Style Outperformer:
Sector Outperformers:
- 1) Biotech +1.86% 2) Airlines +1.49% 3) HMOs +.89%
Stocks Rising on Unusual Volume:
- GLOB, OLN, BMRN, KRFT, CCL, SWKS, RCL, ESPR, RCPT, SCMP, KITE, NCLH and AXLL
Stocks With Unusual Call Option Activity:
- 1) CCL 2) MAT 3) OHRP 4) BMRN 5) SE
Stocks With Most Positive News Mentions:
- 1) SLI 2) CONN 3) SHLM 4) DOW 5) CCL
Charts:
Evening Headlines
Bloomberg:
- Japan's Inflation Gauge Halts at Zero in February. The Bank of Japan’s key inflation gauge
ground to a halt as consumer spending slumped, highlighting
weakness in the nation’s recovery from recession. Consumer prices excluding fresh food rose 2 percent in
February from a year earlier, less than a median estimate of 2.1
percent. The central bank’s measure that strips out last year’s
sales-tax increase showed inflation at zero.
- Banks Slash Dividends as Loans Sour From Beijing To Pearl River. China’s biggest banks are accelerating cuts
to their dividend payouts as bad debts pile up from struggling
exporters in the Pearl River Delta, coal companies in the
nation’s west and manufacturers in the Bohai Rim near Beijing. Three of the nation’s four largest banks, including
Industrial & Commercial Bank of China Ltd., this week cut their
payment ratios for 2014 by the most in three years. ICBC’s fell
to 33 percent from 35 percent a year earlier. The smaller China
Citic Bank Corp. last week eliminated its payment altogether.
- Co-Pilot Focus in Crash Probe Intensifies Hunt for Data Recorder. Crash investigators are rushing to find the
onboard data recorder from Germanwings Flight 9525 to confirm
prosecutors’ suspicions that the co-pilot steered the jet into a
mountain after locking the captain out of the cockpit. Audio files from the flight deck revealed that the co-pilot
began descending after the captain stepped into the cabin, then
denied him re-entry, prosecutor Brice Robin said in Marseille,
France. Except for his breathing, the co-pilot stayed silent
until the plane slammed into a slope at full speed, Robin said.
- TSMC Drops as Weakening Smartphone Market Threatens Chip Demand. Taiwan Semiconductor Manufacturing Co. fell
for a fifth day in Taipei trading, its longest losing streak in
two years, after at least four analysts published reports saying
a stronger U.S. dollar may weaken smartphone chip demand. The shares dropped 1 percent to NT$144 as of 10:58 a.m. in
Taipei, widening the decline this week to 6.5 percent. Taiwan’s
benchmark Taiex, of which TSMC is the largest member, fell 0.8
percent.
- Asian Stocks Decline for Second Day to Head for Weekly Retreat. Asian stocks fell for a second day, adding
to the biggest daily drop in almost two months, as industrial
shares led declines and most Japanese equities went ex-dividend.
The MSCI Asia Pacific Index lost 0.2 percent to 147.10 as
of 9:05 a.m. in Tokyo. The measure headed for a 0.3 percent
decline this week after sliding 1.1 percent on Thursday.
- North American Railroads Caught by Speed of Crude-Oil Collapse. The slowdown that North American railroad
companies had been bracing for in crude oil shipments has turned
into a rout, with volumes falling faster than executives had
predicted. With energy companies scaling back drilling after prices
for the commodity fell about 50 percent since July, industry
executives and analysts anticipated that demand for hauling
crude and extraction materials such as frac sand and pipes would
slow after a four-year surge. They didn’t expect it to slow this
much this fast.
Wall Street Journal:
- Obama Struggles With a Messy Middle East. Latest fighting in Yemen complicates relations with Iran as ties with allies are strained. The Middle East has descended into a state of disarray unusual even
for that troubled region, imperiling President Barack Obama’s policy
dreams and leaving him with limited ability to control events. The
latest complication has erupted in Yemen, where rebel forces backed by
Iran have driven out the country’s president and are expanding their
control southward across the country. The prospect that those Shiite
rebels might succeed in taking over a neighboring...
- Obama’s Mideast Vacuum. The Saudis invade Yemen as the Sunni-Shiite war escalates. An abiding goal of President Obama’s foreign policy has been to reduce
America’s role in the Middle East, in the belief that it would lead to
greater stability and serve U.S. interests. Has a policy ever been so
thoroughly repudiated in so short a time? Mr. Obama has succeeded in his
retreat, but the vacuum he’s left has produced a region on fire that is
becoming a broad Sunni-Shiite war.
- The Campus Climate Crusade. Liberal groups are out to sully the names of conservative professors and shut down programs funded by the Koch foundation. Conservative thought on campus these days is rare, though for some it’s
still not rare enough. Witness the growing campaign by politicians,
unions and environmentalists to intimidate into silence any academic or
program that might challenge liberal ideology.
MarketWatch.com:
- China stocks may be in serious bubble. As market volumes explode, even teenagers are buying. Some say that when the average “mom-and-pop” retail investors get
back into the stock market, it could be time to get out. But what about
when even teenagers start buying?
China has entered a new stock
frenzy, like something out of America in the Roaring 20s or the dottiest
days of the dot-com bubble, with trading volumes continuing to push to
new record highs.
Zero Hedge:
Business Insider:
Evening Recommendations
Morgan Stanley:
- Rated (YHOO) Overweight, target $55.
Night Trading
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 113.0 unch.
- Asia Pacific Sovereign CDS Index 61.25 -.5 basis point.
- NASDAQ 100 futures +.38%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- 4Q GDP is estimated to rise +2.4% versus a +2.2% prior estimate.
- 4Q Personal Consumption is estimated to rise +4.4% versus a prior estimate of a +4.2% gain.
- 4Q GDP Price Index is estimated to rise +.1% versus a +.1% prior estimate.
- 4Q Core PCE is estimated to rise +1.1% versus a prior estimate of a +1.1% gain.
10:00 am EST
- Final Univ. of Mich Consumer Sentiment for March is estimated at 92.0 versus a prior estimate of 91.2.
Upcoming Splits
Other Potential Market Movers
- The Fed's Yellen speaking, Fed's Fischer speaking and the China industrial profits report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Broad Equity Market Tone:
- Advance/Decline Line: Modestly Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- Volatility(VIX) 15.8 +7.0%
- Euro/Yen Carry Return Index 135.44 -.04%
- Emerging Markets Currency Volatility(VXY) 10.57 +1.93%
- S&P 500 Implied Correlation 63.71 -1.34%
- ISE Sentiment Index 66.0 -8.33%
Credit Investor Angst:
- North American Investment Grade CDS Index 64.49 +.29%
- America Energy Sector High-Yield CDS Index 1,014.0 -.20%
- European Financial Sector CDS Index 67.09 -.57%
- Western Europe Sovereign Debt CDS Index 22.90 +1.64%
- Asia Pacific Sovereign Debt CDS Index 61.31 -.01%
- Emerging Market CDS Index 317.73 +.79%
- iBoxx Offshore RMB China Corporates High Yield Index 114.19 +.08%
- 2-Year Swap Spread 24.0 -2.25 basis points
- TED Spread 25.0 +1.5 basis points
- 3-Month EUR/USD Cross-Currency Basis Swap -23.25 +.5 basis point
Economic Gauges:
- 3-Month T-Bill Yield .03% unch.
- Yield Curve 138.0 +6.0 basis points
- China Import Iron Ore Spot $55.36/Metric Tonne -.39%
- Citi US Economic Surprise Index -60.0 +1.9 points
- Citi Eurozone Economic Surprise Index 52.30 -.8 point
- Citi Emerging Markets Economic Surprise Index -3.2 +.4 point
- 10-Year TIPS Spread 1.81 +1.0 basis point
Overseas Futures:
- Nikkei Futures: Indicating -101 open in Japan
- DAX Futures: Indicating +33 open in Germany
Portfolio:
- Slightly Lower: On losses in my medical/tech sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges
- Market Exposure: Moved to 25% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Coal -3.65% 2) Semis -2.73% 3) Road & Rail -1.33%
Stocks Falling on Unusual Volume:
- SCMP, WGO, SNDK, ASML, FRSH, WRLD, IBB, SGNT, CLDN, BIB, ENVA, SWKS, NEWT, CBMG, LRCX, SOXX, ZSPH, KITE, SWAY, MTSI, NXPI, CSH, JMEI, TSU, PTCT, UVE, ACAD, TGTX, ISIS, CSH, SWFT, SRNE, PTCT, DVAX, EPZM, SWKS, FRGI, CLDN, AFFX, ZLTQ, EXAS, INSM, MTSI, BDSI, RARE, AAVL and ENVA
Stocks With Unusual Put Option Activity:
- 1) AMD 2) CCL 3) SNDK 4) DHI 5) DAL
Stocks With Most Negative News Mentions:
- 1) UNP 2) APOL 3) X 4) UPS 5) PBR
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +1.28% 2) Computer Services +.59% 3) Oil Service +.33%
Stocks Rising on Unusual Volume:
- DPLO, FIVE, RHT, ACN and ROVI
Stocks With Unusual Call Option Activity:
- 1) FIVE 2) SGYP 3) IDCC 4) DG 5) QRVO
Stocks With Most Positive News Mentions:
- 1) RHT 2) CBI 3) SCHW 4) GRPO 5) DPS
Charts:
Evening Headlines
Bloomberg:
- Saudi Arabia, Gulf Allies Starts Bombing Houthi Targets in Yemen. Saudi Arabia and its Gulf Arab allies
started bombing Shiite Houthi targets in Yemen Thursday, the
Saudi ambassador to Washington said. The allies launched “the military operations in support of
the people of Yemen and their legitimate government,”
Ambassador Adel al-Jubair said in a statement. The military
strikes were started after an “appeal” from Yemen’s President
Abdurabuh Mansur Hadi. Saudi Arabia’s King Salman ordered the
airstrikes at midnight local time, Saudi-owned Al-Arabiya
television reported. The bombing campaign comes after forces loyal to the rebel
group marched on Aden, the stronghold of the internationally
recognized President Abdurabuh Mansur Hadi in the southern port
city of Aden. Hadi has left his residence in the city, Mohammed
Hadi, an aide, said. Saudi Arabia, the world’s top oil exporter, has accused
Iran of fomenting unrest in Yemen.
- Yemen Government’s Fall Is Another Blow to Obama’s War on Terror. Escalating chaos in Yemen threatens the
Obama administration’s ability to combat the al-Qaeda affiliate
that’s most intent on attacking the U.S. and its allies. It was only last June that President Barack Obama singled
out Yemen as a model for U.S. efforts to fight terrorism by
relying on training allied forces rather than risk American
lives. Now the fall of the government and the turmoil there
further imperil his signature antiterrorist strategies, which
also are facing difficulties in Afghanistan, Iraq, Syria, Libya
and elsewhere. “This is bad for counterterrorism,” said Daniel Benjamin,
a former State Department antiterrorism adviser. “There’s no
question there will be an effect on intelligence-gathering --
and a significant one.”
- A Murky, Sloppy Muddle: How Greece’s Exit From Euro Could Happen. With the fight to keep Greece in the euro
now in its sixth year, everyone is running out of patience. More
importantly, Prime Minister Alexis Tsipras’s government in
Athens is running out of money. While bond yields suggest investors expect Greece to stay
in the euro, economists such as UniCredit Bank AG’s Erik Nielsen
say it may be just a matter of time before he’s forced to print
a new currency. Adopting the euro was always supposed to be a one-way
ticket, so there is no legal precedent or political roadmap for
an exit. If you’re waiting for a formal announcement of a clear
resolution, you may be waiting a long time.
- China Bulls Adopt Price-to-Whatever Ratio as Equities Surge. The signs of a Chinese equity bubble are
visible just about everywhere Hao Hong looks. The chief China strategist at Bocom International Holdings
Co. points to soaring price-to-earnings ratios, the shrinking
yield advantage that stocks offer over bonds and the fact that
mainland-listed equities now trade at a 34 percent premium over
nearly identical shares in Hong Kong. So what’s Hong’s advice to investors? Keep buying, of course.
- Currency War Is Now a Dud as Windfall From Devaluations Vanishes. Currency wars, it turns out, may not be
worth fighting right now. While weaker exchange rates have at times throughout
history helped stoke economic growth by making countries’
exports cheaper, the benefits are becoming hard to find. Nowhere is this more apparent than in developing nations,
where currencies have slumped 24 percent on average against the
dollar since 2011. Yet despite this, their annual export growth
rate has actually slowed to 4 percent in the past four years
from 8 percent during the previous decade, according to the CPB
Netherlands Bureau for Economic Policy Analysis. In Brazil, the
real’s 48 percent plunge since 2011 has done little to revive an
economy heading for its worst performance in 25 years.
- Tech Stock Selloff Continues in Asia; Oil Jumps on Yemen. Asian shares dropped the most in eight
weeks, led by technology shares after the Nasdaq Composite Index
tumbled in the U.S. Oil advanced after Saudi Arabia and its Gulf
Arab allies started bombing targets in Yemen.
The MSCI Asia Pacific Index sank 1.2 percent by 11 a.m. in
Tokyo, as Taiwan Semiconductor Manufacturing Co. and Apple Inc.
supplier AAC Technologies Holdings Inc. tumbled at least 3
percent. Japan’s Topix gauge fell the most since Jan. 6.
- Oil Rises on Mideast Disruption Risk as Saudi Arabia Bombs Yemen. Oil erased losses to rise for a fifth day in
New York as Saudi Arabia said it started bombing rebel targets
in Yemen with its allies. Futures gained as much as 1.4 percent to trade near $50 a
barrel, the highest intraday price since March 10. King Salman
ordered the airstrikes against Shiite Houthi positions after an
“appeal” from Yemen’s President Abdurabuh Mansur Hadi, Saudi
Ambassador Adel al-Jubair said in Washington. Prices slid
earlier on Thursday after a U.S. government report showed crude
inventories and production swelling further last week to the
most in more than three decades.
- The Fed Still Needs to Figure Out How to Raise Rates. For all the talk about when Federal Reserve
policy makers are going to raise interest rates, they haven’t
quite figured out how to do it. The central bank has had trouble controlling near-term
borrowing costs since the 2008 financial crisis and has been
experimenting with ways to do so. While its main new tool has
enabled the Fed to exert more influence over money-market rates
in the past year, strategists from Barclays Plc to Goldman Sachs
Group Inc. say the program is too small to prevent rates from
falling when officials want them to climb. At issue is the Fed’s balance sheet, which has ballooned
through its bond buying, leaving over $2 trillion in excess
reserves in the banking system that may prove to be more
difficult to siphon off than in the past. New methods are needed
because the federal funds rate, long the central bank’s primary
policy instrument, has ceased to be an effective means to guide
short-term market rates.
Wall Street Journal:
- Saudi Arabia Launches Military Operations in Yemen. Saudi ambassador to U.S. says 10 countries participating in operations. Saudi Arabia and other Gulf nations launched airstrikes against
Houthi rebels in the Yemeni capital San’a in defense of what the Riyadh
government called the country’s legitimate government. The
airstrikes began hours after the country’s president, Abed Rabbo Mansour
Hadi, was forced to flee the southern port city of Aden by boat
after...
- Iran Stalls U.N. Probe Into Its Atomic Past. Talks over Iran’s
nuclear program have hit a stumbling block because Tehran has failed to
cooperate with a United Nations probe into whether it tried to build
atomic weapons in the past. Talks over Iran’s nuclear program have hit a stumbling block a week
before a key deadline because Tehran has failed to cooperate with a
United Nations probe into whether it tried to build atomic weapons in
the past, say people close to the negotiations. In response,
these people say, the U.S. and its diplomatic partners are revising
their demands on Iran to address these concerns before they agree to
finalize a...
- Buyout Firms Feel Pinch From Lending Crackdown. Regulatory guidance that
seeks to limit the use of borrowed money in takeovers has hampered the
business of debt-laden acquisitions. An effort by regulators to deter banks from financing takeovers with
high levels of debt has dealt a blow to the private-equity industry. After
resisting at first, banks have lately been falling in line with
guidance regulators set in 2013, which sought to limit how much debt
banks could extend for corporate takeovers. The shift is now stinging
private-equity firms, whose bread-and-butter business is debt-laden
buyouts.
- Obama’s Mideast Realignment. His new doctrine: Downgrade ties to Israel and the Saudis while letting Iran fill the vacuum left by U.S. retreat.
Let’s connect the dots. Data point No. 1: President Obama
withdrew U.S. forces from Iraq in 2011 and is preparing to leave
Afghanistan by the end of 2016, even while keeping a few more troops
there this year and next than originally planned. Point No. 2: The Obama
administration keeps largely silent about Iran’s power grab in...
Fox News:
- Bergdahl charged with desertion, could face life in prison. (video) Army Sgt. Bowe Bergdahl, who was captured by the Taliban after
abandoning his post in Afghanistan and then freed five years later in a
controversial trade for five Guantanamo detainees, was charged Wednesday
with desertion. U.S. Army Forces Command announced the decision at Fort Bragg in North Carolina.
MarketWatch.com:
CNBC:
Zero Hedge:
Business Insider:
LA Times:
- Iran-backed rebels in Yemen loot secret files about U.S. spy operations. Secret
intelligence files held by Yemeni security forces and containing
details of American intelligence operations in the country have been
looted by Iran-backed militia leaders, exposing names of informants and
plans for U.S.-backed counter-terrorism operations, U.S. officials say.
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 113.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 61.75 +1.25 basis points.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Initial Jobless Claims are estimated to fall to 290K versus 291K the prior week.
- Continuing Claims are estimated to fall to 2400K versus 2417K prior.
9:45 am EST
- Preliminary Markit US Services PMI for March is estimated to fall to 57.0 versus 57.1 in February.
11:00 am EST
- Kansas City Fed Manufacturing Activity for March is estimated at 1.0 versus 1.0 in February.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Bullard speaking, Fed's Lockhart speaking, German GFK data, Japan
CPI, $29B 7Y T-Note auction, weekly Bloomberg Consumer Comfort Index,
weekly EIA natural gas inventory report, CIBC Retail/Consumer
Conference, (CIEN) annual meeting, Johnson Rice Oilfield Services
Conference, (SRE) analyst conference and the (PLAB) investor day could
also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and industrial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.