Thursday, October 30, 2014

Friday Watch

Evening Headlines 
  • Merkel Downplays Incursions as Russia Probes NATO Defense. German Chancellor Angela Merkel played down the significance of incursions by Russian jets as Vladimir Putin probed Europe’s air defenses for a third day. “In the last few months I’ve seen very robust exercises with the Russian army, but I’m not acutely concerned about grave airspace violations,” Merkel said at a press conference in Berlin yesterday. Allied jets tracked Russian fighter aircraft along Europe’s fringes, bringing the number of interceptions so far in 2014 to 100, three times last year’s total, the North Atlantic Treaty Organization said in a statement.
  • Russia Agrees to Terms With Ukraine Over Gas Supply. Russia agreed to terms for restoring natural-gas exports to Ukraine, laying the groundwork to prevent residents going without heat as temperatures drop. The gas negotiations, brokered by the European Union, came as pro-Russian rebels stepped up attacks on Kiev government forces. European leaders said they hoped the deal would help improve ties between the two countries. 
  • Russia Seen Raising Rates as Ruble Plunge Feeds Inflation. Russia’s central bank will probably increase its benchmark interest rate for the fourth time this year, bringing it to the highest level since it was introduced 13 months ago, to halt a currency run that’s stoking inflation. The Bank of Russia will raise its key rate to 8.5 percent from 8 percent, according to 22 of 31 economists surveyed by Bloomberg. Two predict a move to 9 percent, with increases of a quarter-point and 75 basis points forecast by one analyst each. Five economists see no change. The central bank will announce its decision at about 1:30 p.m. in Moscow today. 
  • Asia Stocks Rise, Extend Weekly Gain, as U.S. Growth Improves. Asian stocks rose after the U.S. economy grew faster than forecast and amid a report that Japan’s $1.2 trillion Government Pension Investment Fund will increase holdings of equities. The MSCI Asia Pacific Index (MXAP) climbed 0.4 percent to 140.82 as of 9:01 a.m. in Tokyo, before markets opened in China and Hong Kong.
  • OPEC Boosts Oil Output as Prices Slide to Four-Year Low. OPEC countries boosted oil output to a 14-month high in October as crude futures sank into a bear market, a Bloomberg survey showed yesterday. Production by the 12-member Organization of Petroleum Exporting Countries climbed by 53,000 barrels a day to 30.974 million, led by gains in Iraq, Saudi Arabia and Libya, according to the survey of oil companies, producers and analysts. Last month’s total was revised 14,000 barrels a day lower to 30.921 million because of changes to the Iraqi, Kuwaiti, Nigerian and Qatari estimates.
  • Obamacare Faces New Threat as Supreme Court Weighs Appeal. The fate of President Barack Obama’s health-care law is again in the hands of the U.S. Supreme Court. Two years after upholding the law by a single vote, the justices are weighing whether to hear a Republican-backed appeal that would block people in 36 states from getting tax subsidies to buy insurance. The justices are scheduled to discuss the matter tomorrow, with an announcement coming as soon as Nov. 3. 
  • ConocoPhillips(COP) Becomes First to Cut Spending on Lower Oil. ConocoPhillips became the first major oil company to announce plans to reduce spending due to falling crude prices as drilling in some emerging North American fields becomes less profitable. The third-largest U.S. energy producer can meet its target to boost production by as much as 5 percent a year even as it reduces annual spending to below $16 billion, Chairman and Chief Executive Officer Ryan Lance told investors today. U.S. oil prices have declined 24 percent from a high of $107.26 a barrel in June because of increased North American supplies and reduced global demand forecasts.
Wall Street Journal: 
  • Big Banks Brace for Penalties in Probes. Citi Restates Earnings as It and Other Lenders Reserve Cash for Deal in Forex Investigation. Big banks in the U.S. and Europe are stockpiling billions to pay for a potential trans-Atlantic settlement of allegations that they manipulated foreign-exchange rates as talks heat up with regulators on both continents.
  • Japan’s Inflation, Job Creation Slowdown a Blow to Abenomics. Japan’s inflation rate fell to its lowest in nearly a year and a measure of job creation worsened for the first time in more than three years, highlighting the divergence between developments in the economy and policy makers’ optimistic projections.
Zero Hedge:
Business Insider:
Obama takes on coal with first-ever carbon limits
Read more at cuts 2014 GDP growth forecast, keeps fiscal goaFed's Williams: Can't wait too long to raise rates
Australian Financial Review:
Evening Recommendations
  • None of note
Night Trading
  • Asian equity indices are unch. to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 110.0 -1.0 basis point.
  • Asia Pacific Sovereign CDS Index 65.5 +1.5 basis points.
  • FTSE-100 futures +.50%.
  • S&P 500 futures +.22%.
  • NASDAQ 100 futures  +.32%.
Morning Preview Links

Earnings of Note

  • (AXL)/.62
  • (BUD)/1.51
  • (CBOE)/.54
  • (CVX)/2.53
  • (CLX)/1.03
  • (D)/.95
  • (XOM)/1.72
  • (HLT)/.17
  • (ITT)/.60
  • (LM)/.33
  • (NWL)/.55
  • (OSK)/.82
  • (SNE)/-156.14
  • (WY)/.30
Economic Releases
8:30 am EST
  • The 3Q Employment Cost Index is estimated to rise +.5% versus a +.7% gain in 2Q.
  • Personal Income for September is estimated to rise +.3% versus a +.3% gain in August.
  • Personal Spending for September is estimated to rise +.1% versus a +.5% gain in August.
  • The PCE Core for September is estimated to rise +.1% versus a +.1% gain in August.
9:00 am EST
  • ISM Milwaukee for October is estimated to fall to 60.0 versus a reading of 63.18 in September.
9:45 am EST
  • Chicago Purchasing Manager for October is estimated to fall to 60.0 versus a reading of 60.5 in September.
9:55 am EST
  • Final Univ. of Mich. Consumer Confidence for October is estimated at 86.4 versus a prior estimate of 86.4.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Williams speaking, Canadian gdp report and the (BMY) investor event could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

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