Tuesday, September 08, 2015

Wednesday Watch

Posted by Gary .....at 9:37 PM
Evening Headlines 
Bloomberg: 
  • Carmaker China Troubles Poised to Worsen as Dealer Profits Slump. Chinese car dealers suffered a plunge in first-half profits as demand slowed in the world’s largest vehicle market, threatening to further dent sales and hurt automaker margins. The combined net income at the eight Hong Kong-traded Chinese car dealers fell 29 percent in the first six months, according to data compiled by Bloomberg. The slump has eroded the chances that profits will meet analyst expectations for a 21 percent gain for the full year. “If dealers’ profits keep worsening, carmakers will have to bail them out by offering rebates and lowering inventory,” said Robin Zhu, an auto analyst at Sanford C. Bernstein “They can’t let dealers die. This could further erode their margins and affect sales.”
  • No End in Sight for Slide in Singapore Home Prices as Rates Rise. Rising borrowing costs and a weaker currency bode ill for Singapore’s home prices amid their longest slide in more than a decade. The three-month Singapore interbank offered rate has more than doubled in a year to the highest since 2008. The main benchmark for housing loans is seen rising further as it narrows the gap with the swap offer rate, a measure of borrowing costs influenced mainly by exchange-rate expectations. The spread reached the widest since 2009 as the Singapore dollar slumped 7 percent this year.
  • Asian Stocks Advance on China Optimism as Japan Shares Rebound. Asian stocks rose, extending a global rally, amid optimism that Chinese policy makers will succeed in stabilizing mainland equity markets. Japanese shares rebounded to push the Nikkei 225 Stock Average back into positive territory for the year. The MSCI Asia Pacific Index climbed 1.2 percent to 125.64 as of 9:03 a.m. in Tokyo as the Nikkei 225 surged 3.4 percent.
  • Gundlach Says Oil Rally Would Be Short-Lived Due to Imbalance. Any jump in the price for oil is likely to be short-lived, according to Jeffrey Gundlach, co-founder of DoubleLine Capital. “We’re not looking at a big oil rally” any time soon because of an imbalance in supply and demand, Gundlach said on a wide-ranging webcast on Tuesday from Los Angeles. In the near term, crude prices may reach $55 a barrel, he said. That along with a strong stock rally could nudge the Federal Reserve toward raising interest rates this month, the fund manager said, though he called the scenario unlikely. Current levels for nominal economic growth and commodity prices aren’t supportive of an immediate interest rate hike by the central bankers, he said, adding that the Fed has a “‘watch out’ signal” rather than an “all clear.” 
  • China's Cotton Imports Seen Slumping to 13-Year Low Amid Glut. Chinese cotton imports will fall to their lowest in 13 years, according to a U.S. government forecast, as the nation reduces its inventories amid declining domestic use and growing competition from foreign producers. Chinese mills will bring in 5.75 million bales from overseas suppliers in the 12 months started Aug. 1, the U.S. Department of Agriculture’s Foreign Agricultural Service said Tuesday in a report posted on its website. That’s 31 percent lower than a year earlier and the least since 2002-2003.
  • Anthem(ANTM), Aetna(AET) Deals Threaten Competition Across U.S., AMA Says. The market for health-insurance in the U.S. is already so highly concentrated that pending tie-ups among four of the country’s largest insurers risk hurting both consumers and doctors, the American Medical Association said.
  • United(UAL) Ousts Smisek in Probe of Airline-Port Authority Ties. United Continental Holdings Inc. ousted Chief Executive Officer Jeff Smisek as the airline grapples with a federal investigation into its ties to the former chairman of the Port Authority of New York & New Jersey. U.S. prosecutors are looking into the service between United’s Newark hub in New Jersey and Columbia, South Carolina, near where the wife of former Port Authority chief David Samson has a home -- a money-losing route that became known as “the chairman’s flight.” United ended the trip days after Samson left the Port Authority in March 2014.
Wall Street Journal: 
Fox News:
  • Russia undeterred after Kerry phone call, continues flights to Syria. Moscow is continuing to send military cargo flights to Syria despite Secretary of State John Kerry calling his Russian counterpart Sergey Lavrov over the weekend to voice "concerns" about the "imminent" buildup of Russian military forces there. Multiple U.S. officials who have reviewed the latest intelligence in Syria told Fox News that the U.S. military is tracking multiple flights of Russia's largest military cargo plane, the Antonov An-124 Ruslan -- better known by its NATO codename, "Condor."
  • Hillary Clinton offers first apology for private email server. (video) Hillary Clinton offered her first apology for using a private email server while secretary of state, calling it a “mistake” in an interview that aired Tuesday. “Even though it was allowed, I should have used two accounts. One for personal, one for work-related emails,” she told ABC News. ”That was a mistake. I’m sorry about that. I take responsibility.”
CNBC:
  • A stock ploy undermining the US economy. (video) Paper profits on repurchased stock prices has fooled the market. Productivity lags. Corporate investment in fixed assets is at its lowest level in 60 years.
Business Insider: 
Reuters:
  • Tetraphase's bowel drug fails late-stage study, shares slump. Tetraphase Pharmaceuticals Inc said its experimental bowel drug failed to meet the main goal in a late-stage study, sending its shares down 75 percent in extended trading. The company said on Tuesday that data from the study showed that the drug was not better than Johnson & Johnson's antibiotic, levofloxacin, to treat complicated urinary tract infections.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are +.75% to +2.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 136.25 -6.5 basis points.
  • Asia Pacific Sovereign CDS Index 84.5 -2.25 basis points.
  • S&P 500 futures +.28%.
  • NASDAQ 100 futures +.35%.

Earnings of Note
Company/Estimate
  • (BKS)/.12
  • (HDS)/.54
  • (HOV)/.01
  • (JW/A)/.49
  • (NX)/.12
  • (TITN)/-.03
  • (BOX)/-.29
  • (KKD)/.19
  • (PANW)/.25
  • (ZQK)/-.18
Economic Releases
10:00 am EST
  • The JOLTS Job Openings Report for July is estimated to rise to 5300 versus 5249 in June.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The China Inflation report, Australia Unemployment report, UK Manufacturing Production report, $21B 10Y T-Note auction, weekly US retail sales reports, weekly MBA Mortgage Applications report, Cowen Transports Conference, Goldman Retail Conference, FBR Healthcare Conference, Wells Fargo Healthcare Conference, Keefe Bruyette Woods Insurance Conference, Baird Healthcare Conference, BofA Merrill Media/Communications/Entertainment Conference, Citi Biotech Conference, RBC Industrials Conference and the (AAPL) Special 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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