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phil
March 28th, 2014 at 7:11 am

Good morning!  

Futures up 0.25-0.50 – I told you we'd get that flatline one way or the other…

Oil shot up to $101.88 and, even though it's Friday, I still like taking a stab at a $102 short on /CL but has to be very tight stops over that line.  Silly us, we forgot to play gasoline (/RB) bullish yesterday (works most Thursdays) and they popped .05 without us.  Nat gas was rejected at $4.57, back to $4.51.  Gold $1,298, silver $19.81 and copper all the way up to $3.35 with the Dollar at 80.38

Nikkei likes a stronger Dollar and tested 14,800, now 14,780 (they have window-dressing in Japan too).  Gosh, wouldn't it be great if we somehow had a time machine and we could go back 48 hours and see what the Nikkei was going to do?  

Submitted on 2014/03/26 at 9:50 am

Nikkei/Eric – They are happy the Dollar is back up (80.27) and that means not a good short at the moment.  Over 14,500 has very little resistance up to 14,800 so not a good spot to short and maybe a good long, actually, but my heart isn't in longs at the moment. 

As I said yesterday, this isn't hard stuff to predict when we're in a Bot-driven market.  NOW /NKD is worth a short here with a very tight stop over 14,800.

The actual Nikkei only finished at 14,700 but we got a bonus 100 points as Abe talked about MORE STIMULUS.  Yep, I'm not kidding, MORE FREE MONEY!!!  Let's remember our grand premise that Japan is about to raise the National Sales Tax on Tuesday and there's a possibility that it will collapse Japan's Economy and possibly the entire Global market – so, worth a short, right?  

Japan Is Taxing Itself Into Trouble. On April 1, Japan's national sales tax will rise to 8 percent from 5 percent. Unless wages rise by an equal amount, the effect will be a drop in consumer spending. Japanese automakers anticipate a sales decline of as much as 16 percent during the next 12 months. Even if this isn't enough to push the economy into recession, raising the sales tax is a bad move that will undermine Prime Minister Shinzo Abe's agenda for the world's third-largest economy.



Japan Inflation Unchanged in February Before Sales-Tax Rise. Japan’s inflation rate matched forecasts in February ahead of a sales-tax increase next week that could challenge the Bank of Japan’s effort to stoke 2 percent price gains. Consumer prices excluding fresh food rose 1.3 percent from a year earlier, the statistics bureau said today in Tokyo, matching the median estimate of 30 economists surveyed by Bloomberg News on the BOJ’s key inflation gauge. Household spending fell for the first time in six months and retail sales slowed, while the jobless rate dropped to 3.6%, other data released today show.

BOJ Tankan Likely to Show Gain in Business Sentiment


A surge in last-minute demand before an April 1 increase in the sales tax could cheer businesses, if only briefly.

Yen Bears Take Bets Off Table

JPY Confounded As Abe Cornered By Inflation/Spending Dilemma

Hang Seng was up 1% but the Shanghai fell 1% into the close, which ruined their 0.5% gain and they finished the day down 0.25%.  India was up half a point and Singapore up 0.25% so a constructive day in Asia, overall. 

Asian Stocks Swing. Asian stocks swung between gains and losses, with the regional benchmark heading for its biggest weekly increase since September. Telecommunication shares led declines while banks and brokerages led gains. The MSCI Asia Pacific Index fell 0.1 percent to 135.93 as of 9:32 a.m. in Tokyo after rising less than 0.1 percent.

China’s Developers Face Shakeout as Easy Money Ends: Mortgages. The collapse of a Chinese developer in a city south of Shanghai foreshadows a shakeout among the nation’s almost 90,000 real estate companies as the government reins in credit and the housing market slows. Zhejiang Xingrun Real Estate Co., a closely held developer based in Fenghua, is insolvent, with 3.5 billion yuan ($562 million) of debt. Its residential projects have been halted and authorities have detained its largest shareholder and his son, according to the city’s government.

Unprecedented Surge In Chinese Applicants Willing To Buy US Green Cards

Money moves from U.S. momentum names to Brazil

• A sharp boost in the central bank's inflation forecast – suggesting the rate hike cycle will continue – isn't enough to halt the big rally in Brazilian stocks, with the Bovespa's 3.2% gain today putting the index higher by nearly 15% over the last two weeks.
• The central bank now sees inflation of 6.1% this year, 50 basis points higher than its previous estimate. The 2015 inflation forecast is lifted to 5.5% from 5.4%. Both guesses are well above the 4.5% inflation target. The benchmark Selic rate has been raised 350 bps since April to 10.75%, and watchers are calling for another 25-50 bps next week and maybe another boost in May.
• EWZ +4.4%

Petrobras, Brazilian stocks rally on Rousseff's woes

• What S&P downgrade? Brazil equities so far have shrugged it off and are extending gains today, apparently driven by a new poll that shows Pres. Rousseff‘s approval rating fell for the first time since street protests last year and raising the prospect of a change in governmentlater this year.
• "There is so much uncertainty in the region with a lot of election or political clout that the market is not discriminating between good and bad companies," says a portfolio manager for the JPMorgan Latin America Fund.
• PBR +8.1%, EBR +6.7%, SID +6.2%, GGB +4.1%, BDORY +8.3%.

Europe is up 0.5% to 1% in the first two hours but it was all an early surge as windows are being dressed over there.   Draghi has had some success talking down the Euro and Putin is doing his share to make the whole continent look unsafe as troops are massing at the Ukraine border. 

• Russian Border Buildup Stokes Worries
  

  Russian troops massing near Ukraine are actively concealing their positions and establishing supply lines that could be used in a prolonged deployment, ratcheting up U.S. concerns.

  • Congress Takes Action
  • Live Updates

Ukrainian Bailout to Test Cabinet's Mettle Amid Threats. An hour after Ukraine’s lawmakers yesterday passed the laws needed to unlock a $27 billion international lifeline, protesters chanting “Revolution!” gathered by parliament, forcing deputies to evacuate. The demonstration, sparked by one of the nationalist Pravyi Sektor group’s leaders being killed in a firefight with police this week, shows the extent of the challenges Ukraine new leaders must overcome to keep the bailout money flowing.

Crimea Resolution Backed by U.S. Barely Gets UN Majority. Ukraine and its backers won support from little more than half the members of the United Nations General Assembly to declare invalid Crimea’s referendum to secede, as Russia wielded diplomatic and economic pressure for members to abstain or cast no ballot. The 193-member General Assembly voted 100-11 today to pass a nonbinding resolution describing the Crimean referendum as “having no validity” and calling on all states and agencies to not recognize “any alteration of the status” of Crimea. Fifty-eight members abstained, and 24 were absent.

Windfall for hedge funds and Russian banks as IMF rescues Ukraine. Ukraine’s premier said his country was “on the edge of economic and financial bankruptcy”, but will comply with demands for drastic austerity.

 

Noonan: Mr. Putin's Revealing Speech. At the Kremlin, he makes the case for an increasingly aggressive Russia.

Russia May Sell China Its New Advanced Submarines

Russia Set To Sanction US Businesses

Turkey Blocks YouTube, Media Ahead of Vote


The Turkish government blocked YouTube and restricted local media, drawing international outrage days ahead of critical local elections seen as a referendum on Prime Minister Recep Tayyip Erdogan's rule.

Remember these guys?  UN: 400,000 Displaced This Year in Iraq Violence. The United Nations envoy to Iraq says about 400,000 people have been displaced this year by ongoing violence in western Iraq, and the U.N. Security Council is expressing "grave concern" about recent developments particularly in Ramadi and Fallujah.

Our Futures are well summed-up here:

Futures again point to higher open; will it hold

• Stocks look set to open with gains yet again, although reversals of early action have been the norm of late. S&P 500 (SPY) futures +0.3%, Nasdaq 100 (QQQ) +0.4%.
• There's a rally underway in Europe, led by 1%+ gains in Italy and Spain, and Asia was mostly higher overnight, though Shanghai lost 0.2%.
• The 10-year Treasury yield is higher by two basis points to 2.7% and gold is flat at $1,296 per ounce.
• Japan +0.50%.
• Hong Kong +1.06%.
• China -0.24%.
• India +0.56%.
• London +0.52%.
• Paris +0.34%.
• Frankfurt +0.88%.

Friday's economic calendar

• 8:30 AM Personal Income and Outlays
• 9:55 AM Reuters/UofM Consumer Sentiment
• 1:15 PM Fed's George: Economic Outlook
• 3:00 PM USDA Ag. Prices

Fed rejection a shock to Citi

• "Surprise would be an understatement," says one Citigroup (C -5.5%) executive when the top brass learned – 24 hours ahead of the markets – of the Fed rejecting the bank's capital return plan. Traveling on business in Korea, CEO Michael Corbat – who was on the conference call when the Fed relayed its decision – cut his trip short to get back to NYC for a board meeting. Following the meeting, he sat down with FRBNY boss Bill Dudley.
• "It's too early … why are you returning capital when you need it," is the message the Fed is trying to get across, according to a source, who adds the central bank looks like it wants Citi to continue selling off noncore operations.
• Will heads roll? “Since becoming CEO, I have spoken with many of you about the need to hold ourselves accountable for what takes place at our firm," said Corbat in a staff memo today. "I am accountable for getting this right.”

Mortgage suit against Goldman moves forward

• Goldman Sachs (GS) must face a proposed class-action suit over MBS first launched by Detroit's police and fire retirement system in 2010, rules a federal judge. The lawsuit is among thousands faced by Goldman and other banks over the collapse in the prices of these securities during the housing bust.
• In this case, U.S. District Judge Miriam Cedarbaum said offering documents for the securities were "affirmatively misleading" and denied Goldman's dismissal request.

U.S. high-frequency trading ban unlikely -Nasdaq. U.S. regulators are unlikely to put rules in place that would harm high-frequency trading (HFT) as doing so would make trading more difficult and expensive for all investors, Robert Greifeld, chief executive officer of Nasdaq OMX Group said onThursday. ?

Bitcoin sells off on fears of Chinese crackdown

• Bitcoin (BITCN, BTCS) prices are down more than 8% following Chinese media reports stating China's central bank (the PBOC) has ordered state-owned banks to stop transacting with businesses that make use of the cryptocurrency. Coinbase is currently showing a bid-ask spread of $518.59-$522.26.
• The reports haven't been independently confirmed. The CEO of local Bitcoin trading site BTC China says the order (if it exists) would prevent clients from depositing funds via their bank accounts. He adds the PBOC might not make a formal announcement, but simply enforce the ruling via direct channels with banks.
• This month has already seen the PBOC take a harder line on online/mobile payment services, such as those offered by Internet giants Alibaba and Tencent. In December, the PBOC barred financial institutions from giving Bitcoin pricing, buying/selling the currency, and insuring Bitcoin-linked products. The move was seen as an attempt to more tightly regulate the yuan.

REPORT: Wal-Mart Suing Visa For $5 Billion Over Unreasonably High Fees

BP raises estimate of Lake Michigan oil spill

• BP raises its estimate of how much crude oil spilled into Lake Michigan during a malfunction at its Whiting refinery in Indiana to between 15 and 39 barrels of oil, or 630-1,638 gallons; the new figure is up from BP's initial estimate that 9-18 barrels entered the lake (earlier).
• BP says its crews have recovered "the vast majority" of oil visible along the shoreline.
• The two U.S. Senators from Illinois are requesting a meeting with BP, saying the spill "raises questions about the long-term safety and reliability of BP's new, expanded production" at Whiting.

CEO Newman indicates Transocean dividend is safe

• Transocean's (RIG) Steve Newman appears to see the proposed $3/share dividend as astrong commitment, Citigroup analyst Robin Shoemaker says, based on the CEO's comments at a recent investor conference.
• Newman indicated there are several levers RIG could pull to maintain its growth and its dividend through the current challenging phase of the business cycle.
• The CEO also described actions RIG is taking to boost performance and financial flexibility to fund its dividend while carrying out its fleet renewal strategy, including the sale or spinoff of non-core assets such as older floaters and its plan to boost margins by $500M by year-end 2015 through higher revenue efficiency and operating cost reductions.

U.S. shouldn't bail our Europe with natural gas, Dow Chemical says

• As U.S. lawmakers consider allowing more liquefied natural gas exports to help reduce Europe's dependency on Russia as an energy provider, Dow Chemical (DOW) says too bad; if Europe wants to reduce its need for Russian natural gas, it can – and should – produce the gas on its own.
• "Europe has the resources and the capability to provide for its own energy needs," says a top DOW exec. "Just because they rejected nuclear energy and horizontal drilling and left themselves at the mercy of others shouldn’t create an obligation for us to bail them out."
• Chemical companies and many manufacturers oppose the rush for more LNG exports, having benefited from cheap natural gas prices since the fuel is a key ingredient for petrochemicals used in making plastics and other components of manufacturing.

Alcoa +6% as LME warehouse reforms in doubt after court ruling

• Alcoa (AA +6.1%) shares are surging after a U.K. court ruling that for now nixes a planned overhaul of warehouse operations by the London Metal Exchange.
• The High Court in London ruled in favor of Russian aluminum producer Rusal, which fears prices of its products will suffer from the LME's efforts, that the consultation process had been unfair.
• LME reforms designed to make owners of warehouses in the exchange's global network deliver metal more quickly to consumers had been due to take effect April 1.
• ETFs: JJU, FOIL.

We're not the only country whose court system is sponsored by Corporations!  U.K. court ruling against LME a boon to CME

• The CME gets an unexpected windfall just ahead of the launch of its challenge to the LME's dominant aluminum contract, after a U.K. court halts sweeping reforms planned by the LME. London's High Court ruled in favor of Rusal, which feared prices of its products would suffer from LME's efforts to make owners of warehouses deliver metal more quickly to consumers.
• Producers like Alcoa cheered the news (up 6% yesterday), but those gains may prove fleeting, say analysts, who believe the LME will find a way to mover forward with new rules.
• The big beneficiary may instead be the CME which is trying to convince players in the aluminum industry to move some of their business to its new aluminum contract. "There are still some question marks about liquidity, but if they wanted a perfect storm to attract some volume, then this provides it," says Barclays' analyst Nicholas Snowdon.

GE exec sees limited, niche market for fuel cells

• GE engineering chief Vlatko Vlatkovic says the company has studied fuel cell technology and sees only a limited, niche product: "It’s almost impossible to do a good fuel cell without platinum as a catalyst… Very little goes in, but if you scale it up, there’s not enough platinum in the world."
• Battery names were mostly higher in today's trade: FCEL +0.8%, PLUG +6.8%, BLDP +5%,ZBB -3.1%.

Valuation Expert Damodaran Thinks Tesla(TSLA) Is Worth Nearly Half Its Current Price

Caesars -5.8% AH on news of 7M-share offering

• At current levels, Caesars' (CZR) offering would yield gross proceeds of $139M. Underwriters will have a 1.05M-share overallotment option. (PR)
• The casino owner ended 2013 with over $3B in cash/investments, and a whopping $21.1B in debt.
• Earlier: Caesars closing Mississippi casino

GameStop(GME) shares fall as 2014 forecast disappoints. Video game retailer GameStop Corp on Thursday forecast full-year earnings below market expectations as it is yet to see an uptick in sagging video game software sales, despite robust hardware sales driven by the launches of Microsoft's Xbox One and Sony's PlayStation 4 consoles. 

BlackBerry beats by $0.46, misses on revenue

• BlackBerry (BBRY): Q4 EPS of -$0.08 beats by $0.46.
• Revenue of $976M (-63.6% Y/Y) misses by $134M.
• Shares +4.3% PM.
• Press Release

Amazon(AMZN) Plans Free Streaming Media Service. Website Said to Drop Strategy of Only Offering Video to Users of Its Prime Shipping Service.