Wednesday, February 10, 2016

Thursday Watch

Evening Headlines

  • Hong Kong's Year of the Monkey Starts With an Equity Rout: Chart.
  • Yen Advances With Gold as Hong Kong Stocks Decline; Oil Slides. Japan’s yen gained with gold after Janet Yellen said the Federal Reserve may delay policy tightening if the turmoil in financial markets continues. Stocks in Hong Kong slumped fter a three-day trading break, while crude oil extended its rout. The yen climbed for a fourth day as a Bloomberg gauge of dollar strength traded near its lowest level since November. The Hang Seng Index headed for its worst start to a lunar new year since 1994, while Korean shares slumped the most in more than three years. Futures on U.S. equity indexes dropped. Gold rose beyond $1,200 an ounce. U.S. oil dipped below $27 a barrel. The MSCI Asia Pacific excluding Japan index was down 1.2 percent as of 11:26 a.m. in Hong Kong. The Hang Seng declined 3.9 percent and Korea’s Kospi lost 2.5 percent. Markets in Japan, China and Taiwan were closed for trading. The Hang Seng China Enterprises Index, a gauge of mainland Chinese stocks listed in Hong Kong, slid 4.7 percent, the most since Aug.
  • Oil Dividend Fails to Emerge for Indian Rupee Routed by Turmoil. If there’s one currency that underscores the distortions playing out in global markets in 2016, it’s the Indian rupee. India’s status as a net oil importer prompted Goldman Sachs Group Inc. and HSBC Holdings Plc to predict a rally in its currency as the rout in crude prices intensified at the end of 2014. Instead, the rupee has been dragged lower as investors flee emerging markets, posting a fifth straight annual drop in 2015 and falling the most in Asia this year.
  • China Turns a Glut of Oil Into a Flood of Diesel Swamping Asia. Fuel producers from India to South Korea are finding that rising refined products from China are cutting the profit margins they’ve enjoyed from cheap oil to the lowest in more than a year. Worse may be coming. China’s total net exports of oil products -- a measure that strips out imports -- will rise 31 percent this year to 25 million metric tons, China National Petroleum Corp., the country’s biggest energy company, said in its annual research report last month. That comes after diesel exports jumped almost 75 percent last year.
  • Could the Stock Market Cause a Recession? (video)
  • Some Hedge Funds Want to Make Subprime Auto Loans Next Big Short.
Zero Hedge:
Night Trading 
  • Asian equity indices are -2.25% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 169.25 +4.25 basis points.
  • Asia Pacific Sovereign CDS Index 83.25 -2.25 basis points.
  • Bloomberg Emerging Markets Currency Index 68.52 +.08%.
  • S&P 500 futures -.49%.
  • NASDAQ 100 futures -.47%.

Earnings of Note 
  • (AAP)/1.20
  • (AVP)/.08
  • (BWA)/.72
  • (BG)/1.58
  • (DBD)/.68
  • (HUN)/.21
  • (INCY)/.09
  • (K)/.75
  • (LPX)/-.03
  • (TAP)/.49
  • (MWW)/.12
  • (MOS)/.44
  • (BTU)/-8.53
  • (PEP)/1.06
  • (RAI)/.50
  • (TRIP)/.33
  • (ATVI)/.86
  • (AIG)/-.93
  • (CBS)/.92
  • (FEYE)/-.37
  • (WYNN)/.78
Economic Releases
8:30 am EST
  • Initial Jobless Claims for last week are estimated to fall to 280K versus 285K the prior week
  • Continuing Claims are estimated to fall to 2248K versus 2255K prior. 
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Yellen speaking, Bloomberg US Economic Survey for February, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, $15B 30Y T-Bond auction, Keefe Bruyette Woods Financial conference, (QCOM) analyst day and the (ALLY) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 25% net long heading into the day.

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