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Buffet declares stakes in Delta and American

15 Nov 2016

Asia: markets steadier and mixed. Overnight Equities were quieter but DXY topped 100 and is slipping in Asia. US 10y yields touched 2.26% but lower here to 2.20% as bonds now cheapest to equities in a year and a report calling for 2.5% by end 1Q before finishing the year back at 1.355 getting attention. Transports +2% after Buffet declares stakes in Delta and American. Financials again led but approaching resistance. and FANGs hit -2.5% with 200dma in sight and FB already has broken that support. Chinese ADRs weak but likely investors switching to domestic market ahead of SZ launch. Put/Call ratio falls and TED spread shows sharp improvement. Banks CDS prices widened excluding US banks. Tonight, US Retail sales and ex GS partner Mnuchin tops the list for Treasury Secretary. Iron Ore 1st pullback here in Asian time. Credit in Asia squeezes tighter. EEM saw $750mm outflows, but this data is relevant to yesterday's close. Nikkei -0.2% and USDJPY 108.00 the best close since July. Financials still the outperformers, but no exhaustion just yet. Advertiser Dentsu -7% after miss. Shanghai, flat and Evergrande related higher after increasing their stake in Vanke to 10.16%. CNY fixing 6.8495 soars past GFC crisis level. HK +0.4%  and Financials lead. MSCI announced several adds/deletions and additions chased higher. Upside call spreads in HK Exchange active. TenCent, flat after opening lower and results due tomorrow after the close. Taiwan -0.1% and yesterday TSMC saw $168mm net selling. Today Tech stabilizing after recent selloff. AAPL related quiet but yet to see bottom fishing. Korea -0.1% and Samsung +0.5 after buying Harman. US stock initially higher but has drifted in the am session, Posco +2% following US Steel and close to Buy exhaustion. Samsung affiliates strong. Indonesia +0.5% after bouncing off 200dma yesterday. Currencies initially bounced but now drifting again. Gold $1226 and Oil $43.86 stronger. Best Sectors Financials, Airlines and some Tech. Worst Sectors Coal, Energy and Retail.

U.S Equities: came back from an early loss and finished almost unchanged. Technology companies like Apple and Microsoft took big losses on fears about their overseas revenue, but bank stocks continued to surge along with bond yields. Technology stocks have been weak since last week's election, and they fell further as investors wonder if Donald Trump's policies as president will hurt their sales in China and other markets overseas. Bank stocks built on their post-election gains as bond yields continued to rise. That paves the way for banks to make more money from lending. Government bond yields are now at their highest levels since January. The Dow Jones industrial average gained 21.03 points to close at 18,868.69, another all-time high. The S&P 500 index dipped 0.25 points to 2,164.20 after it fell as much as -0.4percent earlier. The Nasdaq composite sank -0.4percent. Technology companies fell sharply, with familiar names taking some of the largest losses. Apple gave up -2.5percent while Facebook declined -3.3percent. Alphabet, the parent company of Google, slipped -2.4percent. Bond prices fell and yields jumped as investors anticipated that Trump's spending plans would lead to higher inflation and more government borrowing. The yield on the 10-year U.S. Treasury note climbed to 2.25percent from 2.14percent late Thursday. The day before the Nov. 8 election, the yield was 1.83percent. That's a huge move for that benchmark rate. 7 of 11 S&P 500 sectors negative with Tech -1.8%, Energy -0.9%, Utilities -0.7%, Telecom -0.7%, Consumer Staples -0.5%, Materials -0.2%, Financials +2.2%, Industrials +0.4%, Consumer Discretionary +0.3%, REITs little changed & Health Care -0.1%.

Commodities: Oil rebounded from the lowest close in eight weeks as OPEC nations were said to be making a final diplomatic effort toward securing a deal to curb production and stabilize prices.

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