Monday, October 12, 2015

Tuesday Watch

Evening Headlines 
  • China Imports Slump for 11th Month, Export Decline Moderates. China’s imports slumped for an 11th month, the longest losing streak in six years, underscoring the heavier headwinds to growth at home and abroad. Imports slipped 17.7 percent in yuan terms in September, widening from a 14.3 percent decrease originally reported in August. Overseas shipments fell 1.1 percent in September in yuan terms, the customs administration said Tuesday, compared with a 6.1 percent decline in August. The trade surplus was 376.2 billion yuan ($59.4 billion). The data signal increasing risk China’s economic slowdown will be a heavier drag on global growth. The People’s Bank of China’s surprise devaluation of the yuan in August has helped exports stabilize, even as slowing property investment has discouraged imports. "Although intensified policy support should help bolster infrastructure investment growth in coming months, it will unlikely fully offset the still sizable headwinds coming from China’s property and financial services sectors," analysts at UBS Group AG led by Harrison Hu wrote in a report ahead of the data.
  • Singapore Set to Ease as Currency Faces Rerun of '97 Asia Crisis. Singapore’s central bank is poised to ease monetary policy for the second time in 2015 in an effort to revive dwindling growth, economists predict. The Monetary Authority of Singapore, which manages the economy through guiding the currency rather than setting interest rates, will boost stimulus when it meets Wednesday, according to 16 of 25 economists surveyed by Bloomberg. The remainder predict no move. The MAS eased policy at an unscheduled meeting in January, saying it would seek to slow the pace of the local dollar’s gains versus its trading partners. At the first of this year’s two scheduled meetings in April, it refrained from further action. 
  • Home Flipping Frenzy in Sydney Sparks Warnings on Housing Risks. Lana Taylor quit a job at Unilever Plc to buy, renovate and sell homes in Sydney, where prices have increased in 13 of the past 15 years. Taylor, a marketing manager at the consumer goods company until October 2013, and two friends started Three Birds Renovations in July last year. Since then, they have bought and sold three homes in Sydney’s northwestern suburbs and made a gross profit of about A$600,000 ($441,000). They are working on the fourth, which will be ready for sale by Christmas. “We aim to flip the property in six weeks,” said Taylor, 37. “We are kind of living the dream, where three friends, three mums are buying and renovating houses for a living.”
  • Asian Stocks Slide as Japan Reopens, Investors Await China Data. Asian stocks dropped, with the regional benchmark index retreating from a seven-week high, as Japanese shares slipped after a holiday and investors awaited China’s trade data. The MSCI Asia Pacific Index fell 0.3 percent to 133.76 as of 9:00 a.m. in Tokyo after closing Monday at the highest since Aug. 20.
Wall Street Journal:
  • SEC Readies Clawback Rules for Punishing Bad Accounting. When errors are found in a company’s books, the responsibility often falls on the finance chief and chief executive who signed off on the numbers. And it is up to the board of directors to decide whether they should be penalized by returning some of their compensation.
  • The Mullahs Say Thanks. Iran becomes more belligerent in the wake of the nuclear deal. President Obama and his foreign-policy admirers—a dwindling lot—hoped that the nuclear deal would make Iran more open to cooperation in the Middle East and with the U.S. Mark this down as another case in which the world is disappointing the American President. Iran’s judiciary on Monday announced that Jason Rezaian, the Washington Post’s Tehran correspondent, has been convicted. He was on trial for “espionage.” Security forces arrested Mr. Rezaian and his wife, journalist Yeganeh Salehi, in July 2014. Ms. Salehi
Fox News: 
  • Former ISIS hostage says 'Jihadi John' beat him, forced him to dance Tango. A Danish photographer who endured months of torture at the hands of Islamic State extremists says the terrorist killer known as “Jihadi John” forced him to stand for days and dance the Tango at a prison in Syria. Daniel Rye Ottosen, 26-- the last ISIS hostage to be released alive last June-- revealed details about his experience in captivity in an interview Sunday with Denmark radio network DR. The identity of “Jihadi John”-- the British terrorist infamous for beheading at least 4 hostages—became public last spring. Mohammed Emwazi, 26, was born in Kuwait, raised in London, and graduated from Westminster University before going to Syria in 2013 to fight with ISIS.
  • Why US banks soon will be singing the blues. (video) Fading hopes for a rate hike in 2015 and other factors are making analysts nervous about just how the quarterly profit reports will shape up. JPMorgan Chase gets things started for the Big Four on Tuesday, with Bank of America and Wells Fargo on tap Wednesday and Citigroup due Thursday. Goldman Sachs reports Thursday as well and PNC will report Wednesday.
Zero Hedge:
  • U.S. hedge funds' favorite stocks lose more than rivals - data. Publicly listed companies that are popular with U.S. hedge funds lost more money than sector rivals when stock markets tumbled in the last few months, new data from research firm show. Hedge fund managers, who often promise strong returns in all markets, were caught off guard when stocks sold off on fears of slower growth in China, falling energy prices, and worries about a potential U.S. interest rate hike. Some funds are nursing double digit declines, their deepest since 2008, according to the data that Symmetric will release to clients on Tuesday. Reuters reviewed the data on Monday. David Einhorn's Greenlight Capital is off 17 percent while Larry Robbins' Glenview Capital is down 13 percent.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.75% to unch. on average.
  • Asia Ex-Japan Investment Grade CDS Index 141.0 -.5 basis point.
  • Asia Pacific Sovereign CDS Index 79.0 .25 basis point.
  • S&P 500 futures -.07%.
  • NASDAQ 100 futures -.09%.

Earnings of Note
  • (ASML)/.73
  • (DFRG)/.04
  • (FAST)/.46
  • (JNJ)/1.45
  • (ADTN)/.17
  • (CSX)/.50
  • (INTC)/.59
  • (JPM)/1.37
  • (LLTC)/.46
Economic Releases
6:00 am EST
  • The NFIB Small Business Optimism Index for September is estimated to fall to 95.5 versus 95.9 in August.
Upcoming Splits
  • (SKX) 3-for-1
Other Potential Market Movers
  • The Fed's Bullard speaking, Fed's Dudley speaking, German ZEW Index, China Trade Balance report, China inflation report, US weekly retail sales reports, (MYL) business update and the (BSX) investor update could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

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