Today - Tuesday, June 30, 2015
- Corn acreage of 88.897M acres, according to the USDA, is lower than trade forecasts for 89.3M acres. June 1 stocks of 4.447M bushels vs. 4.555M forecast.
- Soybean stocks of 625M bushels vs. 670M expected. Acres of 85.139M vs. 85.171 expected.
- Wheat stocks of 753M bushels vs. 718M expected. Acres of 56.079M vs. 55.867M expected.
- Corn and beans are each up about 2% from flat before the report posted. Wheat is up marginally.
- ETFs: CORN, JJG, WEAT, SOYB, GRU, WEET
- Coal companies (KOL -0.8%) are surrendering much of the gains they enjoyed following yesterday's Supreme Court decision against the EPA's mercury emissions regulations, as the initial reaction may prove rosier than the actual benefit to the coal industry.
- The consensus is that the ruling might force the EPA to be less aggressive about its efforts to cut pollution but will not help coal overcome competition from gas and alternative energy; also, the oversupply of natural gas likely will continue to depress the price of gas and reduce coal sales.
- The ruling could prove too late to provide a reprieve for most of the utilities that already had spent the resources to retrofit or retire, Sterne Agee analysts say, but lower MATS compliance operating costs could help some PRB coal power plants compete more aggressively on the margin with gas-fired power plants.
- Citigroup notes the news has important implications for the Clean Power Plan proposal scheduled to be finalized mid-summer 2015, and views the ruling as a net positive for the U.S. thermal coal market and miners such as Peabody Energy (BTU -11.3%), Alliance Resource Partners (ARLP +1.5%),Alliance Holdings (AHGP -0.1%) and Foresight Energy (FELP +0.1%).
- Also: ACI -4.7%, ANR -6.9%, CLD -7%, WLB -2.9%, WLT -12.9%.
- The red-hot trend of currency-hedged ETFs gets hotter as iShares sets the roll out of another ten funds to add to its existing lineup of five.
- The iShares Currency Hedged MSCI United Kingdom ETF (HEWU), with expense ratio of 0.48%
- The iShares Currency Hedged MSCI Switzerland ETF (HEWL), with expense ratio of 0.51%
- The iShares Currency Hedged MSCI Spain ETF (HEWP), with expense ratio of 0.51%
- The iShares Currency Hedged MSCI South Korea ETF (HEWY), with expense ratio of 0.62&
- The iShares Currency Hedged MSCI Mexico ETF (HEWW), with expense ratio of 0.51%
- The iShares Currency Hedged MSCI Australia ETF (HAUD), with expense ratio of 0.51%
- The iShares Currency Hedged MSCI Canada ETF (HEWC), with expense ratio of 0.51%
- The iShares Currency Hedged MSCI ACWI ETF (HACW), with expense ratio of 0.36%
- The iShares Currency Hedged MSCI ACWI ex U.S. ETF (HAWX), with expense ratio of 0.36%
- The iShares Currency Hedged MSCI EAFE Small-Cap ETF (HSCZ), with expense ratio of 0.43%
- Hit hard in recent weeks as the Shanghai and Shenzhen exchanges posted bear market-caliber declines following a massive run-up, Chinese Web/mobile stocks are bouncing today (CQQQ +2.7%) after Beijing drafted rules allowing its state pension funds to invest up to 30% of their net asset value in equities, a move that could lead up to $97B to flow into stocks. Shanghai and Shenzhen respectively posted 5.5% and 4.8% overnight gains.
- Major gainers include Sky-mobi (MOBI +6.8%), Jumei (JMEI +5.8%), Baozun (BZUN +4.6%), LightInTheBox (LITB +4.9%), Autohome (ATHM +5%), iDreamSky (DSKY +3.9%), ChinaCache (CCIH +3.2%), SouFun (SFUN +3.6%), and Leju (LEJU +3.5%). The Nasdaq is up 0.4%.
- ETFs: KWEB, QQQC, EMQQ
- Up nearly 1% earlier, the Stoxx 50 (NYSEARCA:FEZ) has turned lower by 0.6% less than an hour before the close.
- The Stoxx 50 shed 4.25% yesterday, led by Italy's 5%+ decline.
- The Eurogroup has set 1ET as a time for a conference call, at which Greece's latest proposal will be discussed.
- Not too badly dinged yesterday, the U.K.'s (NYSEARCA:EWU) 1% loss is leading on the way down today. Germany (NYSEARCA:EWG) -0.6%, France (NYSEARCA:EWQ) -0.8%, Itay (NYSEARCA:EWI) -0.1%, Spain (NYSEARCA:EWP) -0.2%.
- Athens remains closed for business, but the Greek ETF (GREK +5.1%) and National Bank of Greece (NBG +9.4%) are up sharply.
- ETFs: VGK, FEZ, HEDJ, IEV, EPV, EZU, FEU, EEA, EURL, FEP, UPV, DBEU, ADRU, HEZU, FEEU, IEUR, FIEU, DBEZ, FEUZ, SBEU, HFEZ
- The Global X Funds Greece ETF (NYSEARCA:GREK) is up 3.3% premarket after yesterday's 19.4% drubbing, and National Bank of Greece (NYSE:NBG) is up 10% after yesterday's 24% decline.
- The country today will not make its $1.7B payment due to the IMF, thus officially going into "arrears." Urging the electorate to vote "no" to austerity measures on Sunday, PM Tsipras says Europe has no intention of kicking Greece out of EMU - the cost to the EU and ECB will be too high.
- U.S. stock index futures are up around 0.35% following yesterday's drubbing.
- Europe is roughly flat after it fell 4.25% on Monday.
- Shanghai got back on its bull overnight, gaining 5.5%. Hong Kong and the Tokyo moved higher as well.
- Treasury yields are flat, as are German, Italian, and Spanish yields.
- Gold is modestly lower, and oil slightly higher.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, UDPIX, OTPIX, RYARX
- Inflation in the eurozone eased in June, highlighting that the region remains vulnerable to deflation pressures.
- The eurozone consumer price index rose 0.2% in June from a year earlier, after rising 0.3% in May, while the core annual rate dropped to 0.8% from 0.9%.
- A pick-up in inflation last month had boosted hopes that price pressures were returning to the region after it tumbled into deflation earlier this year.
- Euro -0.4% to $1.1192.
- ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- Greece is just hours away from defaulting on a loan from the IMF, setting the stage for a tense showdown with international creditors ahead of a national referendum that will likely decide its eurozone membership.
- Reports earlier suggested European Commission President Jean-Claude Juncker made Athens a last minute offer, but Greek Prime Minister Alexis Tsipras doesn't appear to be picking up the phone.
- Markets across Asia bounced back today, while European indexes remained in negative territory. On Monday, about $1.5T was erased from the value of global equities, while the Dow dropped 350 points, to slip below its 200-day MA.
- FTSE 100 -0.6%; DAX -0.5%; CAC 40 -0.5%; Euro Stoxx 50 -0.2%
- ETFs: GREK
- Previously: Greece threatens to sue Europe (Jun. 29 2015)
- China is now taking an all-hands-on-deck approach to sooth the country's plunging stock market, after an unexpected weekend interest rate cut failed to right the ship.
- Late on Monday the finance and social security ministries published draft rules that would permit the state pension fund to invest up to 30% of its net asset value in securities, potentially allowing 600B yuan ($97B) to enter the market.
- Shanghai +5.6%
- ETFs: FXI, ASHR, EWH, CAF, YINN, KWEB, PGJ, GXC, FXP, HAO, YANG, TAO, CHIX, CHN, PEK, CHIQ, CQQQ, MCHI, TDF, QQQC, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CHNA, CNXT, CHII, ECNS, CHIE, EWHS, CHIM, KBA, KFYP, FCHI, JFC, FHK, AFTY, CHAU
Monday, June 29, 2015
- For some big U.S. power companies, the Supreme Court's rejection of EPA rules reducing air pollutants from coal-fired plants has arrived too late for them to turn away from a natural gas-fueled future.
- FirstEnergy (NYSE:FE) already has deactivated 5,429 MW of coal-fired generation and says it has no intention of placing any of it back on line, saying "deactivating power plants is an expensive process, and once they are deactivated it is difficult to restart them."
- Dynegy (NYSE:DYN) says it already spent $2B to comply with MATS and other air regulations, and NRG Energy (NYSE:NRG) says it already added the necessary equipment to comply with state and federal laws.
- Officials at other big power companies including American Electric Power (NYSE:AEP) and Duke Energy (NYSE:DUK) also say they will not change their ongoing MATS compliance activities.
- ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, SDP
- Investors may think they have things figured out by buying dollars amid macro jitters, but that strategy had to be faded today. The dollar (UUP -0.6%) closed lower across the board, including a 0.3% decline vs. the euro (NYSEARCA:FXE) after having been about 1.5% higher in knee-jerk action reaction to Greece last night.
- The dollar also lost 1.1% vs. the yen (NYSEARCA:FXY), 0.3% vs. the pound (NYSEARCA:FXB) and 0.6% vs the aussie (NYSEARCA:FXA).
- ETFs: UUP, UDN, FORX, USDU
- "The EU treaties make no provision for euro exit and we refuse to accept it," says Finance Minister Yanis Varoufakis. "Our membership is not negotiable ... The Greek government will make use of all our legal rights."
- His comments come as Europe's leaders threaten to force Greece out of EMU if citizens vote "no" in Sunday's referendum. Varoufakis says the country has enough money to keep going until Sunday, but capital controls and the bank closures are making things difficult.
- While European leaders express confidence Greece is "ring-fenced," British and U.S. authorities don't necessarily share those feelings.
- European Commission President Jean-Claude Juncker injects himself into Greece's internal politics, warning voters not to "commit suicide" with a "no" vote. He denies the troika is demanding pension cuts as part of a deal, a claim called a "preposterous lie" by one Greek official.
- Source: Ambrose Evans-Pritchard
- GREK is at session lows, down 20%. NBG -24%, [[CCHGY]] -3.7%
- In other news, S&P downgrades Greece from CCC to CCC-, putting the odds of a Grexit at 50%.
- "The risk-reward set-up was favorable," says Gundlach, who bought "lots of Treasurys and Ginnie Maes on Friday. He notes the 30-year U.S. T-Bond yield moved to a new high while the rest of the curve did not - exactly the opposite of what happened at the yield lows in January.
- ETFs: AGG, BND, BOND, PTY, RCS, DBL, BTZ, HTR, PCM, SCHZ, JHI, BHK, TAI, JMM, LAG, ICB, VBF, ARMF, FBND, PAI, SAGG, GBF, IUSB, VBND
- The May Prices Index for agricultural production, up 3.9% from the April index but 7.0% below the May 2014 index.
- The crop production index rose 1.1% M/M to 90, while the livestock index rose 5.2% to 122.
- Food grains -2.5% M/M and -23% Y/Y.
- Feed grains -3.2% M/M and -23% Y/Y.
- Oilseeds -1.3% M/M and -32% Y/Y.
- Fruits and nuts +6.3% M/M and +5.5% Y/Y.
- Other crop +5.8% M/M and -11% Y/Y.
- Related ETFs: DBA, RJA, DAG, JJA, RGRA, AGA, AGF, FUD, USAG, UAG, DIRT, TAGS, ADZ
- WTI crude oil is lower by 2.25% to $58.30 per barrel, roughly matching its lowest price since May.
- The move comes amid the panicky action in Europe, where the Stoxx 50 shed 4.25% after Greece closed its banks and stock market, and imposed capital controls. The U.S. averages are currently at session lows, all off in the area of 2%. USO -2.25%
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, TWTI, OLEM
- Among the sizable municipal bond funds, the $6.1B Oppenheimer Rochester Fund (MUTF:RMUNX) has exposure to the Commonwealth of about 20%, according to S&P Capital IQ's Todd Rosenbluth, and the Oppenheimer Rochester New Jersey Municipal Fund (MUTF:ONJAX) has about 29% exposure.
- Looking at ETFs, the $391M SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB -0.9%) holds 14% of its assets in Puerto Rico paper. The $1.5B Market Vectors High Yield Municipal Bond ETF (HYD -1.4%) has roughly 3.2% exposure.
- Previously: Puerto Rico banks slide on default worry (June 29)
- Previously: Bond insurers tumble as Puerto Rico heads to default (June 29)
- Solar stocks are among the top decliners on a morning the Nasdaq is down 1.4%, thanks to a global selloff in equities triggered by Greek news. The Guggenheim Solar ETF (TAN -4.1%) is now down 21% from an April peak of $50.00; it's still up 16% YTD, after having tumbled in 2H14.
- Major decliners include U.S. firms SolarCity (SCTY -4.9%), First Solar (FSLR -4.3%), SunPower (SPWR -4.2%), SunEdison (SUNE -5.1%), Vivint (VSLR -7%), and RGS Energy (RGSE -8.2%), Chinese firms JinkoSolar (JKS -7.4%), Yingli (YGE -6.4%), China Sunergy (CSUN -8.3%), ReneSola (SOL -5.5%), and Trina (TSL -5.4%), and Israeli inverter/power optimizer maker SolarEdge (SEDG -5%).
- Some news: 1) SunEdison and its TerraForm Power YieldCo have closed their $350M acquisition of Atlantic Power's 521MW wind plant portfolio. 2) SolarCity, vita its homebuilder partner program, has launched new energy storage and fixed-rate solar electricity pricing options in California (easily its largest market). The electricity, provided via 20-year deals, is said to feature a cost "equivalent to the lowest standard residential electricity rates of California's largest utilities." 3) SolarEdge is partnering with system provider Andalay on a solution that allows SolarEdge's optimizers to be quickly integrated with Andalay's solar modules.
- Last Thursday: Home solar installer/electricity provider Sunrun files for IPO
- Update: Also possibly hurting the group: A Supreme Court ruling blocking EPA regulations meant to limit emissions from coal power plants. The court ruled regulations need to take costs into account.
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