Wednesday Watch

Evening Headlines 
Bloomberg:

• Russia-Ukraine Crisis Shields EU Gas From Oil Price Rout. The risk of disruptions to Russian natural gas flows through Ukraine this winter is protecting European prices from the rout that sent oil to a four-year low. U.K. gas for next quarter fell 13 percent since mid-June, less than half the 28 percent plunge in Brent crude over that time. While Brent is typically the benchmark used to set the price on almost half the gas supply in Europe, the Russia-Ukraine conflict, along with supply-and-demand fundamentals in the market, is having a bigger impact on gas prices than the decline in oil.
• Obama Syria Strategy Hit by Allies for Sparing Assad. France is calling for the U.S.-led coalition against Islamic State to expand its fight to prevent the fall of Aleppo, Syria’s largest city and a rebel bastion under attack by both government forces and Islamic extremists. Coming from a key ally, the push for increased military support for Syria’s embattled civilians and rebels is a public challenge to President Barack Obama’s policy, which limits military action in Syria to attacking Islamic State fighters while avoiding direct confrontation with forces loyal to President Bashar al-Assad. 
• China Home Buyers Rushing Online to Finance Downpayments. E-House is joining peer-to-peer lenders to finance down payments for buyers struggling to scrape together a deposit after home prices had tripled since 2000. Mortgage lending remains tight, even after the central bank eased its policy in September, as banks anticipate an extended property market decline because of a high supply of housing, according to Standard Chartered Plc.
• Australia Needs Stimulus to Avoid Recession, Morgan Stanley Says. Australia could face its first recession in almost 25 years unless authorities further stimulate the economy, Morgan Stanley (MS:US) said. The nation’s economy will expand just 1.9 percent in 2015, with 1.5 percentage points of that coming from higher exports, and unemployment will climb to 6.8 percent, Morgan Stanley economists led by Daniel Blake said in a research report today. They project the currency will fall to 76 U.S. cents by the end of next year from 87.37 cents at 11:10 a.m. in Sydney. 
• Kuroda Has Draghi in a Bind as Euro Soars Against Yen. Mario Draghi has something new to worry about as he prepares for tomorrow’s European Central Bank policy meeting: the euro-yen exchange rate. The yen approached a six-year low versus the shared European currency after Bank of Japan Governor Haruhiko Kuroda surprised investors late last week by adding to a record stimulus program. Kuroda’s actions jeopardize the weaker euro that analysts say Draghi needs to reflate the economy, heaping pressure on him to come up with a policy response.
• Asia Stocks Slip as Brent Near 4-Year Low; Dollar Drops. Asian stocks slipped from a six-week high as commodity producers and SoftBank Corp. slumped. Brent crude oil traded near a four-year low and the dollar weakened against most major currencies. The MSCI Asia Pacific Index lost 0.4 percent by 11:33 a.m. in Tokyo. SoftBank tumbled 3.3 percent after projecting its first profit decline in nine years.
• Saudis Go Back to the Future to Take on U.S. Shale Rivals. The Saudi oil minister’s visit to Venezuela this week is also a trip through time. Flash back to December 1998 when Saudi Arabia looked to its fellow OPEC member for help lifting oil prices from about $10 a barrel.
• Silicon Valley Privacy Push Sets Up Arms Race With World’s Spies.
• Scrutiny of Fed Seen Intensifying in a Republican Senate. As Janet Yellen was preparing to take over the Federal Reserve, she got some advice from the departing chairman, Ben Bernanke: Keep in mind that “Congress is our boss.” Yellen would do well to heed his words if the Republican Party gains majority control of the Senate in today’s midterm elections, giving fresh impetus to congressional efforts to constrain the Fed’s powers to supervise the financial system and make monetary policy. While any threat to the central bank’s independence would be subject to a veto by President Barack Obama, Yellen, 68, is likely to face pressure to hasten the Fed’s exit from the most aggressive stimulus in its 100-year history.
• Oil Import Decline to U.S. Revealed by Louisiana as Truth. Things are slowing down at the U.S.’s largest oil-import hub. Just six years after importing more than 1 million barrels a day from countries including Saudi Arabia, Nigeria and Iraq, the Louisiana Offshore Oil Port is receiving just half of that from overseas, highlighting a nationwide trend at harbors from Mississippi to Pennsylvania. What’s more, with U.S. output soaring to a 31-year high, neighboring Texas has become the port’s second-biggest supplier. 

Wall Street Journal:

• Election 2014: Streaming Coverage.
• Uber’s ‘Thousands’ of Car Loans Said to Include Risky Subprime Borrowers. Uber defended its new-car financing program for drivers after a report raised concerns that the scheme may be helping to facilitate an emerging category of subprime lending.
• New Oil Shipment Shows Cracks in U.S. Export Ban. BHP Signs Deal to Sell $50 Million of Lightly Processed Ultralight Crude. A major energy company will soon sell U.S. oil abroad without explicit permission from the government, another sign that the decades-old federal ban on crude exports is crumbling. BHP Billiton ’s deal to sell about $50 million of ultralight oil from Texas to foreign buyers without formal government approval is likely to be only the first of many such moves as energy companies seek new markets and higher prices for the surge of crude now pumped in the U.S.
• Dubai Home Prices Rise, but More Slowly. Government Has Worried Over a Potential Bubble.
• A Message to Obama. How to salvage his last two years after another midterm rebuke. 

Fox News:

• 2014 Midterm Election Coverage.

Barron's:

• FireEye(FEYE) Plunges 20%: Q3 Rev Misses, Q4 Rev View Missses. Cloud computing security technology provider FireEye (FEYE) this afternoon reported Q3 revenue that missed analysts’ expectations, and delivered a slightly smaller-than-expected net loss.

CNBC:

• Feds move to close Obamacare hospital coverage loophole. The federal government said Tuesday it will soon move to close a loophole in Obamacare that could allow big employers to refuse to cover employees' hospitalizations. That loophole is significant because hospital-stay costs can quickly become high. 
• T Boone Pickens: The real problem with oil. (video) Many energy investors think there's a powerful force working against them in the market. Investor T. Boone Pickens thinks they're right, but the problem isn't what they think. Pickens says that the big issue in the energy market isn't OPEC or the strong dollar; he says it's supply and he also says domestic drillers are to blame.

Zero Hedge:

• Goldman(GS) Shows "Equity Bust" Risk Highest Since 2008. (graph)
• The Dismal Earnings Outlook In A Chart Even Bob Pisani Can Understand. (graph)
• It Begins: German Bank 'Charging' Negative Interest To Its Retail Customers.
• Spot The Bubble. (graph)
• Spain's Newest Political Party "We Can" Surges Ahead Of Incumbents.
• Anatomy Of A Failing State: Japan's Budgetary Nightmare.

Business Insider:

• There Are Alarming Economic Similarities Between Now And 1873.
• The US Can't Possibly Defeat ISIS If It Sticks To Its Current Strategy.
• Former Wall Street Darling FireEye Is Getting Crushed, Again.
• BMW Boss To China's Auto Market: It's Over. During a recent quarterly conference call, BMW CEO Norbert Reithofer said that Chinese booming car market is slowing down as it becomes more mature. “The general market development in China is normalizing,” said Norbert Reithofer during a conference call. “The high double-digit growth rates are over.”

Reuters:

• TripAdvisor(TRIP) profit sags as costs jump; shares slide. Travel review website TripAdvisor Inc reported a quarterly profit that missed analysts estimates by a wide margin as marketing costs jumped by nearly two-thirds and referral revenue lagged the company's expectations. TripAdvisor shares fell 15 percent to $71 in post-market trading as the higher costs ate into a 39 percent rise in revenue.
• Euro supported by report suggesting ECB's Draghi will be challenged. The euro rose on Tuesday on a report citing internal tensions within the European Central Bank over the leadership style of its chief, Mario Draghi, that left markets expecting limits on future ECB loosening of monetary policy. 
• Facebook(FB) says govt requests for user data rises 24 pct. Facebook Inc said requests by governments for user information rose by about a quarter in the first half of 2014 over the second half of last year.

Obama takes on coal with first-ever carbon limits
Read more at http://www.philly.com/philly/news/politics/20130919_ap_0f857b20e0c144a5a1e1b9dddc9f9d72.html#YRThyDOhArykUeYy.9Brazil cuts 2014 GDP growth forecast, keeps fiscal goaFed's Williams: Can't wait too long to raise rateTripAdvisor profit sags as costs jump; shares slid

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 109.0 +1.0 basis point.

• Asia Pacific Sovereign CDS Index 64.25 +1.0 basis point.

• FTSE-100 futures +.63%.

• S&P 500 futures +.23%.

• NASDAQ 100 futures  +.25%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SMG)/-.22
• (CTSH)/.63
• (TWX)/.94
• (CHK)/.33
• (RDC)/.53
• (SSYS)/.58
• (DUK)/1.52
• (MDLZ)/.39
• (QCOM)/1.32
• (WBMD)/.24
• (NWSA)/.05
• (Z)/.09
• (PRU)/2.41
• (WFM)/.32
• (TSLA)/.00
• (SYMC)/.43
• (CF)/3.48
• (ANDE)/.76
• (DYN)/.00
• (CBS)/.73
• (SCTY)/-1.11

Economic Releases
8:15 am EST

• The ADP Employment Change for October is estimated to rise to 220K versus 213K in September.

9:45 am EST

• The Final US Markit Services PMI for October is estimated to fall to 57.1 versus a prior estimate of 57.3.

10:00 am EST

• The ISM Non-Manufacturing Composite for October is estimated to fall to 58.0 versus 58.6 in September.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,962,500 barrels versus a +2,061,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -455,560 barrels versus a -1,236,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,055,560 barrels versus a -5,294,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.08% versus a -.1% decline prior.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Kocherlakota speaking, Fed's Rosengren speaking, Fed's Lacker speaking, Eurozone Services PMI data, weekly MBA mortgage applications report, (UNP) investor day, (VAR) investor meeting, (AGU) investor day, (SBUX) guidance call and the (DGX) investor day could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and real estate 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.