Style Underperformer:
Sector Underperformers:
- 1) Alternative Energy -1.84% 2) Biotech -1.52% 3) Airlines -1.44%
Stocks Falling on Unusual Volume:
- PCL, TEVA, PRXL, IACI, WU, SFLY, DLR, CHKR, QCOR, PLT, INVN, AVG, CRUS, CLFD, SODA, MX, LGND, INGR, LNKD, MSM, EW, DFT, AIT, PKT, CBG, TNGO, HES, X, TTWO, WWWW, AFL, HTS, YELP, EGN, SAIA, DFT, AEGR, SAVE, BOFI, INGR, FNSR, WBMD, BCOR, WNC and INVN
Stocks With Unusual Put Option Activity:
- 1) EXC 2) GRA 3) HES 4) ETFC 5) WU
Stocks With Most Negative News Mentions:
- 1) CBG 2) IACI 3) JPM 4) SOHU 5) CRUS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.39% 2) HMOs +.64% 3) Restaurants +.44%
Stocks Rising on Unusual Volume:
- NUVA, MZOR, DWA, LOCK, NQ, BWLD, CCJ, RPXC, SM, LVLT, TASR, EA, AZPN, RRC, TRLA, GM, DBD, LOPE, RPXC, SEE, WLT and GILD
Stocks With Unusual Call Option Activity:
- 1) IACI 2) WU 3) BWLD 4) AOL 5) TASR
Stocks With Most Positive News Mentions:
- 1) BA 2) CCJ 3) GOOG 4) GRMN 5) LNKD
Charts:
Evening Headlines
Bloomberg:
- Moody’s Discussed Stripping New Zealand of Its Last AAA Rating. Moody’s
Investors Service considered
stripping New Zealand of its sole remaining top credit rating amid
concern the nation’s current-account deficit is exacerbating its
vulnerability to external shocks. New Zealand’s reliance on overseas
investors means it can face difficulties when crises such as the
Christchurch earthquakes and Fonterra Cooperative Group Ltd.’s
contaminated milk scare occur, Steven Hess, Senior Vice President at
Moody’s in New York, said in an interview in Wellington today. Moody’s
confirmed its stable Aaa rating for the nation on Sept. 2.
- Japan Regulator Widens Probe Into Crime Loans by Big Banks. Japan’s
financial regulator plans to inspect the nation’s three largest
lenders, widening a probe into credit given to gangsters to include
Mitsubishi UFJ Financial Group Inc. (8306) and Sumitomo Mitsui Financial
Group Inc. (8316) The inspections are to determine whether their
banking units are complying with rules including those meant to curb
transactions with criminal organizations, Hiroki Kato, an official at
the Financial Services Agency, said by telephone yesterday. The reviews
will start Nov. 5, another FSA official said, declining to be identified
because of the agency’s policy.
- Japan Industrial Output Rises Less Than Forecast in September.
Japan’s industrial output rose less than forecast in September,
underlining the challenge for Prime Minister Shinzo Abe as he tries to
stoke a sustained expansion in the world’s third-biggest economy. Production
increased 1.5 percent from the previous month, the trade ministry said
in Tokyo today, below the median estimate for a gain of 1.8 percent in a
Bloomberg News survey of 30 economists.
- Japan Tobacco to Cut Workers and Shut Four Plants, NHK Reports. Japan Tobacco Inc. (2914)’s parent company plans to cut 1,600 workers, or about 20 percent of its
workforce, and close four of its nine plants in the country, NHK
reported, citing people familiar with the situation. Japan Tobacco, seller of the Mevius brand, faces a decline
in demand in its home market amid a shrinking population.
- Asian Stocks Climb While Silver Slips as Oil Extends Drop.
Asian stocks rose, with the benchmark index heading for a monthly gain,
and bond risk fell before the conclusion of the Federal Reserve’s
two-day policy meeting. Emerging currencies weakened and oil dropped. The MSCI Asia Pacific Index advanced 0.6 percent at 1 p.m. in Tokyo.
- Rebar Advances as Concern China Will Tighten Policy Dissipates.
Steel reinforcement-bar futures in Shanghai climbed as concern that
China’s central bank would start tightening monetary policy abated. Rebar for delivery in May, the most-active contract by
volume on the Shanghai Futures Exchange, rose as much as 0.4
percent to 3,622 yuan ($595) a metric ton and was at 3,614 yuan
at 10:41 a.m. local time.
- Rubber Climbs for Third Day on Weaker Yen Before Fed Decision. Rubber advanced for a third day as
Japan’s currency weakened against the dollar, raising the appeal
of yen-denominated futures, amid expectations the Federal Reserve will maintain economic stimulus. The contract for delivery in April, the most active by volume on the Tokyo Commodity Exchange, advanced as much as 1.4
percent to 264.8 yen a kilogram ($2,697 a metric ton) and traded
at 263.8 yen at 10:20 a.m. The yen weakened to 98.27 per dollar
today before trading little changed. It dropped the previous
three sessions.
- Italian Bank Foundations Under Siege as Visco Seeks Overhaul. Italy’s banking foundations, the
biggest shareholders in the country’s financial industry, are
under siege as their leaders gather in Rome today. Bank of Italy
Governor Ignazio Visco wants them to loosen their grip on management.
The International Monetary Fund has urged an overhaul of an ownership
structure vulnerable to cronyism. In the last 12 months, their
appointees at the banks
were ousted in Genoa and probed by prosecutors in Siena.
Wall Street Journal:
- Canceled Policies Heat Up Health Fight. Concerns Extend Beyond Troubled Insurance Website. Problems
surrounding the launch of the federal health-care law broadened, as
concerns that thousands of Americans are getting insurance-cancellation
notices bubbled over at a hearing on Capitol Hill.
- IMF Asia Head: Don't See Need for Further BOJ Easing. The International Monetary Fund doesn't think the Bank of Japan needs to expand
its already ultra-loose monetary policy, the multilateral lender's Asia head
said Wednesday, calling instead for concrete action on Prime Minister Shinzo
Abe's much-touted growth strategy. "We currently don't see a need for further monetary easing," said Anoop
Singh, director of the IMF's Asia and Pacific Department, in a media roundtable.
"Rather, the priority now is to advance growth reforms. For Abenomics to work,
Japan's long-term economic problems need to be tackled."
- The ObamaCare Awakening. Americans are losing their coverage by political design. For all of the Affordable Care Act's technical problems, at least one
part is working on schedule. The law is systematically dismantling the
individual insurance market, as its architects intended from the start. The
millions of Americans who are receiving termination notices because
their current coverage does not conform to Health and Human Services
Department rules may not realize this is by design. Maybe they trusted
President
Obama's
repeated falsehood that people who liked their health plans could
keep them. But Americans should understand that this month's mass
cancellation wave has been the President's political goal since 2008.
Liberals believe they must destroy the market in order to save it.
Barron's:
- A Negative View From The 'Skew'. The latest record run for U.S. stocks is sending up
caution flags in two corners of the options market that rack investor
sentiment.
The latest record run for U.S. stocks is sending up caution flags in
two corners of the options market that track investor sentiment. Hefty demand for options that would benefit from a further rise in
stock prices recently sent a measure called "skew" to its fifth-lowest
reading of 2013. A lower skew ratio shows relatively high prices for
calls, options that convey the right to buy shares at a certain price.
Some investors say the reading, which reflects the ratio of bearish
option prices to bullish ones, points to excessive optimism in the
market. The move put the gauge on the brink of crossing a level that twice
this year has preceded stock-market declines of at least 4%, options
watchers said. At the same time, the markets' fear gauge rose Tuesday even as the
S&P 500-stock index rallied to its third consecutive record close,
rising 9.84 to 1771.95. The Chicago Board Options Exchange's Volatility
Index typically falls when stocks rise and vice versa. The divergence is
unusual and shows that new highs aren't being met with the typical
investor calm, investors said.
While the options readings alone are hardly enough to provoke worry
among stock-market strategists, skeptical investors are picking up on
numerous signs of what they term froth in the stock market.
Fox News:
- Exec at HealthCare.gov contractor went to school with first lady, donated to Obama campaign. As the problems pile up for HealthCare.gov, attention is now turning
to the relationship between the Canadian company largely responsible for
the website and the Obama administration. Top officials at CGI Federal, a lead contractor tasked with
developing the site, have a three-decade link to the Obamas. Toni
Townes-Whitley, a senior vice president at CGI Federal, is also a
Princeton University classmate of first lady Michelle Obama -- and a
political donor.
MarketWatch.com:
CNBC:
- Reid: No budget deal without new revenues. President
Barack Obama's top ally on Capitol Hill says he won't support any
attempt this year to ease across-the-board spending cuts hitting the
Pentagon and domestic agencies if it fails to include new revenues.
- Aetna(AET) CEO: Why insurance will be costing more. (video) The fact that many current health-care plans do not offer all the
benefits required under Obamacare means that many premiums are likely to
jump dramatically, Aetna CEO Mark Bertolini told CNBC.
Zero Hedge:
ValueWalk:
Business Insider:
Pittsburgh Business Times:
- U.S. Steel(X) to close Hamilton iron and steel operations.
United States Steel Corp. will permanently discontinue its iron and
steel making at Hamilton Works in Ontario, Canada, on Dec. 31, CEO Mario
Longhi said Tuesday in a conference call. "Decisions like this are
always difficult, but they are necessary to
improve the cost structure of our Canadian operations," he said.
The Blaze:
Telegraph:
China Daily:
- China
Needs More Local AMCs to Handle Growing Bad Assets. China needs more
asset management companies at the provincial level to help handle their
growing non-performing assets, citing Zhao Quanhou, a researcher at the
Fiscal Science Research Center affiliated with the finance ministry.
Caixin:
- Shanghai Party Chief Han Says City Should Slow GDP.
China Securities Journal:
- China 4Q Liquidity May Be 'Tight, Balanced'. Liquidity may remain
"tight, balanced" in 4Q and the nation may mainly adopt short-term
adjustments in its monetary policy, according to a front page commentary.
- China
Wenzhou Home Prices May Continue Fall. Home prices in the eastern
Chinese city of Wenzhou may continue to fall, citing local real estate
agents. Housing prices in the city are now more than 50% lower than they
were in 2012, the agents said. Continued increasing pressure from
inventories and a deleveraging of small and medium-sized developers have
pushed down prices, which have dropped for 25 straight months, the
report said.
- CDB Researcher Says Local Debt Growing Fast.
Problems shown in China's economy in the first 9 months of 2013 include
a "relatively fast" increase in local government debt, and that the
economic recovery was driven mainly by government-led investment and
state-owned enterprises, according to a commentary published by Guo Lian
from the research institute at China Development Bank.
China Business News:
- China May Expand Property Tax Reform at Plenum. China includes
expansion of property tax trial in draft of a statement to be submitted
to the third plenum of the Communist Party's 18th Central Committee,
which will be held Nov. 9-12, citing a person familiar with the matter.
Evening Recommendations
BTIG:
- Raised (FB) to Buy, target $68.
Night Trading
- Asian equity indices are unch. to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 133.0 unch.
- Asia Pacific Sovereign CDS Index 99.25 -1.0 basis point.
- NASDAQ 100 futures +.17%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:15am EST
- The ADP Employment Change for October is estimated to fall to 150K versus 166K in September.
8:30 am EST
- The Consumer Price Index for September is estimated to rise +.2% versus a +.1% gain in August.
- The CPI Ex Food and Energy for September is estimated to rise +.2% versus a +.1% gain in August.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+1,995,000 barrels versus a +5,246,000 barrel gain the prior week.
Gasoline supplies are estimated to rise by +23,000 barrels versus a
-1,805,000 barrel decline the prior week. Distillate supplies are
estimated to fall by -545,000 barrels versus a +1,537,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to rise by +.27% versus a -.3% decline the prior week.
2:00 pm EST
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- The Fed Pace of MBS Purchases for October is estimated at $40B versus $40B prior.
- The Fed pace of Treasury purchases for October is estimated at $45B versus $45B prior.
Upcoming Splits
Other Potential Market Movers
- The German Unemployment rate, Spain GDP, German CPI, Eurozone Industrial Confidence, 7-Year T-Note auction, weekly MBA mortgage applications report, (JBL) analyst meeting and the (TGT) Financial Community Meeting could also 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 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: Underperforming
Equity Investor Angst:
- Volatility(VIX) 13.29 -.15%
- Euro/Yen Carry Return Index 140.73 +.24%
- Emerging Markets Currency Volatility(VXY) 7.70 -1.28%
- S&P 500 Implied Correlation 38.86 +3.41%
- ISE Sentiment Index 142.0 -17.44%
- Total Put/Call .66 -16.38%
Credit Investor Angst:
- North American Investment Grade CDS Index 71.56 -.36%
- European Financial Sector CDS Index 117.85 -3.69%
- Western Europe Sovereign Debt CDS Index 70.0 +.97%
- Emerging Market CDS Index 263.70 +1.24%
- 2-Year Swap Spread 11.75 -1.0 basis point
- TED Spread 20.25 -1.25 basis point
- 3-Month EUR/USD Cross-Currency Basis Swap -3.75 +.25 basis point
Economic Gauges:
- 3-Month T-Bill Yield .04% +2 basis points
- Yield Curve 220.0 -1 basis point
- China Import Iron Ore Spot $131.30/Metric Tonne -.38%
- Citi US Economic Surprise Index 5.4 -6.0 points
- Citi Emerging Markets Economic Surprise Index -4.40 +.3 point
- 10-Year TIPS Spread 2.19 unch.
Overseas Futures:
- Nikkei Futures: Indicating +148 open in Japan
- DAX Futures: Indicating -8 open in Germany
Portfolio:
- Slightly Higher: On gains in my medical/retail/tech sector longs
- Market Exposure: 50% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Papers -1.84% 2) Coal -1.52% 3) REITs -1.0%
Stocks Falling on Unusual Volume:
- BKU, VOLC, CLNY, IPHS, FNB, DAN, CVLT, BTH, SANM, DCO, CHE, CMI, ISSI, AGNC, WPP, CYNO, UBS, GT, MWV, SLG, ALSN, N, TNGO, ST, MR, TXRH, ATVI, PCAR, SHO, HTS, PAG, ALSN, NLY, SCHN, OFG, VSH, AGCO, N, IVR and DAN
Stocks With Unusual Put Option Activity:
- 1) PLCM 2) S 3) DELL 4) AEO 5) JOY
Stocks With Most Negative News Mentions:
- 1) CMI 2) ACI 3) YELP 4) VOLC 5) YRCW
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Semis +1.03% 2) Networking +.72% 3) Telecom +.49%
Stocks Rising on Unusual Volume:
- NTRI, XYL, DATA, ALLT, IDTI, BP, CIE, OLN, GDOT, PBI, PRE, JLL, CGNX, TWI, SHLD, ALR, ACT, LINE, CBG and ADM
Stocks With Unusual Call Option Activity:
- 1) SCHW 2) FE 3) KSS 4) NTRI 5) PLCM
Stocks With Most Positive News Mentions:
- 1) PFE 2) CMI 3) DFS 4) IBM 5) SHLD
Charts: