14 Oct 2013 AMC - Market up for 4th day consecutive

14 Oct 2013 AMC- Market up for 4th day consecutive

Market Summary 

European Markets Closing Prices

European markets are now closed; stock markets across Europe performed as follows:

·         UK's FTSE: + 0.3%

·         Germany's DAX: 0.0%

·         France's CAC: + 0.1%

·         Spain's IBEX: + 0.3%

·         Portugal's PSI: + 1.0%

·         Italy's MIB Index: + 0.2%

·         Irish Ovrl Index: + 0.3%

Greece ATHEX Composite: + 0.9%

 



Before Market Opens

S&P futures vs fair value: -11.50. Nasdaq futures vs fair value: -18.80.
The S&P 500 futures continue to trade near their lows as the Washington stalemate weighs.

Asian markets finished the Monday session on a mixed note while Hong Kong's Hang Seng and Japan's Nikkei were closed. Elsewhere, China's Shanghai Composite advanced 0.4% after China reported a trade surplus of $15.20 billion ($27.70 billion expected, $28.61 billion previous) as imports expanded 7.4% year-over-year (7.0% forecast, 7.0% prior) while exports slipped 0.3% year-over-year (6.0% consensus, 7.2% previous). Separately, CPI rose 0.8% month-over-month (0.5% expected, 0.5% last) while the year-over-year reading climbed 3.1% (2.9% forecast, 2.6% prior). Also of note, PPI fell 1.3% year-over-year (-1.4% expected, -1.6% last). In other regional data, Australia's home loans decreased 3.9% month-over-month (-2.5% expected, 2.1% prior). South Korea's trade surplus narrowed to $3.68 billion from $3.71 billion. Singaporean GDP rose 5.1% year-over-year (3.8% expected, 4.2% previous) while retail sales fell 7.8% year-over-year (-5.2% expected, -8.2% last). India's WPI rose 6.46% year-over-year (6.00% expected, 6.10% prior). 

·         In Japan, the Nikkei was closed for Health-Sports Day. 

·         Hong Kong's Hang Seng was closed for Chung Yeung Day. 

·         In China, the Shanghai Composite added 0.4% with staple stocks in the lead Tsingtao Brewery and VV Food & Beverage jumped 7.9% and 2.7%, respectively. On the downside, heavyweight China Vanke lost 2.5%. 

Major European indices trade in mixed fashion with Great Britain's FTSE (+0.1%) outperforming the remainder of the region. The session has been very quiet so far, but German Finance Minister Wolfgang Schaeuble was quoted as saying the new government should be in place within a month. Economic data was limited to just a handful of reports as Eurozone industrial production rose 1.0% month-over-month (0.8% expected, -1.0% prior) while the year-over-year reading posted a decline of 2.1% (-2.4% forecast, -1.9% previous). Elsewhere, Swiss PPI ticked up 0.1% month-over-month (0.0% expected, 0.2% prior) while the year-over-year reading registered no change, as expected (0.2% previous). 

·         Great Britain's FTSE is higher by 0.1% with staple stocks outperforming. Associated British Foods and WM Morrison Supermarkets trade with respective gains of 2.3% and 1.5%. Financials weigh as Royal Bank of Scotland trades lower by 1.8% and Lloyds Banking Group holds a loss of 1.2%. 

·         In Germany, the DAX is off 0.3% as 22 of 30 components register losses. Industrials have displayed relative weakness with Deutsche Post and Deutsche Lufthansa both down near 1.3%. Utility provider RWE leads with a gain of 1.4%. 

·         In France, the CAC is lower by 0.4%. Consumer names lag as L'Oreal and LVMH Moet Hennessy Louis Vuitton trade with respective losses of 2.2% and 1.3%. Steelmaker ArcelorMittal outperforms with a gain of 3.0%.

Market Internals

Market Internals -Technical-
The Dow ended up 64.15 points (+0.4%) to 15301.26, the S&P 500 was up 6.94 (+0.4%) to 1710.14, and Nasdaq was up 23.4 (+0.6%) to 3815.27. Action has come on below average volume (NYSE 575 mln vs. avg. of 691; NASDAQ 1443 mln vs. avg. of 1590), with advancers outpacing decliners (NYSE 1749/1253, NASDAQ 1534/943) and new highs outpacing new lows (NYSE 189/33, NASDAQ 204/17). 

Relative Strength: Indonesia-IDX +3.0%, Greece-GREK +2.0%, Steel-SLX +1.8%, India-INP +1.6%, Metals & Mining-XME +1.5%, Poland-EPOL +1.3%, Oil Services-OIH +1.1%, Volatility-VXX +1.0%, Coal-KOL +1.0%

Relative Weakness:   Cocoa-NIB -1.2%, Home Construction-ITB -0.8%

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Closing Market Summary: Stocks Climb With Hopes For Budget Deal Flying High
Once again, equity indices posted modest gains even as the agreement to end the partial government shutdown and extend the debt ceiling remained elusive. The S&P 500 added 0.4%, extending its year-to-date gain to 19.9%. 

Stocks slumped at the open after the weekend ended without any concrete progress in Washington. Despite the opening weakness, dip-buyers were quick to step in, drawing encouragement from late-morning reports indicating a bipartisan meeting was scheduled to take place at the White House at 15:00 ET. 

The rebound continued into the afternoon with upbeat quotes from lawmakers providing additional support. On that note, Senate Majority Leader Harry Reid said he is ‘very optimistic' that an agreement will be reached this week. Similar remarks were made by Minority Leader Mitch McConnell who said "I share Senator Reid's optimism." 

A brief slip ensued during the final 90 minutes of the session when the White House meeting was postponed in order to allow more time for talks. Strikingly, the market did not appear too concerned with the cancellation as the major averages ended the session on their highs. 

Eight of ten sectors posted gains while telecom services (-0.7%) and utilities (-0.6%) spent the day in negative territory. 

On the upside, the technology sector (+0.5%) fueled much of the session-long rebound as top components rallied. Apple (AAPL 496.04, +3.23), Google (GOOG 876.11, +4.12), and Microsoft (MSFT 34.45, +0.32) settled with gains between 0.5% and 0.9%. Netflix (NFLX 324.36, +23.51) also displayed strength, surging 7.8% after reports indicated the company is exploring making its service available through cable set-top boxes. In addition, the company said it entered into a production deal with Sony (SNE 19.93, -0.03). 

The outperformance of tech shares helped the Nasdaq end ahead of the broader market. The index also drew strength from biotechnology as the iShares Nasdaq Biotechnology ETF (IBB 202.30, +1.52) ended higher by 0.8% after weighing on the tech-heavy index in early going. 

Elsewhere, the energy sector (+0.6%) displayed relative strength as crude oil added 0.2% to $102.22 per barrel. Meanwhile, other commodities also posted gains. Gold futures rose 0.3% to $1272.50 per troy ounce and copper futures climbed 0.9% to $3.30 per pound. 

The Treasury market was closed for Columbus Day, and the holiday had a visible impact on trading volume as only 575 million shares changed hands on the floor of the New York Stock Exchange. 

Tomorrow, the October Empire Manufacturing Survey will be released at 8:30 ET.

Commodities

Closing Commodities: Crude Oil Rises 0.4%, Ending Above $102/Barrel

·         Nov crude oil erased earlier losses as it pushed into positive territory heading into afternoon pit trade. It touched a session high of 102.62 per barrel after trading as low as $101.06 per barrel in early morning floor action. The energy component eventually settled with a 0.4% gain at $102.39 per barrel

·         Nov natural gas brushed a session low of $3.76 per MMBtu after pulling back from its session high of $3.84 per MMBtu. However, it quickly recovered back into positive territory and settled at $3.82 per MMBtu, or 1.3% higher

·         Precious metals traded higher today as the dollar index chopped around in negative territory

·         Dec gold touched a session high of $1287.40 per ounce but pulled back slightly in afternoon pit action and settled at $1276.60 per ounce, booking a 0.6% gain

·         Dec silver trended lower after touching a session high of $21.67 per ounce in early morning pit trade. It settled with a 0.5% gain at $21.35 per ounce

 NYMEX Energy Closing Prices

  Nov crude oil rose $0.45 to $102.39/barrel 

·         Crude oil erased earlier losses after trading as low as $101.06 in early morning floor action. The energy component pushed into positive territory as it headed into afternoon pit trade and touched a session high of $102.62. It eventually settled with a 0.4% gain. 

  Nov natural gas rose 5 cents to $3.82/MMBtu 

·         Natural gas pulled back from its session high of $3.84 to a session low of $3.76. However, it quickly recovered back into positive territory and settled 1.3% higher. 

  Nov heating oil settled unchanged at $3.03/gallon 

  Nov RBOB gasoline rose 1 cent to $2.67/gallon

CBOT Agriculture and Ethanol/ICE Sugar Closing Prices

·         Dec corn rose 4 cents to $4.37/bushel 

·         Dec wheat settled unchanged at $6.92/bushel 

·         Nov soybeans rose 5 cents to $12.72/bushel 

·         Nov ethanol rose 2 cents to $1.74/gallon 

·         Jan sugar (#16 (U.S.)) rose 0.10 of a penny to 21.98 cents/lbs

COMEX Metals Closing Prices

  Dec gold rose $8.20 to $1276.60/ounce 

·         Gold traded higher today as the dollar index chopped around in negative territory. The yellow metal touched a session high of $1287.40 but pulled back slightly in afternoon pit action. It eventually settled with a 0.6% gain. 

  Dec silver rose $0.10 to $21.35/ounce 

·         Silver also traded in positive territory. It trended lower after touching a session high of $21.67 in early morning pit trade and settled with a 0.5% gain. 

  Dec copper rose 3 cents to $3.30/lbs

Treasuries

Treasuries is closed in observance of Columbus Day

Next Day In View 

Economic Commentary

Economic Summary: No US data today; Markets fall as negotiations continue on Government shutdown; Bernanke to speak tonight at 20:00
Fed/Treasury Events Summary:

·         This morning's weakness follows a weekend that failed to result in any substantial progress out of Washington. The White House rejected the offer for a six-week delay for the debt ceiling and new budget talks to reopen the government. Also the Senate voted down a plan by 53-45 by which the debt ceiling would be raised until 2014, with no strings attached. The latest reports indicate Senate majority leader Harry Reid had a productive conversation with Republican McConnel and is optimistic on a settlement on both the debt limit and government funding. 

·         Joe Manchin (D-WI) has indicated that the Senate is 70-80% close to a deal to end shutdown.

Upcoming Economic Data:

·         October Empire Manufacturing due out Tuesday at 8:30 (Briefing.com consensus of 4.5; September was 6.3%)

Upcoming Fed/Treasury Events:

·         Fed Chairman Ben Bernanke to speak Today at 20:00 in Mexico.

·         NY Fed President Bill Dudley (voting FOMC member, typically dovish) to speak tomorrow at 10:00

·         San Francisco Fed President John Williams (not a voting FOMC member, typically moderate) to speak tomorrow at 11:00

·         Dallas Fed President Richard Fisher (not a voting FOMC member this year, 2014 voter, hawkish) to speak tomorrow at 19:15

Other International Events of Interest

·         China reported a trade surplus of $15.20 billion ($27.70 billion expected, $28.61 billion previous) as imports expanded 7.4% year-over-year (7.0% forecast, 7.0% prior) while exports slipped 0.3% year-over-year (6.0% consensus, 7.2% previous). Separately, CPI rose 0.8% month-over-month (0.5% expected, 0.5% last) while the year-over-year reading climbed 3.1% (2.9% forecast, 2.6% prior). Also of note, PPI fell 1.3% year-over-year (-1.4% expected, -1.6% last). 

On other news.... 

Currencies 



Earnings

Notable earnings out tomorrow morning

·         Citigroup (C) is set to report earnings tomorrow morning at 8am ET with a conference call to follow at 11am. Current Capital IQ consensus sits at $1.09 with revenues expected to come in at approx $18.80 bln. So far banking results for Q3 have fallen short of expectations with WFC and JPM both posting rather pedestrian figures last Friday. This has raised concern over the performance of other banks in the industry. Adding to the concern for C was a cautious Financial Times story on September 20 that warned the bank could see a big decline in Q3 trading revenue due to uncertainty over both tapering and the government shut down. These headwinds face the bank as it continues to try and bounce back from the devastating financial crisis that began in 2007 and still impacts global economies.

·         Coca-Cola (KO) is expected to report Q3 EPS of $0.54 (vs. $0.51 last year) on revenue of $12.06 bln (-2%). The stock is down 8% since reporting Q2 results (and 12% from a 15 year high in May). KO reported Q2 EPS in-line but missed revenue consensus by 2%. Volume was up 1%, growth was 1% in the Americas and just 2% in the International segment; KO cited macro weakness and unfavorable weather. Recent weakness in the dollar provides a tailwind. 

·         Johnson & Johnson (JNJ) is expected to report Q3 EPS of $1.32 (vs. $1.25 last year) on rev of $17.41 bln (+2%). Co has guided for FY13 EPS of $5.40-5.47. The stock hit an all-time high above $94/share in early August but has mostly traded in a range between $86-90/share over the last few months.

Jason's Commentaries


Market went up for the 4th day straight, in speculation that the White house is finally talking and will be likely to come up with a solution for the debt ceiling. Healthcare and Energy are the main leaders of the market last night. Volumes were terribly weak as the market has already priced in the White House's decision. As for 15 Oct AMC, the White house has not announced any change to the policies. Citi, Coke and Johnson&Johnson announced their earnings. Citi did not do very well and is likely to drag the financials down. On the technical side, we're having some upside to go. However, the Nasdaq Composite has reached its all time high once again. If the Nasdaq breaks the high again, we're likely to enter another high. But keep in mind the tapering talk, it is likely to come after the debt ceiling talk which will gyrate the market once again.

Market Call: FLAT to downside

Date: 15 Oct 2013