Sunday, March 01, 2015

Monday Watch

Weekend Headlines 
Bloomberg: 
  • Russian Opposition Gathers in Moscow to Honor Murdered Nemtsov. Tens of thousands marched through Moscow to honor slain political activist Boris Nemtsov in the biggest show of support for Russia’s opposition in three years. The city’s police estimated 21,000 people attended, while Golos, a non-profit monitoring organization, said more than 50,000 took part. Protesters, led by former Prime Minister Mikhail Kasyanov, chanted slogans such as “Russia without Putin” as they passed the bridge near St. Basil’s Cathedral where Nemtsov, 55, was shot dead Friday. “The fact that all this could happen in Russia in the 21st century near the Kremlin walls, is shocking a lot of people,” Kasyanov told Bloomberg News. “Today’s demonstrators aren’t only our activists, but first of all, of course, people who care what is happening in the country.”
  • Nemtsov Sought to Show Russia Is in Ukraine, Poroshenko Says. Ukrainian President Petro Poroshenko said his “friend” Boris Nemtsov, a Russian opposition leader gunned down on a sidewalk near the Kremlin overnight, wanted to show proof that his country’s troops are in Ukraine. Nemtsov, who was scheduled to lead a Sunday protest against Russian President Vladimir Putin and the conflict in Ukraine, was working on a report about Russia’s involvement, according to fellow opposition activist Ilya Yashin. His murder happened just before artillery fell mostly silent for the second time in a week as government forces and the separatists said they were pulling back weapons in line with a Feb. 15 cease-fire.  
  • Murder in the Heart of Moscow Has Hallmarks of Professional Hit. The Friday night killing of Russian opposition leader Boris Nemtsov just outside the Kremlin, in one of the most closely watched areas of Russia, bears all the signs of having been planned and executed by professionals. That’s the assessment of former intelligence officials, analysts and activists familiar with the case. The murder turned a planned rally against President Vladimir Putin into a vigil Sunday to mourn Nemtsov, 55, who Ukrainian President Petro Poroshenko said was writing a report on Russia’s involvement in the neighboring country’s conflict.
  • Rajoy Denies Tsipras Claim That Spain Sought to Undermine Greece. Spanish Prime Minister Mariano Rajoy rejected remarks from his Greek counterpart accusing Spain and Portugal of trying to undermine Greece’s government. Spain is committed to help Greece, as the 26 billion euros ($29 billion) of loans and guarantees already provided to the Greek bailout show, said Rajoy at a political event in Seville today. Greek Prime Minister Alexis Tsipras, speaking yesterday in Athens, said Spain and Portugal took negotiations over Greece’s bailout to the brink of failure in a bid to avoid domestic political consequences.
  • Oil Drops as Gain in Saudi Arabian Output Boosts OPEC Production. Oil fell after posting the first monthly gain since June as Saudi Arabia stepped up production, lifting OPEC’s output beyond its collective quota for a ninth month. Futures decreased as much as 1.1 percent in New York. The Organization of Petroleum Exporting Countries pumped 30.6 million barrels a day in February, according to a Bloomberg survey. Saudi Arabia’s output rose by 130,000 barrels a day to 9.85 million a day, the highest level since September 2013, a Bloomberg survey of companies, producers and analysts shows. The country pumps the most crude among the 12 nations of OPEC, which supplies about 40 percent of the world’s oil.
  • Bearish Oil Wagers Surge to Record as Glut Keeps Growing: Energy. Hedge funds raised bearish wagers on oil to an all-time high, speculating crude has further to fall as the supply glut keeps swelling. Money managers increased short positions in West Texas Intermediate crude by 17 percent in the seven days ended Feb. 24, U.S. Commodity Futures Trading Commission data show. Net-long positions slid to the lowest in seven weeks. Stockpiles in the U.S. have risen for seven consecutive weeks to a record 434.1 million barrels. Domestic production is continually topping weekly records, reaching 9.29 million barrels a day during the report period, while an unprecedented decline in oil drilling rigs is showing signs of slowing.  
Wall Street Journal:
  • Institutions Pour Cash Into Bond ETFs. Move to exchange-traded funds comes as big investors deal with bond-trading challenges. Institutions are piling into exchange-traded bond funds at the fastest pace on record, driven by forces reshaping the increasingly illiquid corporate-debt market and their desire to stay nimble ahead of expected interest-rate moves.
Fox News:
MarketWatch.com:
  • China rate cut renews economic concerns. The central bank renewed concerns about an array of issues weighing on the economy: a slumping property market, capital flight that is squeezing banks' ability to lend, and growing risks of falling prices that, in effect, are pushing up borrowing costs for businesses.
Zero Hedge:
  • Are Central Banks Creating Deflation? (graph) It’s that linkage between investment (or the lack of it) and all the stimulus which we find so disturbing. If the first $5tn of global QE, which saw corporate bond yields in both $ and € fall to all-time lows, didn’t prompt a wave of investment, what do we think a sixth trillion is going to do? Another client put it more strongly still. “By lowering the cost of borrowing, QE has lowered the risk of default. This has led to overcapacity (see highly leveraged shale companies). Overcapacity leads to deflation. With QE, are central banks manufacturing what they are trying to defeat?”
New York Times:
ValueWalk:
Reuters:
  • Japan business capex growth slows in Q4, points to economic headwinds. Japanese corporate capital expenditures grew in October-December from a year earlier but the pace slowed from the prior quarter, casting doubt about strength of business investment seen as key to spurring growth in the world's third-largest economy. The 2.8 percent year-on-year increase in capital spending in the fourth quarter followed a 5.5 percent annual gain in July-September, data by the Ministry of Finance showed on Monday.
Telegraph:
21st Century Business Herald:
  • China Doesn't Have Condition for Massive Loosening. China doesn't have conditions for massive loosening and stimulus, Yang Tao, researcher at Chinese Academy of Social Sciences, writes. Cuts in interest rate and reserve requirement ratio mainly aims to weaken market expectations on deflation.
Night Trading
  • Asian indices are -.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 98.25 -1.75 basis points.
  • Asia Pacific Sovereign CDS Index 59.25 -1.75 basis points.
  • S&P 500 futures +.11%.
  • NASDAQ 100 futures +.15%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (FSS)/.28
  • (ICPT)/-1.62
  • (BID)/1.28
  • (SSYS)/.49
  • (MBI)/.11
  • (MDR)/-.06
  • (SLXP)/-.29
  • (PANW)/.17
  • (NBR)/.39
  • (MYL)/1.05
Economic Releases
8:30 am EST
  • Personal Income for January is estimated to rise +.4% versus a +.3% gain in December.
  • Personal Spending for January is estimated to fall -.1% versus a -.3% decline in December.
  • The PCE Core for January is estimated to rise +.1% versus unch. in December.
9:45 am EST
  • Final Markit US Manufacturing PMI for February is estimated at 54.3 versus 54.3 in January.
10:00 am EST
  • Construction Spending for January is estimated to rise +.3% versus a +.4% gain in December.
  • ISM Manufacturing for February is estimated to fall to 53.0 versus 53.5 in January.
  • ISM Prices Paid for February is estimated to rise to 37.0 versus 35.0 in January.
Upcoming Splits
  • (NJR) 2-for-1
  • (HBI) 4-for-1
Other Potential Market Movers
  • The Eurozone PMI, Eurozone CPI, RBA rate decision, Cowen Health Care Conference and the Morgan Stanley Tech/Media/Telecom Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by metals/mining and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly mixed. The Portfolio is 50% net long heading into the week.

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