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BETWEEN THE HEDGES



Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets



Updated: 2017-01-16T04:01:59.306-05:00

 



Today's Headlines

2017-01-15T18:59:52.171-05:00

Bloomberg:Tech Rally Fails to Budge S&P 500 for Week as Nasdaq Sets Record. Investor enthusiasm for technology stocks helped lift the Nasdaq Composite Index to a record this week, while the S&P 500 and Dow Jones Industrial Average were little changed. The Nasdaq, which gained prominence during the dot-com boom of the 1990s, advanced in four out of five days amid gains in the computer and transportation industries, each of which rose at least 1 percent. The S&P 500 ended the week down 0.1 percent and the Dow lost 0.4 percent. The week marked a turnaround for some of the sectors that had stood out during the market rally after Donald Trump’s surprise presidential election win. Energy shares in the S&P 500 dropped 1.9 percent, the most since the five days ended Nov. 4. Financial stocks slipped 0.1 percent Real estate companies led declines with a drop of 2.2 percent as the 10-year Treasury yield slid for the fourth straight week. Consumer discretionary stocks and tech companies added 0.8 percent.May to Seek Hard Brexit by Leaving EU Market, Times Reports. U.K. Prime Minister Theresa May will this week signal plans for a “hard Brexit’’ by saying she’s willing to quit the European Union’s single market for goods and services to regain control of Britain’s borders and laws, the Sunday Times reported. In a speech scheduled for Tuesday in London, May will prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration, strike commercial deals with other countries, and escape the jurisdiction of the European Court of Justice, the Sunday Times said without saying how it obtained the information. Her finance chief, Philip Hammond, in a separate interview said Britain would be willing to abandon “mainstream economic and social thinking” if it is unable to craft a favorable post-Brexit EU deal, according to the German newspaper Welt am Sonntag.Trump Calls NATO Obsolete and Dismisses EU in German Interview. U.S. President-elect Donald Trump called NATO obsolete, predicted that other European Union members would follow the U.K. in leaving the bloc and threatened BMW with import duties over a planned plant in Mexico, according to an interview with Germany’s Bild newspaper that will raise concerns in Berlin over trans-Atlantic relations. Quoted in German from a conversation held in English, Trump predicted Britain’s exit from the EU will be a success and portrayed the EU as an instrument of German domination with the purpose of beating the U.S. in international trade. For that reason, Trump said, he’s fairly indifferent whether the EU breaks up or stays together, according to Bild. Merkel Coalition Seeks to Punish Social Media for Hate Speech. Chancellor Angela Merkel’s government plans to fine social media networks such as Facebook Inc. and Twitter Inc. if they fail to combat hate speech, as German officials accuse media companies of being too slow to take action. Volker Kauder, chairman of Merkel’s Christian Democratic Union parliamentary caucus, said on Saturday that he reached a preliminary agreement with Social Democratic Justice Minister Heiko Maas that would require companies to respond to speech complaints within 24 hours. Otherwise they’ll have to pay.Wall Street Journal:‘Real Rates’ Show Real Concerns Over Trump Economic Rebound. Decline in inflation-adjusted Treasury yields signals investor doubt about future economic growth.Beijing Says ‘One China’ Policy Isn’t Negotiable. Donald Trump said Friday he wasn’t committed to longstanding policy on Taiwan.Barron's: Had bullish commentary on (GOOGL), (MRK), (ATW), (GS), (PNC), (POOL), (CSX), (RDC), (DO), (HP), (NBR), (PTEN), (UNT), (AMAT), (OLED) and (HXL). Fox News: Pence urges Americans to unite on Inauguration Day, says he's 'disappointed' in Lewis' comments. (video)CIA's Brennan warns Trump, says he doesn't 'fully understand' Russia threat. (video)CNBC:Ringling Brothers, the 'Greatest Show on Earth', will take final bow in May.Zero H[...]



Market Week in Review

2017-01-13T15:25:51.149-05:00

    • S&P 500 2,274.56 -.21%*

    The Weekly Wrap by Briefing.com.

    *5-Day Change
    (image)



    Weekly Scoreboard*

    2017-01-13T15:15:18.185-05:00

    IndicesS&P 500 2,274.56 -.21%DJIA 19,873.34 -.48%NASDAQ 5,572.91 +.89%Russell 2000 1,370.53 +.21%S&P 500 High Beta 37.44 -.60% Goldman 50 Most Shorted 122.27 +.20% Wilshire 5000 23,658.30 -.08%Russell 1000 Growth 1,081.82 +.26%Russell 1000 Value 1,109.82 -.55%S&P 500 Consumer Staples 528.78 -1.19%Vanda Cyclicals-Defensives 1.2955 +1.88% Morgan Stanley Technology 1,269.02 +.54%Transports 9,182.51 +.80%Utilities 655.45 -.98%Bloomberg European Bank/Financial Services 94.69 -.77%MSCI Emerging Markets 36.58 +1.88%HFRX Equity Hedge 1,168.11 +.43%HFRX Equity Market Neutral 992.18 +.88%Sentiment/InternalsNYSE Cumulative A/D Line 276,878 +.10%Bloomberg New Highs-Lows Index 286 -87Bloomberg Crude Oil % Bulls 28.21 -45.24% CFTC Oil Net Speculative Position 440,074 -1.09% CFTC Oil Total Open Interest 2,089,324 +2.53% Total Put/Call .91 -5.21%OEX Put/Call .40 -66.67%ISE Sentiment 110.0 +63.08%NYSE Arms 1.17 +42.34%Volatility(VIX) 11.46 +1.67%S&P 500 Implied Correlation 47.76 -4.84%G7 Currency Volatility (VXY) 10.66 +.85%Emerging Markets Currency Volatility (EM-VXY) 11.24 +1.44% Smart Money Flow Index 19,341.36 +.68%ICI Money Mkt Mutual Fund Assets $2.691 Trillion -.83%ICI US Equity Weekly Net New Cash Flow -$10.919 BillionAAII % Bulls 43.6 -5.5%AAII % Bears 27.0 +6.9% Futures Spot PricesCRB Index 195.54 +.51%Crude Oil 52.40 -2.46%Reformulated Gasoline 160.89 -.95%Natural Gas 3.42 +4.78%Heating Oil 165.11 -2.79%Gold 1,198.10 +2.14%Bloomberg Base Metals Index 175.18 +4.17% Copper 268.95 +5.68%US No. 1 Heavy Melt Scrap Steel 248.33 USD/Ton unch.China Iron Ore Spot 80.54 USD/Ton +5.63%Lumber 332.70 +1.56%UBS-Bloomberg Agriculture 1,180.05 +2.18%EconomyAtlanta Fed GDPNow Forecast +2.8% -10.0 basis points ECRI Weekly Leading Economic Index Growth Rate +12.2% +20.0 basis pointsPhilly Fed ADS Real-Time Business Conditions Index -.1014 +3.24% S&P 500 Blended Forward 12 Months Mean EPS Estimate 131.91 +.3%Citi US Economic Surprise Index 38.0 +11.0 pointsCiti Eurozone Economic Surprise Index 74.8 +3.7 pointsCiti Emerging Markets Economic Surprise Index 37.60 +11.6 points Fed Fund Futures imply 87.6% chance of no change 12.4% chance of 25 basis point hike on 2/1US Dollar Index 101.29 -.92%MSCI Emerging Markets Currency Index 1,522.73 +.51% Euro/Yen Carry Return Index 127.34 -1.04% Yield Curve 120.0 unch.10-Year US Treasury Yield 2.40% -2.0 basis pointsFederal Reserve's Balance Sheet $4.414 Trillion -.01%U.S. Sovereign Debt Credit Default Swap 27.18 +2.05% Illinois Municipal Debt Credit Default Swap 357.0 -.05% Western Europe Sovereign Debt Credit Default Swap Index 20.15 -3.05%Asia Pacific Sovereign Debt Credit Default Swap Index 33.69 -.12%Emerging Markets Sovereign Debt CDS Index 81.55 +8.83%Israel Sovereign Debt Credit Default Swap 69.25 +.57% Iraq Sovereign Debt Credit Default Swap 703.42 unch. Russia Sovereign Debt Credit Default Swap 180.81 +6.57% iBoxx Offshore RMB China Corporate High Yield Index 132.84 -.05%10-Year TIPS Spread 2.0% +1.0 basis pointTED Spread 51.0 +1.25 basis point 2-Year Swap Spread 29.25 +2.25 basis points3-Month EUR/USD Cross-Currency Basis Swap -41.25 +5.25 basis pointsN. America Investment Grade Credit Default Swap Index 65.62 +1.97% America Energy Sector High-Yield Credit Default Swap Index 427.0 +1.32% European Financial Sector Credit Default Swap Index 86.90 -.20%Emerging Markets Credit Default Swap Index 235.74 +2.38%CMBS AAA Super Senior 10-Year Treasury Spread to Swaps 133.50 -.5 basis pointM1 Money Supply $3.318 Trillion -.26% Commercial Paper Outstanding 959.30 +1.0%4-Week Moving Average of Jobless Claims 256,500 -250Continuing Claims Unemployment Rate 1.5% unch.Average 30-Year Mortgage Rate 4.12% -8.0 basis pointsWeekly Mortgage Applications 379.20 +5.77%Bloomberg Consumer Comfort 45.1 -.4 pointWeekly Retail Sales +.9% -60.0 basis points Nationwide Gas $2.35/gallon -.02/gallonBaltic Dry Index 892.0 -7.37%China (Export) Containerized Freight Index 840.35 +4.23% Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 52.50 -8.7%Rail Frei[...]



    Stocks Slightly Higher into Afternoon on Earnings Optimism, Economic Data, Short-Covering, Hospital/Construction Sector Strength

    2017-01-13T14:39:44.908-05:00

    Broad Equity Market Tone:Advance/Decline Line: Substantially HigherSector Performance: Most Sectors RisingVolume: Below Average Market Leading Stocks: OutperformingEquity Investor Angst:Volatility(VIX) 11.35 -1.65%Euro/Yen Carry Return Index 127.17 +.01%Emerging Markets Currency Volatility(VXY) 11.24 -.88% S&P 500 Implied Correlation 47.57 +1.65%ISE Sentiment Index 92.0 +46.03%Total Put/Call .87 -15.53% NYSE Arms 1.11 -.30% Credit Investor Angst:North American Investment Grade CDS Index 65.62 -1.97% America Energy Sector High-Yield CDS Index 427.0 +.45%European Financial Sector CDS Index 86.90 -3.14%Western Europe Sovereign Debt CDS Index 20.15 +3.41%Asia Pacific Sovereign Debt CDS Index 33.49 -1.63%Emerging Market CDS Index 235.74 -.76%iBoxx Offshore RMB China Corporate High Yield Index 132.83 +.02%2-Year Swap Spread 29.25 unch.TED Spread 51.0 -.5 basis point3-Month EUR/USD Cross-Currency Basis Swap -41.0 +1.0 basis piontEconomic Gauges:Bloomberg Emerging Markets Currency Index 70.1 +.02%3-Month T-Bill Yield .52% +1.0 basis pointYield Curve 120.0 +1.0 basis pointChina Import Iron Ore Spot $80.54/Metric Tonne -.56%Citi US Economic Surprise Index 38.0 -3.5 pointsCiti Eurozone Economic Surprise Index 74.80 -.8 basis point Citi Emerging Markets Economic Surprise Index 37.60 -.2 point 10-Year TIPS Spread 2.0 unch. 31.3% chance of Fed rate hike at March 15 meeting, 45.0% chance at May 3 meetingOverseas Futures:Nikkei 225 Futures: Indicating -7 open in Japan China A50 Futures: Indicating +43 open in ChinaDAX Futures: Indicating -33 open in GermanyPortfolio: Higher: On gains in my in my retail/tech/medical/biotech sector longs  Disclosed Trades: None Market Exposure: 50% Net Long[...]



    Bear Radar

    2017-01-13T13:00:10.393-05:00

    Style Underperformer: Large-Cap Value +.2% Sector Underperformers: 1) Oil Service -.5% 2) Utilities -.5% 3) Restaurants -.5% Stocks Falling on Unusual Volume: GME, INFY, AAOI, GNRC, HMST, PVH, RYI and RBA Stocks With Unusual Put Option Activity: 1) AIG 2) FEYE 3) YUM 4) EXEL 5) EA Stocks With Most Negative News Mentions: 1) GNRC 2) SNAK 3) ABCO 4) GME 5) TNP Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



    Bull Radar

    2017-01-13T12:13:47.629-05:00

    Style Outperformer: Small-Cap Growth +1.2% Sector Outperformers: 1) Hospitals +1.7% 2) Alt Energy +1.4% 3) Disk Drives +1.3% Stocks Rising on Unusual Volume:SN, DXCM, STRP, WATT, SSNI, P, WMS, CHKP, HTLD, EVH, CLVS, ARRY, ANGO, SSW, GRUB, PTLA, DERM, MNST and TIFStocks With Unusual Call Option Activity: 1) TMUS 2) ARNC 3) AIG 4) RF 5) SPLK Stocks With Most Positive News Mentions: 1) GRUB 2) THRM 3) P 4) CFX 5) MBLY Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



    Morning Market Internals

    2017-01-13T10:50:19.238-05:00

    NYSE Composite Index:
    (image)



    Friday Watch

    2017-01-12T20:48:41.651-05:00

    Evening HeadlinesBloomberg: Davos Wonders If It’s Part of the Problem. Did the global elite’s devotion to borderless capitalism sow the seeds of a populist backlash? Kenneth Rogoff can pinpoint the moment he started to grow concerned Donald Trump would be the next U.S. president: It was when Rogoff’s fellow attendees at the World Economic Forum’s annual meeting last January said it could never happen. “A joke I’ve told 1,000 people in the months since leaving Davos is that the conventional wisdom of Davos is always wrong,” says the Harvard professor and former chief economist of the International Monetary Fund. “No matter how improbable, the event most likely to happen is the opposite of whatever the Davos consensus is.”Dollar Pares Weekly Loss, Asian Stocks Are Mixed: Markets Wrap. The dollar pared a weekly loss and Asian stocks were mixed as investors continued to assess whether market moves since the U.S. election have gone too far. Investors awaited Chinese trade data and earnings results at three of the largest U.S. banks. Australian and South Korean equities slumped while Japanese shares fluctuated. The yen gave up early gains, trimming its strongest week since July, while the dollar was higher after touching the lowest point in almost a month on Thursday. Gold was steady after a four-day rally. The MSCI Asia Pacific Index lost 0.4 percent as of 9:29 a.m. in Tokyo, with an almost equal number of shares rising and falling. Japan’s Topix index rose less than 0.1 percent and New Zealand’s S&P/NZX 50 slid 0.3 percent. Australia’s S&P/ASX 200 declined 0.8 percent and South Korea’s Kospi index retreated 0.5 percent. Robot Nannies Look After 3 Million Chickens in Coops of the Future. “Problems sometimes involve human error, so full automation enhances the safety level.”Scaramucci, Hedge-Fund Show Impresario, Scores White House Role. Anthony Scaramucci, founder of SkyBridge Capital, has been named an assistant to President-elect Donald Trump, according to people familiar with the decision. Scaramucci will have a general advisory role in the White House, said the people who asked not to be identified without authorization to speak publicly. He’s been a member of Trump’s transition team, making public appearances on television in support of his policies. "It’s not about me, and it’s not about any of these people on the team," Scaramucci said in an interview at Trump Tower earlier Thursday. "It’s about president-elect Trump and the American people."Lyft Loses $600 Million in 2016 as Revenue Surges. U.S. ride-hailing startup is said to generate revenue of $700 million last year. Lyft Inc., the second-largest ride-hailing startup in the U.S. behind Uber Technologies Inc., lost about $600 million last year while increasing revenue 250 percent, according to people familiar with the matter. In 2016, Lyft generated about $700 million in sales, said the people, who asked not to be identified because the financials are private. The San Francisco company's revenue growth far exceeded its 46 percent increase in losses.Wall Street Journal:European Elections Test ECB President Mario Draghi. Politicians in Germany, France, Italy and the Netherlands—which all face general elections this year—have recently stepped up attacks on ECB.Fox News:Inspector general to review DOJ, FBI handling of Clinton case. (video)CNBC:Anadarko Petroleum(APC) to sell Texas assets for $2.3 billion.Hedge funds winners and losers: Risk gets rewarded. (video)Zero Hedge:Jeff Gundlach's Forecast For 2017."Fake News" Facebook(FB) Lands On List Of "America's Most Hated Companies".Obamacare's Death Throes.Morgan Stanley(MS) Cuts Investment Banking Bonuses By 15%, Fires 5% Of Managing Directors.Chatter Of Fed Balance Sheet Unwind Spikes Yield Curve. (graph) Just 3 Things. (graph)VIX-Crushing, Pa[...]



    Stocks Falling into Final Hour on Profit-Taking, Yen Strength, Technical Selling, Financial/Gaming Sector Weakness

    2017-01-12T15:47:42.668-05:00

    Broad Equity Market Tone:Advance/Decline Line: LowerSector Performance: MixedVolume: Around Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 11.52 +2.31%Euro/Yen Carry Return Index 127.12 -.32%Emerging Markets Currency Volatility(VXY) 11.42 unch. S&P 500 Implied Correlation 46.50 +.98%ISE Sentiment Index 67.0 -25.56%Total Put/Call 1.03 +22.62% NYSE Arms 1.14 -12.51% Credit Investor Angst:North American Investment Grade CDS Index 66.12 +.83% America Energy Sector High-Yield CDS Index 426.0 +.21%European Financial Sector CDS Index 90.16 +1.04%Western Europe Sovereign Debt CDS Index 19.49 +.21%Asia Pacific Sovereign Debt CDS Index 34.03 -1.10%Emerging Market CDS Index 237.02 -.46%iBoxx Offshore RMB China Corporate High Yield Index 132.82 +.05%2-Year Swap Spread 29.25 +.5 basis pointTED Spread 51.50 +.5 basis point3-Month EUR/USD Cross-Currency Basis Swap -42.0 unch.Economic Gauges:Bloomberg Emerging Markets Currency Index 70.11 +.78%3-Month T-Bill Yield .51% unch.Yield Curve 118.0 unch.China Import Iron Ore Spot $80.99/Metric Tonne +.72%Citi US Economic Surprise Index 41.50 +1.7 pointsCiti Eurozone Economic Surprise Index 75.60 +4.5 basis points Citi Emerging Markets Economic Surprise Index 37.80 +7.0 points 10-Year TIPS Spread 2.0 unch. 27.8% chance of Fed rate hike at March 15 meeting, 40.6% chance at May 3 meetingOverseas Futures:Nikkei 225 Futures: Indicating +90 open in Japan China A50 Futures: Indicating +45 open in ChinaDAX Futures: Indicating +40 open in GermanyPortfolio: Slightly Lower: On losses in my in my retail/tech sector longs  Disclosed Trades: Added to my (IWM)/(QQQ) hedges Market Exposure: Moved to 50% Net Long[...]



    Today's Headlines

    2017-01-12T15:07:17.483-05:00

    Bloomberg:China Credit Growth Exceeds Estimates as Lending Remains Robust. China’s broadest measure of new credit expanded faster than expected, bringing the total of new loans extended last year to roughly equal the size of Italy’s $1.8 trillion economy. Aggregate financing remained robust at 1.63 trillion yuan ($236 billion) in December, compared with a median estimate of 1.3 trillion yuan in a Bloomberg survey and 1.74 trillion yuan the prior month. New yuan loans stood at 1.04 trillion yuan, exceeding all 37 estimates in the survey. The broad M2 money supply increased 11.3 percent from a year earlier after climbing 11.4 percent in November. The rapid pace of lending is at odds with recent pledges by policy makers to curb excessive borrowing and reduce risk in the financial system.Clean Energy Spending Drops Most on Record as China Slows Growth. Global investments in renewable power dropped the most on record in 2016 as demand in China and Japan faltered. Worldwide spending on clean energy fell 18 percent from 2015’s record high to $287.5 billion, according to a report Thursday by Bloomberg New Energy Finance. It was the first decline since 2013 and comes as environmental policies face pressure from populist movements that have fueled the rise of Donald Trump, the U.K. Independence Party and others.ECB Stimulus Disagreements Signal Vigorous Debates Ahead. European Central Bank policy makers appear to have had a lively debate on how to set the path of stimulus last month, signaling more tension may be ahead as euro-area inflation accelerates. While the Governing Council largely shared the view that “the scenario of a gradual uptrend in inflation still relied, to a considerable degree, on accommodative monetary-policy support, ” the 25-member body couldn’t reach unanimity on how to maintain that support, an account of their Dec. 7-8 meeting shows. Executive Board member Peter Praet, the chief economist, presented two options of extending bond-buying after March for 6 months at 80 billion euros ($85 billion) a month, or for 9 months at 60 billion euros. Europe Stocks Fall to 2-Week Low as Drugmakers, Carmakers Plunge. The Stoxx Europe 600 Index fell 0.7 percent at the close. Carmakers retreated 2.8 percent after the U.S. government accused Fiat Chrysler Automobiles NV of using software that allowed excess diesel emissions in about 104,000 vehicles. Health-care shares tumbled the most since November, deepening losses that began late yesterday after Trump said he’d force the industry to bid for government business. Saudi Oil Output Drops Under OPEC Quota Close to Two-Year Low. (video) Saudi Arabia has reduced oil production to less than 10 million barrels a day, below its targeted level, and will consider renewing its pledge to cut crude output in six months, Energy Minister Khalid Al-Falih said. The world’s biggest oil exporter is currently producing at a 22-month low. It had agreed to cut 486,000 barrels a day to 10.058 million barrels a day as part of a global deal to reduce output to curb a supply glut. The caps on production, together with rising demand and natural decreases in output in some countries, will help balance the market and support prices, Al-Falih said in a speech at an energy conference in Abu Dhabi.Fed’s Evans Says Fiscal Boost Could Lift Growth Forecasts. (video) Chicago Federal Reserve President Charles Evans said government stimulus policies could boost growth and reduce the need for monetary accommodation, underscoring some investor expectations that President-elect Donald Trump’s policies will lead to higher interest rates. A government stimulus “might increase growth by a couple of tenths over the next two years,” Evans told reporters Thursday after speaking at an event in Naples, Fl[...]



    Bear Radar

    2017-01-12T13:49:02.922-05:00

    Style Underperformer: Small-Cap Value -1.6% Sector Underperformers: 1) Disk Drives -1.8% 2) Computer Hardware -1.6% 3) Alt Energy -1.6% Stocks Falling on Unusual Volume: VSTO, FCAU, MGPI, PCBK, HES, EVTC, ETRM, CUDA, FCFS, COLB, GATX, NSIT, SNX, JBLU, CMI, CINF, THG, SWKS and THG Stocks With Unusual Put Option Activity: 1) SPLK 2) MNK 3) CMI 4) VFC 5) KRE Stocks With Most Negative News Mentions: 1) X 2) OCN 3) THG 4) NSIT 5) AKS Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



    Bull Radar

    2017-01-12T13:34:27.807-05:00

    Style Outperformer: Large-Cap Growth -.3% Sector Outperformers: 1) Oil Tankers +.9% 2) Gold & Silver +.9% 3) Biotech +.6% Stocks Rising on Unusual Volume:STRP, AAOI, ABCO, MYCC, MPET, GLOB, CENX, TIF and PIIStocks With Unusual Call Option Activity: 1) GRPN 2) CYH 3) KBH 4) CSX 5) TBT Stocks With Most Positive News Mentions: 1) ABC 2) CCJ 3) AAOI 4) BKD 5) PII Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



    Morning Market Internals

    2017-01-12T10:56:59.719-05:00

    NYSE Composite Index:
    (image)



    Thursday Watch

    2017-01-11T20:44:22.260-05:00

    Evening HeadlinesBloomberg:China’s Great Ball of Money Has More Bubbles in Sight for 2017. Call it China’s Great Ball of Money, Whac-a-Mole Finance, or simply a whole lot of liquidity. Whatever term you use for the excess credit trapped in China’s financial system, few would deny that predicting its sometimes erratic movements can be a money-maker for analysts, traders and investors. After a string of market bubbles in recent years, China will again see assets threatened in 2017 by prices detaching from fundamentals. That’s the opinion of all but one of 14 economists surveyed by Bloomberg late last month. Half penciled in the risk of a real-estate bubble inflating, despite efforts by policy makers in recent months to avoid exactly that outcome. An additional four saw the corporate bond market as most vulnerable to becoming a bubble, again even as officials take steps to raise costs and reduce a build-up in debt.In Surprise Rate Cut, Brazil Signals New Pace of Easing Ahead. (video)India's Economy Faces a Bumpy Road to Recovery. India's Economy Faces a Bumpy Road to Recovery. India’s economy is set for a choppy recovery from the world’s most sweeping currency policy change in decades. Inflation continued to slow in December as the cash ban squelched demand while a volatile factory output gauge rose in November, according to Bloomberg surveys before data due at 5:30 p.m. in New Delhi on Thursday. Companies are bracing for lower sales and employment and bond-market swings are at the highest level since 2013.Yen Gains, Japan Stocks Drop After Trump Comments: Markets Wrap. The yen strengthened for a fourth day and Japanese stocks retreated after Donald Trump’s first press conference since his election victory gave scant detail on policy. Oil maintained gains and currencies of commodity-producing nations climbed. Japan’s currency headed toward 115 per dollar as the greenback held on to Wednesday’s losses. Asia’s regional equity index advanced for a fourth day, poised for the highest closing level since October. The Aussie climbed and the country’s equity market nudged higher. Oil held on to gains after a government report showed U.S. refiners processed a record amount of crude last week. The MSCI Asia Pacific Index rose 0.5 percent as of 9:25 a.m. in Tokyo. Goldman Sachs’s(GS) Dina Powell Said to Join Trump Administration. Goldman Sachs Group Inc.’s Dina Powell, head of the firm’s philanthropic efforts, is poised to be named to a role in Donald Trump’s administration, according to people with knowledge of the matter.Wall Street Journal:Trump Nominee Rex Tillerson Suggests Tough Line on Russia, But Won’t Commit on Sanctions. Pick for secretary of state takes surprisingly hawkish line, but draws ire of senatorsfor hedging on incoming administration’s position.Senate Gears Up for Obamacare Repeal with Late-Night Votes. Marathon session of amendments could end with passing budget resolution.PC Market Declines For Fifth Straight Year. Personal computer sales have been on the decline since 2012. Fox News:Trump Pentagon likely to abandon social experiments for core mission under Mattis, say experts. (video)Zero Hedge:Identity Of "Former Intelligence Officer" Who Prepared The Trump Dossier, Has Been Revealed.NYT Accuses CNN, BuzzFeed Of Peddling "Fake News" Over Russia Report.BofA Finds Consumer Spending Tumbled In December, Warns Of Disappointing Retail Sales. (graph)To "Prevent Public Panic", Beijing Orders Banks To Keep Capital Controls Secret.Soros Group Vows To Stay In Hungary Despite Plans For Government Crackdown On NGOs.Why OPEC Should Fear The Trump Administration.Trump Impeachment Now Even Odds At Bookies.Hedge Fu[...]



    Stocks Higher into Final Hour on Economic Optimism, Oil Gain, Technical Buying, Energy/Transport Sector Strength

    2017-01-11T16:02:32.833-05:00

    Broad Equity Market Tone:Advance/Decline Line: Modestly LowerSector Performance: MixedVolume: Slightly Below Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 11.48 -.09%Euro/Yen Carry Return Index 127.50 -.12%Emerging Markets Currency Volatility(VXY) 11.47 +3.61% S&P 500 Implied Correlation 46.11 +1.52%ISE Sentiment Index 90.0 -4.26%Total Put/Call .84 -7.69% NYSE Arms 1.32 +12.1% Credit Investor Angst:North American Investment Grade CDS Index 66.12 +.52% America Energy Sector High-Yield CDS Index 424.0 +.78%European Financial Sector CDS Index 89.23 +1.37%Western Europe Sovereign Debt CDS Index 19.44 -2.70%Asia Pacific Sovereign Debt CDS Index 34.70 +1.73%Emerging Market CDS Index 241.61 +.09%iBoxx Offshore RMB China Corporate High Yield Index 132.76 +.06%2-Year Swap Spread 28.75 +.5 basis pointTED Spread 51.0 +.75 basis point3-Month EUR/USD Cross-Currency Basis Swap -42.0 +.5 basis pointEconomic Gauges:Bloomberg Emerging Markets Currency Index 69.52 -.13%3-Month T-Bill Yield .51% unch.Yield Curve 118.0 -1.0 basis pointChina Import Iron Ore Spot $80.41/Metric Tonne +1.23%Citi US Economic Surprise Index 39.80 +.5 pointCiti Eurozone Economic Surprise Index 71.10 -.7 basis point Citi Emerging Markets Economic Surprise Index 30.80 +2.1 points 10-Year TIPS Spread 2.0 +2.0 basis points 31.50% chance of Fed rate hike at March 15 meeting, 43.7% chance at May 3 meetingOverseas Futures:Nikkei 225 Futures: Indicating +21 open in Japan China A50 Futures: Indicating +36 open in ChinaDAX Futures: Indicating +4 open in GermanyPortfolio: Slightly Lower: On losses in my in my biotech sector longs and emerging markets shorts Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short Market Exposure: Moved to 75% Net Long[...]



    Today's Headlines

    2017-01-11T14:53:07.453-05:00

    Bloomberg:European Stocks Advance as FTSE 100 Caps Record Winning Streak. European stocks ended the session higher amid gains in miners and energy shares, while comments by U.S. President-elect Donald Trump weighed on drugmakers. The Stoxx Europe 600 Index added 0.2 percent at the close, erasing an early decline of as much as 0.3 percent. Health-care stocks fell the most among sectors after Trump saidin his first press conference as U.S. President-elect that he’d force the industry to bid for government business. Long-Short Hedge Funds Are Ditching the Shorts to Focus on Longs. What happens when you take the “short” out of a long-short trading strategy? Some hedge funds are about to find out. Equity long-short fund managers, the biggest category in hedge funds, hold the fewest bearish stock bets on record, data compiled by Credit Suisse Group AG show. The shift reflects their abysmal performance in 2016, when the S&P 500 advanced 9.5 percent as the long-short managers tracked by Credit Suisse fell 4.3 percent, their worst year since 2011.Drug Stocks Plunge as Trump Threatens to Force Price Bidding. (video) Pharmaceutical and biotech stocks plummeted Wednesday as President-elect Donald Trump said he’d force the industry to bid for government business in order to save the government billions of dollars. “They are getting away with murder. Pharma has a lot of lobbyists and a lot of power and there is very little bidding,” Trump said at a press conference in New York. “We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.” The industry is the latest victim to a president who has made a habit of negotiating with industries via Twitter. The Nasdaq Biotechnology Index fell 2.6 percent at 11:28 a.m. in New York, and the Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index was down 1.7 percent.Suddenly, Home Sale Agreements Are Falling Apart Across the U.S. The share of sales that failed to close doubled in 2016, and nobody knows why. Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare—one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia. A Trulia analysis of U.S. listings shows that 3.9 percent of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such “failed sales” increased in 96 of the 100 biggest U.S. metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.Wall Street Journal:Rex Tillerson Confirmation Hearing: Live Coverage.China Sends Aircraft Carrier Through Taiwan Strait. Maneuver occurs amid heightened tensions between Beijing and the self-ruled island. Fox News: Trump blasts Russia reports, unveils plan for business empire at feisty news conference. (video)CNBC:Is Putin a war criminal? 'I would not use that term,' says Rex Tillerson. (video)Tillerson and Rubio spar over 'resurgent Russia' and scope of Moscow threat. (video)Zero Hedge:NYT Accuses CNN, BuzzFeed Of Peddling "Fake News" Over Russia Report.Trump Slams BuzzFeed As "Failing Pile Of Garbage", Tells CNN "You Are Fake News".Crude Dumps'n'Pumps Despite Massive Inventory Builds, Biggest Jump In Production In 20 Months. (graph)Trump Unveils 'Conflicts Of Interest' Solution: No Divestment, Hands Business Over To Sons And "Ethics Officer".Protests In Mexico Push Co[...]



    Bear Radar

    2017-01-11T13:58:09.911-05:00

    Style Underperformer: Small-Cap Growth -.6% Sector Underperformers: 1) Biotech -3.7% 2) Gaming -2.3% 3) Drugs -2.2% Stocks Falling on Unusual Volume: PPH, BRG, SGNL, PFGC, NICE, ETRM, VECO, IBB, PRGO, IMMR, ENDP, YIN, SIG, GGAL, UBIO, ANIK, SRPT, BIB, ETH, EDIT, AMBA, LMAT, FN, EXEL, TEVA, PFGC, FRED, SCMP and TRCO Stocks With Unusual Put Option Activity: 1) QEP 2) PSX 3) EWY 4) AMBA 5) SMH Stocks With Most Negative News Mentions: 1) NVCR 2) STX 3) SMG 4) RF 5) SGEN Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



    Bull Radar

    2017-01-11T13:46:35.069-05:00

    Style Outperformer: Mid-Cap Value -.1% Sector Outperformers: 1) Oil Service +1.2% 2) Hospitals +1.2% 3) Utilities +.8% Stocks Rising on Unusual Volume:KRNT, FBNC, CUDA, WDAY, MSM, SSW, BOX and GMEDStocks With Unusual Call Option Activity: 1) WDAY 2) HIG 3) HPQ 4) MRK 5) ON Stocks With Most Positive News Mentions: 1) CCE 2) VC 3) ISRG 4) NBL 5) EP Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



    Morning Market Internals

    2017-01-11T10:26:43.650-05:00

    NYSE Composite Index:
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    Wednesday Watch

    2017-01-10T20:49:15.275-05:00

    Evening HeadlinesBloomberg: William Rhodes: China's Major Concern Is the Economy. (video)Trump Tax Cuts Could Jump-Start Global Economy, World Bank Says. President-elect Donald Trump’s tax cuts and spending plans could deliver a shot in the arm to the U.S. economy, lifting growth around the world, although uncertainty about his trade policies adds to the risks, according to the World Bank. The Trump administration could squander the economic gains of fiscal stimulus if it imposes new trade barriers that provoke retaliation by other countries, the Washington-based development lender said Tuesday in the latest update to its global economic outlook. Overall, it’s too early to assess what the net impact will be of Trump’s economic policies, the World Bank said. Accordingly, it left its forecast for U.S. growth this year and next unchanged, at 2.2 percent and 2.1 percent, respectively. The outlook doesn’t incorporate the expected effect of Trump’s policy proposals, according to the report. Asian Stocks Set for Gains Following Metals Surge: Markets Wrap. Contracts on equity indexes from South Korea to Hong Kong signaled advances after a mixed day for U.S. shares. Stocks in Australia rallied as the country’s 10-year debt eased back. The yen held on to a two-day climb versus the greenback amid anxiety ahead of Donald Trump’s first press conference since July, an event that could provide detail on the U.S. president-elect’s policy outlook. Gold was near its highest price since November after a surge in copper to iron ore on the Chinese data Tuesday. Oil snapped a two-day slide. Miners and technology shares led Australia’s S&P/ASX 200 Index up 0.2 percent as of 8:56 a.m. Tokyo time, as the S&P/NZX 50 Index in Wellington also climbed 0.2 percent in a third day of gains. Nikkei 225 Stock Average futures were bid up 0.1 percent to 19,320 in the Osaka pre-market, with yen-denominated contracts traded in Chicago little changed at 19,350. Futures on the Kospi index in Seoul advanced 0.1 percent in most recent trading, as those on Hong Kong’s Hang Seng and Hang Seng China Enterprises gauges climbed at least 0.3 percent.Wall Street Journal:Jeff Sessions and John Kelly Confirmation Hearings: Live Coverage. (video)America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Crisis. Lenders offering energy-conscious loans care little about borrowers’ creditworthiness, contractors function as loan brokers—and investors can’t get enough.Fox News:Slain DNC staffer's father doubts WikiLeaks link as cops seek answers. (video)MarketWatch:Vaccine skeptic Robert Kennedy Jr. says Trump asked him to chair commission. Vaccine skeptic Robert F. Kennedy Jr. said Tuesday that President-elect Donald Trump has asked him to chair a commission on vaccine safety and scientific integrity. The son of the late U.S. senator, attorney general and Democratic presidential candidate said after meeting with the president-elect at Trump Tower that “Trump has doubts about current vaccine policy.” “He said his opinion doesn’t matter,” Kennedy said, “but the science does matter, and we ought to be debating it.”CNBC:Jeffrey Gundlach says he expects markets to reverse post-election moves. There will be "trouble for equity markets" if the yield on the benchmark 10-year U.S. Treasury note moves beyond 3 percent, Jeffrey Gundlach, chief executive of DoubleLine Capital, warned on Tuesday.Some Senate Republicans are trying to stop Trump from lifting sanctions on Russia. Zer[...]



    Stocks Slightly Higher into Final Hour on US Economic Data, Earnings Optimism, Metals & Mining/Medical Sector Strength

    2017-01-10T15:28:59.285-05:00

    Broad Equity Market Tone:Advance/Decline Line: HigherSector Performance: MixedVolume: Slightly Below Average Market Leading Stocks: Performing In LineEquity Investor Angst:Volatility(VIX) 11.69 +1.12%Euro/Yen Carry Return Index 127.69 -.37%Emerging Markets Currency Volatility(VXY) 11.07 +.18% S&P 500 Implied Correlation 47.56 +.49%ISE Sentiment Index 100.0 unch.Total Put/Call .87 -12.12% NYSE Arms 1.06 -28.94% Credit Investor Angst:North American Investment Grade CDS Index 65.55 +.76% America Energy Sector High-Yield CDS Index 422.0 +1.15%European Financial Sector CDS Index 88.03 +.97%Western Europe Sovereign Debt CDS Index 19.99 -1.48%Asia Pacific Sovereign Debt CDS Index 34.12 -.79%Emerging Market CDS Index 238.91 +1.66%iBoxx Offshore RMB China Corporate High Yield Index 132.67 unch.2-Year Swap Spread 28.25 +.25 basis pointTED Spread 50.25 -1.0 basis point3-Month EUR/USD Cross-Currency Basis Swap -42.5 +2.25 basis pointsEconomic Gauges:Bloomberg Emerging Markets Currency Index 69.63 -.31%3-Month T-Bill Yield .51% +1.0 basis pointYield Curve 119.0 unch.China Import Iron Ore Spot $79.43/Metric Tonne +2.19%Citi US Economic Surprise Index 39.30 +10.8 pointsCiti Eurozone Economic Surprise Index 71.80 +.8 basis point Citi Emerging Markets Economic Surprise Index 28.70 +2.0 points 10-Year TIPS Spread 1.98 +1.0 basis point 33.1% chance of Fed rate hike at March 15 meeting, 46.4% chance at May 3 meetingOverseas Futures:Nikkei 225 Futures: Indicating +97 open in Japan China A50 Futures: Indicating +77 open in ChinaDAX Futures: Indicating -10 open in GermanyPortfolio: Higher: On gains in my tech/biotech/medical/retail sector longs  Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges Market Exposure: Moved to 50% Net Long[...]



    Today's Headlines

    2017-01-10T15:02:01.852-05:00

    Bloomberg:Credit Hedge Fund Shorting China Junk Bonds as Risks Mount. Double Haven Capital (Hong Kong), a credit hedge-fund firm that profited last year as most of the industry struggled to make money, is betting against Chinese high-yield bonds as many investors are seeing risks mount in this part of the market. Chinese high-yield bonds have gotten expensive, and heavily indebted issuers throughout Asia need to refinance existing loans, Darryl Flint, chief investment officer of the Hong Kong-based hedge fund, wrote in a newsletter to investors. Double Haven, which has traded more than $10.7 billion of public and private Asian securities since 2011, said a wave of refinancing activity could also amplify price volatility. Double Haven is joining peers such as BFAM Partners (Hong Kong) and Value Partners Group Ltd. in taking a bearish view on Chinese junk bonds this year after such securities helped regional fixed-income managers return nearly eight-fold the average Asian hedge fund gain in 2016. Double Haven did even better, climbing 8.7 percent last year as the average Asia hedge fund rose 0.8 percent for the worst annual performance since 2011, according to preliminary data from Eurekahedge in Singapore.Mexico as U.S. Manufacturing Scapegoat Masks China Effect: Chart.India Auto Sales Plunge Most in 16 Years on Modi’s Bank Note Ban. India’s automobile sales fell the most in 16 years last month after Prime Minister Narendra Modi’s unprecedented clampdown on cash prompted consumers to delay their purchases of cars, motorcycles and trucks. Automobile sales fell 19 percent to 1.2 million units in December, the biggest drop since the same month in 2000, according to data released by the Society of Indian Automobile Manufacturers in New Delhi. Passenger vehicles sales dropped 1.4 percent while scooters and motorcycles -- a key indicator of rural demand -- fell 22 percent, the biggest monthly contraction on record.Oil Drillers Are Expanding Again After Losing Half-Million Jobs. More than three quarters of the 440,131 oil jobs eliminated around the world through the end of 2016 came from the oilfield service providers, drilling contractors and equipment makers, said John Graves, whose Houston firm assists in oil and gas deals with audits and due diligence. He has tracked announcements of layoffs from all parts of the oil industry since the downturn began in the middle of 2014. Roughly a third of the cuts came in the U.S., Graves estimates.Junk Bonds' High-Wire Act. Hudson's Bay Shares Hit Record Low as Holiday Sales Disappoint.Hungary Plans to Crackdown on All Soros-Funded NGOs. Hungary plans to crack down on non-governmental organizations linked to billionaire George Soros now that Donald Trump will occupy the White House, according to the deputy head of Prime Minister Viktor Orban’s party. The European Union member will use “all the tools at its disposal” to “sweep out” NGOs funded by the Hungarian-born financier, which “serve global capitalists and back political correctness over national governments,” Szilard Nemeth, a vice president of the ruling Fidesz party, told reporters on Tuesday. Richmond Fed’s Lacker to Retire Oct. 1, Search on for Successor.Wall Street Journal:FBI’s Comey Says Republican Data Also Hacked by Russians. Russians chose not to disclose as much GOP material as Democrats’ data, intelligence leader says.America’s Fastest-Growing Loan Category Has Eerie Echoes of Subprime Cr[...]



    Bear Radar

    2017-01-10T13:36:33.870-05:00

    Style Underperformer: Large-Cap Growth +.2% Sector Underperformers: 1) Oil Service -1.0% 2) REITs -.7% 3) Computer Services -.5% Stocks Falling on Unusual Volume: WMB, NSTG, COLB, WDFC, ABAX, KONA, ACRS, ZLTQ, WRLD, SIMO, AM, AB, HALO, SHLM, CYNO, TNC, ALLE, KOF, ENDP, DDD, KITE, ACIA, ADMS, AWI, CNK, EROS and QTNA Stocks With Unusual Put Option Activity: 1) EXPR 2) URI 3) WDC 4) KBH 5) JNK Stocks With Most Negative News Mentions: 1) WRLD 2) CF 3) HGG 4) ABAX 5) DISCA Charts: ETFs Falling on Unusual Volume Stocks Falling on Unusual Volume [...]



    Bull Radar

    2017-01-10T13:24:08.851-05:00

    Style Outperformer: Small-Cap Value +.9% Sector Outperformers: 1) Steel +3.7% 2) Gaming +2.4% 3) Airlines +2.4% Stocks Rising on Unusual Volume:PCBK, ETRM, SRPT, YPF, ILMN, GNMK, TWNK, VRX, CMG, KTWO, W, HQY, MDRX, ZBH, BKD, HQY, PODD, ALK, RRGB and BSXStocks With Unusual Call Option Activity: 1) WMB 2) ILMN 3) BSX 4) ARIA 5) RCL Stocks With Most Positive News Mentions: 1) RRGB 2) AMAG 3) BBY 4) LSCC 5) PHM Charts: ETFs Rising on Unusual Volume Stocks Rising on Unusual Volume [...]



    Morning Market Internals

    2017-01-10T10:51:41.189-05:00

    NYSE Composite Index:
    (image)