28 Nov 2014 AMC - Marketing dragged down by Russells on Black Friday

28 Nov 2014 AMC - Marketing dragged down by Russells on Black Friday

Market Summary 

European Markets Closing Prices

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

·         UK's FTSE: 0.0%

·         Germany's DAX: + 0.1%

·         France's CAC: + 0.2%

·         Spain's IBEX: + 0.4%

·         Portugal's PSI: -2.1%

·         Italy's MIB Index: -0.4%

·         Irish Ovrl Index: + 0.2%

·         Greece ASE General Index: + 1.3%

Before Market Opens 

S&P futures vs fair value: -1.90. Nasdaq futures vs fair value: +9.90.
The S&P 500 futures trade two points below fair value.

The major Asian indices ended mostly higher with China's Shanghai Composite (+2.0%) pacing the rally. According to the Wall Street Journal, China is preparing to launch a system for insuring bank deposits up to CNY500,000 

·         In economic data: 

o    Japan's National CPI eased to 2.9% from 3.2% year-over-year (expected 3.0%) while National Core CPI also came in at 2.9%, as expected. Tokyo CPI increased 2.1% year-over-year (consensus 2.3%; prior 2.5%) while Tokyo Core CPI came in at 2.4% (expected 2.3%; last 2.5%). Also of note, Industrial Production ticked up 0.2% month-over-month (expected -0.4%; last 2.9%), Retail Sales rose 1.4% year-over-year (consensus 1.5%; last 2.3%), and Household Spending fell 4.0% year-over-year (expected -4.8%; previous -5.6%), and the Unemployment Rate eased to 3.5% from 3.6% (expected 3.6%) 

o    South Korea's Industrial Production fell 1.6% month-over-month (consensus 0.8%; last 0.0%) 

o    Australia's Private Sector Credit rose 0.6% month-over-month (expected 0.5%; previous 0.5%) 

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·         Japan's Nikkei rose 1.2% with exporters showing strength. Olympus, Konica Minolta, and Sony gained between 4.0% and 4.5%. 

·         Hong Kong's Hang Seng shed 0.1%. Energy names kept a lid on the index with CNOOC, PetroChina, and Kunlun Energy down between 3.1% and 5.5%. Bank of Communications outperformed, surging 6.5%. 

·         China's Shanghai Composite advanced 2.0% with help from financials. China Everbright Bank and China CITIC Bank Corp both surged the limit, 10.0% 

Major European indices trade lower with Italy's MIB (-0.6%) leading the decline. Italian debt has been in demand following a spike in the Unemployment Rate. The country's benchmark yield is lower by three basis points at 2.04% while Spain's 10-yr is holding its ground at 1.90%. 

·         Economic data was plentiful: 

o    Eurozone CPI rose 0.3% year-over-year while Core CPI climbed 0.7%. Both figures matched expectations. The Unemployment Rate held at 11.5%, as expected 

o    Germany's Retail Sales rose 1.9% month-over-month (expected 1.7%; last -2.8%) 

o    Great Britain's Nationwide HPI rose 8.5% year-over-year (expected 8.6%; previous 9.0%) 

o    French Consumer Spending fell 0.9% month-over-month (expected 0.2%; prior -0.5%) while PPI slipped 0.2% month-over-month (consensus 0.0%; last 0.5%) 

o    Italy's CPI ticked down 0.2% month-over-month (expected -0.3%; last 0.1%) while the year-over-year reading inched up 0.2% (consensus 0.0%; previous 0.1%). Separately, PPI slipped 0.4% month-over-month (prior 0.0%) and the monthly Unemployment Rate rose to 13.2% from 12.9% (consensus 12.6%) 

o    Spain's Retail Sales rose 1.0% year-over-year (expected 2.0%; prior 0.8%) and the Current Account surplus narrowed to EUR440 million from EUR1.29 billion 

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·         Great Britain's FTSE is lower by 0.2% with energy names facing broad pressure. BG Group, Tullow Oil, and BP are down between 2.5% and 7.4%. Consumer names outperform with Kingfisher and Marks & Spencer group up 2.8% and 1.3%, respectively 

·         In France, the CAC has given up 0.3%. Energy names also lag with Total and Technip both down near 3.0% while Gemalto leads with a gain of 1.0% 

·         Germany's DAX trades down 0.2%. Conglomerates BASF and Siemens weigh with respective losses of 1.9% and 1.6% while Deutsche Lufthansa outperforms. The airline has jumped 3.4% 

·         Italy's MIB underperforms with a loss of 0.6%. Saipem is the weakest performer, down 4.9% while many financials also trade in the red. BMPS, Mediobanca, UBI Banca, and Unicredit are down between 0.7% and 1.2%

U.S. Equities

·         Equity futures suggest small gains at the open despite the mostly disappointing data

·         Volumes are expected to dissipate over the course of the session as traders ready for Thanksgiving Day

·         MBA Mortgage Index (-4.3%)

·         Initial Claims (313K actual v. 288K expected)

·         Continuing Claims (2316K actual v. 2348K expected)

·         Durable Orders (0.4% actual v. -0.6% expected)

·         Durable Orders-ex trans (-0.9% actual v. 0.5% expected)

·         Personal Income (0.2% actual v. 0.4% expected)

·         Personal Spending (0.2% actual v. 0.3% expected)

·         PCE Prices - Core (0.2% actual v. 0.1% expected)

o    S&P Futures unch @ 2068

o    Dow Futures -7 @ 17,801

o    Nasdaq Futures +11 @ 4293

Asia

·         Markets gained across much of Asia

·         Traders had to grapple with mixed comments out of Japan as BOJ member Shirai suggested even more must be done to reach the central bank's 2% inflation target and Fin Min Sakakibara, aka Mr. Yen, stated the depreciation of the currency is near its end

·         Data out of Australia remained weak as construction work done (-2.2% QoQ actual v. -1.7% QoQ expected) was the latest reading to miss estimates

·         Japan's Nikkei (-0.1%) held near seven-year highs 

·         Hong Kong's Hang Seng (+1.1%) climbed to a two-month high

·         China's Shanghai Composite (+1.4%) rallied to a three-year high

·         India's Sensex (+0.2%) finished just shy of all-time highs

·         Australia's ASX (+1.2%) reclaimed the 50 dma as action continued to run off one-month lows 

Market Internals

Market Internals -Technical-
The Nasdaq closed up 4 (+0.09%) at 4792, the Dow closed down flat at 17828, and the S&P 500 closed down 5 (-0.25%) at 2068. Action came on below average volume (NYSE 635 mln vs. avg. of 805; NASDAQ 916 mln vs. avg. of 1822), with decliners outpacing advancers (NYSE 1210/1918, NASDAQ 897/1794) and new highs outpacing new lows (NYSE 320/166, NASDAQ 179/89).

Relative Strength: 
Volatility-VXX +2.62%, Retail-RTH +1.44%, Turkey-TUR +1.37%, Consumer Staples-XLP +1.27%, Consumer Discretionary-XLY +1.21%, Egypt-EGPT +1.17%, Utilities-XLU +1.05%, Netherlands-EWN +0.69%, Spain-EWP +0.21%, Israel-EIS +0.02%.

Relative Weakness: 
Oil and Gas Exploration-XOP -12.62%, Junior Gold Miners-GDXJ -11.95%, Silver Miners-SIL -9.24%, Oil Services-OIH -8.91%, Oil-USO -8.32%, Columbia Index-GXG -6.54%, Russia-RSX -5.51%, Eastern Europe-ESR -4.18%, South Africa-EZA -3.56%, Malaysia-EWM -3.38%.

Leaders and Laggards

 

Technical Updates

Commentaries 

Closing Market Summary: Gobble Gobble, Stocks Wobble
The stock market endured some post-Thanksgiving indigestion brought on by severe weakness in the energy sector (-6.4%). The S&P 500 (-0.3%) ended at its lowest point of the day while the Nasdaq (+0.1%) eked out a slim gain thanks to the absence of energy stocks within the tech-heavy index. 

Equities began the Black Friday session with investors paying more attention to the oil pits than mall parking lots as black gold was taking a beating. This morning, crude oil was trading near $69.00/bbl after yesterday's OPEC decision to maintain output at 30 million barrels per day. That represented a 6.0% loss, which led to comparable weakness in the energy sector. 

Despite the plunge in energy, the market was able to recover with help from health care (+0.6%), technology (+0.5%), and the two consumer sectors (discretionary +1.2%; staples +1.3%), both of which benefited from strength among retailers. Dow component Wal-Mart (WMT 87.54, +2.56) spiked 3.0% after more than 22 million customers visited Wal-Mart stores on Thursday, suggesting a strong start to the holiday shopping season. The broader SPDR S&P Retail ETF (XRT 94.31, +0.84) advanced 0.9%. 

However, as the session neared the end, the focus shifted to the oil pits once again where crude dropped below yesterday's low to $67.28/bbl, representing an 8.7% decline. 

In turn, the slide in crude pressured the energy sector, and the broader market, to a fresh low for the day. Major sector components took a beating with BP (BP 39.32, -2.27), Chevron (CVX 108.87, -6.24), ExxonMobil (XOM 90.54, -3.94), and Halliburton (HAL 42.20, -5.14) sinking between 4.2% and 10.9%. 

Elsewhere, the materials sector (-2.3%) could not escape the overall weakness among commodities. Copper tumbled 3.7% to $2.847/lb while gold fell 2.5% to $1.167.80/ozt. Last, but not least, silver cratered 7.0% to $15.44/ozt. Miners and steelmakers felt the weight with Market Vectors Steel ETF (SLX 39.50, -1.42) and Market Vectors Gold Miners ETF (GDX 18.36, -1.74) plunging 3.5% and 8.7%, respectively. 

Making matters worse for commodities was the strengthening dollar, evidenced by a 0.5% advance in the Dollar Index (88.41, +0.39). 

The commodity weakness also pressured some components of the industrial sector (-0.8%) like Caterpillar (CAT 100.60, -5.19), which fell 4.9%. However, the sector was able to avoid larger losses thanks to a flat finish from the Dow Jones Transportation Average. Still, the bellwether surrendered its intraday gain after a tug-of-war between railroad stocks and airlines. Rail carriers, who benefit from higher oil prices, tumbled with CSX (CSX 36.49, -1.42), Norfolk Southern (NSC 111.67, -5.53), and Union Pacific (UNP 116.81, -6.00) falling between 3.8% and 4.9%. In turn, air carriers like Delta Air Lines (DAL 46.67, +2.43) and United Continental (UAL 61.23, +4.63) cheered lower fuel prices, soaring higher by 5.5% and 8.2%, respectively. 

When the dust settled, the major outage in the energy sector proved too much for the stock market to overcome. Furthermore, the inability of the sector to recover even a small portion of its losses, led to profit taking from areas that displayed strength. For instance, the iShares Nasdaq Biotechnology ETF (IBB 303.90, +0.03) ended flat after being up near 1.0% at the start. Meanwhile, small caps made new lows into the afternoon with the Russell 2000 ending lower by 1.5%. 

Treasuries benefited from the sloppy equity session with the 10-yr yield sliding five basis points to 2.18%. 

Participation was relatively heavy considering the abbreviated session. More than 635 million shares changed hands at the NYSE floor. 

Monday's data will be limited to the November ISM Index, which will be released at 10:00 ET (Briefing.com consensus 58.0). 

Commodities

Treasuries

Yields Press to One-Month Lows: 10Y: +11/32..2.172%..USD/JPY: 118.63..EUR/USD: 1.2442
The Week in Review

·         Treasuries gained every day this week, running their winning streak to six and pushing yields to one-month lows. Click here to see an intraweek yields chart.

·         Record low yields across Europe provided support, causing money to move into the higher yielding U.S. Treasuries.

·         Economic data was dismal as only GDP - Second Estimate (3.9% actual v. 3.2% expected) was the only notable data point of the week to outpace estimates. 

·         Consumer confidence (88.7 actual v. 96.0 expected), durable orders- ex transportation (-0.9% actual v. +0.5% expected), Chicago PMI (60.8 actual v. 63.0 expected), and new home sales (458K actual v. 470K expected) were among the notable misses. 

·         This week's auctions were mostly impressive.   

·         Monday's $28B 2Y note auction was strong. The auction drew 0.542% (WI 0.554%) and a strong 3.71x bid/cover. Indirect (35.8%) bids provided support as directs (16.2%) missed their 12-auction averages. 

·         Tuesday's $35B 5Y note auction was the best of the week. The auction drew 1.595% (WI 1.612%) and a superb 2.91x bid/cover. Indirect (65.0%) bids posted their best showing in 10 years while directs (9.9%) were a bit light. Primary dealers ended up with just 25.1% of the supply. 

·         Wednesday's 7Y note auction was in-line. The auction drew 1.960% (1.955%) and a 2.63x bid/cover. Indirect bidders (50.0%) provided support as directs (12.8%) were a bit light. Primary dealers were left with 37.2% of the supply. 

·         Up front, the 2Y slipped -3bp to 0.473%. The yield finished at its lowest levels of November, and is probing the lower end of the 0.500%/0.550% range that has been in place over the past month. 

·         In the belly, the 5Y shed -12bps to 1.492%. Action ended Friday's session at a one-month low and on minor support. 

·         The 10Y tumbled -15bps to 2.172%. The benchmark yield settled near its 50% retracement of the move off the October 15 lows. 

·         Buying at the long end dropped the 30Y -14bps to 2.893%. The yield on the long bond closed the week at its lowest level since October 15.

·         A flatter curve developed over the course of the week with the 2-10-yr spread tightening to 170bps.

The Week Ahead 

·         Monday's data is limited to ISM Index (10). NY's Dudley speaks at Baruch College (12:15) and Fed Vice Chair Stanley Fischer takes part in a panel about the "100th Anniversary of the Federal Reserve" (13). 

·         Tuesday will see construction spending (10) and auto/truck sales (14). Fed Vice Chair Stanley Fischer sits on a panel at the 2014 Wall Street CEO Council Annual Meeting (8:10). Fed Chair Janet Yellen makes opening remarks at the 2014 College Fed Challenge National Finals (8:30). Fed Governor Brainard opens the Economic Growth and Regulatory Paperwork Reduction Act Outreach Meeting (12). NY's Dudley appears at Lehman College (15:30).

·         Data picks up on Wednesday as MBA Mortgage Index (7), ADP Employment Change (8:15), productivity-rev., unit labor costs-rev. (8:30), ISM Services (10), and the Fed's Beige Book (14) are due out. Philly's Plosser gives his economic outlook (12:30). Fed Governor Brainard discusses "Financial Stability: a Conversation with Lael Brainard" (14). Dallas' Fisher talks on the economy and monetary policy (19:30). 

·         Thursday's data includes Challenger Job Cuts (7:30) and initial and continuing claims (8:30). Cleveland's Mester makes opening remarks at the 2014 Financial Stability Conference (8:30). Fed Governor Brainard duplicates his speech from the previous day (13:15). 

·         Friday's data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, unemployment rate, hourly earnings, average workweek, trade balance (8:30), factory orders (10), and consumer credit (15) are released.

On other news.... 




Currencies 








Weekly Analysis




Technical Updates

Briefing's Commentaries


Week in Review: Stocks Climb Into Thanksgiving 

The major averages kicked off the holiday-shortened week with an advance that was paced by the Russell 2000 (+1.2%). The small-cap index was followed by the Nasdaq Composite (+0.9%) while the Dow (+0.04%) and S&P 500 (+0.3%) ended closer to their flat lines. Stocks rallied out of the gate with upbeat action overseas contributing to the early strength. Equities in China and Hong Kong spiked in reaction to Friday's PBoC rate cut while European markets were boosted by increased expectations of a forthcoming sovereign QE program from the European Central Bank. To that point, Credit Suisse said it expects the ECB to announce plans for sovereign asset purchases in December. ECB member and German Bundesbank President Jens Weidmann pushed back against the easing expectations, reminding that monetary policy alone is unable to create growth and requires corresponding measures from the fiscal side. Despite Mr. Weidmann's comments, the market's expectation for more QE manifested itself through increased demand for Italian and Spanish debt. Italian and Spanish 10-yr yields both fell five basis points to their respective 2.15% and 1.97%. 

Equities ended the Tuesday session on a flat note. The S&P 500 shed 0.1% after spending the day in a ten-point range while the other indices also settled near their unchanged levels. Despite the flat finish, equity indices rallied at the start after the second revision to Q3 GDP surprised to the upside (3.9%; Briefing.com consensus 3.2%). However, the opening spike marked the session high for the S&P 500, which returned to unchanged by the end of the first hour. 

The key indices ended Wednesday near their best levels of the day with the Nasdaq Composite (+0.6%) finishing in the lead. The S&P 500 settled higher by 0.3% while the Dow Jones Industrial Average hovered near its flat line throughout the session. Meanwhile, the benchmark index spent the day in a slow and steady advance despite a heavy batch of disappointing economic data that was reported on Wednesday. The index did show some signs of defensive posturing as all four countercyclical sectors ended ahead of the market while cyclical sectors traded in mixed fashion. The telecom services sector (+1.2%) finished in the lead after trending higher throughout the day, but more notably, the heavily-weighted health care sector (+0.7%) posted a solid gain with help from biotechnology.

Next Week In View





Economic Commentaries





Jason's Commentaries

All the data in the DMA was messed up by the Thursday so pardon me for missing out some info here and there...

In a nut shell.... Friday was very volatile... after the OPEC meeting on Thursday, Oil sunk big time as OPEC are not willing to do anything to cut their production. Oil prices are expected to fall further, right now it's at $66 and hit a low on Monday at $63. With oil prices plunging, oil producing countries are likely to face a recession. Countries like Russia, and the middle east countries is gonna have a hard time adjusting their economy as Shale Gas starts getting popular. If anything at all, it might even trigger a world recession.

With Oil producing nations' economies threatened by the plunge in oil prices, China has been releasing terrible PMI data. As they have lowered their interest rate further, there might be limited tools the PBOC can do to prevent the inevitable. Trillions of dollars have been wasted in a 'misinvestment' in China's property market. If there is a massive default in the China, the banks are going to take a big hit. Prices of properties are dropping for months in China already and it seems to me that it's going to take out the highly leveraged individuals who bought into the properties hype.

Now looking back at US. The black Friday sale has dropped 11% compared to last year's Black Friday sale. If the Cyber Monday sales is good enough to save US today, we might still have the Santa Claus Rally. However, right now gold and silver are recovering from the sudden plung as the Swiss referendum rejects the proposals to boost gold reserves. Seems that there are a lot of Marcoeconomic volatility right now.

Seems that we might be having a volatile week again!

Market Call: FLAT to downside

Date: 1 Dec 2014