Happy Friday… Futures +25bps this morning on a rebound off yesterday’s weakness spurred by upside earnings from RIMM (+10% premkt), ORCL (+5%), and NKE (+2%); and a better-than-expected business confidence survey in the world’s fourth-largest economy.
Germany’s business confidence actually rose to a 17-month high, and while Euro-markets are mixed, is up 60bps thus far. On the negative side, PALM reported weaker-than-expected and is trading down 8%. Darden Restaurants (Olive Garden, Red Lobster) is also trading lower on earnings. Recall that quadruple-witching is today, with options and futures expiry at hand. Recall that open interest on the S&P 1100 line is huge, so expect markets to want to gravitate toward that number. S&P will rebalance today as well. (BIGGEST BUYS = MJN-w, ROST, MAT, HT, KMX, CKR. BIGGEST SELLS = HANS, AHT, PM, WMT, LO, CVS.) Expect volumes to spike as a result. Here’s a quick note from a derivatives desk: There will be changes to the SPX that take effect tonight on the close. For the C & WFC secondaries, we estimated a total of approximately $3.8B of S&P futures for sale, while some competitors have it slightly lower at ~$3.2B. When combining the C/WFC situation with the SPX quarterly rebalances that will take place tonight, multiple competitors are estimating ~$8B worth of S&P futures for sale on the close tonight. Obama is in Germany today and already spoke at the Climate Conference. In geopolitical news, Oil is spiking higher on news that Iranian forces are storming Iraqi oil fields. Copenhagen
Given all the bad news yesterday, down 1% can be viewed as a resilient market performance. Additionally, we got a glimpse of exactly why it’s difficult to be short the USD when the
is still considered “the lesser of evils” of the global economy. If a double-dip does materialize, or if global growth simply stalls out, the USD should benefit from the corresponding “flight to quality.” In that spirit, BTIG’s Mike O’Rourke posted this summary last night: US
The only saving grace in the market today was the better than expected economic data. Global markets sold off overnight.
was downgraded by a second ratings agency this month. Moody’s has had the Sovereign on negative review since October and expects to complete its review by late 2009 or early 2010. Expect another downgrade for the hat trick in the not too distant future. Recent developments with Greece Europe’s problem children have sent the Euro into a tailspin and the beleaguered Dollar is now investors’ currency of choice again. We have been ranting for months that neither Europe nor the UK or Japan were better off than the , and if anything, it was likely vice versa. A couple of Sovereign downgrades and a dose of reality has quickly set in. We also adamantly argued that using the Dollar to fund carry trades made little sense because shorting the reserve currency doubled the risk while providing only minimal additional upside. The Dollar Index has rallied 5% this month, meaning that the Dollar Index is up 1.4% and the S&P 500 is up 3.7% for the quarter. Although the inverse relationship between the Dollar and assets is weakening, the Dollar’s strength contributed to the overhang in the equity market today and fueled a rout in Gold today. U.S.
Accenture beats by 6c. PIPR cuts BCR. JPHQ ups DAN. DEER raises guidance. EMC added to Conviction Buy List at GSCO. ETFC resumed Buy at BofAMLCO. F reportedly sees encouraging December sales. KMX beats by 8c. NTAP cut at GSCO. RYAAY ends talks with BA on 737 order. JPHQ cuts TI. TTWO higher on earnings release. GSCO ups EMC, STZ. JEFF ups INCY. KBWI ups NTRS, STT. CSFB cuts O. MSCO cuts CIB. Soleil cuts POT.
Brightpoint PreMarket (yest close/premkt/% change/volume):
S&P 500 PreMarket (last/% change prior close/volume):
CR BARD INC 77.40 -8.03% 74014
CELGENE CORP 54.50 +7.66% 523594
FREDDIE MAC 1.45 +5.07% 282733
ORACLE CORP 23.96 +4.72% 1850148
VERISIGN INC 23.20 +4.55% 400
E*TRADE FINANCIA 1.67 +3.73% 978645
FANNIE MAE 1.13 +3.67% 236130
CARNIVAL CORP 32.48 -2.64% 68530
MEDTRONIC INC 41.77 -2.57% 300
Today’s Trivia: What did Frenchman Jules Bengue introduce to
in 1898? America
Yesterday's Answer: The Simpsons debuted on December 17th, 1989 and is the longest-running prime time show in history.
By Wes Goodman and Garfield Reynolds
Dec. 18 (Bloomberg) -- Bill Gross, who runs the world’s biggest bond fund, cut government debt holdings and boosted cash to the most since Lehman Brothers Holdings Inc. collapsed in 2008 amid increasing speculation that interest rates will rise.
Gross, who manages the $199.4 billion Total Return Fund at Pacific Investment Management Co., increased cash to 7 percent in November from negative 7 percent in October, according to Pimco’s Web site. The fund can have a so-called negative position by using derivatives, futures or by shorting.
He reduced government-related securities to 51 percent from a five-year high of 63 percent in October.
Futures contracts on the Chicago Board of Trade show investors see a 41 percent chance the Federal Reserve will increase borrowing costs from a record low by June, versus 36 percent odds a month ago. Traders also raised bets on inflation to the most in 16 months after reports on retail sales and industrial production showed the economy picked up.
“Yields will rise next year,” said Tsutomu Komiya, an investment manager in
at Daiwa Asset Management Co., which oversees the equivalent of $77 billion. “The Tokyo economy will recover and there is a possibility of a rate hike.” U.S.
Gross also cut holdings of mortgage securities to 12 percent, the lowest since Pimco’s figures started in 2000, from 16 percent, according to the Web site.”