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2015-08-27 13:48:43

Posted by
Neil Azous
Founder & Managing Member
Rareview Macro LLC
Contributor
Macro

Crude Oil Revisited

Yesterday (Lower Crude Oil is the Biggest Risk Today…Not Stocks), we said that crude oil weakness, if it were to materialize, would be more significant than stock weakness. Front month WTI crude oil futures closed down -1.81% yesterday yet stocks diverged and closed much higher, making our call null and void.

We were correct in our forecast that crude oil would reject the bullish readings from the larger than expected drawdowns in Tuesday’s API and Wednesday’s DOE inventory data.

Our observation that Schlumberger Ltd (SLB) would trade down following the announcement of their purchase of Cameron (CAM) also proved correct in breaking with the theme that both the buyer and seller in an M&A transaction trade higher in 2015.

Despite all of this, the price of the barrel is up almost 4% this morning and has recaptured the $40 psychological level not seen since last week.

There is a technical argument that if crude oil breaks above ~$40.50 you are supposed to go with it in proper size and have a tight stop. The argument is that while this might have only a 35-40% success rate, if it goes the risk-reward ratio is 7 to 1 given how oversold crude oil is, the degree of the short position, and the fact that there has been no counter-trend bounce this summer.
 

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.


This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 12:30:48

Posted by
Max Lee
New Constructs, LLC
Contributor
Stocks

The Best and Worst of the Mid Cap Blend Style

Style Analysis 3Q15

The Mid Cap Blend style ranks ninth out of the 12 fund styles as detailed in our 3Q15 Style Ratings for ETFs and Mutual Funds report. It gets our Dangerous rating, which is based on an aggregation of ratings of 19 ETFs and 332 mutual funds in the Mid Cap Blend style as of July 14, 2015. See a recap of our 2Q15 Style Ratings here.

Figures 1 and 2 show the five best and worst-rated ETFs and mutual funds in the style. Not all Mid Cap Blend style ETFs and mutual funds are created the same. The number of holdings varies widely (from 20 to 3281). This variation creates drastically different investment implications and, therefore, ratings.

Investors seeking exposure to the Mid Cap Blend style should buy one of the Attractive-or-better rated ETFs or mutual funds from Figures 1 and 2.

Figure 1: ETFs with the Best & Worst Ratings – Top 5

* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Proshares S&P MidCap 400 Dividend Aristocrats ETF (REGL) and Validea Market Legends ETF (VALX) are excluded from Figure 1 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.

Figure 2: Mutual Funds with the Best & Worst Ratings – Top 5

* Best ETFs exclude ETFs with TNAs less than $100 million for inadequate liquidity.

Sources: New Constructs, LLC and company filings

Boson Trust Midcap Fund (BTMFX) and Johnson Opportunity Fund (JOPPX) are excluded from Figure 2 because their total net assets (TNA) are below $100 million and do not meet our liquidity minimums.

Guggenheim Mid-Cap Core ETF (CZA) is the top-rated Mid Cap Blend ETF and Legg Mason ClearBridge Mid Cap Core Fund (LSIRX) is the top-rated Mid Cap Blend mutual fund. CZA earns an Attractive rating and LSIRX earns a Very Attractive rating.

State Street Russell Small Cap Completeness ETF (RSCO) is the worst-rated Mid Cap Blend ETF and Satuit Capital US SMID Cap Fund (SATDX) is the worst-rated Mid Cap Blend mutual fund. RSCO earns a Dangerous rating and SATDX earns a Very Dangerous rating.

The Goodyear Tire & Rubber Company (GT: $30/share), a previous Stock Pick of the Week, is one of our favorite stocks held by Mid Cap Blend funds and earns our Attractive rating. Since 2009, the company has grown after-tax profit (NOPAT) by 24% compounded annually. Goodyear currently earns a return on invested capital (ROIC) of 9%, which is triple the 3% earned in 2009. On a trailing-twelve month basis, Goodyear has generated over $2.6 billion in free cash flow which results in an impressive 16% FCF yield. At the current price of $30/share, Goodyear Tire has a price to economic book value (PEBV) ratio of 0.6. This ratio implies that the market expects Goodyear’s profits to permanently decline by 40%. The ratio also tells us that the no-growth, or economic book value of GT is $46/share – a 53% upside.

DreamWorks Animation (DWA: $25/share), a prior Danger Zone stock, is one of our least favorite stocks held by Mid Cap Blend funds and earns our Dangerous rating. Since 2010, NOPAT has plummeted from $104 million to -$13 million as creating movies became more costly and less profitable. DreamWorks currently earns a bottom-quintile ROIC of 1%, which is a fraction of the 19% earned in 2009. Despite the deterioration of DreamWorks’ business strength, the stock remains overvalued. To justify the current price of $25/share, DreamWorks must immediately achieve pre-tax (NOPBT) margins of 10% (similar to 2013 margin versus -2.5% in 2014) and grow revenue by 20% compounded annually for the next decade. We feel the expectations embedded in DWA are highly optimistic given that, in addition to the issues raised above, revenue has declined in each of the last four years.

Figures 3 and 4 show the rating landscape of all Mid Cap Blend ETFs and mutual funds.

Figure 3: Separating the Best ETFs From the Worst Fundshe Best & Worst Ratings – Top 5

Sources: New Constructs, LLC and company filings

Figure 4: Separating the Best Mutual Funds From the Worst Funds

Sources: New Constructs, LLC and company filings

Disclosure: David Trainer and Max Lee receive no compensation to write about any specific stock, style, style or theme.

 

About New Constructs

QUESTION: Why shouldn’t ETF research be as good as stock research? Why should ETF investors rely on backward-looking price trends?
ANSWER: They should not.

Don’t judge an ETF by its cover. Take a look inside at its holdings and understand the quality of earnings and valuation of the stocks it holds. We enable you to choose the best ETF based on its stock-picking merits so you do not have to rely solely on backward-looking technical metrics. 

The figure below details the drivers of our forward-looking Rating system for ETFs. The drivers of our predictive rating system are Portfolio Management and Total Annual Costs. The Portfolio Management Rating (details here) is the same as our Stock Rating (details here). The Total Annual Costs Rating (details here) captures the all-in cost of being in an ETF fund over a 3-year holding period, the average period for all fund investors.

Cutting-edge technology enables us to scale our forensics accounting expertise so that we can cover enough stocks to cover the ETFs that hold them as well. Learn more about New Constructs. Get a free trial. See what Barron’s has to say about our research. Cutting-edge technology enables us to scale our forensics accounting expertise so that we can cover enough stocks to cover the ETFs that hold them as well. Learn more about New Constructs. Get a free trial. See what Barron’s has to say about our research.

 

This article is from New Constructs, LLC and is being posted with New Constructs, LLC’s permission. The views expressed in this article are solely those of the author and/or New Constructs, LLC and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 11:30:07

Posted by
Rick Rieder
BlackRock
Contributor
Macro

The Problem With Today's Headline Economic Data

Rick Rieder explains how U.S. consumption metrics haven't kept up with the times.

 

There are many headwinds keeping U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest gross domestic product (GDP) revisions testified to this.

However, while the corridor for U.S. growth is likely to remain lower than in the past, I believe the persistent hand-wringing and skepticism regarding the U.S. economy is grossly overstated, especially when you consider the technology renaissance occurring around us today.

The press has paid a lot of attention lately to how the measurement methods behind many U.S. economic statistics haven’t kept up with the times.

For instance, in a recent New York Times Magazine piece, “The Economy’s Missing Metrics,” Adam Davidson writes about how U.S. economic statistics “are all but useless at measuring the change in general welfare created by new technologies.” Similarly, a July front-page story in The Wall Street Journal covered how official metrics don’t capture the productivity gains coming out of new, free technologies.

I couldn’t agree more, and I don’t just see problems with productivity and consumer price index numbers. As I’ve written before, I believe the U.S. economy is actually much stronger than it gets credit for, and some of this strength is obscured by consumption metrics that haven’t kept pace with the technological revolution we’re witnessing. Here are just two factors missing from the measurements.

Technological disinflation

Consumption numbers don’t capture new technologies’ downward influence on price, and U.S. consumption is likely even stronger than headline figures suggest when you take this into account. For instance, when you strip out the influence of collapsing prices from aggregate nominal personal consumption expenditures (PCE) and just look at volumes, the volume of goods consumed remains solid, meaning U.S. consumption is actually in much better shape than many believe. This was evident in the upward revision of June’s disappointing retail sales and rebounding July retail sales, and implies it’s quite sensible to look past a weak retail sales print (or even a few).

The dramatic shifts in consumption habits occurring today

Technology-savvy millennials are embracing what has come to be called the “sharing economy,” which emphasizes a more asset-light stance toward consumption, with more renting/less owning, and a move away from certain categories of consumption. For example, it’s well-known that many millennials have forgone the experience of purchasing a first car, which would have been a rite of passage for their parents and grandparents, in favor of joining car sharing programs, or simply using transportation services like Uber. The rise of the “sharing economy” is leading to lower prices and more efficient consumption not necessarily reflected in consumption numbers.

In short, the structure of the economy is changing so rapidly that old economic data haven’t kept up. Given this, what economic data should we focus on to get an accurate picture of the U.S. economy?

If you examine measures that are “easy to count,” the picture of the economy’s health becomes much less ambiguous. For example, last April, the Internal Revenue Service saw higher levels of income tax revenue than ever before, and recent auto sales and hotel revenues have been accelerating, suggesting a labor market where income is being earned and spent in an ever more confident manner.

In fact, the long-term strength in the jobs market is also illustrative of broader strength in the economy. In the July employment report, released earlier this month, the 3-month, 6-month, and 12-month moving average payroll gains all came in considerably stronger than the 200,000 average level of jobs growth that has been typical of past periods of economic expansion, according to Bloomberg data.

Beyond the long-term strength in nonfarm payrolls growth, a plethora of other labor market measures similarly confirm the robustness of the jobs markets today. Over time, this strength is likely to result in further wage gains, increasing confidence and greater consumer spending. In the meantime, given that the U.S. economy is already ready for liftoff, we should see an initial rate hike by the Federal Reserve (Fed) before year’s end.


Rick Rieder, Managing Director, is BlackRock’s Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income, and is a regular contributor to The Blog.

 

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader.

©2015 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries. All other marks are the property of their respective owners.

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This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 10:22:04

Posted by
Blu Putnam
Chief Economist
CME Group
Contributor
Macro

Fed on Track for Rate Hike in September?

Fed Still Likely to Raise Rates at September FOMC Meeting if Next Labor Market Report Shows 200,000 or More Net New Jobs

 

Currently, the central question for Fed Watchers is whether the economic troubles in China and the stock market downdraft of August 2015 will influence the Federal Reserve (Fed) to delay an increase in its target federal funds rate. We think not, and still look to the September 2015 Federal Open Market Committee (FOMC) meeting as the most likely time for the first rate rise in a decade. Here’s why.

The Fed does not own stocks. The Fed only worries about stock market downdrafts when there is systematic risk to the financial system, such as in October 1987 or September 2008, when large financial institutions might have failed and brought down the whole economy. The Fed often worries about stock prices being too high (remember Alan Greenspan’s “exuberance” comment during the 1990s tech rally). Indeed, the Fed probably views this current market correction as a healthy pause that refreshes, since the Fed’s own zero-rate and Quantitative Easing (QE) policies have likely pushed investors to aggressively search for yield, possibly leading to excessive risk-taking.

The Fed watches China as we all do. The Fed is mainly concerned, however, with whether economic troubles in China could cause a US recession. The Fed is not concerned about whether a stock market that has gone up over 100% comes down 50%. Moreover, China’s economic woes are largely due to the fact that the customers for its exports are hardly growing any more. Brazil’s economy is stagnant. Mexico is growing only slowly. Europe may post all of 1.5% real GDP growth this year after three years of modest decline. The US is on track for 2.5% real GDP growth. Japan is not growing.
China could devalue the RMB by 30% and exports would barely increase given the modest growth prospects of its customers. As in almost any business, customers’ incomes are primary to price when assessing sales prospects. And taking the long view, China was an engine of growth for three decades, 1980-2010, growing at about 10% real GDP on average over this period. As China has successfully modernized, it has also seen its demographics shift into an aging pattern, and it is only natural that real GDP growth would converge to a slower pace consistent with an aging, modernized, mature industrial economy.

So, we do not think the troubles in China or the recent stock market decline will cause the Fed to delay its decision. Moreover, we think there are important reasons that the Fed is ready to make its move.

There is a strong sense that the Yellen-Fed would like to put the Bernanke era of emergency policy measures behind it. Yellen has reformed forward-guidance and abandoned Bernanke’s fixation on the unemployment rate. The Yellen-Fed is highly data dependent, but it is the whole picture that matters, not any one or two indicators.

Yellen has ended QE. The evidence that QE lowered bond yields is compelling, but the evidence that lower bond yields help create any jobs or spur economic growth is highly controversial and disputed by many analysts (including myself). Indeed, the main impact of zero-rates and QE may well have been to support asset prices and push them to unsustainable levels, instead of having any material impact on economic growth or job creation.

The bottom-line for a data-dependent Fed is that the US economy is creating over 200,000 net new jobs a month on a consistent basis, the housing market (which was at the epicenter of the 2008-2009 recession) is healthy and growing, and while real GDP growth is not above 3% as many had hoped, the US economy has been a rock of steady growth in the 2%-2.5% territory since the end of 2009. That is, we have posted almost six years of consistent real GDP growth and job creation.  Does the US economy still need emergency policies? No.

There are risks, however, to consider and they weigh against any aggressive moves. US inflation is between 1% and 2%, where it has been since 1994. Sustained low inflation is a good omen for steady longer-term growth, just so long as the low inflation does not slip into deflation. Because of the weakness in global commodity prices, partly due to supply increases, and slower economic growth in China and other emerging market countries, there is some downward pressure on consumer prices. But the US does not seem at risk of deflation, especially if one focuses, as the Fed does, on core inflation that removes the more volatile food and energy components.

In summary, we still expect the Fed to initiate the first rate-rise in the federal funds rate in over a decade at the September FOMC meeting, although we would put our qualitative probability assessment at only around 55%, with a 30% probability for action later in the year, and 15% probability of the decision being delayed into 2016. The markets, as represented by federal funds futures, have a much lower probability attached to the September FOMC meeting.

When the rate-rise move comes, it is likely to be the first of several. However, the Fed may make it clear that it will go slow and skip meetings in between rate rises.

The Fed may even surprise us by abandoning ranges and reverting back to its old habit of simply setting an explicit point target for the effective federal funds rate. And, to add to the surprise, the Fed might choose 0.25% as the new target for the effective federal funds rate, instead of moving to a 0.25% to 0.50% range.

As a final note of caution, we would point out that the US employment report due for release on 4th September is still a critical data point. We estimate job creation at 225,000 per month or higher. Nevertheless, if for any reason, the jobs data surprises to the downside, say less than 200,000 net new jobs created, then the Fed might delay its rate-rise decision past the September FOMC meeting. The bigger the downward surprise the longer the delay, as more data points will be needed to confirm whether the unexpected downward movement was a blip or a new and weaker trend. For this reason, we feel that if the jobs number is unexpectedly weak, then the October FOMC meeting is off the table, too, since the Fed will want to see more data and will wait for December.

Additionally, because the 4th of September is the Friday before the long US Labor Day weekend, this could make for some very exciting trading, either if (a) as we expect, the data will seal the deal for September, or (b) we are wrong and the data disappoints, suggesting a delay to December or into 2016.

 

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

 

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This article is from CME Group and is being posted with CME Group’s permission. The views expressed in this article are solely those of the author and/or CME Group and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 

2015-08-27 09:34:04

Posted by
Jamie Lissette
Trading Analyst
Hammerstone Group
Contributor
Stocks

Sector News Breakdown

Consumer

  • PVH Corp. (PVH) Q2 EPS $1.37/$1.864B vs. est. $1.29/$1.82B; now sees year EPS $6.90-$7.00 incl. currency impact $1.30; on June 1 saw $6.85-$6.95 (est. $6.92); sees year revs down 2% vs. prior down 3%
  • Williams-Sonoma (WSM) Q2 EPS 58c/$1.13B vs. est. 58c/$1.11B; Q2 comparable brand revenue growth of 6.3%; sees FY15 EPS $3.35-$3.45 on sales $4.95B-$5.02B vs. est. $3.48/$5.01B
  • Guess (GES) Q2 EPS 21c/$546.3M vs. est. 15c/$537.61M; sees 3Q EPS 8c to 12c, below est. 18c and revs down 3.0%-4.5% in constant currency; forecasts year EPS 89c to $1.02 vs. est. 95c
  • Tilly's (TLYS) Q2 EPS 2c/$130.02M vs. est. 4c/$130.34M; reports Q2 comp sales up 0.5%; sees Q3 EPS 12c-16c vs. est. 19c and sees 3Q comp sales up in low single digits
  • Consumer Reports, in what at first appears to be a case of grade inflation, has given a new, top-of-the-line version of Tesla Motors’ (TSLA) Model S sedan a 103-point score…out of a possible 100
  • Destination Maternity (DEST) sees year comp sales essentially flat, with greater comp sales boost in 4Q; sees year gross margins flat y/y, increasing “significantly” in 4Q; posted Q2 eps loss (12c)

Energy

  • Seadrill Ltd. (SDRL) delayed the delivery of 10 offshore oil rigs and drill ships for up to two years and expects challenging market conditions at least through 2016, after reporting a 37% drop in second-quarter net profit; said it expected to reduce or postpone spending to save $500 million this year, after reducing costs by $250 million in 2014

Financials

  • TD Bank (TD) Q3 adjusted EPS C$1.20/C$8.1B vs. est. C$1.18 /C$7.36B; Canadian Retail delivered net income of $1.6 billion, an increase of 11% over the third quarter last year
  • Canadian Imperial Bank of Commerce (CM) Q3 EPS C$2.45 vs. est. C$2.31; Q3 ROE 20.4%, adj. ROE 20.6% and Q3 Basel III Common Equity Tier 1 ratio 10.8%
  • SunTrust (STI) upgraded to Buy from Hold at Evercore ISI
  • Aflac (AFL) upgraded to Outperform from Market Perform at Keefe Bruyette
  • Seacoast Banking (SBCF) files to sell 7.96M shares of common stock for holders

Healthcare

  • Greatbatch (GB) to buy Lake Region Medical for $1.73B in cash/stock; GB will pay about $478m in cash, issue 5.1m shares; sees double-digit cash EPS accretion in 2016, and “meaningfully more” accretive after http://goo.gl/Si3VqL
  • Oncolytics (ONCY) will make an oral presentation at International Association for the Study of Lung Cancer covering updated results, including longer-term survival data, from the company's REO 016 Phase 2 study in Non-Small Cell Lung Cancer
  • ACADIA (ACAD) upgraded to Overweight from Neutral at Piper Jaffray
  • Immune Pharmaceuticals (IMNP) files to sell 14M shares of common stock for holders

Industrials & Materials

  • CRH Plc agreed to buy Los Angeles-based C.R. Laurence Co. for $1.3 billion to expand in products used in window installation as U.S. construction markets stabilize
  • Nordson (NDSN) authorizes additional $200M repurchase plan

Technology, Media & Telecom

  • Avago Technologies (AVGO) Q3 EPS $2.24/$2.74B vs. est. $2.14/$1.74B; Q3 gross margin ops 61%; said saw strong seasonal growth in wireless segment; guides Q4 revs $1.85B +/- $25M (est. $1.87B)
  • Workday (WDAY) Q2 revs $282.7M vs. est. $274.2M; said Q2  billings growth rose 51% YoY vs. 31% in Q1; sees Q3 revs $300M-$303M vs. est. $301.8M
  • 21Vianet (VNET) Q2 ADS 2c; guides Q3 revs RMB900m-RMB940m, vs. est. RMB1.01b and sees 3Q adj. Ebitda RMB146m-RMB166m, est. RMB196.6m
  • SiriusXM's (SIRI) approved an additional $2 billion common stock repurchase program

 

The content of this post was created by the Hammerstone Group. The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com. For more information on the stocks mentioned in the Hammerstone Recap, please contact Brian Ducey at brian@thehammerstone.com.

 

This article is from the Hammerstone Group and is being posted with the Hammerstone Group's permission. The views expressed in this article are solely those of the author and/or the Hammerstone Group and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 09:15:26

Posted by
Jamie Lissette
Trading Analyst
Hammerstone Group
Contributor
Stocks

The Hammerstone Report

U.S. equity futures are pointing much higher again, looking to extend yesterday’s 4% rally. Oil rebounds following the jump in stocks yesterday/futures this morning, with WTI crude back above $40 per barrel. China’s Shanghai Composite gained for the first time in six sessions as volatility in its stocks fell. Investors look to carry yesterday’s momentum into today’s trading, pointing to a strong start. There are several potential market moving economic data points this morning, highlighted by a fresh estimate for U.S. Q2 economic growth, with the GDP reading expected at 8:30 a.m. (est. 3.2%), along with jobless claims and housing data on the agenda as well.

What a week so far, as stocks closed with their biggest gains in nearly four years on Wednesday, snapping a six-session losing streak for the Dow, S&P and NASDAQ. The Dow's 619-point gain was good for the third-largest one-day point gain in the index’s history (up 3.95%), with the majority of gains coming in the afternoon, as markets held up after turning sharply lower the day prior. Sector gains were broad based, with above average participation on what is typically a slow vacation week. Commodity prices slid again, with large losses for gold, silver and energy prices, as the dollar rose. Treasury prices retreated during morning action and extended its slide in the afternoon that sent the benchmark 10-year yield higher. The CBOE Volatility index (VIX) fell -15.8% to 30.32 (after touching 53 level just 2-days ago).

In Asian markets, The Nikkei Index rose 197 points to 18,574, the Shanghai Index surged 156 points or 5.34%), mostly late in the session to snap its 5-day skid, closing at 3,083, and the Hang Seng Index jumped 758 points (3.6%) to 21,838. Europe’s Stoxx 600 rises about 2.9%, led by basic resources and oil & gas sectors outperforming and the food & beverage and real estate sectors underperforming.

World News

  • Kansas City Fed President Esther George says the market turmoil "complicates" any decision to raise rates, but she repeated her long-held call for normalization. George, who is considered a hawk, said the market swings may have been impacted by the central bank's moves
  • Lending to Eurozone firms and households increased in July, as data showed that loans to firms grew by 0.9% in July in annual terms, higher than the 0.2% seen in June. Lending to households rose by 1.9% on the year versus 1.7% in June.
  • The ECB's broad measure of money supply, M3, was up 5.3% on the year, ahead of 4.9% in June
  • China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, Bloomberg reported

 


The content of this post was created by the Hammerstone Group. The Hammerstone Institutional Forum, a chat-based platform for traders, provides subscribers with up-to-the-minute breaking news headlines and instant analysis that drive the market. For more information please visit www.thehammerstone.com. For more information on the stocks mentioned in the Hammerstone Recap, please contact Brian Ducey at brian@thehammerstone.com.

This article is from the Hammerstone Group and is being posted with the Hammerstone Group's permission. The views expressed in this article are solely those of the author and/or the Hammerstone Group and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 08:01:38

Posted by
Elaine Chen
Sales Trader
International Business Division
Guosen Securities
Contributor
Macro

GUOSEN Closing Bell (August.27)

MARKET

Chinese stocks closed higher today, with the benchmark Shanghai Composite Index ended at 3083.59 points. The A share market saw strong rebound this afternoon amid additional cash injection by PBOC, the market was lifted by financial blue chips, ‘national team’ might be behind the buying in an attempt avoid Beijing’s embarrassment before the military parade. It is worth to note that index futures were much lower than equity index, indicating market’s anticipation that stock market might continue to correct after the ceremony. Financial sectors led the gains; none sectors fell. Combined turnover for both markets was 765.2bn yuan, down 14.3% dod.

 

CLOSE

%CHG

VOL (bn yuan)

%YTD

SH Composite

3083.59

+5.34

404.2

-4.67

SZ Component

10254.35

+3.58

361.0

-6.90

CSI300

3205.64

+5.95

278.7

-9.28

ChiNext

1959.49

+3.67

83.8

+33.14

 

Sector

Top 1

Led by

Top 2

Led by

Upward-leading

Non bank financial

601318

Bank

601998

Downward-leading

 

 

 

 

 

NEWS

*Port integration moves have gathered momentum in Zhejiang province with a key facility extending the suspension of trading in its shares in Shanghai on Tuesday, sources said on Wednesday. The move, seen as a precursor to Zhejiang's renewed focus on developing its maritime economy, will see Ningbo Port Co and the Zhoushan Port, the two largest ports in the province, being integrated under a common umbrella. Ningbo Port halted trading of its shares in Shanghai on Aug 4, said a report published in Caixin.com, adding that the move is an indication of the large-scale port integration that is happening in the province. Zhejiang plans to integrate all its port-related resources in the province and manage them under a unified company, Zhejiang Ocean Portal Investment Operation Group, according to Caixin. (China Daily)

*The central bank on Thursday pumped more money into the market to ease liquidity strain. The People's Bank of China (PBOC) conducted 150 billion yuan (23.4 billion U.S. dollars) of seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future. The reverse repo was priced to yield 2.35 percent, down from the 2.5-percent yield on Tuesday's net injection of 150 billion yuan using reverse repos, according to a PBOC's statement. (Xinhua)

FUND FLOW

 

This article is from Guosen Securities Co., Ltd. and is being posted with Guosen Securities Co., Ltd.’s permission. The views expressed in this article are solely those of the author and/or Guosen Securities Co., Ltd. and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 00:42:18

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

WTI Crude (CL) Nearing Daily Chart Downtrend Resistance

WTI Crude (CL) saw a bit of indecision following yesterday's weekly inventory figures.  As the inventory was lower than expected, CL eventually rallied, and in today's Asian morning session, is testing downchannel resistance (on the 4hr chart) and nearing descending wedge/downchannel resistance (on the daily chart).  Although weekly RSI and MACD continue sloping down, the weekly Stochastics and daily and 4hr momentum indicators are bottomish, suggesting a tradable bounce awaits.  I'm flat and waiting for a break of the daily wedge/downchannel resistance before going long. 

 

WTI Crude (CME CL Oct15) Weekly/Daily/4hr/Hourly

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 00:42:13

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

Raw Sugar (SB) Retesting Weekly Chart Descending Wedge Support

Raw Sugar (SB) saw a bit of profittaking yesterday following Tuesday's bounce, but continues trying to reclaim descending wedge support (on the weekly chart).  Weekly RSI, Stochastics and MACD are bottomish.  I'm flat and am looking to go long today in the .104-.106 range.

 

Raw Sugar (ICE SB Oct15) Weekly/Daily/4hr/Hourly

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

2015-08-27 00:42:11

Posted by
Darren Chu, CFA
Founder
Tradable Patterns
Contributor
Technical Analysis

US Treasury Bond (ZB) Testing Weekly Chart Upchannel Support

 

The US Treasury Bond (ZB) saw a second straight day of strong selling, and is now testing upchannel support (on the daily and weekly charts).  Given the length of the current weekly red candle which bearishly engulfs the prior 2 candles, and the fact that weekly RSI and Stochastics continue sloping down, an upchannel support break (on the daily and weekly charts) appears increasingly likely in the next day or so.  I'm flat but looking to short intraday on any bounces towards the 158-159 range.

 

US Treasury Bond (CME ZB Sep15) Weekly/Daily/4hr/Hourly

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures, spot FX and equity CFD markets can be traded consistently profitably. Tradable Patterns’ daily newsletter (blog) provides technical analysis on a subset of ten to twelve CME/ICE/Eurex futures (commodities, equity indices, interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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