Seeking Alpha
  • Today - Wednesday, April 23, 2014

  • 4:36 AM
    • The Bank of England's Monetary Policy Committee voted unanimously, as expected, to keep interest rates at 0.5% and against more quantitative easing at a meeting earlier this month, the minutes of the meeting show.
    • Meanwhile, the U.K.'s Public Sector Net Borrowing dropped to £4.86B in March from £7B in February and was well below consensus of £9.1B. (PR)
    • ETFs: FXB, EWU, GBB, EWUS, FKU, DXPS, DBUK
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  • 4:17 AM
    • Eurozone flash manufacturing PMI has increased to 53.3 in April from 53 in March and topped consensus that was also 53.
    • Services has risen to a 34-month high of 53.1 from 52.2 and vs 52.4.
    • Composite output has climbed to a 35-month high of 54 from 53.1 and vs 53.1.
    • Manufacturing output has increased to 56.5 from 55.6.
    • The growth was led by Germany, while France stabilized.
    • The data indicates that eurozone GDP is on course to rise 0.5% in Q2 following 0.4% growth in Q1.
    • The bloc experienced a return to job creation, says Markit, suggesting that companies believe "that the recovery has legs and is looking increasingly sustainable." However, Markit warns of "growing fears that deflationary pressures are intensifying."
    • The euro rises further, having gained a boost from German PMI, and is +0.25% at $1.3839. (PR)
    • ETFs: FXE, VGK, EUO, FEZ, ERO, IEV, EU, EPV, EZU, HEDJ, DRR, FEU, FEP, UPV, EUFX, ULE, ADRU, FEEU, URR, EURL, EURZ, DBEU, FIEU
    | 1 Comment
  • 3:44 AM
    • German flash manufacturing PMI has increased to 54.2 in April from 53.7 in March and topped consensus of 54.
    • Services has risen to 55 from 53 and vs 53.4.
    • Manufacturing output has climbed to 58.8 from 57.
    • Composite output has grown to to 56.3 from 54.3.
    • "A combination of increased activity, rising new orders and further employment growth across both the manufacturing and service sectors suggest companies will remain in expansion mode during the coming months," says Markit. The data indicates that "the economy is set to build on the foundation of last quarter's solid growth."
    • However, Markit warns that price data points to an "increasing risk of deflationary pressures."
    • The DAX is flat after being lower earlier, while the euro has recovered from prior losses, particularly after French PMI data, and is +0.05% at $1.3814. (PR)
    • ETFs: EWG, BUND, EWGS, DBGR, GERJ, DXGE, BUNL, FGM, BUNT, GGOV, HEWG
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  • 3:16 AM
    • French flash manufacturing PMI has dropped to 50.9 in April from 52.1 in March and missed consensus of 51.9.
    • Services has fallen to 50.3 from 51.5 and vs 51.4.
    • Manufacturing output has declined to 51.6 from 53.3.
    • Composite output has slipped to 50.5 from 51.8.
    • The weaker rise in activity "reflected stalling new business, while staffing levels were cut at a sharper rate," says Markit, adding that companies reported hesitancy among clients. "The business climate looks set to remain frail."
    • The CAC 40 (EWQ) is -0.3%, while the euro dives a bit and is now flat at $1.3808. (PR)
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  • 2:31 AM
    • Australian CPI eased to +0.6% on quarter in Q1 from +0.8% in Q4 and came in below consensus that was also +0.8%.
    • On year, inflation rose to 2.9% from 2.7% but was below forecasts of 3.2%. The latest figure compares with the Reserve Bank of Australia's target of 2-3%.
    • Core CPI +0.5% on quarter vs +0.9% and +0.7%. On year, core inflation +2.6% vs +2.6% and +2.9%.
    • The low inflation could cool speculation that the Reserve Bank of Australia may raise interest rates from a record low of 2.5%, especially with house prices surging and amid the prospect of a looming building boom.
    • "The Reserve Bank can comfortably keep interest rates at exceptionally low levels over the near term," says economist Savanth Sebastian. "Whichever way you cut it, inflation is well and truly in check."
    • The S&P/ASX 200 is +0.7% and the AUD-USD is -0.9% at $0.9285. (PR)
    • ETFs: FXA, EWA, AUD, AUSE, CROC, AUNZ, KROO, EWAS, GDAY, FAUS
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  • 2:17 AM
    • HSBC Chinese flash manufacturing PMI has indicated contraction for a fourth consecutive month, although the gauge has edged up to 48.3 in April from 48 in March. Consensus was for 48.4.
    • "Domestic demand showed mild improvement and deflationary pressures eased," said HSBC, "but downside risks to growth are still evident as both new export orders and employment contracted."
    • HSBC believes that the Chinese government will add to its recent stimulus measures and that the People's Bank of China "will keep sufficient liquidity."
    • The Shanghai Composite is -0.5%. (PR)
    • ETFs: FXI, PGJ, GXC, FXP, YINN, KWEB, CYB, HAO, CNY, ASHR, CHIQ, DSUM, TAO, CHIX, YANG, CQQQ, MCHI, QQQC, PEK, XPP, YAO, CHXX, YXI, FXCH, CHXF, CHII, ECNS, CHIE, CHIM, FCA, KFYP, TCHI, CHLC, CHNA, KBA
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  • Tuesday, April 22, 2014

  • 5:15 PM
    • Some S&P energy stocks set new 52-week highs today, including Hess (HES), EQT and Baker Hughes (BHI), as the sector begins to catch up to the hype about the U.S. energy renaissance.
    • Analysts say oil and gas drillers are just starting to reap the benefits of an ancillary boom in energy-related technology and innovation; RBC Capital sees bullish prospects for rig companies, adding that drillers such as Helmerich & Payne (HP), Patterson-UTI (PTEN) and Nabors Industries (NBR) are best positioned to capitalize on the boom.
    • BofA/Merrill's Stephen Suttmeier offers a technical set-up, seeing energy poised for a breakout similar to Oct. 2010, when the sector moved above its 13-, 26- and 40-week relative moving averages and outperformed for another six months.
    • ETFs: XLE, ERX, OIH, VDE, ERY, FCG, XOP, DIG, DUG, GASL, FRAK, XES, IYE, IEO, IEZ, GASX, PXE, PXJ, PXI, PSCE, FENY, RYE, FXN, DDG
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  • 3:56 PM
    • Solar stocks are among the biggest winners (TAN +5.2%) on a good day for momentum stocks.
    • SunEdison (SUNE +11.6%) is leading the pack after David Einhorn disclosed he has added to the position he started in Q4, and predicted lower solar costs and rising electricity prices should make the company a "winner." Einhorn is less crazy about tech momentum plays in general.
    • Meanwhile, Canadian Solar is benefiting from a Japanese module deal, and SunPower (SPWR +6.5%) and SolarCity (SCTY +6.4%) are getting a lift from a Goldman note calling the companies its two best solar ideas. SunPower reports on Thursday.
    • Other notable gainers: YGE +7.9%. DQ +9.2%. JKS +7.4%. SOL +6.8%. HSOL +6.7%. ENPH +6.2%. JASO +4.5%.
    | 3 Comments
  • 3:54 PM
    • United Technologies (UTX +0.9%) CFO Greg Hayes says Q1's 19% Y/Y rise in orders for the company's Carrier heating and cooling systems - despite the harsh winter weather conditions - suggests growing strength in the U.S. housing market.
    • Hayes says Carrier's residential business historically has proven a reliable indicator about the state of the U.S. housing market; in 2007, Carrier's sliding sales foreshadowed the coming housing bust, but "here it is 2014 and it's going the other way, so we feel pretty good about the U.S. economy."
    • Sterne Agee likes what it saw in UTX's Q1 results, reiterating its Buy rating, while RBC Capital calls the quarter a good start on the way toward improved growth through the year.
    • Homebuilder ETFs: ITB, XHB
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  • 3:26 PM
    • "Our second tech bubble in 15 years," is how David Einhorn - writing in his investor letter - describes the current period. While shorting a number of high-fliers, Einhorn has limited those "dangerous" bets. “What is uncertain is how much further the bubble can expand, and what might pop it."
    • Greenlight Capital lost 1.5% in Q1, and shorts like Green Mountain and Chipotle haven't panned out. Greenlight Capital RE (GLRE) is off 7.5% YTD.
    • Earlier: Greenlight throws in the towel on Chipotle, goes long Conn's.
    • ETFs: QQQ, PSQ, TQQQ, QID, SQQQ, QLD, QQEW, QQQE, QQXT, TNDQ
    | 3 Comments
  • 2:57 PM
    • It may not be the peak, but it's a lot closer to the top than the bottom. Europe's lagging - compared to the U.S. - junk bond market is about to see a $11.6B sale by French cable company Numericable Group. It would be the largest junk-bond sale ever both in Europe and the States.
    • Numbericable is a subsidiary of Altice, which will be using the proceeds to fund its purchase of Vivendi's telecoms business SFR. The deal was originally supposed to consists of a €5.6B bank loan and a smaller offering, but the bank part has pulled back and the high-yield issuance grown.
    • ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, SJB, HYHG, IHY, ANGL, HYXU, PGHY, HYLS, UJB, XOVR, THHY, YPRO, SHYG, QLTC, IJNK, HYND, HYZD
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  • 2:51 PM
    • A "regime change" is at hand, argue two BAML technicians, with mega caps set to take over leadership of the market from small caps.
    • The iShares S&P 100 ETF (OEF) is up 1.3% YTD vs. the iShares Russell 2000 ETF (IWM) down 1.5%. Over both 5- and 10-year horizons, however, the small caps are comfortably ahead.
    • "Mega caps are set up for relative leadership while small caps are breaking relative support and set up for a loss of leadership," setting up a "regime change for the rally that began in late 2012 which was led by small caps and lagged by mega caps."
    • ETFs: IWM, TZA, TNA, UWM, VB, IJR, SLY, RWJ, URTY, SCHA, TWM, RWM, SRTY, OEF, DWAS, SAA, MGC, VTWO, XLG, SDD, VIOO, RSCO, JKJ, SBB, FYX, XSLV, EWRS, TWOK, IWL, SMLV, FMK, PXSC
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  • 1:34 PM
    • The odds of unsterilized large-scale asset purchases - i.e., LSAPs, i.e., QE - from the ECB have pushed past 50:50 says Citi;s Guillaume Menuet, and the program could begin as early as September.
    • How? Citi's team expects the ECB to buy both public and private-asset classes, with a majority likely to be things like sovereign bonds. As for size, Citi sees a bare minimum being €1T. This compares to the BoE's £375B program and the Fed's current pace (amid the taper) of $55B per month.
    • Don't look for action before September, though, says Menuet, as the ECB will likely wait and see if easing at the June meeting begins to do the trick of bringing inflation back up towards its 2% target. Will it work? "While it will likely be on a scale large enough to excite financial markets, we are doubtful it will be on a scale large enough to transform the economic outlook from an extended period of low inflation and low interest rates.”
    • Euro ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
    • European equity ETFs: VGK, FEZ, DFE, IEV, EPV, EZU, HEDJ, GXF, GUR, FEU, ESR, FDD, FEP, UPV, ADRU, FEEU, EURL, EURZ, DBEU, FIEU
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  • 1:08 PM
    • The average compensation at the OCC and the CFPB in 2012 was $190K, writes the AEI's Paul Kupiec, which towers over the average salary of about $50K for bank employees. Is it the special skills of regulators? Probably not. OCC secretaries average about $80K per year and FDIC limo drivers pull down $82K. Human resources management trainees at the CFPB make about $111K.
    • In 2012, 68% of FDIC and CFPB staff - and 66% at OCC - made more than 100K per year, with 19% earning over $180K. Less than 7% of employees at these agencies earn less than 50K - put another way, 93% earned more than the average banker's salary in 2012.
    • Who pays? Bank shareholders (and customers), mostly, through deposit insurance premiums and examination fees levied by the agencies. The CFPB is funded through the Federal Reserve (which doesn't disclose pay, but it's likely even higher than the other regulators).
    • ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, PFI, FXO, KBWB, FNCL, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, PSCF, FINZ, KRS, AIRR
    | 4 Comments
  • 12:28 PM
    • The EGShares Blue Chip ETF (BCHP) will begin trading on the NYSE Arca April 23rd, tracking the EGAI Developed Markets Blue Chip EM Access Index.
    • The index features even weight exposure to 30 well established, large cap firms in developed markets; including the U.S.
    • Other broad developed market ETFs: EFA, VEA, IEFA, DZK, PIZ, DPK, GWX, URTH, EFZ, EFU, DBEF, MFLA, ADRD, PXF, EFO, FNDF, IFSM, IDHQ, FDT, FWDI, HEFA
    | 1 Comment
  • 12:14 PM
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  • 11:55 AM
    • Maybe surprising to many, long-dated investment-grade corporate bonds are outperforming junk bonds this year, with total returns already of 7.48% vs. junk at 3.3%. It's a turnaround from 2013, when high-yield returned 7.42% vs. a loss of 1.57% for IG paper.
    • It's good news for institutional investors like pension funds and insurers, who have been big buyers of the bonds in recent months.
    • Investment-grade corporate debt ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CFT, SCPB, LWC, CLY, ITR, QLTA, IGHG, PFIG, SLQD, IGS, CBND, IGU, QLTB
    • In other junk bond news, DoubleLine's Bonnie Baha says the firm's core fund has cut its high-yield exposure to 3% from 6%. High prices are the reason, says Baha, noting the average price of 104.5 cents on the dollar. Many issuers can force redemptions at 103 cents, and if they don't get called, in a low-rate environment there's extension risk.
    • Baha takes note of the proliferation of short-duration high-yield funds. "It's a fallacy to think that just because it’s short-term that bad things can’t happen."
    • High-yield ETFs: HYG, JNK, HYLD, HYS, SJNK, PHB, BSJF, SJB, BSJE, BSJG, HYHG, BSJI, ANGL, HYLS, UJB, BSJH, XOVR, THHY, YPRO, SHYG, QLTC, BSJK, HYZD, HYND, BSJJ
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  • 11:33 AM
    • The FDA proposes an "Expedited Access PMA" (EAP) process for medical devices that treat or diagnose patients with serious conditions whose medical needs are unmet by current technology. The program features earlier and more interactive participation by agency staff to collaboratively develop a plan for the collection of the scientific and clinical data to support approval. The EAP aims to reduce certain devices' development times in addition to the expected shortened premarket review.
    • Eligible devices must fit the following profile: 1) be intended to treat or diagnose a life-threatening or irreversibly-debilitating disease or condition and 2) represent one of the following: no approved alternative treatment/diagnostic exists or it represents a breakthrough technology that provides a clinically meaningful advantage over existing technology or offers a significant clinically meaningful advantage over currently-available alternatives or the device's availability is in the patient's best interest.
    • The proposed EAP builds on the Expedited Access Program for pharmaceuticals that the FDA launched in 2011.
    • Draft guidance
    • Healthcare ETFs: IYH, IBB, XLV, XBI, VHT, BIB, PJP, BBH, FBT, PBE, XPH, CURE, FXH, IHE, RXL, IRY, IXJ, PPH, IHI, BIS, IHF, FHLC, XHS, PSCH, RYH, XHE, PTH, DRGS, RXD
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  • 11:07 AM
    • ICSC expects monthly retail comparable-store sales to increase 3.5% to 4.0% in April compared to last year.
    • The forecast accounts for a slow start to the period of warmer weather and the late Easter this year which is a boost for April sales.
    • What to watch: Reports on retail sales for April indicate some pent-up demand from a slow Q1 has been unleashed. Analysts think the readings on the first few weeks in May could be the most critical of the year in determining if U.S. consumers are willing to come back out in force.
    • Related ETFs: XLY, XRT, VCR, RTH, RETL, FXD, FDIS, PMR, RCD, PEZ, PSCD
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  • 7:55 AM
    • Gold and silver equities now appear more fairly valued, Goldman Sachs says, raising its sector coverage view to Neutral as it sees more responsible capital allocation, successful cost cutting initiatives, a refocus on maximizing free cash flow, and sound strategic portfolio optimization improving the positioning of select companies and offsetting its below-consensus outlook for commodity prices ($1,200/oz. gold from 2015 forward).
    • The firm upgrades Barrick Gold (ABX) to Buy, believing the company's financial flexibility has significantly improved; ABX +1.8% premarket.
    • B2Gold (BTG) is initiated with a Buy rating and C$4.20 price target, as Goldman cites imminent production growth from the Otjikoto project which enhances BTG’s free cash flow generation and should fund future development.
    • Started at Neutral: AGI, FNV, BVN,.
    • Maintained at Buy: GG, AUY, SLV.
    • Sell: IAG, EGO, PAAS.
    • ETFs: GDX, GDXJ, NUGT, DUST, SIL, GLDX, JNUG, SLVP, RING, SILJ, JDST, GGGG, PSAU
    | 14 Comments
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