods -.7%
Stocks Falling on Unusual Volume: 
  • ITCI, TIS, BSFT, EGHT, RDUS, SNCR, AMG, LXU and TYPE
Stocks With Unusual Put Option Activity:
  • 1) FTNT 2) NBR 3) FIT 4) K 5) SYF
Stocks With Most Negative News Mentions:
  • 1) EGHT 2) ITCI 3) NWL 4) HP 5) AEGN
Charts:

Bull Radar

Style Outperformer:
  • Large-Cap Growth +.4%
Sector Outperformers:
  • 1) Gaming +1.6% 2) Internet +1.4% 3) Banks +1.1%
Stocks Rising on Unusual Volume:
  • ASPS, ENSG, ARLP, GGP, EHTH, TTWTR, LE, KMG, TRCO, ARCX, UCTT, KBR, TRVG, DDC, AHGP, WMAR, BLKB, MTCH, FORM, PICO, SIMO, DSLV, ZEUS, CNXC, RGNX, FLT, KBR, MTRX, PETS, RCL and W
Stocks With Unusual Call Option Activity:
  • 1) AAOI 2) COH 3) CZR 4) UTX 5) MA
Stocks With Most Positive News Mentions:
  • 1) CGNX 2) TWTR 3) RCL 4) ADSK 5) WAT
Charts:

Morning Market Internals

NYSE Composite Index:

Sunday, April 30, 2017

Monday Watch

Today's Headlines
Bloomberg:
  • China Manufacturing Gauge Declines From a Nearly Five-Year High. China’s official factory and services gauges pulled back from multi-year highs, dimming the outlook for the sustainability of the past two quarters’ acceleration in economic growth. Manufacturing purchasing managers index fell to 51.2 in April from an almost five-year high of 51.8 in March, missing the median estimate of 51.7 in a Bloomberg survey and falling short of all projections. Non-manufacturing PMI dropped to a six-month low of 54 from 55.1 last month. Gauges still show momentum, as numbers higher than 50 indicate improving conditions.
  • Macron Hunts for French Rural Votes, Le Pen Cheers New Ally. French presidential front-runner Emmanuel Macron hunted Saturday for votes in rural France where his far-right opponent, Marine Le Pen, is making inroads among country folk who feel left behind. Back in Paris, Le Pen announced that if she wins the presidency in the May 7 runoff she would name former rival Nicolas Dupont-Aignan, her new campaign ally, as her prime minister. The move aims to secure the nearly 1.7 million votes that the anti-European Union conservative got when he was eliminated from the presidential race in the first round of balloting.
  • Turkey Threatens Further Strikes on U.S.-allied Syrian Kurds. Turkish President Recep Tayyip Erdogan said Sunday his country may take further action against Kurdish militants in Iraq and Syria, as U.S.-backed forces in Syria closed in on the last neighborhoods of a former stronghold of the Islamic State group. The U.S. views the Kurdish-led Syrian Democratic Forces as the most effective partner to counter the Islamic State group in northern Syria, an assessment bolstered by the SDF's steady advances against the jihadists. But it has complicated relations with Turkey, which views the group's Kurdish component as an extension of a terror group operating inside its own borders.
  • Cautious Start for Stocks as Global Growth Wanes. The MSCI Asia Pacific Index was flat after capping a fourth straight month of gains. Stocks in Japan were little changed in light trading as China’s factory gauge fell more than expected from March’s almost five-year high. The yen recouped some of last week’s slide as investors weighed the possibility of escalating tension between the U.S. and North Korea. On top of all that, Congress will have this week to agree on a spending bill or risk a shutdown, after passing a stopgap measure Friday.
  • Libya's Oil Output Rebounds as Sharara, El Feel Fields Restarted. Libya’s crude production rebounded to more than 700,000 barrels a day as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after a halt. The Sharara field is currently producing 216,400 barrels a day, while the El Feel, or Elephant, deposit is pumping 26,500 and is expected to boost output further, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday by phone. Crude from Sharara started flowing to the Zawiya refinery after the port of Zawiya re-opened last week following a three-week closure. El Feel, idled since April 2015, also restarted last week.
  • Oil Price Optimism Wears Off as Texas Wildcatters Drill On. The relentless drilling ramp-up in America’s top shale plays is making investors more skeptical that an oil price rebound is on the horizon. After increasing their bets on rising West Texas Intermediate crude for three straight weeks, money managers slashed the wagers by 21 percent, according to U.S. Commodity Futures Trading Commission data. Producers in Texas are leading the longest shale revival since 2011, making OPEC-led efforts to rebalance the market increasingly difficult.
  • What Trump’s Done—or Undone—for Business in 100 Days.
  • Fox, Blackstone Said Teaming to Make Competing Tribune Bid. Twenty-First Century Fox Inc. is teaming with Blackstone Group LP to make an offer to acquire TV-station owner Tribune Media Co., rivaling a planned bid by Sinclair Broadcast Group Inc., people familiar with the situation said. The all-cash bid would be funded by Blackstone while Fox would contribute its TV stations to the joint venture that would acquire Tribune, said one of the people, who declined to be identified because the talks are private. The two sides are in talks about a deal ahead of a deadline this week for final bids. No agreement has yet been reached.
Wall Street Journal:
Zero Hedge:
Night Trading
  • Asian indices are unch. to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 94.50 +.75 basis point.
  • Asia Pacific Sovereign CDS Index 22.25 -.25 basis point.
  • Bloomberg Emerging Markets Currency Index 72.29 unch.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures +.03%.

Earnings of Note
Company/Estimate
  • (AMG)/3.18
  • (AWI)/.56
  • (CAH)/1.45
  • (DO)/.09
  • (DISH)/.69
  • (L)/.66
  • (AMD)/-.04
  • (AGU)/-.07
  • (CGNX)/.28
  • (RCII)/-.02
  • (THC)/-.52
  • (VNO)/1.25
Economic Releases
8:30 am EST
  • Personal Income for March is estimated to rise +.3% versus a +.4% gain in February.  
  • Personal Spending for March is estimated to rise +.2% versus a +.1% gain in February.
  • The PCE Core MoM for March is estimated to fall -.1% versus a +.2% gain in February. 
10:00 am EST
  • ISM Manufacturing for April is estimated to fall to 56.5 versus 57.2 in March.
  • ISM Prices Paid for April.
  • Construction Spending MoM for March is estimated to rise +.4% versus a +.8% gain in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The BoJ Minutes and the (AXP) general meeting could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and industrial shares in the region. I expect US stocks to open modestly lowr and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the week.

Weekly Outlook

BOTTOM LINE: I expect US stocks to finish the week mixed as earnings optimism, healthcare/tax reform hopes and diminished government shutdown fears offset European election worries, geopolitical concerns and profit-taking. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 50% net long heading into the week.